|From: JakeStraw||6/18/2019 3:03:01 PM|
|Google Chrome blocks malicious web address tricks, lets you flag suspicious sites|
Malicious websites can use substitute characters to try to fool you into thinking they're legit. But now Chrome will let you know.
|RecommendKeepReplyMark as Last Read|
|From: Glenn Petersen||6/23/2019 9:12:13 PM|
Scoop: Bipartisan senators want Big Tech to put a price on your data
June 23, 2019
Senators Mark Warner (D-Va.) and Josh Hawley (R-Mo.) will introduce legislation on Monday to require Facebook, Google, Amazon and other major platforms to disclose the value of their users' data, as first reported Sunday evening on "Axios on HBO."
Why it matters: Our personal data is arguably our most valuable asset in the digital age, but internet users don't have any way of knowing how much their data is actually worth.
The big picture: Two decades ago, consumers made a bargain — we traded our data in exchange for using "free" sites like Facebook, Instagram, Google, YouTube and Twitter. Warner says he wants consumers to be more informed about the real value of what they give up in the form of, for example, location data, relationship status, data about the apps we use, our age, gender and lifestyle.
"These companies take enormous, enormous amounts of data about us... If you're an avid Facebook user, chances are Facebook knows more about you than the U.S. government knows about you. People don't realize one, how much data is being collected; and two, they don't realize how much that data is worth."
— Sen. Mark Warner on "Axios on HBO"
Between the lines: The point of the bill is to help consumers understand what they may be giving up when they click on "I agree" and hold tech companies to a higher level of transparency.
-- Individuals wouldn't get any sort of pay-out for the use of their data.How it works: The legislation will be introduced Monday as the Designing Accounting Safeguards to Help Broaden Oversight and Regulations on Data Act, or DASHBOARD for short.
-- The value of an individual's data is the subject of some debate. Warner says it's probably around $5 a month, while other estimates put it around $20 a month. It could be more, depending on the type of data collected.
-- The bill would require companies that generate material revenue from data collection or processing — and have more than 100 million monthly users — to disclose to users the types of data collected, how it is used, and to provide an assessment of the value of that data once every 90 days. The other side: Tech companies are reluctant to disclose specifics of how users data is gathered, shared and sold. There's little chance they'll be interested in putting a dollar figure on how much that data — the core of their business — is actually worth to them.
-- It would require these companies to disclose annually to the Securities and Exchange Commission the aggregate value of all of their users' data. The report would have to include details of contracts with third parties for data collection, how revenue is generated by user data, and measures taken to protect that data.
-- The bill would direct the SEC to develop methods for calculating the value of user data, accounting for varying uses, sectors, and business models.
-- Companies must provide a setting or tool for users to delete all or part of their data.
-- Some have argued it's not possible to calculate the exact value of specific pieces of data in a high-volume marketplace across an industry that uses data across dozens of platforms, all delivering different services with different business models. Despite more aggressive calls to break up Big Tech, Warner said he's not yet sure that's necessary, as long as Silicon Valley is receptive to more tailored measures like this bill.
-- "Boloney," Warner said of that defense. "I mean if these companies — go back to Facebook — can do all these acquisitions and many of these acquisitions were made on what appeared to be outrageous prices — they had a pretty darn good notion of how they could use that data and how much that was worth from one platform to another."
-- Warner told "Axios on HBO" he plans to introduce a separate bill "in a few weeks" that would require tech firms to make data portable so consumers can move it from one platform to another.The bottom line: "This senator's patience is wearing very thin. It's time for these companies to put their money where their mouth is."
-- He's also sponsored legislation to improve online political ad disclosures, and to ban social media sites from tricking users into giving up their data.
-- "If they're not willing to work with us on this kind of, I think, rational, focused reform, then I may very quickly join the crowd that simply says, 'you know, let's break them up,'" he said. "And I say that as somebody who was a technology entrepreneur longer than I've been a senator."
Go deeper: Axios Deep Dive on Data Privacy
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|From: Glenn Petersen||6/24/2019 4:12:02 PM|
|The full report is embedded at the link: engadget.com|
Sidewalk Labs finally publishes its smart city master plan
The company has released its long-awaited MIDP for Quayside and the broader Eastern Waterfront.
