An American Airlines Passenger Was Stuck Next to a 'Screaming and Kicking' Toddler. His Stunning Reaction Went Viral

Imagine your happy place. Now, imagine that in order to get to your happy place, you first have to sit next to a screaming toddler in economy on American Airlines for a few hours.

(Related: We Took Our 2-Year-Old on United and JetBlue. Here’s What We Learned)

We’ve seen this kind of thing happen a lot lately–with bad results and viral videos. There’s the New York state employee who reportedly yelled at a baby on a Delta flight and lost her job (at least temporarily) as a result. There’s the flight attendant who simply kicked a passenger and a fussy toddler off a plane.

And there’s the guy whose response was to record a video of a screaming child on a flightpost it to YouTube, and bask in the social media notoriety.

But perhaps there’s another way to respond. And a passenger on American Airlines who made that choice recently, went viral himself as a result.

Meet Todd Walker, a father of two who just celebrated 30 years with his employer, and who flies as often as four times a month from Kansas City to North Carolina for work.

He’d boarded an American Airlines flight recently on that route, getting seat 33A toward the back of the plane, only to find that the passengers sitting next to him were a mom named Jessica Rudeen, and her two kids: four-month-old Alexander on her lap, and three-year-old Caroline.  

After some chaos in the boarding area, Rudeen hadn’t had a chance to feed the four-month-old–and he started reacting the way hungry four-year-olds are known to do. Then, her three-year-old daughter changed her mind about the whole idea of flying.

That meant Walker was about to get what we might call, “whole toddler experience.” I’ll let Rudeen herself describe the maelstrom, as she did in a post (embedded at the end of this article):

My 3 year old, who was excited before boarding the plane, lost her nerve and began screaming and kicking, ‘I want to get off the plane! I don’t want to go!’ I honestly thought we’d get kicked off the plane. So with two kids losing their minds, I was desperately trying to calm the situation. 

Walker responded in a way that seemed completely unremarkable to him, he told me in a phone conversation this weekend. He just decided to help. As Rudeen explained further, Walker…

reached for the baby and held him while I forced a seatbelt on Caroline, got her tablet and started her movie. Once she was settled and relatively calmed, he distracted her so that I could feed Alexander. Finally, while we were taxiing, the back of the plane no longer had screams. During the flight, he colored and watched a movie with Caroline, he engaged in conversation and showed her all the things outside.

By the end of the flight, he was Caroline’s best friend. I’m not sure if he caught the kiss she landed on his shoulder while they were looking out the window.

Walker also was on the same connecting flight in Charlotte that Rudeen planned to take. He walked her daughter through the terminal to the new gate, and then asked to have his seat reassigned to he could sit next to the family and help out on the second flight, too.

I talked with both Walker and Rudeen this weekend, after Rudeen’s Instagram/Facebook post–which she originally put up because she hadn’t gotten Walker’s last name or contact information, and wanted to connect with him again–got so much traction. As of this writing it has more than 5,000 shares, and it’s been featured in media around the world.

The Walker and Rudeen families say they think their meeting was a result of divine intervention, and that they plan to meet again next month.

“I wasn’t expecting it to get to places like Brazil or Ireland or Australia or the U.K.,” Rudeen told me. “I’m just a stay-at-home mom in northwest Arkansas. But, I’m glad that it highlights the importance of what it means to be kind.”

Walker said he hadn’t thought his conduct had been a big deal, either, and but he welcomed the attention if it inspires other people to offer help, or to notice kindness around them.

“When I walked away in Wilmington, I never thought I’d hear from or see them again,” he said, reiterating that it hadn’t seemed like a big deal to him to respond to the family with kindness.

He also praised Rudeen for being willing to admit she could use the assistance, even in a world where people often have good reason to be wary of strangers. “Part of the reason this worked is that Jessica was willing to accept the help. That’s not always the case today, and I get it.” 

Here’s Jessica Rudeen’s Facebook post:

China fund managers slash ZTE valuation after U.S. sanction

SHANGHAI (Reuters) – Chinese funds have slashed valuations of ZTE Corp (000063.SZ) (0763.HK) after the United States banned American companies from selling components to the telecoms equipment maker for seven years, a move ZTE said threatened its very survival.

The logo of China’s ZTE Corp is seen on a building in Nanjing, Jiangsu province, China April 19, 2018. REUTERS/Stringer

The U.S. action last week was sparked by ZTE’s violation of an agreement reached after it was caught illegally shipping U.S. goods to Iran. American companies are estimated to provide 25-30 percent of the components used in ZTE’s equipment.

Chinese mutual fund managers cut the value of the stock in their portfolios by 20-30 percent in a spate of announcements over the weekend, a blow to ZTE that suspended trading in its mainland and Hong Kong shares on April 17.

Around 40 Chinese mutual funds have adjusted the valuation of ZTE in their portfolios since it suspended trading. In the latest batch, five fund managers revalued the stock on Saturday.

FILE PHOTO: A ZTE smart phone is pictured in this illustration taken April 17, 2018. REUTERS/Carlo Allegri/Illustration/File Photo

Huatai-PineBridege and GTJA Allianz cut their valuation of ZTE’s mainland shares to 25.05 yuan, 20 percent lower than its last trading price. JT Asset Management – the most pessimistic – slashed the valuation to around 30 percent below ZTE’s last close of 31.31 yuan ($4.98).

Several funds with exposure to ZTE’s Hong Kong shares, including HuaAn Fund and Harvest Fund, cut valuations to about 20 percent below the last trading price of HK$25.60 ($3.26).

ZTE, which had a market capitalization of about $20 billion before trading in its shares was suspended, did not respond to a request for comment on Monday.

The valuation adjustment by mutual funds could be just preliminary, as the real impact of the U.S. sanctions needs to be assessed continuously as the incident unfolds, said Reagan Li, investment manager at private fund house Shanghai V-Invest.

On Sunday, ZTE said it was “making active communications with relevant parties and seeking a solution to the U.S. export denial order”. Earlier, the U.S. Commerce Department said it would allow ZTE to submit more evidence related to the matter.

The threat to ZTE’s business has triggered a broad sell-off in technology shares as investors fear the sector could suffer from the fallout, or that other firms could be targeted by the United States amid escalating trade tensions.

Shares in display maker BOE Technology (000725.SZ) slumped as much as 6 percent on Monday, even after the firm said it had not received any official information regarding U.S. sanctions in response to rumors in the market that it would be targeted.

The CSI Information Technology index .CSIINT of Shanghai- and Shenzhen-listed tech firms fell 2 percent.

“Investors are asking: who will be next on the U.S. sanction list?” fund manager Li said.

Reporting by Samuel Shen and Adam Jourdan, additional reporting by Anne Marie Roantree in Hong Kong; Editing by Himani Sarkar

Toshiba eyes cancelling chip unit sale if no China approval by May: media

TOKYO (Reuters) – Japan’s Toshiba Corp has decided it will cancel the planned $18.6 billion sale of its memory chip unit if it does not get approval from China’s anti-monopoly regulator by May, the Mainichi newspaper said on Sunday.

The logo of Toshiba Corp is seen behind cherry blossoms at the company’s headquarters in Tokyo, Japan April 11, 2017. REUTERS/Toru Hanai

A consortium led by U.S. private equity firm Bain Capital last year won a long and highly contentious battle for the unit, which Toshiba put up for sale after billions of dollars in cost overruns at its Westinghouse nuclear unit plunged it into crisis.

But Toshiba was unable to complete the sale by the agreed deadline of March 31 as it was still waiting for approval from China’s antitrust authorities.

Toshiba raised $5.4 billion from a share issue to foreign investors late last year and it had now decided it did not need to go through with the sale, the Mainichi newspaper reported. It did not cite any source.

“Toshiba has come to a decision that there is little necessity for the sale as it is no longer in insolvency,” the newspaper reported, adding that Toshiba would consider listing the unit if the sale did not go ahead.

A Toshiba spokesman said the company was still aiming to complete the sale as soon as possible.

In early April, Toshiba Chief Executive Nobuaki Kurumatani said his company would not use the option of cancelling the sale unless there was any “major material change” in circumstances.

Reporting by Makiko Yamazaki, Kiyoshi Takenaka; Editing by Robert Birsel

How Some New College Graduates Are Pulling Over $1 Million a Year (Courtesy of Elon Musk)

Artificial intelligence experts can command huge salaries and bonuses–even at a nonprofit.

OpenAI, a nonprofit research lab started by Tesla founder and CEO Elon Musk released the salary details of it’s employees–and they are striking. The organization’s top researcher was paid more than $1.9 million in 2016, and another leading researcher who was only recruited in March was paid $800,000 that year, according to a recent article in the New York Times.

Salaries for top A.I. researchers have skyrocketed because there is high demand for the skills–thousands of companies want to work with the technology–and few people have them. So even researchers at a nonprofit can make big money.

It likely has more to do with competition than interest in the field itself, however. The Times points out that both of the researchers employed by OpenAI used to work at Google. At DeepMind, a Google-owned A.I. lab in London, $138 million was spent on the salaries of 400 employees, translating to $345,000 per employee including researchers and other staff, the Times reports. 

OpenAI was started by Musk who recruited several engineers from Google and Facebook, two companies pushing the industry into artificial intelligence. People who work at major companies told the Times that while top names can expect compensation packages in the millions, even A.I. specialists with no industry experience can expect to make between $300,000 and $500,000 in salary and stock as demand for the skills continues to outstrip supply. 

​Learn to use GitHub with GitHub Learning Lab

Video: GitHub: EU copyright crackdown could hurt open-source development

The most popular open-source development site in the world is GitHub. It’s used by tens of millions of developers to work on over 80 million projects.

It’s not just a site where people use Linus Torvalds’ Git open-source distributed version control system. It’s also an online home for collaboration, a sandbox for testing, a launchpad for deployment, and a platform for learning new skills. The GitHub Training Team has now released an app, GitHub Learning Lab, so you can join the programming party.

GitHub Learning Lab is not a tutorial or webcast. It’s an app that gives you a hands-on learning experience within GitHub. According to GitHub, “Our friendly bot will take you through a series of practical, fun labs that will give you the skills you need in no time–and share helpful feedback along the way.”

With GitHub Learning Lab, you’ll learn through issues opened by a bot in a GitHub repository. As you finish tasks, the bot will comment on your work and review your pull requests like a project collaborator would.

Read also: Google Fuchsia is not Linux: So, what is it and who will use it? | Perfectly legal ways you can still get Windows 7 cheap (or even free) | Google AI can pick out a single speaker in a crowd: Expect to see it in tons of products | Open source’s big German win: 300,000 users shift to Nextcloud for file sharing

If you have questions that come up while you complete a course, you can get answers in the GitHub Learning Lab Community Forum. This is a new way to get support from your fellow students and expert trainers, including members of the GitHub Training Team

The Lab is opening with five courses. These are:

  1. Introduction to GitHub: Get an introduction to the most common, collaborative workflow for developers around the world.
  2. Communicating using Markdown: Learn how to communicate on GitHub and beyond with Markdown’s simple syntax.
  3. GitHub Pages: Host a website or blog directly from your GitHub repository.
  4. Moving your project to GitHub: Get tips for migrating your code and contributors to GitHub.
  5. Managing merge conflict: Learn why merge conflicts happen and how to fix them.

GitHub will also release “Contributing to open source: Make your first open source contribution in a friendly mapping project,” soon.

Afterwards GitHub will add more classes to the app. It will also invite inviting new course authors and add more topics. You can add your own two cents on what should be offered on the Community Forum.

Related stories

Why Can't We Fix Puerto Rico's Power Grid?

And then the lights went out. Again.

The loss of electrical power in Puerto Rico and the US Virgin Islands after Hurricane Maria churned across the islands in September 2017 was already the second-biggest blackout in the history of power on Earth—3.4 billion lost customer-hours. But in recent weeks, various agencies were touting their success in restoring Puerto Rico’s flattened grid. The numbers were encouraging; the US Department of Energy, working from data from the Puerto Rican power authority Prepa, said 95.8 percent of customers had power and all 78 municipalities had at least some electricity. (That still left 62,000 people in the dark.)

On Wednesday, pop went the bubble. According to the New York Times, a contractor working to repair the grid took a bulldozer too close to a 230-kV connection from a generation facility in Aguirre. And that was it. Prepa estimated that it would be 24 to 36 hours before the agency could fix the failure. That’s a day and a half of eking by on generators and solar microgrids for 3.3 million American citizens. “Can you imagine the chaos if you said Washington, DC was going to be without power for 36 hours? Or New York? Or San Francisco?” says Scott Knowles, a disaster researcher at Drexel University.

Let’s call this what it is: a crime.

Most folks understand, by now, the difficulties Puerto Rico’s electrical grid faced even before the hurricane. “It’s not the right word, but Puerto Rico’s system is too chunky,” says Jeremy Fisher, a senior strategy and technical advisor at the Sierra Club who co-wrote a scathing 2016 report on the Prepa grid for Synapse Energy. Essentially, the generating capacity is overly centralized, which “puts a lot of requirements on a few large fossil-fueled generating units.” When one fails: poof. “The quality of the electricity degrades so rapidly by not having enough generation on the system that you put at risk personal computers, motors, and other equipment,” Fisher says. In other words, one fault propagates through the system.

How’d they get that way? As an invaluable article in IEEE Spectrum points out, tax incentives in the 1970s induced mainland US companies to build factories in the southern part of the island, so Prepa built generating facilities there. In 1996 the tax break expired and the factories left. So today, 70 percent of Puerto Rico’s population lives in the north, around San Juan, and 70 percent of the power generation is in the south. A fragile grid connects the two via tough, mountainous terrain. Scattered rural populations have always had a tenuous connection to that grid. Meanwhile Prepa, hamstrung by billions of dollars of debt, austerity measures, and possible corruption slacked off on maintenance. Hurricane Maria sliced Puerto Rico’s broken-down grid in half.

This has been what Knowles calls a “slow disaster.” Like the lead-tainted water in Flint, Michigan or a flood in Houston, the crisis in Puerto Rico came not as a consequence of one big storm but after years of well-understood neglect. “The standard logic has been, ‘we know, and that’s just the way our government works.’ So we wait for a disaster,” Knowles says. “But disaster relief funds are not up to the challenge of meeting deferred maintenance issues.”

So engineers and aid groups now see Puerto Rico as a potential lab to rethink entirely what a resilient, environmentally benign electrical grid might look like. Before Maria, just 2.4 percent of Puerto Rico’s electricity came from renewable sources like solar and wind. Now groups like Elon Musk’s Tesla and the provider Sonnen are proposing to build solar “microgrids,” installations that power community centers, hospitals, and other self-contained institutions that people can access locally. A group run in part by the Puerto Rican architect Jonathan Marvel hopes to get legal and technical buy-in to extend similar microgrids over entire neighborhoods, megawatt-scale installations that can power not just one building but a few hundred homes at a time.

In fact, a December 2017 report (from the New York Power Authority and a couple dozen electricity research outfits) says that for $17.4 billion (cheap!) you could combine that kind of innovation with hardening the traditional grid—elevating critical machinery, using category 4-capable power poles, building more redundancy into the grid—and get a reliable electrical infrastructure. It’d withstand hurricanes and be a model for other vulnerable coastal cities in an age of climate change-driven sea level rise and monster storms.

