With Tether’s monthly trading volume about 18% higher than that of Bitcoin, it’s arguably the most important coin in the crypto ecosystem. Tether’s also one of the main reasons why regulators regard cryptocurrencies with a wary eye, and have put the breaks on crypto exchange-traded funds amid concern of market manipulation.
“If there is no Tether, we lose a massive amount of daily volume — around $1 billion or more depending on the data source,” said Lex Sokolin, global financial technology co-head at ConsenSys, which offers blockchain technology. “Some of the concerning potential patters of trading in the market may start to fall away.”
Coins With Biggest Daily Trading Volumes
In billions of U.S. dollars
Source: CoinMarketCap.com
Values as of Sept. 27, 2019
Tether is the world’s most used stablecoin, a category of tokens that seek to avoid price fluctuations, often through pegs or reserves. It’s also a pathway for most of the world’s active traders into the crypto market. In countries like China, where crypto exchanges are banned, people can pay cash over the counter to get Tethers with few questions asked, according to Sokolin. From there, they can trade Tethers for Bitcoin and other cryptocurrencies, he said.
“For many people in Asia, they like the idea that it’s this offshore, opaque thing out of reach of the U.S. government,” said Jeremy Allaire, chief executive officer of Circle, which supports a rival stablecoin called USD Coin. “It’s a feature, not a problem.”
Read more: A QuickTake explains the allure of stablcoins
Tether, which is being sued by New York for allegedly commingling funds including reserves, says using a know-your-customer form and approval process is required to issue and redeem the coin.
Asian traders account for about 70% of all crypto trading volume, according to Allaire, and Tether was used in 40% and 80% of all transactions on two of the world’s top exchanges, Binance and Huobi, respectively, Coin Metrics said earlier this year.
Many people don’t even know they use Tether, said Thaddeus Dryja, a research scientist at the Massachusetts Institute of Technology. Because traditional financial institutions worry that they don’t sniff out criminals and money launderers well enough, most crypto exchanges still don’t have bank accounts and can’t hold dollars on behalf of customers. So they use Tether as a substitute, Dryja said.
“I don’t think people actually trust Tether — I think people use Tether without realizing that they are using it, and instead think they have actual dollars in a bank account somewhere,” Dryja said. Some exchanges mislabel their pages, to convey the impression that customers are holding dollars instead of Tethers, he said.
Tether’s Market Cap Balloons
In U.S. dollars
Source: CoinMarketCap.com
The way Tether is managed and governed makes it a black box. While Bitcoin belongs to no one, Tether is issued by a Hong Kong-based private company whose proprietors also own the Bitfinex crypto exchange. The exact mechanism by which Tether’s supply is increased and decreased is unclear. Exactly how much of the supply is covered by fiat reserves is in question, too, as Tether is not independently audited. In April, Tether disclosed that 74% of the Tethers are covered by cash and short-term securities, while it previously said it had a 100% reserve.
The disclosure was a part of an ongoing investigation into Tether by the New York Attorney General, which accused the companies behind the coin of a coverup to hide the loss of $850 million of comingled client and corporate funds.
John Griffin, a finance professor at the University of Texas at Austin, said that half of Bitcoin’s runup in 2017 was the result of market manipulation using Tether. Last year Bloomberg reported that the U.S. Justice Department is investigating Tether’s role in this market manipulation.
Convenience Versus Risk
“Being controlled by centralized parties defeats the entire original purpose of blockchain and decentralized cryptocurrencies,” Griffin said. “By avoiding government powers, stablecoins place trust instead in the hands of big tech companies, who have mixed accountability. So while the idea is great in theory, in practice it is risky, open to abuse, and plagued by similar problems to traditional fiat currencies.”
Mobile money is fast blossoming in Africa, boosted by rising mobile adoption across the continent, but in Zimbabwe—which is battling a severe financial crunch—the most common cash-in and cash-out functionalities have just been killed off as the government battles to contain the country’s economic crisis.
Cash-out is process of converting mobile wallet balances into hard cash while cash-in refers to the process of depositing cash into a mobile wallet. Mobile money agents facilitate these processes and normally, the agents have to get the cash from banks against their mobile money balances which are referred to as “float”. These agents then act as mini banks, basically facilitating deposit or withdrawal of cash (cash-in and cash out respectively) by account holders from mobile wallets.
These functionalities, in addition to sending and receiving money as well as payments at supermarkets and other merchants and cross transfers from and into bank accounts constitute the most impactful financial inclusion use cases that mobile money is hinged on across Africa. Success cases also include Kenya and Tanzania while MTN is ready to roll out mobile money in Nigeria.
Yet in Zimbabwe, cash-in and cash-out has just been killed off by the government, because authorities have concluded the functions are being abused. Zimbabwean mobile money agents, mostly with the dominant EcoCash platform, have been capitalizing on cash shortages in Zimbabwe to buy cash for re-sale to mobile wallet holders at a premium of up to 50%. This means that when trying to access funds in your mobile wallet through the agents, one would only get about 50% of their balance.
[…]
This has given rise to the high premiums on cash and also occasioned heavy discounts for cash purchases in retail outlets. However, the Reserve Bank of Zimbabwe justified the freeze on mobile money cash-in and cash-out functionalities, saying on Monday “some economic agents are engaging in illegal activities abusing the cash-in and cash-out facilities” which was compromising national payment systems.
[…]
Large chunks of the country’s economy runs through electronic systems and mobile money, which is dominated by Econet’s Ecocash with 95% market share. It’s estimated around 5 million transactions a day moving more than $200 million.