Nick Summers, @nisummers
June 24, 2019
Image credit: Sidewalk Labs
Better late than never. Sidewalk Labs, the part of Alphabet focused on cities and urban development, has unveiled its Master Innovation and Development Plan (MIDP) for a proposed smart neighborhood on Toronto's Eastern Waterfront. The MIDP is called a "draft," but it's the first official pitch document that sets out the company's vision for the area. It will be scrutinized by Waterfront Toronto, a publicly-funded organization, and ultimately, voted on by its board and the Toronto city council in late 2019 and early 2020. If it goes through, Sidewalk hopes to begin construction on the first part -- a site called Quayside -- before 2021.
The company has shared morsels of its smart city vision before. These include the 200-page document that helped it secure the project -- that is, the right to develop the MIDP -- back in October 2017. Since then, Sidewalk Labs has been stuck in a research phase, consulting with experts and gathering public feedback. The team has shared some, but not all of its evolving ideas through a mixture of live events, blog posts, PDF presentations and podcasts. These snippets, it always emphasized, were exploratory and subject-to-change ahead of its all-important MIDP.
The document, even in draft form, solidifies the company's thinking. It also gives Toronto residents their clearest picture yet of what a smart neighborhood spearheaded by Sidewalk Labs -- and by extension, Google -- might look like. Below, we've summarized the main features that will likely spark debate in the coming months.
Quayside and Villiers West
First and foremost, a bit of geographical background. The company is currently proposing two smart neighborhoods -- Quayside and Villiers West -- that will exist inside a broader area called the Innovative Development and Economic Acceleration (IDEA) district. Quayside would be the first part of the project, and house 4,200 residents. The company is then proposing a partial redevelopment of Villiers Island, called Villiers West, that would house a 1.5 million square foot innovation campus. Google would build a new headquarters on this land and an applied research institute for urban innovation, "anchored by local institutions." Villiers West would house 2,700 residents and offer 7,400 jobs.
As expected, Sidewalk Labs wants to use timber to construct most of the buildings inside the Eastern Waterfront. The materials would be sourced from a new factory in Ontario that would, according to the company, create roughly 2,500 manufacturing jobs. The final structures would offer adaptable "Loft" spaces with floor plates that can serve both residential and commercial tenants. They would have also have "flexible wall panels" to accelerate renovations and reduce vacancies. Crucially, the company is promising "an ambitious below-market housing program" that would include 20 percent affordable housing and 20 percent middle-income housing units.
Every building inside Quayside will have a Toronto Green Standard Tier 3 rating for energy efficiency and a Tier 4 rating for greenhouse gas intensity. The district would also leverage a thermal grid that, in part, relies on the natural temperature of the earth to both heat and cool homes. In addition, Quayside would use solar energy, some kind of battery storage solutions, and software called Schedulers to optimize energy usage for residents, businesses and building operators. Finally, the proposed smart neighborhoods would have a "smart disposal chain" that includes an underground tube system for household and business waste.
Sidewalk Labs is pushing ahead with the independent data trust that it first announced last October. The proposed watchdog would oversee, analyze and ultimately approve any company that wants to collect or use urban data -- including Sidewalk Labs. The Alphabet-owned company has made three overarching commitments: No selling personal information, no using personal information for advertising, and no disclosing personal information to third parties without explicit consent. The trust, though, could hold other companies to higher or lower standards -- for now, it's still a theoretical concept. The ambiguity though, won't assure residents who are worried the project will become a privacy nightmare.
Sidewalk Labs is pitching three major public spaces for Quayside, called Parliament Plaza, Parliament Slip and Silo Field. They would be supported by building "Raincoats" and free-standing "Fanshells" to provide shelter during harsh weather. The company will also introduce an adaptable ground-floor "stoa" concept that can support stores, restaurants, community spaces, pop-ups and small businesses. In addition, Sidewalk Labs will push ahead with its modular pavement system that could make it easier to repurpose parts of the city -- think temporary street festivals, rush-hour cycle lanes and ride-hailing drop-off points -- for public use.
