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Facebook’s Investor Revolt – Should He Stay or Should He Go? – Futurum Tech Podcast Episode 015

On this week’s Futurum Tech Podcast, we take a look at Facebook’s investor revolt, plus bio hackers, China’s space grab, Apple’s Mini Big Event, Facebook’s misleading metrics and YouTube’s move into concert tickets, plus Bloomberg’s China syndrome, and the future of autonomous vehicles.

Our Main Dive

Recently, Facebook shareholders have been asking for Mark Zuckerberg to step aside so they can get an independent chairman in there instead. Why? Well, they have a few reasons. First, they’re not thrilled about some of the stuff that occurred on Facebook during the 2016 election. Many still think he had a responsibility to block the trolls, bots, spam, etc. from reaching anyone on Facebook in case it changed the election results.

Plus, Zuckerberg hasn’t banned hate groups or fake news spreaders as often or as quickly as many Facebook users and investors would like. And no one else is really calling him out or policing the way he handles the company. Basically, he has too much power and isn’t doing well with it. The drop in Facebook shares is another red flag for investors.

Bottom line: Shareholders plan to have a board meeting in May of 2019, where they’ll decide if Zuckerberg should continue as chairman. And our guess is that he won’t be able to. After all, other big tech companies, like Google and Apple, have independent chairmen, and Facebook investors deserve the same.

Our Fast Five

We dig into this week’s interesting and noteworthy news:

  • Bio hacking—or implanting technology into the human body—isn’t new. But it’s progressed a bit since the advent of pacemakers in the medical field. And now there’s a man named Patrick Kramer of Digiwell, a startup that’s focused on essentially upgrading people with chips. Kramer has implanted about 2,000 chips into people in the last year or so. But what’s the future of this practice? Many say this market is going to grow in the near future, but what are the ethics here? Is it dangerous? It seems like only time will tell on this one.
  • Eventbrite just partnered with YouTube to sell tickets to concerts, following in the footsteps of Ticketmaster, which has been doing the same thing through YouTube. So if you watch a music video of your favorite band, you’ll see a link or button to buy tickets to a nearby concert. Maybe in the next five years or so, you’ll even be able to stream concerts through YouTube, or get a VR experience with goggles as you watch!
  • Apple just sent out invitations to its October 30th event in NYC, where the company will be making some announcements on updates to iMacs, plus info on the iPad Pro. In particular, we’ve heard the iPad Pro will get a larger screen, thinner bezel, Face ID, and maybe even edge glass. We’ll be waiting with bated breath to hear more…ok, maybe we’ll just be waiting.
  • We’re used to hearing about all the western companies that are into space exploration now, such as SpaceX, Virgin Galactic, Blue Origin, etc. But did you know China is pretty into it, too? The country just announced it’s putting about $8 billion into the space industry, so be on the lookout for news about what China’s doing in space soon!
  • Facebook may be in more trouble, this time due to accusations that it lied about the value of video on its platform. The social media giant is being sued because it’s been discovered that when touting the average length of video views to new clients, it only counted the views that went for more than three seconds. So that inflated the average length for sure, which means Facebook wasn’t exactly truthful when telling companies how valuable video would be for them.

Tech Bites

This week, let’s talk about a mix of tech and media that bites. It’s all about Apple and Bloomberg. Basically, we recently mentioned the article Bloomberg released about how the Chinese government somehow supposedly put tiny chips in the motherboards of servers that ended up in the data centers of various tech companies, including Apple. Well, Apple wasn’t happy about this story Bloomberg published, and it’s asked the media outlet to retract it, claiming it’s defamation. So apparently Apple is worried the story will negatively affect the company. We can’t agree on whether it will or not, or whether the story could even be true. But we can agree that the whole story is definitely odd, and we’re curious if we’ll ever get a straight answer about whether these chips were actually implanted in the servers.

Crystal Ball: Future-um Predictions and Guesses

This week, we’re making a prediction on how soon we’ll get fully self-driving cars. We’re talking no steering wheel, no guidance from a driver, nothing. We heard someone claim we’d have that by 2020, but we’re not so sure. We’re thinking more like 2025 at the earliest—because even if the technology is there, you have to get consumers on board. And how many people will be ready to fully trust their self-driving car within a couple of years? Apart from that, we’ll need to have 5G and edge computing to rely on for sure, and we’re not quite there yet. So let’s assume it’s going to be another 5+ years for autonomous cars on the mass market at this point.

And there you have it, this week’s Futurum Tech Podcast.


