With competition from several new streaming TV services preparing to launch over the next year, Netflix is finding itself on the defensive following a drop in U.S. subscribers that is stirring up fears that the company’s days of market dominance might be coming to an end.
Netflix suffered its worst black eye in almost a decade when, late Wednesday, it said it lost 126,000 customers in the U.S. during the second quarter of the year. Netflix’s domestic subscriber drop was compounded by the addition of just 2.8 million subscribers worldwide, which fell far short of the company’s earlier forecast for a gain of 5 million subscribers for the months on April, May and June.
Netflix attributed its situation to a weaker slate of new content, the effect of a stronger-than-expected first quarter, when it added more than 9 million subscribers, and regions where new price increases went into effect.
That included the U.S., where the price of Netflix’s most-popular streaming option went up by $2, to $12.99 a month.
Netflix ended its second quarter with 60.1 million subscribers in the U.S., and a total of 151.6 million paid subscribers worldwide.
To put Netflix’s domestic subscriber situation in some historical perspective, the last time the company reported a drop in U.S. members was in 2011, when it lost 800,000 subscribers in one quarter due to a plan to split Netflix into two companies, one each for its streaming TV and DVD-by-mail rental businesses. Netflix soon dropped that plan.
On Thursday, Netflix saw what Wall Street thought of its newest subscriber figures as investors drove down the price of Netflix stock by 11%, to $322.44 a share.
Michael Pachter, media analyst with Wedbush Securities, said he thinks Netflix will only find it more difficult to grow its share of the U.S. subscription streaming-TV market.
“Netflix has already penetrated the majority of its above median income householdaddressable market at 60 million subscribers,” Pachter said. “And with competition from Disney+, HBO Max and Comcast (NBC Universal), we expect the company to have difficulty meaningfully growing its domestic subscriber base.”
Those new services–none of which is yet online–have already cast a shadow over Netflix’s ability to retain customers, with or without price increases.
Disney+ is scheduled to launch in November for $6.99 a month, and Disney intends to pull its content from Netflix as its deals with Netflix expire over the next year and a half. Netflix will see one of its most-popular shows, “Friends”, disappear from its services next year when when AT&T’s Warner Media, which owns the rights to “Friends”, will move the series to its upcoming HBO Max service. Comcast-owned NBC Universal will also move the one-time NBC series “The Office” from Netflix to its upcoming streaming service in 2021.
But Netflix said that even with losing some of its best-known titles, it remains confident about its ability to grow its subscriber base, and that it expects to add 7 million new members worldwide in the third quarter of this year. Netflix said it expects new seasons of “The Crown” and “Orange Is The New Black”, along with Martin Scorsese’s new film “The Irishman” to get its subscriber growth back on track.
“There should be a positive impact from an improving slate (of programs),” said Piper Jaffray analyst Michael Olson. “We are, therefore, optimistic about the company’s opportunity togrow subscriber additions.”
One thing Netflix said it won’t be doing is putting commercials on its service.
“We, like HBO, are advertising free,” Netflix said in a statement. “When you readspeculation that we are moving into selling advertising, be confident that this is false.”
SAN FRANCISCO — Is a peek into the future worth your privacy in the present? That concern was pushed to the spotlight this week with the resurgence of a smartphone app that uses artificial intelligence to transform your current face into your younger and older selves.
People raised fears on Twitter and other social media sites that on iPhones, FaceApp would be able to see and upload all your photos, including screenshots with sensitive financial or health information or photos of kids with the names of their schools in the background.
That’s not actually true, but the scuttle serves as a good reminder to think twice before downloading new apps.
Even large, mainstream apps routinely collect user data. But many trendy-at-the-moment apps are guilty of mining user data as a primary purpose. Some personality quizzes on Facebook and similar services collect user information as a business, opening people up to breaches such as in the Cambridge Analytica scandal.
On Wednesday, the ranking Senate Democrat, Chuck Schumer, wrote in a letter to the FBI and Federal Trade Commission that he’s concerned FaceApp could pose “national security and privacy risks for millions of U.S. citizens.” The New York Democrat is asking the two agencies to assess the situation.
As for FaceApp, the app grabs a photo only if you specifically select it to see your face change, security researcher and Guardian Firewall CEO Will Strafach said.
