Tagged: Business

Amazon and Microsoft are under serious pressure to kill surveillance contracts with ICE

Donald Trump rescinded the order to separate migrant children from their parents at the border, a mess his administration caused in the first place, but people are still enraged — and rightfully so. Many leaders from the tech world voiced their deep concerns with the disturbing policy before it was canceled, but some of these companies still provide assistance to the Immigration and Customs Enforcement (ICE).

Business is business, some will be quick to point out, but it sure looks like people aren’t going to let this heartlessness fly. Specifically, ICE’s surveillance contracts with Amazon and Microsoft are the drawing intense criticism, and not just from outside the companies.

Amazon

Amazon employees penned a letter to Jeff Bezos urging the CEO to cut ties with ICE. Amazon provides the agency with direct access to its Rekognition facial recognition software. But it also offers support, via its AWS business, to Palantir, a tech company founded by Peter Thiel. Palantir has a contract with ICE too, providing predictive policing tools, according to Gizmodo. Of course, we would expect nothing less from one of Thiel’s companies.

Amazonians are “deeply concerned” that Amazon is “implicated, providing infrastructure and services that enable ICE and DHS.” The employees even cited IBM’s assistance to Hitler’s extermination programs as a precedent that should not be forgotten.

“Our company should not be in the surveillance business; we should not be in the policing business; we should not be in the business of supporting those who monitor and oppress marginalized populations,” they say.

The full letter is available at this link.

Microsoft

Microsoft is also facing harsh criticism from within, as employees voiced their concerns about the company’s contract with ICE a few days ago. But there’s also a new category of engineers protesting against Microsoft’s business deals with the agency, and that’s developers who are hosting their projects on GitHub. Microsoft just acquired the company for $7.5 billion.

In a letter, more than 60 GitHub contributors said they’ll abandon the site if Microsoft doesn’t cancel its ICE contract.

“As members of the open source community and free software movement who embrace values of freedom, liberty, openness, sharing, mutual aid, and general human kindness, we are horrified by and strongly object to the Trump administration’s policies of detainment, denaturalization, deportation, and family separation as carried out by ICE,” the letter’s authors wrote.

Microsoft’s Satya Nadella condemned Trump’s actions earlier this week. “Microsoft is not working with the U.S. government on any projects related to separating children from their families at the border,” the top Microsoft exec said.

But the company downplayed its work with ICE. In an internal response, Microsoft’s vice president of Azure Jason Zander said that Microsoft is “not doing anything with AI, Cognitive Services, or facial recognition.” But in a January blog post, Microsoft said that Azure would let ICE to “utilize deep learning capabilities to accelerate facial recognition and identification.”

The full letter to Microsoft is available at this link.

Despite protesting immigration policies, big-name tech companies are all over ICE’s IT contracts

The leaders of some of the most prominent tech companies in the US protested against Donald Trump’s border policy on children in previous days, including Microsoft, which has a contract with the US Immigration and Customs Enforcement (ICE).

Since then, Trump issued a new order to rescind the policy. But, as expected, plenty of other companies have contracts with this particular branch of the government. That’s how business works.

Hewlett Packard Enterprise (HPE), Thomson Reuters, Microsoft, Motorola Solutions and Palantir have active contracts with ICE, NBD News reported after conducting a public records search. Furthermore, The Verge explains that Dell’s federal system branch has more than $22 million in contracts with ICE.

HPE, which split from HP in November 2015, has a $75 million contract with the US Customs and Border Protection for the management of its network operations center.

A subsidiary of the news agency Thompson Reuters, Thomson Reuters Special Services, inked a $6.8 million contract in March. The company provides support to ICE’s Enforcement and Removal Operations unit’s “mission to locate, arrest, and remove criminal aliens that pose a threat to public safety.”

Microsoft has an Azure cloud computing contract in place with ICE, which helps with “deep learning capabilities to accelerate facial recognition and identification.”

Motorola Solutions, not to be confused with Lenovo’s Motorola, has a “tactical communications program” started in late 2017 and worth $13.3 million.

Palantir scored a $39 million deal in 2015, for “operations and maintenance” of FALCON, a proprietary intelligence database that lets ICE track migrants, records, and relationships.

Just because tech companies provide tech products to government agencies, it doesn’t mean they support everything the current administration does, especially what happened to migrant kids. But of the examples mentioned above, only Microsoft and HP took a public stance against Trump’s now-defunct policy.

MoviePass is losing money faster than ever

MoviePass, the subscription service that lets you watch unlimited movies in theaters for less than a Netflix subscription, lost $40 million in the month of May, and things are only getting worse as more and more subscribers join. Parent company Helios and Matheson Analytics said in an SEC filing that it may require a new capital injection of over $1.2 billion to stay afloat, which may be a tough ask for a company that shows no sign of ever generating a profit.

From some perspectives, MoviePass is like any other early-stage Silicon Valley startup: it’s losing money but driving extreme subscriber growth, and undercutting the existing market while doing so. But since MoviePass doesn’t get any kind of deal from movie theaters — it buys tickets for its users at standard box-office prices — the more subscribers it adds, the more money it will lose. There’s some kind of vague plan in the future to monetize data about its users or to use its subscriber base to negotiate deals with movie chains, but the business plan will have to be particularly excellent to turn MoviePass’s dire financials around.

The SEC filing leaves little to the imagination when it comes to Helios and Matheson’s rapidly increasing losses:

Our average monthly cash deficit has been approximately $25.0 million per month from September 30, 2017 to May 31, 2018 inclusive of our processor deposits. From May 1, 2018 through June 15, 2018, we acquired approximately 545,000 new paying subscribers. Due to our greater than anticipated subscriber growth in May 2018, our cash deficit for the month of May 2018 was approximately $40.0 million and we anticipate our cash deficit for the month of June 2018 will be at least $45.0 million due to significant subscriber growth and strong box office results of recently released films. As the MoviePass subscriber base increases rapidly, and as we increase our investments in movies through MoviePass Ventures and MoviePass Films, and make other acquisitions, our monthly cash deficit will continue to increase in the coming months.

