On this edition of the Futurum Tech Podcast, we dive deep into the topic of data privacy, data use and data abuse to answer the question, what happens to a brand when they lose the ability to create digital trust with their consumers? Plus, we’ll be taking a look at Tesla and the issue they have with neural networks. We’ll also be taking a look at Uber’s upcoming IPO and get a latest update on Google. They’re being fined in the EU yet again. Our tech bite segment tackles AT&T’s 5GE because it’s not really 5GE and we’ll tackle the issue of Boeing. What’s going on with their software and when should they actually be let back in the skies? All this and more on this edition of the Futurum Tech Podcast.
Our Main Dive
Diving deep into the topic of Digital Trust, looking at data privacy, data use, and data abuse to answer the question “what happens to a brand’s narrative when they lose the ability to create digital trust with their consumers and is there a Digital Trust Continuum that defines user & partner adoption?”
Our Fast Five
We dig into the week’s interesting and noteworthy news:
- Tesla’s neural networks have a deep learning problem
- Fighting back against hidden video cameras in hotel rooms
- Uber heads to NYSE while Lyft goes to NASDAQ for over-hyped IPOs
- EU regulators fined Google to find a $1.7B cash infusion
- Google’s new gaming platform targets Microsoft, Nintendo & Sony (and kids everywhere)
AT&T’s 5Ge sure doesn’t perform as 5G should. In fact, recent tests show it might actually be slower than 4G LTE offerings from Verizon and T-Mobile. Let’s call this out for the vaporware it is… tsk-tsk-tsk…
Crystal Ball: Future-um Predictions and Guesses
When will, or should, the Boeing 737 Max 8 be let back in the air? Hint: Not any time soon.
Daniel Newman: Welcome to this week’s edition of FTP, Futurum Tech Podcast. I’m Daniel Newman, your host today joined by my always esteemed colleagues and senior analyst in residence at Futurum Fred McClimans and Olivier Blanchard. Good afternoon, gentleman. How are we doing today?
Olivier Blanchard: Doing pretty good.
Fred McClimans: Doing great.
Daniel Newman: That’s always the awkward part of the show when you’re like stop ask … You know what? Going forward, I’m going to stop asking you guys because I actually really don’t care. You’re going to be doing good because this show is going to be awesome. Now, jumping straight ahead. Before we get into this week’s show which is going to be pretty cool. We’re going to talk about digital trust. We got some really interesting fast buys ahead of us. We have a little bone to pick with AT&T and then we’re going to wrap this thing up talking a little bit about Boeing, but before I do all of that I got to give the little spiel and say in case you wanted to use our show as a decision maker for any stock purposes or investment purposes, don’t, because that’s not why we’re here. This show is for entertainment purposes only. So, enjoy it, learn from it but do not invest because of it. All right.
Big topic today, Facebook. This isn’t the dive itself, but yet again, crapping down their leg. Hundreds of millions of people’s passwords kept in plain text files, mind blown. This company cannot be trusted anymore. They cannot be trusted to do things right and they cannot be trusted to do the right things. However, billions, with a B, of people every month still going to Facebook including us, not Fred, still use the platform regularly including Olivier, not Fred or I, and use it to share messages, to communicate, to build relationships, to tell stories, to share our ideas and basically provide a clear path to our data and what’s important to us to the world. Now, this particular incident is only one of more than 21 incidents, breaches and failures that Facebook has had since 2018 and so what’s one more, but it got me thinking. So, over the last month guys, I’ll just frame this for you. I’ve had this thought process in my mind and I call it the digital trust continuum.
I fundamentally believe that in the coming years, I don’t know if it’s going to be this year or in the next two or three that consumer preference is going to start weighing much more heavily based upon companies handling of data. I’m not just talking about data for marketing purposes. I’m talking about data transparency, the way we secure data, the way we manage data, the way we explain our data usage and the way we secure our infrastructure. I believe there’s these two camps right now. There’s data abusers and there’s data protectors. In the tech industry, you have the thing of companies, your Facebooks, your Amazons, your Netflix which is a tech company, you have Google. We’re really outspokenly known as your data abusers.
Then you have your traditional technology companies. Chuck Robbins from Cisco over the last … a few years has been very outspoken about privacy and protection of data. You’ve had Satya Nadella at Microsoft also very outspoken about data and that everybody has the right to privacy in their own data. So, with Facebook falling on their face and actually starting to see some numbers in decline for the first time in many, many moons, actually first time really since they launched, it brought to my attention, there is this continuum, is it real? Meaning, am I just sensing this as someone who’s living every day in the tech space? Are people going to start weighing decisions? Are companies going to start saying, “I don’t want to use the Amazon AWS cloud because I can work with Microsoft, a company whose much more outspoken about customer data privacy than say Amazon as a whole.”?
