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Old 23-08-17, 07:25 AM   #1
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Default Peer-To-Peer News - The Week In Review - August 26th, ’17

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August 26th, 2017




NZ Spy Agency Op Against Kim Dotcom’s Associates ‘Unlawful’ – High Court Docs

Newly-released New Zealand High Court documents reveal that the Kiwi agency’s spying on foreigners in the FBI-led Megaupload investigation was found to be unlawful. Kim Dotcom team’s lawyers argue the illegal spying makes the entire extradition case void.

Lawyers for the Megaupload executives, including Megaupload founder Dotcom, on Friday called for extradition proceeding against their clients to be dismissed.

A newly released court filing stated the Government Communications Security Bureau’s (GCSB) interception of Megaupload executives Mathias Ortmann and Finn Batato was “unlawful.”

The finding is significant as it was previously assumed that Batato and Ortmann, unlike Kim Dotcom and Bram van der Kolk, were valid surveillance targets because they were not New Zealand citizens or residents.

"The circumstances of the interceptions of Messrs Ortmann and Batato's communications are Top Secret and it has not proved possible to plead to the allegations the plaintiffs have made without revealing information which would jeopardise the national security of New Zealand," the GCSB stated, according to the court files.

“As a result, the GCSB is deemed to have admitted the allegations in the statement of claim which relate to the manner in which the interceptions were effected," the court document concludes.

All four men are currently appealing their extradition order to the United States.

A statement from law firm Keegan Alexander, which has been representing MegaUpload executives since 2014, said the admissions mean “the whole of the GSCB surveillance operation involving the extradition defendants was unlawful.”

“Not just because it involved permanent residents (as previously stated by government) but more fundamentally because the whole surveillance operation fell outside the authorisation of the GCSB legislation as it was relevant at the time.”

The firm also questioned if parliament was aware of the extent of the agency’s unlawful behaviour before legislation was amended to broaden the GSCB powers to spy on New Zealanders.

Kim Dotcom’s lawyer, Ian Rothken, told the Inquirer that Dotcom’s extradition case should now be dismissed in the interests of justice.

"The government's illegal conduct has reached such an extreme level that we believe that no court should entertain an extradition proceeding so tainted with state sponsored abuse and violations of basic human rights."

Attorney for Ortmann and van der Kolk, Grant Illingworth, told Ars Technica that Ortmann’s successful challenge of the spying operation calls the legality of the whole surveillance operation into question.

"We now believe on the basis of this judgement that the GCSB were acting outside their powers even in relation to a foreign person—because if they were entitled to spy on [Ortmann], GCSB would have denied the allegations," he said.

"Which means the illegal spying must have been more than the permanent residence issue—in other words the whole operation was outside the scope of the powers of the GCSB."

A spokeswoman for the GCSB told the New Zealand Herald"it was not possible for GCSB to plead to the allegations ...without revealing information which would jeopardise the national security of New Zealand."

Kim Dotcom tweeted following the release of the judgment suggesting that the next step was to establish the NSA’s role in the illegal spying.

Next step:
Let's find out exactly what the NSA involvement was in all that illegal spying and deep state abuse of power against my family ����
— Kim Dotcom (@KimDotcom) August 25, 2017

In July 2017, another court ruling found that the GCSB had been spying on Dotcom for two months longer than had previously been known.

The agency claimed, however, it had no idea it was still spying on Kim Dotcom for months after officially ending its operation, according to court documents.
https://www.rt.com/news/400944-kim-d...pying-illegal/





Pirate Bay Co-Founders Told to Pay Labels $477,000
Marc Schneider

A court in Finland has ordered two founders of torrent site The Pirate Bay to pay record labels $477,000 to close out a six-year-old lawsuit by IFPI, the global music industry trade body. Fredrik Neij and Gottfrid Svartholm, who declined to defend the case, were found guilty by default of copyright infringement and ordered to end TPB's illegal operations in a ruling by the Helsinki District Court on Wednesday.

In its original lawsuit, filed in November 2011, the IFPI (with an assist from the Copyright Information and Anti-Piracy Center of Finland, or CIAPC) demanded that the site cease in facilitating the distribution of copyrighted music and properly compensate rights holders. Neij and Gottfrid essentially did nothing in response, and with a deadline for the case recently passing, the court handed down its judgement.

A year ago, a Finnish court ordered the site's other co-founder, Peter Sunde, to pay $395,000 to Sony Music, Universal Music, Warner Music and EMI. Sunde was also told to pay roughly $62,000 to the IFPI. Like Neij and Gottfried, Sunde simply ignored the case -- or as he claims, was totally oblivious to it. "Bullying is the new black," he said at the time.

There have been other equally-ignored judgements against the Pirate Bay co-founders over the years. In each, the winning plaintiffs have reportedly recovered nothing. (The IFPI did not immediately respond to a request for comment on this latest judgement.)
http://www.billboard.com/articles/bu...ifpi-judgement





Village Roadshow Wants to Sue 'Hundreds' of Australians for Pirating Mad Max and Other Movies

Entertainment company Village Roadshow will reportedly pursue legal action against "hundreds" of Australians the company believes illegally downloaded its films.

The AFR reports Village will act later this year, along with a campaign to stop Google from indexing pages that contain pirated films and TV shows.

Business Insider has contacted Village Roadshow and Creative Content Australia, the industry association representing the entertainment sector, for comment.

The plan is reminiscent of the lawyers for Dallas Buyers Club three years ago demanding pirates sign a $US7000 settlement while threatening up to $US150,000 damages as an alternative – a strategy that was thwarted in the courts in Australia in 2015.

Creative Content Australia chair and Village Roadshow executive officer Graham Burke told the AFR that while offenders would be pursued "vigorously", any damages sought would be gentler than the Dallas Buyers Club.

"We will be looking for damages commensurate with what they've done," he said.

"We'll be saying 'You've downloaded our Mad Max: Fury Road, our Red Dog, and we want $40 for the four movies plus $200 in costs.'"

Burke is cognisant of public opinion turning against big entertainment companies in the 2000s when vulnerable people like children and the elderly were targetted with lawsuits from music record labels for illegal downloads.

"We will identify people who are stealing our product, we will ask them do they have ill health or dire circumstances, and if they do and undertake to stop, we'll drop the case," he said.
http://www.businessinsider.com/villa...-movies-2017-8





Lawsuit Accuses Hawaii Residents of Using File-Sharing Software to Illegally Download Movies
Manolo Morales

Sharing can get you in trouble.

Film companies are cracking down on Hawaii residents who are downloading and sharing movies.

A lawsuit was filed Friday against 16 people in Hawaii, accusing them of using file-sharing software and sharing movies with others.

The lawsuit claims that each of the defendants could be liable for up to $150,000.

We’ve learned that it’s possible to download and share illegal videos without even knowing it. So how do you prevent that?

KHON2 spoke with an expert who says you need to be careful when using file-sharing software, and it’s best to avoid certain ones altogether.

A company called Headhunter, a movie company subsidiary, filed the lawsuit against 16 Hawaii residents for copyright and distribution infringement. They’re accused of downloading a movie that was just released and sharing it with others online.

“So actually as you are downloading a copy of the movie the BitTorrent software announces to the internet that this person at the IP address has the movie or at least a piece of it here to share with other people,” said Kerry Culpepper, attorney for Headhunter LLC.

He says the company has 18 similar cases pending here in Hawaii, each of them with one to 20 defendants.

“The ultimate objective is to deter piracy and to try to make people realize that there are risks to using this type of software to illegally make copies of our client’s movie,” Culpepper said.

We’ve learned that using file sharing software can lead to problems if you’re not careful. You might download and share illegal movies without even knowing it.

“Yeah, absolutely if you’re not familiar with the software or how it works and you try a Torrent software just to get a free show and you don’t know what you’re doing absolutely if you leave it on and you’re sharing it out you can be liable,” said Tim Caminos, CEO of Supergeeks.

Caminos says when you use file-sharing software, you become part of a large community that shares all types of data, and you may not always know what you’re getting.

“You may just want to stay away from those because when you’re downloading those Torrent-type software, for the most part, a lot of people are using them to pull movies and music offline from other users that have basically a library community of thousand and thousands of other users,” Caminos said.

He adds that you also run the risk of getting viruses or malware when using file-sharing software. He says other file-sharing programs like Dropbox or Google Drive are usually safe.

The company that filed the lawsuit points out that the main goal is to stop people from illegally downloading the movies, so people are warned before the lawsuit is filed.
http://khon2.com/2017/08/18/lawsuit-...wnload-movies/





Mayweather vs McGregor Fight Puts Pirated Livestreams in the Spotlight
James Rogers

Saturday’s hotly-anticipated boxing match between Floyd Mayweather and UFC Champion Conor McGregor is sparking a fierce battle outside the ring over pirated livestreams.

Saturday’s fight at the T-Mobile arena in Las Vegas is being distributed live by Showtime Pay-Per-View, with pricing ranging from $90 to $100. Millions are expected to watch the intriguing battle between Mayweather and Irish MMA superstar McGregor.

The fight, however, has been described as potentially “the most pirated event in history” and has already prompted legal action by Showtime Networks. Earlier this month, the CBS subsidiary sued more than 40 websites to prevent unauthorized streaming of the clash.

Despite the move, Eric Feinberg, a founding partner of deep web analysis company GIPEC, told Fox News that pirated streams are still being promoted via social media. “It’s a problem because it makes it look like it’s legitimate,” he said.

The fight also presents a potential challenge for Facebook if footage of the bout is streamed via Facebook Live. This could be shot at the event itself, or via TV footage.

Facebook told Fox News that it devotes "significant resources" to addressing copyright issues for live content on the platform. "Video publishers and media companies can provide reference streams of live content that are checked against files in our Rights Manager tool," explained a Facebook spokesperson, in a statement emailed to Fox News. "If a match surfaces, Rights Manager immediately takes action on the rule set by the rights holder – for example, to block that stream."

The spokesperson added that rights holders can also report live videos at any time during a live broadcast. "We've been growing our global team that processes these reports across time zones and continue to invest in our copyright tools," he said. "This remains a work in progress and we continue to listen to feedback from our partners to help improve our offerings.”

There is huge global interest in the super welterweight fight that marks 40-year-old Mayweather’s return to the ring. The 12-time world champion, who is regarded as one of the greatest boxers of all time, retired undefeated in 2015 with a record of 49-0.

The 28-year-old McGregor is the first fighter to hold two UFC titles simultaneously.

“The fan and media interest exceeds what we have seen for the Mayweather-Pacquiao fight in 2015,” an event spokesperson told Fox News.

Two years ago Mayweather’s welterweight world championship unification fight with Manny Pacquiao, which was distributed by HBO and Showtime, set a new record of 4.6 million pay-per-view buys. However, Saturday’s clash is tipped to surpass this number.

In 2015, streaming app Periscope was forced to take down pirated streams of the Mayweather-Pacquiao fight, as were other streaming apps.

Fox Business reports that pay-per-view purchases for Mayweather vs. McGregor could be in the neighborhood of 5 million buys.

Earlier this month, Mayweather told Fox Business that he expects to earn $300 million from the fight, with McGregor’s earnings expected to top $100 million.

For the first time, Showtime is making the event available to consumers on ShowtimePPV.com and through the Showtime PPV app on Apple mobile and Apple TV devices.

The fight takes place at 9 p.m. EDT Saturday.
http://www.foxnews.com/tech/2017/08/...spotlight.html





Why Your Pirating Days are Numbered

Creative Content Australia rolls out a national campaign to educate audiences on screen piracy as the Federal Court orders a block on 42 infringing websites.
ScreenHub

The days of free screen content could be numbered after a ruling made in the Federal Court of Australia last week. The Hon. Justice John Nicholas ordered ISPs to block 42 websites found to be ‘primarily engaged in facilitating access to copyright-infringing content,’ Creative Content Australia (CCA) reported.

This is not the first time a court of law has intervened in the online space – after last year’s successful block of torrent site, The Pirate Bay, Pay TV provider Foxtel is now asking ISPs to block a further 17 websites. Earlier this month it was also revealed (via a leaked email from an HBO executive) that HBO is also on the look-out for online pirates, offering a $250,000 ‘bug bounty’ Forbes magazine reports.

Will court ordered ISP blocks stop the pirates?

Watching illegal versions of shows like Game of Thrones will get harder but it may not stop torrenting altogether. Research conducted by the CCA in 2016 has shown a dramatic increase of consumers pirating content on a regular basis and young consumers are leading the illegal downloads.

The CCA reports: ‘21 percent of Australians aged 18-64 admit to pirating content at least once monthly. The level of piracy amongst 12-17s is at 26 percent while the number of Australians aged 12-13 who stream or download from pirate sites has increased significantly: from 14 percent in 2014 to 23 percent in 2016.’

A lack of education around pirated content could be one reason for the increase. CCA are answering the trend with a national campaign.

CCA has launched Australia’s biggest anti-piracy campaign, The Price of Piracy, which alerts consumers to the online risks of streaming or downloading pirated content from these types of sites, including the possibility of exposure to dangerous malware.

'Content links on infringing sites have become the number one method of propagating malware on the internet, with one in three sites exposing users to malicious software that can steal personal information like addresses, bank details, credit cards and passwords, and facilitate identity theft,' said the CCA in a statement.

'Ransomware – spreading globally in pandemic proportions – can lock a computer and encrypt files so they become inaccessible until a ransom is paid. Research also shows nearly 40 percent of Android VPNs – often used by pirates to circumvent blocks to access pirate sites – are affected by malware.'

The campaign includes a 30-second and a 15-second TV spot featuring Australian actor Bryan Brown which will screen in most cinemas, with targeted presence on free-to-air and subscription television.
http://www.artshub.com.au/news-artic...umbered-254295





Sony Music’s New Deal with Dubset Will Let it Monetize Unofficial Remixes

Dubset wants to legitimize distribution for DJs and producers
Lizzie Plaugic

Rights clearance startup Dubset has just inked a deal with Sony Music to allow monetization of its songs in DJ sets and of unofficial tracks that sample its artists. This means that artists could have their bootleg remixes and DJ sets legally cleared and distributed on Apple Music and Spotify, with every rights holder receiving a portion of royalties. This is the first major label Dubset has secured, and it’s a big step toward tackling gray area material that has proved problematic for platforms like SoundCloud.

The deal is a tangible move forward in the music industry’s ongoing battle with sampling and bootlegs. Dubset claims more than 35,000 labels and publishers are already using its services, but the Sony agreement will massively expand coverage for DJs, who often use recognizable radio songs for remixes and DJ sets. Sony can set rules to restrict some of its content, but Dubset CEO Stephen White says “the majority” of the label’s catalog will be available.

Dubset has platforms called MixSCAN and MixBANK, which work in tandem to identify songs and distribute royalties. After a track is uploaded on MixBANK, Dubset’s proprietary tech scans it for samples, identifies the rights owners, and clears the track for distribution on Apple Music or Spotify. Dubset also handles the royalties for each track uploaded, dividing the money between rights holders and DJs. “Sony was open to the deal because it not only opens up another revenue stream for them, it also revitalizes their back catalog,” says Alex Dias, a content manager for Dubset.

"We’re talking hundreds of rights holders"

DJ mixes have historically proved to be especially difficult for monetized distribution. “The average mix is 62 minutes long and has 22 different songs in it, and those 22 different songs are represented by over 100 different rights holders,” White tells The Verge. Using Dubset’s technology, a 60-minute mix can be processed in just 15 minutes.

During that 60-minute mix, White says, MixSCAN will fingerprint every three seconds of audio. “We’re using a combination of audio fingerprinting technologies and fairly advanced algorithmic approaches to identify the underlying masters that are being used in a mix or a remix,” he says. Although MixBANK asks DJs themselves to identify the masters they use (as shown below), White says this is just to help validate MixSCAN’s results.

Dubset recently succeeded in clearing a full DJ set for Apple Music, White tells The Verge. A landmark achievement, this marks the first time a sample-heavy mix has appeared on the streaming service in its entirety. The DJ, H.O.S.H., hosts the majority of his live sets on SoundCloud, which currently only offers limited monetization through label-released SoundCloud Go songs and its invite-only SoundCloud On Premier program.

Dubset’s deal is also a blow to SoundCloud. Once a popular platform for DJ mixes and bootlegs, SoundCloud has in recent years struggled to appeal to creators while also trying to appease labels gunning for copyright takedowns. SoundCloud’s new CEO Kerry Trainor has said he wants to refocus the platform by bolstering tools for creators, but if Dubset can get other major labels on board, they might beat SoundCloud to a legal solution for sample-reliant music content. Should Dubset secure deals with Universal and Warner, there’s a good chance a hefty portion of remixes and DJ sets could be redirected toward Spotify and Apple Music. By alleviating copyright infringement fear for musicians and providing royalty payouts to all parties involved, Dubset could eventually succeed where SoundCloud failed.

“For artists, [this deal] means that the music being used in remixes and mixes is now being properly controlled, properly monetized, and they’re getting fairly compensated for the use of their works,” White says.

A source close to Dubset tells The Verge that the company is also working on similar deals with Universal Music Group and Warner Music.

Disclosure: Verge reporter Dani Deahl is currently working with Dubset to get one of her remixes cleared. She provided the screenshots above. This partnership has not influenced coverage.
https://www.theverge.com/2017/8/22/1...ghts-clearance





AP Photos: Forbidden Soviet-Era Music on X-Ray Snapshots
Alexander Zemlianichenko

An exhibition describing a unique chapter in the history of Soviet culture — bootleg music recordings made on used X-ray film — has opened in Moscow.

From the late 1940s to the early 1960s, ingenuous Soviet music lovers made bootleg copies of banned music on used X-ray snapshots, bypassing strict official controls over recordings people were allowed to listen to. They are played on normal record players.

The Bone Music exhibition, which opened in Moscow's Garage Museum of Contemporary Art last week, presents research by X-Ray Audio, a project by Stephen Coates and Paul Heartfield from London.

Coates, a composer and music producer, described the recordings as "images of pain and damage inscribed with the sound of forbidden pleasure; fragile photographs of the interiors of Soviet citizens layered with the ghostly music they secretly loved."

The clandestine recordings weren't limited to jazz and rock-n-roll, vilified by Communist propaganda as manifestations of Western decadence. They also featured Russian emigre music, as well as popular prison and Gypsy songs also tabooed by Soviet ideologists.

The industry that put bootleggers at risk of arrest gradually died out in the mid-1960s with the appearance of reel-to-reel recorders.

Along with the original recordings on X-ray film, the exhibition tells the stories of people who made, distributed and played them. The installation produced for the Moscow exhibition immerses the audience in an atmosphere that mixes underground technology, forbidden culture, Cold War politics and human ingenuity.
http://www.newstimes.com/news/world/...y-11952115.php





Sonos Says Users Must Accept New Privacy Policy or Devices May "Cease to Function"

The sound system maker will not allow existing customers to opt-out of the new privacy policy.
Zack Whittaker

Sonos has confirmed that existing customers will not be given an option to opt out of its new privacy policy, leaving customers with sound systems that may eventually "cease to function".

It comes as the home sound system maker prepares to begin collecting audio settings, error data, and other account data before the launch of its smart speaker integration in the near future.

A spokesperson for the home sound system maker told ZDNet that, "if a customer chooses not to acknowledge the privacy statement, the customer will not be able to update the software on their Sonos system, and over time the functionality of the product will decrease."

"The customer can choose to acknowledge the policy, or can accept that over time their product may cease to function," the spokesperson said.

News of the changes was announced to customers in an email last week.

But the company's move to disallow any existing customer a way to opt-out of the policy has riled many who commented in various tweets and Reddit threads. It comes as the company becomes the latest tech firm to offer a new privacy policy for its users, which governs how the company collects its customers' data and shares it with partners.

Sonos said that users "can opt out of submitting certain types of personal information to the company; for instance, additional usage data such as performance and activity information."

But users will not be able to switch off data that the company considers necessary for each Sonos device to perform its basic functions.

That "functional data" includes email addresses, IP addresses, and account login information -- as well as device data, information about Wi-Fi antennas and other hardware information, room names, and error data.

The move has drawn ire from several privacy and policy experts.

"Sonos is a perfect illustration of how effective privacy, when it comes to not just services but also physical objects, requires more than just 'more transparency' -- it also requires choices and effective controls for users," said Joe Jerome, a policy analyst at the Center for Democracy & Technology.

"We're going to see this more and more where core services for things that people paid for are going to be conditioned on accepting ever-evolving privacy policies and terms of use," he said. "That's not going to be fair unless companies start providing users with meaningful choices and ensure that basic functionality continues if users say no to new terms."

Lee Tien, a senior staff attorney at the Electronic Frontier Foundation, said it was a "growing" problem among the consumer electronics space.

"[Device] makers obviously can do a lot about the problem," said Tien. "They can design their systems to separate more data collection side from product feature. Obviously some features don't work without data but even so, you can often choose to store data locally and not transmit it to some mothership somewhere."

"Society as a whole continues down a path where devices in your home, traditionally our most private space, are largely controlled by other people who want to know what you're doing," he said.

Sonos isn't the only company under scrutiny for changes to its privacy policy.

Plex, a software multi-platform media server, also told customers last week that it would begin collecting more data on its users, limited to non-identifiable device data. Like Sonos, the company did not allow users to opt-out of the changes.

After users complained on several Reddit threads and across social media that their only option was to no longer use the services, Plex reversed course.

It now proposes to "make it even more clear that we don't collect data that tells us what is in your library," says an updated page on its website.
http://www.zdnet.com/article/sonos-a...e-to-function/





Samsung TV Owners Furious after Software Update Leaves Sets Unusable

Customers say recently acquired televisions stopped working after the company sent out an upgrade a week ago
Miles Brignall

Thousands of owners of high-end Samsung TVs have complained after a software update left their recently acquired £1,400 sets with blank, unusable screens.

The Guardian has been contacted by a number of owners complaining that the TVs they bought – in some cases just two weeks ago – have been rendered useless by an upgrade sent out by Samsung a week ago.

Others have been posting furious messages on the company’s community boards complaining that their new TVs are no longer working.

The company has told customers it is working to fix the problem but so far, seven days on, nothing has been forthcoming. The problem appears to affect the latest models as owners of older Samsung TVs are not reporting the issue.

Lohith Jajee, one of those affected, wrote: “We spent nearly £1,400 on this TV two weeks ago. It’s holiday period in the UK and we thought kids would enjoy watching [a] new TV. To my horror, it stopped working from day two. What’s even more frustrating is the customer service: all I get is ‘we are aware of the issue and will get back’. Six days on and counting.”

Another person, posting on the Samsung community boards, wrote: “So here we are. Another morning without my TV working AND more importantly another morning with NO update from anyone at Samsung.

“I honestly can’t believe the incompetence that is being shown by a company of this size. The lack of communication is astounding and if I could take my TV back it would be there in a heartbeat.”

This is not the first time Samsung customers have experienced problems after buying TVs. Last year Guardian Money reported that buyers had been left frustrated after their new TVs would not access the BBC iPlayer.

The company, thought to be the world’s biggest TV manufacturer, had sold the TVs without having the correct licensing agreements in place.

On Wednesday Samsung is launching its Galaxy Note 8 smartphone in New York. It hopes the new model will restore the company’s reputation after last year’s “exploding” Note 7 problem that necessitated a mass recall.

Responding, the company said: “Samsung is aware of a small number of TVs in the UK (fewer than 200) affected by a firmware update to 2017 MU Series TVs on 17 August. Once this issue was identified the update was switched off and we are now working with each customer to resolve the issue. Any customers affected are encouraged to get in touch with Samsung directly by calling 0330 726 7864.

“We would like to apologise for the inconvenience caused to our customers.”
https://www.theguardian.com/technolo...-sets-unusable





Roku is the Top Streaming Device in the U.S and Still Growing, Report Finds
Sarah Perez

Roku isn’t only maintaining its lead as the top streaming media player device in the U.S., it’s increasing it. That’s the conclusion from the latest industry report out today from market intelligence firm Parks Associates, which states that 37 percent of streaming devices in U.S. households are Roku devices, as of the first quarter of this year.

That’s up from 30 percent in the same quarter last year, the report notes.

The growth is coming at the expense of Roku’s top competitors, like Apple and Google, with only Amazon’s Fire TV able to increase its install base during the same timeframe. Fire TV devices are in 24 percent of U.S. households, as of Q1 2017, up from 16 percent last year. That climb allowed Amazon to snag the second position from Google’s Chromecast, which has an 18 percent share.

Lagging behind, Apple TV’s market share fell to 15 percent – a drop that Parks Associates Senior Analyst Glenn Hower attributes to Apple TV’s price point.

“Higher-priced devices, such as the Apple TV, have not been able to keep up with low-priced and readily available Roku devices, which can be found at Walmart for as low as $29.99,” he said.

Roku last fall overhauled its line of streaming players with the intention of plugging every hole in the market. That strategy is seemingly paying off.

There’s now a Roku device to meet any consumer’s needs – whether that’s an entry-level, portable and affordable “stick,” to rival the Fire TV Stick or the Chromecast dongle, or a high-end player with 4K and HDR support, lots of ports, voice search remote, and other premium bells and whistles.

Roku just shared its own growth numbers, too, as reports swirl regarding the company’s IPO plans. Last month, it announced the Roku user base has now grown to 15 million monthly active users in the first half of this year, up from 13 million in 2016.

This is the second recent report to put Roku ahead of the pack. A July eMarketer forecast said that 38.9 million U.S. consumers will use a Roku device at least once per month in 2017, equating to 23.1 percent market share of connected TV users. (eMarketer’s numbers are higher than Roku’s because it counts individual users, while Roku only measures registered accounts. But a family will have one registered account that’s shared by several different people.)

Chromecast will have 36.9 million users this year (or a 22% share); Amazon Fire TV will have 35.8 million users in 2017 (21.3%); and Apple TV will have 21.3 million users (12.7%), eMarketer said.

The two reports’ numbers differ on which device earns second place. That’s because one is measuring connected TV users while the other is measuring devices owned. Parks Associates gives the second place crown to Amazon, while eMarketer’s forecasts that Chromecast will be close behind Roku this year.

However, one thing that’s true for both reports is Apple TV’s trailing position. That’s something that Apple may address later this year with the release of new Apple TV device, which is rumored to support 4K and HDR video.

To be fair, though, even with a refreshed device, Apple wouldn’t really be competing with all of Roku’s product line; rather it’s only targeting those who would be in the market for the high-end Roku Ultra streaming player, not a basic device or stick.
https://techcrunch.com/2017/08/23/ro...-report-finds/





Hollywood, Apple Said to Mull Rental Plan, Defying Theaters
Anousha Sakoui

• Studios are said focused on project despite exhibitor pushback
• Theater chains are said to seek 10 years of revenue split

Movie studios are considering whether to ignore the objections of cinema chains and forge ahead with a plan to offer digital rentals of films mere weeks after they appear in theaters, according to people familiar with the matter.

Some of the biggest proponents, including Warner Bros. and Universal Pictures, are pressing on in talks with Apple Inc. and Comcast Corp. on ways to push ahead with the project even without theater chains, the people said. After months of negotiations, the two sides have been unable to arrive at a mutually beneficial way to create a $30 to $50 premium movie-download product.

The leading Hollywood studios, except for Walt Disney Co., are eager to introduce a new product to make up for declining sales of DVDs and other home entertainment in the age of Netflix. They have discussed sharing a split of the revenue from premium video on demand, or PVOD, with the cinema chains if they give their blessing to the concept. But the exhibitors have sought a long-term commitment of as much as 10 years for that revenue split, which the studios have rejected, the people said.

Deals with potential distributors such as Apple and Comcast could be reached as soon as early next year to sell digital downloads of major films as soon as two weeks after they debut in theaters, the people said. Comcast, the largest U.S. cable provider, is also the owner of Universal Pictures.

Those pacts would give the studios a way to issue an ultimatum to the theater chains: Agree to a deal, or we’ll start selling the movie downloads anyway. The movie houses could fight back by boycotting films slated for sale via download days after their theatrical debut.

Shares of three of the largest movie theater chains were down Friday. AMC dropped as much as 8.4 percent, Regal Entertainment Group fell 5.4 percent and Cinemark Holdings Inc. slid 3.2 percent.