Most recently Ecocash has struggled to maintain the mobile money system working round the clock as the country has been hit with electricity shortages which have forced it to consider options including Tesla Powerwall storage batteries.
But to make that revenue, you need a business that can exploit containers. So, Google, Microsoft, Amazon Web Services (AWS), and all the rest of the big public cloud companies, earn their dollars from customers eager to make the most of their server resources. Others, like Red Hat/CoreOS, Canonical, and Mirantis, provide easy-to-use container approaches for private clouds.
Docker? It provides the open-source framework for the most popular container format. That’s great, but it’s not a business plan.
This led to more than a little confusion. Quick! How many of you knew Moby was now the “official” name for Docker the program? Confusion is not what you want in sales.
Mere weeks later, Golub was out, and Steve Singh, from SAP, was in.
[…]
As Dave Bartoletti, a Forrester analyst, told The Register at the time: “The poor guy has to figure out how to make money at Docker. That’s not easy when a lot of people in the community just bristle at anyone trying to make money.”
The rise of Kubernetes
Making matters much harder for Docker’s business plans is that Docker swarm and all other orchestration programs have found themselves overwhelmed by the rise of Kubernetes.
When your main value-add is container orchestration and everyone and their uncle has adopted another container orchestration program, what can you offer customers? Good question.
[…]
In the last few months, Docker raised another $75 million in venture capital. This brings the total capitalization of Docker to a rather amazing $250 million from ME Cloud Ventures, Benchmark, Coatue Management, Goldman Sachs, and Greylock Partners. That’s a lot of money, but I still don’t see how Docker will pay out.
Cash from investors is great, but what Docker really needs is cash from customers.
For most enterprise users, there are no real worries here. Docker or Moby, the container standard is both open source and an open standard. For Docker investors, well, that’s another story.
This article suggests that if Docker the company goes bust, it won’t be a problem for Docker users because it’s open source and the community will pick it up and continue development. Unfortunately it’s often the case that the “community” are just the people reporting the bugs and it’s the original handful of developers that are all the people writing the bugfixes and carrying the project forward. In this case it’s a great team of people, who – if they are out of a job – will probably disband and the project will be forked by an internet giant who will repurpose for their own needs and wants.
What is more important is that this is yet another showcase for a hugely popular FOSS project showcasing how ridiculously impossible it is to make money. FOSS needs to change.
A cybercrime data center that was shut down by German authorities was housed inside a former NATO bunker in a sleepy riverside town, police revealed on Friday.
More than 600 law enforcement personnel including Germany’s elite federal police unit, the GSG 9, were involved in an anti-cybercrime operation that took place in the town of Traben-Trarbach on the banks of the Mosel river.
Police officers succeeded in penetrating the building, a 5,000 square meter former NATO bunker with iron doors that goes five floors deep underground. The building was located on a 1.3-hectare (3.2 acre) property secured with a fence and surveillance cameras.
“We had to overcome not only real, or analog, protections; we also cracked the digital protections of the data center,” said regional police chief Johannes Kunz.
The target of the operation was a so-called “bulletproof hosting” service provider. Bulletproof hosters provide IT infrastructure that protects online criminal activity from government intervention.
In the raid, police seized 200 servers along with documents, cell phones, and large quantities of cash. Thursday’s operation was the first time German investigators were able to apprehend a bulletproof hoster, according to German media outlets.
Watch video01:35
German police claim victory against cyber crime
Cracking the security codes to access the contents of the servers was another difficult task for the police. On the servers, they found countless websites facilitating the illegal sale of drugs, weapons, counterfeit documents, and stolen data as well as sites distributing child pornography. The servers hosted Wall Street Market, formerly the second largest darknet market place for drugs in the word before law enforcement shut the platform down earlier this year.
The police arrested 13 people between the ages of 20 and 59 allegedly tied to the operation. Seven are held in custody. The ringleader is a 59-year-old Dutch man with ties to organized crime in the Netherlands. He established the server in Traben-Trarbach in 2013. While his official residency is listed in Singapore, he had been living in the bunker.
The United States House of Representatives’ Judiciary Committee is launching an antitrust investigation into Apple and its anti-competitive behavior.
Part of the investigation will focus on Apple’s repair monopoly, which for years has given the company control over the useful life of its products. In a letter to Apple, the committee asked Apple to turn over all internal communications from 14 top executives at the company—including CEO Tim Cook—relating to “Apple’s restrictions on third-party repairs,” among dozens of other topics.
In particular, the committee wants information about:
“Apple’s restrictions on third-party repairs, including but not limited to any rules with which Apple Authorized Service Providers (AASPs) must comply, such as rules restricting or prohibiting AASPs from making any specific repairs.”
“Apple’s decision in December 2017 to offer iPhone battery replacements at a discounted price, or the actual or projected effects of this decision, including but not limited to, effects on iPhone sales.”
“Apple’s decision to introduce the ‘Independent Repair Provider Program,’ including but not limited to, decisions covering which specific repair parts Apple will make available through the program and at what price.”
“Apple’s decision in 2018 to enter into an agreement with Amazon to sell Apple products on Amazon and to limit the resellers that can sell Apple products on Amazon.”
This is huge news for the independent repair community (and nice for me; the committee cited two Motherboard articles I wrote about Apple’s repair restrictions.)