That’s even harder than it sounds. Puerto Rico would have to stabilize its existing, oil-burning generators while simultaneously building out the supergreen ultraresilient grid of the future … while also dealing with billions of dollars of debt, worries that bondholders will take money meant for hurricane relief, an inability to attract new capital, and a bankrupt Prepa. Right now Puerto Rico has no regulatory structure to understand who will own solar microgrids, how they’d connect to the existing grid or the grid of the future, and how to make sure their owners don’t price-gouge their users. “I’d like to imagine that everyone believes that we need an electricity system in Puerto Rico,” Fisher says. “But it appears from the outside that there’s a lot of political infighting about who will take charge of the process.”

Engineers love a chance to fix a problem. But these challenges are borne of failure and incompetence. It’s fine to celebrate technical improvisation—people cobbling together battery-powered refrigeration for their insulin and tech companies donating solar panels and battery systems. I’ve done some of that lionizing myself. But those kind of stories also tacitly accept the lack of a formal infrastructure—and in one possible timeline they enable privatization. Indeed, privatizing Prepa is already a possibility. The risk is that cheering on high-tech fixes (instead of embracing a big plan like the one in the New York report) will give a weak, cash-poor government cover to corporatize the grid instead of fixing it.

This disaster wasn’t a surprise. It wasn’t even wholly natural. It was a disaster of policy. Puerto Ricans shouldn’t have to be this resilient. They should have a functioning power grid.

The 2018 hurricane season starts on June 1.

More Extremes

Exclusive: Facebook to change user terms, limiting effect of EU privacy law

SAN FRANCISCO (Reuters) – If a new European law restricting what companies can do with people’s online data went into effect tomorrow, almost 1.9 billion Facebook Inc users around the world would be protected by it. The online social network is making changes that ensure the number will be much smaller.

FILE PHOTO: Silhouettes of mobile users are seen next to a screen projection of Facebook logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration/File photo

Facebook members outside the United States and Canada, whether they know it or not, are currently governed by terms of service agreed with the company’s international headquarters in Ireland.

Next month, Facebook is planning to make that the case for only European users, meaning 1.5 billion members in Africa, Asia, Australia and Latin America will not fall under the European Union’s General Data Protection Regulation (GDPR), which takes effect on May 25.

The previously unreported move, which Facebook confirmed to Reuters on Tuesday, shows the world’s largest online social network is keen to reduce its exposure to GDPR, which allows European regulators to fine companies for collecting or using personal data without users’ consent.

That removes a huge potential liability for Facebook, as the new EU law allows for fines of up to 4 percent of global annual revenue for infractions, which in Facebook’s case could mean billions of dollars.

The change comes as Facebook is under scrutiny from regulators and lawmakers around the world since disclosing last month that the personal information of millions of users wrongly ended up in the hands of political consultancy Cambridge Analytica, setting off wider concerns about how it handles user data.

The change affects more than 70 percent of Facebook’s 2 billion-plus members. As of December, Facebook had 239 million users in the United States and Canada, 370 million in Europe and 1.52 billion users elsewhere.

Facebook, like many other U.S. technology companies, established an Irish subsidiary in 2008 and took advantage of the country’s low corporate tax rates, routing through it revenue from some advertisers outside North America. The unit is subject to regulations applied by the 28-nation European Union.

Facebook said the latest change does not have tax implications.


In a statement given to Reuters, Facebook played down the importance of the terms of service change, saying it plans to make the privacy controls and settings that Europe will get under GDPR available to the rest of the world.

“We apply the same privacy protections everywhere, regardless of whether your agreement is with Facebook Inc or Facebook Ireland,” the company said.

Earlier this month, Facebook Chief Executive Mark Zuckerberg told Reuters in an interview that his company would apply the EU law globally “in spirit,” but stopped short of committing to it as the standard for the social network across the world.

In practice, the change means the 1.5 billion affected users will not be able to file complaints with Ireland’s Data Protection Commissioner or in Irish courts. Instead they will be governed by more lenient U.S. privacy laws, said Michael Veale, a technology policy researcher at University College London.

Facebook will have more leeway in how it handles data about those users, Veale said. Certain types of data such as browsing history, for instance, are considered personal data under EU law but are not as protected in the United States, he said.

The company said its rationale for the change was related to the European Union’s mandated privacy notices, “because EU law requires specific language.” For example, the company said, the new EU law requires specific legal terminology about the legal basis for processing data which does not exist in U.S. law.


Ireland was unaware of the change. One Irish official, speaking on condition of anonymity, said he did not know of any plans by Facebook to transfer responsibilities wholesale to the United States or to decrease Facebook’s presence in Ireland, where the social network is seeking to recruit more than 100 new staff.

Facebook released a revised terms of service in draft form two weeks ago, and they are scheduled to take effect next month.

Other multinational companies are also planning changes. LinkedIn, a unit of Microsoft Corp, tells users in its existing terms of service that if they are outside the United States, they have a contract with LinkedIn Ireland. New terms that take effect May 8 move non-Europeans to contracts with U.S.-based LinkedIn Corp.

LinkedIn said in a statement on Wednesday that all users are entitled to the same privacy protections. “We’ve simply streamlined the contract location to ensure all members understand the LinkedIn entity responsible for their personal data,” the company said.

Reporting by David Ingram in San Francisco; Additional reporting by Joseph Menn in San Francisco, Padraic Halpin and Conor Humphries in Dublin and Douglas Busvine in Frankfurt; Editing by Greg Mitchell and Bill Rigby

Tesla aiming to build 6,000 Model 3 cars per week by end-June: report

SAN FRANCISCO (Reuters) – Tesla Inc (TSLA.O) is aiming to ramp up production to 6,000 Model 3 cars per week by the end of June to reach its weekly goal of 5,000 and allow for a margin of error, automotive news website Electrek reported on Tuesday, citing a letter to employees from Chief Executive Elon Musk.

FILE PHOTO: A Tesla Model 3 is seen in a showroom in Los Angeles, California U.S. January 12, 2018. REUTERS/Lucy Nicholson/File Photo

Underscoring Tesla’s need to roll out cars quickly to customers and collect needed revenue, the company will also begin working around the clock on the Model 3 sedan, adding another shift within general assembly, and both the body and paint shops, Electrek quoted Musk as saying.

Tesla did not immediately respond to a Reuters request for comment.

The news comes a day after Tesla temporarily suspended its Model 3 assembly line in what the company said was a planned pause, its second since February, to improve automation and address bottlenecks that have delayed production.

“We will be stopping for three to five days to do a comprehensive set of upgrades. This should set us up for Model 3 production of 3,000 to 4,000 per week next month,” Electrek quoted Musk as saying.

“Another set of upgrades starting in late May should be enough to unlock production capacity of 6,000 Model 3 vehicles per week by the end of June,” he added.

Investors are closely watching to see if Tesla is able to meet long-delayed targets and quickly ramp up the Model 3, on which the company’s future profitability rests. Tesla is pressured on a host of fronts after a fatality in one of its vehicles using its Autopilot system, a downgrade by Moody’s, and a public spat between Musk and safety regulators.

Tesla’s use of robots to assemble Model 3s has led to more complexity and delays, which Musk acknowledged last week in a tweet: “Excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.”

“Tesla’s been trying to run full tilt,” said Chaim Siegel, an analyst at Elazar Advisors, before Musk’s letter was published. “He’s sleeping overnight on the production floor. I don’t think there is any way they’d purposely want to slow production. It tells me something’s not quite right.”

In the letter to employees cited by Electrek, Musk said Tesla had built over 2000 Model 3s per week for three weeks, with 2250 made last week.

Tesla had previously targeted 2,500 Model 3s a week by the end of the first quarter and 5,000 by the end of the second quarter.

Missed deadlines threaten the money-losing company’s credibility with the market and its ability to raise cash. Musk has said no new funds are needed this year, although many analysts dispute that.

Musk rallied employees in the letter, while warning departments or suppliers who missed the mark, saying they would need a “very good explanation” and a plan for fixing the problem presented directly to him.

Shares of Tesla, which ended 1.2 percent lower on Tuesday, rose 1.4 percent in after-hours trading.

Reporting by Alexandria Sage in San Francisco and Aishwarya Venugopal, Supantha Mukherjee and Sonam Rai in Bengaluru; Editing by Sai Sachin Ravikumar and Rosalba O’Brien

IRS gives taxpayers one-day extension after computer glitch

WASHINGTON (Reuters) – The U.S. Internal Revenue Service said it would give taxpayers an additional day to file their 2017 returns after computer problems prevented some people from filing or paying their taxes ahead of Tuesday’s midnight deadline.

A general view of the U.S. Internal Revenue Service (IRS) building in Washington May 27, 2015. REUTERS/Jonathan Ernst

“Taxpayers do not need to do anything to receive this extra time,” the IRS said in a statement announcing the extension.

The agency said its processing systems were now back online.

Earlier, the agency said several systems were hit with the computer glitch, including one that handles some returns filed electronically and another that accepts online tax payments using a bank account.

The IRS said it believed the problem was a hardware issue and “not other factors.”

It was not clear how many taxpayers might have been affected, but the agency said it received 5 million tax returns on the final day of filing season last year.

“This is the busiest tax day of the year, and the IRS apologizes for the inconvenience this system issue caused for taxpayers,” acting IRS Commissioner David Kautter said in a statement.

The agency said taxpayers should continue to file their taxes as normal on Tuesday evening – whether electronically or on paper.

Taxpayers could also ask for six-month extensions, as President Donald Trump did. The White House said on Tuesday that Trump, because of the complexity of his tax returns, would file his by Oct. 15.

Reporting by Eric Beech; Editing by Diane Craft and Chris Reese

Why Crypto Is Being Sold as a Solution for Lower Real Estate Commissions

The real estate industry is known for its volatility. One market may be on its way up as another may be crashing to the ground. While real estate professionals and investors alike are used to navigating the ever-shifting ground beneath their feet, there’s a new real estate tech shake-up headed for the industry: cryptocurrency.

To get a better sense of the burgeoning relationship between real estate and decentralized protocols, I connected with co-founder Matthew Herrick at Deedcoin, an organization aiming to tokenize real estate transactions and, subsequently, reduce real estate commissions down to 1%. Our conversation touched on Deedcoin’s unique solution, as well as ways in which the industry as a whole is ripe for cryptocurrency-powered progress.

How do you think cryptocurrency can help people save money on real estate agent fees?

Herrick: Institutions have grown so large over time that some have neglected innovation. Meanwhile, the public has not yet had the technology to provide competitive options without corporate support.

Through decentralized ledgers, a group of people can join together and become a formidable alternative. Deedcoin is this crowd force of the real estate industry. We tokenize commission percentages and therefore giving the public the free market choice of what those should cost.

Homeowners can pay 1% commission through the Deedcoin Network, because we solve the marketing expenditure and customer acquisition problems for agents. Property sellers can utilize 50 Deedcoin to reduce the agent commission from 6% to as low as 1%. Buyers can use 20 Deedcoin to receive 2% of the purchase price back on any home.

Why did you peg Deedcoin’s initial launch price at $1.50 per token?

Herrick: Deedcoin are originally sold at launch for $1.50, but the whole idea of Deedcoin is to let the free market set the value of the solution. Using 50 Deedcoin lets buyers save 5% of their homes value.

For an average home of $240,000, this equates to $12,000 kept in an owner’s pocket while still receiving the same quality service through a local agent. We divided the ideal launch budget by the amount of token for establishing a wide user base through the launch and it came incredibly close to $1.50.

How much money did you raise for your initial coin offering?

Herrick: Deedcoin has been marketing to the public for just over 90 days and has sold just short of $1 million in DEED so far.

We have been southpaw in the way we have launched our project. Many ideas are coming to the token sale with an idea on a napkin called a whitepaper. The team and I think this is a major issue with the blockchain world.

We began in early 2017 in development, filing pending patents, building a platform, and recruiting a national broker network. Because we wanted to prove the concept before asking for money, Deed was a secret to the outside world until January 2018. We felt it was important to keep things quiet while we established the solution to avoid anyone with more funding beating us to market.

As regulation increases, I wonder, is Deedcoin SEC compliant? What about Know Your Customer (KYC) and Anti-Money Laundering (AML)?

Herrick: Yes, we are SEC compliant. Compliance has been a top priority for Deedcoin since our inception.

Unlike many token sales, Deedcoin is for a large percentage of the population. To be specific, anyone who lives inside a home should own at least 50 Deedcoin to protect their equity when they go to sell.

Due to our wide user base, it was crucial to work within SEC guidelines and sell to U.S. people who are homeowners in our initial footprint. To remain compliant, we developed the concept with our own funding to launch the network, making it a usable product.

Very early in our process, we secured Thompson Bukher LLP out of Manhattan to guide us through every regulation available. We have spent so much time on the phone with attorney Tim Bukher specifically, our teams have become friends. Additionally, for our SAFT sales, we filed a 506D exemption to let the SEC know what we are doing and have a CIK number.

For AML and KYC, all users are screened on registration against the Reuters International database for various factors including watch lists and the politically exposed. The solutions are too great in this technology to let a war with regulation prevent innovation. We believe that working within the guidelines allows the industry to grow and regulation to evolve structurally to provide consumer safety with stifling innovation.

Hyperloop Transportation Technologies Begins Work on Test Track in France

Hyperloop Transportation Technologies, an independent company working to build the high-speed transportation system first envisioned by Elon Musk, has announced the beginning of construction on a test track in Toulouse, France. The company released a video showing the arrival of the first components of the system, a series of huge tubes.

Those tubes, according to the concept laid out by Musk in 2013, will form a sealed vacuum, through which a passenger pod would be sent at speeds of as much as 700 miles per hour. Hyperloop Transportation Technologies, also known as HyperloopTT, says its full-scale passenger capsule is nearing completion.

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Progress towards fulfilling Musk’s vision has been rocky — not entirely surprising given the scale of the challenge. Musk initially said he would not be directly involved in pursuing the idea, but SpaceX later organized student design competitions and built a Hyperloop test track. More recently, Musk and his tunnel-building Boring Company have become even more involved, including gaining a permit for a possible future Hyperloop station in Washington, D.C.

Hyperloop Transportation Technologies is one of two prominent independent companies pushing the concept forward. The other, Hyperloop One, got off to an early lead, attracting headline talent and becoming part of Richard Branson’s Virgin group. Hyperloop One completed a test track in Nevada in April 2017, even while grappling with major internal conflict.

That means HTT’s test track would be the third to be completed worldwide. Though it’s running behind the competition in some ways, HyperloopTT has remained relevant in part by focusing on development deals outside of the U.S., including in Europe and South Korea.

How To Trigger Innovation By Promoting Diversity

Diversity is a critical input for innovation. Variety of talent, thought, experiences and ideas is the fuel and force that makes innovation possible. Yet many companies are not wired to foster diversity and are riddled with practices that actively impede it. One of the most pronounced workplace biased is a gender imbalance that favors men. Psychology Professors Linda Carli and Alice Eagly likened women’s advancement to leadership to a labyrinth, with dead ends and maze-like paths. This is starkly different to a men’s path, which can be compared to a road with bumps and potholes.