Unless studios definitively decide against a PVOD window, exhibitor shares will remain under pressure, said Michael Pachter, an analyst at Wedbush Securities Inc. “They can’t recover because there will be the specter that it’s imminent,” he said.

But he was skeptical that studios would go ahead with digital rentals without an agreement with theaters. ““They always claim they’re going to do something dramatic, and then they don’t,” he said.

Some studio executives are taking a less aggressive stance and don’t want to fight against exhibitors who still wield enormous power in the industry. The studios and movie chains have to negotiate independently because of antitrust rules.

The escalating tensions are likely to fuel investor worries about the movie industry as more viewers find reasons to stay home. The shares of leading circuits such as AMC Entertainment Holdings Inc. have been buffeted all year by the uncertainty around the talks as well as a more than 12 percent decline in the summer box office. In the year to date through Aug. 13, the North American box office is down 4.1 percent, according to ComScore Inc.

The theatrical window of exclusivity over new movies has long been sacrosanct, in part because Hollywood’s biggest directors and actors value the big screen over television. But the industry has allowed the exclusivity period before DVD sales to shrink to about three months after a movie’s opening weekend, compared with six months historically.

Walt Disney Co.’s recent move to create its own streaming service for some of its films, another nod to the growing demand for home viewing of movies, has also added pressure on the exhibitors to reach a deal with studios, the people said. Movie distributors argue that selling movie downloads sooner would let them capitalize on the hype generated by opening weekends in theaters.

Share Decline

The cinema chains have downplayed the severity of the threat even as shares have plummeted this year. AMC Chief Executive Officer Adam Aron spent “days and days devoted to meeting with investors” in mid-May, he told analysts earlier this month on an earnings call with investors. They were focused on “PVOD, PVOD, PVOD,” Aron said. The uncertainty he said was “driving investors bonkers.”

So Aron held one-on one, “emergency meetings” with studio CEOs on the topic over the past two months and concluded there was no consensus and no deal was likely in the U.S. in 2017.

In a call with analysts last month, Regal CEO Amy Miles read aloud from the New York Times an article that claimed the need for PVOD was urgent because of the decline in DVD sales. The article was from 2010, she revealed. “Here we sit today, seven years later, still discussing the urgency of premium VOD,” Miles said. “There is not a consensus amongst the studio partners with respect to what any kind of long-term windowing structure should be.”

Varying Approaches

Yet the talks continue. The terms being discussed vary between each studio and each cinema chain, with some talks focusing on a release date of about 17 days after debut, for about $50, or four to six weeks from release for $30, people familiar with the talks said. Another possibility is first experimenting with a new release window overseas before trying it in the U.S., which is the biggest home-entertainment market, one of the people said.

Some theater executives have highlighted to studios that about 50 percent of a movie’s revenue now comes from its theatrical run, which they could be jeopardizing, one of the people said. But studios have countered that theatrical has become a larger share of the revenue because of the collapse in DVD sales, one of the people said. In the first half of 2017, DVD sales were down 10 percent, according to industry-backed researcher DEG. DVD rentals from stores fell 20 percent year on year. Digital sales rose 8 percent, a slowdown from previous years.

Disney isn’t interested in participating in the discussions because it believes in its strategy of focusing on fewer, bigger event movies that need to be seen on the big screen. Smaller producers like Lions Gate Entertainment Corp., the studio behind “The Hunger Games” franchise, are hoping for a deal. CEO Jon Feltheimer said he believed PVOD would be introduced in the next 12 months. “You’re going to see some tests done at least in some territories in the near future,” Feltheimer said on its earnings call this month. “I hope that will happen, I think it will be great for the business.”

— With assistance by Reade Pickert

https://www.bloomberg.com/news/artic...fying-theaters





Apple Is Planning a 4K Upgrade for Its TV Box
Mark Gurman and Anousha Sakoui

• Company plans to announce new Apple TV model in September
• New model will play 4K HDR content from movie studios, apps

Here's What's Known About Apple's 4K TV Set-Top Box

Apple is planning to unveil a renewed focus on the living room with an upgraded Apple TV set-top box that can stream 4K video and highlight live television content such as news and sports, according to people familiar with the matter.

The updated box, to be revealed alongside new iPhone and Apple Watch models at an event in September, will run a faster processor capable of streaming the higher-resolution 4K content, said the people, who asked not to be identified because the plans aren’t yet public. The 4K designation is a quality standard that showcases content at twice the resolution of 1080P high-definition video, meaning the clarity is often better for the viewer. Apple is also testing an updated version of its TV app, which first launched in 2016, that can aggregate programming from apps that already offer live streaming.

Apple is seeking to revive its video ambitions with the new product. Apple TV trails devices from Roku Inc., Amazon.com Inc. and Alphabet Inc.’s Google in the U.S. set-top box market share with only 15 percent as of the end of March, according to a survey this month from Parks Associates. Apple Chief Financial Officer Luca Maestri told Bloomberg News earlier this year that Apple TV sales had declined year-over-year in the 2016 holiday quarter. The iPhone maker has also lagged behind companies such as Amazon and Netflix Inc. in developing scripted shows and other video content.

In order to view 4K video, users will need to attach the updated Apple TV to a screen capable of showing the higher-resolution footage. Many recent TV models from Sony Corp., LG Electronics Inc., and Samsung Electronics Co. offer 4K output. The new box will also be able to play content optimized for TVs capable of playing High Dynamic Range (HDR) video, which produces more accurate colors and a brighter picture. In February, Bloomberg News reported that a 4K Apple TV model had gone into testing. An Apple spokeswoman declined to comment.

Apple, the world’s most valuable company, relies on the iPhone for more than half of its annual revenue. Its services business, which includes the App Store and Apple Music, is its fastest growing unit and generated 16 percent of the company’s sales in the most recent quarter.

At its developers conference in June, Apple Chief Executive Officer Tim Cook said “you’ll be hearing a lot more about tvOS later this year,” referring to the Apple TV’s operating system. Cook also announced that Amazon Prime Video will be supported by the Apple TV beginning later in 2017. Apple last updated the Apple TV box in 2015 with a new remote control, an App Store and support from its Siri voice assistant. It added new software features, including the TV app, last year.

In order to play 4K and HDR content, Apple will need deals with content makers that can provide video in those formats. The Cupertino, California-based technology giant has begun discussions with movie studios about supplying 4K versions of movies via iTunes, according to people familiar with the talks. The company has also discussed its 4K video ambitions with content companies that already have apps on Apple TV, another person said. Popular video apps on the Apple TV that support 4K on other platforms include Vevo and Netflix.

Apple has also been working on its own content. The company has rolled out video series to its Apple Music service, including Planet of the Apps and Carpool Karaoke. Apple plans to invest an additional $1 billion in creating original video content, Bloomberg News reported earlier this month.

The company has also shown it’s overhauling its living room strategy with multiple key hires. In January, the company recruited Timothy Twerdhal, Amazon’s former chief for its Fire TV set-top box, to run the Apple TV box business. In June, the company hired Jamie Erlicht and Zack Van Amburg, former Sony Pictures Television presidents, to head up its video programming efforts.

The new Apple TV will come as part of a major product blitz planned by the iPhone maker for this holiday season. The company is planning three new iPhone models, including a premium model that includes a 3-D facial recognition sensor for unlocking the phone, as well as a new Apple Watch that can connect to LTE cellular data networks, Bloomberg News has reported. Earlier this year, Apple rolled out upgraded iPad models with improved screens and Macs with faster processors. Apple will end the calendar year with the release of a new iMac desktop geared toward professionals and the HomePod Siri-controlled speaker, the company said in June.

— With assistance by Alex Webb
https://www.bloomberg.com/news/artic...ving-room-push





Crowded TV Marketplace Gets Ready for Three Tech Giants
John Koblin

Apple has more than $1 billion budgeted for original programming, Facebook wants its own version of “Scandal” and Google is ready to spend up to $3 million per episode on a drama.

The three digital giants have signaled to Hollywood that they are serious about entering a television landscape that Netflix and Amazon shook up just a few years ago. Their arrival will make an already hypercompetitive industry even more ferocious. This year, there are expected to be more than 500 scripted TV shows, more than double the number six years ago.

Although there have been some signs that the industry’s output may plateau — cable companies like A&E and WGN have said they are getting out of the scripted television business — the entry of Apple, Facebook and Google into the fray almost guarantees that the volume of shows will continue to grow, even as viewers grapple with a glut of programming and an expanding number of streaming platforms.

With the prospect of a flood of tech money about to rush in, Hollywood has welcomed the news.

“If you ask the creative community if we’re going to be competitive, the answer is yes,” said Robert Kyncl, the chief business officer at YouTube, which is owned by Google.

Still, many in the industry are taking a believe-it-when-we-see-it approach to the new players. Netflix and Amazon have made successful forays into scripted entertainment, but some efforts by digital titans like Microsoft and Yahoo have fizzled.

Scripted television is enormously expensive, so any commitment to it must be sincere. From shooting on location to taking out insurance to paying actors, crew members, directors and writers, it is impossible to dive in without allocating plenty of cash, while also being patient enough to weather blows at a time when it is increasingly difficult to land a signature hit.

The moves also come amid a fierce arms race for content. Netflix recently poached Shonda Rhimes from ABC, whose parent company, Disney, is preparing its own stand-alone streaming services.

But Apple’s wealth and its willingness to commit resources have sent shock waves through the industry. Two months ago, the company chose Sony’s television studio heads, Jamie Erlicht and Zack Van Amburg, to lead its programming efforts.

Mr. Erlicht and Mr. Van Amburg were certainly regarded in Hollywood as talented studio executives, having shepherded hit series like “The Crown,” “The Goldbergs” and “Breaking Bad.” But their move to Apple, and their programming budget of a little more than $1 billion, has suddenly made them among the most powerful executives in television.

That budget also puts them on a par with the most elite programmers in television. FX, which makes shows like “American Horror Story” and “Fargo,” has a programming budget of around $1 billion. HBO’s budget is believed to be around $3 billion, and Netflix will spend about $6 billion on content this year.

FX’s chief executive, John Landgraf, has been outspoken about his uneasiness with the amount of money now pouring into the industry and what it will mean for competitors with smaller budgets.

“It’s like getting shot in the face with money every day,” he said at a news media event this month. “And I have no idea how much capital Apple is going to deploy, how many shows they’re going to buy.”

Mr. Erlicht and Mr. Van Amburg started at Apple a few weeks ago. In the coming months, they are expected to hire a few dozen people as they staff up at the Culver City, Calif., offices they share with Beats Electronics, which Apple acquired for about $3 billion in 2014.

It is not clear how people will be able to watch or pay for Apple’s original programs. Without any current acquisitions, it will take at least a year for any of the company’s projects to be ready for the viewing public. The entertainment drive is also unique from Apple Music — programs like “Planet of the Apps” and “Carpool Karaoke” are currently available on the service — and it is possible that a new app will be made to stream the new original series.

Apple declined to comment for this article, but it should not be long before Mr. Erlicht and Mr. Van Amburg begin competing for projects, most likely to be made by outside studios at first. (And there are already are plenty of projects on the market, including a highly coveted new series about morning TV shows starring Reese Witherspoon and Jennifer Aniston.) With the amount of money at its disposal, Apple could easily have more than a dozen original series.

But as Apple starts to gear up, Facebook is already well on its way.

The company’s Hollywood development team is led by Mina Lefevre, previously of MTV. Facebook has told people in the industry that it is willing to spend $3 million to $4 million an episode on new programming, according to a person familiar with their plans. That kind of spending would put the company on an equal footing with many broadcast and cable networks.

And while many new entrants into scripted television want big shows with mass appeal like “Game of Thrones” or Emmy-bait like “Homeland,” Facebook has a more targeted plan.

It has indicated it wants shows that are attractive to people in their midteens up to those in their mid-30s, along the lines of frothy fare like “The Bachelor,” “Pretty Little Liars” and “Scandal.” Those shows generate plenty of talk on social media platforms, and Facebook executives are apparently dedicated to programming that they believe will ignite conversation on the social network.

Unlike Netflix, which releases all episodes of its series at once so that they can be binge-watched, Facebook is expected to release episodes on a more traditional schedule (it is unclear whether that will be once a week). Facebook also plans to have so-called mid-roll ads, or brief commercials, during episodes.

A Facebook spokeswoman declined to comment.

Facebook will soon unveil a Watch tab, where users can find the original series and other video content that will be less expensive to make.

YouTube is in the process of green-lighting series. Like Facebook, the Google-owned video site is focused mainly on series that appeal to 16- to 35-year-olds, according to a person briefed on the plans. YouTube executives have said they will spend up to $2 million an episode on a comedy, and more than $3 million on a drama, this person said.

Although Mr. Kyncl would not discuss budgets, he said the company’s efforts in scripted television were genuine. Originally, YouTube and its subscription YouTube Red channel were largely focused on creating bigger budget shows for YouTube stars.

YouTube’s ambitions are now pointed toward creating more traditional TV fare. Mr. Kyncl said the company was drawing lessons from what users on its platform search for. (The tactic is not new. Netflix has long used its vast supply of subscriber data to help inform its original programming choices). YouTube plans to put some of its shows behind a paywall, while others will be free.

YouTube recently began development on “Cobra Kai,” a “Karate Kid” comedy spinoff that got the go-ahead after executives saw how often people were searching for clips from the original movie, Mr. Kyncl said. The company gave a green light last year to the scripted dance series “Step Up” after it saw how popular dancing videos were with users.

Data searches, Mr. Kyncl said, provided a “window into the demand of Hollywood product on YouTube.”

“Why not fulfill this demand?” he said. “It makes absolute sense. It’s in the service of our users.”
https://www.nytimes.com/2017/08/20/b...ok-google.html





‘Hitman’s Bodyguard’ is No. 1, as ‘Logan Lucky’ Disappoints
Brooks Barnes

Maybe there is a method to studio madness?

Steven Soderbergh has long believed that the big movie studios overspend on marketing and rely too heavily on focus-group testing of trailers and other advertising materials. And he set out to prove it with “Logan Lucky,” which arrived in wide theatrical release on Friday. Through an unusual arrangement, Mr. Soderbergh had complete creative control over the film’s marketing campaign, which cost roughly $20 million — or half of what a studio would typically spend.

The results were not promising: “Logan Lucky,” a heist comedy directed by Mr. Soderbergh, arrived to about $8.1 million in ticket sales, a weak showing for a well-reviewed film starring the likes of Channing Tatum and released in 3,031 theaters in North America.

In an email on Sunday morning, Mr. Soderbergh called the turnout “certainly frustrating,” but he vowed to try again with his next film. He said that “Unsane,” starring Claire Foy and Jay Pharoah and shot in secret in June using an iPhone, will “go out with the same approach, though with some new marketing ideas we didn’t get to use on ‘Logan Lucky.’ ”

Mr. Soderbergh’s film arrived in third place. The No. 1 movie over the weekend was “The Hitman’s Bodyguard” (Lionsgate), which collected a stout $21.6 million from 3,377 theaters, according to comScore. Starring Ryan Reynolds and Samuel L. Jackson, “The Hitman’s Bodyguard,” which is about exactly what the title says, received mixed-to-negative reviews. It was independently produced for about $30 million.

Second place went to “Annabelle: Creation” (Warner Bros.), which took in about $15.5 million, for a two-week domestic total of $64 million.

“Logan Lucky,” which Mr. Soderbergh released through Bleecker Street Media, cost about $29 million to make and was financed by preselling foreign distribution rights. The cast and crew worked for scale to keep the budget down, with profit participation if the film succeeds. Mr. Soderbergh raised the marketing funds by selling a portion of nontheatrical rights.

“This weekend’s number is not a problem; we were in profit as soon as someone bought a ticket,” Mr. Soderbergh said, noting that 46 percent of total domestic ticket sales “will go into a pool shared by the cast and crew.”

He added, “The entire experience has been a blast, which was also one of my goals.”

Dan Fellman, a “Logan Lucky” producer and film distribution consultant, said by phone that turnout was strong on the coasts. “Where we didn’t connect was in the South and Midwest, which is frustrating because the movie was made for that audience,” he said.

In other box office news, “Girls Trip” (Universal) crossed into certified blockbuster territory, taking in $3.8 million for a five-week total of about $104 million — by far the best result for a live-action comedy this year. (“Baywatch,” with $58.1 million in domestic ticket sales, ranks second.) Now the question is whether the R-rated film, about the adventures of four women at the Essence Festival in New Orleans, can perform in a similar way overseas, where comedies often get lost in translation.

So far, Universal has only released the film in Britain and a handful of small markets, like South Africa and Trinidad, leading to some questions in Hollywood about the studio’s plans. Niels Swinkels, Universal’s executive vice president for international distribution, said in an interview that “Girls Trip” will be released in Australia in the coming weeks and Germany in November, with more markets to follow.

“We’re super encouraged by our first toe dip,” Mr. Swinkels said by phone, noting strong ticket sales in Britain and Ireland, where “Girls Trip” has collected $8.9 million in 24 days of release. “We’re going to take it as far as we absolutely can. With all of our comedies, from ‘Ride Along’ to ‘Bridesmaids,’ we go slow overseas to find the optimal dates.”

Movies like “Girls Trip,” which has a primarily black cast, sometimes suffer in Hollywood because of a belief, however invalid, that they “don’t travel” — that movies with white leads stand a better chance of attracting audiences overseas. Is that a concern here?

“No,” Mr. Swinkels said flatly. “It’s a universal story.”

Tracy Oliver, who wrote the screenplay for “Girls Trip” with Kenya Barris, said in an email that she recently participated in a workshop at the University of California, Los Angeles where visiting students from Germany went to see the film and then participated in a discussion. “Given the entire class was white and were from Germany, I didn’t know what to expect,” Ms. Oliver said. “Not only did they understand it, they loved it.”

She added, “I’m hopeful that people won’t assume certain countries and territories won’t support it and not even play the movie there. I saw firsthand how well this movie translates to an audience that shares very little in common culturally with the cast.”
https://www.nytimes.com/2017/08/20/m...ox-office.html





Murdoch’s Sky Bid Looks Ever Less Rational
Liam Proud

Rupert Murdoch’s bid for Sky looks ever less rational. The media mogul’s Twenty-First Century Fox in December offered 11.7 billion pounds to buy the 61 percent it doesn’t own of the UK pay-TV group. Murdoch will struggle to make the deal pay – though that may not stop him.

Murdoch’s main motivation probably isn’t return on investment. His son James – also Fox chief executive and Sky chairman – said in 2015 that Fox’s minority stake in the company his father helped set up “is not an end state that is natural for us”. Sky’s steady subscription revenue would also give Fox another predictable and geographically-diversified stream of cash flows, and the combined company would have greater clout in the global race for pricey TV content.

It’s nonetheless difficult to make the numbers add up. Fox’s offer would value Sky, including its net debt, at around 25 billion pounds. Murdoch would effectively be acquiring 15 billion pounds of that. Based on analysts’ forecast operating profit for Sky next year and taxed at Fox’s 30 percent rate, the return on investment would be 670 million pounds, or a measly 4.4 percent. To meet Sky’s probable cost of capital, say 8 percent, Fox needs to find synergies that boost operating profit by a whopping 800 million pounds – 50 percent of analysts’ forecasts for Sky in 2018.

That was an issue back when the bid was tabled last December. Since then, things have deteriorated. In the 12 months to June, Sky added almost 40 percent fewer UK and Ireland retail customers than in the same period a year earlier. It could make up for this by cross-selling mobile and broadband services, but on the other hand, sports-rights costs may keep spiralling. A politically-fraught second regulatory review in the UK is also likely to impose further delays, and campaign group Avaaz plans to request a judicial review. Sky's share price is more than 11 percent below the offer, suggesting it could take some time to close, or that there is a real possibility it won't.

Buying Sky at a sensible price never seemed front of mind for Murdoch and Fox. For the deal to go ahead now, it would appear to be positively an afterthought.
https://uk.reuters.com/article/us-sk...-idUKKCN1B20VV





Disney Will Price Streaming Service at $5 Per Month, Analyst Says

Disney's upcoming SVOD service will be about building asset value instead of earning a profit on licensing deals.
Ben Munson

Disney’s upcoming branded streaming service will likely be priced around $5 per month in order to drive wider adoption, according to MoffettNathanson analyst Michael Nathanson.

Nathanson said that the new Disney streaming service and the upcoming ESPN streaming service need a clear distinction. The ESPN service will likely test different prices as it prepares ESPN to be ready to go fully over-the-top, according to the report, but the Disney service is about building asset value instead of taking licensing money from SVOD deals.

“As we’ve pointed out in all of our work on vMVPDs, pricing matters and consumers have signaled that internet-delivered services should be priced materially below traditional products to drive broader adoption. Disney’s pricing strategy will be a key gating factor in determining the rates of adoption. If there are truly complementary services, it would be logical to offer a lower price point to consumers to denote the ‘add-on’ intention of Disney vs. a higher price point, would could signal a replacement option,” wrote Nathanson.

At $5 per month in ARPU, Nathanson sees revenues from the Disney streaming service ranging from $34 million to $38 million in the first year and more than $230 million by year three.

But with the loss of Netflix licensing revenues and accelerated marketing costs for launching the new service, Nathanson predicted Disney’s losses will increase by about $200 million to $425 million per year.

“We expect the loss to ramp in FY 2020 with the first full year of lost Netflix Pay 1 revenues negatively impacting Disney plus higher marketing costs leading to a net after tax loss of $280 million. Similarly, we expect the investment costs to increase in FY 2021 offset by higher OTT revenues leading to after tax loss of $260 million.”
http://www.fiercecable.com/online-vi...5-analyst-says





Franken, Open Internet Advocates Push Back as FCC Moves to Dismantle 'Net Neutrality'

Critics say looser rules could lead to blocked content, higher prices.
Maya Rao

A move to undo federal regulations meant to uphold an open, free internet for all users has pitted providers like Comcast against online giants like Facebook — and millions of their customers — in a debate about protecting the First Amendment in a high-tech world.

Federal Communications Commission Chairman Ajit Pai, appointed in January by President Donald Trump, is championing the repeal of a 2015 regulatory order that banned internet service providers (ISPs) from manipulating access and loading speeds for websites or applications, or from creating “fast lanes” and “slow lanes” based on a content provider’s willingness to pay extra fees.

Opponents of the new measure, dubbed Restoring Internet Freedom, say it does anything but. The FCC has been deluged with a record 20 million-plus public comments in response, almost entirely in opposition, inspired by worry that lighter regulations are likely to mean more costs to users for certain kinds of content or speed of access.

“Hands off the Internet, corporate profit mongers!” Apple Valley resident Joel Ronningen wrote to the FCC. The commission is taking comments until the end of August before finalizing its decision.

Critics fear that without strong FCC oversight, service providers have the leeway to purposely slow access to services from other companies that may be competitors.

“The internet service providers are the only ones who stand to gain from this,” said U.S. Sen. Al Franken of Minnesota, a Democrat who has been a champion of protecting what’s known as “net neutrality,” or an open internet. Franken said he wants a system that allows people to access content ranging from the New York Times and Fox News to a blog from a student at the University of Minnesota-Duluth at the same speed.

Comcast, the leading internet provider in the Twin Cities, supports Pai’s proposal, along with AT&T, Verizon and other major telecommunications companies. Comcast has said it opposes “onerous utility-style regulation” for internet providers while also vowing it will never block, throttle or hinder consumers’ online activity. Comcast and Pai back what they call a regulatory “light touch.” Google, Netflix and a slew of other opponents have fought the proposal.

It’s the latest twist in a years-long debate that has moved in and out of court. The 2015 order reclassified internet companies from lightly regulated “information services” under Title I of the Communications Act to more heavily regulated “telecommunications services” under Title II, which explicitly forbids discrimination in web access.

Pai wants to move internet providers back to the first category, saying the extra oversight burdens small internet providers and hurts investment and innovation.

A group of rural broadband providers in the Midwest wrote to Pai in the spring in support of his plans, urging him to proceed in a way that allows for continued investment in rural broadband networks while at the same time ensuring a smarter path to net neutrality.

“Rural America urgently needs a smarter and more practical approach than rules based on laws written when our parents were stringing the countryside with copper and even cattle wire to connect neighbors on old party telephones,” the group wrote.

Sjoberg’s Inc., a Thief River Falls company that serves about 6,000 customers in northwest Minnesota, supports the concept of net neutrality but backs the move to rescind the 2015 regulations over concerns that they’re a burden on small internet providers in rural areas.

President Dick Sjoberg said that the new regulations have brought on extra expenses for attorneys, consultants and borrowing fees, and led to a climate of uncertainty.

“It’s just so onerous — the cost to everybody is so great — and at the end of the day [the expense] trickles down to the consumer,” Sjoberg said.

So why are supporters of net neutrality worried about losing the 2015 regulations?

“Because you don’t have a First Amendment protection against Comcast,” said Christopher Terry, a journalism professor at the University of Minnesota. “If it were the government trying to prevent you from seeing certain things on the internet, you’d have a First Amendment defense.”

A Minneapolis nonprofit, the Institute of Local Self-Reliance, wrote to the FCC that it depends on the neutrality of the internet to receive and share large amounts of information, mostly from governments and nonprofits, on a limited budget that would leave no room for extra fees for “fast lanes.” The group said it produces videos, podcasts, written reports and other content that could be held hostage by firms that find its speech inconvenient if they were not required to be a neutral messenger.

There’s a fear that large providers like Comcast will effectively “toll booth” certain content that they don’t support in order to steer customers to content providers with which Comcast has struck a deal, said Christopher Mitchell, the institute’s director of community broadband networks.

“I think it’s pretty important that these companies, which already have tremendous power, not have more power over our ability to access the content that we want,” said Mitchell.

But he’s concerned that the FCC doesn’t care what the public thinks.

“I’m worried that whatever 20 million comments say, the head of the FCC hasn’t changed his talking points at all,” said Mitchell.

Some are looking to federal lawmakers for solutions.

“Congress shouldn’t be absolved of blame,” said Terry — though Mitchell and other critics don’t trust them to write a law that isn’t weaker than the current system.

Franken doesn’t think that Congress needs to step in — he just wants to make sure the FCC doesn’t dismantle the current regulations.

“We’re counting on the tidal wave of comments that are coming in to show [the FCC] that what they would be doing would be very unpopular,” said Franken.

Minnesotans from throughout the state have shared their views. Anything other than net neutrality “is a violation of freedom of speech and a level playing field in our free market system,” wrote Sheila Hansen, a Minneapolis resident.
http://www.startribune.com/franken-o...ity/441196013/





Stop Hiding 47,000 Net Neutrality Complaints, Advocates Tell FCC Chair

FCC now says it will release net neutrality complaints "as soon as we can."
Jon Brodkin

The Federal Communications Commission is being pressured to release the text of 47,000 net neutrality complaints before going through with Chairman Ajit Pai's plan to eliminate net neutrality rules.

The FCC has refused to release the text of most neutrality complaints despite a Freedom of Information Act (FoIA) request that asked for all complaints filed since June 2015. The FCC has provided 1,000 complaints to the National Hispanic Media Coalition (NHMC), which filed the public records request but said last month that it's too "burdensome" to redact personally identifiable information from all 47,000.

Today, 16 groups wrote a letter urging the FCC to release all the complaints so they can be reviewed by the public before the commission finalizes a plan to dismantle the 2015 net neutrality rules. "The FCC has failed to make critical evidence available for public review and comment," they wrote to Pai and the other four commissioners.

When contacted by Ars today, an FCC spokesperson said the commission will release the complaints "as soon as we can."

Chairman Pai's Notice of Proposed Rulemaking (NPRM) argues that a lack of formal net neutrality complaints may show that the rules aren't needed. But while there was only one formal complaint, against Verizon, tens of thousands of consumers used the less burdensome informal complaint process to complain about their ISPs.

Advocacy groups wrote in today's letter:

Consumers likely use the informal complaint mechanism to address harms caused by ISPs that violate the current bright-line Net Neutrality rules and transparency rules. Over 47,000 consumer complaints have been submitted against ISPs since June 2015, and carriers provided approximately 18,000 responses to those complaints, and there are 1,500 emails documenting interactions between the ombudsperson and Internet users. These numbers alone should give the Commission pause. However, only a full analysis of these consumer complaints and ombudsperson documents will allow the public to fully answer questions posed in the NPRM.