The confusion comes from an iPhone feature that shows your photo library within the app. It is an Apple feature that lets you select a specific photo, but doesn’t give the app full access to the library, even though it may appear that way.
You have the option of granting access to your entire photo library, but even then, there is no evidence the app is uploading anything other than the photo selected.
“I’m always looking for privacy concerns,” said Strafach, who used a network analyzer tool to track what was happening. “When it’s not happening, it’s not happening.”
There’s a version of FaceApp for Android, but those phones don’t tap photo libraries the same way.
That’s not to say the app isn’t free of problems, Strafach said.
Among other things, photos get sent to the cloud for processing in both the iPhone and Android versions, exposing them to hacking and other problems. FaceApp does not explicitly tell users that the photos are being sent to the cloud. Some apps try to limit exposure by doing the processing on the devices themselves, not in the cloud.
FaceApp, which is developed in Russia by Wireless Lab, has had surges of viral popularity before. The app also allows people to swap their genders or add facial hair or makeup.
Wireless Lab told technology news site TechCrunch that it may store users’ photos in the cloud, but “most” are deleted after 48 hours. It said no user data is transferred to Russia.
The company has not responded to questions from The Associated Press. It told TechCrunch that users can request to have their data deleted.
Even with those admissions, Strafach urged people to resist the pull of the app. He said the app should have been upfront and told users it was processing photos in the cloud rather than on phones.
“Bottom line is they were handling sensitive data and they handled it cavalierly and that’s just not cool,” he said.
A former manager at PayActiv, a San Jose startup that provides payday advances, is accusing the company of racial discrimination and questionable business practices.
In a lawsuit filed this month, Pedro Ibarra said he was fired because he complained about being harassed by the company’s founders over his ethnicity, and because he raised concerns about PayActiv’s handling of user data and whether the company is acting like a regular payday lender and therefore should be classified as a creditor.
Ibarra said in his lawsuit that he was the only Hispanic employee when he was hired in 2014, the year the company was founded. The co-founders are of Pakistani descent, the suit said.
Ibarra, who is of Mexican descent, was subjected to discriminatory comments “from approximately the beginning to the end of his employment” at the startup, according to the lawsuit. He also said he tried to encourage the company’s top executives to hire more minorities — other than those of Pakistani origin — in engineering positions, but they did not, the suit said.
But things got worse right before the 2016 U.S. presidential election, and afterward, Ibarra said in an interview and according to his lawsuit.
“Their behavior became more oppressive,” he said. “I guess they felt like their ethnicity was superior to mine.”
In a statement, PayActiv said, “We believe the lawsuit is spurious and without merit. We will not comment further on pending litigation but will remain focused on our mission to bring financial security, dignity, and savings to the millions of Americans experiencing financial stress.”
In response to questions about PayActiv’s handling of user data, the company said in a statement from Chief Operating Officer Ijaz Anwar, “Exchanged data is encrypted and stored in a secure manner. Data is only shared with third-party vendors for payment processing for the services we provide for earned wage access. We will never sell user data or give data to third-parties for marketing purposes.”
According to the lawsuit, Ibarra was regularly called by a derogatory term referring to Mexicans, and encouraged not to vote for Donald Trump for president because he was told “his people” could get deported. After Trump was elected, according to the lawsuit, Anwar sent him a text message that read, “Mexicans sold out. You lost the Alamo — again.” Then Ibarra was blamed for the election results and “subjected to intensified harassment,” the lawsuit states.
“I’m sort of quiet, I don’t share my opinions in the workforce, whether it’s religious or political,” Ibarra said in an interview. “People tend to take advantage of that.”
He said he couldn’t complain to the human resources department of the 50-employee company. “I was HR,” he said. “I was in charge of on-boarding employees, hiring, posting jobs — it’s a startup.”
Because of stress from work, he went on what was supposed to be a one-month medical leave last November, the suit said. A couple of weeks into that leave, Ibarra sent the company’s founders an email reiterating his concerns about business practices.
The startup, which has partnered with employers Walmart, Goodwill and about 100 others, lets employees access up to half of their earned income before payday. The company says that it doesn’t charge interest. Borrowers are charged $5 each time they get an advance. But because they’re allowed to roll over balances, Ibarra was concerned that the practice was “predatory,” and wanted to make sure the company was complying with state and federal regulations, said his lawyer, Shawn Tillis.
related_articles location=”left” show_article_date=”false” article_type=”automatic-primary-tag”]”When you roll over, that’s no longer based on earned income,” Tillis said.