This maze-like path is what Danni Mohammed, a Global Strategy and Innovation Consultant, has called ‘Gendered Navigation’. In developed markets, it often happens as a result of unconscious bias. She says, “We don’t consciously know we’re excluding women and other minorities in business.” Mohammed’s latest research pinpoints this unconscious bias to three key factors.

1.     Homophily Bias

This is an innate tendency to bond with others who hold similar values, beliefs and attitudes, and display similar characteristics.  We feel more at ease and familiar with those who we can recognize ourselves in and, often unconsciously, form deeper ties and prioritize connection in such circumstances. For example, until orchestras started hosting blind auditions, they were predominantly comprised of men.

2.     Second Generation Bias

This happens when there are established patterns and values in the workplace that are accepted as normal, yet favor a particular profile, often men.  Think about traditional bonding activities like golf or late-night drinks that tend to exclude women. Exposure gained at these sorts of events can help prop up members, and in doing so, exclude others. This type of bias can often happen subconsciously, and would be a surprise to many in the workplace.

3.     Masculine Leadership Bias

This occurs in workplaces that openly prioritize and idolize masculine working styles, values and traits. Often the motivation may not come from a place of intentional oppression; and is instead driven by a belief that male characteristics are what it takes to get the job done well.

Bias Busting Solution

In all these instances, the bias is not a deliberate choice, but an unconscious way of being. And that’s what makes it so harmful. However, there is hope yet. Mohammed believes that to challenge these labyrinth-like walls that inhibit diversity, we need to reconstruct the organization’s internal Architecture, Routines and Culture (ARC) that value all gender. She sees the ARC as the fabric of a company, and in many ways can be described as its operating system.  Mohammed says, “True diversity can happen when we redesign these structures holistically versus deploying tactical solutions. We design them in a way so that they positively reinforce one another.” By intentionally redesigning these elements in a way that addresses gender bias, companies can thrive.

AI tools

A new spade of AI tools have been designed to tackle bias head on.  One company, Pymetrics, invites candidates to play a series of games in the early rounds of the recruitment process. These games ignore characteristics like race, gender and level of education entirely. Instead, they focus on traits more meaningful to workplace success, like memory and attitude to risk. Another company, Texio, focuses on using machine learning to create job descriptions that optimize appeal to a diverse array of candidates. For example, women are more attracted to jobs that talk about ‘developing a team’ rather than ‘managing a team’. According to Texio, this can help get 25% more qualified talent through the door, as well as bolster diversity.

Rotating Sponsorship Programs

In a bid to tackle homophily head on, successful companies initiate a ‘Rotating Sponsorship’ Program, where different leaders are tasked with sponsoring and mentoring different employees, on a rotating basis. This prevents the common phenomenon of men in senior leadership positions sponsoring those they deem to be just like them; and opens up mentorship and the chance at leadership positions to those normally left out of the equation. It is an easy and brilliant way to unearth hidden talent.


Instant Feedback Systems

New enterprise applications like Workday and Impraise, are setting out to challenge the traditional appraisal systems that tend to favor men.  To combat the informal day-to-day encouragement than more vocal men tend to receive from mentors, these apps encourage a workplace where everyone receives informal feedback on a regular basis. Feedback can be given between peers, as well as to team leads and supervisors, based on a job well done. This frequent, fair feedback means that everyone has an equal chance to be encouraged, and therefore motivated.

Apple Warns Employees to Stop Leaking Information to Media

Apple Inc. warned employees to stop leaking internal information on future plans and raised the specter of potential legal action and criminal charges, one of the most-aggressive moves by the world’s largest technology company to control information about its activities.

The Cupertino, California-based company said in a lengthy memo posted to its internal blog that it “caught 29 leakers,” last year and noted that 12 of those were arrested. “These people not only lose their jobs, they can face extreme difficulty finding employment elsewhere,” Apple added. The company declined to comment on Friday.

Apple outlined situations in which information was leaked to the media, including a meeting earlier this year where Apple’s software engineering head Craig Federighi told employees that some planned iPhone software features would be delayed. Apple also cited a yet-to-be-released software package that revealed details about the unreleased iPhone X and new Apple Watch.

Leaked information about a new product can negatively impact sales of current models, give rivals more time to begin on a competitive response, and lead to fewer sales when the new product launches, according to the memo. “We want the chance to tell our customers why the product is great, and not have that done poorly by someone else,” Greg Joswiak, an Apple product marketing executive, said in the memo.

The crackdown is part of broader and long-running attempts by Silicon Valley technology companies to track and limit what information their employees share publicly. Firms like Google and Facebook Inc. are pretty open with staff about their plans, but keep close tabs on their outside communications and sometime fire people when they find leaks.

Facebook executive Sheryl Sandberg last week talked about her disappointment with leakers. In 2016, Google fired an employee after the person shared internal posts criticizing an executive. The employee filed a lawsuit claiming their speech was protected under California law.

In messages to staff, tech companies sometimes conflate conversations employees are allowed to have, such as complaining about working conditions, with sharing trade secrets, said Chris Baker, an attorney with Baker Curtis and Schwartz, PC, who represents the fired Googler. “The overall broad definition of confidential information makes it so employees don’t say anything, even about issues they’re allowed to talk about,” he said. “That’s problematic.”

Apple is notoriously secretive about its product development. In 2012, Chief Executive Officer Tim Cook pledged to double down on keeping the company’s work under wraps. Despite that, the media has continued to report news on the firm to satisfy demand for information on a company that’s become a crucial part of investment portfolios, many of which support public retirement funds for teachers and other essential workers.

In 2017, Apple held a confidential meeting with employees in another bid to stop leaks. Since then, publications, including Bloomberg News, published details about the iPhone X, a new Apple TV video-streaming box, a new Apple Watch with LTE, the company’s upcoming augmented-reality headset, new iPad models, software enhancements, and details about the upcoming iPhones and AirPods headphones.

Here’s the memo:

Last month, Apple caught and fired the employee responsible for leaking details from an internal, confidential meeting about Apple’s software roadmap. Hundreds of software engineers were in attendance, and thousands more within the organization received details of its proceedings. One person betrayed their trust.

The employee who leaked the meeting to a reporter later told Apple investigators that he did it because he thought he wouldn’t be discovered. But people who leak — whether they’re Apple employees, contractors or suppliers — do get caught and they’re getting caught faster than ever.

In many cases, leakers don’t set out to leak. Instead, people who work for Apple are often targeted by press, analysts and bloggers who befriend them on professional and social networks like LinkedIn, Twitter and Facebook and begin to pry for information. While it may seem flattering to be approached, it’s important to remember that you’re getting played. The success of these outsiders is measured by obtaining Apple’s secrets from you and making them public. A scoop about an unreleased Apple product can generate massive traffic for a publication and financially benefit the blogger or reporter who broke it. But the Apple employee who leaks has everything to lose.

The impact of a leak goes far beyond the people who work on a project.

Leaking Apple’s work undermines everyone at Apple and the years they’ve invested in creating Apple products. “Thousands of people work tirelessly for months to deliver each major software release,” says UIKit lead Josh Shaffer, whose team’s work was part of the iOS 11 leak last fall. “Seeing it leak is devastating for all of us.”

The impact of a leak goes beyond the people who work on a particular project — it’s felt throughout the company. Leaked information about a new product can negatively impact sales of the current model; give rival companies more time to begin on a competitive response; and lead to fewer sales of that new product when it arrives. “We want the chance to tell our customers why the product is great, and not have that done poorly by someone else,” says Greg Joswiak of Product Marketing.

Investments by Apple have had an enormous impact on the company’s ability to identify and catch leakers. Just before last September’s special event, an employee leaked a link to the gold master of iOS 11 to the press, again believing he wouldn’t be caught. The unreleased OS detailed soon-to-be-announced software and hardware including iPhone X. Within days, the leaker was identified through an internal investigation and fired. Global Security’s digital forensics also helped catch several employees who were feeding confidential details about new products including iPhone X, iPad Pro and AirPods to a blogger at 9to5Mac.

Leakers in the supply chain are getting caught, too. Global Security has worked hand-in-hand with suppliers to prevent theft of Apple’s intellectual property as well as to identify individuals who try to exceed their access. They’ve also partnered with suppliers to identify vulnerabilities — both physical and technological — and ensure their security levels meet or exceed Apple’s expectations. These programs have nearly eliminated the theft of prototypes and products from factories, caught leakers and prevented many others from leaking in the first place.

Leakers do not simply lose their jobs at Apple. In some cases, they face jail time and massive fines for network intrusion and theft of trade secrets both classified as federal crimes. In 2017, Apple caught 29 leakers. 12 of those were arrested. Among those were Apple employees, contractors and some partners in Apple’s supply chain. These people not only lose their jobs, they can face extreme difficulty finding employment elsewhere. “The potential criminal consequences of leaking are real,” says Tom Moyer of Global Security, “and that can become part of your personal and professional identity forever.”

While they carry serious consequences, leaks are completely avoidable. They are the result of a decision by someone who may not have considered the impact of their actions. “Everyone comes to Apple to do the best work of their lives — work that matters and contributes to what all 135,000 people in this company are doing together,” says Joswiak. “The best way to honor those contributions is by not leaking.”

UK could launch retaliatory cyber attack on Russia if infrastructure targeted: Sunday Times

LONDON (Reuters) – Britain would consider launching a cyber attack against Russia in retaliation if Russia targeted British national infrastructure, the Sunday Times reported, citing unnamed security sources.

A Russian flag is seen on the laptop screen in front of a computer screen on which cyber code is displayed, in this illustration picture taken March 2, 2018. REUTERS/Kacper Pempel/Illustration

Britain’s relations with Russia are at a historic low, after it blamed Russia for a nerve agent attack on former Russian spy Sergei Skripal and his daughter in England, prompting mass expulsions of diplomats.

Russia has denied involvement, and on Saturday also condemned strikes against Syria by Western powers, which Britain took part in.

Cyber security has become a focal point of the strained relations. On Thursday, a British spy chief said that his GCHQ agency would “continue to expose Russia’s unacceptable cyber behaviour”, adding there would be increasing demand for its cyber expertise.

The Sunday Times also said that British spy officials had been preparing for Russia-backed hackers to release embarrassing information on politicians and other high-profile people since the attack on the Skripals.

Reporting by Alistair Smout; editing by Jonathan Oatis

Facebook CEO's compensation jumps to $8.9 million as security costs soar

(Reuters) – Facebook Inc (FB.O) Chief Executive Mark Zuckerberg’s compensation rose 53.5 percent to $8.9 million in 2017, a regulatory filing showed on Friday, largely due to higher costs related to the 33-year old billionaire’s personal security.

FILE PHOTO: Facebook CEO Mark Zuckerberg testifies before a House Energy and Commerce Committee hearing regarding the company’s use and protection of user data on Capitol Hill in Washington, U.S., April 11, 2018. REUTERS/Aaron P. Bernstein

About 83 percent of the compensation represented security-related expenses, while most of the rest were tied to Zuckerberg’s personal usage of private aircraft.

Zuckerberg spent much of last year traveling after he pledged to visit all the U.S. states that he had not previously been to.

His security expenses climbed to $7.3 million in 2017 from $4.9 million a year earlier.

Menlo Park, California-based Facebook paid to buy, install and maintain security measures for Zuckerberg’s personal residences, which include properties in San Francisco and Palo Alto, the filing showed.

The Facebook board’s compensation committee authorized Zuckerberg’s security program, the filing said, “to address safety concerns due to specific threats to his safety arising directly as a result of his position as our founder, Chairman, and CEO.”

Zuckerberg’s base salary was unchanged at $1, while his total voting power at Facebook rose marginally to 59.9 percent.

Facebook, which has consistently reported stronger-than-expected earnings over the past two years, has faced public outcry over its role in Russia’s alleged influence over the 2016 U.S. presidential election.

Earlier this week, Zuckerberg emerged largely unscathed after facing hours of questioning from U.S. lawmakers on how the personal information of several million Facebook users might have been improperly shared with political consultancy Cambridge Analytica.

Reporting by Munsif Vengattil in Bengaluru and David Ingram in San Francisco; Editing by Sai Sachin Ravikumar and Richard Chang

Despite Zuckerberg Pledge, Facebook Fights State Privacy Laws

During Mark Zuckerberg’s first day of hearings on Capitol Hill Tuesday, Senator Richard Durbin, D-Illinois, tried to ask the Facebook CEO a question about his state. “Illinois has a Biometric Information Privacy Act, or the state does, which is to regulate the commercial use of facial, voice, finger and iris scans and the like. We’re now in a fulsome debate on that. And I’m afraid Facebook has come down to the position of trying to carve out exceptions to that. I hope you’ll fill me in on how that is consistent with protecting privacy.”

Zuckerberg never had to answer the question because Durbin’s time expired. But the incident highlights how, even as Zuckerberg promised Congress that Facebook would do a better job protecting its users’ privacy, the company has been working to oppose or weaken privacy measures at the state level.

Facebook pours millions of dollars into state and federal lobbying efforts, some of which oppose legislation designed to bolster privacy. The company has contributed to the campaigns of representatives who want to gut the Illinois privacy law referenced by Durbin, and it ponied up $200,000 to oppose a consumer privacy ballot initiative in California. Wednesday, shortly after Zuckerberg finished testifying in Washington, Facebook said it was no longer contributing to the group opposing the California measure.

“I’m sitting here watching Mark Zuckerberg say he’s sorry and that Facebook will do better on privacy, yet literally as he testifies lobbyists paid by Facebook in Illinois and California are working to stop or gut privacy laws,” says Alvaro Bedoya, a professor and the executive director of the Center on Privacy & Technology at Georgetown Law School. “If Facebook wants to do better on privacy, it needs to put its money where its mouth is, it needs to stop paying lobbyists to gut critical privacy initiatives in these states.”

Facebook’s lobbying efforts are part of a wider push among tech corporations including Google, Verizon, and Comcast, which also often oppose consumer privacy legislation. Facebook’s business model, like that of other internet platforms, primarily relies on collecting people’s personal data and using that information to sell ads. The social network has financial incentives to ensure that state regulations don’t hinder its efforts to amass that info. But Zuckerberg himself said on Capitol Hill this week that he is open to new laws regulating his company, meaning the social network’s lobbying efforts may soon change.

Weakening a Biometrics Law in Illinois

While Zuckerberg answered questions from Congress Wednesday, state representatives in Illinois were scheduled to attend the first of two hearings about a proposed amendment to the Biometric Information Privacy Act, the law Durbin brought up to Zuckerberg.

The proposed amendment was not discussed in committee during the scheduled hearings this week, but if passed, it would essentially gut the law, which is widely regarded as one of the strongest biometric privacy protections in the country. It’s likely the reason for example that Google’s widely popular Arts & Culture app, which turns your selfies into art, doesn’t work in Illinois.

Passed in 2008, the Illinois law requires that companies ask permission before collecting biometric data, including for facial recognition. It mandates corporations list the purpose and length of time a person’s data will be stored, and to include those details in a written biometric privacy policy. The law also allows consumers to sue alleged violators; that’s led to numerous lawsuits, including against Facebook.

Chicago resident Carlo Licata and two others sued the social network in 2015. They said Facebook had enrolled them without their consent in Tag Suggestions, a Facebook feature introduced in 2010 that relies on facial recognition to automatically tag individuals in photos. Snapchat and Google have faced similar lawsuits. Facebook began informing people more explicitly about its facial recognition data collection practices earlier this year, but Licata’s case is ongoing, and a trial is set for July.