Everyone wants to know how Sidewalk Labs will make money from the project. In the MIDP, the company outlined its "specific commitments" and associated "business models." The commitments include a $900 million equity investment that will form part of a $3.9 billion budget for both Quayside and Villiers West. It's also proposing $400 million in optional financing to accelerate the development of the Light Rail Transit (LRT) that is needed to connect the area to the rest of Quayside, as well as "municipal and advanced infrastructure systems" in the area.
On the flipside, Sidewalk wants "standard real-estate economics" for property sold and rented across both Quayside and Villiers West. It would also charge for "advisory services," and "standalone economics" for its investment in the proposed timber factory ($80 million) and a new venture fund ($10 million), based in Villiers West, with a mission to help Canadian startups. Sidewalk Labs would also charge for select technologies that cannot be provided by external partners and request some kind of "market return" for the optional LRT financing, should Toronto decide to go with it.
Finally, Sidewalk is suggesting performance payments, at the end of the project, based on the following: "Success in accelerating development, achieving priority outcomes, and generating new economic activity and government revenues."
Sidewalk admits that its involvement beyond Quayside -- including Villiers West, which would house its new Google office -- will need to be "earned, not guaranteed." It has therefore proposed a number of steps that will be gated -- until it completes the first, it cannot start the second, and so forth. The steps include submitting a Quayside development plan before 2021; beginning construction on Quayside before 2022; submitting a Villiers West Development Plan before 2023; beginning construction on Villierst West before 2024; proposing innovation guidelines for the broader IDEA district by 2025; and requesting performance payments by 2028.
"To successfully achieve each stage gate, Sidewalk Labs would prove that its progress was consistent with Waterfront Toronto's priority objectives and demonstrate the effectiveness of its overall approach," the company says in the MIDP.
Reactions to the MIDP has been mixed. Stephen Diamond, Chairman of the Waterfront Toronto board of directors, said there were some " exciting ideas" in the document, as well as "proposals where it is clear that Waterfront Toronto and Sidewalk Labs have very different perspectives about what is required for success." He said the IDEA District was a "premature" suggestion and argued that Sidewalk Labs shouldn't be the lead developer of Quayside. "Should the MIDP go forward, it should be on the basis that Waterfront Toronto lead a competitive, public procurement process for a developer(s) to partner with Sidewalk Labs," he added.
A protest movement called Block Sidewalk, meanwhile, has criticized the company for labeling its MIDP a "draft" document. "Sidewalk Labs has succeeded in pressuring Waterfront Toronto to consider this plan as a 'draft,' even though they had already bought months and months of extra time by saying they needed it to 'get it right,'" the protest group said in a statement prior to the MIDP's release. "They used that time to lobby politicians and cut side deals, and now they're doing it again. Waterfront Toronto needs to tell Sidewalk Labs that they've had more than enough time to 'get it right' and this will be considered the final version of the plan."
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|From: JakeStraw||6/25/2019 8:34:36 AM|
|Google brings together BigQuery and Kaggle in new integration |
Google bought Kaggle in 2017 to provide a data science community for its big data processing tools on Google Cloud. Today, the company announced a new direct integration between Kaggle and BigQuery, Google’s cloud data warehouse.
More specifically, data scientists can build a model in a Kaggle Jupyter Notebook, known as Kaggle Kernels in the community. You can then link directly to BigQuery through the tool’s API, making it much simpler to query against the data in the data warehouse using SQL, a language data scientists tend to be very familiar with.
The benefit of this approach, according to Google, is that you don’t have to actually move or download the data to query it or perform machine learning on it. “Once your Google Cloud account is linked to a Kernels notebook or script, you can compose queries directly in the notebook using the BigQuery API Client library, run it against BigQuery, and do almost any kind of analysis from there with the data,” Google wrote in a blog post introducing the integration.
|RecommendKeepReplyMark as Last Read|
|From: JakeStraw||6/27/2019 8:33:30 AM|
|Waymo makes autonomous vehicles available to Lyft riders|
The rides are restricted to a small area just outside of Phoenix, Arizona, where Waymo has been testing self-driving vehicles and has started its own autonomous ride-share service called Waymo One.