A few days later, Ibarra received a letter from the company’s attorney informing him that he was fired, according to the lawsuit. He then received several phone calls from Anwar, who “described his numerous connections to organized crime and threatened Plaintiff against going public with his claims,” according to the lawsuit, which was filed in early July.
A federal court judge has thrown out a lawsuit by an Indian technology worker who claimed she was illegally denied an H-1B visa, ruling in favor of the federal government and its claim that the woman’s planned job did not meet the definition of a “specialty occupation” required for the visa.
Usha Sagarwala sued U.S. Citizenship and Immigration Services’ then-director L. Francis Cissna in December, claiming his agency broke the law by denying her an H-1B visa, which is intended for “specialty occupations.”
The agency concluded that the quality-assurance analyst position Sagarwala planned to fill at a Connecticut company was not a specialty job.
The ruling supporting the agency’s narrower view comes as Citizenship and Immigration’s umbrella agency, the U.S. Department of Homeland Security, is developing a new rule that would redefine what constitutes a specialty occupation “to increase focus on obtaining the best and the brightest foreign nationals via the H-1B program,” according to Homeland Security. The agency has not specified a new definition, but said the rule would be finalized next month. However, Homeland Security has several times delayed finalizing a new rule banning from employment H-4 visa-holding spouses of H-1B workers who are on track for a green card.
That planned rule arose from a crackdown by the administration of President Donald Trump on the H-1B. The administration has taken aim at outsourcing and staffing companies, which have been hardest hit by increased denials of H-1B visas.
The H-1B has become a flashpoint in America’s immigration debate, with critics pointing to reported abuses by outsourcers and arguing that those firms, and major technology companies employing H-1B holders directly or via outsourcers, use the visa to supplant American workers and push down wages. Silicon Valley tech firms have lobbied for an increase to the annual 85,000 cap on new visas — which are awarded to employers through a lottery — saying they need more H-1B visas to attract the world’s top talent.
Sagarwala, according to the ruling in Washington, D.C. U.S. District Court, received an H-1B visa in 2012, but those visas are tied to specific employers. So when she sought to change jobs in August last year, the prospective new employer, outsourcing firm HSK Technologies, had to go through the visa application process again.
The company’s application said the quality-assurance job required a minimum of a bachelor’s degree in computer science, information technology, math, engineering or equivalent fields, or a diverse background in science, technology, engineering or math, the ruling said.
Citizenship and Immigration demanded more evidence that Sagarwala and the job met H-1B requirements, and HSK updated its submission, according to the ruling.
“That new submission began with a notable attempted correction: The company claimed that it was an ‘inadvertent statement’ to say in its initial petition that a ‘wide range of specialties’ could qualify someone for the QA Analyst Position,” the judge wrote. “The truth, the company said, was that the position required a bachelor’s degree ‘in Computer Information Systems or [a] related field, such as Information Systems or [Computer Science].’”
Citizenship and Immigration concluded that HSK’s evidence was insufficient to grant an H-1B, saying a minimum-entry requirement encompassing such “disparate fields of study” didn’t meet the visa’s specialty occupation standard unless the company applying showed how each field related directly to the duties of the job, and the agency found that HSK “did not show the requisite connection,” according to the ruling.
The agency also said the position didn’t require the “theoretical and practical application of a body of highly specialized knowledge,” the ruling said.
In May, attorneys for Cissna requested that the case be thrown out, and on Monday, the judge did so, backing Citizenship and Immigration’s position that the HSK job did not meet the specialty occupation requirements for an H-1B.
Elon Musk wants to insert Bluetooth-enabled implants into your brain, claiming the devices could enable telepathy and repair motor function in people with injuries.
Speaking on Tuesday, the CEO of Tesla and SpaceX said his Neuralink devices will consist of a tiny chip connected to 1,000 wires measuring one-tenth the width of a human hair.
The chip features a USB-C port, the same adapter used by Apple’s Macbooks, and connects via Bluebooth to a small computer worn over the ear and to a smartphone, Musk said.
