This Week in Tech 558

Leo Laporte: It's time for TWiT: This Week in Tech! Our 11th anniversary episode. 11 years ago today, we started doing TWiT. I think the conversation has changed a little bit over time. Iain Thomson and Ben Thompson join me, the Thomson twins to talk about Microsoft's new announcement and F8 bots and more. It's all coming up next, on TWiT.

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Leo: This is TWiT, This Week in Tech, episode 558, recorded Sunday, April 17, 2016.

Rattlesnake in a Piñata

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It's time for TWiT, This Week in Tech, the show where we cover the week's tech news. Friends, I am just going to sit back and bathe in the brilliance of our panel this week. It's fitting because this is our 11th anniversary episode, the first TWiT which at the time was called the Revenge of the Screensavers was broadcast or released to the wild. We only did audio, 25 minutes, on April 17, 2005 with Patrick Norton and Robert Heron and Kevin Rose, my old friends from Tech TV. That's how we began 11 years ago on this day. Fast forward, and it's been a wonderful ride. It's still online if you want to go to twit.tv/1, you can hear the first episode. I had to bleep out the word screensavers, because shortly after I recorded that I got a cease and desist letter from G4 Tech TV which had bought the network and show, saying you can't use that name. So we couldn't call it the Revenge of the Screensavers, I asked our audience to come up with a new name, they came up with This Week in Geek, was my favorite. I thought what if it were This Week in Tech, then we could call ourselves TWiTs, which seemed like a good idea at the time. We had a competition for the logo. At the time, we distributed via bit Torrent because I didn't have any bandwidth.

Iain Thomson: Good grief! Everyone says Bit Torrent was killing the medium, and you've done it very nicely.

Leo: Thank you for the card, by the way, Iain brought me a very nice card with a Wayne Teebo painting on the front. Now you've been waiting to get in this cake, I said you couldn't have the cake till we started the show. You may now come and take your cake and Iain wants a piece and Ben, I'll send you one. You'll get it sometime next year. A nice stale piece of birthday cake. Ladies and gentlemen, where's Waldo? We know, he works for us now. Thank you, Chris. So. How are you doing? Ben Thompson from Stratechery.

Ben Thompson: Good and congratulations! I'm honored to be here on the anniversary. 11 years ago, I remember listening to you pretty early. 2005 or so. I remember the project I was working on and this idea that I could listen to podcasts while...

Leo: Were you at Nokia then?

Ben: I wasn't there. I was building a computer based teaching system for English schools. I started out an itinerant world wanderer.

Leo: You didn't work at Nokia. It was Apple and Microsoft, right?

Ben: That was a couple years later. Came back to the US in 2009.

Leo: Ben now is all on his own with his website Stratechery, which is a wonderful free article every week, which I read religiously, but I'm also a subscriber to the newsletter. It's well worth it and he is one of the best analysts out there. I'm thrilled and honored that you could be here on our 11th anniversary episode. Thank you for joining us. I know it's early morning in Taipei.

Ben: There is no daylight's saving time here, so it's earlier than it is when I'm here in the winter. Happy to be here.

Leo: Thank you so much. Also here with us from theregister.co.uk, another great friend of the network, Iain Thompson. We can't get enough of you. Thomson and Thompson. We've got the Thomson twins.

Iain: I know. They're also a band, the Thomson twins.

Leo: There we go. All the allusions you could ever want. Thank you for being with us. Before the show, we started talking about Tesla, and we'll take that conversation and we'll go to it right now because I thought it was a very interesting conversation. You did a good piece maybe last week about the roll out of the Model 3. Tesla is a real car company now.

Ben: That's not what I said.

Leo: I read it, but I obviously didn't understand it.

Ben: That's the real question. My broader point was there was something very powerful they built here.

Leo: They were very smart. They played it very gutsily. He bootstrapped the entire thing, it really wasn't viable until he showed he could sell in the mass quantities.

Ben: It's still not clear that it's viable. They're a company that is still... Tesla, in their financial statements they when they calculate their gross margin (cost of bits sold) R and D is not included, which is typical for a tech company. Usually a tech company, the cost of goods sold is the cost of goods in whatever the device is, and the R and d cost is separate. For a traditional car company, usually the R and D cost is included in the calculation. If you calculate Tesla's financials like you would a traditional car company, they would... the problem is there is not any evidence that they can manufacture this car for the price that they said they can manufacture it at. To your point, if they can pull it off, all they have to do is do what they say they're going to do, and they are going to be very successful. Much more successful than most people realized. The way they keep it high end and built this powerful brand is a part of that. It's certainly fascinating to watch. It really is the new Apple, not just from a branding perspective, but from the passion and fervor of their fans, as I discovered.

Leo: Did you get in line?

Ben: I did. Why not?

Leo: As you made the point, it's a refundable thousand bucks. They don't get to keep the money or anything.

Ben: Right. The problem is, right now, you can't buy Tesla in Taiwan, which is a pain, although someone found a company registration from Tesla, so maybe they'll sell too. The other problem is the infrastructure here is tougher. Everyone lives in these...

Leo: That's the issue. Where do you charge it? That's what has held back electric cars until now. It was massively inconvenient. I think that's changed a lot.

Ben: That's part of it for sure. What I appreciate about Tesla and the approach and the way they built this brand, the point of the article that I wrote, I'm not convinced that those 300,000 people are that interested in buying an electric car. That plays a part in what it means to buy a Tesla and why they're excited. It doesn't follow that because 300,000 people put a thousand dollars on a Tesla that there's a big market for the Chevy Bolt. What is so great about what Elon Musk has accomplished, he made electric cool. It you go back and read his master plan, there's a line in there that talks about if we want electric to change, to take over the world, we have to make it cool. That's what he has absolutely accomplished. That's what is so impressive. Certainly more power to him.

Leo: Yeah. And I think getting that many reservations makes it easier to go to the investment market. That's the real point, right?

Ben: Absolutely. Evertyhing they have done has been paid for primarily by issuing stock.

Leo: They've done nothing but lose money from day one.

Ben: This makes that possible. The cost of batteries is coming down, that's the controlling factor. The battery costs like 35,000 dollars on its own, which is a bunch of tiny batteries wrapped together. There's the extent that with the Model S, they were trying to figure out how to make a car, whereas with the model 3, they can really build it for manufacturing. That's totally valid. That makes a ton of sense. There's no question they'll be able to cost curve much more efficiently with the Model 3 simply because they know what they're doing. The Roadster they didn't really build.

Leo: I think this is a real case study on how to bootstrap a business. It's quite fascinating. It's quite smart. I'm sure the day before they opened up the orders for Model 3 they were on tender hooks. Here's an opportunity to go big or go home, or if it's a flop, they don't have a company. It could have gone either way and I think it went as well as it could possibly have gone for him.

Iain: I was trying to think the last time you saw people cueing up outside the motor show in order to buy a car. It's unheard of, I can't think of it happening with any other. The question is can he ramp up production quickly enough. That's going to be key.

Leo: He has a problem now because he has five years of orders. He has to give people a year. That's where he goes to the equity markets and says OK. We need to take this plant which could be really expanded. I think he's only using a fourth or a fifth of the capacity and build more. He's going to have the Giga battery factory go online.

Iain: He's also going to need a serious supply of lithium and various elements to get the whole thing up and running.

Leo: You feel like this was a well-played chess game. He took big chances, big gambit. I think he saw the end game at the beginning and he knew where he was headed and he did a very good job.