Waymo’s limited partnership with Lyft is the latest example of the company branching out to work with more companies as it develops autonomous vehicles and services.
|RecommendKeepReplyMark as Last Read|
|From: Glenn Petersen||7/1/2019 9:39:17 PM|
|Google internet balloon spinoff Loon still looking for its wings|
July 1, 2019
SAN FRANCISCO (Reuters) - Google’s bet on balloons to deliver cell service soon faces a crucial test amid doubts about the viability of the technology by some potential customers.
The company behind the effort, Loon says its balloons will reach Kenya in the coming weeks for its first commercial trial. The test with Telkom Kenya, the nation’s No. 3 carrier, will let mountain villagers buy 4G service at market-rate prices for an undefined period. Kenya’s aviation authority said its final approval would be signed this month.
Hatched in 2011, Loon aims to bring connectivity to remote parts of the world by floating solar-powered networking gear over areas where cell towers would be too expensive to build.
Its tennis-court-sized helium balloons have demonstrated utility. Over the last three years, Loon successfully let wireless carriers in Peru and Puerto Rico use balloons for free to supplant cell phone towers downed by natural disasters.
Kenyan officials are enthusiastic as they try to bring more citizens online.
But executives at five other wireless carriers courted by Loon across four continents told Reuters that Loon is not a fit currently, and may never be. Those companies, including Telkom Indonesia ( TLKM.JK), Vodafone New Zealand ( IPO-VOD.NZ) and French giant Orange SA ( ORAN.PA), say Loon must demonstrate its technology is reliable, safe and profitable for carriers.
Hervé Suquet, chief technology and information officer for Orange Middle East and Africa, said Loon needs to prove itself in Kenya.
“If the results are positive, we would then be potentially interested,” he said in a statement.
Kuwait-based carrier Zain Group said it, too, is watching the Kenyan trial closely.
Stakes are high for Google’s parent Alphabet Inc ( GOOGL.O). It has touted a few small subsidiaries, including Loon, as being crucial to its next act: diversifying beyond ad sales. But its self-described “other bets,” such as self-driving car company Waymo, generate 0.4% of revenue.
Another cloud is a lawsuit alleging Google swiped a competitor’s balloon ideas in 2008. A trial in federal court is slated to begin August 2 in San Jose, California. If it loses, Loon would pay jury-determined damages to Chandler, Arizona-based Space Data, which sells communications balloons to the U.S. military.
Loon said it will “vigorously defend” itself.
Alastair Westgarth, chief executive of the Alphabet subsidiary officially formed last July, expressed confidence in its strategy. “Multiple” additional entities are close to signing contracts with Loon, he said. The company’s workforce has tripled to over 200 employees in the last year.
Loon internet balloon, carrying solar-powered mobile networking equipment flies over the company's launch site in Winnemucca, Nevada, U.S., in this photo provided June 27, 2019. Courtesy Loon/Handout via REUTERS
Loon also attracted outside funding. An arm of Japanese telecoms firm SoftBank Corp ( 9434.T) developing internet drones invested $125 million as part of a partnership this year. It has accelerated Loon’s previously unreported interest in industrial applications, such as serving farms and off-shore oil wells.
“With years of technical development, over 35 million kilometers flown, and hundreds of thousands of people connected, we have a big head start and are well positioned to connect a lot of people and seize the opportunities that come with it,” Westgarth said in a statement.
INDUSTRY FLIGHT Loon decided to partner with carriers, three former Google executives said, after finding that operating its own network risked blowback from telecom companies, shareholders and activists wary of Google’s influence. It aims to levy a fixed subscription charge based on the size of the coverage area, plus fees linked to data usage.
But some prospective telecoms clients have balked, preferring to pay based on the number of subscribers, according to one of the carrier executives and one of the former Google executives.
Others are wary of technical limitations. A virtual chain of six balloons can supply 4G to thousands of devices over an area nearly as large as Puerto Rico.
