Amazon Google Money Factoids

October 29, 2017

I noted the financial results of Amazon and Google. Amazon reported third quarter sales of $43 billion. Google tallied revenues of $27.7 billion. Amazon has multiple revenue streams; Google is making Steve Ballmer’s one-trick pony comment hold true. Will Google close the revenue gap? Will Amazon stumble?

Stephen E Arnold, October 29, 2017

Palantir Technologies: Valuation Doubts?

October 18, 2017

i read “Palantir Will Struggle to Hold On to $20 Billion Valuation, Study Says.” Interesting stuff because beating up on hapless Silicon Valley companies is becoming a mini-trend. Facebook is in the dog house because it sells ads. Google is in the kennel because Europe finds its business practices less than Euro-cool. Twitter. Poor Twitter. Its part time boss is going to improve controls on the Wild West of short messages.

Now it is Palantir, the software company which offers an alternative to the IBM Analyst Notebook system. I thought Palantir was in the cat bird seat to provide technology that would deliver certain functionality to various US government agencies, financial institutions, and other organizations wanting to make sense of data.

I learned from the Bloomberg write up:

If Palantir Technologies Inc. pursues plans for a public offering and follows through by 2019, it will need to rein in spending and woo corporate customers just to be able to hang on to a $20 billion valuation it was awarded two years ago, according to a new study. It could also be worth a lot less.

Bloomberg cites a “study” which reveals that Palantir technology needs some set up and configuration before the users can make sense of digital information processed by the system.

This apparently comes as a surprise to Bloomberg and the SharesPost research team.

The reality of next generation information access systems is different from an iPhone or Android app one downloads and uses immediately. I know this is a surprise to many “experts,” but next generation information access systems are complicated. I explain why in my 2015 CyberOSINT: Next Generation Information Access Systems.

What’s interesting is that instead of putting the Palantir systems in a meaningful context, the report and apparently Bloomberg want to make another Silicon Valley outfit look like a bent penny.

Valuation is in the eye of the beholder and the Excels generated by whiz kids who want to buy a new Porsche.

Bloomberg quotes the report as a way to wrap up the news story with a stomp on Palantir’s foot; to wit:

Palantir “is currently valued much higher than its peers in the big data and analytics space,” Kulkarni wrote, adding that he believes Palantir will maintain the rich valuation if it keeps adding corporate clients and expedites cost cutting. He wrote that Palantir remains an attractive acquisition target – Oracle weighed the option last year but demurred – and estimated Palantir’s low-end value in 2019 at $13.8 billion.

Is there another view of Palantir? Guess not.

Stephen E Arnold, October 18, 2017

IBM: A Roll Downhill?

October 18, 2017

I read “IBM Reports Marginal Dip in Quarterly Revenue.” I think the headline qualifies as politically correct information. I don’t have the energy to point out that Big Blue is making some stakeholders blue. I highlighted this passage from the Reuters’ news story:

IBM’s revenue has declined for nearly six years as the company continues to exit some legacy businesses, while bolstering its cloud services.

Yep, six years. No, I don’t want to ask Watson anything.

Stephen E Arnold, October 18, 2017

Big Data and Big Money Are on a Collision Course

October 16, 2017

A recent Forbes article has started us thinking about the similarities between long-haul truckers and Wall Street traders. Really! The editorial penned by JP Morgan, “Informing Investment Decisions Using Machine Learning and Artificial Intelligence,” showcases the many ways in which investing is about to be overrun with big data machines. Depending on your stance, it is either thrilling or frightening.

The story claims:

Big data and machine learning have the potential to profoundly change the investment landscape. As the quantity and the access to data available have grown, many investors continue to evaluate how they can leverage data analysis to make more informed investment decisions. Investment managers who are willing to learn and to adopt new technologies will likely have an edge.

Sounds an awful lot like the news we have been reading recently about how almost two million truck drivers could be out of work in the next decade thanks to self-driving cars. If you have money in trucking, the amount saved is amazing, but if that’s how you make your living things have suddenly become chilly. Sounds like the future of Wall Street, according to this story.

It continues:

Big data and machine learning strategies are already eroding some of the advantage of fundamental analysts, equity long-short managers and macro investors, and systematic strategies will increasingly adopt machine learning tools and methods.

If you ask us, it’s not a matter of if but when. Nobody wants to lose their job due to efficiency, but it’s pretty much impossible to stop. Money talks and saving money talks loudest to companies and business owners, like investment firms.

Patrick Roland, October 16, 2017

Palantir Settlement Makes Good Business Sense

October 11, 2017

Palantir claims it is focusing on work, not admitting its guilt over a labor dispute in a recent settlement. This is creating a divide in the industry about what it exactly does mean. We first learned of the $1.66 million settlement in How To Zone’s story, “Palantir Settles Discrimination Complaint with U.S. Labor Agency.”

How did we get here? According to the story:

The Labor Department said in an administrative complaint last year that it conducted a review of Palantir’s hiring process beginning in 2010. The agency alleged that the company’s reliance on employee referrals resulted in bias against Asians. Contracts worth more than $370 million, including with the U.S. Defense Department, Treasury Department and other federal agencies, were in jeopardy if the Labor Department had found Palantir guilty of discrimination.

Serious accusations. But this settlement might not signal what you think it does. Palantir said in a statement:

We settled this matter, without any admission of liability, in order to focus on our work.

This might be the smartest action on their behalf. Consider what happened to SalesForce when they got wrapped up in a legal battle earlier this year. It not only slowed down their sales, but some experts feel the suit may have altered enterprise search for good.

Something tells us Palantir, with its rich government contracts, wants to simply put this behind them and not get caught in a legal web.

Patrick Roland, October 11, 2017

France, Germany, Italy, and Spain: Go Where the Money Is

September 11, 2017

If you are desperate and need money, what do you do? Do you rob senior citizens at money machines? Do you do some MBA fancy math and craft a Madoff? Do you get a job at KFC? Forget that last option.

The answer to the question is tax Amazon, Facebook, and Google if you are a bureaucrat laboring in France, Germany, Italy, and Spain. Local tax revenues don’t pull the wagon. Creating conditions for high value wealth creation is too much work. If I understand “France, Germany, Italy, Spain Seek Tax on Digital Giants’ Revenues,” do the bank robber’s play: Go where the money is.

The real news outfit Reuters states:

France, Germany, Italy and Spain want digital multinationals like Amazon and Google to be taxed in Europe based on their revenues, rather than only profits as now, their finance ministers said in a joint letter.

Group think is wonderfully reassuring, particularly when there is not mechanism to determine what should be taxed by a national authority. Just tax gross revenue is a nifty way to collect money using the “close enough for horse shoes” approach.

Worth monitoring because other countries will be and then deciding how to tap into the Amazon, Facebook, and Google money rivers.

Stephen E Arnold, September 11, 2017

PayPal and eBay Used to Smuggle Funds, According to FBI

September 4, 2017

Online is an exciting place. Now, eBay and PayPal appear to have unwittingly hosted the transfer of terrorist funding, we learn from an article at The Next Web titled, “FBI Says ISIS Smuggled Funds to US Using eBay and PayPal.” Citing reporting by The Wall Street Journal, writer Rachel Kaser reveals:

An FBI affidavit alleges that the Islamic State used everyone’s favorite digital auction house to transfer cash to one of its US-based agents. The agent was disguising himself as a printer salesman — he’d pretend to sell a printer, only to receive payment from IS via eBay and PayPal. Supposedly, it was all part of a network operated by the late Siful Sujan, who was at one point a director of ISIS’s computer operations. The FBI document claims he’s just one of a network of agents stretching from the UK to Bangladesh. It doesn’t say whether they all used eBay to fund their schemes. The suspect in this case apparently used the money he received from the printer sales to buy a laptop, a cellphone, and a VPN.

An eBay spokesperson emphasized their company’s “zero tolerance” for criminal activity on their platform. The company is cooperating with authorities, and the alleged transferor of terrorist funds is awaiting trial.

Cynthia Murrell, September 4, 2017

 

 

The Tech Unicorn Ploy

August 28, 2017

This should not come as much of a surprise— Business Insider reports, “Nearly Half of Tech ‘Unicorns’ Rely on Tricky Math to Land Imaginary Valuations.” So dubbed because they were once rare, “unicorn” startups are ones that have achieved valuations of at least a billion dollars. That is “billion” with a “b.” According to a pair of business professors (from the UBC Sauder School of Business and the Stanford  Graduate School of Business), there are now more than 200 such “rare” prospects globally. Why the apparent boom in unicorn birth rates? Citing a recent study put out by the above-mentioned professors, reporter Alex Morrell writes:

Many of [these startups] are using creative financing maneuvers to conjure imaginary valuation figures that don’t hold up to scrutiny, according to the UBC/GSB study, which examined 116 unicorns. It turns out, when you adjust the valuations to account for guarantees provided to preferred shareholders that dilute the value of common shares, nearly half of unicorns lose their coveted $1 billion status.

The article links to an interview with Will Gornall, the professor from UBC Sauder, that explains how he and co-researcher Ilya Strebulaev re-evaluated purported unicorns to discount the influence of such preferred-shareholder guarantees. They found nearly half sported fake horns, with 11% having been valued at more than twice their fair values. The article continues:

Here’s how it works: In later funding rounds, startups will negotiate a higher share price, but as part of the bargain they guarantee their investors certain protections — such as earning a minimum return on their money or guaranteeing they’ll be paid out in full before all other shareholders. ‘Specifically, we found that 53 per cent of unicorns gave their most recent investors either a return guarantee in IPO (14%), the ability to block IPOs that did not return most of their investment (20%), seniority over all other investors (31%), or other important terms,’ Gornall said. Even though this sort of thing has become normal, valuations haven’t caught up to the fact that providing additional protections to senior shareholders lessens the value of common shareholders. Treating the shares equally can significantly inflate the overall value of the company.

Overvaluation can, of course, help a startup attract funding, talent, and customers. For employees, however, such tactics can end up devaluing their compensation packages. Both workers and investors should be wary of over-valuation trickery.

Cynthia Murrell, August 28, 2017

Online Ad Fraud? You Must Be Joking

July 25, 2017

Years ago a New York conference organizer who specialized in early morning breakfast meetings asked me, “Will you do an exposé about online advertising fraud?” My response to this question was, “No.”

Why did I drag my feet? Three reasons:

In the research for my first Google book “The Google Legacy,” which is now out of print but I sell pre-publication versions 13 years after I wrote it, I realized that online ads were easy to manipulate. Here’s one example. Write a script which visits a page and clicks on an ad. The poor advertiser’s account can be consumed in a nonce. No one paid much attention to this “feature,” and I had zero desire to get involved with ad types. Who wanted hassles when I was still working? Not me.

Second, explaining the who, what, why, and how involved imparting technical information to decidedly non tech type people. Sorry, that’s not for me. Leave that work to those who have the patience and personality to deal with jazzed Madison Avenue types.

Third, none of my contacts wanted to reveal that click fraud was a problem. The approach was similar to the memorable statement, “Android fragmentation? There’s no Android fragmentation.” Yeah, right.

Now there are some brave souls stepping forward in what may become a darned interesting interpersonal, intercompany, and legal battle. This possible dust up is one which I will watch far from the fray.,

To get a sense of what’s about the become either “real” or “fake” news, navigate to “Online Ad Fraud Is a Widespread Problem, Google and Other Big Ad Platforms Admit.” Now the “big” online ad platforms boil down to a two horse race. I suppose the smaller folks like the vendors of annoying weird links, annoying pop ups, and looped videos with raucous sound tracks may be keeping some secrets under a rock, there are people who just want to see those online ad accounts depleted by a software robot. Click, click, click, and the pre paid ad accounts goes down, down, down.

The write up points out:

Google-run tests found evidence of fake ad spaces sold on Google and Oath-owned programmatic ad platforms, as well as well as on PubMatic and AppNexus.

The point, I think, is that the vendors of online ads want to “prove” and “remove doubt” that online ads work. One should keep in mind that almost everything online is an ad. Amazon, for example, is one giant Sears catalog with manufacturers and sellers desperate for positive reviews and placement on the first page of Amazon’s result pages. Do you every look at page 14 when searching for cufflinks which hide USB drives?

The write up focuses on spoofing, offering:

The method is used to trick ad buyers into purchasing advertising space on websites that don’t exist, or that the sellers don’t have access to. Because of the speed and volume of advertising online when bought programmatically, it’s virtually impossible to check if an ad ran where sellers say it was supposed to run.

As long ago as 2003, i noticed that there are many ways and many reasons for fiddling with online ads.

Perhaps Facebook and Google, among others, will share their knowledge, concerns, and ideas. The thrill of losing ad revenue should make for some interesting PR and, possibly, legal activity.

Stephen E Arnold, July 25, 2017

Google: Making Search Better. But What Does Better Mean?

July 17, 2017

I read a darned interesting (no, not remarkable, just interesting) article called “The Google Exec in Charge of Designing Search: ‘There’s Always This Internal Debate about How Much Functionality Should We Add‘”. At first, I thought this was an Onion write up, but I was wrong. The article is a serious expression of the “real” Google. Now the “old” and now “unreal” Google is not applicable. That’s why I thought the write up was like the content I present in HonkinNews.

Here are the points I noted:

First, the write up points out that Google’s core business is its search engine. This surprised me because I thought the firm’s core business was selling ads. I know the “search” system is the honey which attracts the bees (95 percent or so in Europe, for example), but the “search” system is not about finding relevant and objective information. Sure, that happens for some queries, but for most queries, the searches are easy to cache and deliver with matching ads. Examples range from the weather to the latest in the dust ups and make ups between pop stars and starlets.

Second, the source of the write up is an “expert” in “design for search.” I am not sure what “design” means. I am old fashioned and prefer the trusty calculations of precision and recall, the stale bread of Boolean queries, and unfiltered content.

image

I prefer to do my own censoring, thank you. I noted this statement:

The whole goal is to try to organize information and deliver it to you. That’s the problem we’re trying to solve. The design has to accommodate multiple people, multiple expectations, and multiple situations. When you’re looking for whatever answer you want, how do we give you the right answer in a way that you’re like ‘oh yeah, that thing?

No, the “whole goal” consists of sub goals designed to deliver the following, based on my research for the three books in my Google Trilogy (alas, no longer in print but I can provide pre publication copies for those who want to buy a set):

  1. Minimize computational demands on the query matching system via caching frequent queries, partitioning indexes to get around the federation of disparate content like Google Scholar, videos indexed in Google Video, and the gusher of stuff emanating from Google Blogs
  2. With clicks on traditional desktops falling and small screen video queries from smart software or humans (imagine!), Google has to find a way to make ads out of everything. Thus, the need to keep revenue ticking upwards while driving costs down becomes a fairly significant sub goal. Some, like myself, say, “Hey, that’s the actual goal.” Others who enjoy watching billions flood into solving death, keeping Glass alive, and building a new puffy office part would disagree. That’s okay. I think I am right.
  3. Maintain the PR and marketing offensive that makes Google the innovation leader in finding information. The methods involve generating mumbo jumbo that disconnects precision and recall from what Google generates: Results that are often off point or some type of content marketing. (I know content marketing works because the Wall Street Journal told me it does. I assume that’s why Google pays some people to write really rah rah articles about Google. As I said in this week’s HonkinNews, “One must be able to tell the difference between a saint who helps people and a billionaire who rides flying car things.)

The write up identifies the experience “things” which Google is incorporating into its search results. Some of these are content objects like tweets. Others are pages which look like mini reports which cobble together “facts” to make it easy for a person to “know” the answer to the question he, she, or a software module had not yet asked. (Predictive results are part of the pervasive search movement in which Google wants to be a player who gets the biggest payday and the most media love.)

I noted this statement which is worthy of one of the New Age types I bumped into when I lived in Berkeley:

When asked if there are any similarities between the design for Search and the design for Google’s new offices in Mountain View and London, Ouilhet pointed to the fact that both are becoming “more open and more flexible.” He said they were also both becoming more “inclusive between people that belong to Google and people that don’t belong to Google.”

Net net: Google has yet to find Act 2 to its Yahoo/Overture/GoTo inspired business model. Setting up more VC operations, incubators, and buying companies in easy to reach places like Bengaluru, Karnataka, and smart software offices in cheery Edmonton, Alberta are not yet delivering on Act 2. If the European Union has anything to say about Google’s search business, we will have to wait for more action from that Google watcher Margrethe Vestager.

Stephen E Arnold, July 17, 2017

PS. For information about the Google Trilogy, write benkent2020 at yahoo dot com and put Google Trilogy in the Subject field.

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