Huawei booted from the UK. The UK had previously tried a middle path of allowing some Huawei kit in some parts of 5G mobile networks, ignoring heavy US pressure, but has now said it must all be removed from all mobile networks by 2027. Fixed-line networks are being 'advised' to transition away as well. So:
- The telecoms equipment market has been massively consolidated in the last 20 years, and Huawei has become one of the biggest players, with on many axes the best and cheapest equipment, helped by massive state support and to a backdrop of persistent stories of systematic IP theft from competitors.
- If the UK doesn't use Huawei, deploying 5G will take longer and cost more. But 5G really isn't a big deal, as I wrote here.
- There's no transparency at all on who really owns Huawei, but that's a red herring: all Chinese companies are subject to the arbitrary demands of the state.
- There have been regular stories of massive security holes in Huawei equipment: not so much deliberate back doors as huge unpatched bugs - either way there are spying concerns...
- But I'd suggest the real issue is China's newly demonstrated willingness to pick fights. Regardless of whether the equipment itself is secure, do you want a piece of critical national infrastructure to be dependent on the good will of the Chinese state for the next decade or two? The answer to that question today feels very different to what it would have been 5 years ago, and lots of other countries will look at the UK decision and feel the same.
Indian telco deal-making. In the last three months, Google, Facebook and a group of top-tier PE firms (KKR, Silverlake, TPG, General Atlantic, Intel and Qualcomm Capital and others) bought a total of 33% of Reliance Jio in a series of deals, for around $20bn.
- Reliance is a huge family oil / chemicals / textiles / retail conglomerate; in 2015 one of the founder's two sons, Mukesh Ambani, created Jio as a new 4G network and barged into an already very overcrowded mobile market with terrifyingly cheap prices, seizing first place (and bankrupting his brother, who already had a mobile business). It now has close to 400m users, consuming an average of 11 gig per month each, and paying an average of $1.04 month. Something over 100m of these are on subsidised 'Jiophones' - proprietary data-enabled feature-phones.
- Jio has the usual telco 'value-added services' (messaging apps, Zoom clone etc), but has ambitions to be much more, linking up India's mostly unconnected small traders with digital commerce, and moving its base onto smartphones, which is where Google and Facebook come in. Lots of 'digital India' talking points here.
- Every five years or so, a big telco thinks it can move up the stack and compete with the internet. This is a little like a municipal water company trying to get into the soft drinks business. Jio may be different: it has a more captive, less sophisticated base, a retail arm to leverage, and maybe more ability to innovate and understand the market. Or maybe not.
- Regardless, it's a leveraged play on the digitisation of India and a large and very well-connected player in a highly political market. And especially with the changing geopolitical situation, India is probably moving up people's lists.
Google's investment in Jio ($4.5bn) was part of a $10bn investment fund that Google also announced this week for digitisation in India. Link
GTP-3. Much excitement over the weekend as people started playing with a new machine learning tool released in beta by OpenAI. It's a generative text model, trained on an unprecedentedly large data set, which means that can give it some text and ask it to generate more. In practise, as the examples of the launch page show, that means you can give it the wikipedia page for bread, ask it 'why is bread fluffy?' and it will generate a paragraph of plausible-sounding text. Or, you can ask it to write code for a simple task and it will do it, sometimes, if you prime it properly. OpenAI's own page is actually pretty vague, but twitter is full of examples - when it works, it really works. A few years ago I described machine learning as giving you infinite interns: here, 'have a look at this and write something similar'. Link
Softbank selling ARM? The WSJ reports that Softbank may be selling ARM - Masa bought ARM in 2016 for £23bn, a 43% premium to the market price, claiming this fit into a vision of digitising everything on earth with smart chips and IoT. ARM owns the IP for the basic architecture of the CPU in every modern smartphone (and the new 'Apple Silicon' chips in future Macs, and lots of other things), and has a business selling blueprints for other people to make some or all of the rest of the chip as well. That means it gets some money from every device sold, but not actually that much, and there's also not much broader strategic leverage further up the stack. Now Softbank probably needs the liquidity, but in the current geopolitical environment buyers will obviously get careful scrutiny from the UK government, as well as the US and pretty much everyone else. Link ($)
Apple's Irish tax win. Apple won an appeal against an EU Commission claim that the Irish government had charged it too little tax. This means that Apple doesn't now have a bill for €13bn in back taxes. Link
EU v. smart speakers. Meanwhile, the EU is also opening a competition investigation into smart speakers (i.e. is Amazon being unfair to competing services). Makes definition is everything, so if you define the market as 'Alexa' then you will probably discover that Amazon has market dominance, but really, so what? It's hard to see this at the top of anyone's list of problems. EU Commissioners are famously keen on easy headlines, though. Link
Twitter got properly hacked. Full details aren't available yet, but it looks like someone got access to Twitter's own internal tools, and then used that to post messages on some famous people's accounts, saying 'send me Bitcoin and I'll send more back'. Apparently they only made $200k or so, which is a pretty low yield use for that kind of access - imagine reading all the DMs. A bit like the dog that caught the bank truck - once they got in they had no idea what to do with it? Meanwhile, we don't yet have the full story on how they got in, but the NY Times report claims Twitter dropped several balls. Links: Twitter report, NY Times ($)
No Google Cloud in China. According to Bloomberg, Google scrapped a project to extend its cloud computing services to China and other 'sensitive' markets with ring-fencing of some kind. Given how hard it would have been to make this work (and to compete in China without local political pull) I rather wonder if this was just a feasibility study? Link ($)
Substack traction. Andrew Sullivan, a popular New York Magazine columnist, left for Substack. Very US media bubble, but Substack is disrupting Medium so fast it hurts. Link
Remember Google Balloons? In the happy free-spending times of a few years ago Google had a project to beam down internet from free-floating balloons in the stratosphere, steering them by changing altitude to get into different air currents. Well, they're operational, apparently, over parts of Kenya, and got there themselves after launch in the Caribbean. Link
Jay Goldberg on Softbank potentially selling ARM. Link
I went on the 'Out of Hours' podcast to talk about running a newsletter as a side project. Link
Interesting Google study on purchasing journeys through search. Link
Mosaic Ventures on remote hiring. Link
NY Times digs into how department store closures will take malls with them. Something like a quarter of US malls are probably at risk. Link
Fascinating Reuters piece on how Mexican cell tower repair crews deal with drug cartel ‘narco-antennas’. Link
Wunderman study on how lockdown has affected UK consumer attitudes to online shopping. Link (PDF)
There are a lot of Indian people in Silicon Valley, and apparently, some of them have brought caste prejudices with them. Link
Useful writeup of the fiasco of the UK's contact tracing app project. Link
Porsche is testing 3D-printed pistons. Link
'Please scream in your heart'. the CEO of a Japanese theme park shows how to ride a rollercoaster without screaming. Link
From the Gibsonian files: electricity is free to consumers in North Kosovo, for local political and historic reasons. So, lots of people have been mining cryptocurrencies - so much so that local consumption went up 20%, and in 2018 the European power grid association, covering 25 countries, complained about frequency and power input deviations that were making electric clocks across Europe lose time. (I wonder if that would have worked at Nakatomi Plaza?) Link
(This was much too good to check, but I checked the first fact anyway. True. Link)
The story of UK lockdown through Google Trends. 'Gym' down, 'running' up, and more. Link
Lots of stats on email from Mailchimp annual review. They sent 3.2bn emails last year, and their customers have 4bn unique email addresses on file. Link