The letter was signed by 18MillionRising.org, the American Civil Liberties Union, the Center for Democracy & Technology, the Center for Media Justice, the Center for Rural Strategies, Color of Change, Common Cause, the Electronic Frontier Foundation, Fight for the Future, Free Press, Native Public Media, New America’s Open Technology Institute, OpenMedia, Popular Resistance, Public Knowledge, and the United Church of Christ.

The pressure on the FCC seems to be having some effect.

"Pursuant to FOIA, the FCC must redact any personal information from the over 47,000 documents that have been requested before they can be released," a spokesperson for Pai told Ars today. "Currently, commission staffers are in the process of reviewing these documents and redacting any personal information. We anticipate releasing another batch of documents by the end of the week and will release the remainder as soon as we can."

Spreadsheets providing some details of the complaints that have been released so far are available at this link.

Complaints may show “evidence of harm”

Pai's NPRM asks the public if there is "evidence of actual harm to consumers sufficient to support maintaining the Title II telecommunications service classification of broadband Internet access service" and related net neutrality rules, the letter notes.

Yet the FCC is proposing to eliminate the rules and the commission's "open Internet ombudsperson" role "without looking at any of its own evidence," the groups wrote.

"The FCC has confirmed that there are approximately 1,500 e-mails documenting interactions between the ombudsperson and Internet users, and to date, has yet to release a single e-mail for public review and analysis," they wrote.

Between the 47,000 complaints and the ombudsperson's interactions with consumers, "[i]t is disturbing that the FCC has apparently failed to review documents that are in its exclusive possession prior to crafting an NPRM to repeal the very rules that established these enforceable mechanisms to redress consumer harms," they wrote.

The groups asked the FCC to release all the requested documents and extend the deadline for public comments on Pai's plan to overturn net neutrality rules. A deadline delay would give people time to review the complaints and submit analysis to the FCC.

The FCC last month offered to provide NHMC with an additional 2,000 complaints by September 1, but that's after the comment deadline.

Other advocacy groups also recently requested an eight-week comment deadline extension, but the FCC granted only a two-week extension. The comment deadline now stands at August 30.
https://arstechnica.com/tech-policy/...oups-tell-fcc/





AT&T’s Slow 1.5Mbps Internet in Poor Neighborhoods Sparks Complaint to FCC

AT&T refusal to boost Internet speed violates discrimination ban, complaint says.
Jon Brodkin

AT&T is facing a complaint alleging that it discriminates against poor people by providing fast service in wealthier communities and speeds as low as 1.5Mbps in low-income neighborhoods.

The formal complaint filed today with the Federal Communications Commission says that AT&T is violating the Communications Act's prohibition against unjust and unreasonable discrimination. That ban is part of Title II, which is best known as the authority used by the FCC to impose net neutrality rules. But as we've explained before, Title II also contains important consumer protections that go beyond net neutrality, such as a ban on discrimination in rates, practices, and offerings of services.

"This complaint, brought by Joanne Elkins, Hattie Lanfair, and Rachelle Lee, three African-American, low-income residents of Cleveland, Ohio alleges that AT&T’s offerings of high-speed broadband service violate the Communications Act’s prohibition against unjust and unreasonable discrimination," the complaint says.

AT&T is not immune to the ban on discrimination "merely because its discrimination is based on investment decisions," the complaint also says.
Title II authority on chopping block

The FCC's Republican leadership has proposed removing the commission's Title II authority from broadband. But the complaint regarding AT&T's current behavior "should not be dismissed based on a future regulatory decision," the complaint says. The Cleveland residents also argue that the FCC can take action against AT&T under its Section 706 authority to promote broadband deployment. But unlike Title II, Section 706 doesn't explicitly ban discrimination.

A press release further describes the complainants' broadband problems:

[T]he women receive slow speeds at a rate as low as 1.5Mbps downstream or less, although they pay AT&T for high-speed access; meanwhile residents in wealthier and predominantly white areas have gotten premium, upgradable high-speed broadband access at bullet speed comparatively.

As a result of the ineffectual and substandard quality level of speed, the women’s children cannot access homework sites, [and] their home security system[s] that rely on broadband connectivity [are] rendered useless.

Evidence of discrimination

The complaint's allegations are based partly on a study we wrote about in March. The study by advocacy groups analyzed FCC data and alleged that "AT&T has systematically discriminated against lower-income Cleveland neighborhoods in its deployment of home Internet and video technologies over the past decade." (Another study found a similar pattern in California.)

In Cleveland, AT&T has withheld its fiber-to-the-node infrastructure from "the overwhelming majority of census blocks with individual poverty rates above 35 percent," the complaint said. The study cited in the complaint is titled, "AT&T’s Digital Redlining of Cleveland," and it was written by the National Digital Inclusion Alliance (NDIA) and a Cleveland-based group called Connect Your Community.

The complainants and AT&T have held settlement talks, but the two sides have not come to an agreement. "Defendant does not acknowledge its obligation to serve Complainants; therefore parties are sufficiently far apart that we seek Commission intervention in this dispute," the complaint says.

AT&T offered to deploy a 5G wireless service but not faster wired Internet, the complaint said.

Formal complaints to the FCC like this one require a filing fee of $225 and kick off a court-like proceeding in which the parties appear before the commission and file numerous documents to address legal issues. The complainants asked the FCC for monetary damages and an injunction prohibiting AT&T from continuing to engage in "discriminatory and anticompetitive conduct and practices."

We contacted AT&T about the complaint and will update this story if we get a response. After the "Digital Redlining" study was released in March, AT&T defended its network investment in Cleveland but did not dispute any of the advocacy groups' specific findings.

UPDATE: AT&T responded with a statement from Joan Marsh, executive vice president of regulatory and state external affairs, who said, "We do not redline. Our commitment to diversity and inclusion is unparalleled. Our investment decisions are based on the cost of deployment and demand for our services and are of course fully compliant with the requirements of the Communications Act. We will vigorously defend the complaint filed today.”
https://arstechnica.com/information-...plaint-to-fcc/





Why did Verizon Kill the Unlimited Plan that Everyone Loved?
Chris Mills

For the last six months, Verizon was doing well. It introduced an excellent Unlimited data plan with minimal restrictions and an affordable price, and subscribers fell over themselves to sign up.

Well, that’s all out the window. This morning, Verizon made some significant changes to its Unlimited plan that makes it more expensive and worse, and it’s started throttling all smartphone video — on any plan, regardless of price — to 720p.

We’ll come back to the plans and Verizon’s need for a new dictionary in a moment, but first, let’s talk about why Verizon had to make these changes in the first place. Simply put, I don’t think Verizon’s network can keep up.

According to data put out by two testing companies — OpenSignal and Ookla (the company behind Speedtest.net) — Verizon’s average network speed has slowed since the introduction of unlimited data plans. The drop in speed is a few percentage points overall, but the problem is probably more related to congestion at popular spots during peak times. If everyone is streaming video over the network while waiting at the airport, for example, that’s going to put the crunch on the network.

Now, that’s just speculation, because it’s surprisingly difficult to get good data on mobile networks, thanks to the massive size, complexity, and difficulty of testing. Add to that the fact that networks actually pay testing companies for the “awards” that they hand out every few months, and you understand why it’s difficult to take anything at face value.

Ookla network data, interpreted by T-Mobile, that shows Verizon’s average speed slowing after introduction of unlimited data plans

OpenSignal and Ookla are both paid by T-Mobile (for the rights to publish data, not for the testing itself), and both use crowdsourced testing that relies on speedtests run through apps on users’ smartphones. That makes it difficult to scientifically control the data, but it does have the advantage of a huge sample size and more real-time results.

Verizon, on the other hand, prefers to point to RootMetrics, a company that conducts drive testing to evaluate network performance. Verizon’s director of corporate communications, Kelly Crummey, said that “Eight times in a row RootMetrics has declared Verizon the “undisputed leader” for overall network coverage and reliability. That’s eight straight times Verizon has been named #1. And speed? We’ve won that the past seven times in a row.”

Guess which testing company Verizon pays.

Now, as I said, proving that Verizon’s network has been slowed down by Unlimited is impossible if you don’t work at Verzion — and its executives are saying the opposite. Mike Haberman, Verizon’s VP of network support, told me that the data from Ookla and OpenSignal “doesn’t line up at all with what I see,” said that congestion “is not an issue” for Verizon, and that the network is “stronger than ever.”

But if that’s the case, why would Verizon put so many restrictions on its flagship plan? The introduction of Verizon’s Unlimited plan — which only stood out from the competition because of the 10GB hotspot allowance and HD video! — saw great results for Verizon, with thousands of new customers signing up and Verizon having an extremely strong Q2 as a result. Verizon specifically cited the introduction of Unlimited plans as the reason why the company saw 356,000 new phone lines added in Q2, versus 86,000 a year before.

Having a good unlimited plan was doing wonders for Verizon’s bottom line. So the only reasonable explanation I can see for throttling video to 1080p — even on the most expensive plan — is that it was causing problems for the network. Verizon’s only rationale for the changes today is “We are offering choices on unlimited now because everyone deserves to experience unlimited on America’s best wireless network” — which is a nice way of completely avoiding the question.

This isn’t a made-up controversy, by the way. Customers are already mad about the changes on social media, and Verizon retail employees — the people who have to sell the plans — are furious. One said to me “read this on the way to work, realized this entire week is going to suck.” Another simply said “Welp. There goes my commission.”

Sherrif Hanna, a technical marketer for Qualcomm (which makes a lot of the equipment used in Verizon’s network) didn’t pull any punches either:

Operators should be upgrading their networks & seeding more capable devices into their user base…not throttling video to mid 90s quality.

— Sherif Hanna �� (@sherifhanna) August 22, 2017

Of course, T-Mobile’s John Legere was quick to pile on:

@Verizon just limited EVERYTHING about its “unlimited” plan…your network needs help! Just admit it already! pic.twitter.com/ccqPspHYMX

— John Legere (@JohnLegere) August 22, 2017

Now, every network, including T-Mobile, strains the definition of “Unlimited,” and most include some kind of throttling and usage cap. T-Mobile’s basic unlimited plan, T-Mobile One, also includes caps on video quality and hotpost usage. You have to spend a couple extra bucks on an add-on to get HD video and a usable mobile hotspot allowance.

But Verizon’s gone about the changes in a bad way. Existing customers will be subject to the video throttling, even including much older customers on the grandfathered unlimited plan. Verizon says that there’s no real visible difference in quality between 720p video and anything higher when you’re watching it on a phone, which must be why so many people are spending $800 on top-end Android devices with 1440p displays — it’s because they can’t tell the difference.

In short: no-one begrudges a network taking steps to address congestion and keep speeds usable and fast for everyone. But Verizon’s gone about this in the wrong way, by not being open about the changes, and forcing them on existing customers overnight.

It’s exactly this kind of strong-arm, technically-legal-but-really-a-sleazy-move kinda thing that makes people hate telecoms companies in the first place — and it’s the reason why people actually like T-Mobile, despite its prices being nearly the same and the CEO having a penchant for awful onesies. Until Verizon buckles down and starts being transparent, the Uncarrier is going to keep whooping its ass.
http://bgr.com/2017/08/22/verizon-un...t-mobile-2017/





T-Mobile CEO Mocks Verizon for 'Unlimited' Throttling
Karl Bode

You'll recall that it was added competition from T-Mobile that forced Verizon Wireless to bring back unlimited wireless data plans, after spending years telling consumers they neither wanted nor needed such an option (they did). T-Mobile then had a good time making fun of Verizon when data indicated that the Verizon wireless network was slowing slightly under the weight of these unlimited data users.

While Verizon breathlessly denied the claim, the fact the carrier has decided to throttle all video and ban 4K streaming speaks for itself.

Needless to say, T-Mobile CEO John Legere took this week's announcement by Verizon as an opportunity to make fun of big red further.

"If this isn’t a sign that Verizon’s network is crumbling from offering unlimited, I don’t know what is!" the CEO said on Twitter. "Verizon just limited EVERYTHING about its “unlimited” plan…your network needs help! Just admit it already!" added the CEO.

"You can add as many unlimited plans as you want," continued the CEO in an additional Tweet, "but they’re always gonna suck bc your network is always gonna be congested!"

Of course some users were quick to point out that it was T-Mobile that began this whole "pay more to avoid throttling" thing, and opposed real net neutrality protections for consumers.

"Verizon's changes are pretty bad, but do we need to remind you who started the "DVD quality" thing?" chided one user.

Sprint doubled down on the idea and began at one point charging users additional money if they wanted to avoid video, music and games being throttled. Both the current and past FCC turned a blind eye to both this practice, and the practice of zero rating (exempting an ISP's own content from usage caps while penalizing competitors).

"We're doing this to ensure all customers have a great experience on our network since there is no visible difference in quality on a smartphone or tablet when video is shown at higher resolutions than 720p on phones and 1080p on tablets," Verizon said of the changes.
https://www.dslreports.com/shownews/...ottling-140195





After 62 Years and Many Battles, Village Voice Will End Print Publication
John Leland and Sarah Maslin Nir

Without it, if you are a New Yorker of a certain age, chances are you would have never found your first apartment. Never discovered your favorite punk band, spouted your first post-Structuralist literary jargon, bought that unfortunate futon sofa, discovered Sam Shepard or charted the perfidies of New York’s elected officials. Never made your own hummus or known exactly what the performance artist Karen Finley did with yams that caused such an uproar over at the National Endowment for the Arts.

The Village Voice, the left-leaning independent weekly New York City newspaper, announced on Tuesday that it will end print publication. The exact date of the last print edition has not yet been finalized, according to a spokeswoman.

The paper’s owner, Peter D. Barbey, said in a statement that the move was intended to revitalize the 62-year-old Voice by concentrating on other forms, and to reach its audience more than once a week.

In recent years, many of the writers most associated with The Voice, including Wayne Barrett, Robert Christgau, Nat Hentoff and Michael Musto, have either died or been pushed out of the paper.

The print pages of The Village Voice were a place to discover Jacques Derrida or phone sex services, to hone one’s antipathy to authority or gentrification, to score authoritative judgments about what was in the city’s jazz clubs or off off Broadway theaters on a Wednesday night. In the latter part of the last century, before “Sex and the City,” it was where many New Yorkers learned to be New Yorkers.

Writers feuded with each other in the paper’s letters column and in the offices. Readers were as opinionated as the writers. Marginal tastes in the arts or ideology flourished, often in language that readers armed only with graduate degrees could understand. No pun was too convoluted, no cross-cultural reference too obscure. One measure of the paper’s contrarian vitality was the certitude with which diehard readers of any era could say exactly when its quality went downhill. For Voice devotees, the golden age was always the one just past.

But the printed paper was also an artifact of a downtown world that no longer exists.

The Village Voice was founded in 1955 by Dan Wolf, Ed Fancher and Norman Mailer, and for decades it sold a weekly version thick with classified ads. Its mix of political and cultural coverage created a model for alternative weeklies around the country, many of which have since folded. In 1996, facing competition from publications like Time Out New York and The New York Press, it changed to free distribution to boost circulation numbers, but gradually it came to rely on ads for sex and escort services for revenue. Under its current ownership, the paper eliminated sex advertising and increased its print distribution to 120,000 copies.

The print paper fostered the careers of such journalistic luminaries as the investigative reporters Jack Newfield and James Ridgeway, and the music critics Lester Bangs, Ellen Willis and Greg Tate. It was the launchpad for The New Yorker theater critic Hilton Als and the novelist Colson Whitehead, both recipients of the Pulitzer Prize.

Mr. Barbey, whose family has owned The Reading Eagle newspaper in Pennsylvania for generations, purchased the paper from Voice Media Group in October 2015. In his statement, he noted that when The Voice converted to a free weekly, “Craigslist was in its infancy, Google and Facebook weren’t yet glimmers in the eyes of their founders, and alternative weeklies — and newspapers everywhere — were still packed with classified advertising.”

The newspaper business has moved online, Mr. Barbey noted, and so has The Voice’s audience, “which expects us to do what we do not just once a week, but every day, across a range of media,” he wrote.

This summer, The Voice redesigned its website and has since reported an increase in audience traffic.

“The most powerful thing about The Voice wasn’t that it was printed on newsprint or that it came out every week,” Mr. Barbey said in a statement. “It was that The Village Voice was alive, and that it changed in step with and reflected the times and the ever-evolving world around it. I want the Village Voice brand to represent that for a new generation of people — and for generations to come.”

On Tuesday, Voice readers lamented the news on Twitter and Facebook.

But in the Village itself, around the paper’s Cooper Square offices, word of the print edition’s demise was more often met with a shrug.

Print?

“You have Uber killing the taxi biz, are you going to lose sleep over The Village Voice?” said Paul Vezza, 60, the third generation owner of Astor Place Hairstylists. “No.” Mr. Vezza recalled a time when people used to come in for fresh copies of The Voice on publication day. These days a pile sits largely untouched every week, he said.

Alicia Johnson, 46, a chef from Brooklyn, sat on a bench outside the paper’s former offices, reading an article from another publication on her phone.

It had been a long time since she read anything in the physical or online Voice, but it remained a memorable part of her youth, she said. “That’s the iconic paper of this neighborhood,” she said. “If you are a New Yorker you should know that, period.”

Ms. Johnson said she worried what would happen to the paper without its streetcorner red boxes. “They need to do more to make themselves known,” she said. Without the boxes that contain the free papers, “They’re just a building right now.”
https://www.nytimes.com/2017/08/22/n...blication.html





Uber Wins Ruling on ’Terms of Service’ Agreements

Federal court finds online agreements are binding, regardless of whether customers read or understand them
Greg Bensinger

A federal court Thursday ruled that the often lengthy online agreements customers face when registering for sites and apps are binding, even if customers don’t fully understand or take the time to read them, giving a boost to companies seeking to avoid class-action lawsuits.

The U.S. 2nd Circuit Court of Appeals found that Uber Technologies Inc. customers sign over their rights to sue in court when they click to agree to the ride-hailing company’s terms of service, which include a provision requiring arbitration.

The case had been closely watched by technology companies, which favor such agreements as a way to keep customers from taking them to court, where sensitive business practices and unfavorable rulings could become public. Arbitration typically allows businesses to reach settlements privately and may not require them to make broad changes to their practices—a possible outcome in class-action suits.

The case strikes at a fact of everyday life for users of websites and mobile phones, who come across these agreements before being allowed to use a site or app for the first time. There typically is no means for customers to strike out certain provisions or reject the terms outright and still hope to use the service.

Circuit Judge Denny Chin overturned a district-court ruling that found Uber’s terms of service were difficult for customers to access, and therefore couldn’t be enforced because customers didn’t always know what they were agreeing to. New Uber customers agree to terms that include resolving disputes through arbitration when they click to register for the mobile app—even though the full list of provisions is only available on a separate Uber website.

“The district court erred in concluding that the notice of the Terms of Service was not reasonably conspicuous,” Judge Chin wrote. “While it may be the case that many users will not bother reading the additional terms, that is the choice the user makes.”

An Uber customer, Spencer Meyer, sued then-Chief Executive Travis Kalanick in late 2015 over what he said was price-fixing through Uber’s use of software algorithms to set fares. The case mostly revolved around whether Mr. Meyer had the right to sue after agreeing to Uber’s terms. Uber as a company was later added as a defendant in the case.

Mr. Meyer argued Uber’s arbitration terms were difficult to find because they weren’t on the app itself, and therefore shouldn’t be enforceable. Judge Jed Rakoff of the U.S. District Court of Appeals for the Southern District of New York agreed with Mr. Meyer in a December ruling, citing “endless, turgid, often impenetrable sets of terms and conditions.”

Judge Chin found that Mr. Meyer willingly agreed to the terms and should have taken the time to read the provisions that include mandatory arbitration.

“The question is what are consumers likely to see when they agree to a company’s terms and companies are purposefully making these difficult to read,” said Jennifer Bennett, an attorney for the nonprofit law firm Public Justice, which filed a brief in the case siding with Mr. Meyer. “Uber and other sites can make it clear to consumers what they are agreeing to.”

Uber and its attorneys praised the decision. The court’s “common-sense opinion will serve to protect online contracting and strengthen commerce nationwide,” said Theodore Boutrous, a partner at Gibson, Dunn & Crutcher LLP, which represented Uber.

An attorney for Mr. Kalanick said had no comment.

The case is a needed win for Uber, which is operating without a chief executive after Mr. Kalanick stepped down in June under pressure from shareholders. The company also is grappling with a lawsuit by rival Alphabet Inc., which alleges Uber stole self-driving car trade secrets; the fallout from a monthslong probe into its corporate culture following allegations of sexual harassment and sexism; and a board of directors feuding over the direction of the company.

The case was sent back to U.S. District Court on Thursday to determine whether Uber will be subject to arbitration over the facts of Mr. Meyer’s price-fixing claims.

“This ruling does not grant defendants the right to throw this case into arbitration,” said Brian Feldman, an attorney for Mr. Meyer and partner at Harter Secrest & Emery LLP. “We look forward to pressing ahead with the litigation.”
https://www.wsj.com/articles/uber-wi...nts-1503000236





FBI Pushes Private Sector to Cut Ties with Kaspersky
Patrick Howell O'Neill

The FBI has been briefing private sector companies on intelligence claiming to show that the Moscow-based cybersecurity company Kaspersky Lab is an unacceptable threat to national security, current and former senior U.S. officials familiar with the matter tell CyberScoop.

The briefings are one part of an escalating conflict between the U.S. government and Kaspersky amid long-running suspicions among U.S. intelligence officials that Russian spy agencies use the company as an intelligence-gathering tool of global proportions.

The FBI’s goal is to have U.S. firms push Kaspersky out of their systems as soon as possible or refrain from using them in new products or other efforts, the current and former officials say.

The FBI’s counterintelligence section has been giving briefings since beginning of the year on a priority basis, prioritizing companies in the energy sector and those that use industrial control (ICS) and Supervisory Control and Data Acquisition (SCADA) systems.

In light of successive cyberattacks against the electric grid in Ukraine, the FBI has focused on this sector due to the critical infrastructure designation assigned to it by the Department of Homeland Security.

Additionally, the FBI has briefed large U.S. tech companies that have working partnerships or business arrangements with Kaspersky on products — from routers to virtual machines — that touch a wide range of American businesses and civilians.

In the briefings, FBI officials give companies a high-level overview of the threat assessment, including what the U.S. intelligence community says are the Kaspersky’s deep and active relationships with Russian intelligence. FBI officials point to multiple specific accusations of wrongdoing by Kaspersky, such as a well-known instance of allegedly faking malware.

In a statement to CyberScoop, a Kaspersky spokesperson blamed those particular accusations on “disgruntled, former company employees, whose accusations are meritless” while FBI officials say, in private and away from public scrutiny, they know the incident took place and was blessed by the company’s leadership.

The FBI’s briefings have seen mixed results. Companies that utilize ISC and SCADA systems have been relatively cooperative, one government official told CyberScoop, due in large part to what’s described as exceptional sense of urgency that dwarfs most other industries. Several of these companies have quietly moved forward on the FBI’s recommendations against Kaspersky by, for example, signing deals with Kaspersky competitors.

The firms the FBI have briefed include those that deal with nuclear power, a predictable target given the way the electric grid is increasingly at the center of catastrophic cybersecurity concerns.

The traditional tech giants have been less receptive and cooperative to the FBI’s pitch.

Earlier this year, a U.S. congressional panel asked federal government agencies to share documents on Kaspersky Lab because the firm’s products could be used to carry out “nefarious activities against the United States,” Reuters reported. That followed the General Services Administration removing Kaspersky from an approved-vendors list in early July and a congressional push to pass a law that would ban Kaspersky from being used by the Department of Defense.

Kaspersky, which has long denied ever helping any government with cyber-espionage efforts, reiterated those denials.

“If these briefings are actually occurring, it’s extremely disappointing that a government agency would take such actions against a law-abiding and ethical company like Kaspersky Lab,” a company representative told CyberScoop. “The company doesn’t have inappropriate ties with any government, which is why no credible evidence has been presented publicly by anyone or any organization to back up the false allegations made against Kaspersky Lab. The only conclusion seems to be that Kaspersky Lab, a private company, is caught in the middle of a geopolitical fight, and it’s being treated unfairly, even though the company has never helped, nor will help, any government in the world with its cyber-espionage or offensive cyber efforts.”

The U.S. government’s actions come as Russia is engaged in its own push to stamp American tech giants like Microsoft out of that country’s systems.

Russia’s Quid Pro Quo

In the briefings, FBI officials also raise the issue of Russia’s increasingly expansive surveillance laws and what they charge is a distinct culture wherein powerful Russian intelligence agencies are easily able to reach into private sector firms like Kaspersky with little check on government power.

Of particular interest are the Yarovaya laws and the System for Operative Investigative Activities (SORM), among others, which mandate broad, legally vague and permissive Russian intelligence agency access to data moving inside Russia with retention periods extending to three years. Companies have little course to fight back. U.S officials point to the FSB, the KGB’s successor, as the cryptography regulator in Russia, and say it puts an office of active agents inside Russian companies.

A Kaspersky spokesperson emphasized that all information received by the company is “is protected in accordance with legal requirements and stringent industry standards, including encryption, digital certificates, firewalls and more” and insisted that “the company is not subject to these laws and other government tools” like SORM.

The law unquestionably does, however, impact Russian internet and communications providers, which Kaspersky uses. And, after all, it’s the Russian “legal requirements” that raise so many eyebrows.

“If it comes to the case of Kaspersky being induced to do something which is undocumented and illegal, it’s only then we’re in a slightly different domain [than in the West] and yes, you can assume the Russian government would have ways to induce private industry to do what it wants,” Keir Giles, a Russia expert with the British think tank Chatham House, told CyberScoop. “This is extremely hard to pin down because by this very nature this official encouragement is clandestine.”

They show up, say ‘You’re already breaking the law, now what are you going to do for me?’”

By design, there is little visibility and public understanding of this opaque world. Many of the accusations pointed at Russia are met — by Kaspersky’s defenders as well as by civil liberties activists and technologists critical of what they view as gross U.S. government overreach — with fingers pointed right back at U.S. military and spy agencies.

Eva Galperin, the director of cybersecurity at the Electronic Frontier Foundation, believes Western intelligence agencies are engaged in many of the same tactics and must be similarly criticized but that “the legal and political landscape in Russia is very different.”

“The Yarovaya laws and many of the other internet-related laws in Russia were never meant to be implementable,” she told CyberScoop. “They were always meant to be overbroad, overreaching and impossible to comply with because this gives the Russian government a place to start whenever they come calling for your data. They show up, say ‘you’re already breaking the law, now what are you going to do for me?'”

Galperin’s observations on the Russian legal and political landscape mirrors what U.S. officials say in private about intentionally vague laws allowing intelligence officers to have broad abilities and authorities to conduct what U.S. officials see as malicious activity.

Throughout Kaspersky’s leadership ranks, including CEO and founder Eugene Kaspersky, the company is populated with Russian former intelligence officials, some of whom are accused by Western intelligence agencies of continuing in all but name to work for the Kremlin. This is a major point of contention, because Western cybersecurity firms are largely populated by ex-intelligence community employees as well.

While much of the public focus has understandably been on Eugene Kaspersky, the U.S. intelligence community places great focus on other executives, including Chief Legal Officer Igor Chekunov. Prior to joining the company, Chekunov was a KGB officer. A Kaspersky spokesperson stressed that Chekunov’s time was “obligatory military service” equivalent to “working for customs and border protection (CBP), which is under the Department of Homeland Security (DHS).” U.S intelligence officials say in briefings they believe the list of individuals within Kaspersky cooperating with Russian intelligence is far longer, but they’ve offered no public evidence as proof.

