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New Zealand’s games industry creates the exports and well-paid jobs that make government eyes light up.

To date the sector has outperformed almost everyone else. Sales double roughly every two years.

Selling photons around the world earns $20 overseas for every dollar made at home.

Last year the industry earned $323.9 million.

Now all that is at risk.

Australian land grab

Australia plans to hand video games companies a 30 to 40 percent tax incentive.

That, says the local industry, will trigger a brain drain across the Tasman. Investment will follow in its wake.

You could view it as a land grab.

Chelsea Rapp, who chairs the New Zealand Game Developers Association says: “Any chance we had of attracting overseas studios to set up shop in New Zealand ends in 2022, and some New Zealand studios are already looking at expanding into Australia instead of expanding locally.”

The Australian government scheme gives game developers a 30 percent refundable tax offset for production from 2022.

On top of the federal money, several Australian states have their own offers which could add a further 10 percent to the lure.

There’s a suitable vehicle

It’s common when stories like this emerge that the local industry body calls on our government to match the Australian incentives.

Yet, there is a New Zealand scheme in place that is similar to the new Australian one.

The New Zealand Screen Production Grant hands out similar sums of money to film and TV companies planning to shoot here. Most of this goes to overseas companies who move here for a while, then pack up and leave at the end.

Games companies are not able to get this grant.

Here for the longer term

The NZGDA points out that games companies are not likely to pull out immediately after completing a new production. Instead they hang around and start again, either on a sequel or a new project.

In other words, pouring money into the games sector keeps jobs and investment ticking over.

There are arguments that governments should not subsidise industries. And there is always a risk of a race to the bottom with Australia.

Almost everyone in business can make an argument why their needs deserve support.

Yet in this case the subsidies and race to a bottom risk are already in place. At least for the film sector. It doesn’t make sense to exclude the games market.

What’s more, the games industry often interacts with and swaps skills and personnel other high tech sectors. Keeping it here in New Zealand will benefit the entire home grown technology scene.

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Did you ever doubt Apple users would choose to turn off Facebook app-tracking? It’s now a week since an iOS update arrived allowing users to make their own choice. Let’s look at the numbers.

Flurry Analytics, an advertising analytics company, reports around 88 percent of iOS users worldwide have chosen not to allow apps to track them. There’s a daily update of numbers of Flurry’s website.

The number is higher in the US. There a mere four percent of iOS users allow tracking.

No wonder Facebook went on the offensive with a whingey, dishonest response to Apple’s move.

It’s worth remembering there are countries where switching off Facebook app tracking is not allowed by law. And others where authorities might treat users who opt out with suspicion.

Apple’s popular move

The only conclusion to draw is that Apple’s privacy move is popular with customers.

This is an area where Android phone makers will struggle to compete.

Google’s mobile operating system has tracking baked through its insides like the word Blackpool through a stick of seaside rock. That’s the main reason Google subsidises Android.

Presumably there are Android users who prefer not to be tracked. Switching to Apple and iOS is bothersome, but worth the effort if you prize privacy.

Transparency

Apple calls the new iOS feature App Tracking Transparency. When you open an app, a pop-up appears on screen. It asks if you want to allow the app to track your activity across other companies’ apps and websites?

There are two choices. The first is “Ask App Not to Track”. The second choice is “Allow.”

If you take the first choice, Apple stops the app from using the code that identifies the device.

This is a string on letters and numbers. There is one per iPhone or iPad. It gives companies a unique identifier they can track as you move between apps and websites.

Apple then tells the app owner that you don’t want them to track you in any way. It sends a clear, unambiguous message.

It’s almost as clear and unambiguous as the message that 88 percent of users are unwilling to be surveillance fodder.

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Facebook tells users intrusive, privacy abusing ad-tracking keeps the social media service free-of-charge. It’s a snow job.

A week ago Apple upgraded its iPhone operating system. One key new feature of iOS 14.5 enraged online advertisers. It allows users to decide whether apps can track them across different sites.

Facebook’s response was to use its apps to tell users ad-tracking helps keep the service free of charge. 1 The warning appears on both the Facebook and Instagram apps.

Remember, Apple users can choose to let Facebook continue tracking. Keep in mind also that, for now, there is no similar feature on Android phones.

The implication is that without intrusive surveillance, Facebook can no longer feed you cat pictures.

Let’s stop right there

For decades before Facebook came along media companies such as newspapers, radio and TV channels managed to maintain teams of skilled journalists and talented broadcasters to keep you informed.

Like Facebook they did that by selling advertising. They had a rough idea who the audience was, in part because old media covered well-defined geographic areas. But they rarely knew much about the target audience.