The proposed amendment to the Illinois law would create several wide-reaching exceptions to its rules. If passed, the law would no longer apply to companies that collect biometric data used exclusively for “employment, human resources, fraud prevention, or security purposes.” The bill would also exempt companies that don’t directly sell, lease, trade, or similarly profit from selling biometric information. Most importantly, the amendment would allow companies to bypass the law as long as they store and transmit biometric data in the same way that they store and transmit other sensitive information.

“It is a work of art in how to remove consumer privacy protections in a bill that has been on the books for 10 years. It’s really unattractive,” says Pam Dixon, the founder and executive director of World Privacy Forum, a nonprofit research group that opposes the amendment. The Electronic Frontier Foundation said the bill would “strip residents of critical protection of their biometric privacy, including their right to decide whether or not a business may harvest and monetize data about their faces and fingerprints.”

Two sponsors of the legislation in the Illinois Senate—Napoleon Harris, and Chris Nybo each received contributions of $2,000 to $2,500 from Facebook late last year, according to Illinois Sunshine, a tool for browsing political contributions in the state. The amendment is also supported by the Illinois Chamber of Commerce’s Tech Council, of which Facebook is a member.

Bill Cunningham, one of the state senators behind the bill, says Facebook played no role in conceiving the legislation. “I have not talked to anyone at Facebook about this,” he says, adding that he has spoken to Google. “I completely agree with the advocates that protecting biometric material is of utmost importance, but I believe there is a way to walk and chew gum here.”

This isn’t the first time lawmakers in Illinois have tried to gut the biometric-privacy law. In 2016, Facebook supported a similar amendment, according to The Verge. The amendment was withdrawn after outcry from privacy groups.

Illinois is not the only state where Facebook has opposed biometric privacy laws. Trade organizations it is a part of lobbied against similar legislation last year in Montana and Washington, according to a report from the Center for Public Integrity. Facebook also hired its own lobbyist in Washington state, according to the report. “Every single meaningful privacy law at this point when it is introduced at the state level it receives such profound—especially industry association—opposition that is very challenging to get anything passed,” says Dixon.

A Privacy Ballot Initiative in California

In California, a group of citizens has proposed a ballot initiative designed to boost consumer privacy rights. The California Consumer Privacy Act would give Californians the right to find what personal information a business is collecting about them, the right to know where and to whom that data is being sold or disclosed, and the right to opt out of that collection without affecting the services they receive from a business. It also imposes stricter fines on companies that fail to implement reasonable security practices.

“When I really started digging in about how much information corporations were collecting it was just astounding to me. They’re still so powerful, they’ve been able to starve off any sort of regulation,” says Mary Ross, a former CIA counterintelligence officer and president of the group paying for the ballot initiative.

The proposed initiative has not yet gained enough signatures to be placed on the California ballot in November, but that hasn’t stopped tech companies from creating a political action committee opposing the measure. According to public records, Facebook, Google, Verizon, AT&T and Comcast have each donated $200,000 to a group designed to fight the initiative. Aside from Facebook, the companies did not immediately respond to requests for comment.

“If you have tech companies putting a million dollars already to an initiative that’s not even on the ballot, what is going to happen when it does or if it does get on the ballot?” asked Dixon.

On Wednesday, Facebook announced it would stop contributing to the group opposing the measure. The move came after sustained public pressure, and after Zuckerberg spent two days on Capitol Hill answering questions from lawmakers about his company’s privacy practices. “We took this step in order to focus our efforts on supporting reasonable privacy measures in California,” a Facebook spokesperson said in a statement.

But that doesn’t mean Facebook supports the proposed ballot measure. “Facebook did not drop its opposition to the initiative, they’re still opposed to it,” says Steven Maviglio, a representative for the Committee to Protect California Jobs, the group opposing the measure. He says Facebook has not asked for its money back. “It’s not being returned, they haven’t asked for it to be returned.”

Still, the decision to pull out in California might signal a new stance from Facebook. In recent weeks, Zuckerberg and Facebook COO Sheryl Sandberg have both indicated that they are more open to regulation than in the past.

One test will be Facebook’s response to potential federal legislation. The US, for now, has no national privacy law. But earlier this week, two Democratic senators introduced a measure that would require opt-in consent from users to share, sell, or use personal information.

One of the authors, Senator Ed Markey, D-Massachusetts, asked Zuckerberg during Tuesday’s hearing whether Facebook would support the legislation. “As a principle, yes, I would,” Zuckerberg answered.

The Fallout at Facebook

Tesla Fights the NTSB Over Its Latest Autopilot Death

Tesla loves a good fight. CEO Elon Musk has battled car dealers, President Trump, and more than a few reporters. Now he has found a new opponent, in the National Transportation Safety Board. The agency is investigating the crash of a Model X that was running with Autopilot engaged when it slammed into a highway divider in Northern California last month, killing the driver. Today, the NTSB announced it kicked Tesla off the team looking into what happened, and how to stop it recurring.

On the surface, the disagreement is over when and how to make public information about the crash. The NTSB, which investigates all major transportation accidents, is a cards-to-the-vest operation. It often shares facts as it finds them, but rarely draws conclusions about things like causality or remedies until it’s ready to release a thorough, detailed, and considered report. That usually takes at least a year, sometimes two.


Tesla argues the safest thing to do is make whatever it knows public as soon as possible. A week after the March 23 crash, Tesla announced Walter Huang, the driver of the Model X had turned on Autopilot, putting the car’s computer in charge of staying between the lane lines and a safe distance from other vehicles. The driver’s supposed to keep their eyes on the road and hands on the wheel, to monitor the fallible system. Tesla said Huang’s hands were not detected on the wheel for the six seconds prior to the crash, and that he should have had about five seconds of unobstructed view of the concrete lane divider he slammed into, but the vehicle logs show no action was taken.

In revealing those details—and effectively blaming the driver when the investigation has barely begun—Tesla violated its agreement with the NTSB, which requires all parties to keep quiet and let it do the talking. Last night, Tesla released a statement saying it’s pulling out of that agreement:

“Today, Tesla withdrew from the party agreement with the NTSB because it requires that we not release information about Autopilot to the public, a requirement which we believe fundamentally affects public safety negatively,” it said in a statement. “We believe in transparency, so an agreement that prevents public release of information for over a year is unacceptable.”

This morning, the NTSB disputed that account, saying it called Musk last night to give Tesla the boot:

“Releases of incomplete information often lead to speculation and incorrect assumptions about the probable cause of a crash, which does a disservice to the investigative process and the traveling public,” it said in a statement.

Tesla, never one to let a good scrap go to waste, fired back this afternoon. It reiterated that it broke up with the NTSB, not the other way around. “It’s been clear in our conversations with the NTSB that they’re more concerned with press headlines that actually promoting safety,” it said in [a statement. “Among other things, they repeatedly released partial bits of incomplete information to the media in violation of their own rules, at the same time that they were trying to prevent us from telling all the facts.” Tesla also said it plans to complain to Congress.

Musk has previously griped about the NTSB’s involvement, saying it’s up to the National Highway Traffic Safety Administration (NHTSA), not the NTSB, to regulate the auto industry. Indeed, the NTSB has no regulatory power. Its mission is to investigate accidents and make safety recommendations to the relevant government body. (NHTSA is also looking into the crash, and says it will “take action as appropriate.”)

As far as this NTSB investigation goes, Tesla’s departure is unlikely to change much. The automaker says it will still provide whatever technical help the NTSB needs, to recover and interpret data from the vehicle’s sensors leading up to and during the crash. Even if it refuses, the NTSB can subpoena the info.

But to properly understand Tesla’s seething anger at a government body widely seen as even-keeled and impartial, you need a quick dive into the past. In May 2016, a Tesla Model S running Autopilot crashed into a truck turning across its path, killing its driver, Josh Brown. NHTSA pinned the crash on driver error, saying the system wasn’t defective. A few months later, the NTSB issued its own report, saying Tesla bears some blame for Brown’s death, because its car didn’t do enough to ensure he watched the road. “The combined effects of human error and the lack of sufficient system controls resulted in a fatal collision that should not have happened,” NTSB chief Robert Sumwalt said at the time. It was the first substantive rebuke of one of Tesla’s hallmark features, a serious blow to an automaker that trades on innovation.

After Brown’s death, Tesla updated its software, escalating the warnings the car issues to inattentive drivers. But the basic premise of the system remains: The car works the steering and speed, the human monitors and intervenes as needed. And there’s plenty of reason to think humans are just no good at that sort of thing. So it’s easy to imagine the NTSB will come to a similar conclusion once it’s done investigating Huang’s death, painting Tesla’s innovative system in a damning light. It’s also easy to guess that Musk and Tesla are trying to spin things in their favor before the feds tell that kind of tale the second time in two years.

Along with Tesla, Cadillac, Nissan, Mercedes-Benz, Audi, and others already, or soon will offer this sort of semi-autonomous system, requiring the human behind the wheel remain attentive. Cadillac’s Super Cruise is especially sophisticated. It allows hands-free driving, using a camera to track the driver’s head and make sure he’s looking at the road. It stuck bright green and red LEDs in the top steering wheel to grab the driver’s attention when needed, and can vibrate the seat.

These systems make highway driving more pleasant, and likely safer. Most of the time, they work well, and probably prevent many crashes inattentive humans would cause in regular cars. Tesla claims you are 3.7 times less likely to be involved in a fatal accident if you’ve got Autopilot (which it sells as a $5,000 option). “It unequivocally makes the world safer for the vehicle occupants, pedestrians and cyclists,” the company said in a recent blog post. “The consequences of the public not using Autopilot, because of an inaccurate belief that it is less safe, would be extremely severe.”

That’s fair. Humans cause 40,000 deaths on US roads every year. But it’s also fair to say that Tesla’s Autopilot system isn’t perfect, and could be made even safer. For the official word on how to do that, we’ll have to wait for the NTSB to finish its work—even without Tesla’s help.

Self-Driving Quandaries

Uber still believes autonomous vehicles have a future, says CEO

WASHINGTON (Reuters) – Uber Chief Executive Dara Khosrowshahi said on Wednesday that the ride-sharing company still believes in the prospects for autonomous transport after one of its self-driving vehicles was involved in a fatal crash in Arizona last month.

FILE PHOTO – Dara Khosrowshahi, Chief Executive Officer of Uber Technologies, attends the World Economic Forum (WEF) annual meeting in Davos, Switzerland, January 23, 2018. REUTERS/Denis Balibouse/File Picture

A 49-year-old woman was killed after being hit by an Uber self-driving sports utility vehicle while walking across a street in Phoenix, leading the company to suspend testing of autonomous vehicles.

Khosrowshahi declined to say when the company might resume testing or what might have gone wrong. He said the company was cooperating with federal investigators and dealing with the incident “very seriously.”

The accident has raised questions about the lack of clear safety standards for such vehicles.

But, speaking at a transport forum, Khosrowshahi said Uber was still betting on the technology in the long-term.

“We believe in it,” he said, adding that Uber considered autonomous vehicles “part of the solution” and in the long-term key to eliminating individual car ownership.

“Autonomous (vehicles) at maturity will be safer,” he said.

The company’s interest in investing in bike sharing and public transit should not be interpreted as a move away from self-driving cars, he added.

The U.S. National Highway Traffic Safety Administration and the National Transportation Safety Board (NTSB) are investigating the incident.

“They are a neutral party,” said Khosrowshahi. “They understand this.”

“We’ll figure out what we do afterwards.”

Arizona’s governor suspended Uber’s ability to test self-driving cars on public roads in the state following the crash. Arizona had been a key hub for Uber’s autonomous project, with about half of the company’s 200 self-driving cars and a staff of hundreds.

Governor Doug Ducey last month called a video of the incident “disturbing and alarming” and the crash “an unquestionable failure.”

NTSB chairman Robert Sumwalt on Tuesday told Reuters he had no update on the investigation.

Reporting by David Shepardson; Editing by Susan Thomas and Rosalba O’Brien

Apple Music appoints new head, hits 48 million subscribers

(Reuters) – Apple Inc on Wednesday appointed a new executive to oversee its Apple Music streaming business and hit 48 million subscribers, the company said.

FILE PHOTO: An Apple logo hangs above the entrance to the Apple store on 5th Avenue in the Manhattan borough of New York City, July 21, 2015. REUTERS/Mike Segar

Apple said it had appointed Oliver Schusser as vice president of Apple Music and international content. Schusser, who joined Apple 14 years ago, will report directly to Apple senior vice president Eddy Cue and will also oversee Apple’s services outside the United States, including the App Store and iTunes.

Apple’s top streaming music rival Spotify Technology SA has 71 million so-called premium subscribers, a figure that includes users who have given the company a credit card number for a free trial. Spotify became a public company earlier this month after holding a so-called direct listing on the New York Stock Exchange.

On a comparable basis, the Apple Music service has 48 million subscribers, 40 million of whom are paying subscribers and 8 million of whom are on a free trial, Apple said. Both firms charge $9.99 a month for streaming music but provide discounts for student and family plans.

Variety magazine earlier reported the new subscriber figures and Schusser’s promotion. He previously built up Apple’s services businesses outside the U.S. in 155 markets, including China, Japan and Latin America, Apple said.

Apple’s services business, which includes Apple Music, the App Store and iCloud, is becoming increasingly important to the Apple’s financial outlook because the smart phone market has matured and iPhone sales growth has slowed. In its most recent quarter, Apple’s services business grew 18 percent to $8.4 billion, missing analyst expectations of $8.6 billion.

(This version of the story corrects paragraph 1 to Wednesday instead of Thursday)

Reporting by Stephen Nellis; Editing by Bernadette Baum

Long lines, protest before Facebook CEO Zuckerberg testifies

SAN FRANCISCO/WASHINGTON (Reuters) – Facebook Inc (FB.O) Chief Executive Mark Zuckerberg will strike a conciliatory tone on Tuesday in testimony before Congress as he looks to fend off the possibility of new regulations as a result of the privacy scandal engulfing his social network.

The 33-year-old internet mogul is set to appear in Washington before a joint hearing of the U.S. Senate’s Commerce and Judiciary committees some 15 or 20 minutes after the originally scheduled time of 2:15 p.m. (1815 GMT) because of a Senate vote.

Hours before the hearing, people waited in a line inside the Hart Senate Office Building, set off by velvet ropes, stretching from the briefing room down a corridor. Some brought folding chairs, while others stood or sat on the floor.

Outside the Capitol Building, which houses Congress, online protest group Avaaz set up 100 life-sized cutouts of Zuckerberg wearing T-shirts with the words ‘Fix Facebook’ on them.

Zuckerberg, who founded Facebook in his Harvard University dorm room in 2004, is fighting to demonstrate to critics that he is the right person to go on leading what has grown into one of the world’s largest companies.

Facebook faces a growing crisis of confidence among users, advertisers, employees and investors after acknowledging that up to 87 million people, mostly in the United States, had their personal information harvested from the site by Cambridge Analytica, a political consultancy that has counted U.S. President Donald Trump’s election campaign among its clients.

Zuckerberg, who has never testified in a congressional hearing, said in written testimony on Monday that he had made mistakes and had held too narrow a view of the social network’s role in society.