“Once you serve in the [Russian] intelligence services, you’re always kind of linked to them,” Zachary Witlin, a Russia analyst at the Eurasia Group, told CyberScoop. “Kaspersky is an interesting case though. Eugene built this entire company there, he and plenty of other Russians want it to succeed as a global cybersecurity company because it showcases that Russia does have the talent to have world-class software products. I don’t think they would be immune from the same sorts of oversight that incredibly powerful Russian intelligence agencies have on the rest of the country, but they would have to make a calculation about whether or not they would be putting a major company like that at irreparable risk. In a situation like this, I’m not so sure.”

Purely Political?

In closed congressional hearings, senators have responded with some punch to the FBI’s work. The chief criticism from Congress, which is anxious to take legislative action, is that the U.S. intelligence community didn’t speak up sooner about the problem. Earlier this year, senior U.S. intelligence officials slammed Kaspersky in an open congressional hearing; Eugene Kaspersky blamed it on “political reasons” rather than any wrongdoing by his own company.

In the years since suspicion has crept up against Kaspersky, the firm has repeatedly denied that it poses a threat to U.S. security or that it cooperates with Russia or any other government to spy on users. Efforts to reach out to American authorities have repeatedly been ignored or dismissed, the company told CyberScoop.

“CEO Eugene Kaspersky has repeatedly offered to meet with government officials, testify before the U.S. Congress and provide the company’s source code for an official audit to help address any questions the U.S. government has about the company, but unfortunately, Kaspersky Lab has not received a response to those offers,” a company spokesperson said.

“The company simply wants the opportunity to answer any questions and assist all concerned government organizations with any investigations, as Kaspersky Lab ardently believes a deeper examination of the company will confirm that these allegations are completely unfounded.”

The issue of a code audit was dismissed as a “publicity stunt” earlier this year by Jake Williams, an ex-NSA employee who has called the U.S. government’s efforts against Kaspersky “purely political.”

Beyond Kaspersky, U.S. intelligence officials see a problem that encompasses all of Russia and which, more broadly, impacts relations with tech firms from other countries, most notably China. As with so many other Washington, D.C., conversations of late, however, Russia has taken nearly sole possession of the spotlight that might otherwise be spread more globally.

Update: A Kaspersky spokesperson’s comments on the nature of Chief Legal Officer Igor Chekunov’s KGB service was added.
https://www.cyberscoop.com/fbi-kaspe...yarovaya-laws/





Justice Department Walks Back Demand for Information On Anti-Trump Website
Colin Lecher

After controversy over a broad search warrant that could have identified visitors to an anti-Trump website, the Justice Department says it’s scaling back a demand for information from hosting service DreamHost.

Last week, DreamHost disclosed that it was involved in a legal dispute with the department over access to records on the website “disruptj20.org,” which organized protests tied to Donald Trump’s inauguration. The warrant issued by the department was so broad, DreamHost said, that it was effectively requesting information that could identify lawful protestors — including information on more than 1.3 million IP addresses from visitors to the site. The warrant immediately drew condemnation from some privacy law experts.

In a legal filing today, the Justice Department argues that the warrant was proper, but also says DreamHost has since brought up information that was previously “unknown.” In light of that, it has offered to carve out information demanded in the warrant, specifically pledging to not request information like HTTP logs tied to IP addresses.

The department says it is only looking for information related to criminal activity on the site, and says that “the government is focused on the use of the Website to organize, to plan, and to effect a criminal act — that is, a riot.” Peaceful protestors, the government argues, are not the targets of the warrant.

The filing asks the court to proceed with the new, less burdensome request, which, apart from the carved-out sections, still requests “all records or other information, pertaining to the Account, including all files, databases, and database records stored by DreamHost in relation to that Account.”

It’s unclear if DreamHost will continue to fight the new demand. The company did not immediately respond to a request for comment.
https://www.theverge.com/2017/8/22/1...esses-requests





Judge Orders Tech Company to Release Web User Data from Anti-Trump Website
Keith L. Alexander

A D.C. Superior Court judge Thursday ruled a Los Angeles-based tech company must provide email addresses and other computer information from people who visited an anti-Trump website in the months leading to Inauguration Day.

During an hour-long hearing, attorneys for DreamHost, which hosts the website Disruptj20.org, argued the federal search warrant still was too broad and would include information about people who visited the site but were not part of violent Inauguration Day rioting.

The riots left six police officers injured and caused tens of thousands of dollars in damage when downtown D.C. businesses were vandalized just blocks from where President Trump and his family paraded following the swearing-in ceremony.

Prosecutors have filed felony rioting charges against some 200 individuals who they say participated in the riots and are asking for the website information as they pursue their criminal cases.

DreamHost attorney Raymond Aghaian said the site was not an anti-Trump website but an “advocacy site that addresses political issues.”

“They are requesting all database and database records,” Aghaian said. “With one warrant, they are trying to obtain content from multiple email accounts. That is unconstitutional.”

Judge Robert E. Morin’s ruling ordering a data release covers website information between October 2016 and Jan. 20, 2017, Inauguration Day.

Last month, prosecutors obtained a warrant to compel DreamHost to turn over emails, images and other information from computer users who visited the website.

Thursday’s order restricts the time frame for which data will be reviewed.

Prosecutors’ original request in July would have yielded IP addresses for about 1.3 million users of the site, court filings show.

In ordering DreamHost to provide user information for a shorter time window, Morin said he was trying to strike a balance between the free-speech rights of people who used the political site, the rights of “innocent users of the website” and prosecutors’ investigation into the riots.

“There is a need to review the data and decide what is relevant,” he said.

The decision by prosecutors to seek a court-ordered search warrant for website visitor information created an uproar among DreamHost executives and political rights advocates who argued the search violated constitutional protections.

DreamHost is not the first Internet company to challenge the government in its quest to prosecute individuals associated with the riots.

Facebook has filed its opposition at the D.C. Court of Appeals to a court order that blocks the social media giant from letting users know when law enforcement investigators ask to search their online information, particularly their political affiliations and comments.

DreamHosts’s battle with prosecutors is separate, but still tied to the inauguration riots. After prosecutors’ July request covering the IP addresses for about 1.3 million users of the site, DreamHost executives asked for a court hearing over their objections to the search warrant.

Prosecutors earlier this week scaled back their request and changed it to seek emails associated with Disruptj20.org, and email addresses of third parties associated with the website, such as individuals who volunteered to help provide supplies or support to rioters.

[Federal prosecutors scale back request for info on visitors to anti-Trump website]

At the hearing Thursday, DreamHost attorneys said even the narrowed request was still too broad because it could capture information on people who had nothing to do with the riots.

“This action will cause Web users to worry that the government will be monitoring every site they visit,” Aghaian said.

Paul Alan Levy, an attorney with the advocacy group Public Citizen joined DreamHost in its opposition to the warrant. Levy argued on behalf of the unnamed users who he said should be alerted that their information may be turned over to the government.

“This is a case about a website that is engaged in political speech,” Levy told the court.

Prosecutors John Borchert and Jennifer Kerkhoff argued their request had to be somewhat broad because they have no idea who was associated with the rioting through the website until they review the data.

As part of his ruling, Morin ordered prosecutors to tell him who was going to review the data DreamHost provides and, once that information is found, explain to him why prosecutors deem the information “critical” to their case.

Under Morin’s ruling, any information prosecutors find unrelated to the rioting would be sealed and could not be shared by prosecutors with anyone else or any other government authority.

Attorneys for DreamHost said they will turn over the information but are considering appealing the judge’s decision.

Morin then ordered DreamHost to turn over the website information to the court which the judge said he would maintain until DreamHost decides about its appeal.

If the company does not appeal or Morin’s ruling is not reversed by court of appeals review, Morin said he will turn the data over to prosecutors.
https://www.washingtonpost.com/local...70a_story.html





Wall Street Journal Editor Admonishes Reporters Over Trump Coverage
Michael M. Grynbaum

Gerard Baker, the editor in chief of The Wall Street Journal, has faced unease and frustration in his newsroom over his stewardship of the newspaper’s coverage of President Trump, which some journalists there say has lacked toughness and verve.

Some staff members expressed similar concerns on Wednesday after Mr. Baker, in a series of blunt late-night emails, criticized his staff over their coverage of Mr. Trump’s Tuesday rally in Phoenix, describing their reporting as overly opinionated.

“Sorry. This is commentary dressed up as news reporting,” Mr. Baker wrote at 12:01 a.m. on Wednesday morning to a group of Journal reporters and editors, in response to a draft of the rally article that was intended for the newspaper’s final edition.

He added in a follow-up, “Could we please just stick to reporting what he said rather than packaging it in exegesis and selective criticism?”
Continue reading the main story

A copy of Mr. Baker’s emails was reviewed by The New York Times.

Several phrases about Mr. Trump that appeared in the draft of the article reviewed by Mr. Baker were not included in the final version published on The Journal’s website.

The draft, in its lead paragraph, described the Charlottesville, Va., protests as “reshaping” Mr. Trump’s presidency. That mention was removed.

The draft also described Mr. Trump’s Phoenix speech as “an off-script return to campaign form,” in which the president “pivoted away from remarks a day earlier in which he had solemnly called for unity.” That language does not appear in the article’s final version.

Contacted about the emails on Wednesday, a Wall Street Journal spokeswoman wrote in a statement: “The Wall Street Journal has a clear separation between news and opinion. As always, the key priority is to focus reporting on facts and avoid opinion seeping into news coverage.”

In February, Mr. Baker fielded tough questions at an all-hands staff meeting about whether the newspaper’s reporting on Mr. Trump was too soft. Mr. Baker denied that notion, and he suggested that other newspapers had abandoned their objectivity about the president; he also encouraged journalists unhappy with the Journal’s coverage to seek employment elsewhere.

But apprehensiveness in the newsroom has persisted. This month, Politico obtained and published a transcript of a White House interview with Mr. Trump conducted by Mr. Baker and several Journal reporters and editors. Unusually for an editor in chief, Mr. Baker took a leading role in the interview and made small talk with Mr. Trump about travel and playing golf.

When Ivanka Trump, the president’s older daughter, walked into the Oval Office, Mr. Baker told her, according to the transcript, “It was nice to see you out in Southampton a couple weeks ago,” apparently referring to a party that the two had attended.

The Wall Street Journal is owned by the media magnate Rupert Murdoch, who speaks regularly with Mr. Trump and recently dined with the president at the White House.

Sydney Ember contributed reporting.
https://www.nytimes.com/2017/08/23/b...-coverage.html





In Fight for Free Speech, Researchers Test Anti-Censorship Tool Built into the Internet's Core

Researchers tested a way to get into blocked websites using the networks of two ISPs
Matthew Braga

When the Chinese government wanted to keep its users off Facebook and Google, it blocked the entire country's access to the U.S. companies' apps and sites. And when citizens started using third-party workarounds — like Tor, proxies and VPNs — to get around those blocks, it moved to quash those, too.

So a handful of researchers came up with a crazy idea: What if circumventing censorship didn't rely on some app or service provider that would eventually get blocked but was built into the very core of the internet itself? What if the routers and servers that underpin the internet — infrastructure so important that it would be impractical to block — could also double as one big anti-censorship tool?

It turns out, the idea isn't as crazy as it might seem. After six years in development, three research groups have joined forces to conduct real-world tests of an experimental new technique called "refraction networking." They call their particular implementation TapDance, and it's designed to sit within the internet's core.

In partnership with two medium-sized U.S. internet providers and the popular app Psiphon, they deployed TapDance for over a week this past spring to help more than 50,000 users around the world access the free and open internet — the first time such a test has been done outside the lab, and at such a large scale.

The researchers announced the test in a paper presented at the annual USENIX Security conference earlier this week.

"In the long run, we absolutely do want to see refraction networking deployed at as many ISPs that are as deep in the network as possible," said David Robinson, one of the paper's authors, and co-founder of the Washington-based tech policy consulting firm Upturn. "We would love to be so deeply embedded in the core of the network that to block this tool of free communication would be cost-prohibitive for censors."

A secret flag the censor can't see

The concept of refraction networking — which has also been called decoy routing — has been around since at least 2011, and was independently developed by research teams at the University of Michigan, the University of Illinois and Raytheon BBN Technologies. In 2015, with a research grant from the U.S. State Department, they formed a coalition to deploy TapDance within an ISP.

In the end, they actually settled on two — Merit Network, a regional ISP in Michigan, and the University of Colorado Boulder.

The technique works like this: A user in a country where internet filtering exists uses a special piece of software — in this case, a special test version of the app Psiphon — to browse the web. To access a site that's otherwise blocked, the software first sends a request to an unblocked site that's likely to be routed through TapDance along the way.

The user's circumvention software tags this innocuous request with a little extra data — basically a secret flag the censor can't see that says "Hey, I actually want this request to go somewhere else." The TapDance software in an ISP's infrastructure keeps watch for this secret flag and, when detected, re-routes the user's connection to the blocked site instead.

The user gets to where they want to go, everything's taken care of behind the scenes, and the censor is none the wiser — in theory.

Deployment is 'really exciting news'

In the near future, the researchers hope to deploy TapDance within more ISPs to test their approach on an even larger scale. But a still unanswered question is whether censors can tell when TapDance is in use.

It's a problem that's preoccupied PhD student Cecylia Bocovich and professor Ian Goldberg at the University of Waterloo, in Ontario.

"We believe that it is within the capabilities of more powerful censors to detect and block TapDance traffic in its current form," wrote Bocovich in an email, but nonetheless called the deployment "really exciting news."

The pair have been working on an alternate approach to refraction networking called Slitheen that's designed to resist detection, but the trade-off is that it's more difficult for an ISP to implement.

Instead of re-routing or refracting traffic, Slitheen actually hides censored content inside requests for images and videos from unblocked sites — effectively swapping blocked data for what the censor believes is allowed. Hidden content is made to look as close as possible to the original content's traffic pattern as it travels across the network, making the ruse extremely difficult to detect.

Even the TapDance papers' authors admit that they don't yet know how resistant to detection TapDance is in practice, given the limited amount of time their test was run. But if TapDance sensors are ever deployed as widely as its developers hope, it may not matter.

"If we have enough of them out there, the odds of going past a TapDance site increases," Robinson said.

And if enough of those sites happen to be within the heart of the internet, the cost of blocking them all would — the researchers hope — be too high.
http://www.cbc.ca/news/technology/ta...enix-1.4249177





Microsoft’s Speech Recognition System Hits a New Accuracy Milestone
Catherine Shu

Microsoft announced today that its conversational speech recognition system has reached a 5.1% error rate, its lowest so far. This surpasses the 5.9% error rate reached last year by a group of researchers from Microsoft Artificial Intelligence and Research and puts its accuracy on par with professional human transcribers who have advantages like the ability to listen to text several times.

Both studies transcribed recordings from the Switchboard corpus, a collection of about 2,400 telephone conversations that have been used by researchers to test speech recognition systems since the early 1990s. The new study was performed by a group of researchers at Microsoft AI and Research with the goal of achieving the same level of accuracy as a group of human transcribers who were able to listen to what they were transcribing several times, access its conversational context and work with other transcribers.

Overall, researchers from the latest study reduced the error rate by about 12 percent compared to last year’s findings by improving the neural net-based acoustic and language models of Microsoft’s speech recognition system. Notably, they also enabled its speech recognizer to use entire conversations, which let it adapt its transcriptions to context and predict what words or phrases were likely to come next, the way humans do when talking to one another.

Microsoft’s speech recognition system is used in services like Cortana, Presentation Translator and Microsoft Cognitive Services.
https://techcrunch.com/2017/08/20/mi...acy-milestone/





Microsoft Will Never Again Sneakily Force Windows Downloads on Users
Mark Wycislik-Wilson

There have been various controversies with Windows 10, from issues with privacy and telemetry, to ads and forced upgrades. Following a court case, Microsoft has vowed to never force upgrade files onto users again.

Windows users in Germany were particularly unimpressed when Microsoft forcibly downloaded many gigabytes of files to upgrade from Windows 7 and 8 to Windows 10. Having held out for 18 months, and losing its case twice, Microsoft has finally agreed to stop its nefarious tactics.

After a lengthy battle with Germany's Baden-Würtenberg consumer rights center, Microsoft made the announcement to avoid the continuation of legal action. A press release on the Baden-Würtenberg website reveals that Microsoft has announced it will no longer download operating system files to users' computers without their permission:

Microsoft will not download install files for new operating systems to a user system’s hard disk without a user's consent.

The consumer rights center hoped for this resolution to be reached much sooner, but Microsoft's decision will please the courts and could have a bearing on how the company acts in other countries.

The announcement is described as "a success for consumer rights in the digital world," and it brings to a close one of Windows' darker periods. But some people are already asking whether feature updates to Windows 10 fall under the same banner, and wondering whether these will have to be treated in the same way.
https://betanews.com/2017/08/23/no-m...ade-downloads/





IRS Now Has a Tool to Unmask Bitcoin Tax Cheats

Cryptocurrencies were supposed to be largely anonymous. But a software tool gives the IRS has a better chance of identifying people who hide their wealth.
Joseph Cox

You can use bitcoin. But you can’t hide from the taxman.

At least, that’s the hope of the Internal Revenue Service, which has purchased specialist software to track those using bitcoin, according to a contract obtained by The Daily Beast.

The document highlights how law enforcement isn’t only concerned with criminals accumulating bitcoin from selling drugs or hacking targets, but also those who use the currency to hide wealth or avoid paying taxes.

The IRS has claimed that only 802 people declared bitcoin losses or profits in 2015; clearly fewer than the actual number of people trading the cryptocurrency—especially as more investors dip into the world of cryptocurrencies, and the value of bitcoin punches past the $4,000 mark. Maybe lots of bitcoin traders didn't realize the government expects to collect tax on their digital earnings, or perhaps some thought they'd be able to get away with stockpiling bitcoin thanks to the perception that the cryptocurrency is largely anonymous.

“The purpose of this acquisition is… to help us trace the movement of money through the bitcoin economy,” a section of the contract reads. The Daily Beast obtained the document through the Freedom of Information Act.

The contractor in this case is Chainalysis, a startup offering its “Reactor” tool to visualize, track, and analyze bitcoin transactions. Chainalysis’ users include law enforcement agencies, banks, and regulatory entities.

The software can follow bitcoin as it moves from one wallet to another, and eventually to an exchange where the bitcoin user will likely cash out into dollars or another currency. This is the point law enforcement could issue a subpoena to the exchange and figure out who is really behind the bitcoin.

Jonathan Levin, a co-founder of Chainalysis, told The Daily Beast in an email, “All government agencies who have traditionally needed to 'follow the money' now need to also be able to follow digital currencies.”

“This is necessary to identify and obtain evidence on individuals using bitcoin to either launder money or conceal income as part of tax fraud or other Federal crimes,” the IRS contract notes. The document also mentions the IRS’ use of World Check, a database on companies, organizations and businesses designed to provide insight into financial crime and who might be behind it. (World Check does have issues though, including sometimes using Wikipedia as a source).

Public records show the IRS has paid Chainalysis over $88,700 since 2015 for its services.

Of course, just because the IRS has an easier time of tracing bitcoin today doesn’t mean that criminals won’t adapt.

“Those who are actively seeking to avoid tax, especially large amounts of tax, will move onto the next cryptocurrency that is not susceptible to the current tracking tools,” Alan Woodward, a computer science professor at the University of Surrey with a focus on cybercrime and cryptography told The Daily Beast. Some criminals already use alternatives such as Zcash or Monero, both of which provide more privacy features over bitcoin.
Get The Beast In Your Inbox!

The IRS acknowledged a request for comment but did not provide a response.

The IRS has approached bitcoin tax evasion in some more controversial ways in the past. In a legal order filed last November the IRS demanded the identities of all US users of the bitcoin exchange Coinbase over a three year period. The case is ongoing.
http://www.thedailybeast.com/irs-now...oin-tax-cheats





Secret Chips in Replacement Parts Can Completely Hijack Your Phone’s Security

Booby-trapped touchscreens can log passwords, install malicious apps, and more.
Dan Goodin

People with cracked touch screens or similar smartphone maladies have a new headache to consider: the possibility the replacement parts installed by repair shops contain secret hardware that completely hijacks the security of the device.

The concern arises from research that shows how replacement screens—one put into a Huawei Nexus 6P and the other into an LG G Pad 7.0—can be used to surreptitiously log keyboard input and patterns, install malicious apps, and take pictures and e-mail them to the attacker. The booby-trapped screens also exploited operating system vulnerabilities that bypassed key security protections built into the phones. The malicious parts cost less than $10 and could easily be mass-produced. Most chilling of all, to most people, the booby-trapped parts could be indistinguishable from legitimate ones, a trait that could leave many service technicians unaware of the maliciousness. There would be no sign of tampering unless someone with a background in hardware disassembled the repaired phone and inspected it.

The research, in a paper presented this week at the 2017 Usenix Workshop on Offensive Technologies, highlights an often overlooked disparity in smartphone security. The software drivers included in both the iOS and Android operating systems are closely guarded by the device manufacturers, and therefore exist within a "trust boundary." The factory-installed hardware that communicates with the drivers is similarly assumed to be trustworthy, as long as the manufacturer safeguards its supply chain. The security model breaks down as soon as a phone is serviced in a third-party repair shop, where there's no reliable way to certify replacement parts haven't been modified.

The researchers, from Ben-Gurion University of the Negev, wrote:

The threat of a malicious peripheral existing inside consumer electronics should not be taken lightly. As this paper shows, attacks by malicious peripherals are feasible, scalable, and invisible to most detection techniques. A well motivated adversary may be fully capable of mounting such attacks in a large scale or against specific targets. System designers should consider replacement components to be outside the phone’s trust boundary, and design their defenses accordingly.

Chip-in-the-middle attack

To pull off the attacks, the researchers started with a normal touchscreen and embedded a chip in it that manipulates the communication bus, which transfers data from device hardware to the software drivers included with the OS. This technique simulates a "chip-in-the-middle" attack, in which a malicious integrated circuit sits between two end points and monitors or modifies the communications they exchange.

The malicious chip contains code required to surreptitiously carry out a variety of actions the end user never initiated. The researchers' booby-trapped touchscreen, for instance, logs unlock patterns and keyboard input, takes pictures of the user and sends them to the attacker, replaces user-selected URLs with phishing URLs, and installs apps of the attacker's choice. A second class of attacks uses the chip to exploit vulnerabilities in the OS kernel. To keep the attack stealthy, the chip can also turn off power to the display panel while the uninitiated actions are performed. (In the following demonstration videos, researchers left the display on, presumably to make it clearer how the attack worked.)

To send malicious commands to the drivers and touch screen, the researchers used an Arduino platform running on an ATmega328 micro-controller module. They also used an STM32L432 micro-controller and believe that most other general-purpose micro-controllers would also work. The researchers used a hot air blower to separate the touch screen controller from the main assembly and, with that, to gain access to the copper pads that connected them. They then connected the chips to the devices using wires that extended out of the phone. With slightly more work, the researchers believe the entire booby-trapped replacement part could be seamlessly hidden inside a reassembled phone.
Not just for Androids

While the researchers used Android phones for their demonstration, there's no reason similar techniques wouldn't work against tablets and phones running iOS. The researchers outline a series of low-cost hardware-based countermeasures manufacturers can implement that would protect devices from attacks that rely on malicious screens. The hardware countermeasures would have the added benefit of protecting against attacks that use modified firmware. Another defense might be for replacement parts to undergo some sort of certification process.

In one respect, it's unsurprising that someone with physical possession of a phone can severely compromise its security with almost no outward sign. Still, the demonstration makes a convincing case that these types of attacks are inexpensive, undetectable, and able to be carried out on a large scale. With one survey suggesting one in five smartphones may have a cracked screen and a plethora of third-party repair shop services that fix those problems, the threat of malicious replacement parts that can't be detected by the service technicians themselves is worth remembering.
https://arstechnica.com/information-...uldnt-know-it/





Identity Thieves Hijack Cellphone Accounts to Go After Virtual Currency
Nathaniel Popper

Hackers have discovered that one of the most central elements of online security — the mobile phone number — is also one of the easiest to steal.

In a growing number of online attacks, hackers have been calling up Verizon, T-Mobile U.S., Sprint and AT&T and asking them to transfer control of a victim’s phone number to a device under the control of the hackers.

Once they get control of the phone number, they can reset the passwords on every account that uses the phone number as a security backup — as services like Google, Twitter and Facebook suggest.

“My iPad restarted, my phone restarted and my computer restarted, and that’s when I got the cold sweat and was like, ‘O.K., this is really serious,’” said Chris Burniske, a virtual currency investor who lost control of his phone number late last year.

A wide array of people have complained about being successfully targeted by this sort of attack, including a Black Lives Matter activist and the chief technologist of the Federal Trade Commission. The commission’s own data shows that the number of so-called phone hijackings has been rising. In January 2013, there were 1,038 such incidents reported; by January 2016, that number had increased to 2,658.

But a particularly concentrated wave of attacks has hit those with the most obviously valuable online accounts: virtual currency fanatics like Mr. Burniske.

Within minutes of getting control of Mr. Burniske’s phone, his attackers had changed the password on his virtual currency wallet and drained the contents — some $150,000 at today’s values.

Most victims of these attacks in the virtual currency community have not wanted to acknowledge it publicly for fear of provoking their adversaries. But in interviews, dozens of prominent people in the industry acknowledged that they had been victimized in recent months.

“Everybody I know in the cryptocurrency space has gotten their phone number stolen,” said Joby Weeks, a Bitcoin entrepreneur.

Mr. Weeks lost his phone number and about a million dollars’ worth of virtual currency late last year, despite having asked his mobile phone provider for additional security after his wife and parents lost control of their phone numbers.

The attackers appear to be focusing on anyone who talks on social media about owning virtual currencies or anyone who is known to invest in virtual currency companies, such as venture capitalists. And virtual currency transactions are designed to be irreversible.

Accounts with banks and brokerage firms and the like are not as vulnerable to these attacks because these institutions can usually reverse unintended or malicious transactions if they are caught within a few days.

But the attacks are exposing a vulnerability that could be exploited against almost anyone with valuable emails or other digital files — including politicians, activists and journalists.

Last year, hackers took over the Twitter account of DeRay Mckesson, a leader of the Black Lives Matters movement, by first getting his phone number.

In a number of cases involving digital money aficionados, the attackers have held email files for ransom — threatening to release naked pictures in one case, and details of a victim’s sexual fetishes in another.

The vulnerability of even sophisticated programmers and security experts to these attacks sets an unsettling precedent for when the assailants go after less technologically savvy victims. Security experts worry that these types of attacks will become more widespread if mobile phone operators do not make significant changes to their security procedures.

“It’s really highlighting the insecurity of using any kind of telephone-based security,” said Michael Perklin, the chief information security officer at the virtual currency exchange ShapeShift, which has seen many of its employees and customers attacked.

Mobile phone carriers have said they are taking steps to head off the attacks by making it possible to add more complex personal identification numbers, or PINs, to accounts, among other steps.

But these measures have not been enough to stop the spread and success of the culprits.

After a first wave of phone porting attacks on the virtual currency community last winter, which was reported by Forbes, their frequency appears to have ticked up, Mr. Perklin and other security experts said.

In several recent cases, the hackers have commandeered phone numbers even when the victims knew they were under attack and alerted their cellphone provider.

Adam Pokornicky, a managing partner at Cryptochain Capital, asked Verizon to put extra security measures on his account after he learned that an attacker had called in 13 times trying to move his number to a new phone.

But just a day later, he said, the attacker persuaded a different Verizon agent to change Mr. Pokornicky’s number without requiring the new PIN.

A spokesman for Verizon, Richard Young, said that the company could not comment on specific cases, but that phone porting was not common.

“While we work diligently to ensure customer accounts remain secure, on occasion there are instances where automated processes or human performance falls short,” he said. “We strive to correct these issues quickly and look for additional ways to improve security.”

Mr. Perklin, who worked at a Canadian mobile phone operator before joining ShapeShift, said most phone companies would write down any additional security requests in the notes of a customer account.

But agents can generally act on their own, he said, regardless of what is in the notes, and can easily miss what is in the notes.

The vulnerability of phone numbers is the unintended consequence of a broad push in the security industry to institute a practice, known as two-factor authentication, that is supposed to help make accounts more secure.