For years, the independent repair community has said that Apple has engaged in anticompetitive behavior by refusing to sell parts to repair shops who are not “authorized” by the company. The company has also lobbied heavily against so called right-to-repair legislation, which would require it and other electronics companies to sell parts and tools to the general public. It has sued independent repair companies for using aftermarket and refurbished parts and worked with the Department of Homeland Security to seize unauthorized repair parts from small businesses both at customs and from individual shops. And, as the committee’s letter notes, Apple cut a deal with Amazon that restricted who is allowed to sell refurbished Apple devices on Amazon.
Logius is absolutely minting it, considering that almost every interaction with the government, locality, insurance company is done through DigiID. Unbelievably, this price is down from EUR 3,50 in 2006, but up from last years’ 12 cents per login.
So now we know why government IT projects cost such an inane amount of money – if they can ask this amount for just a login server, even after having been paid to develop the system! Which idiot at government level negotiated this contract?
New York State Attorney General Letitia James announced Friday she is launching a multistate investigation into Facebook for possible antitrust violations.
Facebook shares were down about 0.5% in Friday’s premarket, but did not seem to react to James’ announcement.
Attorneys general of Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio, Tennessee and the District of Columbia will join the probe, according to the announcement. It will focus “on Facebook’s dominance in the industry and the potential anticompetitive conduct stemming from that dominance,” according to the release.
“Even the largest social media platform in the world must follow the law and respect consumers,” James said in a statement. “I am proud to be leading a bipartisan coalition of attorneys general in investigating whether Facebook has stifled competition and put users at risk. We will use every investigative tool at our disposal to determine whether Facebook’s actions may have endangered consumer data, reduced the quality of consumers’ choices, or increased the price of advertising.”
Facebook is already facing a separate investigation by the Federal Trade Commission over antitrust concerns, the company confirmed in its quarterly report in July. That announcement came on the same day that the FTC announced its $5 billion settlement with Facebook over its privacy policies.
The study suggests that marketers can use this understanding of local identity versus global identity to shape consumers’ price perceptions and behavior. UTA and three other universities contributed to the study.
“Consumers tend to use price to judge a product’s quality when their local identity is most important to them,” Janakiraman said. “When promoting high-priced or branded products, marketers can situationally activate consumers’ local identity. To accomplish this objective, businesses can encourage consumers to think locally or employ local cultural symbols in advertising and other promotional material.”
Findings also suggest that discount stores, such as dollar stores, should discourage consumers from using the price of a product to infer its quality.
“Discount stores, therefore, would be better served by temporarily making consumers’ global identity more prominent,” Janakiraman said. “Cues in advertisements that focus on a product’s global appeal would help achieve that goal.”
The Washington Post reported on Tuesday that “more than half of the nation’s state attorneys general” have signed on to and are preparing an antitrust investigation against digital titan Google, with the paper writing the inquiry is “scheduled to be announced next week, marking a major escalation in U.S. regulators’ efforts to probe Silicon Valley’s largest companies.”
Details of the investigation remain hazy, but the Post reported that the effort is “expected” to be bipartisan and could involve over 30 state attorneys general. The states’ investigation is as of yet separate from another antitrust review currently being conducted by the Department of Justice, and it comes as both Democrats on the campaign trail and the Trump administration have amped up the pressure on tech giants (albeit for entirely different reasons). The Post wrote:
A smaller group of these state officials, representing the broader coalition, is expected to unveil the investigation at a Monday news conference in Washington, according to three people familiar with the matter who spoke on the condition of anonymity because they were not authorized to discuss a law enforcement proceeding on the record, cautioning the plans could change.
It is unclear whether some or all of the attorneys general also plan to open or announce additional probes into other tech giants, including Amazon and Facebook, which have faced similar U.S. antitrust scrutiny. The states’ effort is expected to be bipartisan and could include more than 30 attorneys general, one of the people said.
While it’s “unclear” whether any DOJ officials will join the attorneys general during the expected announcement next week, the Post wrote, the agency’s antitrust chief Makan Delrahim did say in August that the DOJ was coordinating with state inquiries into possible violations of antitrust law by tech firms. The feds are currently carrying out multiple such antitrust investigations, including Federal Trade Commission probes of Facebook (separate from the paltry $5 billion fine it levied on the company earlier this year) and Amazon and a DOJ probe of Apple.
As the Post noted, the states have more limited powers at their disposal than the feds, which can break up entire firms on the grounds of anticompetition law. However, states can join with the feds in court, as they did during the antitrust investigation into Microsoft in the 1990s, as well as tangle Google up in years of legal battles. Former Maryland attorney general Doug Gansler told the paper, “If multiple states—and I mean not just Democratic attorneys general but Republican attorneys general as well—are all looking into potential antitrust violations, one of the biggest effects might be to pressure the federal government to do a deeper dive.”
Researchers from Texas A&M University published new research in the INFORMS journal Marketing Science, which shows that retailers’ branded mobile apps are very effective in increasing customer engagement, increasing sales on multiple levels, not just on the retailer’s website, but also in its stores. At the same time, apps increase the rate of returns, although the increase in sales outweighs the return rates.
The study to be published in the September edition of the INFORMS journal Marketing Science is titled “Mobile App Introduction and Online and Offline Purchases and Product Returns,” and is authored by Unnati Narang and Ventakesh Shankar, both of the Mays Business School at Texas A&M University.
The study authors found that retail app users buy 33 percent more frequently, they buy 34 percent more items, and they spend 37 percent more than non-app user customers over 18 months after app launch.
At the same time, app users return products 35 percent more frequently, and they return 35 percent more items at a 41 percent increase in dollar value.