Again, this is an important caveat because AWS has very strict security and data privacy policies for their cloud services, but when you’re buying books, movies, underwear, diapers on Amazon, they use data completely differently. How was that going to bleed together? So, guys, I want to kick over the first question to you to start. One was, what do you think about this whole concept of a continuum right now? Is this a real thing? For people that are outside of the tech space, are they paying any attention to this or is this just something maybe us bow our heads living in the tech world are starting to take note of now and it’s not really impacting consumers at all? Olivier, why don’t you jump in first.
Olivier Blanchard: Oh, well, I was hoping to hear Fred’s take on it because it might be a little bit different from ours. From power station we’ve had before the show, one thing I would say is that I think we’ve trained ourselves to complain but accept the fact that we have no privacy or data privacy rights right now and that these companies are going to either deliberately abuse their power with regards to that or negligently put us in situations where our data becomes vulnerable to hacks and to access by third parties. I would say that because of that, because we’ve become accustomed to Facebook and Twitter and for just data breaches to happen regardless, there’s not a lot of real will, political will and cultural will to make that change.
However, I think that begins to change as homes becomes smart, as cameras, microphones, speakers, doorbells, thermostats that are connected to the internet, that are connected to data centers, that are actually collecting data about us become embed in the home, I think that the virtual privacy of something that happens online is more abstract than the physical privacy of being secure in your own home or in a hotel room which is something that we’re going to talk about later in the show. I think that’s where the tipping point happens when people don’t feel like they’re even secure in their own homes anymore. I think that’s when they’ll really push for more data and for more digital privacy period from the physical space into the virtual space. That’s when the technology companies will have to come up with better solutions.
Daniel Newman: You could argue that that’s already happening. We’ve seen scandals this year with Nest, with Ring, both Google company. At this point, engineers watching Ring doorbell cameras and people unwilling and unknowing. Microphones embedded in the Nest that somehow got left out in the spec manual all together. Totally mind blowing. Definitely a damage to the trust ingredients within that company at this point. Fred, you’ve spent a decent amount of time actually on this topic in your former life before you were a Futurum superhero. You really did spend some time in the research mode doing this, doing indexes around digital trust. What do you think is going on here? Am I on to something? Is this just one more black mark that people are going to forget in a week just like so many other things in this age? What’s your take?
Fred McClimans: Yes. So, this whole concept the idea of a trust continuum or the idea of a brand having a particular level of digital trust with its consumers, with its partners is very real. We’ve seen it for a number of years. You can almost think of this as an extension of a brand narrative or a corporate narrative around a particular company. Over time, their actions have impact in the marketplace. They have impact with consumers. As we see with companies that continue to put out inferior product or have significant lapses in their quality, in their deliverability, their support capabilities or even the things they say and do in advertising or in perhaps donations to political affiliations real or perceived, those detract from the level of trust that an individual has with that particular brand. When it comes to data, that’s really no different. We can almost in fact from a data perspective break it down.
We can look at data breaches where somebody has failed to secure data properly. We can look at data misuse where somebody has allowed people within their employment or their partners to, Facebook being a great example here, just abuse user privacy. Then there’s that sort of overall, “Do you really trust this company to do the right thing for you with your data?” A good example there would be somebody like 23andMe that gathers all this genetic information about people and then said, “Hey, look, it’s secure. Don’t worry about it. We’re not going to share it. Oh, by the way, we’re being invested in by this company over here that now has full access to your data there.”
So, it’s real but it’s a challenging thing because as Olivier pointed out with his complain but accept concept there, we see time and time again certain brand, certain companies, they continue to let us down and people simply say, “Well, look, my data is already out there. I don’t really care. I just want the product or I want the service with that.” So, it’s a bit of a challenge, but it’s definitely real and I think that it’s something that companies and consumers should start paying a lot more attention to.
Daniel Newman: I would definitely agree with that. I think some of your examples are really convincing Fred, because you think about that, right? We ship off our DNA and you go, “What does this company really using this data for?” We’re in the middle of doing some research with a client right now on new monetization with data and kind of the holy grail for businesses really being the ability to monetize data in new ways, creating entirely new business models with it. Well, that’s going to raise some questions, because as data transfers, it’s not the transferability under laws does not truly let customer data in its purest form to pass between clouds or between companies seamlessly.