Facebook has unprecedented global scale. It still knows where its audience is. Thanks to digital technology it has better location information than old media ever had.

It can piece together a lot of other information from clues its users disclose on the Facebook site. The internal Facebook data is often good enough to know if someone is about to become a parent or is in the market for a new car.

Ad-tracking means a better picture of you

By tracking a user over the rest of the online world it can get an ever more accurate picture of each individual user.

The information must be valuable to Facebook. It’s squealing and whinging tells you Apple rattled Facebook. Yet, from Facebook’s point of view there is less at stake than you might imagine.

Apple might account for close to half of US phone users, but worldwide less than one person in five uses an iPhone. And not all will use the privacy feature. (That comment didn’t age well). Facebook stands to lose extra tracking information from, at a rough guess, one user in ten.

It won’t lose all the information it gathers. It can continue to capture activity inside Facebook’s apps.

Which means in round numbers Facebook could lose five percent of the data it collects. That isn’t going to change the economics of its surveillance capitalism business model.

We know this will cost Facebook something.

At the moment it can track when users buy a product in an online store, it can then use that information to push ads for complimentary products. Think: ’You’ve bought a new motorbike, here’s a selection of helmets and leather jackets”.

When a user sees an ad on Facebook and, two days later, learns the user purchased that product online, it can bill more for the advertisement.

Ad-tracking drop in the ocean

In the first three months of 2021 Facebook took a whopping US$26 billion in revenue. Its net income was close to $10 billion. That’s double the result a year earlier.

The pace Facebook is growing at dwarfs any effect Apple’s privacy feature might have.

And that’s if we assume Facebook does not earn another cent from Apple customers who use its app. It’s an heroic assumption.

To argue that choosing not to let the technology giant know what you had for breakfast last Thursday so it can sell you a slimming aid next week means Facebook has to start charging is laughable.

It could end up costing Facebook two or three percent of its revenue. Remember, this is at a time earnings double every twelve months.

  1. At this point I should mention that for years Facebook had a message on the site that says words to the effect that the service was free and that it always would be. ↩︎
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Technology commentator Bill Bennett joins Kathryn to talk about the GCHQ chief’s warning of the West facing a “moment of reckoning” over cybersecurity, and the need for countries like the UK to build their own technologies lest other nations take control.

Meanwhile ransomware payments have climbed 43 per cent since the end of last year – with attackers setting their sights on big corporations.

And what happens when a computer program, used to prove you committed a crime, has a bug? Bill looks at the case of the UK Post Office.

Listen at the RNZ website.

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Mark Zuckerberg

“They’re not good in any industry they have to compete in or have to be innovative in. They can buy and they can copy, like they just did the other day, again, with another thing. What did they borrow from? From Clubhouse or whatever. They just can’t do anything innovative.”

Facebook may look invincible. Yet as Kara Swisher and Scott Galloway discuss, it could face a rough future. See: Why Facebook Is the Most Vulnerable of the Tech Giants.

It’s hard to like Facebook. At its worst, the company’s business model depends on manipulating emotions. At times it does this in dangerous ways. The more it seeds fear, loathing and misinformation, the richer it gets.

When it’s not undermining democracy, Facebook makes money by spying on its users. It then sells the fruits of its espionage to the highest bidder.

Facebook has no respect for its users.

Over half a billion Facebook customers have details leaked

Last week we heard the personal details of over 530 million users are circulating online. Facebook treated the issue as a public relations problem, not a security breach.

To put that leak into perspective, 530 million people is around seven percent of the world’s population.

Facebook says it has no plans to notify users of the data leak. At no point was there anything resembling an apology or an admission of guilt. So far it has focused on deflecting blame.

Old news

The leak may be old news, Facebook says it is. It says it fixed the problem. Yet it underlines the lax attitude and incompetence. A company packed with high-paid engineers should be able to protect user information.

There’s evidence that Facebook has known about the problem for a long time.

To date the tech giant has skirted past crisis after crisis. Everyone knows you can’t trust Facebook. 

Each act of incompetence or cynicism looks like it could be the last straw for certain users. Each time the business recovers and moves on. It is not going any time soon.

The latest news is also unlikely to sink the company. Although if you listen to what it says, you might think otherwise.

Facebook has made a lot of noise about Apple’s privacy plans for iOS 14.5. Anyone with an iOS app must warn users about the data they collect.

Squeals

Judging by Facebook’s squeals, you’d think transparency will destroy the world’s economy. As the Wall Street Journal puts it: Apple and Facebook Clash Over Ads, Mom-and-Pop Shops Fear They’ll Be the Victims.