All factors considered, the researchers found that app users spend 36 percent more net of returns.
“Overall, we found that retail app users are significantly more engaged at every level of the retail experience, from making purchases to returning items,” said Narang. “Interestingly, we also found that app users tend to purchase a more diverse set of items, including less popular products, than non-app users. This is particular helpful for long-tail products, such as video games and music.”
“For the retailer, the lesson is that having a retail app will likely increase customer engagement and expand the range of products being sold online and in store,” added Shankar. “We also found that some app users who make a purchase within 48 hours of actually using an app, tend to use it when they are physically close to the store of purchase. They are most likely to access the app for loyalty rewards, product details and notifications.”
Ultimately, the rider paid $65 for the half-hour trip, according to a receipt viewed by Jalopnik. But Dave made only $15 (the fares have been rounded to anonymize the transaction).
Uber kept the rest, meaning the multibillion-dollar corporation kept more than 75 percent of the fare, more than triple the average so-called “take-rate” it claims in financial reports with the Securities and Exchange Commission.
Had he known in advance how much he would have been paid for the ride relative to what the rider paid, Dave said he never would have accepted the fare.
“This is robbery,” Dave told Jalopnik over email. “This business is out of control.”
Dave is far from alone in his frustrations. Uber and Lyft have slashed driver pay in recent years and now take a larger portion of each fare, far larger than the companies publicly report, based on data collected by Jalopnik. And the new Surge or Prime Time pricing structure widely adopted by both companies undermines a key legal argument both companies make to classify drivers as independent contractors.
Jalopnik asked drivers to send us fare receipts showing a breakdown of how much the rider paid for the trip, how much of that fare Uber or Lyft kept, and what the driver earned.
In total, we received 14,756 fares. These came from two sources: the web form where drivers could submit fares individually, and via email where some drivers sent us all their fares from a given time period.
Of all the fares Jalopnik examined, Uber kept 35 percent of the revenue, while Lyft kept 38 percent. These numbers are roughly in line with a previous study by Lawrence Mishel at the Economic Policy Institute which concluded Uber’s take rate to be roughly one-third, or 33 percent.
Of the drivers who emailed us breakdowns for all of their fares in a given time period—ranging from a few months to more than a year—Uber kept, on average, 29.6 percent. Lyft pocketed 34.5 percent.
Those take rates are 10.6 percent and 8.5 percent higher than Uber and Lyft’s publicly reported figures, respectively.
Graphic: Jim Cooke — G/O Media
In regulatory filings, Uber has reported its so-called “take-rate” is actually going down, from 21.7 percent in 2018 to 19 percent in the second quarter of 2019 (Uber declined to offer U.S.-only figures for a more direct comparison to Jalopnik’s findings).
A judge in Oklahoma on Monday ruled that Johnson & Johnson had intentionally played down the dangers and oversold the benefits of opioids, and ordered it to pay the state $572 million in the first trial of a drug manufacturer for the destruction wrought by prescription painkillers.
The amount fell far short of the $17 billion judgment that Oklahoma had sought to pay for addiction treatment, drug courts and other services it said it would need over the next 20 years to repair the damage done by the opioid epidemic.
Still, the decision, by Judge Thad Balkman of Cleveland County District Court, heartened lawyers representing states and cities — plaintiffs in many of the more than 2,000 opioid lawsuits pending across the country — who are pursuing a legal strategy similar to Oklahoma’s. His finding that Johnson & Johnson had breached the state’s “public nuisance” law was a significant aspect of his order.
Judge Balkman was harsh in his assessment of a company that has built its reputation as a responsible and family-friendly maker of soap, baby powder and Band-Aids.
In his ruling, he wrote that Johnson & Johnson had promulgated “false, misleading, and dangerous marketing campaigns” that had “caused exponentially increasing rates of addiction, overdose deaths” and babies born exposed to opioids.
The state attorneys in more than a dozen states are preparing to begin an antitrust investigation of the tech giants, The Wall Street Journal and The New York Times reported Monday, putting the spotlight on an industry that is already facing federal scrutiny.
The bipartisan group of attorneys from as many as 20 states is expected to formally launch a probe as soon as next month to assess whether tech companies are using their dominant market position to hurt competition, the WSJ reported.
If true, the move follows the Department of Justice, which last month announced its own antitrust review of how online platforms scaled to their gigantic sizes and whether they are using their power to curb competition and stifle innovation. Earlier this year, the Federal Trade Commission formed a task force to monitor competition among tech platforms.
[…]
Because the tentacles of Google, Facebook, Amazon and Apple reach so many industries, any investigation into them could last for years.
Apple and Google pointed the Times to their previous official statements on the matter, in which they have argued that they have been vastly innovative and created an environment that has benefited the consumers. Amazon and Facebook did not comment.
Also on Monday, Joseph Simons, the chairman of FTC, warned that Facebook’s planned effort to integrate Instagram and WhatsApp could stymie any attempt by the agency to break up the social media giant.
Amazon constantly scans rivals’ prices to see if they’re lower. When it discovers a product is cheaper on, say, Walmart.com, Amazon alerts the company selling the item and then makes the product harder to find and buy on its own marketplace — effectively penalizing the merchant. In many cases, the merchant opts to raise the price on the rival site rather than risk losing sales on Amazon.
Pricing alerts reviewed by Bloomberg show Amazon doesn’t explicitly tell sellers to raise prices on other sites, and the goal may be to push them to lower their prices on Amazon. But in interviews, merchants say they’re so hemmed in by rising costs levied by Amazon and reliant on sales on its marketplace, that they’re more likely to raise their prices elsewhere.