Many email providers and financial firms require customers to tie their online accounts to phone numbers, to verify their identity. But this system also generally allows someone with the phone number to reset the passwords on these accounts without knowing the original passwords. A hacker just hits “forgot password?” and has a new code sent to the commandeered phone.

Mr. Pokornicky was online at the time his phone number was taken, and he watched as his assailants seized all his major online accounts within a few minutes.

“It felt like they were one step ahead of me the whole time,” he said.

The speed with which the attackers move has convinced people who are investigating the hacks that the attacks are generally run by groups of hackers working together.

Danny Yang, the founder of the virtual currency security firm BlockSeer, said he had traced several attacks to internet addresses in the Philippines, though other attacks have been tracked to computers in Turkey and the United States.

Mr. Perklin and other people who have investigated recent hacks said the assailants generally succeeded by delivering sob stories about an emergency that required the phone number to be moved to a new device — and by trying multiple times until a gullible agent was found.

“These guys will sit and call 600 times before they get through and get an agent on the line that’s an idiot,” Mr. Weeks said.

Coinbase, one of the most widely used Bitcoin wallets, has encouraged customers to disconnect their mobile phones from their Coinbase accounts.

But some customers who have lost money have said the companies need to take more steps by doing things like delaying transfers from accounts on which the password was recently changed.

“Coinbase looks like a bank, stores millions of dollars like a bank, but you don’t realize how weak its default protections are until you are robbed of thousands of dollars in minutes,” said Cody Brown, a virtual reality developer who was hacked in May.

Mr. Brown wrote a widely circulated post about his experience, in which he lost around $8,000 worth of virtual currency from his Coinbase account, all as he sat online and watched, getting no response from the customer service at either Coinbase or Verizon.

A spokesman for Coinbase said the company “has invested significant resources to build internal tools to help protect our customers against hackers and account takeovers, including compromise through phone porting.”

The irreversibility of Bitcoin transactions has often been lauded as one of the most important qualities of virtual currency because it makes it harder for banks and governments to intervene in transactions.

But Mr. Pokornicky said the virtual currency industry needed to alert new users to the added risk that comes with the new features of the technology.

“It’s powerful to be able to control your money and move things without any permission,” he said. “But that privilege requires a clear understanding of the downside.”
https://www.nytimes.com/2017/08/21/b...-currency.html





Identity Theft at Epidemic Levels, Warns Cifas
Kevin Peachey and Chris Johnston

Identity theft is reaching "epidemic levels", according to a fraud prevention group, with victims most likely to be aged in their 30s.

ID fraudsters obtain personal information before pretending to be that individual and apply for loans or store cards in their name.

A total of 89,000 cases were recorded in the first six months of the year by UK anti-fraud organisation Cifas.

That is a 5% rise on the same period last year and a new record high.

"We have seen identity fraud attempts increase year on year, now reaching epidemic levels, with identities being stolen at a rate of almost 500 a day," said Simon Dukes, chief executive of Cifas.

"These frauds are taking place almost exclusively online. The vast amounts of personal data that is available either online or through data breaches is only making it easier for the fraudster."

ID theft accounts for more than half of fraud recorded by Cifas, a not-for-profit organisation that shares fraud prevention tips between businesses and public bodies.

More than four in five of these crimes were committed online, it said, with many victims unaware that they had been targeted until they received a random bill or realised their credit rating had slumped. This would prevent them getting a loan of their own.

Fraudsters steal identities by gathering information such as their name and address, date of birth and bank account details.

They get hold of such information by stealing mail, hacking computers, trawling social media, tricking people into giving details or buying data through the "dark web".

Analysis: Rory Cellan-Jones, technology correspondent

I got a worrying insight into how our online activity can leave us open to identity theft when a security company offered to examine my digital footprint.

Its 30-page report showed that a lot of personal details that might be useful to a criminal were out there on public websites - but if you choose to have an online presence, that is quite hard to avoid.

Far more worrying was the presence in hidden corners of the web of some of my passwords for various accounts, harvested in some of the many hacking attacks on major online firms.

Luckily I had already changed those passwords, but the security researchers told me that anyone in the Western world who used the internet reasonably often was likely to have their details held in one of these data dumps. That information is up for sale on a number of criminal marketplaces.

Identity theft is big business and it is thriving on the dark web.

Victims are more likely to be in their 30s and 40s, often because a good deal of information about them has been gathered online.

The stereotypical image of a fraud victim is someone who is elderly and vulnerable, but the over-60s are the only age group that has seen cases fall this year compared with the first half of the year, according to Cifas.

The age group which has seen the biggest rise is 21 to 30-year-olds. This finding was mirrored in separate research by credit checking company Experian. It said that since 2014, it was increasingly likely that victims were male, aged in their 20s and living in London.

Cifas said it was important that employers needed to be alert to fraud, rather than just consumers. There had been a sharp rise in ID fraudsters applying for loans, online retail, telecoms and insurance products, it added.

"For smaller and medium-sized businesses in particular, they must focus on educating staff on good cyber-security behaviours and raise awareness of the social engineering techniques employed by fraudsters. Relying solely on new fraud prevention technology is not enough," Mr Dukes said.

Katy Worobec, from UK Finance, which represents the banking industry, said: "Tackling fraud and financial crime is a top priority for the industry. Banks have sophisticated controls in place to safeguard the financial system from fraudsters, and work closely with enforcement agencies and government to identify and disrupt criminal activity."

One victim's story

Anil Sharma found out the hard way that fraudsters had enough information about him to obtain new smartphones in his name. Not one but two mobile phone contracts taken out through a well-known high street retailer were posted to his Liverpool home.

He says the chain was quite dismissive of his plight and he was forced to contact the mobile networks to resolve the situation. One was more helpful than the other, Mr Sharma says, but ultimately both accepted that the contracts were taken out fraudulently and cancelled them.

As well as taking a good deal of phone bashing to resolve, the identity theft was also stressful - and affected his credit score as well. "It's very very worrying."

But how did the fraudsters obtain his details? Initially Mr Sharma thought it was the result of losing his wallet a couple of years ago, but Action Fraud says an online breach is the more likely culprit.

How to protect yourself from identity crimes

• Limit the amount of personal information you give away on social networking sites. Your real friends know where you live and know your birthday
• Update your computer's firewall, anti-virus and anti-spyware programmes. Up to 80% of cyber-threats can be removed by doing this
• Never share passwords or PINs (personal identification numbers) with others and do not write them down
• Use strong passwords and PINs - don't use your date of birth or your child's name, include a mix of upper and lower case letters, numbers and punctuation marks. Aim for a minimum of 10 characters in a password
• Do not use the same password or PIN for more than one account
• Shred all your financial documents before you throw them away

http://www.bbc.co.uk/news/business-41011464





AccuWeather Caught Sending User Location Data, Even when Location Sharing is Off

A security researcher has found that the popular weather app sends private location data without the user's explicit permission to a firm designed to monetize user locations.
Zack Whittaker

Popular weather app AccuWeather has been caught sending geolocation data to a third-party data monetization firm, even when the user has switched off location sharing.

AccuWeather is one of the most popular weather apps in Apple's app store, with a near perfect four-star rating and millions of downloads to its name. But what the app doesn't say is that it sends sensitive data to a firm designed to monetize user locations without users' explicit permission.

Security researcher Will Strafach intercepted the traffic from an iPhone running the latest version of AccuWeather and its servers and found that even when the app didn't have permission to access the device's precise location, the app would send the Wi-Fi router name and its unique MAC address to the servers of data monetization firm Reveal Mobile every few hours. That data can be correlated with public data to reveal an approximate location of a user's device.

We independently verified the findings, and were able to geolocate an AccuWeather-running iPhone in our New York office within just a few meters, using nothing more than the Wi-Fi router's MAC address and public data.

When the location is enabled, it sends the down-to-the-meter precise coordinates of the user, including speed and altitude, back to the data firm.

That's where Reveal Mobile comes in. The data firm isn't an advertiser per se but helps provide data for advertisers. Reveal says it "turns the location data coming out of those apps into meaningful audience data," and "we listen for [latitude and longitude] data and when a device "bumps" into a Bluetooth beacon," according to a brochure on its website.

For its part, Reveal Mobile executives said on a call last week with ZDNet that though company does collect Wi-Fi data and MAC address information, it "does not use it" for location data.

"Everything is anonymized," said Brian Handley, the company's chief executive. "We're not ever tracking an individual device," but described a situation where his company can point advertising to customers inside a Starbucks location, for example.

According to one AccuWeather executive, Reveal Mobile's technology "has not been in our application long enough to be usable yet."

"In the future, AccuWeather plans to use data through Reveal Mobile for audience segmentation and analysis, to build a greater audience understanding and create more contextually relevant and helpful experiences for users and for advertisers," said David Mitchell, AccuWeather's executive vice president of emerging platforms, on the call.

But while AccuWeather's privacy says that the company and its partners may use geolocation tracking technologies, its privacy policy doesn't specifically state that this data will be used for advertising, Strafach told ZDNet.

"Essentially I see a few problems," he said. "AccuWeather get GPS access under an entirely innocent premise -- no users expect the location data to be used this way," he said.

Several people have tweeted at Strafach in recent days to say they have deleted the app, based on his findings.

"When GPS access is not allowed, the app sends the [Wi-Fi network name] and possibly uses their Bluetooth beacon technology. This seems especially problematic as their website plainly states that use of Wi-Fi information is for geolocation, and that seems a bit over the line for situations where the user pretty clearly does not wish to share their location," he said.

In a blog post detailing his findings, Strafach said that similar opt-out geolocation tracking behaviors have in the past caught the eye of the enforcement arm of the Federal Trade Commission.

A 2016 case saw the FTC bring action against one offending app after it "deceived consumers by presenting them with an option to not share their information, even though it was shared automatically rendering the option meaningless."

A spokesperson for AccuWeather denied that the cases were similar. "Our legal team does not believe those cases are on point relative to our practices," said the spokesperson.

"This is a quickly evolving legal field and what is best practice one day may change the next; and... we take privacy issues very seriously," the spokesperson said. "We work to have our [terms of service and agreements] as current as the law is evolving and often beyond that which may be legally required to protect the privacy of our users."

Reveal Mobile has since published a statement noting that it follows "all app store guidelines, honoring all device level and app level opt-outs and permissions."

AccuWeather later in the day said in a follow-up joint statement with Reveal Mobile that the companies will update their apps and services following ZDNet's report.

"Reveal is updating its SDK and pushing out new versions of the [software kit] in the next 24 hours, with the iOS update going live [Tuesday]," said an AccuWeather spokesperson. "The end result should be that zero data is transmitted back to Reveal Mobile when someone opts out of location sharing."

"In the meanwhile, AccuWeather had already disabled the [software kit], pending that update," the spokesperson confirmed.
http://www.zdnet.com/article/accuwea...denied-access/





Sensor Tracks Who is Driving in Your Neighbourhood
Dave Lee North

A start-up that lets residents monitor who drives in and out of their neighbourhood was among the companies revealed at a Silicon Valley event on Monday.

Flock's sensor, which it offers for $50 a year per house, logs the number plates of every car that drives into a street and takes a picture. The sensor could eventually provide facial recognition.

Residents of monitored neighbourhoods can opt-out of being tracked - but visitors, or people passing through, cannot.

Flock is backed by Y Combinator, a start-up “incubator” which in the past has funded successes including Dropbox, Reddit and AirBnB.

A privacy expert said he believed the data collection to be legal according to US law, but that the idea could ignite a debate about the "right to be left alone in public”.

“One of the great weaknesses in US privacy law is that we only protect against intrusions into private areas, not public spaces,” said Albert Gidari, director of privacy at Stanford Law School's Center for Internet and Society.

"Public roads through neighbourhoods, licence plates, pedestrians on public sidewalks etc all are fair game," he said.

The data is only made available to “neighbourhood leaders”, Flock says, and is a tool that could be used to fight crime.

To date, one person has been convicted thanks to evidence captured by the device.

“An unfortunate individual drove into one of our [monitored] neighbourhoods,” explained Garret Langley, chief executive and co-founder of Flock.

"He put a nice road bike in the back of his car, and drove off with both the window down and the trunk open.

"Not only do we have footage of his licence plate, we have a picture of his face and a picture of the bike in the back.”
‘Not our data'

The technology was shown off at Y Combinator’s Demo Day, the twice-yearly event at which entrepreneurs pitch their companies to several hundred investors.

Flock’s devices are being trialled in seven neighbourhoods in and around Atlanta, with more locations across the US currently being considered.
http://www.bbc.co.uk/news/technology-41008141





Fourth US Navy Collision this Year Raises Suspicion of Cyber-Attacks
Tristan Greene

Early Monday morning a US Navy Destroyer collided with a merchant vessel off the coast of Singapore. The US Navy initially reported that 10 sailors were missing, and today found “some of the remains” in flooded compartments. While Americans mourn the loss of our brave warriors, top brass is looking for answers.

Monday’s crash involving the USS John McCain is the fourth in the area, and possibly the most difficult to understand. So far this year 17 US sailors have died in the Pacific southeast due to seemingly accidental collisions with civilian vessels.

There are only a few reasonable explanations for the increase in US Navy-involved collisions that appear to be isolated to this one particular region of the map. The crashes could be due to a lack of proper training, an act of war, terrorism, or coincidence.

The first US Navy collision this year occurred in January, when the USS Antietam ran aground near Yosuka, Japan.

The USS Champlain was the next ship to crash, colliding with a South Korean fishing vessel in May. According to reports Navy personnel spotted the fishing craft and tried to contact it, but it lacked a radio and GPS. It’s pretty strange to think that a South Korean fishing boat wouldn’t have GPS — almost beyond belief.

When the USS Fitzgerald — operating near Yokuska — collided with a container ship from Philippines on June 17th seven US sailors died. They weren’t found until the following day when damage control personnel gained access to flooded compartments. The commanding officer, executive officer, and command masterchief were relieved of command on August 17th, after 7th Fleet Admiral Joseph P. Aucoin determined that “the bridge team lost situational awareness.”

Navy leadership has issued new training directives in response to the crashes, but that’s standard procedure for any military event. The US Navy works on a “lessons learned” methodology; leadership treats every failure as a teaching tool and immediately implements new training procedures.

It’s still possible that the 7th Fleet dropped the ball and consistently placed untrained sailors in positions and situations that were bound to result in an eventual loss of life. We may also consider no matter how well-trained a person is, sometimes mistakes are made — we’re only human.

Should four collisions in the same geographical area be chalked up to coincidence?

Let’s also consider that the current generation of sailors have been at war for their entire careers. The longest war in US history may be affecting the entire fleet’s readiness.

But if we don’t believe that the fault lies with the sailors who were standing the watch during each collision, we’re left with the suspicion of some form of attack. TNW recently reported on the ease with which hackers were able to breach civilian ships.

Could a military vessel be hacked? In essence, what if GPS spoofing or administrative lockout caused personnel to be unaware of any imminent danger or unable to respond?

The Chief of Naval Operations (CNO) says there’s no reason to think it was a cyber-attack, but they’re looking into it:

2 clarify Re: possibility of cyber intrusion or sabotage, no indications right now…but review will consider all possibilities

— Adm. John Richardson (@CNORichardson) August 21, 2017

The obvious suspects — if a sovereign nation is behind any alleged attacks — would be Russia, China, and North Korea, all of whom have reasonable access to the location of all four incidents. It may be chilling to imagine such a bold risk, but it’s not outlandish to think a government might be testing cyber-attack capabilities in the field.

If that isn’t bothersome enough there’s a third hypothesis. This may very well be the next wave of terrorist attacks against US military personnel. Terrorists have attacked US Naval vessels and killed sailors before. In 2000 the USS Cole was attacked by terrorists who drove a small boat loaded with explosives into its hull while the ship was docking. That attack left 17 sailors dead and nearly 40 injured.

Terrorists typically take responsibility for attacks though, and we weren’t able to find any reports of this being the case in 2017. Al Qaeda claimed the attack on the USS Cole and investigations were able to confirm that to be the case — this preceded the 9/11 attacks.

While it remains within the realm of possibility that these are isolated incidents that have no connection, the frequency with which the collisions are occurring might suggest something other than human error at fault.
https://thenextweb.com/insider/2017/...est-collision/





The CIA Built a Fake Software Update System to Spy on Intel Partners
Russell Brandom

Anyone relying on the CIA for tech support got a nasty surprise this morning, as documents published by Wikileaks revealed a secret project to siphon out data through its technical liaison service, dating back to 2009.

The program, called ExpressLane, is designed to be deployed alongside a biometric collection system that the CIA provides to partner agencies. In theory, those partners are agreeing to provide the CIA with access to specific biometric data — but on the off-chance those partners are holding out on them, ExpressLane gives the agency a way to take it without anyone knowing.

ExpressLane masquerades as a software update, delivered in-person by CIA technicians — but the documents make clear that the program itself will remain unchanged. Instead, the program siphons the system’s data to a thumb drive, where agents can examine it to see if there’s anything the partner system is holding back. If the partners refuse the phony update, there’s a hidden kill-switch that lets agents shut down the entire system after a set period of time, requiring an in-person visit to restore the system.

It’s still unclear who exactly those intel partners are. WikiLeaks claims the program was primarily used against US agencies like the FBI and Department of Homeland Security, although the targets are far less clear from the documents themselves. Since the CIA doesn’t maintain any significant biometric database on its own, it’s also unclear what the agency would do with any data obtained in this manner.

Still, it’s a striking example of the CIA using tech support as a way of gaining access to sensitive information — and as WikiLeaks continues to release the agency’s hacking tools as part of the Vault 7 campaign, it’s a reminder of how sophisticated the agency’s digital spycraft really is.
https://www.theverge.com/2017/8/24/1...ileaks-vault-7





Google Touts Titan Security Chip to Market Cloud Services
Salvador Rodriguez

Alphabet Inc’s (GOOGL.O) Google this week will disclose technical details of its new Titan computer chip, an elaborate security feature for its cloud computing network that the company hopes will enable it to steal a march on Amazon.com Inc (AMZN.O) and Microsoft Corp (MSFT.O).

Titan is the size of a tiny stud earring that Google has installed in each of the many thousands of computer servers and network cards that populate its massive data centers that power Google's cloud services.

Google is hoping Titan will help it carve out a bigger piece of the worldwide cloud computing market, which is forecast by Gartner to be worth nearly $50 billion.

A Google spokeswoman said the company plans to disclose Titan's technical details in a blog post on Thursday.

Titan scans hardware to ensure it has not been tampered with, Neal Mueller, head of infrastructure product marketing for Google Cloud Platform, said in a recent interview. If anything has been changed, Titan chip will prevent the machine from booting.

Data center operators are concerned that cyber criminals or nation-state hackers could compromise their servers, which are mostly made by Asian hardware companies, before they even reach the United States.

“It allows us to maintain a level of understanding in our supply chain that we otherwise wouldn’t have,” Mueller said.

Neither Amazon.com nor Microsoft - which hold 41 percent and 13 percent of cloud market share, respectively, according to Synergy Research Group - have said if they have similar features. In response to inquiries from Reuters, representatives of both companies pointed to the various ways they use encryption and other measures to secure their data centers.

Google holds just 7 percent of the worldwide cloud market. Titan is part of a strategy Google hopes will differentiate its services and attract enterprise customers from sectors with complex compliance regulations, such as those in financial services and the medical field. Google announced Titan in March.

“Having physical safeguards goes a long way of telling the story of how seriously Google takes people’s security,” said Kim Forrest, vice president at Fort Pitt Capital Group.

Google has struggled to compete with Amazon Web Services, which has more features, and Microsoft, which has long-standing relationships with enterprises, said Lydia Leong, an analyst for Gartner.

Leong was skeptical of Google's strategy.

"Security is a hallmark for both AWS and Microsoft,” she said this week. "Google has a lot more work to do."

Google uses Titan chips to protect the servers running its own services like search, Gmail and YouTube, and the company claims Titan has already driven sales. It points to Metamarkets, a real-time analytics firm, as a customer it landed in part due to Titan.

Dan Cornell, principal at Denim Group, a firm that helps tech organizations build secure systems, said the rise of nation-state hacking makes such a feature timely.

"Those level of adversaries certainly have an incentive to hack or to have influence over the security of hardware. It's interesting of Google to say, 'Here's one part of the hardware that we're going to control.'”

Editing by Jonathan Weber and Matthew Lewis
https://uk.reuters.com/article/us-al...-idUKKCN1B22D6





State Supreme Court Says Digital Cameras Can't Be Searched Without A Warrant
Tim Cushing

Some more good news on the Fourth Amendment front, even if it's somewhat jurisdictionally limited: the Supreme Judicial Court of Massachusetts has (sort of) decided the Supreme Court's Riley decision isn't just for cellphones. (via FourthAmendment.com)

In this case, the search of a robbery suspect's backpack while he was being questioned yielded a ring, a digital camera, and other items. The police warrantlessly searched the digital phone, discovering a photo of the suspect next to a firearm later determined to have been stolen. This led to two convictions: one for the stolen property and one for carrying a firearm without a license.

The defendant challenged all of the evidence resulting from the warrantless search of the backpack, but the state got to keep most of what it found, along with the conviction for theft. But it didn't get to keep the firearm conviction, as the court here sees digital cameras to be almost no different than cellphones when it comes to warrantless searches and the Riley decision. From the opinion:

The Commonwealth counters that Riley does not apply because digital cameras, lacking the ability to function as computers, are not analogous to cell phones for Fourth Amendment purposes. We decline to address the constitutionality of the search of the digital camera on Fourth Amendment grounds, but we apply the reasoning in Riley in holding that the search of the camera violated art. 14 [of the Massachusetts Declaration of Rights].

As the court points out, there's nothing in the law that allows officers to warrantlessly search something if that something poses no risk to officer safety or the preservation of evidence. Searching the backpack is fine, because it may have contained a weapon. But searching the camera isn't because a camera isn't a weapon (the US Supreme Court made the same observation about cellphones) and the possibility of evidence destruction even lower in a device with limited or zero network connectivity.

This reasoning presents a compelling basis to exclude digital cameras from the reach of the search incident to a lawful arrest exception to the warrant requirement. Like the cell phone, the twin threats of "harm to officers and destruction of evidence" are not present with regard to the data on a digital camera. See id. Once the camera has been secured and potential threats eliminated, "data on the [camera] can endanger no one." Id. at 2485 (officers free to "examine the physical aspects of a phone to ensure that it will not be used as a weapon" [emphasis supplied]). Likewise, the risk of destruction of incriminating data is also mitigated once the camera has been secured. Although the concern regarding the destruction of cell phone data via remote wiping and data encryption was considered and rejected by the Supreme Court, see id. at 2486, this issue poses even less of a risk with respect to digital cameras, which, like the camera at issue here, may lack Internet or network connectivity.

The court also finds digital cameras to be just as filled with private information as cellphones, at least in terms of opening them up to search warrant exceptions. Cellphones contain far more personal information to be sure, but that doesn't make digital cameras any less of a privacy concern.

Although digital cameras do not allow storage of information as diverse and far ranging as a cell phone, they nevertheless possess the capacity to store enormous quantities of photograph and often video recordings, dating over periods of months and even years, which can reveal intimate details of an individual's life. As the United States Supreme Court aptly recognized, "an individual's private life can be reconstructed through a thousand photographs labeled with dates, locations, and descriptions; the same cannot be said of a photograph or two of loved ones tucked into a wallet," Riley, 134 S. Ct. at 2489, and "the fact that a search in the predigital era could have turned up a photograph or two in a wallet does not justify a search of thousands of photos in a digital gallery." Id. at 2493.

But for all the Riley decision quotes, the state Supreme Court doesn't go so far as to apply Riley to digital cameras. It notes the US Supreme Court did not explicitly address digital cameras, so it's not interested in setting precedent beyond its jurisdiction. Instead, the court finds the warrantless search a violation of the state's version of the Bill of Rights.

Instead, we decide the issue based on our State Constitution, bearing in mind that "art. 14 . . . does, or may, afford more substantive protection to individuals than that which prevails under the Constitution of the United States." Commonwealth v. Blood, 400 Mass. 61, 68 n.9 (1987). We hold, for the same reasons articulated by the Supreme Court in Riley and as set forth above, that digital cameras may be seized incident to arrest, but that the search of data contained in digital cameras falls outside the scope of the search incident to arrest exception to the warrant requirement.

[...]

Indeed, with the twin threats justifying the search incident to arrest exception mitigated here because the camera was secure in the custody of the police, the officers had ample opportunity to obtain a search warrant.

As other electronic devices are subjected to warrantless searches, I expect more courts will find Riley covers those as well, even if not explicitly named in the 2014 decision. When officers have "ample opportunity" to seek a warrant for a seized item, "but it's not a phone" is a relatively worthless argument.
https://www.techdirt.com/articles/20...-warrant.shtml





Chrome Adds Warning for When Extensions Take Over Your Internet Connection
Catalin Cimpanu

Google engineers have added two neat features to the Chrome browser that will alert users of extensions that hijack proxy settings or the new tab page.

The changes — spotted in Google Chrome Canary builds (v62.x) — are in the form of popups that appear to the right side of the screen, near the Chrome dropdown menu.

Warnings will help fight onslaught of malicious extensions

The first of these warnings is for extensions that take over the user's proxy settings, effectively hijacking the user's Internet connection.

Malicious extension devs use proxy hijacking to redirect malicious traffic through their servers, where they inject or replace legitimate ads with their own.

Proxy change warning

The second warning popup is for extensions that change the user's home tab. Usually, malicious extensions hijack a browser's new tab to insert their own custom web page or redirect users to a search engine.

New tab warning

The popup messages that Google added include buttons that allow users to quickly reverse the actions of the malicious extensions.

These buttons are extremely important, as not all users have the technical knowledge to revert proxy changes, Chrome's default tab, or even uninstall an extension on their own.
Chrome Web Store under assault by malicious extension devs

The addition of these popups are part of Google's plan to fight malicious Chrome extensions that have been starting to plague the Web Store [1, 2, 3, 4].

Bleeping Computer obtained a copy of an email Google sent to Chrome extension developers in July. The email informs extension developers that starting with August 1, extensions that programmatically change the startup page, homepage, search provider setting, or any other setting, must do it only via the Settings Overrides API.

Google added the Settings Overrides API in Chrome for Windows in 2014, and ported it for Mac earlier this year.
https://www.bleepingcomputer.com/new...et-connection/





Google Pulls 500+ Backdoored Apps from Google Play

Security researchers have identified over 500 apps on Google Play containing an advertising software development kit (SDK) called Igexin, which allowed covert download of spying plugins.

The apps in question represent a wide selection of photo editors, Internet radio and travel apps, educational, health and fitness apps, weather apps, and so on, and were downloaded over 100 million times across the Android ecosystem.

Malicious third-party code

“Typically, mobile apps use advertising SDKs to make it easy for app developers to leverage advertising networks and deliver ads to customers. Like many ad networks, the Igexin service promotes its targeted advertising services that leverage data collected about people such as their interests, occupation, income, and location,” Lookout researchers noted.

It should be standard procedure for app developers to analyze any third-party code they embed in their apps in order to discover and disclose any data collection capabilities it has in the app’s privacy policy. Unfortunately, too many of them don’t bother or don’t know how to, and opt for trusting the developers of SDKs blindly.

The researchers pointed out that not all versions of the Igexin ad SDK deliver malicious functionality, but tose that did implemented a plugin framework that allows the client to load arbitrary code, and requested instructions on what to download next.

Mostly, it was to exfiltrate call logs, which contain information such as time of call, calling number, and call state. But there were also instances where data about installed apps and GPS location was exfiltrated.

“Users and app developers have no control over what will be executed on a device after the remote API request is made. The only limitations on what could potentially be run are imposed by the Android permissions system,” the researchers pointed out.

A growing problem

“It is becoming increasingly common for innovative malware authors to attempt to evade detection by submitting innocuous apps to trusted app stores, then at a later time, downloading malicious code from a remote server. Igexin is somewhat unique because the app developers themselves are not creating the malicious functionality – nor are they in control or even aware of the malicious payload that may subsequently execute. Instead, the invasive activity initiates from an Igexin-controlled server.”