“If you’re going to stick something in a brain, you want it not to be large,” Musk said, playing up the device’s diminutive size.
Neuralink, a startup founded by Musk, says the devices can be used by those seeking a memory boost or by stroke victims, cancer patients, quadriplegics or others with congenital defects.
The company says up to 10 units can be placed in a patient’s brain. The chips will connect to an iPhone app that the user can control.
The devices will be installed by a robot built by the startup. Musk said the robot, when operated by a surgeon, will drill 2 millimeter holes in a person’s skull. The chip part of the device will plug the hole in the patient’s skull.
“The interface to the chip is wireless, so you have no wires poking out of your head. That’s very important,” Musk added.
Trials could start before the end of 2020, Musk said, likening the procedure to Lasik eye correction surgery, which requires local anesthetic.
Musk has said this latest project is an attempt to use artificial intelligence (AI) to have a positive affect on humanity. He has previously tried to draw attention to AI’s potential to harm humans.
He has invested some $100 million in San Francisco-based Neuralink, according to the New York Times.
Musk’s plan to develop human computer implants comes on the heels of similar efforts by Google and Facebook. But critics aren’t so sure customers should trust tech companies with data ported directly from the brain.
“The idea of entrusting big enterprise with our brain data should create a certain level discomfort for society,” said Daniel Newman, principal analyst at Futurum Research and co-author of the book Human/Machine.
“There is no evidence that we should trust or be comfortable with moving in this direction,” he added.
While the technology could help those with some type of brain injury or trauma, “Gathering data from raw brain activity could put people in great risk, and could be used to influence, manipulate and exploit them,” Frederike Kaltheuner of Privacy International told CNN Business. “Who has access to this data? Is this data shared with third parties? People need to be in full control over their data.”
The tech industry is coming under heightened scrutiny over how it handles data.
France fined Google parent company Alphabet in January for violating EU online privacy rules. Facebook reportedly faces a major fine in the United States over its own data privacy violations.
Tesla has also suffered data leaks. In 2018, researchers at security firm RedLock saidTesla’s cloud storage was breached to mine cryptocurrency.
Amazon became the target of an antitrust investigation by the European Union on Wednesday over its use of merchants’ data, underlining the increasing regulatory scrutiny about how tech companies exploit customers’ information.
U.S. tech giants Amazon, Google, and Facebook have been in the regulatory spotlight as antitrust enforcers examine how they use data to boost their market power. Some U.S. politicians and even one of Facebook’s co-founders have called for them to be broken up.
The European Commission has been seeking feedback from retailers and manufacturers since September into Amazon’s dual role as a marketplace for merchants and acting as a competitor following complaints from traders about Amazon’s practices.
The Commission said its investigation would focus on Amazon’s standard agreements with marketplace sellers and its use of data in choosing winners of the “buy box,” which allows consumers to add items from a specific retailer directly to their shopping carts.
European Competition Commissioner Margrethe Vestager, who can fine companies up to 10% of their global turnover, said the issue was crucial as more and more Europeans shop online.
“E-commerce has boosted retail competition and brought more choice and better prices. We need to ensure that large online platforms don’t eliminate these benefits through anti-competitive behavior,” she said.
Amazon said it would cooperate fully with the EU investigation. The company reached a deal with Germany’s antitrust authority on Wednesday to overhaul its terms of service for third-party merchants.
Under its terms of service for Europe set out on its website, merchants grant Amazon “royalty-free” rights to use in a range of ways their materials, such as technology, trademarks, content and product information.
The EU probe has some parallels to the Commission’s investigation of Google for giving illegal advantage in search results to its own comparison shopping service, said Ian Giles, a partner at Norton Rose Fulbright.
“There have been concerns around the world that competition authorities have failed to appreciate the market power that comes from ownership of data,” he said.
In Amazon’s case, he said the Commission needed to show “the standard agreements with retailers were anti-competitive in somehow allowing Amazon to use the data to manipulate market outcomes, or that Amazon had in some way abused its dominance.”
Politico reported last week the EU would start a probe.
The Commission had been struggling to define the market in which Amazon operates in order to identify where the competitive harm could have been, sources said.
They said the issue was whether to look at Amazon in the overall retail market or in its own niche.
