Daily Tech Snippet: Friday, February 19

• Uber is profitable in the US, but is losing $1 billion a year to compete in China: Uber is burning through more than a billion dollars a year in China as it wages a fierce price war against local rival Didi Kuaidi, its chief executive said. The company's Chinese business boosted its valuation last month to more than $8 billion after raising more than $1 billion in its latest funding round, but the U.S. ride-hailing app is not yet profitable in mainland China because of the intense competition. "We're profitable in the USA, but we're losing over $1 billion a year in China," Uber CEO Travis Kalanick told Canadian technology platform Betakit.  "We have a fierce competitor that's unprofitable in every city they exist in, but they're buying up market share. I wish the world wasn't that way."  The $1 billion figure was confirmed by Uber officials in China in an email to Reuters on Thursday. Uber and China's Didi Kuaidi, backed by Chinese technology giants Tencent Holdings and Alibaba Group Holding, have both spent heavily to subsidise fares to gain market share, betting on China's Internet-linked transport market becoming the world's biggest.

• Facebook Plans To Put Ads In Messenger: A leaked document Facebook sent to some of its biggest advertisers reveals that Facebook will launch ads within Messenger in Q2 2016. The document, obtained by TechCrunch but kept private to protect its verified source, says businesses will be able to send ads as messages to people who previously initiated a chat thread with that company. To prepare, the document recommends that businesses get consumers to start message threads with them now so they’ll be able to send them ads when the feature launches. The document also notes that Facebook has quietly launched a URL short link fb.com/msg/ that instantly opens a chat thread with a business. Facebook confirmed the existence of the URL short link. That seems to back up the validity of the leaked document. Messenger is one of Facebook’s most popular and fastest-growing products, with 800 million monthly active users. Yet the social network has never monetized it directly before. Thankfully for users, Facebook isn’t going to let brands send ad messages to just anyone or even people who’ve liked their Pages. Only those who have voluntarily chatted with a business can be sent ads. This should somewhat limit the spam potential and annoyance. Right now, almost all messages come from one’s friends, so Facebook will likely try to preserve this high signal-to-noise ratio with limits on advertising.

• Secondary Shops Flooded With Unicorn Sellers: Until recently, shares of some of the highest-flying unicorn companies have been so hard to come by that secondary buyers have battled each other, not to mention other investors, to acquire some of the startups’ common shares. As the fortunes of billion-dollar companies like Evernote have fizzled, however, so has their shareholders’ enthusiasm. Says the cofounder of one secondary shop who asked not to be named, “We aren’t seeing huge discounts yet in the top 10 names, but people are trying to dump them. It’s not just one person calling you about a particular company. It’s four.” Says another secondary investor, who also asked not to be identified for this story, “We’re seeing an enormous uptick in inbound selling interest.” The situation is changing so quickly that several people with whom we spoke say a number of new characters are now peddling shares of so-called “A List” companies whose shares would have been beyond nearly anyone’s reach six months ago. “We’re seeing a lot of sketchy people advertising these deals,” says one insider. It didn’t used to be like this. Just a year ago, demand for unicorn stock was at an unprecedented level, as were the number of companies establishing billion-dollar valuations for themselves. Unicorn coverage became a cottage industry unto itself, with tech outlets and even data analysis firms poring over which unicorns were the best employers, which companies were positioned to become unicorns, and which venture firms were the best at spotting unicorns early on, among other angles. Alas, by late August, China’s market was in a nose-drive, and both late-and early-stage investors began applying the brakes. It wasn’t long before non-traditional venture investors like Fidelity and Blackrock were slashing the valuations of some of the startups in the portfolio. A parade of well-reported WSJ pieces about what isn’t quite right at high-flying Theranos seemed to cement what many had started to think: That many unicorns really weren’t worth what their ambitious investors had settled on. (It didn’t help when, last week, the human resources startup Zenefits asked its CEO to resign over sloppy and possibly damning business practices. Ten months ago, the company was valued at $4.5 billion by investors.) Partly, such nervousness owes to employees, some of whom are getting laid off as companies cut back on costs in order to lengthen their runway. These former staffers have to exercise their options within 90 days or else lose them, and they’re calling secondary firms for help in figuring out what to do. Some sellers are venture capital firms that thought they could exit some of their investments in 2016 and are now concluding that they can’t. (As some readers will know, the clock is always ticking on a venture fund. Most have 10 or 11 years, tops, to invest in startups and get some cash back to investors before losing the confidence of those backers.)