On this week’s Futurum Tech Podcast, we take a look at Facebook’s investor revolt, plus bio hackers, China’s space grab, Apple’s Mini Big Event, Facebook’s misleading metrics and YouTube’s move into concert tickets, plus Bloomberg’s China syndrome, and the future of autonomous vehicles.

Daniel Newman: Welcome to this week’s edition of Futurum Tech Podcast. I’m Daniel Newman, your host for this week’s show, joined by my always esteemed colleagues at Futurum Research, Olivier Blanchard, and Fred McClimans. Welcome to this week’s show, gentleman.

Fred McClimans: Great to be here, Dan.

Daniel Newman: Always excited, you know the excitement that you guys share when I introduce you always gets me fired up and 30 minutes, which always turns into 40 minutes, but we thank everybody out there who does chime in, join in, and stay in our community because we do think this show is a lot of … On every week, we have a lot of ground to cover, talking goods and bads, a little bit of smack here and there, but I learned that from years of my own podcast experiences on Smack Talk, but today, we’ve got a really interesting show.

Facebook’s going to get a little more love than normal, I don’t know if it’s more love, they’re going to get a little more talk than normal. We’re going to talk some autonomous vehicles, we’re going to talk a little bit about an upcoming Apple event, and several other topics, and before I jump into the main topic today, which is Facebook, I just have to say, this show, we do talk about equities, we will talk some about stocks, but we are not soliciting any sort of financial advice. So please just know these are our opinions, enjoy them, but don’t make any stock purchasing decisions based upon what we do or do not say here on Futurum Tech Podcast. So all right, jumping into the first topic.

Facebook. The shareholders this week, and actually for some time now, have been calling for Mark Zuckerberg, the longtime CEO, Chairman, and, right? Shareholder, what’s the word I’m looking for? Basically, he all the rights, all the voting rights, as a shareholder, and controls the board, but these activist investors, some very large institutions, as well as some states, funds, foundations have been raising their hands and saying, “We think we need an independent chairman, that Zuckerberg is out of control, he has too much control, that 2016 election, there’s still suggestions that his platform, Facebook, contributed to Donald Trump’s election, that the Russian spam, bot, troll farms and the stuff that was allowed to happen on Facebook attributed to what could have been erroneous election results.”

And, that’s just the beginning, all the stuff with hate groups, all the stuff with misappropriated data, the continued allowance for advertisers who are spending money on questionable ICOs and other areas that people are really uncertain about, all these things continue to happen, and it’s all on Mark Zuckerberg’s watch, and with him not being policed, it brings a lot of concerns in the investor community. Other big tech companies, like Apple, like Google, they all have independent chairmen now, and these activist investors are calling for this same thing to happen.

Now, on a little tiny bit of background, in May of 2019, they are saying they’re going to have a vote on this, in that board meeting, which is still eight months away, and most of the speculation is that vote is nothing more than appeasing of these people because with Zuckerberg’s current situation, he has so much control that there’s really no way that he could be voted out, unless he makes an independent decision to step down from his role at chairman.

So, this is really, really interesting stuff, it’s not uncommon for activist investors to get involved, but Facebook’s grown really fast, it’s been really successful, and the market as a whole, people who got in on them early, and even in the mid-stages have done very, very well on Facebook. But here they are, maybe not seeing the growth they want, maybe just worried about what all the implications of some of these things could mean.

So Olivier, I want to throw it over to you, first, because I can see Fred really wanting to talk, and therefore I’m going to give it to you before he has the chance, what’s your take on this? I know you’re very heavily invested in the political side, Facebook’s been a big platform for you, for that reason. How do you feel about what’s going on with Facebook, and moreover do you feel Zuckerberg needs to consider taking a step back?

Olivier Blanchard: Yeah, okay, so my personal experience and use of Facebook aside, let me put my analyst hat on for like a minute-and-a-half, and detach myself from this. So, I think there are two things going on, on the one hand, I think that if you look at Facebook’s user growth, and particularity, the negative user growth of a key demo, like basically young users 18 and above, or actually even 13 and to 25, let’s say, Facebook has been underperforming, so growth is flat, revenue is good, but it’s not exactly gangbusters, and so from a business standpoint, there, I’m sure, are concerns among investors and institutional investors about the direction of Facebook, and whether or not Mark can steer Facebook in the right direction, to get the company back on a growth path.

So, that’s a very pragmatic, very ROI focused concern that investors have. On the other hand, you also have Facebook’s many, many missteps, with regard to data security and breaches, with regard to its transparency and the honesty with which it’s addressed some of the issues that it’s run into, from hacks, to its role in giving access to data and enabling certain organizations and companies out there to try, at least, try to manipulate elections, we don’t know if they effectively did, we know that they attempted to.

