Tidbits #71 – Russia, Free Fire Ban, Inflation, Blockades + More

Hello, hello! 👋🏻👋🏻

Welcome back to another edition of Tidbits covering all the recent things worth talking about in business, media, and technology.

Sorry I’m a bit behind since the last issue 3 weeks ago. Unfortunately, I seem to have given myself a combination of carpel tunnel syndrome and tendonitis. Will need to see how my arm situation evolves from here to know how much I can type (and unfortunately each issue does take almost a full day to hash out). I may have to pick my spots in the coming weeks to meter out my typing.

🗺 World Affairs + Geopolitics

#1 Russia to Invade Ukraine “Very Soon”?

Russia has compiled lists of Ukrainians to target after an invasion, a U.S. official has said, as President Vladimir Putin is set to address his country’s security council.
In a letter to the U.N.’s Human Rights chief, seen by NBC News, U.S. Ambassador to the U.N. Bathsheba Nell Crocker said the U.S. had “credible information” that Russia has compiled lists of Ukrainians “to be killed or sent to camps” following an invasion. The contents of the letter were first reported Sunday evening by The Washington Post.
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It came after the White House warned Moscow was planning to launch a full-scale attack on Ukraine “very soon,” and British Prime Minister Boris Johnson warned there was evidence Russia is planning “the biggest war in Europe since 1945.”
Source: CNBC

Unsure if war will break out or not.

But if so, I think it will be a reminder for most of the world (especially the West) that despite being at constant “war” over the last two decades in Iraq and Afghanistan, the world has been remarkably peaceful…only several thousand people died in the Middle East over two decades. That is probably several thousand more than necessary, but if the world truly returns to war, several thousand people could die every day.

#2 The Battle for the Future of the West

Vladimir putin likes to say that playing chess with the United States is like playing against a pigeon: It struts around the board, knocks over the pieces, shits everywhere, and then declares victory. Playing chess with Europe, in contrast, must be like playing with a child who has forgotten the rules of the game, claims to have invented new ones, and then sulks when no one wants to play.
For so long, many people in Europe, including the U.K., have comforted themselves with platitudes that “hard power” no longer matters, that spheres of influence are outdated, and, even, that geopolitics itself has become somewhat passé. Then Russia sent 100,000 troops to the Ukrainian border. Suddenly playtime was over and once again the future security of Europe was being decided by someone else, somewhere else.
Source: Atlantic

What an intro.

And the concluding paragraph(s) is equally devastating. But I won’t spoil it for you. This is obviously an opinion piece, and it’s a painful opinion. But maybe it’s closer to the truth than the West believes.

As someone that tries to tap into the media around the world to understand how perspectives differ (which is important because every country is making decisions based on their own perspective), the gap between US / Europe and Russia / China is stark. US (and to some extent Europe) view Russian and Chinese actions as filled with ego and hubris. But Russia and China also view US actions as filled with hubris. This is important to keep in mind. The US / West is not destined to “win”. And it’s kind of strange that the US / West assumes it will win a struggle against Russia / China without really trying. Russia and China appear to be mobilizing the full efforts of their country for years of struggle, yet Americans can barely bother to stop watching Netflix.

#3 India Bans Garena Free Fire, 53 More China-Linked Apps

India has banned Tencent’s Xriver, Garena’s Free Fire, NetEase’s Onmyoji Arena and Astracraft and 50 more apps with apparent links to China, the latest in a series of similar blockings over the past one and half years on national security grounds.
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The series of app blockings in India began in late June 2020 when the world’s second largest internet market banned TikTok, Alibaba’s UC Browser and Tencent’s WeChat and dozens of other apps with links to China over national security concerns.
New Delhi, which has never explicitly mentioned China in these announcements, did not make an official statement on its move Monday. With most of the previous bans, New Delhi has said the way the apps have compiled, mined, and profiled users’ data posed risks to national security and defence of India.
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US giants as well as firms from other nations including China and South Korea aggressively focused on India in the past decade as they looked for the next great growth region. In comparison, only a handful of Indian firms operate in China.
Source: TechCrunch

This piece of news had a very negative impact on Sea’s stock. I would normally slot this under the Media section, but this has a lot of geopolitical implications worth considering in a broader context. It’s not clear why the game is being blocked, yet.

1/ Sea isn’t a Chinese company. It’s Singaporean. Although the company was founded by an ethnic Chinese, the founder holds a Singaporean passport. Is the game being blocked because of the company’s perceived potential loyalties to China even though it is not a Chinese company? Is this a global trend or is India an outlier here, assuming this is the reason?

2/ Tencent (a Chinese company) is one of Sea’s largest shareholders. Tencent recently reduced its stake as well as convert its super voting shares to ordinary shares. These actions brought Tencent’s voting power from >20% to <10%. But even while Tencent had >20% voting power, Tencent had an agreement with Sea to always vote as preferred by Sea. Is India concerned about Tencent’s voting power over the company even though Tencent did not have the power to vote against management’s wishes? Is Chinese minority ownership now a concern around the world in (arguably) a non-strategic industry?