Antitrust experts say the Amazon policy is likely to attract scrutiny from Congress and the Federal Trade Commission, which recently took over jurisdiction of the Seattle-based company. So far, criticism of Amazon’s market power has centered on whether it mines merchants’ sales data to launch competing products and then uses its dominance to make the original product harder to find on its marketplace. Harming consumers by prompting merchants to raise prices on other sites more neatly fits the traditional definition of antitrust behavior in the U.S.
“Monopolization charges are always about business conduct that causes harm in a market,” said Jennifer Rie, an analyst at Bloomberg Intelligence who specializes in antitrust litigation. “It could end up being considered illegal conduct because people who prefer to shop on Walmart end up having to pay a higher price.”
[…]
Online merchants typically sell their products on multiple websites, including Amazon, EBay Inc. and Walmart Inc., which also removes products with “highly uncompetitive” prices compared with those on other sites. But merchants often generate most of their revenue on Amazon, which now accounts for almost 40% of online sales in the U.S., according to EMarketer.
Merchants have long complained that Amazon wields outsize influence over their businesses. Besides paying higher fees, many now have to buy advertising to stand out on the increasingly cluttered site. Some report giving Amazon 40% or more of each transaction, up from 20% a few years ago.
[…]
Amazon began sending the price alerts in 2017, and merchants say they have increased in frequency amid an intensifying price war between Amazon and Walmart. Merchants receive the alerts via a web platform they use to manage their Amazon businesses. The alerts show the product, the price on Amazon and the price found elsewhere on the web. They don’t name the competing site with a lower price; the merchants must find that themselves.
A typical pricing alert reads: “One or more of your offers is currently ineligible for being a featured offer on the product detail page because those items are priced higher on Amazon than at other retailers.”
In plain English, that means merchants lose the prominent “buy now” button that simplifies shopping on Amazon. With that icon missing, shoppers can still buy the products, but it’s a more tedious and unfamiliar process, which can hurt sales
[…]
“Amazon is in control of the price, not the merchant,” said Boyce, who runs Avenue 7 Media.
Molson Hart, who sells toys online through his company Viahart, typifies the challenge. Hart says more than 98% of his $4 million in 2018 sales came from Amazon even though he also sells his products on EBay, Walmart and his own website. He was trying to sell a toy stuffed tiger for $150 on Amazon. Hart designs, manufactures, imports, stores and ships the item to customers; Amazon would get $40 for listing some photographs on its website, handling the payment and charging Hart to advertise the product on the site.
Hart said he could sell the product for about $40 less on his own website, but won’t since that would jeopardize his sales on Amazon due to its pricing enforcement, he said. “If we sell our products for less on channels outside Amazon and Amazon detects this, our products will not appear as prominently in search,” he wrote in a recent article on Medium. Hart has since lowered the price of the tigers on Amazon and is now selling them at a loss.
Amazon used to require that merchants offer their best prices on Amazon as terms for selling on the site, but the agreement attracted the attention of regulators bent on ensuring competition. Amazon removed the requirement for sellers in Europe in 2013 following investigations and quietly removed the requirement without explanation for U.S. sellers in March shortly after Democratic presidential hopeful Senator Elizabeth Warren announced a goal of breaking up Amazon and other big tech companies.
[…]
Michael Kades, a former FTC attorney who now researches antitrust issues at the Washington Center for Equitable Growth, says the price alerts will almost certainly draw the government’s attention. “If regulators can prove that this conduct is causing merchants to raise prices on other platforms,” he said, “Amazon loses the argument that their policies are all about giving everyone lower prices.”
As I say in my talk, Break it Up! monopolistic behaviour is a lot more than just pricing – just this sort of anti-competitive pressure on third parties is one of the more maffia style sort
America’s trade watchdog has officially told millions in the US not to apply for the $125 it promised each of them as part of the deal it struck with Equifax – and instead take up an offer of free credit monitoring.
In a memo on Wednesday, FTC assistant director Robert Schoshinski said the regulator has been overwhelmed by people filing claims against Equifax after the biz was cyber-looted by hackers in 2017.
He then warned that, because the settlement with the mega-hacked outfit had been capped, it is very unlikely people will end up receiving that promised $125 each. In fact, the deal may be worth no more than 21 cents. We note that the FTC website folks can file claims through, ftc.gov/equifax, no longer mentions a $125 option, whereas the settlement website it redirects to still offers the cash lump sum.
“There is a downside to this unexpected number of claims,” noted Schoshinski.
“The pot of money that pays for that part of the settlement is $31 million. A large number of claims for cash instead of credit monitoring means only one thing: each person who takes the money option will wind up only getting a small amount of money. Nowhere near the $125 they could have gotten if there hadn’t been such an enormous number of claims filed.”
The ransomware sought out vulnerabilities and used a modified version of the NSA’s leaked EternalBlue SMB exploit, generating one of the most financially costly cyber-attacks to date.
Among the victims was US food giant Mondelez – the parent firm of Oreo cookies and Cadburys chocolate – which is now suing insurance company Zurich American for denying a £76m claim (PDF) filed in October 2018, a year after the NotPetya attack. According to the firm, the malware rendered 1,700 of its servers and 24,000 of its laptops permanently dysfunctional.
In January, Zurich rejected the claim, simply referring to a single policy exclusion which does not cover “hostile or warlike action in time of peace or war” by “government or sovereign power; the military, naval, or air force; or agent or authority”.