So, there are a lot of issues with Facebook’s image, with market trust, with users threatening to leave, that I think are also making investors really nervous, and when you combine those two things, of the flat growth, and slight under performance, and all of these institutional issues with the culture of Facebook, I think that you have a perfect storm for … Or at least, perfect fuel for investors to start to ring the alarm bell and ask for changes to happen.

And, I think that this ask of Mark to step down, or to be removed as chairman, is more symbolic, it’s more shaking a stick, as opposed to actually being able to use it, but it does signal that Mark needs to make some changes, and that Facebook needs to make some changes.

Daniel Newman: Which is a great question for Fred, but if they need to make changes does that change need to start with him? Does he need to start by changing himself?

Fred McClimans: You know, actually, back after the first congressional testimony that Mark offered up, that was one of the things that we discussed, and I remember at the time being asked what’s the future here for Facebook, for Zuckerberg, because there were calls then for him to shake things up a bit. Back then, as now, I believe that Facebook’s future probably does not include Zuckerberg as the chairman, I think that’s a very reasonable step, and just to kind of walk through this a bit.

The idea of institutional investors here, or activist investors, taking a larger role here, it’s not necessarily an unexpected thing. What is a little bit different is usually when we think of an activist investor, it’s usually some type of financial firm, some type of MNA type of fund that buys an equity stake in a company and looks to influence management to either break off a certain portions, to change some of the board structure, it’s very often that we see this kind of activity associated with pending sale, or acquisition.

In this case here, what we’re really seeing are a lot of institutional investors on the state’s side. I mean if you look at the filing, here that was put out, it was launched by the Illinois State Treasurer’s office, it includes state representatives from Rhode Island, Pennsylvania, New York City, all of these are organizations that typically invest a lot of money on behalf of the state employees through various pension funds in these corporations, and if you’re lucky enough to be in the SNB 500, or if you’re one of the top firms, you’re almost guaranteed that investors are going to come and put money into your businesses.

So, this kind of an activist here, it’s a little bit different. They cite some great examples, the Russian meddling, the Cambridge Analytica, data sharing issue, what? 87 million profiles shared through Cambridge Analytica, just a whole number of things, ranging from … One of the claims was that they’re helping to propagate violence in Myanmar and Southern Sudan.

So, there’s a lot to unpack here. At the end of the day, though, what this really comes down to, is right now we’re looking at Facebook with a share price of about 153 dollars a share, that’s down from 217 dollars a share this past July, significant drop. Now, granted, we’re still back where we were about April of this year, but from an investor perspective, you can’t overlook that kind of drop in the value of your portfolio, it’s something that’s going to get a lot of attention.

And, in this case here, Zuckerberg, nice guy, smart guy, has shown himself very capable, but as soon as you saw Facebook really start to take off, you could start to see the need for some independence on the Board of Directors, and in this case here, I think it is justified and is probably more than likely to happen.

It may not happen immediately, it may wait until 2019, but I think for the best interest of Facebook’s investors, for the company itself, and certainly for its users, I think this kind of impartial chairman of the board is more than justified.

Daniel Newman: Yeah, it’s really interesting because it raises a couple of massive questions here, I mean what you said about the stock is true, and as I mentioned in my opening monologue, you got in early, you’ve done quite well, if you bought in at 200 or above, you’re probably really frustrated. Markets are not continuous, and people sometimes like to think they only go up, and we’ve seen just in this past week with the corrections that have taken place in the market, your gains are not permanent until you turn it to cash.

Having said that, Mark Zuckerberg has set himself up in a way where he has this control, he’s done a lot of things well, he has shown himself as capable. It does seem inevitable that eventually, control does change, founders tend to go so far with a company before some external leader comes in and takes over.

This does feel a little Jobs-esque, with the Apple days of Jobs and then getting outed because he was too much of a founder, too much of the big-picture, visionary, risk-taker, and of course it’s a little different time, and a different situation, but all in all, this does raise another question, guys, and we don’t have time to fully go into this today, but maybe something for a future segment is, how accountable are technology companies, and social media, I would say, falls into tech, into that bucket, how accountable are technology companies for the way people use their technology?

Meaning, if someone manipulates the technology, if someone buys AWS, sets up the servers and the cloud to launch a massive hack, is that AWS’s fault? You know what I’m saying? To some extent while Facebook is maybe not taking strong enough actions, how responsible are they for the way people use their technology, and when someone abuses it, how quickly are they expected to rectify that before they get held accountable for it? Olivier and Fred, I’d love for you guys to give me a 30-second answer to that question, and maybe we can turn that into a future main topic for this show.