This would not be Amazon’s first run-in with the Commission. Two years ago, it was told to pay back taxes of about 250 million euros ($280 million) to Luxembourg because of illegal tax benefits. That same year it settled with the regulator over its distribution deals with e-book publishers in Europe.
Apple and Google are rolling out dozens of new emojis that of course include cute critters, but also expand the number of images of human diversity.
The announcement coincides with Wednesday’s World Emoji Day .
Apple Inc. is releasing new variants of its holding hands emoji that allow people to pick any combination of skin tone and gender, 75 possible combinations in all. There are also wheelchairs, prosthetic arms and legs, as well as a new guide dog and an ear with a hearing aid.
WASHINGTON (AP) — Under sharp criticism from senators, a Facebook executive on Tuesday defended the social network’s ambitious plan to create a digital currency and pledged to work with regulators to achieve a system that protects the privacy of users’ data.
“We know we need to take the time to get this right,” David Marcus, the Facebook executive leading the project, told the Senate Banking Committee at a hearing.
But that message did little to assure senators. Members of both parties demanded to know why a company with massive market power and a track record of scandals should be trusted with such a far-reaching project, given the potential for fraud, abuse and criminal activity.
“Facebook is dangerous,” asserted Sen. Sherrod Brown of Ohio, the committee’s senior Democrat. Like a toddler playing with matches, “Facebook has burned down the house over and over,” he told Marcus. “Do you really think people should trust you with their bank accounts and their money?”
Republican Sen. Martha McSally of Arizona said “the core issue here is trust.” Users won’t be able to opt out of providing their personal data when joining the new digital wallet for Libra, McSally said. “Arizonans will be more likely to be scammed” using the currency, she said.
The litany of criticism came as Congress began two days of hearings on the currency planned by Facebook, to be called Libra. Also Tuesday, a House Judiciary subcommittee was extending its bipartisan investigation of the market power of Facebook, Google, Amazon and Apple.
On the defensive from bursts of aggressive questioning, Marcus indicated the currency plan is a work in progress. “We will take the time” to ensure the network won’t be open to use by criminals and illicit activity like money laundering and financial fraud. “We hope that we’ll avoid conflicts of interest. We have a lot of work to do,” Marcus said.
The grilling followed a series of negative comments and warnings about the Libra plan in recent days from President Donald Trump, his treasury secretary and the head of the Federal Reserve.
But some senators emphasized the potential positive benefits of Facebook’s plan, meant to bring money transacting at low cost to millions around the globe who don’t have bank accounts. Facebook had its strong defenders of the project, too, on the panel.
“To strangle this baby in the crib is wildly premature,” said Sen. Pat Toomey, R-Pa.
In that vein, Marcus said Libra “is about developing a safe, secure and low-cost way for people to move money efficiently around the world. We believe that Libra can make real progress toward building a more inclusive financial infrastructure.”
The planned digital currency is to be a blend of multiple currencies, so that its value will fluctuate in any given local currency. Because Libra will be backed by a reserve, and because the group of companies managing it will encourage a competitive system of exchanges, the project leaders say, “anyone with Libra has a high degree of assurance they can sell it for local (sovereign) currency based on an exchange rate.”
Promising low fees, the new currency system could open online commerce to millions of people around the world who lack access to bank accounts and make it cheaper to send money across borders. But it also raises concerns over the privacy of users’ data and the potential for criminals to use it for money laundering and fraud.
To address privacy concerns, Facebook created a nonprofit oversight association, with dozens of partners including PayPal, Uber, Spotify, Visa and MasterCard, to govern Libra. As one among many in the association, Facebook says it won’t have any special rights or privileges. It also created a “digital wallet” subsidiary, Calibra, to work on the technology, separately from its main social media business. While Facebook owns and controls Calibra, it won’t see financial data from it, the company says.
Senators demanded to know exactly what that separation will entail.
“Facebook isn’t a company; it’s a country,” said Sen. John Kennedy, R-La. Kennedy and other conservative senators took the occasion to air long-standing grievances against Facebook, Twitter and Google for a perceived bias against conservative views.
Facebook’s currency proposal has also faced heavy skepticism from the Trump administration.
Trump tweeted last week that the new currency, Libra, “will have little standing or dependability.” Both Treasury Secretary Steven Mnuchin and Fed Chair Jerome Powell have expressed serious concerns recently that Libra could be used for illicit activity.