3/ Data collection and data privacy concerns? This is clearly a rising concern globally. Every country (that has the power to demand this) will want their citizen’s data housed in their own country (which benefit edge networks like Cloudflare). But what data is realistically at risk when it comes to a game? And what happens if you are playing a multi-player game with players from different countries? What does it mean to have the data stored locally if 1 person playing is in India and 1 person is in Europe?

Right now games are still somewhat frivolous, but increasingly games will become worlds unto their own. Games will become social networks. And we have already seen what happens when social networks operate in an uncontrolled manner. To what extent will countries want to control games for fear of metaverse social networks wrecking society? This is an important consideration as more and more countries (especially China) consider games to be the key industry for “cultural exports” (historically dominated by American music, film, and social media).

4/ The most interesting consideration is whether India begins to create extraterritorial law. There’s reason to suspect Trump sought to force a TikTok ban / sale in the US after India banned it. India is also becoming a very important geopolitical partner for the US. This raises the potential for geopolitical coordination in ways that would have been unlikely a decade ago.

People have disliked US laws for a long time because it extends to other countries even when it is meant to be domestic.

Europe has similarly created extraterritorial law through GDPR privacy regulations. Since internet companies are global in nature, it’s very hard to create specific versions of their services that only operate a certain way for a certain geography. As Europe pushes harder and harder on data privacy, it is also affecting operations of internet services in other countries. This is extraterritorial law.

China’s actions have had similar effect. Many businesses adjust their global operations in order to not offend China because China is a large and important market. Unfortunately, many businesses (especially internet-related) are shut out of China entirely. This makes India’s large market appealing and attractive to US and European companies. India in the long-run could end up with the same impact as China – a large market that Western companies care about and may adjust global operations in order to not offend India. Understanding India’s long-term goals and vision, therefore, is becoming more and more important. India has never been passive on the global stage, but it never had the market or political weight to bend the world to its will. Increasingly it does.

#4 Ex-Afghan President: Biden Order On Frozen Funds An Atrocity

Afghanistan’s former president on Sunday called a White House order to unfreeze $3.5 billion in Afghan assets held in the U.S. for families of 9/11 victims an atrocity against the Afghan people.
Former President Hamid Karzai at a packed news conference sought the help of Americans, particularly the families of the thousands killed in the 9/11 terrorist attacks, to press President Joe Biden to rescind last week’s order. He called it “unjust and unfair,” saying Afghans have also been victims of al-Qaida leader Osama bin Laden.
Source: AP News

These funds were frozen back in August when the Taliban took over. At the time, we discussed how the episode reveals the plumbing of the dollar system. The USD system gives the US significant sanction powers because most countries keep their USD at the Federal Reserve banks in US (or allied) soil. This is because you usually don’t want to be shipping money around physically. It’s inefficient. It’s better to keep it at a bank (with the US Fed) and just digitally transfer money when you make transactions.

That’s a problem if the US is not happy with you and wants to freeze your assets.

It’s interesting because the former Afghan President (that got ousted by the Taliban) is unhappy that the US is now taking Afghanistan’s reserves and distributing it to US victims impacted by 9/11. The Taliban runs the country now. Although he’s probably not happy about it, the money technically does belong to the Afghan people. But from the US’ perspective, does it make sense for the Afghan people’s money to be handed over to the Taliban?

These are all very hard questions…and it likely makes many countries rethink their reliance on the USD unless they are very closely aligned with US goals. However, given the uncertain future of American politics, how many countries can realistically know whether they are aligned or not?

🤑 Economics + Markets

#5 Inflation Surges 7.5% On An Annual Basis, Even More Than Expected And Highest Since 1982

Consumer prices surged more than expected over the past 12 months, indicating a worsening outlook for inflation and cementing the likelihood of substantial interest rate hikes this year.
The consumer price index for January, which measures the costs of dozens of everyday consumer goods, rose 7.5% compared with a year ago, the Labor Department reported Thursday.
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Markets also got more aggressive in pricing rate hikes ahead.
The chances of a 0.5 percentage point Fed rate increase in March rose to 44.3% following the data release, compared with 25% just before, according to CME data. Chances of a sixth quarter-percentage point hike this year rose to about 63%, compared with about 53% before the release.
Source: CNBC

Inflation is running very hot. After a decade of loose monetary policy and QE with limited inflation, we seem to have truly overdone it this time.

But there’s a couple of unique differences this time around: 1/ Loose monetary policy was combined with loose fiscal policy (we actually sent checks to people), and 2/ Supply chains are a complete mess.

The Fed is now forced to tighten monetary policy aggressively, but it’s not clear how much that will help undo inflation caused by supply chain stress. In addition, the fiscal checks already ended a few months ago. The Fed could end up pulling back much more aggressively than it needs to given the fiscal checks have already ended, and hopefully supply chains start to normalize.

While monetary policy certainly has been very aggressive, it’s not clear to me that monetary policy has been the key cause for inflation. Seems more likely that fiscal checks and supply chain issues have been bigger contributors. I hope we don’t learn the wrong lesson where we become so averse to monetary policy that we don’t do anything the next time we need to.

We shall see.