Olivier Blanchard: Yeah, I’ll start. So, I think a good way to start thinking about that is to not think about it in terms of technology companies, but transfer it to another industry. So, for instance, instead of technology companies, what if we were talking about car companies, right? What do we do? Are car companies responsible when a driver buys the car and mows through a crowd of people or gets drunk behind the wheel and goes out and drives drunk? I think that we need to take the sort of approach that we’ve taken before with other industries and see if they can be applied to technology, and that may require legislation, not just a question of asking or requiring tech companies to protect their own selves and do something about it. I think it may actually take a more public approach to liability and what people can and cannot do legally with some of these platforms.

Fred McClimans: Yeah, no, Olivier, I agree with what you’re saying, let me kind of build on that a bit. There’s a certain point in which handguns are a great example. The counter to legislation there is, “handguns don’t kill people, people kill people.” That’s true to-

Olivier Blanchard: Murder is illegal, right? So, it’s not so much about the gun control, it’s about the crime itself, right? So, I’m talking about the crime itself, not gun control, not regulation, I’m talking about holding users accountable for their actions whether the medium that they use to harm others is Twitter, a gun, a car, a box of Tylenol, right?

Fred McClimans: Yeah.

Olivier Blanchard: It’s really about addressing the legal aspects of this, as opposed to holding companies accountable or creating restrictions on speech or anything like that, I think it’s about the outcomes, you can not do this on this platform or you will be arrested.

Fred McClimans: Right. And, that’s one of the challenges we face though, with technology like this, I mean the technology is moving faster than our laws have progressed, and certainly there’s an aspect of ethics that need to come into this whole equation to frame those rules and those regulations. When we think of ethics, you got the ethics of the designer of a system, you have the ethics that are baked into the system itself, what does it allow, what does it not allow, and then of course, you have the third category, the ethics of the user.

That’s probably the most difficult one to police, because use cases, man, they’re almost open-ended on a lot of this stuff, but I do think that there is, I think, an increased obligation to look at the ethical aspect of technology, that there’s certainly a strong argument to be made for injecting digital ethics, social anthropology, all of these things into technology so that we at least consider what are the extremely wide possibility of use cases out there, and I think that some tech companies are a little bit ahead of this, some are a little bit behind, there are also some like Snap, when Snap went public, they were adamant in their filing, there is no shareholder control, there is no activist investor that can step up and force a change in the company or to the Board of Directors. The voting shares that are out there for Snap, they’re all owned by the company, and its original investors. There’s nobody in the publicly traded market that has any vote or say in what’s taking place.

Yeah, Dan, this is a good further conversation we can dive into, but the digital ethics has got to put at the forefront here, and we do need some type of group think, group consensus on what that really means in technology today.

Daniel Newman: So, great analysis, worst 30-seconds ever. Guys, great segment though, gotta move on into our Fast Five. Fred, I want to kick it off with you, keep talking, you’re mouth’s already partially moving, talk about bio hacking.

Fred McClimans: Yeah, bio hacking, so when we think of bio hacking, we’re talking here about the implanting of technology into the human body for, take your pick, it’s been something that’s been going on for a while, pacemakers, certainly, an example of bio hacking to an extent, and in fact, back in 1998, I wrote a piece about a professor who was actually, at that point, early on, implanting chips into himself, little RFID chips, so that he could open and close doors, and so forth.

Not necessarily that new, the big thing now, though, is a guy out there, Patrick Kramer, he is the CEO of the company called Digiwell, they’re a German startup, and he’s really kind of moving this marketplace forward. He’s implanted about 2,000 chips in the last year, year-and-a-half, or so, into people. At this point, it’s a really interesting question, what happens with these chips, how are they used? What kind of adoption can we get?

To an extent, there’s a part of me that says, “Hey, this is all about IOT, the personal IOT.” Embedding things into yourself, probably more important here, we’re starting to see people pay attention to this market, and in fact, one of the predictions that we’ve seen here is that this could be a two billion plus market within the next five or six years, so I think it’s something, kind of touching back on digital ethics, we start to need to think about this market place a little bit here, and certainly it’s an exciting time, but perhaps a little bit dangerous as well.

Daniel Newman: Would you put one in your hand, or in your body yet?

Fred McClimans: I would never do that again, no.

Daniel Newman: No. All right, well I’m thinking of getting some languages implanted in my brain as soon as I know how to do that so I can be just a little bit more wise as I travel the world. Olivier, talk a little bit about what’s going on with YouTube and Eventbrite.