“Now we have to go through every part of our relationship with people and make sure we’re taking a broad enough view of our responsibility,” he said.

Facebook hired several outside consultants to help coach Zuckerberg, even holding mock sessions to prepare him for questions from lawmakers.

In an olive branch on Friday, Zuckerberg threw his support behind proposed legislation requiring social media sites to disclose the identities of buyers of online political campaign ads. Twitter Inc (TWTR.N) also said on Tuesday, for the first time, that it supports the bill, called the Honest Ads Act.

U.S. lawmakers have discussed legislation that would strengthen data privacy protections and enforcement. Tighter regulation of how Facebook uses its members’ data could affect its ability to attract advertising revenue, its lifeblood.

Slideshow (2 Images)

Some 40 senators out of the 100-member Senate sit on the two committees holding Tuesday’s hearing, setting up a possibly marathon hearing.

To ease the way, Zuckerberg on Monday met some lawmakers privately, listening to their concerns before they will have a chance to interrogate him in public.

Zuckerberg appeared willing “to turn things around where he sees mistakes that have been made,” Senator Bill Nelson, the top Democrat on the Senate Commerce Committee, said after meeting with the CEO.

For hearings last year about Russia’s alleged use of social media to influence American politics, Facebook, Twitter and Alphabet Inc’s (GOOGL.O) Google sent lawyers, angering lawmakers.

Zuckerberg may face a torrid time from some senators. On Tuesday, Democratic Senator Chris Coons, a member of the Judiciary committee, complained via Twitter about fake profiles.

“On today of all days, I just found out that there are two fake Facebook accounts impersonating me, and guess what? Many of the ‘friends’ appear to be Russian accounts,” he tweeted. “@facebook and Mr. Zuckerberg-this is unacceptable.”

Zuckerberg will get a second dose of questioning on Wednesday from the U.S. House Energy and Commerce Committee.

His perch atop Facebook is assured as long as he wants it, given that he remains its controlling shareholder.

But his reputation has suffered as television comedians have mocked his perceived robotic speaking patterns and allegedly cavalier attitude toward privacy.

Shares in Facebook are down more than 14 percent since the Cambridge Analytica scandal broke last month.

Reporting by David Ingram in San Francisco and Dustin Volz in Washington; Additional reporting by David Shepardson in Washington and Andy Sullivan in Washington; Editing by Cynthia Osterman and Bill Rigby

Intel Is Back In The Game With This Strategy Shift

Long known as the computer chip maker, Intel’s (NASDAQ:INTC) business model was at risk of falling victim to what iPad Pro’s TV commercial so adeptly captured when a girl, laying on the grass working on her iPad, is asked “Whatcha doin’ on your computer?”, to which she responds:

“What’s a computer?”

The ad has its share of critics, but the truth of the matter is that the computer, as us Gen Xers knew it, is quickly becoming, well, something else. So while some people may be upset at the ad, the truth is kids growing up these days are less likely to use one, and my daughter, who is turning four this year, will probably rarely if ever use “a computer”.

Intel recognized that after upstarts like Nvidia (NVDA) and Micron Technology (MU) focused on other markets. But Intel, being a pioneer of sorts, and with plenty of capital and talent to redirect its strategy, has begun to do so. It’s not an easy task, and analogies to the steering of the Titanic are applicable here too, but this shift in strategy to data-rich segments is starting to pay dividends.

Semiconductor Industry Overview

The semiconductor industry is made up of companies engaged in the design, manufacturing, and marketing of a range of products that include: discrete semiconductors, optoelectronics, sensors, and integrated circuits (also called: “semiconductors,” “chips”). Some companies within the industry engage in full product development cycle, while some focus only on manufacturing (i.e. foundry companies or foundries) or design and marketing (i.e. fabless companies).

The majority of revenues come from the sale of Integrated Circuit products, which fall into four categories:

  • Commodity Integrated Circuits
  • Memory
  • Microprocessors
  • Complex SoC (System on Chip)

Commodity Integrated Circuits serve as processors for routine tasks required of relatively simple electronic devices, such as small, single-purpose appliances. Memory products function as temporary repositories and conveyors of information to and from the Central Processing Unit (CPU) of a device. Microprocessors are the CPUs or “brain” of a computer. They contain the logic to carry out the myriad tasks expected of multifunctional and relatively complex devices (like mobile phones, laptops, and digital cameras), and are assembled with other chips (e.g. Memory) or components (e.g. sound and graphics cards) in order to perform. Finally, Complex SoCs do the same work as CPUs, but without the need to be connected to chips or components external to themselves. This is because SoCs contain a CPU together with other components like: a Graphics Processing Unity (GPU), a memory chip, power management circuits, and network connectivity provisions (i.e. 3G, 4G/LTE, and WiFi). The total chip industry is reported to have generated $419 billion in revenue globally in 2017, and is anticipated to reach $451 billion in 2018.

End markets served by the industry have been broadly categorized according to end use or application of the products. The six categories are:

  • Data Processing (also “Computing,” “Computer/s”)
  • Communications (also “Networking & Communications”)
  • Consumer (also “Consumer Electronics”)
  • Industrial
  • Automotive
  • Military & Aerospace

In Data Processing, chips are used in personal computers (e.g. desktops, notebooks), servers, and related hardware (e.g. printers). In Communications, chips are utilized for wireless and wired communications infrastructure and equipment (e.g. smartphones, tablets, and broadband devices). In the Consumer market, chips are built into household appliances and home entertainment equipment (e.g. TVs and gaming consoles). In the Industrial market, chips form part of power supply equipment, as well as specific-use devices relevant to particular business settings. For instance, in the logistics and retail contexts, chips are used in barcode scanners and point-of-sale terminals. In the medical context, chips are used in ultrasound imaging machines and patient monitors. The Automotive market uses chips in electronic components like lighting and power-steering. In the Military & Aerospace market, chips are used for bespoke applications.

The Communications and Data Processing markets accounted for the majority of semiconductor sales and revenue in 2017.

Source: Semiconductor Industry Outlook – December 2017

While the Communications and Computing segments have traditionally been the reliably lucrative end markets, the 2017 KPMG Global Semiconductor Outlook reveals emerging opportunities yet to be fully exploited. Internet of Things, Automotive, Consumer Electronics and Industrial follow Wireless Communications as top revenue drivers. In regards to product types, Sensors/Micro-Electronic-Mechanical Sensors (MEMS) have the strongest growth potential, followed by Microprocessors, and Optoelectronics.

Source: KPMG Global Semiconductor Outlook 2017

Semiconductor companies compete on the basis of a product’s innate qualities (e.g. performance, reliability, energy efficiency, integration, innovative design, and features) as well as external factors like price, brand renown, technical support, and availability.

Company Profile and Strategy

Intel is engaged in the design, manufacturing, and marketing of semiconductor products. From its establishment in 1968 until 2015, its focus was on developing and providing components and platforms for designers, manufacturers, and users of servers and personal computers (PCs). For many years, the business was considered PC-centric.

Intel led in the industry terms of manufacturing technology, volume sales, and revenue in so far as the PC was the predominant personal computing device. Demand for Intel products declined, however, as mobile device sales overtook PCs in 2011, since these devices required powerful processors that were also very energy- and cost-efficient – something Intel did not offer then, and which caused the company to miss out on what would have been a growth boost from the mobile device era.

In 2016, amidst the continued decline of PC sales and a persistent handicap in mobile, the company changed tack and announced the start of its transformation from being PC-centric to data-centric – in a bid to position the company at the forefront of the next frontier of computing. Essentially, this shift meant expansion of the company’s Target Available Market (TAM) and the reach of its core product portfolio, as well as diversification of its portfolio – beyond PC and server CPUs. The ultimate aim is to compete in increasingly more relevant and rewarding end markets, such as in cloud computing and the Internet of Things (IOT), which may not necessarily compensate for slumping PC-related volumes but provide the opportunity to command higher Average Selling Prices (ASPs).

Source: Feb. 2017 Intel Investor Presentation

Intel also reconfigured its organization. Currently, its operating units are: Client Computing Group (CCG), Data Center Group (DCG), Internet of Things Group (IOTG), Non-Volatile Memory Solutions Group (NSG) and Programmable Solutions Group (PSG). CCG is concerned with platforms for PCs (notebooks and desktops), as well as wired and wireless connectivity products. DCG covers servers, storage, and workstation platforms for small, medium, and large enterprises. IOTG includes high-performance platforms that have applications in retail, automotive, industrial, and other areas. NSG includes memory products (i.e. Intel® Optane™ and 3D NAND technology) used in solid-state drives (SSDs). PSG includes field-programmable gate arrays (FPGAs) and other programmable semiconductors, which have applications in communications, data center, military, industrial, and automotive.

CCG equates to the PC-centric side of the business and primarily markets “Platform Products” for consumer end-use: microprocessors (processor or central processing unit/CPU) combined with chipsets, stand-alone System on Chip (SoC), or multichip packages, alongside Adjacent Products (e.g. modem, Ethernet, and silicon photonic). Meanwhile, DCG, IOTG, NSG and PSG roll up to the data-centric side, where Platform Products are promoted alongside relevant Adjacent Products, Mobileye for IOTG, FPGA for PSG, and high-performance memory solutions for NSG. Platform Products and Adjacent Products can be integrated to create comprehensive technological systems addressing the respective users’ needs.

Intel’s revenues, which are sensitive to seasonality, are driven by sales volumes as well as ASPs, and may be substantially offset by research and development (R&D) and other operational costs. As of the end of 2017, as reported in Form 10-K, Platform Products delivered 82% of revenue vs. Adjacent Products, which delivered 17%. The PC-Centric side of the business contributed 53% of revenue vis-à-vis data-Centric’s 47%. Its three largest customers, Dell (16%), Lenovo (OTCPK:LNVGY) (13%), and HP (NYSE:HPQ) (11%), which belong to the top ten semiconductor buyers in 2017 according to a Gartner report, accounted for 40% of total revenue (per Form 10-K, December 30, 2017).

A supplier of silicon components and platforms, Intel faces competition from other designers, makers, and sellers of similar products with comparable performance, better energy efficiency, and lower cost. Its Platform Products compete with the Advanced Micro Devices’ (AMD) portfolio, which are positioned as comparably powerful yet less costly. Additional competitors are ARM Holdings (NASDAQ:ARMH) – which designs various foundry-produced components and platforms, which have applications in servers, as well as mobile devices. Within the Adjacent Products, Intel comes up against Qualcomm (QCOM) for 5G modems, Xilinx (XLNX) in the programmable chips market, and against Micron Technology in the non-volatile memory space.

4Q 2017 Results and Milestones

Intel closed 2017 on a celebratory note, having exceeded its financial targets and placing it a full year early in its three-year plan. Total revenue increased by $17.1 billion (+8% year-on-year) and operating income was up by $5.9 billion (+21% year-on-year), in spite of dips in revenue (-3%) and operating income (7%) in the PC-centric side of the business. Earnings per share (EPS) increased 37% to $1.08 and the quarterly dividend was raised by 10%.

Overall performance was buoyed by the individual operating segments’ performance within the data-centric side. DCG revenue increased by 20% vs. the fourth quarter in the past year, owing to customer uptake of high performance products (like Xeon Scalable) that allowed for higher ASPs, in addition to substantial volume in the cloud segment. PSG, IOTG, and NSG’s collective revenue increased by 21% year-on-year. PSG outcome was driven by growth in industrial, military, and automotive market segments, advanced products, and final purchases of legacy products. IOTG’s contribution resulted from sales of platform and adjacent products across retail, industrial, and smart video segments, while NSG benefited from high demand in data center. DCG, PSG, and IOTG reported significant increases in operating income of 59%, 95%, and 43%, respectively, while NSG recorded a positive operating margin vs. the past year.

Source: Intel Reports Fourth-Quarter and Full-Year 2017 Financial Results

Intel’s strategy execution to tap into data-rich segments was successful. It made inroads towards establishing its position as a contender in emerging end-markets.

  • In Autonomous Driving – Per the annual report, the acquisition of Mobileye grants Intel the capacity to “create automated driving solutions from car to cloud” as it combines Mobileye’s competency in “the development of computer vision and machine learning, data analysis, localization, and mapping for advanced driver assistance systems and autonomous driving” with its own “high-performance computing and connectivity expertise”, and ultimately position itself “as a leading technology provider in the fast-growing market for highly and fully autonomous vehicles.” Case in point, “Mobileye had a strong finish to 2017 with a total of 30 Advanced Driver-Assistance Systems (ADAS) customer designs wins as well as design wins for advanced L2+ and L3 autonomous systems with 11 automakers” (Per the 4th Quarter Earnings Release).
  • In Artificial Intelligence – Apart from the Mobileye transaction, Intel’s Movidius vision processing unit was included in Google’s (NASDAQ:GOOG) (NASDAQ:GOOGL) AIY vision kit; its Intel Atom® Processor and Intel Gen9 Graphics Engine were used in Amazon’s (NASDAQ:AMZN) DeepLens, “the world’s first deep learning enabled video camera for developers” (from the Seeking Alpha 4Q 2017 Earnings Call Transcript).
  • In Memory – Manufacturing capacity was upgraded from “2D NAND to 3D NAND, reaching 100% 3D NAND production at the end of 2017” (per the 2017 Annual Report).
  • In 5G and connectivity – The “first family of 5G NR multi-mode commercial modems, the Intel XMM 8000 series modems” was launched and “the 5th generation LTE modem, the Intel® XMM™ 7560 modem” was introduced.

Despite the celebratory mood, the disconcerting topic seemed to be the information security risks posed by Meltdown and Spectre. Preempting questions on the matter at the last earnings call, Intel CEO sought to reassure concerned parties by saying that the company is focused on urgently “delivering high-focus mitigations to protect its customers’ infrastructure from these exploits” and that work is underway for protective silicon-based changes to be part and parcel of its future products, and that these will begin to be available in 2018. He also emphasized that “Security is a top priority for Intel,” a cornerstone of its products, and crucial for the success of its data-centric strategy.


2018 will be the third year of Intel’s announcement of its transformation of growing beyond its traditional data processing end-markets into data-rich segments. It will be critical to take note of how the company delivers on its promise to address the incumbent information security threats, and to ensure the integrity of its forthcoming products within hardware, to make it resistant to Spectre, Meltdown, and similar exploits. The other crucial areas to watch are the revenue split between the PC-centric and data-centric sides of the business, and what additional investments and decisions the company will make to further decrease reliance on PC-centric sales and increase penetration of the redefined TAM of $260 billion.

Our Take

Intel currently pays a decent dividend yield of 2.3%, which until recently, was favorable compared to the 10YR Treasury rate. But as of early this year, the 10 yr has spiked to 2.81%.

Analysts currently estimate an average price target of $51.72, which is a modest 5.6% increase from current levels. At a current PE of 24x, the stock looks fully priced. But an often-overlooked metric, the forward PE multiple is at 13x, which looks more reasonable even if it too looks high compared to its recent historical average. The driver is a considerable increase in EPS estimates for next year from $3.40 to $3.80 per share, partly due to the impact of recent tax reform and partly due to improved prospects. The company’s non-GAAP EPS guidance is a more modest $3.55 per share. Applying a PE multiple of 24 to $3.55 per share and $3.80 per share results in a much more optimistic price target of $85 to $92, more than 73% return from current levels. The high analyst price target is $60, which I think is a more reasonable expectation to have, which results from an EPS estimate of $3.55 and a multiple of 17.