So, how do you get that opt in? So, does it become more manipulation meaning where the terms of privacy when someone opts in gives them flexibility for the company to use the data in much more abusive ways in order to give them the ability to build that [inaudible] or do they try to actually communicate that as a value proposition which of course would be a better way to approach it but would also be riskier because people aren’t going to opt in to that.
They’re not going to be as … like, “Oh, you’re going to sell my data 100 more time.” Then you have those that are packaging and anonymizing the data, right? So, we’re going to take all this data from a certain geography that we can actually zoom pretty close into and we’ll anonymize it. Again, as intelligence grows greater and associations between data and its origin of creation at the edge become closer, what stopped the backwards compatibility of anonymized data becoming unanonymized.
Fred McClimans: Yeah. That’s a really big thing especially in the area of medical testing and research where there are very strict requirements for data masking and data anonymization. Even last week we talked about Foursquare and their ability to anonymize cellphone advertising IDs but literally to track everybody that happens to be in a given location. Well, if you have that and you have access to other data, you can figure out who they are pretty damn easily.
Daniel Newman: So, let me ask you guys a question because one of my I guess you could call it hypothesis is that some of the traditional tech companies have a significant opportunity to take advantage of this kind of tepid market more or less of uncertainty. You have all these uncertainty around Facebook, around Google, around Amazon, around their data practices, around their invasion in your home and then you got companies like Cisco who have built products in the past that are somewhat similar to for communications, for collaborations, for video. We all remember … what was the Cisco that had the camera that was really popular for a while and then they shut it down?
Fred McClimans: The flip.
Daniel Newman: The flip camera which was like the pre mobile phone age. I can’t believe I couldn’t remember that. That was pretty consumerized type of technology but they’re really starting to be more outspoken. Microsoft is doing a lot with their Kinect products. Building sensors and tools that can see and hear and be the eyes and ears. That could easily be modified and adapted with the SDK to turn those into products in the home. Those companies have a renaissance to be more consumer facing. Is there an opportunity right now to say, “Look, we haven’t abused you in the last 10 years?”
Fred McClimans: I like that qualifier there.
Daniel Newman: Well, everybody had their day and the point is we have a pretty good track record of protecting your data. We have enterprise level infrastructure that’s going in to banks, that’s going in to healthcare, that’s going into government and of course, so do the others to some extent, but they can really tell a story of we have not built products. We have not monetized data the way these other companies have. We’re going to build the same stuff but we’re going to be more sensitive and we’re going to take care of your … could these companies really get on that wave and ride that in? Olivier, do you think a company like Cisco, Dell, Microsoft, IBM that has much more traditional data practices and you could say more rigorous data protection across their entire organizations than say Amazon, Google or Facebook, could they win market share back and become more interesting at the consumer level if they came to market with products and can that story be compelling not only the enterprise level but the whole market level?
I don’t want to say no because anything is possible. I just find it unlikely. However, I think that we’re thinking of the problem in terms of what the problem looks like today. I don’t think we’re thinking of the problem in terms of what it will look like in 10 years. So, I think that the way companies that abuse data monetize data is to abuse data, right?
The reason that we’re not paying huge amounts of money for these services is because they’re basically paying themselves by collecting our data and monetizing that as opposed to a Cisco where you’re going to pay upfront for the service or the equipment or a combination of both and you’re going to pay for that security because they don’t use the data. So, we’re making a choice. Like you want it free and have low data security or do you want to pay for it and have high levels of it. It brings up … this isn’t a political sub thread but it reminded me of this semi scandal right now around Jared Kushner, senior White House advisor, using WhatsApp to allegedly conduct sensitive government business.
It seems to me that within this ecosystem of Twitter, Facebook, and then the WhatsApp type of applications of the world and then the more robust like Cisco solutions, it’s like the amateur consumer level all the way up to the MIL-SPEC like really high end military grade type technologies that are approved by the department of defense that are really secure and that are harder to break into. I think that even us consumers that we’re beginning to see that ecosystem fragment that way with the low hanging fruit because Facebook with the middle ground being the app space like WebEx teams which is a Cisco product, like Telegram, like Signal, apps like those that are … where the messaging isn’t only encrypted, it also disappears and then like real hard core solutions that are unbreakable. I don’t think the unbreakable like the Cisco of the world can take over or WhatsApp or Facebook. I don’t see that happening.
Fred McClimans: Well, you’re really talking about different market segments there and different applications.