Ben: The article I wrote was very admiring of this and he's done it different than the traditional business approach said he should. It's because make electric cool matters. The caveat is he hasn't won yet. Things are looking great. He could not be in a better position, given his strategy. The actual hard part, that feels stupid to say because everything they've accomplished has been so incredible and against the odds already which is why you don't want to bet against the guy. But if you look at it objectively, the real hard part is now, because this is of a scale of complexity and difficulty, they've pushed all the chips on the table now. It's going to be fascinating to watch. At the price they need to and the quantities they need to, the other thing that's so risky about this is Iain just made the point very well, they're risking not just the company but the brand. The brand is the value that they built right now. If they don't deliver this car on time, if they don't deliver it to the point they delivered it, it's going to be that much more damaging to them. If GM screws up a bolt, no one cares. They screw up everything. It's super high risk, but risk goes both ways, there's upside risk and downside risk and upside risk is massive with the approach of...

Leo: It's nice that they're trying to save the world too.

Iain: It does seem ridiculous we're burning valuable hydrocarbons in this day and age when we could be using electricity which also going further ahead, electric cars are for one huge advantage, which is if you can put motions on all four wheels, the performance and cornering ability of these cars goes through the roof. We're going to see there's a hill climbing event in California later this year, and there electric cars are outpacing petrol cars because they can independently control their wheels and they go like rails.

Leo: Through all wheel drive. What most of the S's but not all the threes have 4 engines yet.

Iain: That's going to be the ruin of racing cars. But it will come, these things filter down.

Leo: I feel like Elon would be a dangerous opponent in poker.

Iain: I was thinking Bridge, but yeah. The guy strategizes so far ahead down the line.

Leo: It's just smart.

Ben: The real advantage he has, this is the power of being mission driven, if he fails, if Tesla doesn't successfully make the Model 3 for the price he says, what's the worst that happens? One, he accelerated the curve when it comes to batteries, 2 he made electric cool in a way GM wasn't going to. He motivated the car companies to accelerate their efforts in this space, and if his goal is not to build a successful company but to shift the world in a meaningful way away from carbon based transportation, that's a nice goal. That's the power that comes from being a real, mission driven company is you get loose a bit from the financial imperative. It doesn't change the fact that they have very real questions to answer and I can understand why some people are starting to stock and all that sort of things.

Leo: If you're going to short them though, it's a long term short. At this point, they've got years. They've got runway.

Ben: They don't have that much money. A little over a billion dollars...

Leo: Can't they raise money on the pre-orders.

Ben: That's a huge benefit of this, they've really demonstrated it around real demand and power in the market that will let them raise money at a better rate than they would have otherwise. They're going to have to make the money back. It's still and open question. The margins are going in the wrong direction, actually, they went down, not up. They're not moving down, the cost curve yet.

Leo: They've shown amazing capacity to lose money and they're having technical issues with their model X. All of their Model S were recalled for safety issues. The company itself said we showed hubris, we attempted too much and we're having difficulty making the car.

Ben: They would not do the Model X if they could do it all over again.

Leo: That's why I want one. Right? Don't you want the car that was the biggest stretch--unless it was a piece of crap. I don't think it was.

Iain: You'd get great money for that car right now.

Leo: It's only ten years ago, remember the documentary, "Who Killed the Electric Car," and remember General Motors EV1 which came out in the 90's, the documentary documented effectively how the oil industry, the Government, the battery industry, the car industry all united to say this is a bad idea for business, we're not going to let it happen.

Iain: It was a huge mistake, given the fact that the first Toyota with a Prius are eating American car companies' lunch. They've taken that opportunity years ago and addressed this market, they could be earning big bank right now. As it is, major competition, someone else is earning it.

Leo: I think Elon did learn a lesson from that. One of the things people need is range, they would also need to fill up. Tesla very wisely addressed that early on with a supercharger.

Ben: It's one of the most impressive things about Tesla. Tesla actually says they will share the super network with other cars as long as they share in the cost.

Leo: As long as it's not the Chevy Bolt.

Ben: I'm very curious as to how Tesla measures that cost that the other car company has to contribute. I imagine that the amount is substantial and it's interesting because in some respects you get a weird network effect in that the more Teslas that are on the roads, the more supercharger stations they can afford to build. You do get that effect where there being more Teslas makes your tesla more valuable. This is more a weaker effect, it is interesting that there is a little bit of that effect there. If Tesla is like of course we'll be open with the supercharger network, you just have to pay us X billion dollars because all the R and D and you have to pay your fair share, that's the real advantage they have by being electric only the way they think about what to invest in is very different from a company like GM or BMW or Mercedes where all their revenue comes from a different part of the company that already has infrastructure in place. It's definitely an advantage. I do think to go back to a point, GM gets a little bit of a bad rap for that electric car in that movie. Any rational manager would have done exactly what GM did, which is collect all the cars and smash them to bits because they were on the hook. The cars cost them a tremendous amount of money and continued to cost them a tremendous amount of money over time, and they did them for very rational reasons. They're painted a bit as a villain when what they did was...

Leo: Sensible business move. I don't think anybody disagrees with that. The question is did their business interests coincide with our national and global interests.

Iain: This was like the Kodak case where they could have ruled the digital camera market and they put it to one side because it was interfering with their profit stream.

Leo: That's the problem, isn't it? The innovator's dilemma.

Iain: GM wasn't as bad as the film made them out to be, but they were pretty dunderheaded in this whole thing. People wanted electric cars and they protested and fought to keep them and they had to hand them in and that caused an enormous amount of bad feeling. Electric cars make sense. The market has spoken, people want these things. Other car manufacturers are going to have to supply them as well.

Leo: They're also bringing emissions down, right? There's a governmental mandate that they have to get overall emissions of all their vehicles down significantly. One easy fast way to do that is with an electric vehicle.

Ben: To that end, it's not clear that people want electric vehicles. That was the point of my article. It's clear people want Teslas. I don't say that trivially. It's powerful what they've built. To that end, GM is farther ahead than a lot of other car companies when it comes to electric cars. They have the Volt already on the road, the Bolt is coming out later this year, and the problem is no one is lining up to by a Chevy Bolt and the truth is every single electric car on the market has sold massively under expectations. The truth is, there is no evidence that they're popular. To go back to the EV1, they sold it because California passed a law that you had to sell an electric car. It gets to the limitations when it comes to Government mandates. GM lost money on these cars because they were mandated to do so and when the mandate went away, they got rid of them so they wouldn't have to keep supporting them and losing money. You could just as make it an article about when Government regulation doesn't work, but that doesn't fit with the filmmakers in this case.

Leo: The Tesla isn't in any way better than existing cars on the road.

Ben: It is though!

Leo: It accelerates faster, which I guess is important.

Ben: It is important. The fact that it's awesome, to use the technical term.

Leo: It's awesomely better than any other hundred thousand dollar car.

Ben: The quality of the interior and the components.

Leo: That turned me off. For the car that costs this much, it doesn't feel like it cost that much.

Ben: To go back to the actual quote, the Tesla master plan...

Leo: He wrote this in 2006.