Lookout researchers did not name the apps that were found using the malicious SDK, but notified Google of the problem. The latter then proceeded to clean up house, either by removing the offending apps altogether, or by forcing app developers to upload an updated version with the invasive features (i.e. the Igexin SDK) removed.
https://www.helpnetsecurity.com/2017...s-google-play/





Oreo has a Game-Changing Android Feature, But You Won’t Even Realize it’s There
Chris Smith

Android 8.0 Oreo is finally official, but that has little meaning for most Android users out there. Aside from a few millions of Pixel and Nexus devices that can be updated to Oreo right now, all the other Android users are left in the dark, having to rely on the “old” Nougat, at best, for now. The fact that Android 8.0 has an incredibly cool name won’t comfort those users who’d like to update to Oreo as fast as possible, without being forced to buy one of Google’s devices to enjoy this perk.

However, Oreo does come with a hidden feature that might be one of the best Android tricks we saw in years. You won’t even know it’s there, but it might make a world of difference.

How cool would it be for non-Pixel devices to get almost instant Android updates? That’s something Google was never able to achieve no matter how much it tried. Android fragmentation is a major defeat that was almost always sold as an advantage to the user. But it definitely isn’t.

That’s why tucked in Oreo code, is Project Treble. That name is definitely not helpful, as people will soon forget what it means. They should have called it Project Faster Updates, so everyone realizes its potential.

With Project Treble, Google is aiming to help Android device makers and carriers push out Android updates faster than the current schedule.

From Google’s own documentation, Project Treble is described as a sort of software modularization that would help out with fast updates. A few months ago we learned that Google’s current Pixel models will work with Project Treble, which might extend their life past the guaranteed two years of Android updates.

Now that Android Oreo is official, Google Android Product Manager Sagar Kamdar confirmed to 9to5Google in an interview that Google is working with several partners on Project Treble. Every new phone that will launch with Oreo is “treblized,” which means those devices will be easier to upgrade to future Android releases. At least, that’s the theory of Project Treble.

Who’s working with Google on Oreo updates? Sagar mentioned 11 partners in the short video at the end of the post without naming names. However, earlier this week, Google’s Vice President of Engineering David Burke mentioned a few of them in a blog post about Android 8.0. Google is working with Essential, Huawei, HTC, Kyocera, Motorola, HMD Global Home of Nokia Phones, Samsung, Sharp, and Sony on Oreo upgrades and new devices that will run Android Oreo out of the gate.
http://bgr.com/2017/08/23/google-pix...roject-treble/





Ukraine Cyber Security Firm Warns of Possible New Attacks

Ukrainian cyber security firm ISSP said on Tuesday it may have detected a new computer virus distribution campaign, after security services said Ukraine could face cyber attacks similar to those which knocked out global systems in June.

The June 27 attack, dubbed NotPetya, took down many Ukrainian government agencies and businesses, before spreading rapidly through corporate networks of multinationals with operations or suppliers in eastern Europe.

ISPP said that, as with NotPetya, the new malware seemed to originate in accounting software and could be intended to take down networks when Ukraine celebrates its Independence Day on Aug. 24.

"This could be an indicator of a massive cyber attack preparation before National Holidays in Ukraine," it said in a statement.

In a statement, the state cyber police said they also had detected new malicious software.

The incident is "in no way connected with global cyber attacks like those that took place on June 27 of this year and is now fully under control," it said.

The state cyber police and the Security and Defence Council have said Ukraine could be targeted with a NotPetya-style attack aimed at destabilizing the country as it marks its 1991 independence from the Soviet Union.

Last Friday, the central bank said it had warned state-owned and private lenders of the appearance of new malware, spread by opening email attachments of word documents.

Ukraine - regarded by some, despite Kremlin denials, as a guinea pig for Russian state-sponsored hacks - is fighting an uphill battle in turning pockets of protection into a national strategy to keep state institutions and systemic companies safe.

Reporting by Natalia Zinets; Additional reporting by Pavel Polityuk; Writing by Alessandra Prentice; editing by Mark Heinrich and Richard Balmforth
https://uk.reuters.com/article/us-cy...-idUKKCN1B222O





India's Top Court Rules Privacy a Fundamental Right in Blow to Government
Suchitra Mohanty and Rahul Bhatia

India's top court unanimously ruled on Thursday that individual privacy is a fundamental right, a verdict that will impact everything from the way companies handle personal data to the roll-out of the world's largest biometric ID card program.

A nine-member bench of India's Supreme Court announced the ruling in a major setback for the Narendra Modi-led government, which argued that privacy was not a fundamental right protected by the constitution.

The court ordered that two earlier rulings by large benches that said privacy was not fundamental in 1954 and 1962 now stood overruled, and it declared privacy was "an intrinsic part of the right to life and liberty" and "part of the freedoms guaranteed" by the constitution.

"This is a blow to the government because the government had argued that people don't have a right to privacy," said Prashant Bhushan, a senior lawyer involved in the case.

India's law ministry was not reachable for comment, but the Law Minister Ravi Shankar Prasad is expected to weigh in on the ruling at a news conference late on Thursday.

The judgment also has a bearing on broader civil rights, as well as a law criminalizing homosexuality. Lawyers said it also impacts a ban imposed on the consumption of beef in many states and on alcohol in some states.

In his personal conclusion, Justice Sanjay Kishan Kaul wrote privacy is a fundamental right and it protects the inner sphere of an individual from interference from both state and non-state actors and lets individuals make autonomous life choices.

"The privacy of the home must protect the family, marriage, procreation and sexual orientation," Kaul wrote.

The ruling is the second landmark decision to come from the Supreme Court this week.

On Tuesday it ruled that a law allowing Muslim men to divorce their wives instantly by uttering the word "talaq" three times was unconstitutional, in a major victory for Muslim women who spent decades arguing it violated their right to equality.

The privacy judgment was delivered at the end of the tenure of the chief justice of India, Jagdeep Singh Khehar, who retires in a few days.

The ruling comes against the backdrop of a large multi-party case against the mandatory use of national identity cards, known as Aadhaar, as an infringement of privacy. There have also been concerns over data breaches.

Critics say the ID card links enough data to create a full profile of a person's spending habits, their friends, property they own and a trove of other information.

Aadhaar, which over one billion Indians have already signed up for, was set up to be a secure form of digital identification for citizens, one that they could use for government services.

But as it was rolled out, concerns arose about privacy, data security and recourse for citizens in the face of data leaks and other issues.

Over time, Aadhaar has been made mandatory for the filing of tax returns and operating bank accounts. Companies have also pushed to gain access to Aadhaar details of customers.

Those opposed to the growing demand for Aadhaar data cheered the ruling.

"Truly a victorious week for India - upholding liberty, dignity and freedom for all," Jyotiraditya Scindia, a member of parliament from the opposition Congress party, said in a tweet.

Bhushan, the senior lawyer involved in the case, said while government demands for the use of Aadhaar for tax purposes could be considered reasonable, any demands for the use of Aadhaar for travel bookings and other purchases could now be questioned in the face of the ruling.

"The fact that there was no dissent is an important thing," said Raman Chima, policy director at Access Now, which defends digital rights. "They made it clear that the government has to protect privacy."

Reporting by Rahul Bhatia and Suchitra Mohanty; Editing by Malini Menon, Euan Rocha, Nick Macfie and Kim Coghill
https://www.reuters.com/article/us-u...-idUSKCN1B3125





'Data is the New Oil': Your Personal Information is Now the World's Most Valuable Commodity

Huge amounts of data are controlled by just 5 global mega-corporations that are bigger than most governments
Ramona Pringle

There was a time that oil companies ruled the globe, but "black gold" is no longer the world's most valuable resource — it's been surpassed by data.

The five most valuable companies in the world today — Apple, Amazon, Facebook, Microsoft and Google's parent company Alphabet — have commodified data and taken over their respective sectors.

"Data is clearly the new oil," says Jonathan Taplin, director emeritus of the USC Annenberg Innovation Lab and the author of Move Fast and Break Things: How Google, Facebook and Amazon Cornered Culture and Undermined Democracy.

But with that domination comes responsibility — and jurisdictions are struggling with how to contain, regulate and protect all those ones and zeros.

For instance, Google holds an 81 per cent share of search, according to data metrics site Net Market Share.

By comparison, even at its height, Standard Oil only had a 79 per cent share of the American market before antitrust regulators stepped in, Taplin says.

Selling access

What "the big five" are selling — or not selling, as in the case of free services like Google or Facebook — is access. As we use their platforms, the corporate giants are collecting information about every aspect of our lives, our behaviour and our decision-making. All of that data gives them tremendous power. And that power begets more power, and more profit.

On one hand, the data can be used to make their tools and services better, which is good for consumers. These companies are able to learn what we want based on the way we use their products, and can adjust them in response to those needs.

"It enables certain companies with orders of magnitude more surveillance capacity than rivals to develop a 360-degree view of the strengths and vulnerabilities of their suppliers, competitors and customers," says Frank Pasquale, professor of law at the University of Maryland and author of Black Box Society.

Access to such sweeping amounts of data also allows these giants to spot trends early and move on them, which sometimes involves buying up a smaller company before it can become a competitive threat. Pasquale points out that Google/Alphabet has been using its power "to bully or take over rivals and adjacent businesses" at a rate of about "one per week since 2010."

But it's not just newer or smaller tech companies that are at risk, says Taplin. "When Google and Facebook control 88 per cent of all new internet advertising, the rest of the internet economy, including things like online journalism and music, are starved for resources."

Traditionally, this is where the antitrust regulators would step in, but in the data economy it's not so easy. What we're seeing for the first time is a clash between the concept of the nation state and these global, borderless corporations. A handful of tech giants now surpass the size and power of many governments.

For comparison sake, Facebook has almost two billion users, while Canada has a population of just over 36 million. Based on the companies' sheer scale alone, it is increasingly difficult for countries to enforce any kind of regulation, especially as the tech giants start pushing for rules that free them from local restrictions, says Open Media's Meghan Sali.

"Take, for example, NAFTA, where big tech companies are pushing to include legislation that stops countries from making rules that require the local storage of data," Sali says. "When data is stored in Canada, it's a lot easier to legislate its uses and address privacy concerns."

That's just one way economic considerations are taking precedence over consumer protection.

Pasquale adds that regulators would "certainly be able to intervene effectively" if they had more resources — money, personnel and technical capacity — with which to level the playing field. "And very simple interventions could help enormously — for example, requiring any dominant platform to pay out as wages or other compensation some percentage of revenues."

'We need the political will'

Sali also points out the similarities between the global dominance of the big five and the stranglehold of Canada's three major internet service providers — Bell, Rogers and Telus — whose dominance of the domestic market has kept out competitors and led to Canadians paying some of the highest prices for wireless internet access in the world.

"When we look at the price of data and the amount of money that's being made by big companies by reselling that data, it's certainly comparable to oil in that manner," she says. "But it's a little bit different in that data isn't a finite resource. At the end of the day, we can certainly create more data, whereas we can't create more oil."

Government could also help by managing crucial parts of the data economy as public infrastructure — a measure that has seen great success through the Community Broadband initiative, whereby government subsidies have helped build local fiber optic networks.

In other words, if the Radio-television and Telecommunications Commission (CRTC) is going to claim that every Canadian has a right to high-speed internet, then perhaps network infrastructure should be treated like roads and highways and bridges, as opposed to resting it in the hands of corporate giants.

There are ways to rein in these mega-corporations, Taplin says.

"We just need the political will," he says.
http://www.cbc.ca/news/technology/da...-oil-1.4259677





Molecular Data Storage Could Hold Every Movie Ever Made on a Rubik’s Cube
Luke Dormehl

A class of molecules known as single-molecule magnets will make future mass data storage more feasible.

Imagine being able to store upward of 200 terabits of data — the equivalent of every Hollywood movie ever — on a device measuring just one-inch square. That is not out of the realms of possibility, based on a new piece of research coming out of the University of Manchester. Scientists there recently demonstrated the ability to control the magnetism of a specific class of molecule to get them to store massive amounts of information. The bad news? To do so you need to keep your data chilled to minus-213 degrees Celsius — or 60 Kelvin.

“We have made a new molecule that holds magnetic information up to 60 K,” Dr. David Mills, a lecturer in the University of Manchester’s School of Chemistry, told Digital Trends. “This eclipses the previous record of 14 K set in 2011 and is now tantalizingly close to the temperature of liquid nitrogen, 77 K. Achieving magnetic information storage in single molecules at this temperature would make molecular data storage technologies economically viable, as liquid nitrogen is cheap and plentiful. We have studied this molecule in detail to understand why it is so much better at holding information than other molecules.”

There is a clear advantage in getting molecules to be able to store bits of binary information since this would make data storage devices much denser than they are at present. That is ideal for a world in which data is generated on an ever-increasing scale. It means that the Earth of, say, 2050 will not have to have as many Google data centers as it currently does McDonald’s.

Don’t get too excited yet, however, as a lot more engineering work needs to be carried out to turn this into a practical technology. It is unlikely that this particular molecule will ever be commercialized but the team is working to make even better magnetic molecules which could be used to carry out this task.

“Understanding in detail why this new molecule has such extraordinary magnetic properties is our current goal, as this will allow us to target new molecules with better performance,” Dr. Nick Chilton, also with the School of Chemistry, told us. “We think this has to do with molecular vibrations and are now trying to understand how these can be controlled.”

For now, you are better off sticking with these storage options. But you can still prepare for the storage world of the future by checking out the researchers’ paper, which was published in Nature.
https://www.digitaltrends.com/cool-t...-storage-cold/





Verizon Actually Just Stood Up For Your Privacy For Once
Karl Bode

For years, incumbent telcos like AT&T and Verizon quickly yelled "how high?" when asked by law enforcement or the intelligence community to help them hoover up consumer data. In fact, both companies often went well beyond what was asked of them, AT&T getting busted at one point giving the NSA direct access to absolutely every shred of data that touched the telco's network. AT&T's enthusiasm ran so deep, the company was also caught advising government on the best way to skirt privacy and wiretap law.

But with Verizon now trying to focus more on media and advertising, at least one of these telcos appears to be slightly shifting their positions.

Verizon was one of several companies last week (including Google, Apple, Facebook, and Microsoft) to inform the US government it's leaning too heavily on outdated laws from the 1970s to justify Fourth Amendment overreach. More specifically, Verizon is joining a chorus of experts, academics and companies opposing the government in the case of Carpenter v. United States, a case which focuses on whether the government can obtain your cell phone location data without a warrant.

The case is “one of the most important Fourth Amendment cases in recent memory,” Craig Silliman, Verizon’s executive vice president for public policy and general counsel, said in a post on LinkedIn. “Although the specific issue presented to the Court is about location information, the case presents a broader issue about a customer’s reasonable expectation of privacy for other types of sensitive data she shares with any third party.… Our hope is that when it decides this case, the Court will help us better apply old Fourth Amendment doctrines to an evolving digital era.”

Verizon's not just being altruistic here. The company is trying hard to pivot from stodgy old telco to Millennial-focused advertising via its acquisitions of both AOL and Yahoo -- so far with very mixed results. As such, the impression that it actual values protecting consumer privacy is a profitable brand move.

"At the end of the day, a company like Verizon isn’t going to stick its neck out if it doesn’t think that there’s a business rationale in addition to it being the right thing to do," ACLU lawyer Nathan Freed Wessler told Wired.

That said, Verizon still has an arguably atrocious track record on this subject. From its recent lobbying efforts to dismantle relatively basic FCC broadband privacy protections, to the time it was busted covertly modifying user packets to track users around the 'net without their consent, Verizon has a long way to go before earning the public's trust on this particular subject.
https://www.dslreports.com/shownews/...or-Once-140165





Ancient Science: Mysterious Babylonian Tablet Could Hold Mathematical Secrets For Today's Researchers
Josh Lowe

An ancient Babylonian tablet whose purpose has been a longstanding mystery reveals that the ancient Mesopotamian civilization beat the Greeks to the discovery of trigonometry by more than 1,000 years, researchers say—and their methodology might even hold lessons for modern-day mathematicians.

The tablet, Plimpton 322, was discovered in the early 1900s in present-day Iraq, according to Phys.org, but researchers have since puzzled over its function. It displays four columns and 15 rows of numbers in the contemporary cuneiform script composed in a base 60, or sexagesimal, system.

But Dr Daniel Mansfield of the School of Mathematics and Statistics in the University of New South Wales (UNSW) Faculty of Science, Sydney, says his research has unearthed the tablet’s true meaning. His paper, co-authored with UNSW Associate Professor Norman Wildberger, is published in Historia Mathematica.

"The huge mystery, until now, was [Plimpton 332’s] purpose—why the ancient scribes carried out the complex task of generating and sorting the numbers on the tablet,” he said.

"Our research reveals that Plimpton 322 describes the shapes of right-angle triangles using a novel kind of trigonometry based on ratios, not angles and circles. It is a fascinating mathematical work that demonstrates undoubted genius, Mansfield continued.

The calculations may have been used for architectural calculations when building pyramids or other structures.

"The tablet not only contains the world's oldest trigonometric table; it is also the only completely accurate trigonometric table, because of the very different Babylonian approach to arithmetic and geometry.”

In a video promoting the discovery, Mansfield said the 60-base system used by the Babylonians could potentially influence the way we use mathematics today, as it can facilitate more precise division.

“It’s rare that the ancient world teaches us something new,” he said.

Mansfield came across Plimpton 322 unexpectedly when gathering material for his first year students at UNSW.

He and Wildberger wanted to look into Babylonian mathematics and to explore the different historical interpretations of the tablet's meaning when they noticed that it had parallels to rational trigonometry theories found in Wildberger's book Divine Proportions: Rational Trigonometry to Universal Geometry.
http://www.newsweek.com/babylonian-t...t-maths-654978





As Coding Boot Camps Close, the Field Faces a Reality Check

Successful schools, analysts say, will increasingly be the ones that expand their programs to suit the changing needs of employers.
Steve Lohr

In the last five years, dozens of schools have popped up offering an unusual promise: Even humanities graduates can learn how to code in a few months and join the high-paying digital economy. Students and their hopeful parents shelled out as much as $26,000 seeking to jump-start a career.

But the coding boot-camp field now faces a sobering moment, as two large schools have announced plans to shut down this year — despite backing by major for-profit education companies, Kaplan and the Apollo Education Group, the parent of the University of Phoenix.

The closings are a sign that years of heady growth led to a boot-camp glut, and that the field could be in the early stages of a shakeout.

“You can imagine this becoming a big industry, but not for 90 companies,” said Michael Horn, a principal consultant at Entangled Solutions, an education research and consulting firm.

The demand from employers is shifting and the schools must adapt. Many boot camps have not evolved beyond courses in basic web development, but companies are now often looking for more advanced coding skills.

One of the casualties, Dev Bootcamp, was a pioneer. It started in San Francisco in 2012 and grew to six schools with more than 3,000 graduates. Only three years ago, Kaplan, the biggest supplier of test-preparation courses, bought Dev Bootcamp and pledged bold expansion.

It is now closing at the end of the year.

Also closing is The Iron Yard, a boot camp that was founded in Greenville, S.C., in 2013 and swiftly spread to 15 campuses, from Las Vegas to Washington, D.C. Its main financial backer is the Apollo Education Group.

Since 2013, the number of boot camp schools in the United States has tripled to more than 90, and the number of graduates will reach nearly 23,000 in 2017, a tenfold jump from 2013, according to Course Report, which tracks the industry.

Tarlin Ray, who became president of Dev Bootcamp in April, said in an email that the school offered “a high-quality program” that helped thousands of people join the high-tech economy. “But we were simply unable to find a sustainable business model,” he wrote.

Iron Yard echoed that theme. In an email, Lelia King, a spokeswoman, said that while students benefited, the company was “ultimately unable to sustain our current business model.”

Boot camp courses, aimed at adults, vary in length and cost. Some can take 26 weeks or more, and tuition can reach $26,000. The average course length is just over 14 weeks, and the average cost is $11,400, according to Course Report.

The successful schools, analysts say, will increasingly be ones that expand their programs to suit the changing needs of employers. Some have already added courses like data science, artificial intelligence, digital marketing and project management. Other steps include tailoring courses for corporations, which need to update the skills of their workers, or develop online courses.

Ryan Craig, a managing director at University Ventures, which invests in education start-ups, including Galvanize, a large boot camp, predicted that the overall market would still grow. But students, he said, would become more concentrated in the schools with the best reputations and job placement rates.

The promise of boot camps is that they are on-ramps to good jobs. But rapid expansion into new cities can leave little time to forge ties with nearby companies, the hiring market for boot camp graduates, said Liz Eggleston, co-founder of Course Report.

That message was underlined by Mr. Ray of Dev Bootcamp. While he would not discuss specifics about what happened to his school, he wrote: “We do think that as the boot camp industry continues on, it will be important to create stronger alignment with employers.”

Some boot camps cater directly to corporate customers. General Assembly, which operates 20 coding campuses and has raised $119 million in venture financing, now works with more than 100 large companies on programs to equip their employees with digital skills.

“Employer-paid programs are now a big slice of the pie” for General Assembly, about half of its business, said Jake Schwartz, its chief executive.

At Galvanize, Jim Deters, the chairman, said he recently stepped aside as chief executive to concentrate on getting more business from corporations. This year, Galvanize will have 2,000 students who pay their own tuition, and about 1,500 people in its programs tailored to — and paid for by — companies like IBM, Allstate and McKesson. “The business re-skilling marketplace has become one of our biggest drivers of growth,” Mr. Deters said.

Kaplan is not closing Metis, a data science boot camp, which has corporate training programs.

Several boot camps are deploying “blended” models with both in-person and online teaching. Entirely online courses, in theory, could deliver rapid, profitable growth. But that is a different model from the immersive, face-to-face learning that has been the hallmark of the boot camp experience.

“Online boot camp is an oxymoron,” said Mr. Craig of University Ventures. “No one has figured out how to do that yet.”

The Flatiron School in New York may have discovered one path. Founded in 2012, Flatiron has a single campus in downtown Manhattan and its main offering is a 15-week immersive coding program with a $15,000 price tag. More than 95 percent of its 1,000 graduates there have landed coding jobs.

In late 2015, the co-founders, Adam Enbar and Avi Flombaum, decided to try an online-only offering, Learn.co. The tuition is $1,500 a month. Students go at their own pace, and on average complete the course in seven months, putting in about 800 hours. Tuition charges stop after eight months — and there are instructors online 16 hours a day for help and advice.

Kailee Gray, 29, a math instructor in Fargo, N.D., seeking a career change, said she had communicated daily with instructors and participated in online study groups. On the night before a job interview, she recalled “getting panicked” and sent a message to an instructor. Soon, Rebekah Rombom, vice president for career services at Flatiron, was on the phone for a reassuring pep talk.

Ms. Gray landed the job — as have more than 95 percent of the students so far in Flatiron’s online program, according to the company and an outside audit report.

It seems a particularly high rate for an online course, especially when compared with free online courses, which only a small proportion of students complete.

The school was the subject of a Harvard Business School case study, published this year, which found that the early success of the online-only course has “expanded strategic options for Flatiron.”

But just how much is uncertain. “It’s pretty clear that they can do it at the scale they have,” said Thomas Eisenmann, a professor and lead author of the study. “What’s not clear is whether it can go from a hundred or a few hundred to thousands and thousands.”
https://www.nytimes.com/2017/08/24/t...mps-close.html





'Psychologically Scarred' Millennials are Killing Countless Industries from Napkins to Applebee's — Here are the Businesses they Like the Least
Kate Taylor

Millennials' preferences are killing dozens of industries.

There are many complex reasons millennials' preferences differ from prior generations', including less financial stability and memories of growing up during the recession.

"I think we have got a very significant psychological scar from this great recession," Morgan Stanley analyst Kimberly Greenberger told Business Insider.

Here are 19 things millennials are killing:

Casual dining chains like Buffalo Wild Wings and Applebee's

Brands such as TGI Fridays, Ruby Tuesday, and Applebee's have faced sales slumps and dozens of restaurant closures as casual-dining chains have struggled to attract customers and increase sales.

In August, Applebee's announced it would close up to 135 restaurants, in part because it focused too much on winning over millennials and forgot its "Middle America roots."

"Millennial consumers are more attracted than their elders to cooking at home, ordering delivery from restaurants, and eating quickly, in fast-casual or quick-serve restaurants," Buffalo Wild Wings CEO Sally Smith wrote in a letter to shareholders earlier this year.

Beer

In late July, Goldman Sachs downgraded both Boston Beer Company and Constellation Brands based on the data that younger consumers prefer wine and spirits to beer, as well as the fact that they're drinking less alcohol than older generations more generally.

Beer penetration fell 1% from 2016 to 2017 in the US market, while both wine and spirits were unmoved, according to Nielsen ratings.

While some argue that calling a 1% drop in penetration a beer-industry homicide case is an overreaction, small shifts have a huge financial impact on beer industry giants. Beer already lost 10% of market share to wine and hard liquor from 2006 to 2016.

Napkins

Younger consumers are opting for paper towels over napkins, according a Washington Post article from 2016.

The Post points to a survey conducted by Mintel, which highlights that only 56% of shoppers said that they bought napkins in the past six months. However, 86% surveyed said they had purchased paper towels.

Paper towels are more functional than napkins, and can be used for more purposes. And, the Post noted that millennials are more likely to eat meals out of the home, contributing to the decline.

"Breastaurant" chains like Hooters

People from the age of 18 to 24 are 19% less likely to search for breasts on pornographic website Pornhub compared to all other age groups, according to an analysis conducted by the website.

For "breastaurants" like Hooters and Twin Peaks, a loss of interest in breasts is bad for business. The number of Hooters locations in the US has dropped by more than 7% from 2012 to 2016, and sales have stagnated, according to industry reports.

Hooters has struggled to win over millennials for some time now. In 2012, the chain attempted to revamp its image with updated decor and new menu items to attract more millennial and female customers.

Cereal

Almost 40% of millennials surveyed by Mintel said that cereal was an inconvenient breakfast choice because they have to clean up after eating it, the New York Times reported in 2016.

Instead, younger consumers are turning to convenient options with minimal cleanup that can be eaten on the go, from yogurt to fast-food breakfast sandwiches.

Cereal sales dropped 5% from 2009 to 2014, despite the fact that more Americans are eating breakfast than ever before.

Companies such as Kellogg and General Mills have reported that sales have stopped falling in 2017, so cereal may not be dead just yet.

Golf

"From the golf industry statistics, we know that rounds are down," Matt Powell of industry-research firm NPD said in a video in 2016. "We know that millennials are not picking up the game, and boomers are aging out. The game is in decline."

While millennials have created new fitness crazes, like SoulCycle and barre classes, golf has failed to capture their interest in the same manner.

Motorcylces

"Our data suggests the younger Gen Y population is adopting motorcycling at a far lower rate than prior generations," AB analyst David Beckel said in a July note downgrading its rating of Harley-Davidson shares from "outperform" to "market perform."

Motorcycle sales at Harley-Davidson, which represents about half of the US big-bike market, were down 1.6% overall in 2016 versus the year before. US sales fell 3.9%.

The company shipped 262,221 motorcycles overall, which fell short of expectations of 264,000-269,000 units.

Homeownership

Homeownership is hitting record lows among millennials.

"We believe the delay in homeownership is due to tighter credit standard and lifestyle changes, including delayed marriage and children," wrote Michelle Meyer, a US economist at BAML, in a recent note.

"We do not expect these factors to change in the medium term, keeping the homeownership rate low for young adults."

Yogurt — especially light yogurt

Light yogurt sales fell 8.5% in the year ending in September 2016, dropping $200 million from roughly $1.2 billion to $1 billion, according to Nielsen data.

Wider yogurt industry sales declined 1.5%, the fourth consecutive year of falling sales.

The decline in light yogurt can be traced to a growing demand for natural, protein-rich foods that fill up health-conscious consumers, instead of simply low-calorie and low-fat options. That's been a huge help for Greek yogurt, which appeals to customers seeking a filling option packed with protein.

On the flip side of the rise of protein and organic options is the fall of sugar.

Low fat-diets were the norm in the US in the '80s and '90s. As food makers worked to cut fat from products, they began replacing it with another ingredient: sugar. As a result, "light" yogurts were often packed with sugar, yet advertised as low-fat, healthy choices.