Daniel Newman: Well, I don’t know that they’re market segments. I think they’re used case segments. I think that one person like me and you will potentially use all three of those layers to do different things. That’s how I see it. So, I think that like very high ends non consumer applications can penetrate the consumer market by virtue the fact that they are secure and if you have secure communications, whether you’re married and its with your boyfriend or your girlfriend or you’re doing stuff for work or you’re a contractor or whatever, you’re going to use maybe non consumer type products and services whereas for your everyday posting of pictures of your lunch, you don’t need to use that. So, I think that consumers are going to start segmenting and using all of those layers.
Olivier Blanchard: So, what about the opportunity for fast followers though to build on the technology stacks that these other companies are offering? Like I said, I use Microsoft Kinect as an example. Those are ears and eyes and sensors for everything from building a smart city to building a smart doorbell camera. What I’m saying is, will people start to say, “You know what? I want the smart doorbell camera but I’d rather have the one that’s built on the back of a company we trust using the technology.” It could be a different company. I just wonder if preference will start to move away. One other point I want to add is it’s not about the end of utilizing data to create great experiences.
In fact, I’m one of the biggest proponents of that. It’s the end of abusing people’s understanding of how data is used. Creating a more understandable highway for getting on and off the ramp. Things like blockchain can potentially solve this in the long run, but how do we let somebody opt in to an experience and then opt back out of it? How do companies make that very simple? It seems very easy to opt into a list, into an experience and it’s nearly impossible to get off of it. So, what I’m saying is that Facebook and a Google and Amazon could reinvent their image by not continuing to be so manipulative by retelling the story. So, doesn’t only have to come down to those enterprise companies with that maybe more rigorous protection practices, it also comes back to companies that are in that abuser profile right now say, “Hey, you know what? We can start to fix it.”
Like I said, Facebook I think is full of crap. Everything they’ve said or the last 22 scandals has been BS but that doesn’t mean Amazon couldn’t change and that doesn’t mean Google couldn’t change. That doesn’t mean others couldn’t change. So, it doesn’t have to be one way or the other. It just has to be, is there an actual modality to getting towards more transparency where customers know what they’re opting into and then know how to opt back out of it in a way that is truly simple like pressing the easy button? Like single setting on your device or in an application.
Right now like I said, I think they trap you in their systems. They use you. Your data goes thousands more directions than you’ll ever know and then once you’re in the system, there’s no way back out off.
Daniel Newman: I think Fred has something to say but I want to throw this in before I forget because I’ve seen your moments during the show. There’s three ways that you can do that. On the one hand, if your company that’s on the high end of security, you could partner with consumer services company and basically have Nest partnering with Cisco with regard to technology and create products that way. So, you could have these hybrid merge services that make sense.
Another way of doing that is to have a company like Cisco that has no place yet in these consumer type products or applications creating lines not necessarily in partnership like I just said but actually creating sublines. So, this is … here’s what we usually offer enterprise clients. We’re creating lower tiered services for consumer. So, that’s another approach to do that and basically bank on that high security like really solid black box reputation that they already have and working their way down into consumer markets.
Then the third one is for companies like a Facebook or an Amazon or a Microsoft or whatever to offer premium services. Basically say, “We are really confident with our security for these existing services but we’re going to create a red band version of this like a premium version of this that adds even more security to it and you’re going to pay us premium for that because it’s slightly higher quality.” Those companies already have the captured market. What they’re missing is that product.
So, I think that because you can arrive at the same solution from those three different angles, it’s entirely possible that we’ll start to see the ecosystem shift and it may look like a combined version of those three mechanisms. Okay, Fred. I’m sorry. You’re on mute by the way.
Olivier Blanchard: Yeah and by the way, we’ve got to wrap this segment up, Fred. So, last thought.
Fred McClimans: I think the idea is that we’re all putting out there. I think they’re all very good ideas. It’s important to recognize though that we’re talking about just like you know a continuum of trust or trust continuum, sort of this continuum of infrastructure, building up. You have security and encryption, data integrity, data monitoring, breach detection and so forth that goes into the infrastructure and that’s something that’s very important to the brands. They want that technology in their organization so they can appeal to people and say, “We are more secure.”
Then you also have the brand themselves where they’re consumer facing technologies and their policies that can be very, very radically different here. Each one of those demands a different type of trust, but we know that at the end of the day, trust does have an impact. Look at Ashley Madison, Toast. That’s a very unique specialized case but T-Mobile a good example. They had a big hack. They lost a lot of users, but they’ve regained the users. So, this is something that I’m hoping we can really dive into this in the trust index later this year and really figure out, does Apple have an edge? Are they more trusted than somebody else and why?