#6 U.S.-Canada Bridge Reopens After Police Clear Protesters

North America’s busiest trade link reopened for traffic late Sunday evening, ending a six-day blockade, Canada Border Services Agency said, after Canadian police cleared the protesters fighting to end COVID-19 restrictions.
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The blockade had choked the supply chain for Detroit’s carmakers, forcing Ford Motor Co (F.N), the second-largest U.S. automaker, General Motors Co (GM.N)and Toyota Motor Corp (7203.T) to cut production.
The bridge carries about $360 million a day in two-way cargoes – 25% of the value of all U.S.-Canada goods trade.
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The “Freedom Convoy” protests, started in the national capital Ottawa by Canadian truckers opposing a vaccinate-or-quarantine mandate for cross-border drivers, entered its 17th day on Sunday. But it has now morphed into a rallying point against broader COVID-19 curbs, carbon tax and other issues, with people joining in cars, pick-up trucks and farm vehicles.
Source: Reuters

While I would like to see supply chains normalize, it’s unclear how soon that will happen since we continue to experience disruptions like the blockage in Canada. Canada is one of the US’ largest trading partners alongside China. This will not be good for inflation.

#7 Trudeau Vows To Freeze Anti-Mandate Protesters’ Bank Accounts

Canadian Prime Minister Justin Trudeau has taken the unprecedented step of invoking the Emergencies Act to crack down on anti-vaccine mandate protests.
Mr Trudeau said the scope of the measures would be “time-limited”, “reasonable and proportionate” and would not see the military deployed.
With no need for court orders, banks can freeze personal accounts of anyone linked with the protests.
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Ms Freeland said they were broadening Canada’s “Terrorist Financing” rules to cover cryptocurrencies and crowdfunding platforms, as part of the effort.
Source: BBC

What’s going on in Canada is an economic issue for the US, but it’s a political issue in Canada.

Canada has limited tools to deal with the blockade. Like most democracies, there are very limited tools to deal with domestic unrest because the most direct way is to use force, but most democracies are increasingly reluctant to do so. Canada is instead pursuing economic / financial controls that are normally reserved for money launderers and international criminals.

What will be interesting to watch is how democracy is remade by these Covid protests.

On one hand, you have a lot of people realizing that if you’re unhappy with certain laws, you can either ignore it or block an important piece of infrastructure until you get what you want. Normally, a democracy gives everyone a voice. It gives everyone a voice, but it doesn’t guarantee that everyone gets the outcome they want. Usually only the majority’s views are implemented. But even if you are in the minority, you can take comfort that your views are heard. That is the grand bargain of Democracy. But increasingly, people think democracy means your views (even if it is in the minority) must be respected. And if it isn’t, you can ignore it or block a bridge. Call this “Democracy” 3.0.

On the other hand, elected leaders that represent the majority is finding it increasingly hard to deal with minority parties / views. And when there is unrest or disruption, leaders are forced to use very limited tools that all look very, very autocratic. Historically, if you aren’t happy with something, you just try to vote the leader out. But the new way of doing things in “Democracy” 3.0 might be to take the economy hostage and play chicken with your government, banking on the belief that your government will be too chicken to pull authoritarian levers.

As our societies become more and more divisive, expect “Democracy” 3.0 to be more and more volatile.

#8 ‘Occupy Canberra’: Behind The Anti-Vaccine Protests At Parliament House

It’s called the “Convoy to Canberra”, with participants in the protest driving en masse from as far away as north Queensland and Perth. Its roots snake to several recent events in the anti-vaccination and sovereign citizen space.
Inspired by large-scale truck driver protests in Canada, Australian anti-vaccine and anti-government groups began demanding a “trucker convoy for freedom” online. Dr Kaz Ross, a researcher who monitors conspiracy groups, said some involved in the convoy had links to January’s protests at old Parliament House, which saw the building’s doors damaged by fire.
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“End the mandates, end the restrictions, protect the children,” is one slogan from online posters.
But as groups ballooned, protesters expanded their list of grievances. By Tuesday, hundreds yelled claims that federal politicians were “paedophiles”, and called for prime minister Scott Morrison to be “removed”.
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“They say they’re sick of protesting and going home. That’s why they’re camping, they’re saying now is the time to ‘take back the government’.”
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Protesters waved flags or wore merchandise supporting Donald Trump, the United Australia Party, One Nation, the dangerous QAnon conspiracy theory, and anti-lockdown groups.
Source: The Guardian

So we have similar movements across US, Canada, and Australia. Seems like a transnational political movement across the English world if you ask me.

👻 Cryptocurrencies + NFTs

#9 Solana Pay Could Solve The Crypto Payments Puzzle

A new way for people to pay with crypto, Solana Pay, is launching today. It’s one of many efforts to solve the crypto payments puzzle, from bitcoin’s Lightning Network to stablecoins. But Solana believes it has solved some of the problems that have held crypto payments back.
Solana Pay is an open protocol for developers with standardized payment specifications to build on and customize, meaning merchants can connect directly or use software built by ecommerce providers, point-of-sale software makers or payments companies.
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While the Solana network is not as big as the bitcoin blockchain or Ethereum’s network, Solana has fast transactions (65,000 per second) and a low cost (fractions of a cent per transaction).
Source: Protocol

Crypto is mostly an asset meant to be hodled these days but that’s because they failed so miserably at transactions. Bitcoin is too slow to be used for daily transactions. Ethereum is better but still too slow. And both are very expensive to transact with.