But users can lose connections if winds push balloons astray. Their solar-powered gear needs abundant year-round sunshine, leaving chunks of the United States, Europe, China and southernmost South America and Africa off limits. And using balloons too close to cities could jam other communications.
In addition, the balloons each cost tens of thousands of dollars and must be replaced every five months as their plastic shells degrade.
Loon declined to comment on costs, but said it is continuing to improve coverage and longevity.
STUMBLE IN INDONESIA The company also has faced political and cultural headwinds.
In 2015, it invited officials from Indonesia to Google’s headquarters to announce trials in the world’s fourth most populous country. Its 268 million people are spread over thousands of islands, making traditional coverage challenging.
But four years on, Loon is still awaiting final approval to test there.
It stumbled early by serving pork sandwiches to its Muslim guests during the 2015 Silicon Valley visit, according to a person familiar with the proceedings. Loon said it accommodated dietary restrictions and scheduled prayer time for guests.
Back in Indonesia, rumors swirled online and in government that the balloons held surveillance cameras, which the company denied. Indonesian authorities in 2016 probed Google for alleged tax evasion, eventually agreeing to an undisclosed settlement.
But the damage was done. Loon staff that year canceled an Indonesian trip over concerns about rising anti-Google sentiment, according to two people familiar with the plans.
“To lobby, you have to be there to bow and respect,” one of the people said. Loon “could have pushed much more.”
Loon said it holds frequent talks with Indonesian authorities and that last month they issued preliminary clearance. The nation’s Ministry of Defense must still perform security inspections, including checking for cameras, an Indonesian official told Reuters.
Meanwhile, Telkom Indonesia, the nation’ No. 1 carrier, is focusing on satellites to expand coverage, David Bangun, a top executive, told Reuters.
Madrid-based Telefonica ( TEF.MC), which declined to comment but has held deal talks with Loon for years, has tested alternatives such as relying on solar power to reduce the costs of remote towers.
Another Latin American carrier, whose operations are vulnerable to storms, said it found an alternative for disaster resilience: It will fortify its cell towers.
Reporting by Paresh Dave; Additional reporting by Fanny Potkin and Cindy Silviana in Jakarta; Editing by Marla Dickerson
|RecommendKeepReplyMark as Last Read|
|From: Glenn Petersen||7/15/2019 4:26:41 PM|
|YouTube's Trampled Foes Plot Antitrust Revenge|
By Lucas Shaw and Mark Bergen
July 15, 2019
-- Former allies, rivals in video ads seek trustbuster attention
-- Google unit says it competes in broader market, including TV
Photographer: Kiyoshi Ota/Bloomberg
Brian O’Kelley built AppNexus Inc. to help companies advertise anywhere on the internet. Its software plugged into virtually every digital ad-trading hub, including those from Google, the biggest ad seller, and Google’s YouTube video service. By 2014, AppNexus was valued at $1.2 billion.
Then, in 2015, Google stopped letting companies buy ads on YouTube using outside software. The move got more marketers to use Google ad services. It also created a glaring hole for AppNexus: The startup could no longer give customers access to the largest supply of online video. It never really recovered.
“They crushed our growth and ruined our product," said O’Kelley, who stepped down as AppNexus chief executive officer last year. YouTube represented a huge portion of the video inventory that AppNexus offered to advertisers. Those marketers couldn’t just ignore YouTube "because it’s pretty much a monopoly in that space," he added. "It’s not a supply-and-demand problem. It’s a ‘You just broke our entire business’ problem.’”
Photographer: Andrew Toth/Getty Images
The story is familiar to advertising and media entrepreneurs who built businesses around YouTube, only to be hobbled when the video giant changed the rules of engagement. Google used YouTube’s popularity to lure creators, media companies and tech firms onto the service, gaining access to more videos and ad space. YouTube then used that supply to control ad prices and amass data about viewers, squeezing out anyone that tried to compete, according to interviews with more than a dozen partners, rivals and former employees. Many asked not to be identified discussing sensitive information about a powerful industry player.