There is a lot of competition within the automobile, robotics, cloud, and data segments and in some of those markets, Intel’s competitors have a head start. Furthermore, the semiconductor industry is highly complex and evolves quickly based on the dynamics of its end user markets. The stock hit a multi-year high recently and I am wary of a pullback.


For income investors, we suggest writing a covered call with a January 18, 2019, call with a strike price of $60 for $1.43, according to prices as of March 2nd, 2018. That’s an additional 3% on Friday’s closing price of $48.98, providing total income of more than 5.5% annualized and, if called, would result in another 22% upside on price appreciation.

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Why Pure Reason Won’t End American Tribalism

If you haven’t encountered any reviews of Harvard psychologist Steven Pinker’s new bestseller Enlightenment Now—which would be amazing, given how many there have been—don’t worry. I can summarize them in two paragraphs.

The positive ones say Pinker argues convincingly that we should be deeply grateful for the Enlightenment and should put our stock in its legacy. A handful of European thinkers who were born a few centuries ago set our species firmly on the path of progress with their compelling commitment to science, reason, and humanism (where humanism means “maximizing human flourishing”). Things have indeed, as Pinker documents in great detail, gotten better in pretty much every way—materially, morally, politically—since then. And if we stay true to Enlightenment values, they’ll keep getting better.

The negative reviews say things like this: Pinker attributes too much of our past progress to Enlightenment thought (giving short shrift, for example, to the role of Christian thinkers and activists in ending slavery); his faith in science and reason is naive, given how often they’ve been misused; his assumption that scientifically powered progress will bring happiness betrays a misunderstanding of our deepest needs; his apparent belief that secular humanism can fill the spiritual void left by rationalism’s erosion of religion only underscores that misunderstanding; and so on. In short: In one sense or another, Pinker overdoes this whole enlightenment thing.

My own problem with the book is the sense in which Pinker underdoes the enlightenment thing. In describing the path that will lead humankind to a bright future, he ignores the importance of enlightenment in the Eastern sense of the term. If the power of science and reason aren’t paired with a more contemplative kind of insight, I think the whole Enlightenment project, and maybe even the whole human experiment, could fail.

If you fear I’m heading in a deeply spiritual or excruciatingly mushy direction—toward a sermon on the oneness of all beings or the need for loving kindness—I have good news: I’ve delivered such sermons, but this isn’t one of them. Eastern enlightenment has multiple meanings and dimensions, and some of those involve more logical rigor than you might think. In the end, an Eastern view of the mind can mesh well with modern cognitive science—a fact that Pinker could have usefully pondered before writing this book.

Pinker’s argument is more sophisticated than some caricatures of it would have you believe. In particular, he recognizes the big kink in his famously optimistic take on the future: Though reason can help us solve the problems facing humankind, our species isn’t great at reasoning. We have “cognitive biases”—like, for example, confirmation bias, which inclines us to notice and welcome evidence that supports our views and to not notice, or reject, evidence at odds with them. Remember how unseasonably warm it was a few months ago? The answer may depend on your position on the climate change question—and that fact makes it hard to change people’s minds about climate change and thus build the consensus needed to address the problem.

Pinker also understands that cognitive biases can be activated by tribalism. “We all identify with particular tribes or subcultures,” he notes—and we’re all drawn to opinions that are favored by the tribe.

So far so good: These insights would seem to prepare the ground for a trenchant analysis of what ails the world—certainly including what ails an America now famously beset by political polarization, by ideological warfare that seems less and less metaphorical.

But Pinker’s treatment of the psychology of tribalism falls short, and it does so in a surprising way. He pays almost no attention to one of the first things that springs to mind when you hear the word “tribalism.” Namely: People in opposing tribes don’t like each other. More than Pinker seems to realize, the fact of tribal antagonism challenges his sunny view of the future and calls into question his prescriptions for dispelling some of the clouds he does see on the horizon.

I’m not talking about the obvious downside of tribal antagonism—the way it leads nations to go to war or dissolve in civil strife, the way it fosters conflict along ethnic or religious lines. I do think this form of antagonism is a bigger problem for Pinker’s thesis than he realizes, but that’s a story for another day. For now the point is that tribal antagonism also poses a subtler challenge to his thesis. Namely, it shapes and drives some of the cognitive distortions that muddy our thinking about critical issues; it warps reason.

Consider, again, climate change. Pinker is not under the illusion that many members of his (and my) climate-change tribe are under: that people in our tribe have objectively assessed the evidence, whereas climate change skeptics have for some reason failed to do that. As with most issues, few people in either tribe have looked closely at the actual evidence. On both sides, most people are just trusting their tribe’s designated experts.

And what energizes this trust? Often, I think, the answer is antagonism. The more you dislike the other tribe, the more uncritically you trust your experts and the more suspiciously you view the other tribe’s experts.

For purposes of addressing this problem, a key link in the tribalism-to-cognitive-distortion chain is this: The antagonism is directed not just toward the other tribe’s experts but toward their evidence. Seeing evidence inimical to your views arouses feelings of aversion, suspicion, perhaps even outrage.

If you don’t believe me, just observe yourself while on social media. Pay close attention to your feelings as you encounter, respectively, evidence at odds with your views and evidence supportive of them. It’s not easy to do this. Feelings are designed by natural selection to guide your behavior automatically, without you reflecting on them dispassionately. But it’s doable.

And, by the way, if you manage to do it, you’re being “mindful,” as they say in Buddhist circles. Mindfulness involves being acutely aware of, among other things, your feelings and how they guide your thought—an awareness that in principle can let you decide whether to follow this guidance.

If earning the label “mindful” isn’t enough of an incentive for you, how about this: The foundational Buddhist text on mindfulness, the Satipatthana Sutta, says that complete and all-encompassing mindfulness (of feelings, physical sensations, sounds, and much more) brings full-on enlightenment—the utter clarity of apprehension that is said to entail liberation from suffering. So to become a bit more mindful as you peruse social media is to realize an increment, however small, of enlightenment in the Buddhist sense of the term.

Or, to translate this back into Western talk: an increment of making-inroads-against-cognitive-biases. So long as you remain truly mindful, you will be less inclined to reflexively reject evidence at odds with your views, less inclined to uncritically embrace—and impulsively retweet—evidence supportive of your views.

One take-home lesson from this mindfulness exercise is that the term “cognitive bias” is misleading. Confirmation bias isn’t just a product of the cognitive machinery, a purely computational phenomenon. It is driven by feeling, by affect. You reject evidence inconsistent with your views the way you reject food you don’t like or the way you recoil at the sight of a spider. The thought of embracing unwelcome evidence makes you feel bad. You may even have an urge to, in a sense, attack it—find the critical factual error or logical flaw that you know must be propping it up. Evidence that supports your views is, on the other hand, attractive, appealing—so much so that you’re happy to promulgate it without pausing to fully evaluate it; you love it just the way it is.

This view of cognitive biases is consistent with a decades-long trend in psychology and neuroscience (a trend that was anticipated by Buddhist psychology eons ago): the growing recognition that the once-sharp distinction between cognition and affect, between thinking and feeling, is untenable; thinking and feeling inform one another in a fine-grained and ongoing way. I assume Pinker knows this at an abstract level, but he doesn’t seem to have really taken it onboard.

That, at least, could help explain why his prescriptions for combating cognitive biases sound less than potent.

He wants schools to do more effective “cognitive debiasing”—to cultivate “logical and critical thinking” by encouraging “students to spot, name, and correct fallacies across a wide range of contexts.” Back when I was in high school, we did exercises very much like this in English class, and they blessed me with an enduring tendency to … look for such fallacies in arguments made by people I disagree with. Period.

And, actually, human beings are pretty good at that even without special instruction. The problem isn’t that natural selection didn’t bless us with critical faculties; it’s that our feelings tell us when to use those faculties and when not to use them, and they do this in a way that typically escapes our conscious awareness.

Pinker also has some ideas specifically geared to cognitive biases that surface in a tribal context. He suggests changing the “rules of discourse in workplaces, social circles, and arenas of debate and decisionmaking.” Maybe we can “have people try to reach a consensus in a small discussion group; this forces them to defend their opinions to their groupmates, and the truth usually wins.” Or get “mortal enemies” to “work together to get to the bottom of an issue, setting up empirical tests that they agree beforehand will settle it.”

These things don’t sound very scalable—even leaving aside the question of how long any of the supposed benefits would last in the wild.

I’m not saying these proposals are worthless. And I certainly agree with Pinker that no student should graduate from college without learning about cognitive biases. (I’d also encourage college students to read this book, which, like all of Pinker’s books, is a model of sharp analysis and clear exposition, an example worthy of emulation whether or not you agree with all of it.)

Still, if I could implement only one policy to solve the problem Pinker wants to solve, it would be the teaching of mindfulness meditation in public schools. One virtue of this approach is that it doesn’t involve convincing participants to buy into some high-minded goal like collaborating with “mortal enemies.” Indeed, the practice of mindfulness meditation often starts as simple self-help—a way to deal with stress, anxiety, sadness. The path from that to, say, more mindful engagement on social media is, if not quite seamless, pretty straightforward.

The path to full-on enlightenment is, of course, a bit more tortuous. Happily, the salvation of humankind doesn’t depend on anyone in the next generation actually getting there. (I’m agnostic on the question of whether anyone ever has gotten there.) One of the most underappreciated aspects of full-on Buddhist enlightenment is the sense in which it is a state of complete objectivity, an absolute transcendence of the perspective of the self: a kind of view from nowhere. And from the very beginning of a mindfulness meditation practice, there can be gains along that dimension; as you get less reactive and more reflective, you can, in principle, get better at objectivity, bit by bit by bit.

And note one bonus of this approach to combating cognitive biases. By addressing the antagonism that underlies them, mindfulness can make direct inroads on the more obvious threat posed by tribalism—the conflicts that kill people, the simmering tensions that keep them from getting together and solving problems like, say, the proliferation of nuclear and biological weapons.

The great Enlightenment philosopher David Hume—who used careful introspection as part of his methodology—famously wrote that reason is “the slave of the passions.” Pinker doesn’t quote this line. He does note that Hume and other Enlightenment thinkers were “aware of our irrational passions and foibles” and says they saw that “the deliberate application of reason was necessary precisely because our common habits of thought are not particularly reasonable.”

But I don’t think the “deliberate application of reason” is by itself up to the challenge. After all, our minds are designed to delude us into thinking we are being reasonable when we’re not. It is only when we make it a practice to look carefully at the mechanics of the delusion—look at the way affect steers reason, the dynamic Hume so vividly described—that we have much hope of solving the problem. And if you want to do that, if you want to actually look at those mechanics and see them at work in yourself, then reason alone isn’t going to do the trick. If you really want to see these things, I recommend that you start by sitting down and closing your eyes.

Meeting of the Minds

When Will Self-Driving Cars Be 'Ready'?

For the people who develop self-driving cars—the software engineers, the hardware tinkerers, the welders and the bumper-affixers, the C-Suite execs and the marketing folks paid to sell it all—the rest of the world is bit like like a kid-crowded backseat. Are we there yet? the globe asks.

Sometimes, the public is excited, because autonomous vehicles promise to, perhaps, one day banish dangerous drunk, drowsy, and distracted drivers in favor of precise machines. (Nearly 40,000 Americans died on the roads last year, and the National Highway Safety Administration attributes about 90 percent of those to human error.) Sometimes, the public is fearful, because loosing new technology on public streets can be frightening. Just last month, a self-driving Uber testing in the Phoenix metro area struck and killed a woman as she crossed the street.

Either way, people want to know when autonomous vehicles will get here, when they will be ready. Here’s the unsatisfying but correct answer: never. “The technology is constantly being updated,” says Nidhi Kalra, a roboticist who co-directs the Rand Corporation’s Center for Decision Making Under Uncertainty. “Sometimes we will talk about it as if, ‘We have this self-driving car, we have this product.’ But with software updates, there’s a new vehicle every week.”

This is what differentiates the autonomous vehicle from even the most advanced cars rolling off the production lines in places like Detroit: so. much. software. More than half a million lines of code will power the various systems and algorithms that could one day help self-driving cars go anywhere. That includes localization systems, overlaid with high-definition maps to help the vehicles understand where they are. And perception systems, which help vehicles determine exactly what’s going on around them (Is that really a person? Should I expect her to walk in front of the vehicle?) And planning systems, which synthesize all that info and actually chart the vehicle’s journey from this intersection to that one. Oh, and the software that actually makes the thing move without a foot to push a gas pedal or a hand to guide a steering wheel.

There’s a reason experts are softly backpedaling expectations on autonomous vehicle tech—this stuff is complicated. Add in weather, terrain, and car cultures that differ from city to city, and you can see why companies like Waymo are only testing in specific places. (Ever heard of a Pittsburgh left?) Testing everywhere would be nigh-impossible. And just like your iPhone, your Snap app, or your Tesla, these cars have code that will get updated, and updated a lot.

“Any product is going to be improved over time,” says Mike Wagner, co-founder and CEO of Edge Case Research, which helps robotics companies build more robust software. “That’s life-cycle maintenance in any system.”

Now, this shouldn’t necessarily be a scary prospect. If, say, Waymo wants to expand a (theoretical) taxi service from this neighborhood in Atlanta to that neighborhood in Atlanta, it will need to update its software. If, say, General Motors wants to start offering autonomous vehicle riders the chance to make mid-trip pit stops at Starbucks, that’s a software update, too. If, say, any autonomous vehicle built five years ago wants to work today, it needs an upgrade—there will be new car models to recognize, new traffic patterns to negotiate, maybe new, climate changed weather patterns to contend with.

“The environment isn’t static,”says Forrest Iandola, the CEO of the startup DeepScale, which builds perception systems. “Even if you, in theory, have a perfect system for today in a certain location, that becomes stale.”

Vehicles will also constantly encounter new situations on the roads, and contend with obstacles engineers might never have dreamed of. “As soon as you turn any sensor to face the outside environment, the number of different things it could see is on the order of the number of permutations of atoms you could see in the universe,” says Iandola. A bunch of tigers escaped the zoo? Time to train self-driving on tiger images—and update.

Then there are the scarier fixes, the safety-related updates that need to go through extremely rigorous validation processes before they’re pushed to robot cars. This is new territory for automotive engineers, even the people who validate the software in cars driven around by humans today. “Consider automatic emergency braking or adaptive cruise control. That clearly has software,” says Kalra. “But these are pretty limited algorithms: They’re handwritten, they’re provable.” With self-driving cars, the scale of the systems, and the way they interact with each other, makes perfecting updates much harder.

“The challenge is, as those systems get more and more safety-critical, traditionally what happens is you slow down the cycle,” says Wagner. “You have to do quite a bit of classical safety validation before you release a product.” But some of these fixes will have to happen much more quickly—if there’s a bug sending cars careening into barriers, or opening a backdoor to hackers, for example. Wagner’s company, Edge Case Research, is working on ways to speed up that process, to get important robotics safety updates proven out and patched quickly.