Daniel Newman: Yeah. The giving of the god mode to Uber definitely put them high up on my confidence list. So, I’ll get them under the fast five. Fred, I’m going to let you kick off this week. Tell me what’s going on in South Korea speaking of privacy and trust.
Fred McClimans: Yeah. So, this is a really bizarre type of situation here. It turns out that approximately 1,600 plus hotel guests were filmed without their knowledge while visiting hotel rooms. Hotel room, a place that usually think of as sort of an extension of your home. It’s private. It’s secure but a group of individuals managed to plant video cameras inside these rooms and they actually set up a profit model here where they were charging people to watch the live feeds coming off these rooms. So, that’s one part of it. The real interesting part is that we are now to the point where there are a flood of apps hitting the market saying “If you think your hotel room is bugged, buy our app and our app will allow you in the hotel room to go around the room with your phone and detect certain signals that cameras might be giving off of their transmitting video feeds somewhere.” I mean, this is just such a bizarre case and one of those things where I really hope that cameras in hotel rooms are not the new norm, but what we’re seeing here is cameras in hotel rooms are at least norm enough that there’s a thriving app market taking place. So, something to watch and something to just shake my head at.
Daniel Newman: Well, really it’s more of like an am I bugged but the … wow, does that fit well off our main dive segment?
Fred McClimans: It does.
Daniel Newman: Olivier, you’re feeling googly today. You have two bits of Google news. I’ll let you pick which one you want to share first.
Olivier Blanchard: Yeah. Both of my fast five today are Google which is totally an accident. So, one is good news and bad news. Which one do you want to go with first: the good news or the bad news?
Daniel Newman: Bad news first. Let’s finish off with-
Olivier Blanchard: Bad news first. Okay. So, bad news for Google anyway. Google was just fined by the EU again, third time in two years, and I should say it’s the third antitrust penalty in two years in Europe for Google. This time 1.5 billion euros Google was found to have been abusing its dominant position to give its AdSense platform an advantage over competitors. So, Google is making changes and has promised to give more visibility to their advertisers in its program.
I should say however that things are looking on the up and up for Google in the EU even though they keep getting fined at a pretty regular interval. This was the smallest of the three. The previous two were somewhere along the lines of 4.5 billion and then the other one was like 2.5 billion. This was only 1.5 billion. So, at this rate, the next fine should only be about 750 million euros and hopefully it will keep going down that way.
Daniel Newman: Holy wowzers.
Olivier Blanchard: Yeah. So, some changes with Google’s business model in Europe.
Daniel Newman: All right. So, mine’s going to be on Uber. Some big news for Uber. While they keep losing billions, the founders and early investors are about to cash in big time as Uber announced their decision to go public and they’re going to do so on the New York Stock Exchange in what could amount to be one of the five biggest IPOs of all time. Though sometimes perplexes me that a company that cannot make money can raise this much money when average businesses that actually turn profits here around the US can’t even find a bank to lend them five bucks. Again, this show is not about politics or investments for that matter at least not for you, but I thought that’s really interesting, really exciting.
Concurrently, Lyft is about to list on Nasdaq, too. So, you’re about to see both of these companies come out and go public. It’ll be a big day. My gut is that there’s a chance that people get in early will make money on this and even though like I said I’ve had somewhat negative sentiment about Uber as a company, the popularity cannot be denied. It’s become one of the world’s greatest metaphors for disruption. So, all right. Let’s move on to the next one. I’m going to spin it back to you quick Olivier and let you talk about Google, too. Then, Fred you’ll take us home.
Olivier Blanchard: Yeah. Google’s good news. So, they had a big announcement earlier this week with gaming. So, Google is taking on the gaming industry with a new platform and a new console I guess called Stadia or Stadia depending what part of the world you happen to be in. Essentially, they’re flipping the model in its head. They’re saying, “We don’t need to have CDs. People don’t need to have these huge consoles. We’re basically going to host everything in the cloud and just create a gaming streaming platform, a little bit like Netflix but for gaming, where people can basically access it from anywhere and it doesn’t really matter what platform they’re on. They’ll be able to play us. As long as they have a screen, they can play our games.”
The issue with Google isn’t ability to innovate, the issue is their ability to execute. So, I have some questions about latency. I have some questions about how well this will work rather as opposed to how well they hope it will work. So, we’ll see what happens. It’s very exciting and I think it’s going to force everybody to make big changes about the way that they think about gaming.