YouTube didn’t wipe out competition in one fell swoop, or act maliciously, according to these people. Instead, YouTube made decisions to consolidate the video ad-buying process, with little regard for partners or competition, and few regulatory checks. That left a graveyard of failed companies in its wake and fewer choices for advertisers, the people said.
In digital video advertising, YouTube has no peers. The U.S. market harnessed $16.3 billion in ad spending last year, according to the Interactive Advertising Bureau. YouTube accounted for the majority of that. Globally, the video giant generated $16 billion in 2018 sales, BMO Capital Markets estimates.
YouTube disputes this depiction of its dominance. The company said it shares more than half its ad sales with video producers, and competes in a much bigger market than just online video ads. "Viewers have never had more choice when it comes to where to watch their favorite videos," YouTube spokeswoman Andrea Faville wrote in an email. "Similarly, advertisers have a wide and growing array of options, including traditional television, which still accounts for the majority of video ad spend."
But U.S. regulators and politicians are now listening to claims that Google and YouTube may have run afoul of the law. The Department of Justice is considering an antitrust investigation of Google. The Federal Trade Commission is probing allegations that YouTube violated privacy laws protecting children, Bloomberg reported earlier this year. Congress, which has multiple investigations into Google and its peers, recently requested an interview with a former YouTube business partner, according to some of the people who spoke with Bloomberg.
“If you’re looking into Google, it would be remiss not to look at YouTube,” said Sally Hubbard, director of enforcement strategy for Open Markets Institute, a think tank. “You’ve got monopolies upon monopolies.”
YouTube may be preparing for scrutiny. Its executives recently reached out to partners to ask how its practices have affected their ad sales, according to one of the people who spoke with Bloomberg. YouTube did so as part of typical partner relationship management efforts, but this person interpreted the outreach as a sign of YouTube nerves about antitrust regulation.
Few companies show YouTube’s grip on the digital video market better than Vevo, which distributes music videos online from two of the three largest record labels.
The company was conceived by Doug Morris, then head of Universal Music Group. Founded in 2009, Vevo collected music videos and original programming, and distributed those clips across the internet – on YouTube, on Yahoo and on Vevo.com. The ultimate goal was to turn Vevo’s site into the MTV of the internet and get higher advertising rates, Morris said.
At a lunch with Morris, then Google CEO Eric Schmidt embraced the idea. Vevo could share ad revenue with the internet giant when Vevo clips ran on YouTube.
As YouTube grew, though, the relationship frayed. Vevo music videos were popular on YouTube, and advertisers loved them. But YouTube couldn’t sell ads on these clips because Vevo had exclusive rights in every market where it operated. The Google unit set out to take control of this valuable inventory through aggressive contract negotiations, sneaky sales tactics and even an effort to buy its rival outright, according to the people who spoke with Bloomberg.
In late 2012, YouTube proposed a new contract that would have allowed it to also sell ads on Vevo videos, and would have reduced Vevo’s share of the revenue from those ads. Google also offered to buy Vevo. When the record labels balked, YouTube said it would take down Vevo music videos before the existing contract expired, according to the people who spoke with Bloomberg.
Vevo’s leadership called an emergency board meeting. The company stood to lose millions of dollars if it disappeared from YouTube, which then reached about 1 billion people a month and accounted for most of Vevo’s audience and sales.
Vevo executives told YouTube they would file an injunction describing what they said was bullying tactics, and asking a judge to block the video giant from removing Vevo videos, according to former employees and music industry executives. The gambit worked. YouTube agreed to a new deal that let Vevo keep exclusive rights to its ad inventory.
In July 2013, Google acquired a minority stake in Vevo. That didn’t give it full control, but offered more visibility into Vevo’s business.
YouTube’s attempts to stifle Vevo continued, according to people familiar with the efforts. While it couldn’t access Vevo’s ad inventory, the video giant could reduce its influence, the people said.
YouTube encouraged artists to go around Vevo by creating their own YouTube channels to replace the ones operated by Vevo, the people said. Faville, the YouTube spokeswoman, said the company encouraged artists to consolidate their presence on a single "official" channel to avoid confusion. "This product change was a net benefit to fans and artists," she added.