MoviePass’s continued existence is reliant on future revenues, which in turn relies on the company getting big enough, which relies on burning more cash right now:

We expect MoviePass’ continued growth will continue to create new revenue opportunities from marketing the movies of others, from partnerships with exhibitors and from our own movie content businesses including participation in box office and home entertainment revenues from our own movies, which we believe we can maximize by marketing our films through the MoviePass subscription service. To maintain our growth and continue to fundamentally transform the movie industry, for the benefit of the entire movie ecosystem, we will continue to incur a significant monthly cash deficit, until or unless we achieve positive cash flow or profitability, of which there is no assurance.

It’s not a unique business model: Uber, which is also losing money, is predicated on the same idea that burning cash short-run is worth it to acquire a customer base. Once the company has a virtual monopoly, so the theory goes, prices can be ramped up, discounts can be negotiated, and a profit will be generated.

The biggest threat to MoviePass, therefore, is competition. If competitors can spring up and prevent MoviePass from totally dominating the movie theater industry, it will never achieve the size it needs to turn a profit, and MoviePass will be forced to rapidly increase prices or fold. That might be part of the reason why movie chain AMC just announced its own subscription, AMC Stubs A-List, which offers better perks than MoviePass, but for $20 a month rather than $10. At that price, it’s not going to steal customers from MoviePass, but AMC doesn’t need to — it just has to force MoviePass to keep burning cash until it goes under.

US lawmakers urge Google to reconsider partnership with Huawei

Project Maven doesn’t mean anything for many people unless you’re in the military or Google. It’s an artificial intelligence research partnership between the search giant and the US Department of Defense that Google decided not to renew following some internal protests on the matter.

Some US lawmakers aren’t happy about that, and now they’re asking Google to detail its partnership with Huawei, one of the two Chinese companies having a hard time in the States right now.

The letter, penned by various Republican senators and congresspeople, as well as a Democrat congressperson, manages to link Project Maven to the Google-Huawei partnership:

We urge you to reconsider Google’s partnership with Huawei, particularly since your company recently refused to renew a key research partnership, Project Maven, with the Department of Defense. This project uses artificial intelligence to improve the accuracy of U.S. military targeting, not least to reduce civilian casualties. While we regret that Google did not want to continue a long and fruitful tradition of collaboration between the military and technology companies, we are even more disappointed that Google apparently is more willing to support the Chinese Communist Party than the U.S. military.

Obviously, there’s no connection between these two aspects of Google’s business decisions. The fact that Google doesn’t want to support Project Maven anymore doesn’t imply that it’s “more willing to support the Chinese Communist Party.”


Sure, intelligence agencies and lawmakers have rightful reasons to suspect that Chinese companies may be working with the Chinese government to spy on its adversaries. But that doesn’t mean Google is supporting in any way Huawei more than other Android device makers.

The letter, addressed to Google CEO Sundar Pichai, says that the concerns are real, and that a former “US intelligence officer charged with spying for the Chinese government used Huawei technology to communicate with his handlers.”

Then again, an intelligence officer would probably be able to communicate with any sort of handlers using a variety of devices, not just Huawei — again, it’s unclear from the statement above whether some sort of spy apps were installed on the Huawei handset in question.

While I have no way of knowing what the Google-Huawei partnership contains, I do know that the two companies did not launch a joint product in quite a while. That’s the type of collaboration that would require a closer relationship. Moreover, it’s not like Google’s business is doing great in China either.

Google already issued a first response to the letter, but not from Pichai.

“Like many U.S. companies, we have agreements with dozens of OEMs (manufacturers) around the world, including Huawei. We do not provide special access to Google user data as part of this agreement, and our agreements include privacy and security protections for use data,” Google spokeswoman Andrea Faville said in an emailed statement to Reuters.

The letter also contains a reminder that US Congress is pushing various legislative measures to prevent the Huawei threat and the battle against China’s biggest smartphone maker isn’t over.

Sundar Pichai, it’s your turn to serve!

Facebook stock hits new all-time high as company seeks to move past prior scandals

To say that the past few months have been incredibly challenging for Facebook would be a gross understatement. Not only has the company had to address a myriad of privacy concerns from pundits and users alike, the company’s entire ad-based business model has been called into question. And though Facebook and Mark Zuckerberg seemingly handled the fallout resulting from the Cambridge Analytica scandal as best they could, it sometimes seems as if new privacy controversies are emerging every few weeks.

Nonetheless, Facebook shares have rebounded completely from the lows they experienced in the immediate aftermath of the Cambridge Analytica debacle. At the time, Facebook shares plummeted by nearly 20%, dropping down to a low of $152 in late March. Since then, Facebook shares have steadily been on the rise. This week, Facebook stock — for the first time in history — managed to hit the $200/share threshold.

At the close of trading on Wednesday, Facebook shares were trading at $202, representing a brand new all-time high for the company. As to the root cause behind the stock’s recent rise, investors seem to be moving past the company’s data privacy issues and are now paying more attention to the company’s financials. And in that respect, there’s a lot to like about the current health of Facebook’s business.

During the company’s most recent earnings report, the social networking giant bested Wall St. expectations and posted a quarterly profit of $4.99 billion. Revenue, meanwhile, jumped by nearly 50% year over year. What’s more, Facebook’s user base increased by about 3.5% compared to the previous quarter. In short, all of the speculation regarding a massive exodus of Facebook subscribers didn’t pan out in the slightest.