Facebook launched an ad campaign insisting that those who will be most hurt by Apple’s changes are small and medium-size businesses, which represent the majority of the social network’s more than 10 million advertisers.

If their business depends on lying to users, that’s not a real problem. 

Swisher and Galloway end their discussion acknowledging that for a potentially vulnerable business, it remains popular with investors. That’s true.

Facebook isn’t going to fall overnight. There’s enough wealth in the business for it to switch its focus and remain huge. Microsoft did this when it flipped from PC software to cloud computing.

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Google and Facebook are too powerful, but monetization won’t solve the core problems

Source: A New Australian Law Is the Wrong Answer to Big Tech | by Owen Williams | Feb, 2021 | OneZero

At OneZero, Owen Williams writes about the Australian government’s proposed media law that will make online giants pay local companies.

He writes:

…the News Media and Digital Platforms Mandatory Bargaining Code, would require social media platforms to negotiate with local media in order to use their content. For instance, whenever Google publishes headlines and summaries on Google News, Google would have to pay a small sum to the newspapers or magazines listed.

European governments have attempted similar media law changes with little success.

Devastating for traditional media

There’s a huge disconnect with the plan. Yes, the likes of Google and Facebook have devastated traditional media. They, and other world scale media giants, have sucked almost all the advertising revenue that once paid for a vibrant and diverse market of newspapers, radio stations and television channels.

And yet today’s media companies depend on the same tech companies to drive online readers to their sites allowing them to pick up the few remaining revenue crumbs. Without that traffic they’d wither and die.

The analogy that comes to mind is that the media companies have a prescription drug dependency. The medicine reduces their pain and allows them to function, but in the long term it is killing them.

Doomed

Australia’s proposed legislation isn’t only doomed to failure. It will almost certainly end up doing more harm than good. The likes of Google and Facebook need to be dragged into line, but this is not the way to do it.

What would I do? First, I’d flatten the playing field by making sure all revenue sucked out of the local market is subject to tax. If local media companies pay tax, but their more successful rivals do not, they don’t stand a chance of competing. While that train has already left the station, taxing the giants on an equal footing with local publishers might create local opportunities that would not otherwise exist.

Second, I legislate so that the likes of Google and Facebook have the same responsibilities for their content that more traditional publishers have. It’s not good enough for them to wash their hands of damaging and harmful material published on their sites. It’s not as if they don’t have the rivers of gold to help them pay for teams of editors.

In the meantime, I’m also concerned the Australian moves could have implications for New Zealand. Like it or not, the tech giants tend to treat us and Australia as a single, unimportant market.

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Samsung Galaxy Note 20I’m back on the NZ Tech Podcast with Paul Spain. We discuss the latest tech news including current geopolitical matters impacting Chinese firms and share thoughts on new devices including the Samsung Note 20 Ultra, Jabra Evolve2 65 bluetooth headset, Jabra Panacast conferencing camera, Microsoft Surface Go 2 – and a prerelease first look at Huawei’s newest laptop; the MateBook 13.

New tech – Samsung, Jabra, Microsoft and Huawei – NZ Tech Podcast

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Quibi is the blockbuster streaming video service that you probably never heard of.

There is one big idea behind Quibi: that you want to watch small up-to–10 minute video shows on your phone.

Yeah, me neither.

And as it turns out, that’s most people’s reaction.

The weird name is a contraction of Quick Bites.

Like Netflix only shorter

Quibi’s founders hoped it would be to short form video what Netflix is to video. Early on in the project the founders suggested Quibi would become a verb, the way Google is sometimes used.

It exists as a phone app, the kind that you load and then start paying a monthly subscription. The official price in the US is on a par with the cost of Netflix. You can pay less and get ads served up with your video clips. I’m amazed anyone would pay US$5 for such a service with advertising. But… Americans.

There’s a gimmick or special feature: You can watch everything in portrait or landscape mode on your phone, the app moves seamlessly between the two.

Well the people behind Quibi think that will pull in the punters.

There are dramas, documentaries, talk shows even movies served up in small ten minute segments.

Wall-to-wall celebrities

One key is that almost everything features famous actors or other well known performers. It comes with high production values and wall-to-wall celebrities.

Jeffrey Katzenberg and Meg Whitman started Quibi. Katzenberg is a film producer and was a founder of Dreamworks. Whitman was the former Hewlett-Packard CEO.

So far Quibi has spectacularly missed its targets. The goal was to get 7.5 million subscribers in the first year. At the moment it looks like it will get around 2 million at the end of its first year.

The 7.5 million target was fairly modest. Netflix has more than 180 million subscribers.

Now the US media is already writing Quibi’s obituary.

Quibi says it failed to meet targets because of the pandemic. But that’s odd because sales of other streaming video services have surged in that time.