YouTube also flirted with the limits of its Vevo deal. Some of YouTube’s sales pitches to advertisers included the Vevo logo and artists such as Rihanna, according to people who saw the documents. The documents suggested that YouTube could run ads on Vevo videos even though YouTube was contractually prohibited from doing so. Vevo executives flagged the problem to YouTube executives, who apologized and blamed the sales team, the people said. Faville called this a one-time error.
Vevo tried to send viewers to its own website and mobile app, but YouTube’s algorithms made that risky. The software recommended videos that were watched a lot on YouTube. If Vevo clips were seen elsewhere, those views were not counted by the Google unit. The result: Vevo videos didn’t perform as well on YouTube, according to industry executives. Faville said YouTube’s algorithms don’t factor whether videos direct viewers elsewhere.
In 2018, Vevo stopped competing with YouTube for a large consumer audience, shutting its app and website, and cutting product and engineering staff. Around the same time, YouTube secured a deal that gave it what rivals say it wanted all along: the right to sell Vevo’s ads.
In thinking about what went wrong, Morris remembers discussing Vevo with Steve Jobs. “Why won’t Vevo be worth billions?” he asked before the Apple Inc. co-founder died in 2011. Jobs said Google already effectively owned Vevo because YouTube had a lock on Vevo’s viewers. "They’ll control it," Jobs warned, according to Morris.
Once envisioned as a site that would compete with YouTube for views and ad dollars, Vevo is now mostly a logo with a small sales team.
Machinima’s demiseMachinima Inc., like Vevo, started out as an asset for YouTube. In YouTube’s early days, it didn’t have an advertising sales team nor staff managing relationships with individual video creators. Machinima was one of the first companies to assemble a network of YouTube channels and creators. It sold ads on the channels’ behalf, struck deals with brands and developed YouTube stars, including PewDiePie, one of the most popular video bloggers. That success spawned clones, including Maker Studios, Fullscreen and AwesomenessTV. Known as multi-channel networks, or MCNs, they were seen as the cable networks of the future.
But the relationship soured as MCNs got big enough to compete for ad dollars. YouTube executives didn’t want third parties getting in between viewers, video creators and advertisers, according to former MCN executives and employees. So YouTube made MCNs superfluous by replicating many of their offerings, while limiting their access to data and tools that would have helped them build their own businesses, these people said.
Machinima.com studios in West Hollywood in 2012.
Photographer: Luis Sinco/Los Angeles Times via Getty Images
In November 2013, YouTube instituted a policy that made it clear MCNs would need to look beyond YouTube if they wanted to thrive. The company said it would take 45% of ad sales from all partners on YouTube, up from the 30% it collected from some large media companies. Solo creators could survive on a 55% share, but the MCNs couldn’t support their growing staff and expansion plans.
“These companies realized advertising sales weren’t enough,” said Peter Csathy, founder of advisory firm CREATV Media. “Too much of a share had to go to YouTube.” YouTube’s Faville said revenue sharing agreements with MCNs didn’t change.
The MCNs tried using collective power to get more favorable terms. They wrote a letter asking YouTube to consider changes, but that went nowhere. Some MCN executives pitched their boards on going to the Justice Department to file an antitrust suit against YouTube, but directors refused to fund what would have been a long and expensive legal battle, according to people familiar with the deliberations.
Relations between MCNs and YouTube deteriorated under Susan Wojcicki, who took over as chief executive officer of YouTube in 2014. The veteran Google advertising leader corralled the company’s huge digital sales force to focus more on YouTube. She also created Google Preferred, a package of the best-performing videos on YouTube that advertisers could buy.
YouTube already sold more video ad space at attractive prices than any media company online. With Google Preferred, YouTube could also compete on quality. Google offered advertisers similar videos as Machinima at lower prices, with better targeting and more volume. YouTube had the relevant clips – and, with data from Google’s other popular services, it knew more about what viewers wanted to see. Smaller media companies like Machinima could not sustain their sales forces selling less-targeted ads at the lower rates offered by Google and YouTube.