Daniel Newman: My question mark is, is this going to be Google+ and what Google+ was to social media or is this going to truly be a third flash fort competitor because Sony and Microsoft definitely carried the weight. Nintendo has been innovative and sort of an irritant I’d say but hasn’t really developed anything for the hard core gamer the way that X-box and Sony have, but Google has the platform, has audience. To your point Olivier, I do worry about some of those same things. When you’re streaming a game and it’s real time play of a high resolution, those graphic cards, the technology required to do that, you really do wonder, “How are they going to do that without some sort of serious edge deployment or a really, really fast consistent connection.” 5G, anyone?
Olivier Blanchard: Well, you got 5G and Wi-Fi, too.
Daniel Newman: Yeah. Like I said, what percentage of the population is going to have in a short period of time? Yes, over time … and again, they don’t need to win today. They need to win over time.
Olivier Blanchard: Yeah.
Daniel Newman: Fred, talk to me about Tesla.
Fred McClimans: Tesla, yes. This is an interesting story about Tesla and the increased risk of neural networks and the way AI system learn. So, there’s a great article in Ars Technica this week about a Reddit user and a Tesla owner who noticed that as he was driving along a particular section of roadway, his Tesla would occasionally lean or veer a little bit to the left as he was getting to exit off to the right. So, you got driving down the road. There’s a lane divider that has a little bit of a median script look to it and as he would peel off to the right, the car would lean into that lane briefly and then correct. So, this was something that he noticed, made a note of it but it would correct itself every time there was a software update from Tesla. Then some period of time later, it would reoccur again. Very perplexing, very confusing. Why would Tesla’s AI system mistake this in its vision system?
Well, it turns out that the problem here is probably related to neural networks. What’s happening is every time Tesla resets the software, the neural net begins to learn again and makes this same mistake. So, there’s a bug in here somewhere. The biggest challenge here is that neural networks, the way they learn is somewhat autonomously. They scan their surroundings. They ingest all their data. We don’t really have any good insight into what the actual algorithms inside the AI system look like that are created by neural nets that learn, sort of a deep learning aspect of AI here. It’s a perplexing thing. I think this is just the beginning of challenges that we’re going to see with deep learning, potentially machine learning and the implementation of this neural technology in artificial intelligent systems.
Daniel Newman: All right. Well, I’m at least 1 percent smarter just for listening to you talk about that for the last minute and a half. Overall with Tesla, always interesting to follow what they have going on. All right. I want to jump in to what bites right now and AT&T. Wow. So, I will take a lump because I actually said AT&T was the winner in the 5G telco service providers from Mobile World Congress and I was actually basing it upon the fact that they’ve been the most clever with their 5G evolution. Well, its brought to them a lawsuit from Sprint, a significant complaint memo from the CEO of Verizon.
It hasn’t stopped AT&T from lighting up phones that are on what is truly their advanced 4G LTE network from saying 5GE on it. AT&T does this under the onus that the 5GE or as an evolution is part of a change that’s happening that isn’t a single moment that flips to 5G, but I do want to alert AT&T that a 5G network is legitimately different than an advanced LTE network. They are really, really on the boarder of pure customer manipulation or abuse. So, I’ll be outspoken. I give them credit. I’m going to slap them across the face right now.
Well, another slap across the face for them right now comes from an article I was reading on Ars Technica. They basically open signaled, did some evaluation of the 5GE network and it turns out that not only is AT&T’s 5GE network not 5G, it’s not even as fast as its competitors with both Verizon, Sprint and T-Mobile showing up as faster right now than what AT&T is marketing as their 5G evolution network. So, that was funny. Very simply it said AT&T’s network name change may well trick consumers into thinking they’re getting better service than a 4G operator but they aren’t. We already knew that 5GE has no technological advantage over LTE advanced because they are the same thing with different names, but actual speed test could reinforce that point and they did. They reinforce that 5GE is worse than 4G advanced LTE. Guys, this bites. What do you think?
Olivier Blanchard: It does.
Fred McClimans: Yeah. It bites but tell me your surprised here. The tech industry like just about any industry is full of marketing hype and promises that initially rarely meet up to initial expectations. I mean it happens now and then, but the phrase that we’ve seen over the past couple decades in the software industry was always vapor ware. Here’s a great sheet. Here’s our technology. It’s vapor because we’re hyping it, but the reality is we’ll get to that level of hype at some point. Right now we’re starting off really small, but it does everything but right now, it does just a little bit but it does everything. AT&T, yeah, they’ve been doing that for years. Definitely slap them for this especially when your service degrades kind of like some of the iOS software releases and some of the iPhones where “Hey, new iOS. Oh and by the way, we didn’t tell you but we’re really cutting the performance of your battery life and slowing your system down.”