Experts say prepping for that iterative future, for the constantly updated autonomous car, starts now. Smart engineers should be building in many software entry points, so they can validate separate parts of the system. Can they sort what’s going on in the sensor fusion system from the localization system? Can they quickly diagnose what’s wrong?

The fortunate news is that a number of autonomous vehicle developers are heads down, working on these problems—though it’s an open question whether they’re moving fast enough. OK, and more good news: If you’re looking for long-term employment, the imperfectable self-driving space may be the place to be.

Self-Driving Spiels

The Facebook Debacle Proves It’s High Time for Stronger Privacy Laws

In the wake of the Facebook-Cambridge Analytica debacle, we’re hearing a lot of new and interesting ideas about how to solve the so-called Facebook problem: Let’s classify Facebook as a monopoly and break it up. Let’s declare it a public utility and regulate it like electricity or phone service. Let’s force Facebook to reveal exactly how its algorithm works so there’s greater transparency and accountability.



Jessica Rich is the vice president of advocacy for Consumer Reports and served as the director of the Federal Trade Commission’s Bureau of Consumer Protection from 2013 to 2017.

The ease with which Cambridge Analytica was able to harvest and exploit Facebook user data is indeed highly disturbing. However, some context and pragmatism are in order. First, Facebook is hardly the only company that develops detailed profiles about consumers and uses them—or allows them to be used—for commercial and political targeting. This has been going on for years, across a multitude of industries. The current scandal merely pulled back the curtain on a common practice that industry doesn’t like to talk about.

Second, the ability of companies to collect, combine, infer, and sell the kind of detailed information that Cambridge Analytica stockpiled has rapidly expanded while Congress has stood idly by and let it happen—if not enabled it. For more than 20 years, many of us who champion consumers have urged Congress to pass a federal law establishing basic privacy rules that all companies must follow, and that all Americans can count on. With each attempt, industry has objected and Congress has retreated, even recently eliminating the federal rules governing broadband privacy.

Today, even as countries across the globe are strengthening their privacy laws to meet the challenges and threats of the digital era, the US remains one of the only countries in the Western world that still lacks even the most basic rules to protect the privacy of its citizens.

Rather than getting caught up in the shock and outrage about Cambridge Analytica, or dreaming up new and creative solutions to clip Facebook’s (and only Facebook’s) wings, let’s focus more broadly on what is one of today’s most important consumer protection issues and finally do what’s been needed for over 20 years: pass a privacy law that gives all consumers the fundamental protections they deserve across the marketplace. This whole mess happened because in the US, the wholesale collection, use, and sharing of data with third parties is largely unregulated, uncontrolled, and conducted in secret.

The consumer harm goes much further than the now-87 million people deceived in this one Facebook incident. It applies to every American who goes online, uses a smartphone, drives in a smart car, uses a smart watch, or relies on other products that may lack the safeguards needed to protect users’ private information and personal security.

Each day, connected devices track our location, our online searches, the friends we contact, the things we buy, and even what we say in the privacy of our homes. Each day, thousands of data brokers sell information about our finances, politics, religion, race, and personal habits to anyone willing to buy it, including scam artists that use the information to trick and defraud us. Medical websites are largely free to sell our private searches about cancer, Alzheimer’s disease, and depression to the highest bidder. And companies are increasingly using data to charge different consumers different prices—including, as Consumer Reports and ProPublica found last year, higher auto insurance prices to consumers living in minority neighborhoods.

And Facebook is hardly the only company guilty of recklessly handling consumers’ personal information. During the last decade, consumers have been victimized by hundreds of data breaches at companies that profit handsomely from consumer data but fail to protect it, including last year’s massive breach at Equifax. It’s not surprising that, last year, nearly 17 million Americans lost $17 billion to identity theft.

This is an issue of personal security and safety. Just as we needed safety laws for seat belts and cigarettes, we need common-sense laws for online privacy.

Here’s a good place to start. Let’s require companies to post clear information about their data practices—no, not buried in privacy policies or Terms of Service, but prominently displayed in a simple, easy-to-understand, and standardized “dashboard” so consumers can compare companies’ practices. Let’s give consumers an easy, consistent way to say ‘yes’ or ‘no’ to data uses that go beyond the reason they provided it, and ‘yes’ or ‘no’ to having their data shared with third parties like Cambridge Analytica.

Among other things, we need to vastly simplify and standardize the permissions structure that many tech companies use today, which is often misleading and always confusing. Let’s prohibit certain uses of data altogether, like using information about our medical conditions or treatments for marketing. Let’s require companies to secure the consumer data they collect and the devices they sell. And let’s give the Federal Trade Commission—or another agency, if the FTC can’t do it—the strong authority and resources it needs for robust enforcement, including the ability to levy sizable fines for violations.

For too long, companies have profited from consumer data without giving the owners of that data—consumers—the rights, protections, and clear information they deserve. For too long, companies have fostered the specious narrative that collecting and selling consumer data is completely “harmless” because its sole purpose it to tailor advertising and marketing to an individual consumer’s preferences. It’s time to address the real problem by establishing strong standards and accountability—not just for Facebook, but for all companies that collect, use, and profit from our personal information.

WIRED Opinion publishes pieces written by outside contributors and represents a wide range of viewpoints. Read more opinions here.

More on Privacy

Why Winning in Rock-Paper-Scissors Isn’t Everything

Rock-Paper-Scissors works great for deciding who has to take out the garbage. But have you ever noticed what happens when, instead of playing best of three, you just let the game continue round after round? At first, you play a pattern that gives you the upper hand, but then your opponent quickly catches on and turns things in her favor. As strategies evolve, a point is reached where neither side seems to be able to improve any further. Why does that happen?

Quanta Magazine

author photo


Original story reprinted with permission from Quanta Magazine, an editorially independent publication of the Simons Foundation whose mission is to enhance public understanding of science by covering research developments and trends in mathematics and the physical and life sciences.

In 1950, the mathematician John Nash proved that in any kind of game with a finite number of players and a finite number of options—like Rock-Paper-Scissors—a mix of strategies always exists where no single player can do any better by changing their own strategy alone. The theory behind such stable strategy profiles, which came to be known as “Nash equilibria,” revolutionized the field of game theory, altering the course of economics and changing the way everything from political treaties to network traffic is studied and analyzed. And it earned Nash the Nobel Prize in 1994.

So, what does a Nash equilibrium look like in Rock-Paper-Scissors? Let’s model the situation with you (Player A) and your opponent (Player B) playing the game over and over. Each round, the winner earns a point, the loser loses a point, and ties count as zero.

Now, suppose Player B adopts the (silly) strategy of choosing Paper every turn. After a few rounds of winning, losing, and tying, you are likely to notice the pattern and adopt a winning counterstrategy by choosing Scissors every turn. Let’s call this strategy profile (Scissors, Paper). If every round unfolds as Scissors vs. Paper, you’ll slice your way to a perfect record.

But Player B soon sees the folly in this strategy profile. Observing your reliance on Scissors, she switches to the strategy of always choosing Rock. This strategy profile (Scissors, Rock) starts winning for Player B. But of course, you now switch to Paper. During these stretches of the game, Players A and B are employing what are known as “pure” strategies—a single strategy that is chosen and repeatedly executed.

Clearly, no equilibrium will be achieved here: For any pure strategy, like “always choose Rock,” a counterstrategy can be adopted, like “always choose Paper,” which will force another change in strategy. You and your opponent will forever be chasing each other around the circle of strategies.

But you can also try a “mixed” strategy. Let’s assume that, instead of choosing only one strategy to play, you can randomly choose one of the pure strategies each round. Instead of “always play Rock,” a mixed strategy could be to “play Rock half the time and Scissors the other half.” Nash proved that, when such mixed strategies are allowed, every game like this must have at least one equilibrium point. Let’s find it.

So, what’s a sensible mixed strategy for Rock-Paper-Scissors? A reasonable intuition would be “choose Rock, Paper or Scissors with equal probability,” denoted as (1/3,1/3,1/3). This means Rock, Paper and Scissors are each chosen with probability 1/3. Is this a good strategy?

Well, suppose your opponent’s strategy is “always choose Rock,” a pure strategy that can be represented as (1,0,0). How will the game play out under the strategy profile (1/3,1/3,1/3) for A and (1,0,0) for B?

In order to get better picture of our game, we’ll construct a table that shows the probability of each of the nine possible outcomes every round: Rock for A, Rock for B; Rock for A, Paper for B; and so on. In the chart below, the top row indicates Player B’s choice, and the leftmost column indicates Player A’s choice.

Each entry in the table shows the probability that the given pair of choices is made in any given round. This is simply the product of the probabilities that each player makes their respective choice. For example, the probability of Player A choosing Paper is 1/3, and the probability of player B choosing Rock is 1, so the probability of (Paper for A, Rock for B) is 1/3×1=1/3. But the probability of (Paper for A, Scissors for B) is 1/3×0=0, since there is a zero probability of Player B choosing Scissors.

So how does Player A fare in this strategy profile? Player A will win one-third of the time (Paper, Rock), lose one-third of the time (Scissors, Rock) and tie one-third of the time (Rock, Rock). We can compute the number of points that Player A will earn, on average, each round by computing the sum of the product of each outcome with its respective probability:

This says that, on average, Player A will earn 0 points per round. You will win, lose and tie with equal likelihood. On average, the number of wins and losses will even out, and both players are essentially headed for a draw.

But as we’ve already discussed, you can do better by changing your strategy, assuming your opponent doesn’t change theirs. If you switch to the strategy (0,1,0) (“choose Paper every time”), the probability chart will look like this

Each time you play, your Paper will wrap your opponent’s Rock, and you’ll earn one point every round.

So, this pair of strategies—(1/3,1/3,1/3) for A and (1,0,0) for B—is not a Nash equilibrium: You, as Player A, can improve your results by changing your strategy.

As we’ve seen, pure strategies don’t seem to lead to equilibrium. But what if your opponent tries a mixed strategy, like (1/2,1/4,1/4)? This is the strategy “Rock half the time; Paper and Scissors each one quarter of the time.” Here’s the associated probability chart:

Now, here’s the “payoff” chart, from Player A’s perspective; this is the number of points Player A receives for each outcome.

We put the two charts together, using multiplication, to compute how many points, on average, Player A will earn each round.


On average, Player A is again earning 0 points per round. Like before, this strategy profile, (1/3,1/3,1/3) for A and (1/2,1/4,1/4) for B, ends up in a draw.

But also like before, you as Player A can improve your results by switching strategies: Against Player B’s (1/2,1/4,1/4), Player A should play (1/4,1/2,1/4). This has a probability chart of

and this net result for A:


That is, under this strategy profile—(1/4,1/2,1/4) for A and (1/2,1/4,1/4) for B—Player A nets 1/16 of a point per round on average. After 100 games, Player A will be up 6.25 points. There’s a big incentive for Player A to switch strategies. So, the strategy profile of (1/3,1/3,1/3) for A and (1/2,1/4,1/4) for B is not a Nash equilibrium, either.

But now let’s consider the pair of strategies (1/3,1/3,1/3) for A and (1/3,1/3,1/3) for B. Here’s the corresponding probability chart:

Symmetry makes quick work of the net result calculation:

Again, you and your opponent are playing to draw. But the difference here is that no player has an incentive to change strategies! If Player B were to switch to any imbalanced strategy where one option—say, Rock—were played more than the others, Player A would simply alter their strategy to play Paper more frequently. This would ultimately yield a positive net result for Player A each round. This is precisely what happened when Player A adopted the strategy (1/4,1/2,1/4) against Player B’s (1/2,1/4,1/4) strategy above.

Of course, if Player A switched from (1/3,1/3,1/3) to an imbalanced strategy, Player B could take advantage in a similar manner. So, neither player can improve their results solely by changing their own individual strategy. The game has reached a Nash equilibrium.

The fact that all such games have such equilibria, as Nash proved, is important for several reasons. One of those reasons is that many real-life situations can be modeled as games. Whenever a group of individuals is caught in the tension between personal gain and collective satisfaction—like in a negotiation, or a competition for shared resources—you’ll find strategies being employed and payoffs being evaluated. The ubiquitous nature of this mathematical model is part of the reason Nash’s work has been so impactful.

Another reason is that a Nash equilibrium is, in some sense, a positive outcome for all players. When reached, no individual can do better by changing their own strategy. There might exist better collective outcomes that could be reached if all players acted in perfect cooperation, but if all you can control is yourself, ending up at a Nash equilibrium is the best you can reasonably hope to do.

And so, we might hope that “games” like economic incentive packages, tax codes, treaty parameters and network designs will end in Nash equilibria, where individuals, acting in their own interest, all end up with something to be happy about, and systems are stable. But when playing these games, is it reasonable to assume that players will naturally arrive at a Nash equilibrium?

It’s tempting to think so. In our Rock-Paper-Scissors game, we might have guessed right away that neither player could do better than playing completely randomly. But that’s in part because all player preferences are known to all other players: Everyone knows how much everyone else wins and loses for each outcome. But what if preferences were secret and more complex?

Imagine a new game in which Player B scores three points when she defeats Scissors, and one point for any other victory. This would alter the mixed strategy: Player B would play Rock more often, hoping for the triple payoff when Player A chooses Scissors. And while the difference in points wouldn’t directly affect Player A’s payoffs, the resulting change in Player B’s strategy would trigger a new counterstrategy for A.

And if every one of Player B’s payoffs was different, and secret, it would take some time for Player A to figure out what Player B’s strategy was. Many rounds would pass before Player A could get a sense of, say, how often Player B was choosing Rock, in order to figure out how often to choose Paper.

Now imagine there are 100 people playing Rock-Paper-Scissors, each with a different set of secret payoffs, each depending on how many of their 99 opponents they defeat using Rock, Paper or Scissors. How long would it take to calculate just the right frequency of Rock, Paper or Scissors you should play in order to reach an equilibrium point? Probably a long time. Maybe longer than the game will go on. Maybe even longer than the lifetime of the universe!

At the very least, it’s not obvious that even perfectly rational and reflective players, playing good strategies and acting in their own best interests, will end up at equilibrium in this game. This idea lies at the heart of a paper posted online in 2016 that proves there is no uniform approach that, in all games, would lead players to even an approximate Nash equilibrium. This is not to say that perfect players never tend toward equilibrium in games—they often do. It just means that there’s no reason to believe that just because a game is being played by perfect players, equilibrium will be achieved.

When we design a transportation network, we might hope that the players in the game, travelers each seeking the fastest way home, will collectively achieve an equilibrium where nothing is gained by taking a different route. We might hope that the invisible hand of John Nash will guide them so that their competing and cooperating interests—to take the shortest possible route yet avoid creating traffic jams—produce an equilibrium.

But our increasingly complex game of Rock-Paper-Scissors shows why such hopes may be misplaced. The invisible hand may guide some games, but others may resist its hold, trapping players in a never-ending competition for gains forever just out of reach.


  1. Suppose Player B plays the mixed strategy (1/2,1/2,0). What mixed strategy should A play to maximize wins in the long run?
  2. Suppose Player B plays the mixed strategy (1/6,2/6,3/6). What mixed strategy should A play to maximize wins in the long run?
  3. List item

How might the dynamics of the game change if both players are awarded a point for a tie?

Original story reprinted with permission from Quanta Magazine, an editorially independent publication of the Simons Foundation whose mission is to enhance public understanding of science by covering research developments and trends in mathematics and the physical and life sciences.