Ben: The parts that people are focusing on in this plan, none of it is actually reality. Tesla is paying for the model 3 or will pay for it with capital rates. It's not from Model S profits, because there aren't any Model S profits. If you calculated on a traditional car company accounting basis. He says in here I am funding the company, why do we have this amazing car that wants to kick everyone's ass? This is because the overarching purpose of Tesla Motors (and the reason I am funding the company) is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy, which I believe to be the primary, but not exclusive, sustainable solution. Critical to making that happen is an electric car without compromises, which is why the Tesla Roadster is designed to beat a gasoline sports car like a Porsche or Ferrari in a head to head showdown. " What he's getting to with that is you have to make electric cool, and you make electric cool by having videos of a Tesla racing a 737 down the runway. That's cool, it's desirable. It makes people willing to pay a hundred thousand for a car that feels like a 40 thousand car. However much, whatever it slides into. It's that line that is the most remarkable thing about the approach he's taken, and really insightful in his understanding of the market, and people do want Teslas. It remains to be seen if they want electric.

Leo: I think the biggest success he has is making a brand that's in demand.

Iain: Steve Jobs turned the iPhone that was quite frankly in hardware terms a second generation behind the pack phone and made it really sexy and everybody wanted it. I do think the big worry I have with Tesla is they have a long-term problem. These battery packs don't last forever. Paying 35,000 for a Tesla 3 is all well and good, but if you've got to pay another ten grand in four or five years’ time, is that going to turn people off? Is that going to damage the brand in that regard? I'd love to see some more stats on how long these batteries will survive.

Leo: He claims they're recyclable even at the end of a hundred thousand miles, there's still some value in them.

Ben: It's a good question. It's not clear it's going to turn out. I think the comparison is to Apple. Not from a financial perspective and no one is saying that. The iPhone was a technological leap forward, I would disagree with you Iain on that point, there's a lot Apple does think about this. All the stuff Apple goes on about these high end finishes and touches, a lot of that is about building the brand. I will be as annoyed as anybody else by the argument that Apple is built on advertising or marketing. It's also not true to say it's popular for purely technical reasons. An iPhone means something, it has status. You pull it out and put it on the table and it shows something, particularly in certain parts of the world. Just as much as it's silly to say that's the only reason people buy iPhones, it's silly to say that doesn't play a role and Absolutely, Tesla has pulled that off. People don't put down a thousand dollars without knowing what something looks like without there being a brand at play. There has to be something powerful at play from the brand and what it means to be a Tesla.

Iain: If you see two Teslas going down a road, the two drives will check each other out and give each other a nod and that sort of thing.

Leo: Well, we're in the club. It's a club. We suffered to get our Teslas, that's what makes you in the club. Let's take a little break. We're going to have a great time today with lots more to talk about. Iain Thomson is here, from the Register.co.uk, Ben Thompson from Stratechery, and we are talking about high tech. I want to talk about Tracker and why I will never again lose my keys. This is a really great success story that started in crowd funding and has now become one of the best products I have ever used. Tracker. This is a tracker, it's on my keys. It's a coin sized device that pairs to your IOS or Android phone. You have a key loop, but you can also use adhesive and glue it to something. What's cool is if you lose your phone, you press the button on the tracker and the phone rings, even if it's on silent. If you lose your keys, your phone goes hey, your keys. It even has a map of where your keys where seen last. Here's the thing I'm most excited about. This is also a crowd sourced network, it turns into Tracker for battery life reasons has a one year battery. Not rechargeable, you just put a new lithium cell battery in there, but it does pair with your phone, which does have GPS. What they've built is a tracker network. 1.5 million devices, that's more than anybody else out there. If you lose something, it can show up on a map, even if it's far far away. It's remarkable. Scroll down a little bit and you'll see the map of Trackers in the Wild and this map is growing. This means no matter where you lost it, not just your phone. You can put it on a dog or cat collar, a lap top, I keep it in my backpack. The tracker records its last known location on a map and if another tracker user comes within a hundred feet of your lost item, you're going to get a GPS update of where your item is. So it says, I just saw your keys. They're in San Francisco. That's amazing. They just introduced this TrackR atlas, or a TrackR bravo, or a TrackR BluTooth to give it a customizable floor plan of your home. It's one thing to know your keys are in the house, it's another thing to know that they're under the sofa cushion. You'll save time and energy just by asking TrackR Atlas where your item is and you will instantly get a location. This is truly amazing. These guys have really figured it out, and I want to get more people to buy them, because the more people who have them, the bigger the TrackR network gets, the better it gets, and I want people to buy them all over the world. Amazon Echo integration, just ask your Echo. Hey, where's my phone. I love this. You got to get it. Here's the deal. Go to thetrackr.com and you're going to get 30% off your entire order right now if you use the promo code TWiT. Get 3 or 4, you'll find lot sof places to use it, it's a great idea, and you will never lose your phone or keys or car again. I don't think people lose their homes, unless they’re on wheels.

Iain: They are very very drunk.

Leo: I'm going to put this back down. I don't want to lose, and I'm traveling, I don’t want to lose my backpack. Here's what I do, it's on my keys so if I take the keys off, I have them, but then I attach it to my FOB which is chained to my backpack and now I am doing double duty on my tracker. I will never again lose my backpack either. So great. thetrackr.com, never lose anything again. Use the Promo code TWiT, you'll save 30% off your brand new trackr.

Iain: I lost my phone last weekend, I could seriously use that.

Leo: How did you find your phone?

Iain: The old fashioned way. I worked out where I'd been the night before, where I most likely would have left it, went to the last park. Somebody had it at the bar, it was sitting there waiting for me. It restored my faith in humanity.

Leo: You obviously didn't have the new iPhone or you would have never seen it again.

Iain: I’ve a Nexus 5.

Leo I don't want this, so I'll leave it at the bar. I've become a major Android fan, I know it bothers Iain every time I say that. I am an Android fan. I think I have an extra TrackR. I was going to give it to you. I have an extra. I lost my trackr. It's not activated. Extra Trackr just for you. You'll never lose your keys again. How about that. Burr Feinstein, names that will live in infamy. It is now officially a bill, the compliance with court orders act of 2016.

Iain: The mindless stupidity or we want it now act.

Leo: It is the sense of Congress that no person is above the law. Economic growth, security, stability, liberty and growth require adherence to the rule of law, so all providers of communications services and products, including software must listen to a judicial order and in a timely manner, respond to an authorized judicial order for information or data. It has to be intelligible information, in other words not encrypted or appropriate technical assistance to obtain such information or data. This is not proscriptive. It doesn't tell us how we should do it. It doesn't mention back doors, it is just sheer requirement if you're Apple or Google or Microsoft or DropBox or anybody selling stuff. You need to have a way to un-encrypt it if law enforcement comes walking on your door. Furthermore, it also applies to third parties, licensed distributors, which means that Apple in its app store and google in its now store and Microsoft in its Window Store would be required to verify every single app sold in those stores also provides access. They are required under penalty of law, so if this bill were to become law, it would be the end of encryption in the United States. Not the end of encryption, but the end of security. You call it in your article Brain Dead.

Iain: I was quoting Bruce Snyder on this one. He literally wrote the book on cryptography and I had some of the stuff in that article I had to leave out because he would have got sued over it.

Leo Say it now and then he would...

Iain: Well, he just couldn't believe they were actually putting this out there and saying Right.

Leo: Doesn't just effect phones, it would affect things like compression. Like zip.

Iain: On a broad reading, companies would have to provide deleted data. It's...

Leo: This is the most brain-dead piece of legislation I've ever seen. The person who wrote this either has no idea how technology works, or just doesn't care. I should point out, Diane Feinstein is the senator for Silicon Valley.

Iain: How the hell did that happen?

Leo: She's a California senator, and Richard Burr is from North Carolina where the research triangle is. Some of the most technology in the world.