Mondelez, meanwhile, suffered significant loss as the attack infiltrated the company – affecting laptops, the company network and logistics software. Zurich American claims the damage, as the result of an “an act of war”, is therefore not covered by Mondelez’s policy, which states coverage applies to “all risks of physical loss or damage to electronic data, programs, or software, including loss or damage caused by the malicious introduction of a machine code or instruction.”
While war exclusions are common in insurance policies, the court papers themselves refer to the grounds as “unprecedented” in relation to “cyber incidents”.
Previous claims have only been based on conventional armed conflicts.
Zurich’s use of this sort of exclusion in a cybersecurity policy could be a game-changer, with the obvious question being: was NotPetya an act of war, or just another incidence of ransomware?
The UK, US and Ukrainian governments, for their part, blamed the attack on Russian, state-sponsored hackers, claiming it was the latest act in an ongoing feud between Russia and Ukraine.
[…]
The minds behind the Tallinn Manual – the international cyberwar rules of engagement – were divided as to whether damage caused met the armed criterion. However, they noted there was a possibility that it could in rare circumstances.
Professor Michael Schmitt, director of the Tallinn Manual project, indicated (PDF) that it is reasonable to extend armed attacks to cyber-attacks. The International Committee of the Red Cross (ICRC) went further to enunciate that cyber operations that only disable certain objects are still qualified as an attack, despite no physical damage.
The U.S. Justice Department said on Tuesday it was opening a broad investigation of major digital technology firms into whether they engage in anticompetitive practices, the strongest sign the Trump administration is stepping up its scrutiny of Big Tech.
The review will look into “whether and how market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers,” the Justice Department said in a statement.
The Justice Department did not identify specific companies but said the review would consider concerns raised about “search, social media, and some retail services online” — an apparent reference to Alphabet Inc, Amazon.com Inc and Facebook Inc, and potentially Apple Inc.
[…]
Senator Richard Blumenthal, a Democrat, said the Justice Department “must now be bold and fearless in stopping Big Tech’s misuse of its monopolistic power. Too long absent and apathetic, enforcers now must prevent privacy abuse, anticompetitive tactics, innovation roadblocks, and other hallmarks of excessive market power.”
In June, Reuters reported the Trump administration was gearing up to investigate whether Amazon, Apple, Facebook and Alphabet’s Google misuse their massive market power, setting up what could be an unprecedented, wide-ranging probe of some of the world’s largest companies.
[…]
The Justice Department said the review “is to assess the competitive conditions in the online marketplace in an objective and fair-minded manner and to ensure Americans have access to free markets in which companies compete on the merits to provide services that users want.”
[…]
“There is growing consensus among venture capitalists and startups that there is a kill zone around Google, Amazon, Facebook and Apple that prevents new startups from entering the market with innovative products and services to challenge these incumbents,” said Representative David Cicilline, a Democrat who heads the subcommittee.
[…]
Senator Marsha Blackburn, a Republican, praised the investigation and said a Senate tech task force she chairs would be looking at how to “foster free markets and competition.”
It’s good to hear that the arguments are not only founded on product pricing but are much more wider ranging and address what exactly makes a monopoly.
Tinder joined a growing backlash against app store taxes by bypassing Google Play in a move that could shake up the billion-dollar industry dominated by Google and Apple Inc.
The online dating site launched a new default payment process that skips Google Play and forces users to enter their credit card details straight into Tinder’s app, according to new research by Macquarie analyst Ben Schachter. Once a user has entered their payment information, the app not only remembers it, but also removes the choice to swap back to Google Play for future purchases, he wrote.
“This is a huge difference,” Schachter said in an interview. “It’s an incredibly high-margin business for Google bringing in billions of dollars,” he said
The shares of Tinder’s parent company, Match Group Inc., spiked 5% when Schachter’s note was published on Thursday. Shares of Google parent Alphabet Inc. were little changed.
Apple and Google launched their app stores in 2008, and they soon grew into powerful marketplaces that matched the creations of millions of independent developers with billions of smartphone users. In exchange, the companies take as much as 30% of revenue. The app economy is expected to grow to $157 billion in 2022, according to App Annie projections.
As the market expands, a growing revolt has been gaining steam over the past year. Spotify Technology SA filed an antitrust complaint with the European Commission earlier this year, claiming the cut Apple takes amounts to a tax on competitors. Netflix Inc. has recently stopped letting Apple users subscribe via the App Store and Epic Games Inc. said last year it wouldn’t distribute Fortnite, one of the world’s most popular video games, through Google Play.
Microsoft Corp. agreed to pay $25 million to settle U.S. government investigations into alleged bribery by former employees in Hungary.
The software maker’s Hungarian subsidiary entered into a non-prosecution agreement with the U.S. Department of Justice and a cease-and-desist order with the Securities and Exchange Commission, Microsoft said in an email to employees from Chief Legal Officer Brad Smith that was posted Monday on the company’s web site. The case concerned violations of the Foreign Corrupt Practices Act, according to an SEC filing
The Justice Department concluded that between 2013 and June 2015 “a senior executive and some other employees at Microsoft Hungary participated in a scheme to inflate margins in the Microsoft sales channel, which were used to fund improper payments under the FCPA,” Smith wrote in the email.
Microsoft sold software to partners at a discount and the partners then resold the products to the Hungarian government at a higher price. The difference went to fund kickbacks to government officials, the Wall Street Journal reported in 2018. The company fired the employees involved, Smith noted.