• Why Carriers Want to Delete WhatsApp: Two years ago, Mark Zuckerberg took the stage at the Mobile World Congress, an annual industry gathering held in Barcelona, to reassure phone companies that Facebook is their natural ally. He’d just announced the $22 billion purchase of the WhatsApp messaging service and was touting an initiative called Internet.org, a low-bandwidth suite of basic services carriers would offer in conjunction with Facebook to get hundreds of millions of people online for the first time. He pledged to “build what is going to be a more profitable model with more subscribers for carriers.” By sticking together, the Facebook founder said, both sides could benefit handsomely.As Zuckerberg prepares to return to Barcelona for this year’s MWC on Feb. 22, phone executives say his company looks more like a competitor than a partner. Last year, WhatsApp introduced free voice calls—something Facebook already offered—and both brands have messaging apps. These so-called over-the-top services cut into mobile carriers’ voice and texting revenue because they’re offered over the Internet. Some phone companies say Facebook and its ilk are freeloaders that rely on carriers’ network infrastructure without spending any money to support it. “WhatsApp is competing with us, not only with messaging but with voice, too,” Telefónica Chief Operating Officer José María Álvarez-Pallete said in August at a telecommunications industry event in the Spanish coastal city of Santander. “The premise should be, same services, same rules.” Not all carriers are lining up against Facebook. The company has more than a dozen partnerships with phone companies from Paraguay to the Philippines. Many of them say teaming up with Facebook is beneficial, because it boosts data usage and has the potential to increase revenue. Millicom International Cellular, a carrier with more than 63 million subscribers in Africa and Latin America, has run promotions in certain markets where it offers free access to Facebook and Internet.org for a couple of months. The company reported last year that 33 percent of subscribers who take part end up upgrading to fee-paying data plans. Similarly, South Africa’s No. 3 mobile company, Cell C, offers Facebook and WhatsApp for free in certain subscription packages, because they draw new users. “If we don’t innovate around these services and drive value to our customers, we run a higher risk of being left out of the future entirely,” said Cell C Chief Executive Officer José Dos Santos in an e-mail. In the long run, say some industry analysts, WhatsApp and other alternatives shouldn’t be seen as a threat to the voice service of phone companies. The typically superior sound quality of the voice calls in the apps uses lots of data. “If carriers price their data offerings correctly, it could drive up revenues,” says John Delaney, an analyst at researcher IDC. And when people graduate to video apps like Skype, data consumption grows exponentially. Says Delaney, “What carriers resent is investing heavily and having others piggyback on their investments.”

• Scientists created a three-armed cyborg to play the drums like no human can: Georgia Tech researchers have built a robotic arm that attaches to a drummer’s shoulder and plays along. This allows drummers — now equipped with three arms — to play sequences that two-armed humans can’t even attempt. “It’s a richer and more sophisticated rhythm because you can hit one more thing,” said Gil Weinberg, director of the Center for Music Technology at Georgia Tech. The robotic arm is capable of hitting a drum up to 20 times per second, a rate that’s impossible for humans. And it never needs a break. The computerized arm listens to the sound of the human playing and improvises to accompany the beat. Currently it can’t be programmed to play specific songs. The robotic arm will generally mirror the volume and speed that the human is playing. Weinberg stopped short of saying the three-armed solution is presently better than what a drummer can do with two hands. The arm, finalized last week, hasn’t been tested yet to see how it complements professional drummers. Weinberg’s next step is having drummers wear a brain-scanning headband, and see whether the robotic arm can interpret their intentions and play exactly what they desire. Since 2006, he has worked to create memorable music through artificial intelligence. In one project, Weinberg built a robotic prosthesis for a drummer who lost an arm in an accident.