Olivier Blanchard: Oh! That one, okay, so, Eventbrite and YouTube are partnering to sell tickets, so this is something that YouTube was already doing with Ticket Master, so essentially what happens is you watch a rock video, or a music video on YouTube and you might see a little button somewhere in the comments or above the comments that says, “Buy Tickets.” Or, it will have a date or basically an access to a concert venue nearby, and so essentially Eventbrite and Ticket Master are both working with YouTube now, to sell tickets through YouTube, which is a really cool way to bridge the gap between somebody watching a rock band or their artist of choice on YouTube and being reminded, “Hey, maybe I should buy a concert ticket.” Apparently, according to YouTube, YouTube now covers more than 70% of the US ticketing market, and I had no idea this was going on.

So, that’s kind of cool, what I think, though, and I’ll be proven right or wrong in the next five or six years, I think, is that ultimately, this turns into an experience play, not just a ticket portal, but actually being able to stream concerts through YouTube, and ultimately, being able to do that as a VR experience with VR goggles. I’m pretty sure that this is YouTube trying to just kind of dig its heels, plant its flag in this before Disney, and Time Warner, and even the carriers like At&t that are making huge investments in content, get their teeth into it too, so we’ll see, but that’s where I think this is going.

Daniel Newman: Yeah, it will be interesting to follow, still the headset, it’s a close call for me, I’m still not a hundred percent sure.

Olivier Blanchard: Oh, it’s not next year, it’ll be five, six years from now.

Daniel Newman: We’re probably a ways out, I just mean, I still think we need to get an inner, slimmer experience if VR’s ever going to take off, but that’s just another topic for another day. I’m going to quickly touch on Apple. Invites went out yesterday for their October 30th Apple event in New York City, in Brooklyn of all places, so moving away from their Cupertino spot, which they do from time to time, and the word on the street is it’s going to be announcing some updates to some iMacs and then the iPad Pro is going to be going to a thinner bezel, larger screen to format itself like the iPhone X series, so you’re going to see that notch, maybe, of some type, or some sort of edge … All the way up to the edge glass, which still don’t know how much I care about on a screen that large, or anyone else cares about, we can debate that at a later time.

I’m also thinking key announcements could be anything from a firmware upgrade, to some of their devices, to a new OS, no I’m just kidding, those last two are totally made up, and I am just joking. So, Fred, back to you, Space Program.

Fred McClimans: Yes, so Space Program here, we’re going to go back to one of our frequent topics here, China, and space. When we think about the private space market, space industry, usually that’s Space X, Blue Origin, Virgin Galactic, all these western companies, that are out there really pushing the envelope of space exploration and tech development, however, China has just announced that they are dumping about eight billion dollars into the private space industry in China. Looking to really kind of jumpstart their program and to be very competitive alongside these companies. Is this a threat to Musk, Bezos, and Branson, and so forth?

Actually, I think it is, because if you look at the Chinese Space Program, this is not a new fledging program, they’ve actually done some pretty impressive things over the past decade or so, and we see the acceleration of this now in this particular investment cycle here, so get ready for a bit more news about space from China and get ready for a lot more space junk up there, unfortunately.

Daniel Newman: It’s gotta go somewhere. Olivier, circling back to where we started, Facebook’s faulty data push news publishers to make terrible decisions on video.

Olivier Blanchard: Yeah, so another flashback to something that Facebook was doing several years ago, so there’s this new lawsuit that alleges that Facebook mislead content publishers, and especially digital agencies with some faulty metrics, that allegedly, according to the lawsuit, Facebook was aware of much longer than they said they were and even though they were pushing this.

But, essentially, during the original investigation, according to Engadget, it was found, and I’m going to quote here, that the company only counted video views that lasted more than three seconds when calculated its, quote, “Average duration of video viewed metric.” So, views under three seconds worked back then, which kind of inflated the average length of a view, so essentially what the lawsuit alleges, that Facebook lied about the value of video on its platform to incite agencies and content publishers to focus more on video, spend on more video, and now Facebook is rightfully, if this is true, if this is accurate, being accused of fraud and misrepresenting the value of video on its own metrics, so there you have it, just one more black mark on Facebook’s reputation, and if this actually happened, I’m not surprised at all.

I’ve always thought that Facebook’s metrics were not necessarily shady, but just not what they needed to be, I always kind scratched my head at this, even way back when I wrote Social Media ROI, this is something that I have an issue with.

Daniel Newman: More art than science?