Solana is much better in terms of transaction speeds. Maybe Solana will succeed where the others have failed.

#10 There’s a Portrait of Jamie Dimon Hanging in JPMorgan’s Metaverse Lounge

JPMorgan Chase & Co. has a lounge in the metaverse: Visitors are greeted by a digital portrait of Jamie Dimon and a roaming tiger. Walk upstairs and you’ll see an executive’s presentation on the crypto economy.
The lounge is located at the Metajuku mall in Decentraland, a browser-based metaverse backed by the Digital Currency Group. Onyx, JPMorgan’s blockchain unit formed in 2020, set up the lounge as it released a paper on how businesses can explore opportunities in the metaverse.
Source: Bloomberg

Does this make JPM cool or disruption proof?

#11 The Crypto Craze Is Spawning A New Niche In Psychology: Therapy For Crypto Addicts

Not long after covid-19 forced Patty Fiore to move her therapy practice to Zoom, she started noticing a new affliction. Her new clients, many of whom were from San Francisco, described to her how the crypto industry was wrecking their mental health. Crypto’s wild ride, Fiore said, was affecting their psyche. “‘Should I have sold it at a higher price?’ ‘Should I have done it two months ago?’ All these questions were cropping up, along with regret, depression, and anxiety.”
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Many crypto traders exhibit behaviors that recall other forms of addiction—to alcohol, say, or gambling—but that also bear the unique stresses of this particular market.
Source: Quartz

#12 Nike Sues StockX for Selling Unauthorized Sneaker Pics as NFTs

Nike has filed a lawsuit against online sneaker reseller StockX at a New York federal court today, alleging the Detroit-based vendor has been selling images of Nike sneakers as non-fungible tokens (NFTs) without authorization.
Since January, StockX has sold a wide variety of sneaker-themed NFTs as part of its “Vault” collection.
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Nike’s filing argues that this is a clear case of copyright violation: “Those unsanctioned products are likely to confuse consumers, create a false association between those products and Nike, and dilute Nike’s famous trademarks.”
Source: Decrypt

Well that was fast. A few weeks ago back in Tidbits #69, we discussed how StockX was getting into NFTs in a pretty interesting and novel way. Many NFT projects have the issue of having to create new attractive IP, but StockX planned to directly tap into existing IP that people already care a lot about like Nike sneakers. More interestingly, they have the potential to resolve one of the biggest challenges (and opportunities) for NFTs – tying your NFT to something in real life. Since many sneakers are already authenticated, custodied, and sold on the platform, they are in a unique position to issue an NFT tied to a specific sneaker in their facility.

Well turns out Nike thinks that’s an infringement on their IP. While StockX is only trying to issue an NFT tied to a very specific sneaker in their facility, Nike is arguing it infringes on the overall brand IP of the sneaker itself.

This is a reminder that crypto began as an entirely alternative way of doing things. It is now trying to negotiate how it can coexist with an existing world of systems and laws that it was created to ignore / replace. And the existing systems and laws of the world do not appreciate being ignored.

Stocktwits is the latest online financial services firm to add crypto trading in a bid to court users looking to branch out from traditional investments.
Crypto exchange FTX US is providing the infrastructure for the trading, with fees being the same as on the FTX platform, Stocktwits confirmed to CoinDesk.
Founded in 2008, New York-based Stocktwits has historically focused on U.S. equities through its dedicated channels with collated social media discussions using specific hashtags. Crypto has lately become a more sizable part of the discussions on the site.
The platform follows the likes of Robinhood, PayPal and others in bringing crypto into the fintech fold. PayPal enlisted blockchain infrastructure firm Paxos in 2020 for a service that was seen at the time as a key moment in the mainstreaming of crypto assets.
Source: Coindesk

For those not familiar with Stocktwits, it’s a twitter-like platform for discussing stocks. A few years ago, they also added stock trading. Now they are adding crypto trading.

This is a very natural evolution. One of the most important mega trends in this world is recognizing that transactions are moving closer to where decisions are made. For example, in e-commerce you used to decide that you want something (by watching an ad) and then you go somewhere else and buy it. Now the transaction is moving closer to where the decision is made (e.g. you can now transact inside Instagram, the very place where your decision is being influenced by an ad or an influencer).

The same thing is happening to asset trading. The trading happens very far away from where the decision is made today. For retail investors, the decision is being made within Twitter or Reddit (or StockTwits). You make the decision to buy or sell something by reading what others are writing about it. Then you can hop over to Robinhood to trade it. But it makes more sense for the transaction to move closer to the point of decision making. This is why it makes sense for Stocktwits to offer trading functions. I think it will eventually make sense for Reddit to do the same if they maintain their position as THE place to discuss meme stonks. You can read about it (and do your “DD”) on Twitter, Reddit, or Stocktwits and then trade without going somewhere else (like Robinhood).

For the record, most retail investors probably shouldn’t be “investing” because whatever retail investors do hardly count as investing. But I also don’t see how this mega trend reverses.