Bars of soap

Bar soap sales fell 2.2% from 2014 to 2015, a time when the rest of the shower-and-bath category grew, according to Mintel.

And, millennials are to blame.

"Almost half (48%) of all US consumers believe bar soaps are covered in germs after use, a feeling that is particularly strong among consumers aged 18-24 (60%), as opposed to just 31% of older consumers aged 65-plus," Mintel wrote in a press release.

Diamonds

Fewer millennials are getting married and those that are are increasingly choosing nontraditional rings, CNBC reported.

As sales of diamonds have slowed globally, trade associations such as Diamond Producers Association have attempted to win over millennial customers by retooling how the jewels are branded.

Fabric softener

Liquid fabric softener sales fell 15% in the US between 2007 and 2015, the Wall Street Journal reported. Market leader Downy fell 26% in the same period.

According to Downy maker Procter & Gamble's head of global fabric care, millennials "don't even know what the product is for."

Banks

Millennials distrust financial establishments and rarely visit physical banks.

"There's a massive shift in consumer behavior and consumer trust," Rick Yang, a partner at venture-capital firm New Enterprise Associates, told Business Insider. "I think coming out of [the financial crisis], millennials have a massive distrust of existing financial services."

While banks themselves will probably never die, bank branches and physical bank locations may soon be a thing of the past.

Nearly three-quarters of millennials with a bank account visit a branch once or less per month, according to BI Intelligence data. And, slightly less than 40% of millennials do not visit physical banks at all.

Department stores like Macy's and Sears

As millennials flock to fast-fashion brands like H&M and Zara, Macy's and Sears have suffered. Sears is closing more than 300 Sears and Kmart stores this year, while Macy's plans to shutter 68.

Part of the reason is that when millennials do spend money, they're spending more on experiences like restaurants and traveling. Millennials are less drawn to aspirational, designer brands, and they're perfectly happy saving money by buying private label lines, which further hurts traditional department stores.

Designer handbags

Speaking of once popular brands, millennials are also hurting designer handbag sales.

Brands like Michael Kors and Kate Spade have been forced to sell handbags at major discounts as millennials lose interest (and lack the money to spend on the bags). In some ways, the brands' mega-popularity contributed to their downfall.

Widespread popularity is the "kiss of death for trendy fashion brands, particularly those positioned in the up-market younger consumer sectors," industry expert Robin Lewis wrote on his blog.

Gyms

While millennials like to workout, they're ditching gyms in favor of boutique, class-centric centers.

"Millennials don't want to be tied down," Megan Smyth, the CEO of FitReserve, a service that lets members book boutique studio classes, told the New York Post. "It's a spontaneous demographic."

In July, Foursquare found that mid-market gyms like 24 Hour Fitness, Snap Fitness, and New York Sports Club lost 5% of their gym visit share in the last year, as boutique fitness visits have grown.

Home-improvement stores like Home Depot and Lowe's

While people have been investing more in their homes, some experts have questioned whether millennials' reticence to buy homes could ultimately hurt these retailers.

"Millennials are redefining the American family," Jeff Fromm wrote in Forbes. "Millennials are delaying marriage and childbirth at rates never seen before. This cultural shift will have a near-term impact on housing: millennials may not need the same space, permanence, and practicality that most Americans want out of their housing."

Football

Both college football games' attendance and NFL viewership have recently declined.

Analysts said the drop could be tied to a number of things — the 2016 election, protests as NFL players have taken a knee during the national anthem, or that the game has simply gotten more boring.

However, one explanation would directly target millennials: younger people are ditching cable at an increasing rate, leaving them to watch games in groups or simply stay updated on their iPhones.

Oil

Millennials' conception of the oil industry means that it may struggle to find workers — and customers — in the future.

McKinsey found that 14% of millennials say they would not want to work in the oil and gas industry because of its negative image — a higher percentage than any industry. And, a recent survey by EY found that millennials "question the longevity of the industry ... Further, they primarily see the industry's careers as unstable, blue-collar, difficult, dangerous and harmful to society."

Teens are even more critical, with two out of three saying that the oil and gas industry causes problems instead of solving them.
http://www.businessinsider.com/mille...g-list-2017-8/





Amazon: Why A Waterfall Decline Might Be Underway
DoctoRx

Summary

• AMZN stock has entered a correction, down about 12% from its recent all-time high.

• Several of the stronger retailers recently reported either progress in e-commerce, store-based sales, and/or the interplay between order online and pick-up in store.

• Some leading chain results are highlighted, most notably WMT.

• This article suggests that the more that tomorrow's investors see these promising data, the less willing they may be to pay up for AMZN shares.

• Thus, perhaps a sharp fall in AMZN's share price may have begun.

Background

On July 31, with Amazon.com (AMZN) having closed at $1,020, Seeking Alpha published my article suggesting that AMZN might be about to crash. The title was Amazon's Stock Looks Headed For A Waterfall. Since then, the stock has done little but drop.

The main bearish thesis, which I listed as something that short sellers might wish to consider (I'm a long-only investor), was that the company was now missing EPS estimates so badly that, in the face of what I expected would actually be good results from conventional retailers, investors might soon be revaluing AMZN to more normal levels, which could lead to much lower stock prices over time. The article mentioned that AMZN's pending acquisition of Whole Foods (WFM) at a 30X or greater P/E put a valuation challenge on AMZN. Doesn't this, and AMZN's expanding chain of bookstores, suggest that e-commerce can only take AMZN "so far" and no farther? So, why the exalted P/E?

That article was written after AMZN reported its Q2 results.

Now that the retailers that are on a July quarter have weighed in, with enough sales data from Costco (COST), which is on an August quarter to also be able to discuss it, this article makes the case that this new information may show that AMZN stock has more downside risk than upside potential, and that it could be in the process of being valued more normally.

Note, I'm leaving Amazon Web Services (AWS) out of the discussion for now. Value it how you will. I'll comment on why I cannot value it later in the article. Investors who are bullish enough to own AMZN because of AWS are of course entitled to do that, but for me, that's a "tail wags dog" story.

Within retail aside from AMZN, there is a huge bifurcation. Some chains have failed, meaning they are restructuring debt and closing a number of stores. Other chains such as Macy's (M) are profitable but also closing stores and in general struggling to find their way in an omni-channel world of retailing.

However, the evolving data show that the strong retailers are, if anything, outperforming AMZN from either a P&L standpoint and or in e-commerce growth and innovation, and that AMZN may therefore be in the process of going from hunter to hunted.

I'll discuss several names to show how they are making their way forward in the current retail landscape.

Wal-Mart (WMT)

The Big Dog of global retailers commented just a bit on e-commerce in its presentation accompanying Q2 results. On p. 9, it commented that:

Multi-channel sales growth was strong, including online grocery and general merchandise pickup in stores.

Gross margin rate declined 5 basis points as savings from procuring merchandise benefited the margin rate, but were more than offset by the mix effects from our growing e-commerce business, as well as continued investments in price.

Operating expenses increased 3.9%, primarily due to investments in e-commerce and technology.

WMT is focusing heavily on e-commerce and is using its formidable computer-based sourcing and logistics skills to increase its product range and try to leapfrog AMZN in an omni-channel world where order online, deliver to home is expected to shrink as a percentage of total sales initiated online.

Supporting that thesis are just a few of the comments that the CEO and CFO made in what WMT calls its management call, as recorded (no questions taken). First, from the CEO:

In e-commerce, customers are responding favorably to our expanded assortment, which surpassed 67 million SKUs on Walmart.com...

We believe that we're uniquely positioned to grow and delight customers by providing the seamless shopping experience they desire. Having stores within 10 miles of approximately 90 percent of the U.S. population allows us to serve customers in ways that are most convenient for them. We've seen strong results from the rollout of online grocery, which is now in more than 900 U.S. locations, and we're expanding this service in many of our markets around the world.

Retail is constantly evolving and it's critical that we move even faster as the customer and competitive landscape continue to change.

All of that represents carefully-chosen summary words; note that before this quote, he presents a number of details about WMT's e-commerce efforts.

Two points from this quote may be specially worth noting. One is that WMT may be thinking of the AMZN-WFM deal in specifying how WMT's online grocery business is showing "strong results" and is already in more than twice as many stores as WFM has; with expansion of this initiative occurring globally.

The second point is what the CEO ended with: "it's critical that we move even faster..." In other words, they are doubling down, as it were, on the competition with AMZN.

Some key details were mentioned later in the same document from Brett Biggs, EVP and CFO of Wal-Mart Stores:

Let's now move on to eCommerce. As a reminder, eCommerce results include all web-initiated transactions including those through Walmart.com such as ship-to-home, ship-to-store, pick up today and online grocery, as well as transactions through Jet.com and the other sites in our family of brands.

Walmart U.S. eCommerce again performed very well on the topline as GMV [gross merchandise volume] grew 67 percent and sales increased 60 percent, including acquisitions. The majority of this growth was organic through Walmart.com, including Online Grocery, which is growing quickly [just in case you missed the CEO saying the same thing!]. We're delivering growth through an improved customer value proposition that includes free two-day shipping on millions of items and Easy Reorder, as well as an expanded assortment, now with more than 67 million SKUs - an increase of more than 30 percent from the first quarter. With Easy Reorder, we're integrating both in-store and online purchases to provide customers with a single spot to view and repurchase the items they buy most frequently.

All these initiatives and all this e-commerce growth at WMT, which was already a large e-commerce player, are going to have, in my view, to have a direct adverse effect on AMZN's growth and profit margins. Perhaps this will lead to a change in Mr. Market's perception of downside risk to the growth story at AMZN.

Before moving on, much of what trends in the stock market is driven by news flow, and AMZN may be losing some, perhaps much, of its massive dominance. Witness this Bloomberg News article that I noticed as I was preparing this article:

Wal-Mart Extends Online Grocery Home Delivery to Dallas and Orlando

Wal-Mart Stores Inc. has brought its online grocery delivery service to two more cities, extending a program that could attract new customers as it battles Amazon.com Inc. and brick-and-mortar rivals.

The world's biggest retailer is expanding the service to Orlando and Dallas in a partnership with Uber Technologies Inc., whose drivers will make the home deliveries. The service already exists in Denver, San Jose, Phoenix and Tampa.

The move is the latest step in Wal-Mart's broader e-commerce push, which includes curbside grocery pickup in more than 900 locations and two-day free shipping on millions of items. It also comes just a week after German discounter Aldi unveiled grocery home delivery in Dallas and two other U.S. cities...

Not long ago, a headline about retail may well instead have been one reinforcing the idea that AMZN was the innovator. Suddenly, it's WMT (and in the body of the article, Aldi), and WMT is doing this well before AMZN even owns WFM.

This may show that mindshare is shifting from AMZN to incumbents.

Moving on...

On Target (TGT)

I covered this just last week, in Target Reports Q2: Updating My Bullish Comments From Last Month (and in the prior month's TGT article). So, there's not a lot to say that was not said in that piece. From a much smaller sales base than WMT, the TGT news was also good regarding e-commerce. Reporting on a point TGT emphasized, last week's TGT article said this:

While the absolute numbers remain smallish, a 32% gain on top of a 16% yoy gain in Q2 last year means over a 50% jump in e-commerce sales in two years.

This looks like pretty good progress. Neither WMT nor TGT is lying down before the AMZN juggernaut; rather, they are fighting back and trying to play to their strengths of their large store bases.

I actually liked the TGT story so much relative to its P/E that I took profits on WMT (which were small but positive) and moved the capital to TGT. The main reason is that TGT has an interesting remodel of its stores ongoing and perhaps being improved upon, beginning soon. Its e-commerce progress was another reason to hope for better times at this name.

TGT grew e-commerce sales yoy faster in Q2 than AMZN did.

Costco (COST)

This is worth mentioning here because COST is booming with regard to monthly yoy total and same store sales. It is not focusing on e-commerce. Yet its yoy sales are tracking up high single digits, with very strong same store comps.

COST has taken what in my very humble opinion is an intelligent view of e-commerce. First, it wants people in its stores, for the "treasure hunt" aspect of shopping. Second, it wants to keep its investment in e-commerce simple. Thus, it wants to focus on low-hanging digital fruit and not compete with AMZN and WMT in offering massive numbers of SKUs, most of which are small sellers.

COST provides an example of a thriving store-based retailer despite the heavy investments in, and growth of, online product purchasing. I like COST shares based on relative value to the high P/E of the S&P 500 (SPY), though on an absolute P/E, or P/E to growth, ratio, it is probably just 'meh.' But we live in a relative value world, do we not?

Home Depot (HD)

This large company is doing about 6% of its sales via e-commerce, much of which involves buy online, purchase in the store. More important, HD provides an example of a company that is much larger than WFM, and that is years ahead of the AMZN-WFM combination in meeting the needs of customers with integrated online/store solutions.

When thinking of the next marginal buyer looking at customer-facing stores, i.e. retail, who actually wants some value as well as growth potential, HD, at roughly a 5% forward earnings yield, may offer stiff competition to AMZN, which offers an unpredictable forward earnings yield (but a very low one on a 12-month ahead basis), and a 0.4% TTM historical earnings yield. (Note, earnings yield is the reciprocal of the P/E expressed as a percentage.)

Between HD and COST, and WMT and TGT, investors have many choices from which to choose that offer strong finances, an earnings yield competitive with or superior to bonds, dividend payments, and various ways to potentially continue or resume succeeding despite the alleged AMZN juggernaut.

Now, some comments on two smaller fry.

"Small-box" discounters

There are two names that I own and like, which have done very well in the face of the surge of e-commerce. As opposed to the above big box names, these are smaller stores, so I call them small box chains; though TJX (TJX) especially has some larger formats.

TJX reported a modest beat-and-raise quarter last week, and the stock rallied a bit. The company reports growth in e-commerce and is investing in its capabilities. But mostly it wants and is getting customers in its stores to look around (the treasure hunt aspect). It is spending perhaps half of its ad budget on digital media, but it readily admits it is behind the curve on a full e-commerce platform. And, it does not seem to mind. TJX is a global marketer and, overall, is doing fairly well ex-US (and very well in Canada), so even as AMZN moves along internationally, TJX is able to execute ex-US against it.

A smaller but significant player, Ross Stores (ROST), is a deeper discounter than TJX. And, it has no current interest in e-commerce, yet it also reported a nice beat-and-raise quarter last week.

All the above names, plus certain others, represent resilience in the face of the rise of AMZN and the rise of e-commerce. They offer investors alternatives to AMZN for what are in today's market reasonable valuations, plus dividends, and generally share shrinkage as well.

Before summing up and including some comments on AWS, a few points should be emphasized. These are my opinion, of course.

AMZN's current version of E-commerce is not so efficient

"Buy online, deliver to home" has structural problems.

The "last mile" is very costly; i.e., getting one or more packages individually to a home. Then, there are issues with all items of what to do if the customer is not home. Will the package be stolen or damaged by weather or an animal if left at the doorstep? There are many other issues. Returns are costly and more frequent if an item is purchased without seeing it up close and personal. The issue of one missing piece of merchandise from a larger order is an issue. Does the retailer send the five items that are in stock and then, separately, send the sixth that it found was out of stock when it took the order (this happens)? Whereas, if a shopper comes to the store and finds 5/6 items desired, that's not so bad. Often, a substitute will do; or another store will have the item; or, it can wait; or, it can be ordered online; etc.

The last mile problem is so expensive that WMT is already testing home delivery by its employees. It is also spending money to improve its kiosk systems for automated pick-up of orders placed remotely.

Some of my prior AMZN articles have made the analogy between the rise of remote ordering, i.e. from the old Sears, Roebuck and Montgomery Ward. The analogy was that over time, stores were simply better ways to get product to customers than catalog shopping, which was a prior era's version of Internet-based information presentation. I continue to believe that's the case today and that AMZN is implying just that by its growing chain of brick-and-mortar bookstores and the WFM purchase. One of several reasons to think this way is that most people, even in "rich" countries, value their free time as having almost no monetary value. Meaning, we are happy to provide the "last mile" delivery via, usually, our cars or trucks, rather than incur the cost of a delivery vehicle and person coming to our residence. Also, in e-commerce, product has to be collected from warehouses, assembled in one or more containers, wrapped in a way that protects the merchandise, and labeled. That's costly. Whereas in a physical store, either the retailer brings the merchandise to a shelf from a back room, or straight from the truck if it's a warehouse-type store; or the brand company puts the merchandise on the shelves. Then, the customer walks around the store, picks what's desired, does in-person comparison shopping if desired, maybe makes an impulse buy or two, and then checks out: no packaging needed other than some cheap bags if that much. Then, after the customer completes the purchase, returns are not usually a problem for many classes of goods. Lots of costs, errors, and other inefficiencies are avoided this way.

For these and other reasons, including that we are social animals and like to get out of the house now and then other than to go to work, I am skeptical that e-commerce is going to devour brick-and-mortar stores. And, I think that AMZN's strategy is supportive of my views.
Concluding comments

What's AMZN worth?

Well, no one even knows what AWS is worth, much less what AMZN as a whole earn over time. We know the sales and gross margins for AWS. But I think we do not know if internally within AMZN, whether AWS is credited with revenues from AMZN's retail division, certainly the largest "customer" of AWS. All we have, I believe, are consolidated P&L and margin data - and these are not too impressive.

AMZN also does not break out its R&D expenditures separately. We also know little about the economics of AMZN's Kindle/Alexa etc. line of proprietary electronics.

Call me unduly cautious, but I give a valuation haircut to companies that tell investors less rather than more. So, when looking at AMZN's extreme valuations by all measures I use, its sharply declining earnings estimates, and the growing competition both in e-commerce and from traditional discounters, I tend to suspect that tomorrow's buyers in the stock market may back away. Why not buy a bargain, perhaps TGT, perhaps WMT, perhaps TJX, etc.? Why overweight AMZN's price to earnings ratio so heavily?

A rebalancing could be underway, just as occurred between tech/telecom and Old Economy stocks beginning in 2000.

Ultimately, perhaps a waterfall decline could be underway. I think that way in this case because: where's the valuation bottom for AMZN if buyers turn skeptical? 100X P/E? 50X? Etc.

Two additional notes are worth stating. First, I am not an AMZN short in any way, nor do I "work with" anyone (nothing like that at all). I simply write what I think and submit articles to Seeking Alpha for its editorial review and potential publication. Next, I'm not an Amazon.com basher in terms of its success as a company, which is remarkable. I am just criticizing the stock price.

In summary, I hypothesize that the growing examples of resilience and growth, both in e-commerce and in brick-and-mortar retailing, may be putting pressure on AMZN's stock price and that this pressure may continue much farther in price, given AMZN's extreme valuation and sharply diminished forward earnings estimates. AMZN is in a short-term downtrend, and since Mr. Market rings no bells when a durable rally is to begin, I think it is possible that a cascading, waterfall-type decline may have started. And, if not now, one could begin at any time. As a long-only investor, I do find the AMZN story and the changes it has catalyzed fascinating and have placed some chips on some of its competitors. I will wish good luck to all investors in all names in this dynamic situation.

Thanks for reading and sharing any views you wish to contribute.

(Submitted Monday at 2:30 PM with AMZN around $950.)

Disclosure: I am/we are long COST, HD, ROST, TGT, TJX.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Not investment advice. I am not an investment adviser.
https://seekingalpha.com/article/410...might-underway





Thanks to Amazon, Seattle is Now America’s Biggest Company Town

Amazon so dominates Seattle that it has as much office space as the city’s next 40 biggest employers combined. And that’s only the beginning: Amazon’s Seattle footprint of 8.1 million square feet is expected to soar to more than 12 million square feet within five years.
Mike Rosenberg and Ángel González

Amazon’s extraordinary growth has turned Seattle into the biggest company town in America.

Amazon now occupies a mind-boggling 19 percent of all prime office space in the city, the most for any employer in a major U.S. city, according to a new analysis conducted for The Seattle Times.

Amazon’s footprint in Seattle is more than twice as large as any other company in any other big U.S. city, and the e-commerce giant’s expansion here is just getting started.

The swarms of 20-somethings crowding into South Lake Union every morning represent an urban campus that is unparalleled in the United States — and they have helped transform Seattle, for better or worse. Amazon’s rapid rise has fueled an economy that has driven up wages and lowered unemployment, but also produced gridlock on the roads and sky-high housing prices.

And while Seattle’s booming economy is often attributed to a wide variety of factors, increasingly, it’s all about one company.

Amazon now occupies more office space than the next 40 biggest employers in the city combined.

And that’s only the beginning: Amazon’s Seattle footprint of 8.1 million square feet is expected to soar to more than 12 million square feet within five years.

Amazon’s supremacy in e-commerce and cloud computing has translated, locally, into an avalanche of glass, steel, people and money. It’s given Seattle more prominence as a magnet for talent from all over the world, and reshaped formerly forlorn parts of the city, into vibrant live-work-and-play neighborhoods.

The company’s unparalleled impact in determining Seattle’s fortunes may give some pause to those who experienced the downturn of the 1970s, when the shine of “Jet City” was tarnished as Boeing cut about two-thirds of its huge local workforce.

“Seattle’s been through this before,” said Tracey Seslen, a professor at the University of Washington’s Foster School of Business. “If Amazon were to leave, that would create a giant hole in their wake.”

However, unlike Boeing, whose local operations focus on the single business of building airplanes, Amazon runs a vast web of mutually reinforcing but diverse businesses, from selling computing power, to retailing nearly everything, to publishing books and producing films.

John Schoettler, Amazon’s director of real estate, says that all he’s experienced in his nearly two decades at Amazon is “steady, continued growth,” the result of the company’s zealous focus on satisfying customers.

The legacy of what so far amounts to $4 billion spent by the company on real estate here will be long-lasting, he said: “These buildings will stand for hundreds of years.”

How we got here

For this story, the real-estate data firm CoStar provided a list of all office tenants in the nation’s 20 biggest cities by population, looking at only Class A offices, the modern buildings used by the vast majority of major employers.

While other company campuses may be larger and more dominant in some suburbs — think Microsoft in Redmond, or Apple, Google and Facebook in Silicon Valley — in big cities, corporate tenancy is generally fragmented.

For example, financial giant Citi has 3.7 million square feet in New York — making it the second-largest major-city office tenant in absolute terms after Amazon. But it represents less than 3 percent of Class A office space in the Big Apple.

That’s typical: In most big cities, the top employer has less than 5 percent of local office space.

Among the country’s largest 20 cities, only Columbus, Ohio — where insurer Nationwide occupies 16 percent of office space — has a situation comparable in its dominance to Amazon. But it’s still less than half of Amazon’s total square footage.

In Seattle itself, Amazon is in a league of its own. Its footprint is nearly 20 times greater than that of the next-biggest employer.

Next in size after Amazon, Safeco Insurance and the University of Washington each occupy about 400,000 square feet of office space in Seattle, followed by several companies with about 300,000 square feet each: Tableau, Zillow, Zulily, Nordstrom, F5 Networks, Facebook and the U.S. Department of Labor.

Before its collapse last decade, Washington Mutual occupied about 1.6 million square feet downtown, more than any other company. It took years for the downtown office market to recover after WaMu was absorbed by JPMorgan Chase and its headquarters employees were dispersed. The market only fully bounced back once the recession was fully in the rearview mirror and Amazon began expanding earlier this decade.

‘A sea of parking lots’

Amazon got its start in a Bellevue garage in 1994, and it first grew without much of a plan — its employees were scattered in various downtown Seattle buildings and in the former Pacific Medical Center building on Beacon Hill. When Schoettler, the Amazon real-estate executive, joined the company in 2001, it had 630,000 square feet in Seattle.

In 2005, Schoettler said, he told CEO Jeff Bezos that the company needed a plan, and Bezos agreed. His only condition was that Amazon would stay in downtown Seattle, Schoettler said.

That coincided with the reversal of a decades-long outflow from U.S. cities to their suburbs: By staying in the urban core, Amazon would attract members of the hip creative class.

“It was a very conscious decision we made,” Schoettler said.

The easiest place for Amazon to grow into was South Lake Union. “It was essentially a sea of parking lots,” Ada Healy, vice president of real estate at Vulcan, billionaire Paul Allen’s real-estate firm — which built much of Amazon’s campus — said at a recent real-estate conference.

Allen had paid for 11.5 acres he intended to donate to an urban park project called the Seattle Commons. But when voters turned it down — twice, most recently in 1996 — the land went to Allen. His Vulcan development company then gobbled up more land in the neighborhood over the following decade, giving it about 60 acres.

Amazon’s first request was for about 2 million square feet, to be delivered in 2010. That initial expansion, Schoettler said at the real-estate conference, “was supposed to last us through 2016.”

As it turned out, by then the company would have three times as much.

That’s because its Seattle payroll was growing even faster than expected. The company now employs about 40,000 employees in Seattle, up from 5,000 in 2010.

Now it is by far the largest employer in the city. Under Amazon’s current plans, there will be room in Seattle for more than 55,000 Amazonians at the beginning of next decade.

Amazon later acquired another 2 million square feet from Vulcan, and some 3.3 million square feet from Clise Properties in the Denny Regrade, formerly a realm of cheap motels and car dealerships. There, Amazon is building the epicenter of its campus around three 40-story towers and three giant spheres.

Altogether, Amazon occupies or plans to be in about three dozen office buildings in Seattle.

This breakneck rate of expansion, in contiguous land, “would be difficult to do in a lot of other metropolitan areas,” Schoettler said.

Amazon’s expansion has led, in the short time since the end of the recession, to a “record level of private investment,” as well as significant levels of public infrastructure investment, according to John Scholes, CEO of the Downtown Seattle Association.

Over the last decade, South Lake Union has seen $668 million in infrastructure improvements, from a new electrical substation under construction to the revamped Mercer Street to a new streetcar line to upgraded parks. About one-sixth of the cost has come from private investment, the rest from ratepayers and public funds.

Housing, traffic impacts

Amazon has become the go-to scapegoat for people complaining about Seattle’s problems associated with growth, like housing prices and clogged streets. And while it’s certainly not the only reason Seattle is bursting at the seams, Amazon makes up a disproportionate share of the city’s rapid growth.

Apartment rents this year are 63 percent higher than in 2010, as Seattle has become the fastest-growing city in the country.

Home costs are rising faster here than anywhere in the nation, and have doubled in the past five years, pushing the middle class to surrounding, less expensive towns.

Seattle now also has the nation’s third-highest concentration of mega-commuters — people traveling at least 90 minutes each way to work. Their numbers have grown 72 percent in five years.

Buses are more packed than ever, and lines that run along the Amazon campus are often standing-room-only during rush hour; Metro drivers at times have to leave commuters waiting outside an Amazon office because their buses are full. Local officials even added buses to accommodate the crush of Amazon interns that arrived this summer.

“It’s hard to keep pace in terms of development of infrastructure,” said Simon Stevenson, the director of the Runstad Center for Real Estate Studies at the University of Washington. But overall, “the positives, economically, outweigh the potential of the downside.”

Wages here are rising faster than anywhere else in the country, driven by Amazon’s hiring binge of employees making six figures. Unemployment is near record lows.

Local celebrity chef Tom Douglas, who operates 16 restaurants in the area, including several in the South Lake Union epicenter of Amazon’s boom, has seen the transformation since he arrived in Seattle in 1984.

He says that despite the traffic and high cost of living, he’d rather have the growth happening here than in another city.

“There’s this romantic notion about Seattle. I’ve been here long enough to see both sides of this,” he said. Douglas recalled how the opening of Dahlia Lounge on Fourth Avenue, in 1989, “was a tough go.”

“There were crackheads in the 7-Eleven next door to us. We barely made it,” he said. “We should be thankful for the prosperity we have right now. I think we should embrace it.”

Amazon has also begun turning around the reputation that it’s done little to alleviate the problems stemming from Seattle’s growth. The company recently said it would house a homeless shelter in one of its new offices and is offering nonprofits space for restaurants in some of its other buildings. It donated $10 million to the University of Washington last fall, created plazas for public use and has helped underwrite the South Lake Union streetcar.

A real-estate revolution

Amazon’s growth has been so substantial that it can single-handedly skew the city’s core office market, said Matthew Gardner, the chief economist of Windermere Real Estate.