Quibi crowded out

It is more likely that the quick bite format isn’t enough to grab audiences. Attention spans may be dropping, but it seems few people are willing to pay a Netflix-like price to fill in the odd spare moments of their lives with yet more video content.

There is an abundance of free, short-form video content. YouTube has more than you could ever watch. That doesn’t help Quibi.

The most likely way out of the dead end that Quibi has found itself in is for the service to switch to a more Netflix-style format. That means longer shows and putting the app on devices other than cellphones.

Although that is now a crowded space, there is still potential for a service with the right content.

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From yesterday 400 high profile advertisers including Coca-Cola and Starbucks joined a Facebook boycott.

The month-long Stop hate for profit campaign wants Facebook to do a better job of dealing with hate speech, bigotry, racism, anti-semitism and calls for violence.

Some of the advertisers are also worried about Facebook’s promotion of wild conspiracy theories.

Facebook pushback

Other social media sites have faced similar advertiser pushback. But the focus a the moment is very much on Facebook which seems unwilling to tackle hate speech and far right extremism.

Stop hate for profit is a response to calls from civil right groups. Campaigners and members of the public have contacted brands when their advertising appears next to extremist material asking if they endorse the content.

Things moved up a gear following the George Floyd killing, the subsequent protests and the fast growth of the Black Lives Matter movement.

Among others things the advertisers want Facebook to give refunds to companies whose ads show up next to hate speech and other offensive comment.

Responsibility

They also want Facebook to take responsibility when people experience severe harassment online. This includes letting them speak to a Facebook employee. At the moment Facebook makes it hard for victims to contact the company.

According to media reports there were last minute talks between Facebook and large advertisers taking part in the campaign.

It turns our Facebook refused to budge, all the company would do was point at its recent press statements.

Now the boycott is underway there are calls for a new meeting. Apparently the advertisers have asked for Facebook CEO Mark Zuckerberg to face up to the meeting. It is clear that he calls the shots on these matters.

Facebook says Zuckerberg will attend a meeting next week.

It may not be conciliatory.

In a leaked address to Facebook staff Zuckerberg says: “We’re not going to change our policies or approach on anything because of a threat to a small percent of our revenue, or to any percent of our revenue.”

He went on to say: “…my guess is all of these advertisers will be back on the platform soon enough”.

Policy

Facebook has made some recent changes in policy. It says it plans to label content in the same way that Twitter has started doing. But it hasn’t said when it will do this.

It also says it uses artificial intelligence to remove hate speech. The implication in this language is that the AI is already working. Yet there seems little has changed in practice.

Zuckerberg’s confidence that Facebook can ride out the boycott isn’t just chest thumping. Social media sites like Facebook, YouTube and Twitter are now the preferred route for big advertisers to reach mass markets. It has replaced TV advertising.

Dependency

Some of the biggest advertisers use Facebook to build their brand. Little long-term harm is done if branding stops for a month. Others sell direct. If they don’t advertise, their revenue dries up. A month of low revenue during a global pandemic that is already depressing sales would be hard to stomach.

What about Zuckerberg’s claim the Facebook boycott only affects a small percent of revenue?

Last year Facebook took $70 billion in advertising. About 20 percent of that comes from the top 100 advertisers. This group doesn’t necessarily align with the boycotters.

It turns out that only three of Facebooks biggest advertisers have joined the boycott. The company says if all the top 100 advertisers joined, revenue would only drop 6 percent. There are around 400 boycotters, so a ballpark estimate says revenue will be down around 10 percent for one month. That’s likely to be around one percent of annual revenue.

On that basis Zuckerberg’s claim is probably right.

And yet there’s more to this than a small one-off revenue drop.

Facebook boycott a turning point?

Some in the advertising sector see the campaign as a turning point. It hits Facebook where it hurts most. There could be more to come.

In the past Facebook has dealt with criticism of its failure to deal with extreme content in two ways. First, it issues press releases outlining the action it is taking. As we can see, this approach no longer cuts it with many critics. There’s been a lot of talk but little evidence of real change.

The other tactic has been to zero in on the most visible and offensive recent outrage and mop it out. That gets headlines and creates the impression the company is doing something.

This week it banned 220 members of the Boogaloo movement who advocate violence. The group overlaps with neo-nazis and white supremacists, but some members are gun lobbyists.

With anything involving business, it helps to follow the money trail. It turns out Facebook’s investors are relaxed about the boycott. On Friday the company’s share price dropped eight percent when the news first broke.

Earlier today the price had recovered. It was down about one percent on Thursday. Given the price fluctuates anyway, that indicates no one at Facebook anticipates much change.