🎭 Society

#14 IRS To End Use Of Facial Recognition To Identify Taxpayers

The IRS said Monday it will suspend the use of facial recognition technology to authenticate people who create online accounts after the practice was criticized by privacy advocates and lawmakers.
The agency said it would no longer use a third-party service, called ID.me, for facial recognition. Critics of the software said the database could become a target for cyberthreats. They also expressed concern about how the information could be used by other government agencies, among other concerns.
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“No one should be forced to submit to facial recognition to access critical government services,” he added.
Source: AP News

The power to issue and authenticate identity cards used to be a core function of governments. It’s interesting that part of that function was outsourced when it comes to digital services. But maybe the government does not have the technology capabilities to do this internally. Or maybe people don’t trust the government with this stuff in a digital world?

#15 Disney Launches New Business to Develop Residential Communities

As more and more fans look for new ways to make Disney a bigger part of their lives, The Walt Disney Company today announced plans to introduce Storyliving by Disney, vibrant new neighborhoods that are infused with the Company’s special brand of magic. These master-planned communities are intended to inspire residents to foster new friendships, pursue their interests and write the next exciting chapter in their lives—all while enjoying the attention to detail, unique amenities and special touches that are Disney hallmarks.
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“For nearly 100 years, Disney has shared stories that have touched the hearts and minds of people all around the world,” said Josh D’Amaro, chairman, Disney Parks, Experiences and Products. “As we prepare to enter our second century, we are developing new and exciting ways to bring the magic of Disney to people wherever they are, expanding storytelling to storyliving. We can’t wait to welcome residents to these beautiful and unique Disney communities where they can live their lives to the fullest.”
Source: Disney

Recently I wrote about how the world is seeing a shift and rebirth in religion. This is part of it. Disney Marvel is sort of a pantheon. Marvel heroes are sort of new age gods, and each Marvel character represents a certain human personality that we either admire or find fault with.

Some companies are better positioned than others to capitalize on this shift towards religion. Disney is one of them. Not only do many people worship their pantheon of gods. Disney wants you to live in their world.

🔋 Energy

#16 Why Germany Will Regret Its Nuclear Plant Shutdowns

At the end of 2021, in the middle of a European energy crisis which has pushed electricity costs to a record high, Germany defied critics by shutting down some of its last remaining nuclear power stations. Other countries, including Belgium and Spain are planning to follow suit in the next few years.
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Andreas Kluth: Just to bring people up to speed, Germany had 19 nuclear reactors. A few weeks ago, it shut down three of the last six. The three remaining plants will be shut down later this year. It’s all part of the nuclear exit that Angela Merkel’s government decided just after the Fukushima disaster. Being anti-nuclear is a religion in Germany, so most of the controversy right now, especially with the Greens in power, is how should the nation react to a move by the EU.
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There is a disconnect in American politics, which likes to think that energy operates as a free market when actually it doesn’t and never has because it’s just too important to be left to the market. Nuclear power presents a particular issue because so much of its benefit in terms of security and zero carbon are things that are simply not priced in the market.
Source: Bloomberg

I think in a few years it will be clear how incomprehensible Western nuclear policy has been. Not only does denuclearization make it nearly impossible to meet climate change goals, denuclearization puts the entire Western world in a very tough geopolitical spot. It makes the Western world more dependent on unstable places like the Middle East, Russia, and Venezuela.

#17 Accelerating Fusion Science Through Learned Plasma Control

To solve the global energy crisis, researchers have long sought a source of clean, limitless energy. Nuclear fusion, the reaction that powers the stars of the universe, is one contender. By smashing and fusing hydrogen, a common element of seawater, the powerful process releases huge amounts of energy. Here on earth, one way scientists have recreated these extreme conditions is by using a tokamak, a doughnut-shaped vacuum surrounded by magnetic coils, that is used to contain a plasma of hydrogen that is hotter than the core of the Sun. However, the plasmas in these machines are inherently unstable, making sustaining the process required for nuclear fusion a complex challenge.
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In a paper published today in Nature, we describe how we can successfully control nuclear fusion plasma by building and running controllers on the Variable Configuration Tokamak (TCV) in Lausanne, Switzerland. Using a learning architecture that combines deep RL and a simulated environment, we produced controllers that can both keep the plasma steady and be used to accurately sculpt it into different shapes. This “plasma sculpting” shows the RL system has successfully controlled the superheated matter and – importantly – allows scientists to investigate how the plasma reacts under different conditions, improving our understanding of fusion reactors.
Source: DeepMind

Amazing.

💬 Media + Games

#18 [NSFW] Problems at Roblox (RBLX)

Roblox (NYSE: RBLX — $38.3 billion) is a platform for children generally between six and fourteen to play online. It is also the leading platform for pedophiles. Roblox ex-employees, Roblox developers, Roblox award winners, and Roblox users have been linked to a wide array of misconduct.
Source: The Bear Cave

These are some serious allegations. I’m not an investigative journalist so I have no view on how credible these allegations are. But I do know the Internet and software are tools, and all tools can be abused and used for dark purposes.

This is not to pick on Roblox specifically, but I do think these are issues worth thinking about, especially if the Metaverse (i.e. some 3D version of the internet) is ever to materialize.

Our digital borders are already probably too loosely policed. It becomes ever more dangerous if we one day fully live in it.