Olivier Blanchard: Yeah, but when you sell it as a science, you sell it as an actual metric, there’s not really a lot of room for art, art is in the content itself, and in the campaign, it shouldn’t be in the metrics. Like, if you tell people that the value of video is X, and spend your money on video here with us, as opposed to somewhere else, with other platforms, and other types of contents, and you know that, that’s not true, and you’re inflating your own metrics, that is broad.

Fred McClimans: Well put.

Daniel Newman: Well, there’s a lot of a manipulation and all these digital ad platforms, it’s been very problematic for a long time. The amount of ad fraud, I can’t recall the number, but there’s been some audits and analysts that have actually looked at what agencies have had companies spend, and the waste is in the billions, and it’s not just Facebook, but in the age of Facebook and Googles, it’s been proliferated in a big way. And, you know you say it to yourself, if you’re a company and you’re selling advertising, what the heck does a two-second ad view to your content really get you?

Fred McClimans: Yeah.

Daniel Newman: Again, when that’s what you’re committing to people, then what’s that ROI? Now, at the same time, people have been buying Super Bowl ads for ages, and television advertising where you really have no idea if anyone’s been watching them at all, with the exception of having certain links and activities that people have to refer to, very specifically to know that they saw your specific advertisement, but Facebook’s definitely gotten away with a lot of things, which all goes back to our original story at the beginning, is, are they taking advantage of the market? Are they taking advantage of gray areas consistently in order to gain advantages to increase their revenue, and at some point, when does the chickens come home to roost? So, we’ll have to talk more about that one too, Olivier, and thanks guys, always a great Fast Five.

Now, let’s talk about something that bites, and let’s talk about technology, and let’s talk about media, and let’s talk about the first time in history that Apple has ever asked for a story, regardless of its accuracies, or inaccuracies, erroneous nature, or misinformation and they’re asking for a retraction.

So, a couple weeks back, on this very show, we analyzed a Bloomberg article, a big expose that came out that talked about some alleged Chinese hacking that put tiny tracking type devices inside of servers for over 30 technology companies that had fabrications being done in Asia, and there was a number of interesting corroborations in this story but not a lot of specificity, and now Tim Cook is coming out and saying, “You can’t prove this story, you have defamed our company, I want you to take this story down.” Which is a big, big kick in the teeth, when this has never happened before. Fred, gotta ask you, as someone who tracks this stuff, pays a lot of attention to what’s going on, first of all, is Apple giving too much validation to this story by being mad enough to ask for it to be retracted? Are they in the right? Does Bloomberg have something to prove? What do you think needs to happen next?

Fred McClimans: Well, first off, do I think that Apple has been defamed here, no. Not even close. This is one of those situations where I think Apple may be in the right, to ask for a retraction, they may be in the right to ask for proof of the story, and in fact, I’m really interested to see what Bloomberg comes back with, because I’d like to see the details, I’d like to see what they based this story on, because if the story isn’t accurate somebody’s trying to pull a fast one here with some misinformation, and I’d like to get to the bottom of who it is.

In this case, the retraction, the one thing that I will say that’s kind of curious is, there’s a certain point in time at which people protest a bit too much. There’s still more about this story that we don’t have access to yet, so in that sense, I’m glad to see this happening, I think it will help shed some light on the situation here. Yeah, it’s curious, it’s getting more and more curious every day here.

Daniel Newman: Yeah, I think that’s a great point, I think it is really, really provocative, if nothing else, it was provocative journalism, it was piece that maybe was more Rolling Stone than Bloomberg, in a sense of just how big it was, because Bloomberg really isn’t technically known for writing that kind of piece, but I, at the same time, don’t know that just because they haven’t corroborated everything, that it isn’t true. Olivier, where do you tend to sit on this one? Seems like there’s a lot of specific information for something that-

Olivier Blanchard: Yeah, I might disagree with Fred on his assessment that there’s no defamation here, I think that what the story implies, it isn’t so much that there was any wrongdoing by Apple necessary, except for the alleged coverup aspect of this, where they contacted, allegedly, the federal government, and told them that they found these chips, or they find some issues, and then didn’t tell investors, didn’t tell anybody else. But, the issue here isn’t so much just one of trust, it’s also that Apple bases a lot of the services that would be affected by this hack on data security, and if you’re now alleging that Apple has, for years, didn’t really have control over its own data security, that its servers and user-information wasn’t as secure as they claimed it was, then it does hurt their business, as it would hurt the business of AWS and whoever else was involved.

So, I think that there are material damages, financial damages there at play. So, it’s natural, I think, for these companies, whether it’s Amazon, or Apple, or whoever else was named to fight back and say, “No, we’re innocent of this.” [crosstalk 00:27:56] Hold on, hold on, hold. Let me finish, let me finish.