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The SEC noted that some Microsoft employees violated the law by engaging in unscrupulous sales practices in Saudi Arabia, Turkey and Thailand.
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The U.S. uses the FCPA to police bribe-paying around the world, in what officials have said is an effort to even the playing field. Since 2005, the government has collected billions of dollars in fines from foreign companies and U.S. firms found to be in violation of the law.
Faced with continued rumbles of discontent from its reseller network on the eve of its Inspire conference, Microsoft has climbed down from plans to pull free software licences from its channel chums.
Doubtless fearful of a keynote sabotaged by a baying mob of angry resellers, Microsoft corporate veep for commercial partners Gavriella Schuster was tasked with the job of backing down.
Thanking its besuited middlemen and woman for “sharing your feedback with us”, Schuster confirmed the kindly corporation had “made the decision to roll back all planned changes related to internal use rights and competency timelines”.
Schuster blustered that “a thorough review” had taken place over the, er, days since the company dispensed the bad news and said: “We listened to you, and we have acted.”
The veep sadly missed out the words: “We looked at what annoying those who sell our stuff would do to our bottom line” in the latter comment. Fixed it for you.
More than 2,500 resellers and integrators have signed a petition opposing Microsoft’s intention to remove free software licences granted to members of the channel to run their business.The changes are described here:Effective July 1, 2020, we will retire the internal use rights (IUR) association with the product licenses partners receive in the Microsoft Action Pack and included with a competency. Product license use rights will be updated to be used for business development scenarios such as demonstration purposes, solution/services development purposes, and internal training.Beginning October 1, 2019, the product licenses included with competencies will be specific to the competency you attain. Please review the benefits you will receive with your competency in Partner Center at time of purchase. Additional licenses can be purchased through commercial licensing to run your business.There are a huge number of partners resellers, most of them small businesses, who recommend, resell and support customers running Microsoft wares or services. In 2017, Microsoft said that “our partners employ more than 17 million people around the world”.The barriers to entry are low and companies who sign up can qualify for a range of competencies, starting with an “Action Pack” subscription that comes with a wide range of benefits, such as five Office 365 seats, five Dynamics 365 licences, 2-core SQL Server, ten Windows 10 Enterprise packages, $100 per month Azure credit and so on. The Action Pack costs around £350 per year but represents excellent value if you would otherwise have to purchase the licences. The same is true of the higher levels, Silver and Gold competencies, which command a higher fee but provide a wider range of benefits.Resellers are not allowed to resell these specific licences, but critically, they do allow use for “internal business purposes”. Smaller Microsoft channel firms have been able to operate their businesses, in large part, using these subsidised licences.That offer is now ending. “We will retire product licenses for internal use purposes on July 1 2020,” stated the Microsoft Partner Network (MPN) guide.There are more changes too, and none of them good for partners. Free support incidents are being withdrawn. “Starting August 2019, on-premise Product Support incidents will no longer be available for Action Pack and competencies,” warned Microsoft.In addition, the matching of cloud benefits to specific competencies means reduced benefits. Dynamics 365 seats, for example, will now only be available to partners with the Cloud Business Applications Competency, instead of being doled out to all.
The current unrest concerns a proposed change to Hong Kong’s extradition laws that would allow island fugitives to be transferred to Taiwan, Macau, and mainland China. The proposal sparked mass outrage, as many Hongkongers saw it as little more but a new way for the People’s Republic of China to erode the legal sovereignty of Hong Kong.
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So tens of thousands of Hongkongers took to the streets to protest what they saw as creeping tyranny from a powerful threat. But they did it in a very particular way.
In Hong Kong, most people use a contactless smart card called an “Octopus card” to pay for everything from transit, to parking, and even retail purchases. It’s pretty handy: Just wave your tentacular card over the sensor and make your way to the platform.
But no one used their Octopus card to get around Hong Kong during the protests. The risk was that a government could view the central database of Octopus transactions to unmask these democratic ne’er-do-wells. Traveling downtown during the height of the protests? You could get put on a list, even if you just happened to be in the area.
So the savvy subversives turned to cash instead. Normally, the lines for the single-ticket machines that accept cash are populated only by a few confused tourists, while locals whiz through the turnstiles with their fintech wizardry.
What could protestors do in a cashless world? Maybe they would have to grit their teeth and hope for the best. But relying on the benevolence or incompetence of a motivated entity like China is not a great plan. Or perhaps public transit would be off-limits altogether. This could limit the protests to fit people within walking or biking distance, or people who have access to a private car—a rarity in expensive dense cities.
If some of our eggheads had their way, the protestors would have had no choice. A chorus of commentators call for an end to cash, whether because it frustrates central bank schemes, fuels black and grey markets, or is simply inefficient. We have plenty of newfangled payment options, they say. Why should modern first world economies hew to such primordial human institutions?
The answer is that there is simply no substitute for the privacy that cash, including digitized versions like cryptocurrencies, provide. Even if all of the alleged downsides that critics bemoan were true, cash would still be worth defending and celebrating for its core privacy-preserving functions. As Jerry Brito of Coin Center points out, cash protects our autonomy and indeed our human dignity.
Of course, Western offerings like Apple Pay and Venmo also maintain user databases that can be mined. Users may feel protected by the legal limits that countries like the United States place on what consumer data the government can extract from private business. But as research by Van Valkenburgh points out, US anti-money laundering laws afford less Fourth Amendment protection than you might expect. Besides, we still need to trust government and businesses to do the right thing. As the Edward Snowden revelations proved, this trust can be misplaced.