Human civility is an illusion that is created through culture and laws. It’s way more brittle than people assume. The ultimate forcing function that ensures civility is that if you do something outrageous and unacceptable to society, you will be put in place (usually behind bars but sometimes dealt with alternatively…). But that forcing function disappears in digital space because our physical presence and safety is almost never at risk. Criminals can act from afar, many times not even within the borders or laws of your country. Laws can definitely be taken too far by overbearing states. But history has also proven lawlessness to be an unviable societal state. Lawless societies have disintegrated far faster than authoritarian states.

#19 Roblox Tumbles Most Ever as Results Take Hit After Pandemic

Roblox Corp. shares tumbled the most ever on Wednesday after the video game platform reported bookings that missed analysts’ estimates in the fourth quarter, reflecting a retreat from the pandemic-inspired boost over the last two years.
“As parts of the world began to return to a more normal way of life, our absolute numbers have continued to grow,” Chief Executive Officer David Baszucki said, but “growth rates have declined as we are comparing, in some cases, to quarters last year in which certain key metrics doubled or even nearly tripled.”
Source: Bloomberg

Seems like a very challenging time for Roblox at the moment.

But users are still growing nicely, and the ecosystem continues to attract more and more developers and brands.

#20 Snapchat is Hosting a Virtual Concert Starring Jennifer Lopez

The company is teaming up with Universal to host a virtual concert featuring Jennifer Lopez and Colombian pop singer Maluma, which viewers can watch as their Bitmoji avatars.
The concert itself won’t take place in the Snapchat app, but would-be spectators can access the show by signing into the concert’s dedicated websitewith their Snapchat login. Users’ Bitmoji avatars will appear as spectators in the crowd. There are also a handful of interactive effects that will be available during the show, including the ability to start “the wave” and trigger a virtual laser effect. Lopez and Maluma will also appear as 3D avatars.
Source: Engadget

Although Roblox gets most of the love for metaverse-like things such as concerts, Snapchat is an interesting dark horse in the race. Snap dominates AR content, and maybe it’s not so hard to do digital concerts and experiences like Roblox?

#21 Sony to Buy Videogame Maker Bungie in $3.6 Billion Deal

Sony Group Corp.’s SONY -0.55% videogame unit said Monday that it is buying videogame developer Bungie Inc., the studio that created the Halo and Destiny franchises, in a deal valued at $3.6 billion.
Source: WSJ

A lot of deals happening in gaming space. This follows Take Two’s acquisition of Zynga and Microsoft’s acquisition of Activision Blizzard.

Probably more coming…

This is a very interesting Chess move from Sony. Sony objected to Microsoft’s acquisition of Activision for fear of losing access to Activision’s Call of Duty, one of the most popular games on Sony Playstation. However, with Bungie, Sony will now control two of the most popular titles (Halo and Destiny) on console and PCs as well. It’s a bit of offense and a bit of defense in case Microsoft plays dirty.

#22 Facebook Loses Users For The First Time In Its History

Facebook parent Meta’s quarterly earnings report on Wednesday revealed a startling statistic: For the first time ever, the company’s growth is stagnating around the world.
Facebook lost daily users for the first time in its 18-year history — falling by about half a million users in the last three months of 2021, to 1.93 billion logging in each day. The loss was greatest in Africa, Latin America and India, suggesting that the company’s product is saturated globally — and that its long quest to add as many users as possible has peaked.
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The company is facing challenges on multiple fronts, as competitor TikTok booms, federal and international regulators scrutinize its business practices, and it begins a lofty transition to focus on the “metaverse.”
Source: Washington Post

After reaching almost half of the world, core Facebook is losing users for the first time. I wouldn’t count Meta out even if core Facebook continues to struggle, but the road ahead is going to be long and hard.

Meta is competing for the future of the internet against very able competitors while trying to slow the sinking of the Facebook ship. This is before mentioning all the politicians that want them to fail.

#23 Satya Nadella: ‘Being Great At Game Building Gives Us Permission To Build The Next Internet’

SN: Take what’s happening with the metaverse. What is the metaverse? Metaverse is essentially about creating games. It is about being able to put people, places, things [in] a physics engine and then having all the people, places, things in the physics engine relate to each other.
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To me, just being great at game building gives us the permission to build this next platform, which is essentially the next internet: the embodied presence. Today, I play a game, but I’m not in the game. Now, we can start dreaming [that] through these metaverses: I can literally be in the game, just like I can be in a conference room with you in a meeting. That metaphor and the technology . . . will manifest itself in different contexts.
Another one would be in the context of a very different business process. If you look at retail or construction, that’s also like when you create a digital twin: you have a factory and you are trying to visualise how to simulate its operation. That’s also a game-playing exercise, except you’re not game playing. You’re trying to simulate how a factory functions.
Source: FT

Fascinating interview and interesting perspective on why gaming and metaverse concepts are converging.