In the last quarter of 2016, for instance, all non-Amazon employers in Seattle’s greater downtown region shrank by a combined 150,000 square feet of office space. But Amazon gained 408,000 square feet by itself, making it a positive quarter for the market overall.

“They’re kind of almost juicing the market in some respects,” Gardner said.

Amazon’s supercharged growth has made it harder for other companies to find available offices in the entire downtown core, said Eric Blohm, a senior managing director for Savills Studley, which represents companies looking for office space.

The company’s expansive effect is being felt well beyond the South Lake Union and Denny Regrade neighborhoods. Amazon recently leased 400,000 square feet in Bellevue, and various real-estate sources said the company is interested in taking over the entire office portion of a forthcoming 58-story downtown Seattle skyscraper at Rainier Square, scheduled to open in 2019. Amazon declined to comment on the potential expansion.

If that move happens, it would have a cascading effect on availability for other businesses in the core of downtown, outside of South Lake Union, Blohm said.

Previously, he said, “A landlord in that (downtown) market couldn’t really say, ‘Oh we’re holding out for Amazon’ … Now they would have some ammunition to say that.”

Amazon’s growing mass has also created a gravitational pull for other big tech companies on the prowl for employees. Google and Facebook have set up big offices in Seattle’s urban core, and by the end of the decade they are both poised to be among the top 10 tenants in the city.

Apple, Airbnb, Uber, the makers of Snapchat and others have also set up shop downtown following Amazon’s success in recruiting engineering talent.

That, said Seslen, the University of Washington professor, helps strengthen the local tech community.

Because Amazon does not have an isolated suburban campus like Microsoft, “there’s more opportunity for employees at Amazon to network with their peers at other companies,” she said.

But that influx of deep-pocketed tech giants also makes it more difficult and expensive for smaller businesses to find space.

“Some landlords aren’t even talking to us about (leasing) full floors,” Blohm said. “They’re holding out for the full building user. Or they’ll say, ‘Get in line, you’re third in line, we’re talking with other people.’ ”

Revitalizing retail

Although Amazon, the world’s largest e-commerce company, has been long criticized for destroying Main Street retail jobs, in Seattle’s case the influx of Amazon jobs has been accompanied by a boom in local retail.

Between 2010 and 2015, retail sales in downtown Seattle have grown more than 19 percent annually — much faster than in nearby cities, according to the Downtown Seattle Association. Just in 2015, sales spiked 27.5 percent to some $1.4 billion. By comparison, Bellevue sales grew by 13.3 percent and Redmond’s by 5.7 percent that year.

Scholes, the Downtown Seattle Association president, says there’s been a shift toward beverage and food services, a corollary of the expanding downtown residential population, many of them well-paid.

Even department stores — a category that’s been eviscerated by Amazon’s success elsewhere — have been buoyed here by downtown Seattle’s increasing hubbub. Their 2015 sales rose 224 percent from the recession’s tail end in 2010, while across the lake in Bellevue, sales grew 64 percent.

Stevenson, the UW real-estate expert, said that localized retail surge is the result of Amazon breaking with the suburban campus tradition of software companies.

“Actually the benefit to downtown is enormous,” he said. “The development and revitalization would not have happened this quick without Amazon moving there and expanding that much.”
http://www.seattletimes.com/business...-company-town/





Why Didn't Electricity Immediately Change Manufacturing?
Tim Harford

For investors in Boo.com, WebVan and eToys, the bursting of the dotcom bubble came as a bit of a shock.

Companies like this raised vast sums on the promise that the worldwide web would change everything. Then, in the spring of 2000, stock markets collapsed.

Some economists had long been sceptical about the promise of computers. In 1987, we didn't have the web, but spreadsheets and databases were appearing in every workplace - and having, it seemed, no impact whatsoever.

The leading thinker on economic growth, Robert Solow, famously quipped: "You can see the computer age everywhere but in the productivity statistics."

It's not easy to track the overall economic impact of innovation but the best measure we have is something called "total factor productivity".

When it's growing, that means the economy is somehow squeezing more output out of inputs, such as machinery, human labour and education.
The productivity paradox

In the 1980s, when Robert Solow was writing, it was growing at the slowest rate for decades - slower even than during the Great Depression. Technology seemed to be booming but productivity was almost stagnant.

Economists called it the "productivity paradox".

For a hint about what was going on, rewind 100 years. Another remarkable new technology was proving disappointing: electricity.

Some corporations were investing in electric dynamos and motors and installing them in the workplace. Yet the expected surge in productivity did not come.

50 Things That Made the Modern Economy highlights the inventions, ideas and innovations which have helped create the economic world in which we live.

It is broadcast on the BBC World Service. You can find more information about the programme's sources and listen online or subscribe to the programme podcast.

The potential for electricity seemed clear.

Thomas Edison and Joseph Swan independently invented usable light bulbs in the late 1870s.

In 1881, Edison built electricity generating stations at Pearl Street in Manhattan and Holborn in London.

Within a year, he was selling electricity as a commodity. A year later, the first electric motors were driving manufacturing machinery.

Yet by 1900, less than 5% of mechanical drive power in American factories was coming from electric motors. The age of steam lingered.

A steam-powered factory must have been awe-inspiring.

The mechanical power came from a single massive steam engine, which turned a central steel drive shaft that ran along the length of the factory. Sometimes it would run outside and into a second building.

Subsidiary shafts, connected via belts and gears, drove hammers, punches, presses and looms. The belts could even transfer power vertically through a hole in the ceiling to a second or even third floor.

Expensive "belt towers" enclosed them to prevent fires from spreading through the gaps. Everything was continually lubricated by thousands of drip oilers.

Steam engines rarely stopped. If a single machine in the factory needed to run, the coal fires needed to be fed.

The cogs whirred, the shafts span and the belts churned up the grease and the dust, and there was always the risk that a worker might snag a sleeve or bootlace and be dragged into the relentless, all-embracing machine.

Some factory owners did replace steam engines with electric motors, drawing clean and modern power from a nearby generating station.
Revolutionary impact

But given the huge investment this involved, they were often disappointed with the savings. Until about 1910, plenty of entrepreneurs looked at the new electrical drive system and opted for good old-fashioned steam.

Why? Because to take advantage of electricity, factory owners had to think in a very different way. They could, of course, use an electric motor in the same way as they used steam engines. It would slot right into their old systems.

But electric motors could do much more. Electricity allowed power to be delivered exactly where and when it was needed.

Small steam engines were hopelessly inefficient but small electric motors worked just fine. So a factory could contain several smaller motors, each driving a small drive shaft.

As the technology developed, every workbench could have its own machine tool with its own little electric motor.

Power wasn't transmitted through a single, massive spinning drive shaft but through wires.

A factory powered by steam needed to be sturdy enough to carry huge steel drive shafts. One powered by electricity could be light and airy.

Steam-powered factories had to be arranged on the logic of the driveshaft. Electricity meant you could organise factories on the logic of a production line.

More efficient

Old factories were dark and dense, packed around the shafts. New factories could spread out, with wings and windows allowing natural light and air.

In the old factories, the steam engine set the pace. In the new factories, workers could do so.

Factories could be cleaner and safer - and more efficient, because machines needed to run only when they were being used.

But you couldn't get these results simply by ripping out the steam engine and replacing it with an electric motor. You needed to change everything: the architecture and the production process.

And because workers had more autonomy and flexibility, you even had to change the way they were recruited, trained and paid.

Factory owners hesitated, for understandable reasons.

Of course they didn't want to scrap their existing capital. But maybe, too, they simply struggled to think through the implications of a world where everything needed to adapt to the new technology.

In the end, change happened. It was unavoidable.

Mains electricity became cheaper and more reliable. American workers become more expensive thanks to a series of new laws that limited immigration from a war-torn Europe.

Leap forward

Average wages soared and hiring staff became more about quality and less about quantity.

Trained workers could use the autonomy that electricity gave them. And as more factory owners figured out how to make the most of electric motors, new ideas about manufacturing spread.

Come the 1920s, productivity in American manufacturing soared in a way never seen before or since.

You would think that kind of leap forward must be explained by a new technology. But no.

The economic historian Paul David gives much of the credit to the fact that manufacturers had finally figured out how to use technology that was nearly 50 years old.

Which puts Robert Solow's quip in a new light.

By 2000 - about 50 years after the first computer program - productivity was picking up a bit.

Two economists, Eric Brynjolfsson and Lorin Hitt, published research showing that many companies had invested in computers for little or no reward while others had reaped big benefits.

Time and imagination

What explained the difference was whether the companies had been willing to reorganise to take advantage of what computers had to offer.

That often meant decentralising, outsourcing, streamlining supply chains and offering more choice to customers.

You couldn't just take your old systems and add better computers. You needed to do things differently.

The web is younger still. It was barely a decade old when the dotcom bubble burst.

When the electric dynamo was as old as the web is now, factory owners were still attached to steam. The really big changes were only just appearing on the horizon.

The thing about a revolutionary technology is that it changes everything - that's why we call it revolutionary. And changing everything takes time and imagination and courage - and sometimes just a lot of hard work.
http://www.bbc.com/news/business-40673694





DIY Powerwall Builders Are Using Recycled Laptop Batteries to Power Their Homes
Louise Matsakis

Who needs Tesla?

In May of 2015, Elon Musk unveiled Tesla's Powerwall. The battery allows homeowners to store electricity, either from the grid or solar panels. The tech was alluring to those interested in alternative energy, but for many, the starting price of $3,000 was too steep. The battery could only store up to 10 kWh of electricity, or around a third of the amount the average American household consumes a day (the newer version can hold up to 14 kWh).

For some alternative energy enthusiasts, Musk's deal wasn't good enough. Instead of buying Tesla's Powerwall, they build their own DIY versions using recycled batteries for a fraction of the cost. Then, naturally, they share their creations and swap knowledge with other hobbyists across the internet. DIY powerwall enthusiasts congregate on a dedicated forum, in Facebook groups, and on YouTube. They live all over the world: I spoke to makers on three different continents and a half dozen time zones.

"It's the future. It's clean, simple, efficient and powerful," Jehu Garcia, one of the most popular powerwall builders, told me. He and people like him are deciding for themselves what the future of alternative energy will look like, instead of waiting for technology companies to shape it for them. "The end result is being able to rely on something I not only built myself but understand the ins and outs of to power some or all of my electricity in my home. That is inspiring," Joe Williams, another powerwall builder, told me.

Almost all of the hobbyists I talked to built rigs capable of storing far more energy than the Powerwall Tesla makes. (A spokesperson for Tesla declined to comment.) A French Diypowerwalls.com forum member, who goes by Glubux, said his powerwall can store 28 kWh. "I run all the house with it, in fact I even bought an electric oven and induction cooking plate to use the extra energy during summer," they explained.

Peter Matthews, an Australian YouTuber and one of the most central figures of the DIY powerwall scene, built a gigantic battery that can store 40 kWh of energy. It harvests power from over 40 solar panels on his roof. The system powers nearly his whole home: "The only things I don't run are the big air conditioners and the water heating system," he told me over Skype. Matthews created both DIYpowerwalls.com and the most popular powerwall Facebook group.

I also spoke to Daniel Römer, another YouTuber, who built one of the biggest DIY powerwalls I could find. His battery has over 22,500 cells, which he says can store more than 100 kWh—10 times as much energy as Tesla's original Powerwall. The Swedish maker also uses it to harness energy from solar panels: "My system is built to be able to run my whole house 10 out of 12 months," he told me in an email.

Many of the makers I spoke to said they were inspired by Garcia, who is likely the most popular battery hobbyist online. The California-based YouTuber has plans to build what could one day be one of the biggest privately owned sources of power in the US. The giant battery system will be able to store 1 megawatt of power—1000 kWh, he says. "We're going to power a recycling facility," he told me.

Becoming a battery hoarder

Most of the hobbyists I spoke with used 18650 lithium-ion batteries for their projects. They're usually encased in colorful plastic coating and can be found inside electronics like laptops. One of the biggest challenges of building a powerwall is stockpiling the hundreds or thousands of 18650 cells needed to build a battery capable of storing a significant amount of power.

If you buy them off the shelf, they can cost more than $5 a piece, and rates on second-hand sites like eBay aren't much better. At that price, you could end up paying more to build your own powerwall than just buying Tesla's.

The powerwall makers I spoke to instead often relied on recycled batteries, which they get from old Dell, HP, Lenovo, and LG laptops (among other manufacturers). YouTube is full of videos explaining how to crack open an old laptop battery to harvest its cells.

People often just throw away old laptop batteries, Garcia said. "I thought that's incredibly wasteful because everyone online is showing that you can harvest these cells and reuse them."

He's right. The old batteries he and other powerwall builders collect would likely end up in a landfill if they weren't reused. "Approximately 95 percent of consumer batteries sold in the US are not recycled and are ultimately thrown away," Carl E. Smith, the CEO and president of Call2Recycle, a leading battery recycling organization, told me in an email. "Virtually all batteries can be recycled into valuable secondary products which is the biggest reason why they should not be landfilled and should be recycled instead," he said.

It's often extremely time consuming to gather enough cells to build a powerwall. "In the early days I spent like 5 or 6 hours a week calling people," Matthews, the Australian powerwall builder, told me. "I drove hundreds of kilometers each way to pick up batteries."

Part of the problem is that not many laptops get recycled in the first place, Jason Linnell, the executive director of the National Center for Electronics Recycling told me on a phone call. He said that people may be simply storing their old laptops in their homes: "To be honest, laptops don't come in in huge quantities right now for whatever reason," he explained.

Garcia told me old laptop batteries can be so scarce that he's seen their prices go up since people started building their own powerwalls. "The market was driven because so many people had interest in it," he explained. "So it became really hard for me to get deals on these batteries."

Another problem is that laptop manufacturers don't provide old batteries directly to consumers. "I'm hoping we're going to push these companies to be okay with using and reclaiming these batteries," Garcia said. "It's complicated with all the rules, the regulations, the lawyers."

When I reached out to the laptop manufacturers, both Dell and HP discouraged hobbyists from reusing their batteries. "Dell laptop batteries are designed to be used within Dell-branded products only and we do not recommend or endorse any other use," a spokesperson from Dell told Motherboard in an email.

"HP battery packs are designed for use in HP products and we don't recommend their use in applications we have not designed and qualified them for," a spokesperson from HP also said in an email. Lenovo declined to comment, and LG did not respond to a request for comment in time for publication.

Building a powerwall

Gathering enough batteries is only the first step to building a DIY powerwall. Every cell then has to be tested—not all are safe enough to be used, several hobbyists told me. Lithium-ion batteries have a limited lifespan: Some laptop batteries harvested end up having too little capacity to be used.

"You basically get the batteries, you crack them open, you test voltage to see where they're at and then you cycle them," Garcia said.

"Cycling" a battery means depleting its energy completely, then recharging it to capacity again. "These things are old...you kind of have to wake them up by cycling them," he explained.

Once you have enough quality batteries, makers arrange the 18650 cells into holders or "packs." Online suppliers offer pre-made battery holders, but many powerwall builders prefer to design and build their own. They're often crafted so that if one cell goes bad, it can be replaced without having to take apart the entire rig.

Then, "busbars," or strips of metal that can conduct electricity, are added to the top of the pack. Matthews, the powerwall builder in Australia used recycled copper in order to make his, for example. Once the busbars are added, the individual cells are then soldered together.

After enough battery packs are assembled, the completed powerwall is hooked up to an inverter and mounted to the inside of a shed or outside structure. Most hobbyists I spoke to said they don't keep their powerwalls inside their homes for safety reasons or to comply with local regulations.

Don't burn the house down

One of the most frequent topics that came up in my conversations with powerwall makers was safety. Fusing together hundreds of recycled lithium-ion batteries is dangerous, and could cause a fire if done incorrectly.

On the DIYpowerwalls forum, there are dozens of threads dedicated to preventing these massive, homemade electronic devices from catching ablaze. YouTube too is littered with videos warning powerwall builders that their projects are unsafe.

DIY powerwall makers often aren't engineers or electricians. Most, including the most popular—like Jehu Garcia—lack formal training altogether. But they remain mostly unfazed by safety concerns, and said that more recently, makers have pushed each other to engineer more safeguards into their rigs.

"There's a lot of videos online where they say: 'Let me show you how dangerous these batteries are,'" Garcia explained. "But what they're doing is sawing them in half or pushing a ton of energy into them."

There was "a lot of negativity in the beginning," Williams said. "All of that 'you'll burn your house down' type of stuff."

Over time, and as well-made DIY powerwalls have proven to be capable of storing power safely, the community has become more positive. Recently, there's been a push to adopt battery management systems (BMS), which can monitor a powerwall and notify its owner when it's getting too hot, for example.

"I do recommend to have some kind of BMS or monitoring that automatically or partly can protect the cells from over and under charge including shorts," Römer, the powerwall maker from Sweden, said. "I run Batrium BMS with special designed software that controls my 4 units including disconnecting the battery banks if something goes wrong."

"I think the liability has grown. Someone is going to burn their house down if we don't promote a good quality safety system for these batteries," Garcia told me.

Every powerwall builder I talked to said developing their own source of alternative energy was worth the risks and significant resources involved. The payoff amounted to more than just dollars saved on utility bills—it's given powerwall builders a community.

"I guess the most inspiring thing about building a Powerwall is all the different people from around the world getting together and figuring things out," Williams said.
https://motherboard.vice.com/en_us/a...er-their-homes





Mini-Antennas Could Power Brain-Computer Interfaces, Medical Devices
Matthew Hutson

Engineers have figured out how to make antennas for wireless communication 100 times smaller than their current size, an advance that could lead to tiny brain implants, micro–medical devices, or phones you can wear on your finger. The brain implants in particular are “like science fiction,” says study author Nian Sun, an electrical engineer and materials scientist at Northeastern University in Boston. But that hasn’t stopped him from trying to make them a reality.

The new mini-antennas play off the difference between electromagnetic (EM) waves, such as light and radio waves, and acoustic waves, such as sound and inaudible vibrations. EM waves are fluctuations in an electromagnetic field, and they travel at light speed—an astounding 300,000,000 meters per second. Acoustic waves are the jiggling of matter, and they travel at the much slower speed of sound—in a solid, typically a few thousand meters per second. So, at any given frequency, an EM wave has a much longer wavelength than an acoustic wave.

Antennas receive information by resonating with EM waves, which they convert into electrical voltage. For such resonance to occur, a traditional antenna's length must roughly match the wavelength of the EM wave it receives, meaning that the antenna must be relatively big. However, like a guitar string, an antenna can also resonate with acoustic waves. The new antennas take advantage of this fact. They will pick up EM waves of a given frequency if its size matches the wavelength of the much shorter acoustic waves of the same frequency. That means that that for any given signal frequency, the antennas can be much smaller.

The trick is, of course, to quickly turn the incoming EM waves into acoustic waves. To do that, the two-part antenna employs a thin sheet of a so-called piezomagnetic material, which expands and contracts when exposed to a magnetic field. If it's the right size and shape, the sheet efficiently converts the incoming EM wave to acoustic vibrations. That piezomagnetic material is then attached to a piezoelectric material, which converts the vibrations to an oscillating electrical voltage. When the antenna sends out a signal, information travels in the reverse direction, from electrical voltage to vibrations to EM waves. The biggest challenge, Sun says, was finding the right piezomagnetic material—he settled on a combination of iron, gallium, and boron—and then producing it at high quality.

The team created two kinds of acoustic antennas. One has a circular membrane, which works for frequencies in the gigahertz range, including those for WiFi. The other has a rectangular membrane, suitable for megahertz frequencies used for TV and radio. Each is less than a millimeter across, and both can be manufactured together on a single chip. When researchers tested one of the antennas in a specially insulated room, they found that compared to a conventional ring antenna of the same size, it sent and received 2.5 gigahertz signals about 100,000 times more efficiently, they report today in Nature Communications.

“This work has brought the original concept one big step closer to reality,” says Y. Ethan Wang, an electrical engineer at the University of California, Los Angeles, who helped develop the idea, but did not work on the new study. Rudy Diaz, an electrical engineer at Arizona State University in Tempe, likes the concept and execution, but he suspects that in a consumer device or inside the body the antennas will give off too much heat because of their high energy density. Wang notes that the acoustic antennas are tricky to manufacture, and in many cases larger conventional antennas will do just fine.

Still, Sun is pursuing practical applications. Tiny antennas could reduce the size of cellphones, shrink satellites, connect tiny objects to the so-called internet of things, or be swallowed or implanted for medical monitoring or personal identification. He’s shrinking kilohertz-frequency antennas—good for communicating through the ground or water—from cables thousands of meters long to palm-sized devices. Such antennas could link people on Earth’s surface to submarines or miners. With a neurosurgeon at Massachusetts General Hospital, he’s also creating brain implants for reading or controlling neural activity—helpful for diagnosing and treating people with epilepsy, or eventually for building those sci-fi brain-computer interfaces.
https://www.sciencemag.org/news/2017...edical-devices





Nikon’s New D850 has 45.7 Megapixels and Enough Features to Tempt Canon Shooters

Jack of all trades, master of some
Sean O'Kane

Nikon has a new full-frame DSLR: the D850. Announced today, the D850 is a monster of a camera in terms of specs, and it’s one that will cost accordingly — the retail price is $3,299 for just the body when it goes on sale in September. The pro-level D5 may still be the king of Nikon’s current DSLR offerings, but at first glance it’s the D850 that will likely be the Nikon full-frame camera that gets the most use by pros, semi-pros, and amateurs with deep pockets. For all intents and purposes, this is Nikon’s flagship camera going forward.

So what does a 2017 flagship camera look like in Nikon’s eyes? Well, this camera has just about everything you could want from a full-frame DSLR these days. It’s built around a hefty 45.7-megapixel CMOS sensor that’s back-side illuminated — a first for any of Nikon’s full-frame cameras. That should make the D850 handle low light situations pretty well despite the high megapixel count, which usually limits low light quality. And to wrangle those mega files, Nikon’s included its top-line Expeed 5 image processor.
"Tons of detail without, but hopefully without the normal tradeoffs "

Nikon’s also following a major trend in digital cameras by not including a low pass filter on the D850, which — combined with the high megapixel count — means the camera should be able to capture incredible detail.

And yet, Nikon’s not positioning the D850 as simply a great tool for stills and studio photographers. In fact, there’s a pretty good case to be made for the D850 in almost any shooting scenario judging from its specs. More bluntly: it doesn’t carry as many of the tradeoffs for that resolution that high-resolution DSLRs like Canon’s two-year-old 50-megapixel 5DS line asks of its users. It also outclasses (on paper, at least) Canon’s own “jack of all trades” full-frame camera, the year-old 5D Mark IV.

"The D850 outclasses the 5D Mark IV — on paper, at least"

That all starts with the D850’s video capabilities — it shoots 4K UHD footage at 30 or 24 frames per second, and 1080p video at up to 120 fps. It can record uncompressed 4:2:2 8-bit 4K UHD footage to an external recorder over the HDMI port while recording locally to a card at the same time. There’s an 8K time-lapse video mode, too, which is double the resolution that’s typically found on DSLRs these days.

But the camera is also relatively fast on the stills side when you consider the size of the files it’s dealing with. It has the same robust 153-point (99 cross type) autofocus system used in the D5, and can shoot 7 frames per second at full, 45.7-megapixel resolution. (If you buy the $399 battery grip, that max speed bumps up to 9 fps.) That’s with a 51-image buffer for 14-bit lossless RAW files, or 170 images shooting at 12-bit.

There’s also a “silent shooting” option — something more commonly seen on mirrorless cameras, not DSLRs — that lets users shoot up to 6 fps at full resolution (or up to 30 fps at 8.6-megapixels). This is done through the camera’s Live View mode, where the mirror stays up out of the way, and so the limitation here is that the camera’s exposure and focus will be locked from the first frame forward. But in the right setting this could be a big help, and it helps (slightly) make up for one of the biggest current shortcomings of DSLRs when compared to mirrorless cameras.

The D850 has two memory card slots — one XQD and one SD — to help capture all that data, and the battery will last for about 1,800 shots (or 70 minutes of video). On the back is a fairly standard 3.2-inch tilting touchscreen, which is surrounded by those illuminated buttons that leaked a few weeks ago. It has a big viewfinder with 0.75x magnification, the highest ever in a Nikon DSLR, according to the company. Wi-Fi, Bluetooth, and Snapbridge (the company’s solution for maintaining a constant connection to your smartphone) are all included as well.

I spent mere minutes with the D850, so I can’t speak to its performance in any meaningful way. But the viewfinder is immersive, the grip on the front is deeper than ever, and the body is sturdy even if it’s not very svelte. As for how it handles the outdoors, the D850 is basically the most weatherproof Nikon camera with the exception of the D5, which is in a league of its own, I was told.

The D850 looks like a mashup of the best things that Nikon is doing at both extremes of its DSLR lineup. It’s got most of the brains and brawn of pro-only cameras like the D5, but with much of the approachability and versatility you typically have to look for in the company’s entry-level and prosumer DSLRs. That “best of all worlds” approach obviously won’t come cheap, but don’t expect that to slow the D850 down. Barring unforeseen issues, this will be the camera that Nikon users will spend the next few years saving to buy, and the one that might cause Canon (or maybe even Sony) shooters to defect.
https://www.theverge.com/circuitbrea...-45-megapixels





h3h3Productions Wins 17 Month Copyright Lawsuit After Expensive Legal Fees
Jonathan Leack

Back in April of 2016 h3h3Productions' Ethan Klein confirmed that fellow YouTuber Matt "Bold Guy" Hoss had flagged a recently published video titled "The Big, the BOLD, the Beautiful" (view the re-upload here). Matt Hoss' complaint was that the video used over 70% of his work "while contributing nothing substantive", as argued by his lawyer Tim Bukher. He wasn't happy that the video received hundreds of thousands of views, especially given it analyzed his work in traditionally comedic h3h3Productions fashion.

Matt Hoss would soon transition the YouTube flag into a civil action lawsuit against Ethan Klein, alleging copyright infringement for the video. h3h3Productions would upload a follow-up called "Matt Bold Guy Hoss Is a Dick" (view the re-upload here) just a few days later, explaining the seriousness of the situation to the channel's audience.

Instead of settling with a payout, Ethan Klein chose to combat the charges in court, a move he would argue was "for principle". His explanation was that unless himself and others refuse to be intimidated by the time and financial costs of lawsuit threats on YouTube, they may continue to be exploited to silence the opinions of content creators.

Since then, Ethan Klein and wife Hila have spent over a year dealing with the nuances of the lawsuit, including a transition of representation from Morrison & Lee LLP to a new unknown law firm back in November 2016, causing a major setback. More importantly, the cost of legal fees have continued to stack up, to a point where Ethan Klein confirmed in February that they were charged more than $50,000 in a single month.

Following this tumultuous period, h3h3Productions' Ethan Klein announced with excitement today that he won the lawsuit. The announcement was made via Twitter, reading:

We won the lawsuit. Video coming soon. Huge victory for fair use on YouTube.

Details of the ruling are currently unconfirmed, but as stated by Ethan Klein a video update is in the works.

This is a particularly significant moment in the history of YouTube. There have been many cases of settlements over copyright infringement in the past, but very few cases of lawsuits working their way to completion. In most circumstances, the legal fees deter many channels from defending themselves.

The judgment of this case is a landmark victory for proponents of fair use, and a huge loss for DMCA abusers. Copyright law and how it applies to YouTube videos has been wildly debated in recent years, with some contending that when a channel uploads content, it should grant the creator exclusive rights to its use and distribution. Other state that fair use should protect that content from being used in a referential manner.

YouTube has been quick to grant takedowns in response to copyright requests throughout the history of its product, to a point where, in many cases, works that very clearly don't step into copyright territory are treated as doing so. Some argue that this is due to YouTube and parent company Alphabet's vulnerability as the creator of a platform where millions of users actively share content, much of which uses copyrighted works.

Update: h3h3Productions has uploaded a video that shares Ethan and Mila Klein's opinion on the verdict, which you can watch below. In addition, the full written judgement has been published online here.
http://www.gamerevolution.com/featur...ive-legal-fees

















Until next week,

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