Australia begins privacy investigation into Facebook

SYDNEY (Reuters) – Australia on Thursday said it had begun an investigation to decide whether social media giant Facebook Inc breached its privacy laws, after the company confirmed data from 300,000 Australian users may have been used without authorization.

A 3D-printed Facebook logo is seen in front of displayed stock graph in this illustration photo, March 20, 2018. Picture taken March 20. REUTERS/Dado Ruvic

Personal information of up to 87 million users, mostly in the United States, may have been improperly shared with political consultancy Cambridge Analytica, Facebook said on Wednesday, exceeding a media estimate of more than 50 million.

In a statement, Australia’s privacy commissioner, Angelene Falk, said her office would “confer with regulatory authorities internationally”, given the global nature of the matter.

A Facebook spokeswoman in Australia said the company would be “fully responsive” to the investigation and had recently updated some privacy settings.

Facebook’s chief executive, Mark Zuckerberg, told reporters during a conference call that he accepted blame for the data leak.

Zuckerberg is due to testify about the matter next week during two U.S. congressional hearings, and the data breach has drawn criticism from lawmakers and regulators around the world.

London-based Cambridge Analytica, which has counted U.S. President Donald Trump’s 2016 campaign among its clients, disputed Facebook’s estimate of affected users.

It said in a tweet on Wednesday that it received no more than 30 million records from a researcher it hired to collect data about people on Facebook.

Australia’s investigation follows comments by New Zealand’s privacy commissioner last week that Facebook had broken laws in that country, a charge the company called disappointing.

Australia’s competition regulator is already investigating whether Facebook and Alphabet Inc’s Google had disrupted the news media to the detriment of publishers and consumers.

Reporting by Tom Westbrook; Editing by Michael Perry and Clarence Fernandez

I Don't Believe Tesla's Weird And Wacky Deliveries Report

Hold CoverDrive’s Beer

Every time I publish another one of CoverDrive’s Tesla (TSLA) earnings forecasts (always founded on his estimate of the upcoming deliveries number), I take a lot of incoming.

Not just from bulls, who insist CoverDrive has grossly underestimated what Tesla will accomplish, but from bears as well, who feel he is too generous to Tesla, and are certain he must have imbibed a few too many of his favorite oatmeal stouts before turning to his spreadsheets.

And yet, time after time, CoverDrive delivers the goods. His initial estimates are good. His refined calculations, later in the quarter, are even better. And his final EPS forecast after release of the delivery numbers is best of all.

CoverDrive initially based his forecast on 32,000 deliveries. He revised that down to 30,000 a month ago. He was off by 20.

OK, he wasn’t quite that good. He was about 500 high on the Models S and X and 500 shy on the Model 3. In other words, CoverDrive imagined Tesla would favor its cars that lose less money over its car that loses more money. He’s always had a soft spot for Tesla in that way.

CoverDrive’s delivery estimates form the foundation for his earnings forecast. And those forecasts, too, are uncannily accurate.

By contrast, the analysts’ “consensus” earnings number invariably begins the quarter at a distant remove from CoverDrive’s estimate. Ineluctably, as the earnings release date approaches, the consensus number inches ever closer to CoverDrive’s, until finally there is almost convergence.

The same thing will happen again over the next several weeks.

CoverDrive’s Q1 EPS Update

CoverDrive sent me a note after the delivery numbers were published. Essentially, he’s hanging tough with his Q1 EPS forecast. The different mix of cars caused him to pencil in only another $12 million in GAAP losses. He still sees the GAAP loss coming in at about $900 million.

In analyst-speak, that translates to a non-GAAP EPS of -$4.25. That’s quite different from the analysts’ Q1 EPS consensus, which, as I write this, is closer to -$3.25.

What do you think will happen between now and the second week of May, when we see the Q1 financials? Will CoverDrive confess error and move in the direction of the analysts? Or will the analysts come crawling to CoverDrive?

Two cautionary notes from CoverDrive: (1) he has assumed no ZEV credit revenue this quarter, and (2) he has assumed the same 13.2% gross margin even despite the richer mix of Model 3 cars (which are sure to have a negative gross margin).

A Kind Word For Adam Jonas

Back in December, Adam Jonas wrote a note estimating Tesla would deliver 8,000 Model 3 cars in Q1.

Lo and behold, Tesla delivered 8,180. To my knowledge, no one came closer than Jonas on the Model 3 number. Not even CoverDrive who penciled in 7,500 Model 3 deliveries for his Q1 EPS forecast.

Fortunately, CoverDrive is holding fast to the Jonas forecast for Model 3 deliveries during the remainder of 2018 (24k in Q2, 32k in Q3, 46k in Q4). CoverDrive has grounded his 2018 GAAP loss forecast ($2.8 billion) on the Jonas Model 3 numbers.

(No, Tesla is not going bankrupt. Not so long as it can continue to raise capital. Only once it no longer can. Photo posted by Elon Musk on Twitter as part of an April Fool’s joke)

About That Deliveries Report

Several others have already written great pieces about Tesla’s Q1 deliveries report: Anton Wahlman here and here, Bill Maurer here, and EnerTuition here.

I don’t want to repeat what they’ve said. I have these thoughts.

First, this was the longest delivery report ever, by a long margin. Its tone combines fantasy and defiance in a manner that is vintage Elon Musk.

I would wager Musk has not only pushed aside Doug Field in handling the production line, but also has decided he is best suited to handle his company’s investor communications.

Second, the stunningly selective sifting of data continues. In the Q4 deliveries report, Tesla boasted about the delivery numbers. This time, the delivery numbers are unimpressive, so it boasts about the production numbers.

Help me out here. In Q4, Tesla said it achieved an exit rate of 793 per week. In Q1, Tesla reported production of 9,766 Model 3 cars over 13 weeks. That works out to… 751 cars per week.

The share price spiked on this news. What does that tell you about the (I’m searching for a neutral term) thought processes (ah, that works) of those buying in contrast with the thought processes of those selling?

I don’t know what it tells you, but I know what it told me. I took the opportunity to add just a bit to my long-dated put options.

Third, the Models S and X have a significantly higher gross margin than the Model 3. Yet in the quarter’s final week, Tesla pulled workers from the Model S and X production lines and moved them to the Model 3 line.

I can think of only two explanations for Tesla’s decision:

  1. Tesla wanted to increase its Q1 losses.
  2. Tesla knows demand for the Models S and X is weak and waning.

Take your pick.

Fourth, in its report, Tesla said this:

Tesla continues to target a production rate of approximately 5,000 units per week in about three months, laying the groundwork for Q3 to have the long-sought ideal combination of high volume, good gross margin and strong positive operating cash flow.

I’m confident this forecast will come back to haunt Tesla.

CoverDrive’s Q3 forecast is for $647 million in GAAP losses. That won’t translate to “strong positive operating cash flow” in Q3. It won’t translate to any positive operating cash flow at all.

Fifth, Tesla continued with this:

As a result, Tesla does not require an equity or debt raise this year, apart from standard credit lines.

At this point, Tesla investors are Charley Brown, and Tesla is Lucy holding the football.

Do you need a reminder? How about this:

Add up the capital raises since October of 2016. It will serve as a useful education.

Sixth, Tesla claimed an end-of-quarter burst production rate of 2,000 Model 3s per week. I give you CoverDrive on March 26:

What weekly rate will they report at the end of the quarter? Just as they did at the end of Q4, it will be whatever they need to keep the story alive. They may not need to report 2500/wk, but certainly more than 2000.

Tesla settled for exactly 2,000 as the number it would serve up this time for consumption by the gullible. A number any higher would have been too unbelievable even for the most faithful Tesla fans.

Seventh, Tesla said this:

The quality of Model 3 coming out of production is at the highest level we have seen across all our products.

Really? How about this and this?

And those touchscreen problems I’ve been writing about are far from resolved. There’s more evidence that the theory of my engineer correspondents is on target. When will Tesla come clean about them?

Yes, mere anecdotes. Let’s all keep watching.

Yes, There Will Be A Capital Raise In 2018

I’m confident Tesla will not achieve “strong positive operating cash flow” in Q3. I very much doubt it will achieve any positive operating cash flow in 2018.

Tesla will instead rack up at least $2.5 billion in GAAP losses. More likely closer to $3 billion.

Tesla finished 2017 with deeply negative working capital. It produced 4,500 more cars in Q1 than it delivered. These situations are simply unsustainable.

I have no doubt that unless Tesla raises capital in 2018, it will be insolvent. Tapping existing credit lines will not suffice. Tesla will need to expand those lines (into the teeth of higher interest rates) and also issue more stock.

We will all look back on the latest delivery report as a deeply misleading document.

I’m Going to Build A Wall, And It’s Going To Be Beautiful

Seeking Alpha has put most of my work behind a pay wall. However, the suits have agreed to turn their backs while five of my articles jump the fence.

I particularly commend to your attention my 23-point short thesis and CoverDrive’s explanation of why Tesla is structurally bankrupt.

And also, to those tempted to crow about Tesla’s terrific gross margins, I would first commend them to a piece entitled Just Say ‘No’ To Tesla’s Misleading Margin Metric.

Disclosure: I am/we are short TSLA.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am short TSLA via long-dated options

Spotify Subscriptions Helped The Streaming Company Win Listeners

In 2011, when Spotify launched its streaming music service in the U.S., the future of digital media lay squarely in the realm of advertising. Sure, everyone knew ad-based models—sometimes called “the Internet’s original sin”—had flaws. But companies like Google, Yahoo, and Facebook were able to grow very large, very quickly by attracting big audiences to their free services and selling ads. Spotify aimed to emulate that success, but with a different model that also included an odd consumer option: a subscription.

At the time, Pandora, the market leader in music streaming, had already positioned itself as the future of radio, going after the industry’s $17 billion advertising market. Spotify executives took aim for that same pool of money, calling advertising “a huge part of the company strategy.” Both companies offered a paid subscription option. Spotify’s main difference was the ability to play any music on-demand, where Pandora only offered radio-style playlists with limited options to skip songs.

No one could have foreseen the digital media world’s recent shift toward paid subscriptions, driven, in part, by the success of Netflix and newspapers like the New York Times. Consumers have grown increasingly comfortable with the idea of paying to access digital media that they once got for free. Venture capitalists are now more excited to invest in tools and platforms that enable subscriptions.

Likewise, no one foresaw the rise in anti-advertising sentiment. Ad blocker use continues to grow and advertising boycotts are now a frequently-deployed culture war tool. Ad fraud remains a problem. Even Facebook and Google, the successful digital advertising duopoly, now look like sinister privacy invaders due to their data-collecting sales operations. Rival tech executives, like Apple CEO Tim Cook, are weaponizing this anti advertising sentiment to slam competitors with advertising-based business models.

Lucky for Spotify, the company’s paid tier of subscriptions put it in a strong position to ride that shift. Of Spotify’s 157 million users, 71 million pay a monthly fee to subscribe. Only around 10 percent of the company’s revenue comes from ads. On Tuesday the company went public. Investors valued the company at more than $26 billion at market close.

The focus on subscriptions, combined with its hard-won relationships with the record labels, has saved Spotify from the fate of its many failed streaming music peers. That includes MOG,, Muxtape, Imeem,, Myxer, Mixwit, Seeqpod, Grooveshark, and Skeemr. Pandora, which bought Rdio in 2015 in a distressed sale, endured takeover speculation for the last year, culminating with a bail-out investment from SiriusXM.

Spotify has long argued its service fights the music industry’s piracy problem by offering a convenient alternative. By doing so, it proved it was possible to convince a generation of users who grew up with Napster and Kazaa to pay for music for the first time. That shift is notable: Spotify subscribers who pay $10 a month, or $120 a year, to access the service are spending more on music than the average U.S. consumer did at the peak of the CD boom. (Detractors would argue that that money now gets spread across a lot more songs, therefore shorting artists.)

Spotify CEO Daniel Ek’s promise has been that Spotify can help return the music industry to growth. He’s delivered on that. Last year the industry experienced its first double-digit revenue growth since 1998.

But new challenges loom for the company. Spotify is not profitable. Plenty of artists and record labels that the company relies on continue to criticize its business model. And the company’s success has attracted competition. Apple, Google and Amazon all have competing subscription services which threaten Spotify’s leadership position. In that sense, Spotify will do well to remember the fate of Pandora—success is precarious.

Spotify’s Sleeper Power Grab

  • Spotify eschewed the bankers and went public without a bells-and-whistles IPO.
  • With its recommendation algorithms, Spotify doesn’t just influence what you listen to; it can make a hit.
    -There’s a better way to listen. Here’s how to join the ranks of Spotify’s power users.

Smart cities need the cloud—and vice versa

“Smart city” priorities and use cases are all over the place. Nonethless, IDC expects spending to accelerate over the 2016-2021 forecast period, reaching $45.3 billion in 2021.

So, what is a smart city and what does it have to do with cloud computing?  Everything.

Smart cities are cities that have embraced both the internet of things and the cloud technology to do what cities should do better. This includes intelligent traffic and transit management, surveillance such as body cams and GPS locators for police, intelligent water and power usage, and anything else that is automated and uses cloud-based procedural computing, cognitive computing, data retention, and analysis.

The real advantage of using mostly public clouds to create and run smart cities is not the capabilities of the various clouds to host basic compute and storage in support of city automation. It’s the ability to reuse common smart city services across cities, services that will be sold and managed by the public cloud providers.

The fundamental larger role of public cloud providers is to create sets of cloud services that will deliver best practices via services to all cities that want to become smart cities. The public cloud providers will essentially be the vehicle for sharing this technology. And they need cities to help define those services.

The larger piece of the puzzle is cost reduction. There is no real reason to become a smart city unless it’s going to reduce city operations costs, as well as deliver citizen services better than you did before. In other words, it’s not enough to become “smart”; you need to spend tax dollars in more effective ways.

Some cities are now successfully evolving into smart cities, paving the way for other city governments to follow. Of course, this is going to be an evolutionary process, with aspects of automation showing up at different times. After all not much happens fast with city governments.

Related videos: Smart cities

Panera Bread's website leaks customer records: KrebsOnSecurity

(Reuters) – Bakery-cafe chain Panera Bread’s website leaked customer records for at least eight months, cyber security blog KrebsOnSecurity reported on Monday.

The sign on the hood of a delivery truck for Panera Bread Co. is seen in Westminster, Colorado February 11, 2015. REUTERS/Rick Wilking

The blog post here said the data leak included names, email and physical addresses, birthdays and the last four digits of credit card number of “millions” of customers who ordered food online on the company’s website,

Panera Bread told Reuters the issue was resolved.  

“Our investigation is continuing, but there is no evidence of payment card information nor a large number of records being accessed or retrieved,” Panera Bread’s Chief Information Officer John Meister said in a statement.

Meister also said the company’s investigation into the matter to date indicated that fewer than 10,000 consumers had been potentially affected and it was working to finalize the investigation and take the appropriate next steps.

The St. Louis-based company, which competes with Chipotle Mexican Grill Inc (CMG.N), was acquired by privately owned German conglomerate JAB Holding in 2017.

Reporting by Nivedita Balu and Arjun Panchadar in Bengaluru; Editing by Anil D’Silva and Diane Craft