The Treasury Department has “very serious concerns that Libra could be misused by money launderers and terrorist financers,” Mnuchin told reporters at the White House on Monday. “This is indeed a national security issue.”
Facebook has “a lot of work to do before we get to the point where we’re comfortable with it,” Mnuchin said.
Elizabeth Warren’s plan to break up the country’s biggest tech firms hasn’t stopped employees of those companies from bankrolling her campaign.
The Massachusetts senator came in second among the Democratic presidential candidates in donations from employees of Amazon, Apple, Facebook, Google and Google’s parent company Alphabet over the last three months, fundraising reports released Monday night showed. And she led the field in donations from people who listed their occupation as “software engineer” or “programmer” — a sign that her message of fighting corporate power is resonating among the tech industry’s rank-and-file.
Warren came in behind Indiana mayor Pete Buttigieg in total donations from workers at the big four tech firms, raising about $102,000 to Buttigieg’s $124,000 between April and the end of June. She took in $211,000 from software engineers, just above Vermont Sen. Bernie Sanders’ $210,000, according to a Bay Area News Group analysis. Only donations from people who gave more than $200 were counted, as campaigns aren’t required to report smaller donations individually.
The numbers are an escalation of a similar trend from the first fundraising quarter of the year, when Warren came in third among employees of the big tech firms and second among software engineers and programmers.
Since then, Warren’s proposal to split the largest companies apart — in order to promote competition and reduce the tech giants’ power — has caught on in Democratic circles, with top candidates like Sanders endorsing the idea and plenty of others, including Buttigieg, saying they’d consider it. Supporters argue it would give tech startups more room to grow without being crushed or sucked up by the 800-pound gorillas of the industry.
“I don’t think it will magically take us back to the days of the tech boom when there were lots of startups having IPOs after a handful of years, but I think it would create some more variety in the job market,” Max Kaehn, a Google software engineer and Warren donor, said in an interview earlier this year.
But many tech executives strongly oppose the idea, arguing it would be a boon for massive tech companies in China, and some remain worried about Warren. Peter Thiel, a PayPal co-founder and Trump supporter, called the senator the most “dangerous” Democratic candidate for president in an interview on Fox News Monday night. Google employees had donated to her campaign because they had “a little bit of a bad conscience,” he said.
Some of the senator’s tech-world donors include Chris Sacca, a venture capital investor who’s backed companies like Twitter and Uber, John Macfarlane, the founder of Sonos, and Chamath Palihapitiya, a former Facebook executive and venture capital investor.
Overall, Warren raised more than $19 million over the fundraising period, about two-thirds of which came from people who gave her less than $200. Her numbers were especially strong considering she’s vowed not to hold large-dollar fundraisers for her campaign, instead relying on online donors to send her a few dollars at a time.
Google is pushing back against Peter Thiel’s insinuation that the company is doing business with China’s military after President Donald Trump tweeted Tuesday that his administration will “take a look.”
Thiel, the tech industry’s most high-profile Trump supporter, questioned Google’s loyalty to the United States during a speech Sunday at the National Conservatism Conference in Washington, D.C. He reportedly said he thought the CIA and the FBI should investigate Google’s ties to China after the company’s reported plans to operate a search engine there again, plus Google letting lapse an artificial-intelligence contract with the Pentagon after its employees raised ethical concerns. He offered no evidence about what he said were “questions that should be asked” of Google, according to news reports.
“As we have said before, we do not work with the Chinese military,” a Google spokeswoman said Tuesday. “We are working with the U.S. government, including the Department of Defense, in many areas including cybersecurity, recruiting and healthcare.”
Trump’s statement that his administration would look into Thiel’s claims came after his National Economic Council director, Larry Kudlow, said on television that he didn’t understand where Thiel, a billionaire investor who sits on the board of main Google rival Facebook, was coming from.
“I have not spoken with Peter Thiel about this,” Kudlow said on Fox Business Network on Monday. “Not sure where he’s going, what he’s pointing to. I meet with the Google CEO on a regular basis, I think they’re working for our country, not China.” He added that “it’s very fashionable to pick on big tech companies” and that he’d have to hear what Thiel has to say about it.
But Kudlow’s boss tweeted this morning about Thiel: “A great and brilliant guy who knows this subject better than anyone!”