The other aspect of this is that the story smells weird, there’s always been something wrong with it, I don’t believe that chip technology, or at least as described in the story exists, whether small chips were implanted in there that did something is a separate discussion, but the way that the story was explained, the way the technology was explained in that Bloomberg piece makes no sense, and there isn’t a single tech analyst or ship maker that I’ve talked to so far since the story came out that has said, “Yeah, it’s possible.” They are all shaking their heads at this going like, “No, this cannot actually happen, this story cannot be true.” And, generally when companies like Apple or Amazon or Facebook, or whomever get accused of doing something they don’t want to admit too, their rebuttals and denials are kind of … They’re always kind of the same.

The reaction of Apple this time, and you know how hard I am on Apple, I’m not a huge advocate of Apple under Tim Cook, in this case I’m going to side with them, because I think they’re right, and their reaction has been so different from the reaction we usually get when they get accused of something that they ultimately did, that I’m going to go ahead and believe them on this, so it’s a combination of my gut feeling about the story, my understanding of where the technology is and isn’t, and Apple’s reaction to this being different than usual, and I think they do stand to lose business through this story, which turns out to be probably not true, or at least not accurate.

Fred McClimans: Yeah. I see your point, if I look, though at the impact on Apple, there hasn’t been any appreciable impact in the valuation of the company, the stock price hasn’t tanked, they are still a trillion dollar market cap plus company-

Olivier Blanchard: Well, the story only broke like two weeks ago-

Fred McClimans: Yeah-

Olivier Blanchard: There’s not going to be … Too early for that.

Fred McClimans: Well, that’s true, but if you go back to the story itself, the allegation originally came up through Amazon, through Amazon’s due diligence into the company, they were looking to acquire, and it was spotted back 2015, I would have assumed anything that was spotted back then would have been corrected pretty quick, so we’re talking about something that, it’s not ancient history, but it is history here, I just don’t see the defamation aspect of this come into play, again, I think you’re right, Apple is certainly justified in pursuing this particular course of action, but yeah, it just seems like a bit of a heavy-handed response to me. That’s okay. That’s why we’re debating it.

Daniel Newman: Yeah, well, it’s very interesting, ’cause like I said, when you give a lot of attention to something, you create validity for it, that’s typically how things work in the media, at the same time, they’ve never given a lot of attention to stories that were true or not true, because Apple just does what Apple does, so it’s very interesting, they’ve chosen this one, because maybe there is some legitimate fear that if this is corroborated or validated, or even considered as valid, it could do material harm to their organization.

I think we’re in this age, and again, no matter where you stand on Trump, you can say that more than ever the media is being targeted and it’s being okay for people to invalidate what they write and what they say by just lashing out against them, but as Olivier said, that’s not really what you’re seeing here, you’re just seeing a simple request for a retraction, but in this day, it’s really hard to say, it’s hard to say because people now, want to challenge the media, they don’t want media, they don’t want honesty in media, and truth in media, so I still, my gut, which again, just my opinion, is that there’s something true in that story, or there’s no way it ever got published.

Are all the players correct? Are all the details correct to what Olivier said? Probably not, but I just don’t see a news source, that’s typically as reliable and well-respected as Bloomberg publishing that if they didn’t feel they had enough to go on to write it, but again, my opinion, we’re going to-

Olivier Blanchard: Well, bear in mind, that nobody else went with this, right? This was obviously the kind of story that’s fished around, so if you’ve been around journalism for a while, and nobody else took a bite, nobody-

Daniel Newman: I have. And, I’ve been around it for a while, and I published a few things in my life, and I can say there was a lot of risk that went with writing that article, and in this day of media flashback, took some risk, so again, if they’re wrong, they deserve to be called out, they deserve, and should, publicly retract and apologize to the companies they’ve called out, inaccurately, or incorrectly.

However, if they’re right, we need brave media to continue to report on information, because if everyone turns the other cheek ’cause they’re afraid of advertising consequences, and let’s be very honest, that is a big part of why some companies didn’t run with it, is if you look at the 30 companies that were potentially named in this thing, I bet you a lot of them advertised for a lot of big media platforms that maybe should have run with this story, they didn’t because they were worried about their bottom line, so I’ll go ahead and throw that out there as a possibility-

Olivier Blanchard: Fair point.

Daniel Newman: … and we’ll just say as a collective, none of the three of us agree, or disagree, we just don’t see this quite the same, but, the beauty of it is, that’s what makes this show so great. So, let’s move to something a little more positive, a little bit more fun, end the show today.