One by one, the MCNs either shrank, sold themselves or died. Earlier this year, Machinima laid off its remaining employees and ceased operations.
AppNexus’s ordealBrian O’Kelley’s AppNexus had a similar experience. It flourished in a market that Google helped create: programmatic online advertising. For years, ads were placed with handshake deals between marketers willing to spend and websites willing to sell. With programmatic software, buying ads became more automated, effective, cheaper and faster. Several firms raised millions of dollars to pursue this opportunity. Rocket Fuel Inc., went public in 2013 valued at more than $2 billion. The Rubicon Project Inc. did an initial public offering in 2014, and AppNexus was tipped to follow.
But in 2015, Google made a move that showed how powerful it was in this market. Google removed YouTube inventory from ad exchanges run by other companies including AppNexus. With a few exceptions, any advertiser that wanted to market on YouTube had to use Google’s software or ad exchange.
Google saw a business rationale behind the decision. Outside exchanges handled less than 5% of YouTube’s ad slots at the time, according to the company. Also, YouTube’s most popular ad format -- a skippable one that ran before videos, called TrueView -- was "not supported" on external exchanges, YouTube’s Faville said. Keeping such a small slice of ads available to buyers through other exchanges wasn’t worth the extra work.
However, O’Kelley and others in the ad-tech industry saw the move as a clear example of Google using YouTube’s assets to favor other parts of its business -- in this case, Google’s ad software -- at the expense of rivals. Five percent of YouTube ads may not be important for Google, but it’s a vast amount for smaller competitors.
Dina Srinivasan, a former executive at ad agency WPP Plc, compared Google’s 2015 move to a company decreeing that investors can only trade popular shares on one stock exchange, and through one brokerage firm.
Google ad prices are set in an auction and not public. But taking YouTube off outside exchanges probably reduced the number of marketers bidding on its ads, lowering prices, according to Srinivasan. “Google may have absorbed a loss in YouTube revenue for some other reason,” she added. “The question regulators will be asking is whether that reason was to drive out competition.”
Despite a short-term dent in YouTube sales, the ploy likely increased the long-term value of Google by billions of dollars because it strengthened the company’s grip on advertising technology, according to O’Kelley. "That’s kind of how monopolies roll," he said.
There’s a “no economic sense” test in U.S. antitrust law that may apply here, according Srinivasan. The Justice Department’s top trustbuster Makan Delrahim discussed this in a recent speech about big tech companies. When oil refineries refused to sell themselves to Standard Oil in the late 19th century, the giant cut prices to drive them out of business. Lower prices are the essence of competition, but a powerful company is not allowed to do things that make no business sense just to make it harder for rivals to catch up, he said.
YouTube said its tactics were sensible. "Like any business, we make changes to how we operate to reflect the current climate," Faville said. "We make all these decisions with the same goal: to improve the YouTube experience for our users, creators, and advertisers."
Since Google changed the YouTube ad-buying process, much of the rest of the programmatic market has withered: Rubicon Project is trading about two-thirds below its IPO price; Rocket Fuel Inc.’s valuation fell below $100 million before it was acquired. The AppNexus IPO never happened and it sold to AT&T Inc. last year for $1.4 billion. The Trade Desk Inc. is a rare thriving player, but it operates in China and other markets where Google is less active.
In 2016, several ad tech companies, including AppNexus, met with Justice Department and Federal Trade Commission to discuss the industry, and some complained about YouTube’s behavior, according to O’Kelley. The response was tepid at best, he said.
“We had a really hard time getting them to pay attention," O’Kelley recalled. "They would say, ‘It’s hard to understand.’" A spokeswoman for the FTC declined to comment, and the Department of Justice didn’t respond to a request for comment.
But now, O’Kelley may have a more attentive audience. In May, he testified before the Senate Judiciary Committee on digital advertising. "This is not a functioning market," he said. "It enables Google, which doesn’t produce content, to monopolize all aspects of the programmatic business and take a disproportionate tax for its trouble."
Later, over the phone, O’Kelley was less grim about the political response. "Maybe now they’re paying attention," he said.
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