Daniel Newman: Don’t get me started on Apple. Don’t get Olivier started on-
Fred McClimans: Well, yeah. Olivier here, I’ve teed it up for you. Go ahead. Link Apple and AT&T.
Olivier Blanchard: Well, I will. Apple and AT&T have had a long relationship. Initially in the United States, the first iPhones were only available in AT&T, right? So, maybe those cultures kind of rub off on each other and here we are.
Daniel Newman: Wow, that was a little bit of a sucker punch. I will say this is the only thing that Apple will put out that has 5G on it in the next 12 months will be an AT&T phone on the slowest advanced LTE.
So, congratulations once again Apple. Thank you AT&T for just validating our point that the Apple iPhone will not be 5G for a long time, but you all should take some pictures of that and post it online because that’s the close to 5G is they’re going to get anytime soon. I also do think though and I want to ask you this Olivier is, should AT&T potentially be held accountable? Is this an FTC … they get mad at influencers for not clearly disclosing relationships with their clients, but man, this is where I wish the FTC would spend some time, because there’s real money being spent here and I guarantee you, consumers are walking into AT&T stores thinking when they get 5GE, that they’re getting a better network than when they would get a comparable product from Verizon or T.
Olivier Blanchard: Yeah. Well, I think that’s why Sprint is suing them, right? All these companies whether it’s AT&T … I mean, I’m sorry not AT&T. Sprint, Verizon and all these carriers are investing a ton of money into infrastructure, into providing these services. You have actual like genuine 5G roll outs happening in Chicago and where Minneapolis, I think. Definitely, Chicago. It’s like two major metropolitan centers on April 11th. Real 5G networks in the United States rolling out in April in just a couple of weeks. Here you have AT&T basically appropriating this 5G branding and slapping it on phones and services and they’re not spending the same amount of money. They’re essentially implying to customers that they have the same level or a similar level of service than these other carriers who are actually really doing the work and really putting investments into it. So, I think the Sprint lawsuit is helpful. If I would like to see the FTC investigate AT&T with that, but I don’t know.
Daniel Newman: I mean, if the FTC has all this time to spend on the Qualcomm and Apple stuff, you would think that they could spend something that’s truly manipulating consumers in the market. We’re investigating the $7.50 in loss profit per phone in a depreciating market where the company has actually lost market share during the course of the investigation. That you have a company that is truly using misleading branding so much so that their biggest competitors have had to file lawsuit yet there’s no interference at all from your government entities that are supposed to be protecting consumers from this.
Olivier Blanchard: Well, I’ll add this too. One of the issues I have for the FTC going after Qualcomm on behalf of Apple is that they’re treating a contractual dispute as an antitrust issue. That wasn’t happening five years ago. I don’t know what they’re doing. A contractual dispute between Apple and Qualcomm is one thing. It’s not even an antitrust case. The FTC shouldn’t even be getting involved with it. However, to your point, the FTV probably should get involved with AT&T’s “5GE” to determine whether or not it’s deliberately misleading advertising or if it’s just perfectly legal.
Daniel Newman: Well, we’re going to move on from this, but let’s just say as Peter Griffin in Family Guy said “What grinds my gears” so in case you haven’t seen that episode, wasn’t really that good. They’re all good. They’re all okay. You just have to have a lot of cultural and historical references and not mind some really, really sideways humor.
Anyway, last segment guys. Let’s jump into the crystal ball.
It’s not been a very good couple of months for Boeing and I know we don’t typically cover companies outside of aviation but technology fuels the aeronautical aviation space a lot. Boeing now has had two crashes of their 737 MAX 8. They’ve had an executive order in the US to ground planes. Several airlines had voluntarily grounded their plane. It was their new hot product. We’ve recently found out that the company was taking safety sensors that could be directly correlated to these crashes and making them optional, so people didn’t have to buy them when they were buying the plane. They had software upgrades that were supposedly not deployed and have not been deployed somewhat due to maybe the shutdown and there’s amount of evidence that shows that they shouldn’t have ever … these planes never should have taken off in the first place.