ByteDance, owner of short-video sharing app TikTok and its Chinese sibling Douyin, has launched a social app in China that allows users to interact in a virtual community through avatars, as interest around the metaverse continues to grow.
Source: SCMP

💰 Fintech

#25 Marqeta Partners with Plaid, Bringing Together Seamless ACH Payments With the Power of Modern Card Issuing

This technology will enable Marqeta customer’s cardholders to more easily initiate ACH transactions to send money between customer accounts and external accounts. They will also be able to verify and link external accounts more quickly, making it easier to fund their accounts and start spending sooner. Marqeta customers will also be able to keep their users up-to-date on transfer status with real-time notifications and will be able to more simply handle initiation, cancellations, and returns across their accounts via Marqeta’s APIs.
“By partnering with Plaid, we are building on the capabilities of modern card issuing that make it easier for our customers to build innovative card programs that allow their businesses to thrive,” said Vidya Peters, Chief Operating Officer, Marqeta. “We’re making it as simple as possible for consumers to access their bank information from one application, and reduce the time it takes to fund and begin using their account. Through our Plaid integration, developers building on Marqeta can authenticate users’ bank accounts without the complexity and extra time associated with traditional ACH processing, creating an overall more seamless experience.”
Source: Businesswire

Plaid continues to lay the groundwork for payment rails. Right now, Visa and Mastercard rails are very good and very efficient. Although ACH is cheaper, using it is not particularly user friendly. If Plaid can make it easier to use, it could eventually become a viable alternative rail for payments. Of course, the ACH rails don’t “belong” to Plaid, but if Plaid is the only one that can make it use-friendly, then it would be the only viable on-ramp to that rail.

#26 Apple Empowers Businesses To Accept Contactless Payments Through Tap To Pay On iPhone

Apple® today announced plans to introduce Tap to Pay on iPhone®. The new capability will empower millions of merchants across the US, from small businesses to large retailers, to use their iPhone to seamlessly and securely accept Apple Pay®, contactless credit and debit cards, and other digital wallets through a simple tap to their iPhone — no additional hardware or payment terminals needed. Tap to Pay on iPhone will be available for payment platforms and app developers to integrate into their iOS apps and offer as a payment option to their business customers. Stripe will be the first payment platform to offer Tap to Pay on iPhone to their business customers, including the Shopify Point of Sale app this spring. Additional payment platforms and apps will follow later this year.
Source: Businesswire

In the last edition of Tidbit s, we discussed how Apple was on the verge of turning iPhones into payment terminals.

Now it’s official.

#27 Square Sellers Can Now Offer Buy Now, Pay Later Through Afterpay

Today, Square launches its first integration with Afterpay, providing “Buy Now, Pay Later” (BNPL) functionality to sellers using Square Online for e-commerce in the United States and Australia. The integration will enable Square sellers to offer Afterpay’s BNPL experience to their customers, helping them attract new shoppers and drive incremental revenue. This product integration becomes available at the same time Block, Inc. (NYSE: SQ) announces it has completed its acquisition of Afterpay.
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“In joining with Square, Afterpay can now more meaningfully give small and midsize sellers the tools to attract young, engaged shoppers who prefer Afterpay and help these sellers compete alongside businesses of all sizes,” said Nick Molnar, Afterpay Co-Founder and now Afterpay Lead at Square. “And this is just the beginning. As part of Square’s powerful ecosystem, we look forward to continuing to more deeply integrate the Afterpay platform to unlock even more value for sellers across the world in the coming weeks and months.”
Source: Square

The integration begins.

BNPL has historically been a merchant selling-driven process. It’s not hard to convince consumers to sign up since BNPL is basically free money (low / no interest). But it’s harder to convince the merchant to offer it because they are paying the bill. That is why Square’s acquisition of Afterpay made a good amount of sense. Square’s merchant POS business effectively solves one of the biggest problems for Afterpay – Signing up merchants. Now any Square merchant can press a button and accept / offer Afterpay BNPL.

Meanwhile, Affirm is going about this differently by partnering with players like Shopify, Amazon, etc. These are companies that already have access to many merchants. In exchange, Affirm is giving companies like Shopify and Amazon large chunks of equity to get in the door.

🛍 Commerce

#28 Amazon Finally Reveals The Size Of Its Massive Ad Business

Amazon on Thursday said it made more than $31 billion in advertising last year, a huge feat for the tech giant, which for years kept the size of its budding ad empire under wraps.
Why it matters: Amazon has one of the fastest-growing advertising businesses in the world. It now makes more money than Microsoft, Snapchat and Twitter combined on advertising annually.
Source: Axios

It was increasingly clear that Amazon ads is big. Now we know how big.

#29 Hard Times Ahead For DTC Ecommerce And The Rise Of A Dropshipping Marketplace

If you look at the below Facebook (excuse me, Meta) stock price chart, there is an obvious correlation with Shopify. Facebook lost 40% of its valuation in the last 6 months and we all know why.
Apple’s iOS privacy changes effectively killed what was a source of cheap and well-targeted traffic. CPMs were rising year-to-year even before as competition grew and the bidding war among DTC brands escalated. But Apple neutered Facebook ads once and for all.
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But Shopify, as a commerce enablement platform, doesn’t exist in a void but rather co-exists with traffic generation platforms, mainly Facebook and Google.
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Even if you have the greatest eCommerce platform but you’re unable to generate interest, traffic, and orders, it’s not going to go well for you. To convert users into buyers, at which Shopify is very effective, you first need to have users.
Source: Spree Commerce

Interesting how the past year has revealed challenges in Shopify’s model. Not only has Covid pressured supply chains and logistics, which coincidentally makes Amazon logistics much more valuable, Apple’s privacy drive is also impacting Facebook ads. Regardless of how you feel about Facebook, Facebook is one of the most important advertising channels for small businesses including many Shopify stores. Shopify merchants are mostly small businesses that have a hard time getting users to go to their websites directly. Ads play an important role in making that happen.

Facebook has a politics problem on its platform, but people should keep that cancer separate from how they view the other stuff that mostly do work on the platform such as connecting people with small businesses.

👨‍💻 Technology

#30 OpenAI – Solving (Some) Formal Math Olympiad Problems

We built a neural theorem prover for Lean that learned to solve a variety of challenging high-school olympiad problems, including problems from the AMC12 and AIME competitions, as well as two problems adapted from the IMO.^[1] The prover uses a language model to find proofs of formal statements. Each time we find a new proof, we use it as new training data, which improves the neural network and enables it to iteratively find solutions to harder and harder statements.
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While these results are extremely exciting, as they demonstrate that deep learning models are capable of non-trivial mathematical reasoning when interacting with a formal system, we are still very far from best-student performance on these competitions, only occasionally, rather than consistently, closing challenging olympiad problems.
Source: OpenAI

Technology is truly amazing. A language AI is now able to solve math olympiad problems. It’s still not as good as the best math olympians, but even if it is average compared to math olympians, it’s probably already better than 90-95% of the general population at math.

#31 Competitive Programming with AlphaCode

As part of DeepMind’s mission to solve intelligence, we created a system called AlphaCode that writes computer programs at a competitive level. AlphaCode achieved an estimated rank within the top 54% of participants in programming competitions by solving new problems that require a combination of critical thinking, logic, algorithms, coding, and natural language understanding.
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Competitive programming is a popular and challenging activity; hundreds of thousands of programmers participate in coding competitions to gain experience and showcase their skills in fun and collaborative ways. During competitions, participants receive a series of long problem descriptions and a few hours to write programs to solve them. Typical problems include finding ways to place roads and buildings within certain constraints, or creating strategies to win custom board games. Participants are then ranked mainly based on how many problems they solve. Companies use these competitions as recruiting tools and similar types of problems are common in hiring processes for software engineers.
Source: DeepMind

Here’s another interesting one! This isn’t just about a computer that can write code…it’s about a computer being able to read a complex challenging problem and write code that can solve it. It has to understand the problem, come up with a solution, and write code all at the same time!

🍪 Semiconductors + Chips

#32 NVIDIA and SoftBank Group Announce Termination of NVIDIA’s Acquisition of Arm Limited

NVIDIA and SoftBank Group Corp. (“SBG” or “SoftBank”) today announced the termination of the previously announced transaction whereby NVIDIA would acquire Arm Limited (“Arm”) from SBG. The parties agreed to terminate the Agreement because of significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties. Arm will now start preparations for a public offering.
Source: Nvidia

That’s too bad. Would have been a very interesting acquisition.

When the deal was first announced, the biggest hurdle seemed to be regulatory approval in China. I was fairly confident that would eventually get approved. But I didn’t anticipate that the US would be the one denying this deal even though Nvidia and ARM have no overlap.

#33 Intel’s Strategy For Outflanking Arm Takes Shape With Bet On RISC-V

Many of Intel’s current woes can be traced to the fact that the company was left out of the iPhone. Whether Intel passed on the opportunity or couldn’t meet the spec is by now a moot point, but missing out on the smartphone revolution—and its billions of chips—played no small part in the company falling behind the leading edge.
Now, Intel is ponying up $1 billion in an attempt to avoid repeating history.
The company announced an “innovation fund” this week that places bets on a couple of key technologies, chief among them RISC-V, a free, open source instruction set that shows promise in low-power and embedded systems, markets that are expected to grow significantly over the next several years.
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In pushing RISC-V, Intel appears to be ceding the current smartphone market to Arm (it wasn’t much of a competition anyway) while betting on simpler, smaller, and even lower-power chips that promise to be in everything from cars to smart lightbulbs. In other words, Intel is trying to squeeze Arm from the top and the bottom.
Source: ArsTechnica

Intel is struggling in x86 and is coming from behind in foundry (vs TSMC). It’ll be very hard to change the situation on x86 and ARM, but it seems like Intel is just going to try and skip ahead. If it is successful, it can own the next thing (RISC-V) before TSMC can dominate there. And RISC-V has the potential to challenge ARM in the long-run.

🚘🌽 “Nuts and Bolts” Tech

#34 Cruise Launches Public Waitlist For Its Robotaxis In San Francisco

Cruise, the self-driving company backed by General Motors and Honda, announced a public waitlist for its robotaxi service in San Francisco. It’s a significant step for the company that has previously been beset by delays in its quest to get paying customers into its autonomous ride-hailing vehicles.
The rides will be free to start out, as Cruise has yet to be approved to accept paid rides. The company, which has previously only allowed employees to ride in its autonomous vehicles, says it has tested the waters with a few of its first non-employee customers, including GM CEO Mary Barra, as well as a few non-employees.
Source: The Verge

Wonder how long before commercial robotaxis are rolled out more broadly or whether we’ll remain in “testing” for a few years.