Hong Kong is about as first world as you can get. Yet even in such a developed economy, power’s jealous hold is but an ill-worded reform away. We should not allow today’s relative freedom to obscure the threat that a cashless world poses to our sovereignty. Not only can “it happen here,” for some of your fellow citizens, it might already have.
Retail Industry Leaders Association (RILA), [is] a trade group representing the likes of Walmart, Target, Dollar General, Coca Cola and other world-swallowing corporations
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RILA, as it turns out, is feeling just as freaked out by the dominance of a handful of tech giants as the rest of us, and in a letter today to the Federal Trade Commission—which, along with the Justice Department, has called dibs on potential antitrust investigations into tech firms including Amazon, Google, Facebook, and Apple—it fired its first shot in the ongoing war to break up Amazon, Google, and the rest.
While activists and, increasingly, politicians have taken up the cause of curbing the unimaginable power these companies have amassed and exerted with little oversight, this letter is tantamount to 200 of the biggest U.S. companies declaring open season on their ecommerce competitors. Importantly, RILA also represents a handful of ostensible Big Tech allies, with T-Mobile listed as a member, and Accenture and IBM executives sitting on RILA’s board.
The first major complaint RILA lodges is with search, which allows these companies—namely, Google and Amazon—to dictate what information buyers get before they even make a purchase (emphasis ours throughout):
While classical antitrust analysis assumes that customer behavior is driven by prices, the reality is that consumers can only make price-driven decisions if they have accurate, trustworthy, and timely access to information about prices […] It should thus be quite concerning to the Commission that Amazon and Google control the majority of all internet product search, and can very easily affect whether and how price information actually reaches consumers.
This isn’t a theoretical complaint either. Amazon already uses design flags like “Amazon’s choice” to differentiate certain products, many of which were found to be unreliable. Researchers from Harvard and the University of Oklahoma have also suggested that “Amazon is more likely to target successful product spaces” and “less likely to enter product spaces that require greater seller efforts to grow,” suggesting it uses data harvested via its role as a platform to inform its decisions as a seller of a growing number of private-label products.
Of course, it wouldn’t be an antitrust argument without some mention of data privacy, which is another RILA area of complaint:
[B]ecause nearly two-thirds of consumers search directly on Amazon when looking for a consumer product, it has a massive amount of data on consumer shopping needs and behaviors. According to its Privacy Notice, Amazon can and has shared consumer data with many unaffiliated companies, including the largest wireless carriers. Moreover, Amazon does not offer the consumer a choice to opt-out of this data sharing. As a result, consumers are asked to make tradeoffs that they could not anticipate or understand—provide their personal data to Amazon […] or not be allowed to shop on the most widely used platform in the world.
Lastly, RILA hits on something that, at least in the day-to-day reporting of growing anti-monopoly sentiment against tech platforms, tends to get lost: quality. RILA even earmarks this as an issue that is “frequently overlooked in favor of a focus on price.” Given that a huge swath of internet services are “free” or near-free (in exchange for your valuable data, an eyeful of ads, or both, of course), the antitrust argument that monopoly power online hurts consumers can be hard to prove in a monetary sense. Still, RILA argues:
It is worth observing how the quality of [Google, Facebook, and Amazon] have degraded as these companies shifted from fierce competitors to dominant monopolists. Google search used to be elegant and free from advertising […] Facebook co-founder Chris Hughes recently observed that Facebook’s initial innovations—including its “simple, beautiful interface”—were forged by the pressure of competition [but] has given way to advertising and interfaces that make it difficult for users to avoid content they do not wish to see.
Obviously, RILA’s place in this fight is self-serving: If anyone was hit hardest by ecommerce, it was traditional retail. Still, where reforming antitrust law for the digital age is concerned, RILA is largely right, even if it feels somewhat icky to be agreeing with Walmart about anything.
3 July 2019: The CMA has launched a market study into online platforms and the digital advertising market in the UK. We are assessing three broad potential sources of harm to consumers in connection with the market for digital advertising:
to what extent online platforms have market power in user-facing markets, and what impact this has on consumers
whether consumers are able and willing to control how data about them is used and collected by online platforms
whether competition in the digital advertising market may be distorted by any market power held by platforms
We are inviting comments by 30 July 2019 on the issues raised in the statement of scope, including from interested parties such as online platforms, advertisers, publishers, intermediaries within the ad tech stack, representative professional bodies, government and consumer groups.
Government officials from Germany and the Netherlands have signed an agreement this week to build the first-ever joint military internet.
The accord was signed on Wednesday in Brussels, Belgium, where NATO defense ministers met this week.
The name of this new Dutch-German military internet is the Tactical Edge Networking, or TEN, for short.
This is the first time when two nations merge parts of their military network, and the project is viewed as a test for unifying other NATO members’ military networks in the future.
The grand master plan is to have NATO members share military networks, so new and improved joint standards can be developed and deployed across all NATO states.
TEN will be headquartered in Koblenz, Germany, and there will also be a design and prototype center at the Bernard Barracks in Amersfoort, the Netherlands.
For starters, TEN will merge communications between the German army’s (Bundeswehr) land-based operations (D-LBO) and the Dutch Ministry of Defence’s ‘FOXTROT’ tactical communications program, used by the Dutch military.
Troops operating on top of the TEN network will use identical computers, radios, tablets, and telephones, regardless of the country of origin.
TEN’s deployment is expected to cost the two countries millions of euros in costs to re-equip tens of thousands of soldiers and vehicles with new compatible equipment.