I gave a keynote at a Samsung event this week, and one of the questions in a later panel in the day is, what year does full autonomous driving take place? And some of the most bold predictions, I think, what it’s concerned, level four, full autonomy, no driver, was as early as 2020. Just want to get your guys’ take, will there be full autonomous, no steering wheel, cars that do not require any sort of governance, guidance, management, remote control, by the year of 2020, if not what do you sort of foresee happening in this year, Olivier, you start off.

Olivier Blanchard: Well, yeah. The answer is yes and no. So, yes, in 2020 you could have cars that are self-driving that don’t require a driver on a closed course in the controlled environments where you’re not going to be murdering people or running into walls or other vehicles. I think, however, that a laboratory conditions and ideal conditions or proof of concept are not the same thing as real-world applications.

I think that 2020 is way too soon for truly autonomous vehicles, the technology on vehicle to person, V2P, V2I, which is vehicle to infrastructure and V2V, which is vehicle to vehicle, these three things have to work in concert with a non-board AI that doesn’t require constant back and forth with the cloud, and we are absolutely not there yet, and I don’t think that we’ll even be there in 2025.

So, caution ahead, I think the pace of development for autonomous vehicles is being way, way exaggerated overly. And if you go to any technology company that makes the chips for this stuff, or that designs the cars for it, or makes any other components for these systems, you will see, if you look at a video representation of what the computers actually do in real-time to help the vehicles drive themselves, you will see how rudimentary, and how still very, very early we are in a development of it.

Fred McClimans: Right. So, I think if we’re talking about the mass market, going to your Ford dealership, your BMW dealership and buying a full level four vehicle, yeah it’s not 2020, it’s probably minimum of 2022 to 2025, somewhere in that timeframe. But, if we look at the real application in, what I’ll call a semi-closed course, for level four vehicles, I think 2019, 2020 is very achievable if you look at applications such as buses in an airport, controlled environment, great opportunity there, and in fact China’s Baidu is already doing that. So, I think they’re a number of industrial applications or limited commercial applications where level four autonomy is sitting right around the corner, we’re getting ready to turn, we’re in the left-hand lane, the signal is going, it’s about time to turn the corner here.

But, for mass market, now that’s 2022 to 2025 at a minimum before we get there, and don’t forget, a large part of that is user-adoption. We can push the vehicles out there and get them ready and capable, but I think the level of trust that the average consumer has just won’t be there by that time.

Daniel Newman: Yeah, I think our younger children, under the age of maybe 10 will be fully bought in, but I think people who grew up really involved in cars and driving, I think you have two major challenges, you have one trust, that you mentioned, and two, there’s the affinity to driving, I mean, Olivier, you and I were together recently with a client, we talked a lot about cars and we talked about people going to race tracks to pay money for the experience of driving cool cars, and are people ready to just completely relinquish the control and the experience. Especially here in the US, but in other countries, in Germany, Italy, and places around the world, driving is a tradition.

I will add a technical component to this conversation very quickly, the proliferation of 5G is going to be critical to this happening because, like you said, in a closed environment, with a fixed 5G deployment, you have onboard, or embedded AI, potentially in the SOC, that can do a lot of that AI processing, and then you need the rest of it to be happening very close to the edge, which means you’re going to need very fast productivity to the edge data and servers to be grabbing machine vision and all the information from that airport or local route that’s being run autonomously, the bigger that landmass becomes, the more complex that is.

So, when you don’t have that high speed edge, being able to communicate to and from the vehicles, you just can’t just really do it, because like you guys said, a lot of processing has to happen onboard, but a lot of the additional information isn’t from the vehicle, it’s from the surroundings of the vehicle, and that data has to get to the vehicle, somehow, and that’s going to come from 5G and the proliferation of edge computing.

Guys, I want to say, another great show, really appreciate you guys taking the time, almost as if we have obliged ourselves to doing this on a weekly basis, we want to thank everybody out there in the Futurum Tech Podcast community that continues to listen in, download, and subscribe, and share, we love it when you share. So, jump on Twitter, Facebook, LinkedIn, let’s get these episodes out there, let’s start a conversation and let’s get people talking about this stuff, a lot of good stuff in this episode, so Fred, Olivier, for Futurum Tech Podcast, we’re out of here, we’ll see you again next week.

Outro: There will be plenty of more tech topics and tech conversations right here on the Futurum Tech Podcast, FTP. Hit that subscribe button, join us, become part of our community, we would love to hear from you. Check us out, or Futurum Tech Podcast, Daniel Newman, Fred McClimans, Olivier Blanchard, we’ll see you later.

Author Information

Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.

From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.

A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.

An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.


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