They went back and looked at that line error like they crashed and said … and they looked at the data from the previous flight where I guess the pilot sort of was able to overcome a similar issue and land the plane. That flight never should have taken off in the first place. So, the crystal ball question is here for you guys. How long before those 737 MAX 8s are off the ground again? I’m going to give you guys a bonus question but I want you to keep it to about a minute each because you know this is the crystal ball section. Can Boeing repair their reputation from this or is this going to cause them long term damage? Fred, go first.
Fred McClimans: Well, yes. So, here we have a really interesting turn of events that actually touches on the trust continuum and digital trust that we were talking about at the beginning of the show in the main dive. You have Boeing that is facing a number of different challenges. 737 MAX is one. Leaving wrenches and trash and spare parts in planes that they’ve delivered to the Air force is another. How does that happen? I don’t know. The bigger issue here is that we’re to the point now where software has worked its way into all of our product, all of our lives whether it’s a Tesla car and the autopilot or whether it’s the control system on a Boeing jet. Everything that we buy now is software and software literally has become the fuel, the engine, the infrastructure for everything that we do. I’m sorry, but taking a system as complex as the MAX 8 and saying, “We’re just going to release a patch, a software fix.”
In my mind that doesn’t cut it. You have two events that may or may not be directly related. There may be other factors involved here. You have an airline that has been given increased self-regulatory abilities by the government saying, “Look, we’ll trust you. If you tell us it’s safe, it’s safe.” which has resulted in Boeing launching these fleet of planes and training pilots on an iPad. I’ve got some huge issues her just with the way that we are leveraging software in our products. I think that given the issue and the magnitude of the failures that we’ve seen take place, it would be borderline criminal if that plane is up in the air in a month, two months, three months. I think this thing is grounded six months plus at this point.
Daniel Newman: It’s got to be a huge financial hit for them but also with all the things they’re doing though, they really deserve to be penalized. These are those points where you almost can say that their activity were borderline criminal. If us as a small company develop a product, shipped it to people’s houses and the thing blew up on their countertop and killed somebody, we’d probably go to jail and somehow Boeing is like, “It’s almost too big to criminalize this.” People die for their negligence. This is potentially. Now of course I’m not saying it’s 100%. Nothing has been proven, but you could correlate that people have died based on negligence here. Everything from like what you said training on iPads to not properly cleaning up the sites, not having the software properly calibrated. Just to not have a mode where a pilot could overtake the plane. It’s crazy to think that the trained professional cannot outwit the machine. Olivier, sounds like a great story for a book that we’ve written. Okay. So, that was the slow response but that’s partially my fault. All right, Olivier, let’s hear yours. Let’s close down the show.
Fred McClimans: Well, just so people know, there’s a US Senate panel convening on March 27. That should be Wednesday to grill Boeing and the FAA and start basically an investigation or the process of investigating what happened. So, I think that what we’re seeing here is a chain of failures that begins with Boeing. That begins with the business decision to make safety features optional as opposed to making them mandatory and even making them premium features for their customers. You don’t have to pay for them. If you want them, you’re going to have to pay extra which I think is going to be a serious problem for them.
You also have failures on the part of the airlines to make these choices as well. To not pay for the additional safety equipment that’s made optional. That’s also a business decision that has nothing to do with Boeing. That’s the airline is doing it. The airlines are responsible again for not necessarily training their pilots properly. There they share some of the blame there with Boeing which reportedly some pilots were trained on this aircraft with iPads instead of regular flight simulators. So, that’s going to be an issue as well.
There’s also a failure on the part of the FAA in this case for having waited so long to ground these planes and even requiring and executive order to get there. So, I think there’s a lot of blame to go around. It’s a chain of failures. I don’t think these planes even if a software fix is not the solution. This is not an iPhone. It’s an aircraft, so the software fix, the software upgrade is not going to do the job. So, I think also that by October I think maybe we’ll see some movement but these planes will not be flying in the US this summer.
Daniel Newman: Yes. I will agree we’re looking at minimum three months but it could be as long as a year. I think less people will go to prison than for the entire financial downfall of 2008. All right, everybody, thank you so much for tuning in to this week’s edition of FTP, the Futurum Tech Podcast. Olivier, Fred, terrific stuff. Always enjoy and appreciate the support of all you out there that are listening. We’ll try think to get these out there timely, regularly and keep you abreast of what’s going on currently. For FTP, for Futurum Tech Podcast and the team here, we are out of here. We will see you later.
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Disclaimer: The Futurum Tech Podcast is for information and entertainment purposes only. Over the course of this podcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.
Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio