Daily Tech Snippet: Wednesday, October 7

• Twitter’s Next Hail Mary, Project Lightning, Has Arrived..is Uncannily Similar to Snapchat's Live Stories: Just 24 hours after Jack Dorsey officially took over as the new CEO, Twitter is finally rolling out Project Lightning, the multimedia update it has aggressively pitched for months, to resuscitate growth and get Twitter back on track with Wall Street. In many ways, Lightning is Twitter’s most important product update ever. The new product, which Twitter is now calling Moments, is the kind of product that will shape how Dorsey is remembered in his third stint at the company he helped create. A Moment is a group of tweets stitched together around a specific topic, such as the Super Bowl or a breaking news event. These Moments are curated by Twitter, or Twitter partners like BuzzFeed and the New York Times, and primarily exist within a new tab inside the Twitter app, although they can be shared as links within tweets as well. Moments tend to be multimedia-heavy, with lots of photo and video tweets included, although that isn’t necessarily a requirement. Unlike your Twitter timeline, in which tweets are typically read in reverse chronological order, Moments are constructed in the same way you’d read a book — with a beginning, middle and end. If you’re familiar with Snapchat’s Live Stories feature, which have become very popular with its users, you’ll notice some striking similarities. (Very striking.) The purpose of the product is twofold. For starters, it’s a way for Twitter to play to its strengths by creating more content and engagement around live events, an area where Twitter truly does dominate other social platforms, including Facebook. When you follow a Moment, Twitter will temporarily insert tweets about that topic into your feed from people you don’t actually follow; as soon as the event is over, you’ll stop seeing tweets from those people. There’s no easy way to follow a bunch of people talking about a breaking news event, for example, so Twitter is trying to do that for you. Twitter is also looking for ways to entice new users, and believes Moments may serve as the bait. Twitter can be underwhelming when you first sign up, admits Madhu Muthukumar, product manager for Moments. But if you can immediately follow a Moment — and all the important people contributing to that event — it’s easier to find interesting people and feel like you’re part of the conversation right away, he added.

• Bill Gurley on Tech Bubble: I’m a Pragmatist, Not a Doomsayer:  Bill Gurley, general partner at venture capital firm Benchmark, has developed a reputation as the Nostradamus of Silicon Valley. He has repeatedly called out startups and fellow investors for over-the-top valuations, warning of an impending tech bubble. He isn’t ditching that reputation. “It’s kind of my responsibility to call it out,” the venture capitalist said at the Vanity Fair Summit in San Francisco on Tuesday. “If you’re in a car heading over a cliff and I say, ‘Hey, slow down’ — that’s being a pragmatist, not being a doomsayer.” New York Times reporter Nick Bilton, who moderated the panel, asked Gurley how he squares that view with the fact that Benchmark is among the venture firms priming startups with cash. Gurley’s retort: The founders he backs could raise money in any condition — and could do it even better when funding dries up. “Most of the great CEOs I work with want this to stop. They’re forced to play this game,” he replied. “Great entrepreneurs raise money in any cycle. When there’s less money available, the better entrepreneurs have the advantage.”

• Data Transfer Pact Between U.S. and Europe Is Ruled Invalid: Europe’s highest court on Tuesday struck down an international agreement that allowed companies to move digital information like people’s web search histories and social media updates between the European Union and the United States. The decision left the international operations of companies like Google and Facebook in a sort of legal limbo even as their services continued working as usual. The ruling, by the European Court of Justice, said the so-called safe harbor agreement was flawed because it allowed American government authorities to gain routine access to Europeans’ online information. The court said leaks from Edward J. Snowden, the former contractor for the National Security Agency, made it clear that American intelligence agencies had almost unfettered access to the data, infringing on Europeans’ rights to privacy. The court said data protection regulators in each of the European Union’s 28 countries should have oversight over how companies collect and use online information of their countries’ citizens. European countries have widely varying stances toward privacy. Data protection advocates hailed the ruling. Industry executives and trade groups, though, said the decision left a huge amount of uncertainty for big companies, many of which rely on the easy flow of data for lucrative businesses like online advertising. They called on the European Commission to complete a new safe harbor agreement with the United States, a deal that has been negotiated for more than two years and could limit the fallout from the court’s decision. Some European officials and many of the big technology companies, including Facebook and Microsoft, tried to play down the impact of the ruling. The companies kept their services running, saying that other agreements with the European Union should provide an adequate legal foundation. But those other agreements are now expected to be examined and questioned by some of Europe’s national privacy watchdogs. The potential inquiries could make it hard for companies to transfer Europeans’ information overseas under the current data arrangements. And the ruling appeared to leave smaller companies with fewer legal resources vulnerable to potential privacy violations. “We can’t assume that anything is now safe,” Brian Hengesbaugh, a privacy lawyer with Baker & McKenzie in Chicago who helped to negotiate the original safe harbor agreement. “The ruling is so sweepingly broad that any mechanism used to transfer data from Europe could be under threat.”

• Microsoft is making its first-ever laptop: Under the leadership of chief executive Satya Nadella, the message out of Microsoft has been one of collaboration rather than competition. Since Nadella took over in February of last year, the historically sharp-elbowed firm has seemed to soften. A humbler Microsoft emerged, putting a greater focus on helping consumers use its products on whatever device they wanted, rather than being its own cheerleader. But Microsoft showed that its competitive spark is alive and well Tuesday with the announcement that it's making its first-ever laptop. The laptop, called the Surface Book, has a 13.5-inch screen and weighs 3.34 pounds with a detachable keyboard -- clearly putting it in competition with Apple's MacBook Air and the many, many Microsoft partners who make the class of lightweight laptops known as ultrabooks. (So does its starting $1,499 price tag.) The Book can be used as a tablet or as more traditional laptop.

• Samsung Electronics third-quarter profit guidance beats estimates:  Samsung Electronics said on Wednesday its July-September operating profit likely leapt 79.8 percent from a year earlier, beating expectations and pushing the South Korean tech giant's share price sharply higher. Samsung, in a regulatory filing, estimated its third-quarter profit at 7.3 trillion won ($6.29 billion), its first quarterly profit gain in two years and its biggest since the first quarter of 2014. This compared with a 6.7 trillion won profit tipped by a Thomson Reuters SmartEstimate poll of 30 analysts. Samsung's shares opened 4.1 percent higher after the guidance release. Smartphone earnings likely improved from a year earlier, analysts said, partly due to the launch of new lower-end models and the August launch of the Galaxy Note 5. Semiconductor sales were also expected to be strong, driven by the launch of new smartphones including the Galaxy Note 5 and Apple's iPhone 6S models. The weaker South Korean won likely also boosted profits, analysts said. Samsung expects third-quarter revenue to rise by 7.5 percent from a year earlier to 51 trillion won.

• Adobe 2016 forecast disappoints, shares slump: Adobe lowered its profit forecast for 2016 below analyst estimates partly due to a strong dollar, sending its shares down as much as 13 percent in extended trading. The Photoshop maker said it expects full-year revenue of about $5.7 billion and an adjusted profit of $2.70 per share. Analysts on average were expecting revenue of $5.93 billion and earnings of $3.19 per share, according to Thomson Reuters I/B/E/S. In 2013, Adobe forecast an adjusted profit of $3 per share for 2016. The company is expecting a $200 million hit on revenue as a result of the stronger dollar, and a $100 million hit as Adobe's "last material businesses are transitioning to ratable revenue." Adobe has been switching to web-based subscriptions from traditional licensed software to help attract more predictable recurring revenue.

• Etsy doubles down on manufacturing as it faces off with Amazon: Etsy, the online store that made its name selling handmade crafts, is trying to stop merchants from defecting as giant rival Amazon.com Inc prepares to attack it on its own ground with a new site for artisanal items called Handmade. But Etsy's policy of allowing sellers to use outside manufacturers continues to anger some of the smaller vendors of handmade items who helped make it successful. Even changes to that policy have done little to address the criticism or hold off defections, analysts and sellers say. "Until now, Etsy sellers had nowhere else to go," said Gil Luria, an analyst at Wedbush Securities based in Los Angeles. "But what Handmade at Amazon represents is a trip back in time to Etsy's original vision." Etsy disputes that sellers had no other outlets, saying it knows that while about half of its sellers sell only on its site, the other half also use other venues - from craft fairs to their own websites. But on average, even those who sell in many venues make the majority of their income on Etsy, the company said. Etsy, launched 10 years ago, became popular as an alternative to Amazon and eBay, tapping into shoppers' appetite for handmade items. But since its April initial public offering, which valued the company at $4 billion, Etsy's shares have fallen by more than 50 percent. And the company's losses doubled in the most recent quarter due in part to rising expenses and the stronger dollar, which dampened demand for U.S. products.

• Facebook Gives Viewers 3 New Ways to Engage With Their Favorite TV Shows, Challenges Twitter for second-screen supremacy: Facebook is trying to steal some of Twitter's thunder, aiming to be the first choice among second-screen viewers, people who watch TV and engage on social media at the same time. So, this morning Facebook—with its 213 million monthly active users in the U.S.—announced new tools aimed at helping TV producers better engage audiences during live broadcasts.  1. Hashtag voting and polling: This feature should get broadcasters the most excited. Instead of being directed toward separate apps within a show's Facebook page, users will be able to vote directly within a top-level post or comment. 2. Photo and video submissions: Facebook is giving viewers or aspiring contestants on competition series the ability to submit photos and videos directly to show pages. Those can be anything from video questions (Fox News used this to solicit questions for August's GOP debate) to funny submissions for late-night talk shows or audition videos. 3. Custom icons: Taking a page from Twitter's playbook, Facebook will create custom icons—much like Twitter's custom emojis—for certain events such as the Oscars, the Emmys, The Bachelorette and sporting events like the Rugby World Cup.

Daily Tech Snippet: Wednesday, August 5

Apple Denies Planning to Sell Mobile Services Directly to Consumers: Apple, the world’s most profitable mobile phone maker, has denied a report that it is working on a plan to market communications services directly to consumers that would bypass telecom operators on which it now relies. Business Insider on Monday reported that the iPhone maker was testing a so-called mobile virtual network operator (MVNO) service in the United States, which would involve it renting capacity from one or more network operators to sign up its own customers. The mobile phone maker is also in talks with European operators about such an arrangement, the website reported. “We have not discussed nor do we have any plans to launch an MVNO,” said an Apple spokeswoman in a statement on Tuesday.

Facebook Mobile App Advertisers Won't Lose Their Device-Level Data After All As Social giant switches gears: Facebook said three months ago it planned to take away mobile app-install advertisers' ability to collect device-level data. But money talks, and ad-buying marketers evidently protested enough for the social media giant to reverse course. The Menlo Park, California-based company said in an email statement: "We advise our advertisers to apply people-based measurement solutions so they can determine when they're reaching multiple people, not just multiple devices. While we believe device-level reporting is not the most accurate way to properly determine advertising effectiveness, we want to provide advertisers with the choice to measure ads based on what is important to them. In order to provide that choice, we will continue giving advertisers the option to receive device-level reporting from our mobile measurement partners for mobile app ads." For nearly two years, Facebook has allowed app-install marketers to grab information that helped them determine—among other things—how their ads performed on devices such as iPhones, Samsung Galaxies and HTC Ones. Advertisers have to agree to keep that device-level data to themselves, as Facebook wants brands to focus on other metrics and is wary of privacy concerns. When Facebook revealed to marketers its plans to cut off such data while making them focus on campaign-based statistical results, they pushed back, according to a VentureBeat story last month.

Hackers Exploit ‘Flash’ Vulnerability in Yahoo Ads: For seven days, hackers used Yahoo’s ad network to send malicious bits of code to computers that visit Yahoo’s collection of heavily trafficked websites, the company said on Monday. The attack, which started on July 28, was the latest in a string that have exploited Internet advertising networks, which are designed to reach millions of people online. It also highlighted growing anxiety over a much-used graphics program called Adobe Flash, which has a history of security issues that have irked developers at Silicon Valley companies. “Right now, the bad guys are really enjoying this,” said Jérôme Segura, a security researcher at Malwarebytes, the security company that uncovered the attack. “Flash for them was a godsend.” The scheme, which Yahoo shut down on Monday, worked like this: A group of hackers bought ads across the Internet giant’s sports, news and finance sites. When a computer — in this case, one running Windows — visited a Yahoo site, it downloaded malware code. From there, the malware hunted for an out-of-date version of Adobe Flash, which it could use to commandeer the computer — either holding it for ransom until the hackers were paid off or discreetly directing its browser to websites that paid the hackers for traffic.

Crafts website operator Etsy's loss doubles; shares tumble: Crafts shopping website operator Etsy's quarterly loss doubled due to higher marketing expenses and the company said these costs would only increase in the current quarter. Etsy's shares fell more than 15 percent to $16.27 in after-hours trading on Tuesday. The company's marketing costs jumped 77 percent in the second quarter ended June 30 due in part due to higher spending on product listing ads. Total costs rose 49.3 percent. Etsy said it plans to spend more on marketing in absolute dollars in the third quarter than it did in the second quarter or the year-earlier quarter. It also said it expects to increase the pace of hiring in the current quarter compared with both the second quarter and the year-earlier quarter. The company said the strengthening dollar could hurt demand for dollar-denominated goods in the current quarter, which could slow the pace of growth of gross merchandise sales. Gross merchandise sales, a measure of total value of goods sold, rose 24.6 percent in the second quarter, driven by a 24.6 percent growth in active sellers and a 31.6 percent jump in active buyers on Etsy's website. Revenue rose 44.4 pct to $61.4 million in the quarter.

Apple's momentum 'meltdown' bites investors: Has the "curse of the Dow" finally caught up with Apple? Shares of the iPhone maker have been in a rut since posting disappointing quarterly results in late June, falling to a six-month low of $113.25 on Tuesday. The recent declines have wiped out nearly $100 billion of Apple's market value - about as much as fellow Dow components Boeing and McDonald's are worth in total. For CEO Tim Cook, it means his stake of more than 111 million shares is now worth about $12.76 billion, compared with nearly $15 billion at the peak in late April. The dropoff represents a notable bout of weakness for a stock basically impervious to pain for the better part of two years. Strategists pinned the sell-off on the steady run in the shares, as the stock has gained more than 137 percent since hitting a low in April of 2013. In addition, more than 5,700 different funds already own the shares, according to Morningstar data. With Tuesday's declines, the shares have dropped 13 percent over the last 11 trading days. "When you get a stock that is over-owned it’s difficult to find that incremental buyer," said Art Hogan, chief market strategist at Wunderlich Securities in New York. "It’s having its own momentum meltdown."

Apple Doing Own Cellular Service Doesn’t Make Sense, at Least Not Today: The appeal is tempting, of course. Apple would then fully own the relationship with the customer rather than leaving that job to one of the “orifices,” as Steve Jobs famously labeled the wireless providers. Google is in fact doing just this with its Google Fi effort, where it offers service starting at $20 per month using the networks of both Sprint and T-Mobile. But the service is fairly limited. It’s offered only on a single Nexus 6 phone and its designed to keep the service more of a test than a true national rival. It doesn’t make sense for Apple for a number of reasons. First it has a tough time doing things small — Apple currently represents a huge part of the carriers’ business, and some of the carriers’ most lucrative customers are its iPhone owners. So the carriers aren’t going to be eager to hand that over to Apple. Even if Apple could convince them to do so, it might not be in Apple’s long-term interest. First of all, consumers today are benefitting from four carriers heavily competing against one another, with a resurgent T-Mobile and an increasingly desperate Sprint both putting price pressure on AT&T and Verizon. Also, carriers spend a fortune to keep their networks strong enough to handle increasing demands and to swiftly upgrade to faster technologies. If they become truly a dumb pipe just selling gigabytes to Apple, the incentive to differentiate on customer service or speed is reduced, as would be the amount of capital they would have to invest. Over time, that could mean both Apple and consumers would lose. Plus, if it is Apple’s name attached to the service, it would have to take on the role of customer support and the perceived blame when the service doesn’t meet customer expectations. “That’s a lot to bite off, and I can’t see Apple wanting to do it,” said Jackdaw Research analyst Jan Dawson. Now, that doesn’t mean Apple isn’t interested in seeing more value come to it over time. With iMessage, for example, Apple took something that consumers value — their text messages — and made it a feature of their phone rather than something tied to their carrier and phone number. There are reports Apple would like to do the same thing with voicemail. Apple also introduced on the latest iPads a SIM card that works across different cellular networks so customers don’t have to choose a carrier when choosing a device. Apple could do something similar with the next iPhone. These moves make sense. Whether Apple has dreams of eventually offering cell service or not, it is to their advantage that consumers are more tied to their iPhone than they are to being a customer of AT & T or T-Mobile. Do such moves also open the door to Apple offering its own cell service some day? Sure. And it would be foolish for Apple not to constantly consider whether such a move makes sense. But, at least for now, the downsides likely outweigh the benefits.

Daily Tech Snippet: Wednesday, June 17

• Here is an audio version of this snippet

• How A US Interest Rate Hike Could Deflate The Tech Boom: The technology industry has benefited from low interest rates, contributing to the creation of more than 100 unicorns, startups valued at more than $1 billion. Now that economists predict a rate hike as soon as September, investors question whether the move will do what seemingly nothing else has been able to accomplish -- cool off the sector.The U.S. central bank has kept benchmark rates near zero since 2008, before companies such as Uber, Snapchat and Pinterest even existed. That means most of today’s startups haven’t been tested in an economy in which borrowing costs fluctuate. Young companies may find it harder to raise capital. It also could add stock-market volatility, making it harder to hold an initial public offering. Even the biggest beneficiaries of the boom see a shakeout coming. Chris Sacca, an investor in companies including Twitter and Uber, said too much money is flowing to technology startups that will fail in a coming industry slowdown. “Bad deals are being done,” Sacca said in a Bloomberg Television interview. “It’s kind of inevitable that the funds right now that are putting a lot of this money to work here aren’t going to see it all back.”


• As Delivery Costs Rise, Amazon Is Building An App To Let Normal People Deliver Packages For Pay: The Wall Street Journal reports that Amazon is working on an app internally that would allow the average consumer to make a little cash by picking up Amazon packages at various retail locations and dropping them off at their final destination. WSJ’s sources did not have a timeline for the release of this product, internally called ‘On My Way,’ and were unsure whether it would launch at all. Amazon offers its own lockers program, with pick-up stations in various locations (like parking garages) and 7-Eleven stores that are rented out by Amazon. Customers can choose to have their package shipped to one of these lockers for pick-up at their convenience. The WSJ reports that Amazon would likely use a similar logistics structure for the rumored On My Way app, letting users pick up and deliver packages from a convenient location to make some extra money. Besides the standard shipping (or two-day for Prime members), Amazon has fiddled with the idea of letting Uber drivers and yellow cabs deliver products same-day, as well as using bike messengers and third-party delivery services for Prime Now and AmazonFresh, both of which function within hours-long (and not days-long) delivery windows. The company has even talked about launching a fleet of drones to deliver parcels, though that flight faces its own delays.


• Snapchat Turns Geofilters Into An Ad Unit: Snapchat may have finally found a way to monetize that its users will actually like. The company is now extending its custom geofilters to businesses as a monetization strategy. On Monday, McDonald’s became the first company to pay Snapchat to run a geofilter advertising campaign. Now, McDonald’s branded geofilters will be available for users to use at any of the over 14,000 McDonald’s stores in the U.S. Added as a feature in 2014, geofilters allow Snapchat users to add a location-specific filter to photos or videos. These filters quickly became a popular way to tell friends where a snapchat was taken, and now over one million snapchats a day are decorated with a geofilter. While users have been able to propose and submit potential geofilters since December, the company says only about one-third of submissions are approved. This new program will allow companies to bypass the user submission process, as well as add geofilters to thousands of locations at once. While geofilters paid for by companies will be denoted with a tiny “Sponsored” imprint, they otherwise will function exactly the same as existing filters.


• Uber is getting serious about maps, and it has poached the former head of Google Maps to lead the charge.: Brian McClendon, a Google engineering VP and 10-year company veteran, will be overseeing Uber’s new Pittsburgh center, staffed by engineers recruited from Carnegie Mellon’s National Robotics Engineering Center. Uber has taken several steps recently to strengthen its mapping technology. In March it acquired deCarta, a nearly decade old company that powers the mapping technology behind location-based services like General Motors’ OnStar navigation system. Uber also recently put in a bid for Nokia’s Here mapping technology, going head to head with the likes of a consortium of German automotive companies for the property. Almost everything Uber does relies on geospatial software, from its estimated car arrival times to directions for drivers to its UberPool system for matching travelers who want to share rides. Understandably, the company doesn’t want to rely solely on Google and Apple, as it currently does, for the technology that underlies its system, particularly in a time when Google’s and Uber’s initiatives are starting to overlap. McClendon was one of the rare Googlers to join the search giant via an acquisition and stay for several years. He arrived in 2004 with the purchase of Keyhole, part of a trio of companies Google swept up before the public birth of Maps. Keyhole’s technology became Google Earth. Its co-founder, John Hanke, also stayed at Google, where, in 2010, he was given oversight of the internal incubator Niantic Labs. McClendon was given purview over Google’s “Geo” products, which include Maps, Earth and Street View. He was one of the few execs to lead a product portfolio who was not an SVP or part of the inner circle of CEO Larry Page. Amid Google’s sweeping reorganization last October, McClendon was replaced by Jen Fitzpatrick, another engineering VP, who has been with Google since 1999. His mapping background made him a prime recruitment target for Uber.


• Twitter Unleashes Autoplay Video Ads With a 100% Viewability Promise: If not completely viewable, brands won't be charged: Twitter is ready to serve autoplay video, which has the potential to change up the experience on the platform with richer and more engaging media. The company has taken a hard stand on viewability standards: It is promising only to charge on video ads that have been seen 100 percent in full view of the user. Autoplay video has become a standard format in social media and one that is supported by advertisers, who like the fact that their content makes more of an impact. Here are some of the key numbers Twitter revealed about its tests regarding autoplay video: Users were 2.5 times more likely to prefer autoplay over click-to-view or thumbnail previews on videos. Ad recall was 14 percent greater on autoplay-promoted videos versus other formats. Completion rates were seven times greater on autoplay compared to other formats.


• Google Highlights Cloud Capabilities as GCP Beats AWS, Microsoft to Win HTC as Customer: At an event Tuesday for Google Cloud Platform — Google’s name for the computing, storage and networking it sells to business — Google will name the Taiwanese phone maker HTC as a customer. HTC has used Google to build a new kind of computing architecture that enables smartphone apps to update data fast and reliably to many devices at once, and look efficient even when the phones get poor reception. HTC also looked at the cloud offerings of AWS and Microsoft Azure, along with IBM and Alibaba. Google was the dark horse, because it does not operate in China, and HTC wanted to be everywhere in the world. Google’s technical dedication won the day. “The other salesmen just wanted to take orders,” Google is talking more openly about companies that use its cloud business, and revealing more about its computing resources, perhaps the largest on the planet. These include disclosures about Google’s ultrafast fiber network, its big data resources, and the computers and software it has built for itself. The disclosures follow earlier moves by Google Cloud Platform, as the search company’s cloud computing business is called, to show off its data analysis capabilities. The aim is to position Google as a company capable of handling the biggest and toughest computational exercises, lightning fast. Each cloud player is now reflecting the nature of its core business. Amazon, a retailer, is offering computing at scale and ease of use in data analysis. Microsoft, with decades of business ties, stresses its interoperability with current systems and data tools. And IBM has lots of high-level data analysts. Google Cloud Platform has built out specialties in areas like manufacturing, genomics and media to handle industry-specific needs on a global basis.


• Airbnb Says Chinese Travelers Are Fastest-Growing Users: Airbnb is drawing more customers from China, Chief Technology Officer Nathan Blecharczyk said. The firm has built relationships with Chinese consumers when they travel abroad, he said. The group represents Airbnb's fastest growing category, according to Blecharczyk.The San Francisco-based company doubled the number of properties it lists in Cuba to 2,000 within 45 days after debuting in the country, Blecharczyk said. Airbnb, which started in the country after President Barack Obama took steps to open relations with the communist nation, said last month Cuba was its fastest-growing market.


• Adobe earnings: revenue $1.16 billion, up 9% YoY; shares fall 2%: Photoshop maker Adobe reported that total revenue for quarter ending May 29th rose 8.8 percent to $1.16 billion, in line with analysts' average estimate. Net income rose to $147.5 million from $88 million in the year-ago quarter. The firm recorded better-than-expected profit for the sixth straight quarter, helped by a 12 percent sequential jump in annualized recurring revenue in its digital media segment. However, the company's shares fell about 2 percent in extended trading after it forecast lower-than-expected revenue and profit for the current quarter. Adobe is switching from traditional box licenses to web-based subscriptions for its Creative Cloud software bundle for more predictable recurring revenue. Online subscriptions let customers access the latest software versions for a monthly payment. The company said it expects revenue in its print and publishing business to be relatively flat in the current quarter with the second. Adobe earlier on Tuesday launched Adobe Stock, a collection of 40 million photographs, illustrations and graphics, available in 36 countries and 13 languages.

Daily Tech Snippet: Wednesday, March 18

• Facebook continues edging into commerce - introduces free friend-to-friend payments through messages: (More here and here) Facebook‘s instant messaging service isn’t just for sending smiley faces and photos anymore. Now you can use it to send money instantly to your friends. Facebook, the social networking company, announced Tuesday that American users of its Messenger app would be able to link their debit cards to the service and use it to message money to one another just as easily as they send a snapshot or text. Given Facebook’s huge size and reach, the introduction of its payments feature — which has been highly anticipated by Wall Street — is likely to cause tremors in the nascent market for instantly sending money to individuals, known as peer-to-peer payments. And analysts said that if the payment system succeeded, Facebook would extend it to other types of purchases, such as consumers’ buying of products directly from advertisers. “Facebook could use this as a back door to get people’s debit cards to enable the buy button,” said Robert Peck, an Internet analyst with SunTrust Robinson Humphrey. WeChat, which is essentially the Facebook of China, and other Asia-based communications services like Alipay already allow their hundreds of millions of users to send money via instant message. But the technology is only beginning to appear in the United States, where email payment services like PayPal have long been more popular. As messaging has begun to eclipse email as the preferred form of electronic communication, especially among younger users, Facebook has sought to dominate that market much as it dominates social networking. The company’s Messenger app is one of the largest platforms in the world, with more than 500 million monthly users. And last year, Facebook spent nearly $22 billion to buy WhatsApp, a separate messaging platform that now counts more than 700 million active users globally. In the United States, a host of peer-to-peer money transfer services have emerged and are trying to capture the wallets of messaging enthusiasts.

• "Insights as a service" - IBM introduces twitter-fueled data services for business: IBM is betting a fair share of its future on exploiting large troves of data for its business customers, and Twitter is a big-data fire-hose with 6,000 tweets a second, more than half a billion each day. And Twitter’s data-licensing business, though still a small part of the company, is growing rapidly. IBM and Twitter are bringing out the first products on Tuesday, developer tools and cloud-based data analysis services that mine Twitter data. The data services run on IBM’s Watson artificial intelligence technology and on its flavor of Hadoop, the open-source software for processing big data across computer clusters, IBM BigInsights. The developer tools will allow people to write applications that pull in Twitter data. In recent months, IBM has trained more than 4,000 engineers and consultants on using Twitter data in business projects. Its goal is to have 10,000 IBM employees with Twitter data-handling skills. And IBM has worked with more than 100 corporate clients so far, in a range of industries and projects. “We thought the early interest would be in consumer products and marketing, but it has turned out to be much broader than that,” said Alistair Rennie, general manager of IBM’s analytics business. The early work, he said, included companies that want to tap the Twitter data to help guide product development and plan manufacturing schedules. IBM is not naming the companies that have tried out its Twitterized technology, but it did describe a few examples of what it calls “insight as a service.” It combined tweets with hyper-local weather data to help predict where disgruntled telephone or cable customers, whose service might be impaired by severe weather, were most likely to switch suppliers. Using the data-fueled predictive models, customer churn was reduced by 5 percent, IBM says. Another case involved an unnamed drink and food retailer with thousands of shops. IBM blended Twitter data with sales tracked on loyalty cards and smartphone apps, as well as employee data. It found that the company’s best customers were the ones most influenced by turnover in the chain’s sales associates. In short, the human touch matters most to your most loyal customers. IBM has plenty of competition in mining social media data for insights. Rivals include big companies like SAS Institute, Adobe, Oracle and Salesforce, and start-ups like Crimson Hexagon and DataSift. IBM’s deal with Twitter is not exclusive. But David Schubmehl, an analyst at IDC, said that more than its competitors, IBM was focused on applying the Twitter data to a wide range of uses, beyond marketing to tasks like churn analysis, talent management and product development. IBM, Mr. Schubmehl said, is ahead of most of its rivals in its knowledge of many industries. “And it’s the combination of internal corporate data and external data from sources like Twitter where the real payoff is going to come from,” he said.

• Apple, banks at odds over who is to blame for high fraud rates on Apple Pay: A raft of headlines over the last week about unusually high fraud rates from thieves using stolen credit numbers on Apple Pay has exposed what many of the banks privately acknowledge they have been trying to fix for months. An industry consultant, Cherian Abraham, put the fraud rate at 6 percent, compared with a traditional credit card fraud rate that is relatively minuscule, 10 cents for every $100 spent. Mr. Abraham wrote in a blog post, one of the first to spotlight the issue, that the Apple Pay fraud “is growing like a weed, and the bank is unable to tell friend from foe. No one is bold enough to call the emperor naked.” It is not clear, however, that Apple is the naked emperor. More likely it is at least as much the banks’ fault, if not more. Apple Pay itself should, in theory, cut down on fraud because it makes stealing credit card information almost impossible. Each time a transaction takes place, Apple generates the equivalent of a new credit card number so the merchant never actually sees a customer’s information. The vulnerability in Apple Pay is in the way that it — and card issuers — “onboard” new credit cards into the system. Because Apple wanted its system to have the simplicity for which it has become famous and wanted to make the sign-up process “frictionless,” the company required little beyond basic credit card information about a user. Nor did it provide much information to the banks, like full phone numbers and addresses, that might help them detect fraud early. The banks, desperate to become their customers’ default card on Apple Pay — most add only one to their iPhones — did little to build their own defenses or to push Apple to provide more detailed information about its customers. Some bank executives acknowledged that they were were so scared of Apple that they didn’t speak up. The banks didn’t press the company for fear that they would not be included among the initial issuers on Apple Pay. Within weeks of Apple Pay’s introduction, a second set of banks joined: Barclays, Navy Federal Credit Union, PNC Bank, USAA and U.S. Bank. It also appears that banks set up a flawed process to deal with the credit cards that it did flag. Affected users were directed to a customer care phone center, not a fraud prevention center. A customer care center’s mission is to help customers use their cards, leading more fraudulent cards to be approved for use on Apple Pay. Call centers are a poor approach for two reasons,” Mr. Abraham wrote. “One — fraudsters are better at social engineering than call center reps are at sniffing out fraud. In some cases, fraudsters are calling the call center themselves to ‘alert the bank about a trip out of town’ so that fraud rules looking for transaction anomalies (like a customer living in California and transacting in Miami) do not trip them up.” Some Apple supporters have sought to discredit Mr. Abraham based on his affiliation as an adviser to a company that is based on Apple’s main competitor, Android. While he may indeed be conflicted, he has rightfully raised an important security issue that all sides have acknowledged is a problem, though perhaps not to the extent he has contended. All of this has led to a thriving black market in which thieves enter stolen credit card numbers into iPhones, essentially turning the devices into physical credit cards, which they in turn take to stores and walk out with merchandise. Thieves have even used Apple Pay at Apple Stores. In a statement, Apple put the problem squarely on the shoulders of the banks: “During setup, Apple Pay requires banks to verify each and every card and the bank then determines and approves whether a card can be added to Apple Pay. Banks are always reviewing and improving their approval process, which varies by bank.” Apple has now begun providing additional information to the banks that should help deter some of the fraud. The banks, which are responsible for the costs of the frauds, have toughened standards to review customer sign-ups on Apple Pay. No bank executive would speak with me on the record for fear of upsetting their company’s relationship with Apple. If you’re asking yourself, “Why are criminals more inclined to use Apple Pay than just use stolen credit cards at an online retailer?” it’s a good question. It is apparently much easier for banks to catch thieves using stolen credit cards with online retailers because of the delay in shipping a product — it can often take days — as well as the extra information that every online retailer requires, like an address where the product is to be shipped.

• Oracle quarterly earnings: revenue $9.33B, 0% Y/Y. Shares up 1.7% on dividend hike, strong PaaS revenues: Oracle Corp. reported fiscal third-quarter sales that missed analysts’ estimates, hurt by a rise in the U.S. dollar and weak corporate demand for cloud software. Revenue in the period that ended Feb. 28 was little changed from a year earlier at $9.33 billion, and profit before certain costs was 68 cents a share, the Redwood City, California-based company said Tuesday in a statement. On average, analysts projected $9.47 billion in sales and profit of 68 cents, according to data compiled by Bloomberg. Without the effect of the stronger dollar, revenue would have gained 6 percent, Oracle said, sparking optimism that the company is making headway with its push into corporate cloud services and sending the shares up in extended trading. The software maker also boosted its dividend by 25 percent to 15 cents a share, up from the prior payout of 12 cents. The company last raised its dividend in 2013, according to data compiled by Bloomberg. Oracle shares rose 1.7 percent in late trading following the report and dividend increase. The stock fell 1.2 percent to $42.87 at the close in New York, leaving it down 4.7 percent this year. Third-quarter net income fell to $2.5 billion, or 56 cents a share, from $2.57 billion, or 56 cents, a year earlier. Combined sales in Oracle’s cloud software, platform-as-a-service -- known as PaaS -- and infrastructure businesses were $527 million, up 29 percent from $408 million a year earlier. The company started disclosing cloud revenue in June. In the long term, Oracle’s transition to the cloud should benefit the bottom line, Catz said on the conference call. “For every million dollars of license we sell, we expect to collect another million dollars of support over five years for a total of $2 million,” she said. “While for every million of PaaS we sell, we actually expect to collect $5 million over five years.”

• Adobe quarterly earnings: revenue $1.11B, shares slide 3.8% on weakness in cloud sales: Adobe shares fell late Tuesday after the company reported lower-than-expected subscription growth for its Creative Cloud service and forecast second-quarter earnings and revenue below analysts’ estimates. Adobe increased its Creative Cloud subscriptions 28 percent to 517,000 in the fiscal first quarter, missing the 575,000 average of two analysts’ estimates compiled by Bloomberg. The company projected second-quarter sales of $1.125 billion to $1.175 billion and profit, excluding some items, of 41 cents to 47 cents a share. Analysts expected $1.18 billion and 48 cents, according to the average of 19 estimates. Adobe has introduced cloud-based marketing and creative-design tools as part of its push to generate more sales from subscriptions instead of software installed on computers. Revenue and profit declined in 2013, the year after the transition began, but have recovered as customers are getting used to the new way of buying software. “People are realizing they don’t necessarily need the full suite,” said Norman Young, an analyst with Morningstar Inc., who has a hold rating on the stock. “Our worry is, how are they going to raise prices over time and get people to move over from the point solutions to the full suite?” To encourage people to buy more products, Adobe will add more services, such as stock photos from Fotolia, a company it acquired last quarter. The new offerings should lead to a boost in revenue per user “this year” from that integration, Chief Financial Officer Mark Garrett said in an interview. Adobe fell 3.8 percent to $76.66 in extended trading at 7:25 p.m. New York time. The San Jose, California-based company had gained 17 percent in the past 12 months through the close. Sales were $1.11 billion and profit, excluding some items, was 44 cents a share in the period ended Feb. 27, Adobe said Tuesday in a statement. Analysts had on average projected revenue of $1.09 billion and profit of 39 cents, according to data compiled by Bloomberg.

• Rumor negates rumor: Alibaba may not invest in Snapdeal: Alibaba may scrap plans to invest in Indian online marketplace Snapdeal, technology website Recode reported, citing a person who was familiar with the matter. Last week, a person informed about the deal had told Reuters that Alibaba was in talks with Snapdeal over a potential cash investment in what could have been the Chinese e-commerce giant's first direct investment in India. Alibaba has held discussions with Snapdeal about a possible investment, but the Chinese company is leaning away from investing in Snapdeal right now, Recode said. Snapdeal competes in India with bigger rivals Flipkart.com and Amazon.com, and media reports had said it was seeking $1 billion in its latest funding round to fuel growth. Alibaba and Snapdeal's talks, however, did not involve a deal close to the $1 billion number reported, Recode cited the source as saying.

• Pinterest valued at $11B on new round of fund-raising: Less than a year after being valued at $5 billion, Pinterest has joined the 11-digit valuation start-up club. Pinterest, an online scrapbooking service, disclosed on Monday that it raised about $367 million in a new round of financing from new and existing investors. It valued the company at $11 billion, putting the start-up in roughly the same range as the Silicon Valley darling Dropbox and the data analysis company Palantir Technologies. In a regulatory filing, Pinterest disclosed that it could raise as much as $211 million in additional financing, bringing its potential haul to $578 million. That would be on top of the $764 million that the nearly five-year-old start-up has raised in previous rounds. Interest has been so ardent that the start-up has nearly tripled its valuation in just about a year and a half. Pinterest has shown strides in expanding and developing revenue, especially with so-called promoted pins that advertisers can buy. Advertising will continue to be a main focus this year, company executives have said.