Iain: These are the chairman and vice chairman of the Senate intelligence committee, which is supposed to oversee the NSA and other intelligence agencies. It boggles the mind, what on earth were they thinking? It says, "Do this, It's mathematically possible, but anyway..."

Leo: If you went to Microsoft and said we want that file that was on one drive, and Microsoft says that was deleted, that doesn't work. They have to say, "No. Here it is."

Iain: Which means they've got to keep a backup of deletions. It's not physically possible for companies to do this and stay in business. It's going to make their products as popular as a rattlesnake in a piñata. It would kill an awful lot of American business, it would possibly make what the NSA does illegal, because I can't see them backing up encrypted tech.

Leo: We should point out, it's not a forgone conclusion that this would become law. It's clear that the President, if he's still president, will veto it. Ron Whiten, I love Ron Whiten, he's a senator from Oregon, he says I will filibuster this thing. It will never ever become a bill as long as I'm here. Good for you, Ron. It's in committee.

Iain: A draft had leaked out to the hill ten days ago. This solution which they put in is amended slightly so the bill can only be... a court order can only be raised with a serious felony or a drug charge, or a whole bunch of other charges that you can't stick to anyone. But it's so over-arching. There's no hint at what the penalties would be, there's no hint at how this should be done, and they have the nerve to say in the bill we're not prescribing how these things should be built, which is of course what the entire bill is about. It's insulting.

Leo: The good news is, there was a bill in California to prevent the sale of smartphones that had encryption, that died.

Iain: They couldn't get a senator for it, which shows you how brain-dead it was.

Leo: No one should not take this seriously, but there is some hope that this isn't widely viewed as a good idea in Congress.

Iain: It's going to be very unlikely this bill as it stands goes through. What is worrying is this is a sign that the Government is taking this position, and they will carry on hammering away, as the FBI will do with the next iPhone case that needs to be decrypted, and if this is their starting point, then we're in serious trouble. If something like this eventually goes through in two or five or ten years’ time after a big terrorist attack and everyone is already panicky and their like Oh well, let's give up our security this once, and this is the kind of thing they're trying to do . California, that bill couldn't get a seconder. In Congress, however, 60% of Congress are lawyers. There's only 5 Congress people with direct technology experiencce, that's if you include car alarm systems. There are very few people who know anything about technology in Congress. With the first crypto wars, Congress ducked it and passed a stupid law and it took the courts to resolve it. Thankfully the AFF and others are coming in on this, but if something like this goes through, the results are going to be catastrophic, and getting security back from this is going to be a really tough job.

Leo: Any thoughts, Ben?

Ben: A few. So I think to go back to when this broke, I think it was on TWiT, my point then was this. The real danger with that case was not that particular phone. What the FBI was asking Apple to do was certainly problematic, particularly from the Government compelling Apple to weaken their own security, that was a very small problem relative to a political movement forming to weaken encryption. That's exactly what this is. Fortunately, I would hesitate to characterize Diane Feinstein and Richard Burr as the Government. It's two senators in the Government.

Leo: Although ranking senators in the house intelligence committee.

Ben: It's true, but I don't think that, just to go back to the 90's, this was an issue, and Congress did pass a law, they passed the CALEA act, which basically led to the capability of the NSA to force telecommunication carriers to let them listen in on everything.

Leo: Strictly forbid a requirement that manufacturers modify their phones.

Ben: It did allow them to dictate the design of devices, and that's arguably a core reason why the all writs act doesn't apply, because basically the All Writs act is if nothing else in the law applies, then apply this. According to Apple's legal briefing, this argument under which in this case, Apple was found to not have to unlock the phone in that case is CALEA considered this question and chose not to make them design it. That said, it did in effect force communications carriers like AT&T and Verizon, that secret room, that is an outcome of CALEA. CALEA also at the same time did say that encryption was allowed and that the Government could not allow encryption, basically, which if you go back at the time that it was an open question, you couldn't export encryption. You could only have it for the US, which the net effect was everybody got the crappy encryption, 40 bit encryption in browsers, which we're still doing with problems today because of that. I guess there's good and bad news. The bad news is this is the negative outcome I feared from the beginning when it comes to the Apple/FBI case that wasn't about encryption actually, it was about weakening their security measures so they could brute force a phone, a four digit passcode, but the concern was this would result in a political movement to weaken encryption and that's where we are. The fact that a fight that we as an Industry are going to have to win, but again, I don't know how far we're going to get by demonizing the opposition or calling people names. This is a complicated argument that's hard to explain, and it's on us to explain exactly why this is so problematic and make the case that not only is this the wrong thing to do for technological reasons and privacy reasons, but it's the wrong thing to do for security reasons.

Leo: That's the big deal. It makes us less safe.

Ben: Basically to get into this, there was a great video done by CPG this week, getting into encryption, there's one more point that could have made it even better, but the idea is that in the physical world, we're OK with granting police power with a warrant to break a physical lock basically and do that. I think that's an important point for advocates of encryption to make to acknowledge there is a legitimate need for this. That's the case. I think the trouble is when the Government breaks a lock and they're doing it in the physical world, that is one lock. They're constrained by, even if you want an example of a golden key. The TSA luggage brew ha ha. Now luggage has to have a TSA approved lock, which can be unlocked by a particular set of keys which only the TSA has. Then someone took a picture of it and put it on Twitter, and now you can 3D print the key that can unlock all the luggage in the world. It's a great example of the problem with golden keys that they do leak, and now every single luggage lock in the world was weakened immediately. All at the same time. The difference is you still have to get the key and go to every piece of luggage and unlock it one by one. There's a physical constraint on what can be done with a golden key. The danger with a digital golden key, the only way you can fulfill this law is that Apple or Google or WhatsApp or Amazon, this applies to every single company that deals with the Internet period. Every single company has to retain a key that can undo their encryption. The difference is when that key leaks, these things do leak, what happens if this key leaks? Not only is every piece of software in every service and everything that touches immediately vulnerable, but it's vulnerable in a way that can be taken advantage of immediately and at scale because that’s how digital works. Some bad guy in some Eastern European company like Russia or China or whoever can immediately compromise and take advantage of that weakness in a matter of minutes. That's different than having to go to every piece of luggage in an airport and unlock them one by one. The degree of risk is massively greater and put that in an equation, who has the most to lose? Who has the most to keep secure? If you did a census of every single company in the world, who has the most to lose? If you put this in a ledger and weigh it out and balance it out, it comes out that the United States has the most to lose of every single country in the world. Instituting an environment where you're security rests on hoping stuff doesn't leak or get out, the history of everything shows never persists and over the ark of time, will get out. that's what happens. That's why you design security for the worst case. You don't design it for the best case, so when and if that happens, who will be decimated? It will be us. It will be the US. That's the argument that we need to win on. Not calling them idiots even though they are.

Iain: It is tremendously satisfying to call these people wankers, but it doesn't advance the conversation in any way shape or form.

Leo: You baited him into it. You made him. I would love to ask Senator Feinstein what's your thinking here? These two are members of the intelligence committee. Maybe they know something. Maybe, they probably do have a good reason to be very worried and you really need to do something about this.

Iain: I'm sure they're being told by the Intelligence agencies that they are going dark. We seem to forget that before Smart Phones we did have a good record of catching criminals... We've had encryption for decades and we're still catching criminals, there are still stupid people out there. It's that mindset that this will make law enforcement's life easier, therefore we should do it and ignore the consequences. As you say, the consequences are huge if the Government's OPM department can't keep its finger prints and security clearances safe. If Microsoft could lose its source code, if Google could suffer outages, there is no way to keep us safe. If you're going to introduce a deliberate flaw into the encryption, China, Russia, malware people will do a Manhattan project to find out what it is and to exploit it.

Ben: Just to be clear, you can design a golden key that cannot be discovered. The problem is the golden key will be discovered. A core issue here is it's hard for normal people to... what do tech companies sell, particularly Apple? They sell magic. They sell a magical device, it's amazing all these things we can do. To go back to brand, they're selling this amazing behavior. Look, we made a robot that can win at Go. It can beat the best player in the world. All these sorts of things, to turn around and say sorry can't do it, impossible. True. In many respects it goes against the image that tech has been selling of itself for a long time. Oh sorry, that's hard to use, the computer crashed, this stuff is really difficult. I think it's hard for people to appreciate that this is a fundamental trade off. Either... the difference with encryption is with real encryption where every device and every person has their own individual key, the case of an iPhone, the passcode is a piece of the key that goes into unlocking that phone. Can that passcode leak? Let's say I have an 18 digit passcode, which is basically unbreakable, can that leak? Yes it can. This phone can be compromised, but the difference is the only thing that's compromised is this one phone. That's a big difference with a golden key where if it leaks, every single phone in the world is compromised or with WhatsApp every single message in the world is compromised. With Amazon, every single transaction and everything that involves that is compromised. It's a good thing it's not about iPhones, it's everything on the internet depends on this. To think that... to make a broader point is this. The obvious point we haven't said yet, is the US can ban encryption, it doesn't mean encryption goes away. Encryption is fundamentally an idea that is manifested in ones and zeros and at a higher level is manifested in code, and the idea is out there. You can't put it back in a box, given that highly motivated criminals will always have access to encryption. The only people that are hurt by this is one, law abiding citizens, and stupid criminals who are dumb. To that end, the police are mostly concerned with stupid criminals that are dumb. A lot of it has to do with drug charges. It could deal with murders or terrible crimes, but at the end of the day, the sort of folks that are going to pull off a 9/11 attack which as awful as it was was in the four digits, and you put that up against people who die in car crashes, but the people who have the sophistication to pull off that degree of an attack have the sophistication to get an encryption that was made outside the US. The sort of people the FBI won't be able to get to because an iPhone has encryption or WhatsApp has encryption, the degree of crime they can commit, it could be murder or terrible crimes, but the physical constraint on their actions by virtue of no one can be in a ton of places at once, or pull off something of that magnitude. It goes into the pros and cons equation, and it sounds callus to say that, but the trade off, not all criminals are the same. The sophistication of the crime I think correlates to the sophistication they have in getting encryption on their own, relative to someone who gets encryption on accident because Apple happened to include it on an iPhone if that makes sense.

Leo: Microsoft is getting into the act. They have filed a federal law suit to stand up for what we believe are consumers constitutional and fundamental rights, rights that help protect privacy and promote free expression. They don't like the fact that so many Government orders are secret and cannot be revealed and they have decided they are going to pursue this in court. Good on them. In the last 18 months they say they have received 2,000 legal demands that require Microsoft not say anything about it. They couldn't tell customers about the warrants or legal processes, and of those secret demands, 68 percent didn't have an end date. It means that never, not a year from now. not ten years from now, there's no statute of limitations, never could Microsoft tell their customers the Government is obtaining their data, and they believe that violates the fourth amendment and the first amendment. They should be able to talk, and the fourth amendment protects you against unreasonable seizure. They would like to change that and have gone to a court to sue over it. I want to see more companies like Apple and Microsoft step up and defend their customers.

Iain: Exactly. On one level, the people that I speak to at Microsoft about this, Do you believe passionately in the arguments that they're making that it's a fourth amendment issue? On the other hand, there's also a business motive here, let's not deny it.

Leo: It looks good. Customers like it. It justifies the spend, I guess.

Iain: The genuinely do believe in what they're doing. To be honest, they've got a point, because they can be very few cases where the person should never ever know they're being surveilled.

Leo: It seems to me a fundamental point of fairness not just in American law, but in common law in general that you have the right to face your accusers, you have the right to know if you're being investigated. To be secretly investigated, I understand that's a useful tool for law enforcement if they're trying to crack a drug ring or find a terrorist's cell, you don't want to let them know you're looking for them.

Iain: But it’s also very useful for police if they’re trying to do something completely innocuous and stretch the law to do it.

Leo: That’s the fear is that they’re overusing it. 2,756 in 18 months, that’s a lot of warrants.

Iain: When the Patriot Act got ran through in 2 days, then it was just like, “Oh, we’re only going to use this in very certain circumstances to protect against terrorism.” And before you know it, it’s being used left, right and center. And the same thing’s happened in the UK with the RIPA Act. I mean once these laws are in station and the police use them to save some work. And that’s perfectly understandable.

Leo: National Security has become the tool of scoundrels, I think.

Ben: There is a specific, to Iain’s point, I actually have the article in front of me. There was a provision in the Patriot Act called Sneak and Peak. Which basically is the ability to conduct a search while delaying the notice to the suspect of the search. It’s this point exactly. Although this is about an actual physical search, I believe, not about this point specifically but it’s the same principle. And in the, when this went through this was actually a very controversial provision and they stated that this is only going to be for terrorism, to investigate the crimes without tipping off the terrorists. Robert Mueller said “It is an invaluable tool in the war on terror, efforts to combat serious criminal conduct.” Well since the Patriot Act has been passed, there have been over 11,000 sneak and peek requests. And of those 11,000 a total of 51 have been used for terrorism, which is an infinitesimal percentage. The vast majority have been used for run of the mill drug cases. And again, I’m more than happy to have a debate about the war on drugs and the impact it’s had and the questionable motivations for why you would have gotten started in the first place.

Leo: Did you read what Erlichman said about it?

Ben: I did, I did.

Leo: That was fascinating. John Erlichman who was one of the Watergate co-conspirators and did some jail time. It was just recently somebody was interviewing him. And he said, “Yea, well you want to know about the war on drugs? Really it was because we couldn’t really just go after black people. We couldn’t just really go after hippies. So we inaugurated a war on drugs that would in effect just by accident just kind of reel them all in.” This was under Nixon.

Iain: Out of the mouths of babes and scumbags. I mean it just—

Leo: We’re still fighting that war on drugs and there are so many people in jail for so long for one joint. It’s criminal. And I don’t, I mean Erlichman is passed on and I don’t know if this is true or not.

Iain: Well given the fact that we’ve had this 40 year war on drugs and drugs are cheaper, more powerful and more available than they’ve ever been, by all logical reasons it’s a failure. It should be scrapped. But for some reason it’s being kept in. And then you’ve got to wonder why. Who wins all this?

Ben: It’s my fault for sending us down this rabbit hole.

Leo: Yea, I don’t mind though. I think it’s fascinating, really.

Ben: But here’s the thing though. Even if, the reason why it’s maybe not productive, not to take over your show, but the point being is I think we can all at least agree that the war on drugs is not, does not rise to the level of 9-11, let’s say. And the problem is that, and this is the key to this debate, is that the reality of the matter is that the law enforcement in general are cloaking themselves in terrorism and people’s fear of things like 9-11.

Leo: And child pornography.

Ben: The debate I want to have is that the real problem is that we wildly over estimate the cost of terrorism. Again, not to trivialize people who died in 9-11 but you compare it to one other countries and two the number of people who died in any number of other things and on a cost benefit basis our reaction is completely and utterly out of wack. And that’s what really needs to be fixed. But that’s a whole other rabbit hole. But the fact of the matter is, even as bad as it is, I think all evidence is that law enforcement is being duplicitous in levering that fear to in fact get a tool that’s going to be used for drug dealers. And I think that’s the case that I think if people understood that this would be a different conversation. Because the fact of the matter is this Feinstein Burr Bill, all these bills, are going to do nothing to disrupt Al-Qaeda. They’re going to do nothing to disrupt Isis. Because this technology is out there. It exists. The only people that it’s going to help, the only law enforcement it’s going to help, and we have evidence of this, is small scale stuff. And do we want to trade the ability to more easily arrest a drug dealer for exposing the secrets and value of all US Corporations and profit to whomever may come along?

Leo: There you go.

Ben: That’s the real issue at case here.

Leo: Apple by the way, this is germane to tech because Apple is now fighting yet another case where the feds want them to unlock a phone, in this case it’s a drug case in New York. A Federal drug case.

Iain: With a guy that’s already in prison as well.

Leo: Yea.

Ben: This is a case we referred to earlier where Apple actually did win the first round. What’s interesting about this particular case, in some respects this is an easier case for the government to win because Apple doesn’t actually have to do, Apple can just unlock it. They don’t have to create a less secure operating system and all this sort of stuff. Because it’s running iOS 7, it’s not full disk encrypted. I think it has some encryption but it’s not fully encrypted. And Apple has unlocked these cases in the past. They’ve just never, in this case the judge actually invited Apple—in all cases Apple acquiesced without agreeing or disagreeing on whether it’s justified. In this case the judge actually asked Apple, “Do you actually think this is legally permissible?” And Apple came back and said, “No, we don’t.”

Leo: And the judge agreed initially.

Ben: Right, well it’s interesting because the guy went to prison. And so they kind of fell off the radar. But then once the San Bernardino thing happened, Apple actually went back to this judge and said, “You know? Why don’t you rule on that case? We’re curious what you think.” And that ruling came out before the San Bernardino thing was wrapped and the judge ruled in favor of Apple. This guy is kind of a well-known agitator in this area so Apple probably knew that was going to happen.

Leo: He said, “You can’t keep using the All Writs act for all everything you wanted to use it.” It does not mean what you think it means (laughing).

Ben: It’s interesting though because the government, I think the reason the government is appealing this and this is an appeal, is because the issues for this case, again it’s all about precedent without question. But the issues in this case are narrower in that the government is not requesting that Apple be compelled to do additional work.

Leo: Right, right. And that’s Apple’s point. The government can do this without us. They don’t need us. Why are they demanding this?

Ben: Well, Apple now, frankly that’s Apple kind of obfuscating.

Leo: Because what they really want is a broader ruling. Anyway, enough of this. We’ve talked enough about this.

Ben: You can get in the weeds for ages on this show.

Leo: Yea, I know. The House has passed a bill to sabotage net neutrality, at least that’s the interpretation by the EFF. It’s H.R. 2666. Now it’s ostensibly about regulation. The No Rate Regulation of Broadband Internet Access Act, and by the way a strong 241-173 vote. Ostensibly this just bars the FCC from regulating the rates. However the bill is worded in such a way according to EFF, it can be used to keep the EFF, FCC from enforcing other consumer protections including the net neutrality regulations that they proposed. President Obama says he will veto the bill. It has to get through the Senate. Just thought I’d pass that along. And here’s another tip thanks to Mike Elgin for this. Do not carry a satellite phone in India.

Iain: Oh, yea, this was terrible.

Leo: Kruss Daniel Morton, he’s 65 years old, he lives in Illinois. And he’s a physician. He carried a satellite phone into India with him because he needed to stay in touch in some of the rural areas he was visiting with his patients and his hospitals. He was arrested. Turns out it’s illegal to have a satellite phone in India. He didn’t know apparently but of course ignorance is no defense even in a case like this. He has been bailed out but he has to stay in India until the investigation is conducted and a report regarding the calls made from the phone. This is bizarre.

Iain: Yea, I mean, you can understand people getting hassled for their phones.

Leo: But you have to figure that law was made by Indian telecoms that want to own the wireless business.

Iain: It wouldn’t surprise me. Yea, I mean the fact is you need satellite phones in parts of the world if you need to get phone access anywhere in the world. A lot of sailors use them and a lot of medics as this guy was. It’s almost as stupid as saying an American lawmaker looking to ban encryption—oh, we’ve done that.

Leo: Hold on (laughing). No more government stuff. Let’s talk about Facebook in just a little bit. Google. Netflix. Twitter. And if you’re using QuickTime for Windows, a little warning all coming up. Oh and the Oasis. I don’t know if you’ve seen Amazon’s new highly expensive Kindle. I don’t even know who’s asking for it but somebody is I guess. Our show today brought to you by Harry’s, the best shave ever for a fraction of what you’re paying now from Harrys.com. I have to say I didn’t use to think shaving was anything but a chore but once you start using Harry’s, you start to kind of like it. The idea that you can afford to get a new blade every week, nice sharp blade. Harry’s comes to you directly from their factory in Germany. I’m a big fan of the Winston set, that’s the metal handle. But this is a Truman. Look how nice that is, with a new grippy. They have kind of this new grippy handle that really feels good. And of course you can get a Harry’s kit for very little money. I think it’s $15 dollars for the Truman kit. It includes the foaming shave gel, the handle, three blades and the travel cover. That’s a great deal. And then you get blades and foaming shave gel or the cream which is what I use shipped to your door automatically. Why pay $30 dollars or more for blades, an 8 pack of blades when you can get them for half the price at Harrys.com. They have customized shaving plans based on how often you shave. Supplies will be delivered to your door on your terms. They’re so confident that you’re going to love Harry’s that right now they’re offering a special deal for a limited time. Sign up for a shave plan and for an extra $3 bucks you can get one of their beautifully crafted razor handles, the 5 blade cartridge, their foaming shave gel and travel cover free. Just $3 dollars for shipping. This is a nice deal, a great way to get started. There’s lots of stuff on Harry’s site. If you’ve got graduation coming up or it would be a great Mother’s Day gift for the bearded lady. Go to Harrys.com/twit right now. Get your free trial started today. Harry’s the better way to shave Harrys.com/twit. One more, this really irks me. And Motherboard by the way has been doing a really great job on tech reporting. This is a Vice column. But this one really bugged me. The FBI says – talk about losing the golden keys—says a mysterious hacking group has had access to government files for years, since 2011. Um and there’s nothing they can do about it? The group known as APT6 has compromised and stolen, this is a quote, “stolen selective and sensitive information from various government and commercial networks since 2011.” This is an FBI alert. It comes months after the government revealed the group of hackers widely believed to be working for the Chinese government got into the OPM, the Office of Personal Management. Stole data about millions of government workers. And it underscores the fact that you can’t give the FBI this kind of stuff because they have no control over what’s going on.

Iain: It does make me wonder what our law enforcement money’s being spent on. You know it’s like we’re supposed to have the NSA, the finest hacking squad in the world. We’re supposed to have rock hard government protection of our data. And this happens. And it’s not the first case. I mean there have been hackers going around the White House’s systems for months now. They can’t get out of there. And you’ve got to wonder why it’s probably in this case almost a nation’s state act.

Leo: They think it’s the Chinese government.

Iain: Yea. Which would explain why the new Chinese jet looks very, very like an F-22.

Leo: (laughing) Michael Adams is quoted by Motherboard. He’s an information security expert who has served 20 years in the US Special Operations Command. Said, “Looks like they were in for years before they were caught. God knows where they are. Anybody who’s been in that network all this long, they could be anywhere and everywhere.” He said, “This alert is an admission that the government is still not in control of what goes on inside its most sensitive networks. It’s just flabbergasting. How many times can this keep happening before we finally realize we are screwed?” Well, that’s great. That really inspires confidence.

Iain: Lovely stuff, isn’t it? Just what you want to hear from the people who are supposed to be guarding you, guarding our tax returns this weekend you know.

Leo: Yea, by the way, 700,000 tax returns lost by the IRS last year. Lost to mysterious hackers. We don’t know. Where do they come from? Who are they? What are they doing? We don’t know.

Iain: Insanity.

Ben: The broader point is I mean frankly we’re probably well infiltrated into the Chinese government as well.

Leo: Yea, we’re doing the same thing, I’m sure, yea. I hope.

Ben: The point is that you, the broader point is that you have to design for failure. You have to presume that security will fail. You have to presume that people will break into anywhere and everywhere. And you start with that and then you think through what makes sense. And that’s where, that at a very core level is why this golden key thing is the issue. Is because you have to presume it gets out. And then when it gets out, how do you mitigate the damages? Well, if you’re in a situation where millions, hundreds of millions of services or devices are compromised immediately and because it’s digital said compromise can be exploited immediately and at scale. That’s the fundamental problem with the golden keys is the fact that it compromises everything at once and it compromises all immediately. And can be taken advantage of immediately. And that’s the key thing about this that I think so many people who are like, “Well, the government, we let the police have a warrant. We let people break locks.” Once you get digital it changes everything about this and again, yea, you have to design with the assumption that everything is compromised. And that’s what’s brilliant about encryption is that it really can make it—encryption defeats the power of scale because it can be encrypted on a one to one, every device can have its own individual encryption key.

Leo: I should mention by the way, somebody said, “Oh, big deal. You lost 700,000 returns.” Not only lost. I mean hackers got them.

Iain: They used those to steal money from everyone else.

Leo: The IRS originally said, “Oh, it’s about 125,000. Now we—no, it was 700,000.” It’s really not just the returns it’s the entire account including social security numbers, birthdays.

Iain: The digital checking system they put in place to reassure people, that got hacked as well. You couldn’t make this stuff up. It just, it boggles the mind.

Leo: Uber on the other hand, FBI’s probably thinking to themselves, “Why can’t you be more like Uber?”

Iain: Yea, bending over.

Leo: Why can’t you be more like Uber? Uber says, “We never got any national security letters. We have never received any orders under the Foreign Intelligence Surveillance Act. No. We just decided to hand over information on 12 million riders and drivers to various regulators.

Iain: And that was 12 million in the last six months, wasn’t it?

Leo: Yea.

Iain: Yea.

Leo: Yea, we just feel like we ought to be more helpful.

Iain: Yea, yea.

Leo: 415 requests from law enforcement agencies, the majority from state governments, and you know what? We’ve got a great record on that. We were able to hand over data in 85% of those cases. Now tie that into the story that’s going around. And I don’t know if I’m completely worried about this, that Uber’s new Android app asks for access to your history of your browser and your texts and a whole bunch of other stuff. Browsing history, bookmarks, running apps. Now I mention this—

Ben: I’m going to jump in here because we can’t have our cake and eat it too. Like you can’t at the end of the day, we’ll start with the law enforcement thing. I mean, the police have a legitimate interest if they have a warrant for getting information for one. For two, like there’s tradeoffs you make just to live in public. I mean you’re asking to use a car service.

Leo: Right. I agree with you.

Ben: And you give your credit card and presumably it’s a high thing for fraud. A large number of these requests are about fraud under investigations for the use of stolen credit cards. I mean I guess the, I worry about this privacy absolutism for lack of a better term. And –

Leo: I’m in agreement with you.

Ben: I’m pro privacy. But at the end of the day, it’s dangerous, I’m concerned about the conflation of Uber responding to legitimate law enforcement requests with this bot battle of golden keys for example. And I’m not saying you are doing that but it happened to come in the show next to each other.

Leo: Yea, yea, yea. I brought it up.

Ben: No, and I just think, but there’s people who are doing great work on line about privacy and all that sort of stuff. And the problem is it’s definitely an area where you can be a bit of an idea-log about. And the fact of the matter is like everything in the world, there are tradeoffs. And there are difficult tradeoffs. And we’re not, the issue is not preaching to the choir and making us all feel good about ourselves because who can come up with the most witty insult for government officials.

Leo: Although that is fun.

Ben: It is fun. It is fun. But the reality is this is a political fight where it’s going to come down to winning the hearts and minds of the American people, not to get all grandiose about it, and we’re not going to get there by being absolutists and fundamentalists about this issue. Even if we get into the problems with our whole politics in general, but the idea that there is no compromise. And my team must be right no matter what. And the refusal to see and acknowledge the shades of gray in almost every issue. You know, take fracking. Fracking wanted absolute thing on fracking. Meanwhile there’s also news this week about Saudi Arabia and like quote unquote holding hostage the US about this 9-11 bill. Those are actually intimately related because we are, Saudi Arabia has less influence over the US because fracking has released so many energy reserves. Again, that doesn’t mean one issue or the other—you can still be against one or for one, but you have to think through, there’s multiple levels going on and there are very few actual right answers to any one question. Not to bring politics into it, I’m not saying my position on either side, just that things are super-duper complex and we do ourselves a disfavor by coming across as ideologues because it’s not about preaching to the choir. This is a real political fight we have to win. And I’m sorry I’m going on and on about this. It’s just that I believe so deeply that this golden key stuff and this bill is such a bad idea. And because of that, I’m almost more worried about demonizing the whole thing because we actually have to win this fight.

Leo: Well really you can use this to prove your point which is to say there are plenty, that we are not going dark. There are plenty of legitimate ways that law enforcement can fight crime, can fight terrorism. And this is an example, by the way the Uber story that Uber was asking for all these permissions in its Android app, and I’m always a little nervous about these permissions things because the way permissions are clumped together, a lot of times you can ask for permission for something you need to do and it includes a whole bunch of other stuff. The response by an Uber engineer a couple of hours ago was, “These permissions were mistakenly introduced by an engineer on the team who thought a 3rd party library when in fact it does not. We definitely do not need or want those permissions and we have released a new version to the Play Store that does not request them so please upgrade to version 3.98.3 and you won’t be asked for those permissions.” Of course nobody trusts Uber so the immediate response was, “Well, really? Another oopsie from Uber?” But I think in this case it probably was a mistake.

Iain: With the request for information, what was most disturbing for me was the bulk of these requests were subpoenas. And you don’t necessarily need to go before a judge to get a subpoena.

Leo: Right, it’s a lower standard. And then there’s pen registers which don’t even require a subpoena. You just go to a portal on the phone company’s website and pay a $1.50 and say, “Where was Iain Thompson the other night?” That’s the real point. The good news is finally Congress has recognized that just because email’s 180 days old it is not abandoned and that you can’t just—because until, well I think you still can but soon you will not be able to.

Iain: Well the bill’s out of committee now. It’s got to go up for a vote.

Leo: It’s got to pass, though.

Iain: Yea. It’s got huge support in the House. It’s got 340 co-supporters.

Leo: Because they have email too. They understand that one.

Iain: But also I mean the original email legislation that we’re operating under was written in 1986 where people stored their email on their personal computers. It wasn’t given out to a 3rd party provider. Now it’s the case but when was the last time you really delete your Gmail emails or do you just read them?

Leo: No, I have emails 10 years old and more on my Gmail.

Iain: Exactly. And that’s open to law enforcement.

Leo: You don’t need a warrant to read it because it’s considered abandoned after 6 months. And I think that will be the end of that for now anyway. Delete your email.

Ben: From the Uber perspective, Uber has enough fights with government—

Leo: And they don’t want to fight anymore, yea.

Ben: No just to be totally- yea.

Leo: That’s the last place they’re going to fight. I agree.

Ben: Exactly and the, and so yea, it’s the last place they’re going to fight.

Leo: Pick your battles. Pick your battles is the phrase you’re looking for.

Ben: Yea and I think fortunately that’s something you take in your own hands. You cannot ride an Uber. And so it’s good that this is being exposed. This is why journalism is important. It’s why the news is important and you as a consumer can make the decision is the convenience of an Uber worth knowing this is the case. And so I’m glad we know. I’m not going to demonize Uber for it though.

Leo: Let’s take a break. I still want to talk about Facebook and I also—well, there’s lots more to talk about. We’ve got a great panel on our 11th anniversary episode. Ben Thompson from Stratechery.com. Great analyst, must read analyst every week on his website. And from theregister.co.uk we’ve got the other acerbic Iain Thomson. I don’t know if acerbic is the right word.

Iain: Snarky maybe.

Leo: Snarky. There’s a word. I like it. Great to have you both. Good friends and it’s really always fun to talk. We had a great week and we have a great week ahead. We’re going to NAB tomorrow. I’ll tell you about that but first let’s see what it was like last week on TWiT.

Narrator: Previously on TWiT.

Megan Morrone: We have an email from Tim who writes, “You continue to refer to the grin emoji as the grimace emoji.

Jason Howell: No wonder there’s an emoji divide going on right now.

Narrator: Security Now.

Leo: WhatsApp flipped a switch for encryption for a billion users.

Steve Gibson: These guys absolutely nailed it.

Narrator: The New Screen Savers.

Leo: Alexey Pajitnov the creator of Tetris. Originally writing on, this says a PDP 11 clone.

Alexey Pajitnov: It had no graphics at all. All I had was lines and symbols. That was all my bits.

Narrator: Tech News Today.

Megan: All of us have goals. 25 year old Alejandro AJ Frogoso set for himself the noble goal of breaking the Guinness World Record for binge watching. He broke it with his 94 hours straight of watching television. He said, “Binge watching can be quite taxing.”

Jason: Doesn’t look like he’s having fun.

Narrator: TWiT. Technology—

Iain: I’d pray for a shotgun to the head.

Leo: (laughing) Oh, Lord. A great week ahead. Megan Morrone from TNT, what’s coming up?

Megan: Thank you, Leo. This week is the National Association of Broadcasters trade show. And as you know we will all be live from Las Vegas so check us out there. In other news, Google Music Podcast reportedly begins rolling out next week at least according to NPR. Soon you will be able to get your TWiT fix right from Google Play. It’s also a big week for earnings. Google, Microsoft, IBM, Netflix, even Yahoo will be reporting their latest figures. And the Internet of Things summit happens next week in San Francisco so we hope to hear some news on connecting all the things, maybe even some welcome privacy news on what’s it’s like to connect all the things more safely. Back to you, Leo.

Leo: Yahoo Monday will be, they will announce who’s picking up Yahoo. What do you think?

Iain: I don’t know. The most interesting one I heard was possibly the Daily Mail.

Leo: The Mail.

Iain: Yea, or The Fail as it’s known in certain circles.

Leo: Isn’t it like a tabloid, The Mail?

Iain: Well it’s a tabloid with pretensions.

Leo: Even worse.

Iain: The Daily Mail is read by as a TV host famously put it, the wives of the people who run the country.

Leo: Oh, well.

Iain: But they’ve built up this enormous salacious website that is the number one news website in the world, everyone else is copying it and occasionally it is, if you try reading it, it gets very depressing very quickly because it’s sort of slightly lyrated and very pious and that sort of thing.

Ben: That’s what cool about analyzing Yahoo’s financial results.

Iain: Yea, yea.

Leo: Can you imagine, oi. For sale, one slightly used internet company (laughing). Verizon, Yahoo might also go to Verizon. Of course they just bought AOL. That’s where I think. The real value at this point of Yahoo is as much the information they have about their users as the content, right?

Ben: Well the big problem is they don’t really know anything about the users. Yea, Yahoo brings scale. They bring a lot of users, mostly on the desktop. But still a lot of users. And there’s still value in that. And frankly AOL has much better technology than Yahoo does. It’s a good investment they made in that over the last 3-4 years. And so I think bringing that better technology and understanding tracking users, serving ads, all that sort of stuff to bear on Yahoo’s user base could make this something that makes sense for AOL as part of Verizon.

Leo: AT&T, Comcast also considered although maybe not as many bidders as you think. Erin Griffith, a good friend of the network writes in Fortune that many of the so called 40 bidders for Yahoo have never even signed the nondisclosure agreement to view the sale book which means they’re probably not that interested.

Iain: It always helps to get a bit of publicity in there.

Leo: Right. Softbank for instance never signed the NDA. And actually according to The New York Times on Friday isn’t interested in bidding anyway. The Daily Mail has never signed the NDA. Microsoft never signed the NDA. So there are probably a lot of people doing due diligence and maybe dipping their toe in the water. You think Verizon? I think Verizon.

Iain: I think Verizon makes sense to a certain degree. I mean it all depends on what’s included in the package as well because you know the Alibaba stake is basically Yahoo’s complete value at the moment. Everything else is just—

Ben: And it’s definitely not included. I mean the whole point is to separate the Alibaba.

Iain: Exactly.

Leo: So how much actual value?

Iain: How much are they going to pay for it? I mean I’ve got $20 bucks in my wallet. I mean to buy a loss making enterprise like that, you know, you’ve got to have some value in there. And you’re right, the value’s with the users.

Ben: Well it’s not loss making though. Yahoo’s profitable and they throw off a lot of, a fair bit of cash albeit a declining amount of cash. So there is, the problem is yea, all the trends are in the wrong direction. But there is cash flow there. So you could, there’s theoretically a deal like a leverage buyout sort of deal too. Again the problem though is the fundamentals of the company and where they exist in the current environment are all wrong.

Leo: They don’t seem to be encouraging the buyers either. Erin quotes one senior private equity executive whose firm expects to make an offer saying, “The auction process has been an f-ing joke. Most financial bidders were required to listen to a lengthy prerecorded management presentation before they’d even answer questions over the phone.” That’s like water torture. Very few suitors were granted face to face meetings with management, Verizon and Comcast among the lucky few. Even they struggled to extract information from Marissa Mayer and CFO Ken Goldman. They were rebuffed after asking about current revenue projections from Tumblr. I think one of the reasons this article’s even been written is people are coming out of these meetings and calling Erin and saying, “This is horrible.”

Iain: I don’t think Mayer particularly wants to sell anyway. I mean she still wants to make it work.

Leo: That’s exactly it. “One popular theory,” writes Erin, “among bidders is that it’s an open rebellion by Mayer against Starboard Value and board members who want to sell.” Starboard is the activist investor who—

Iain: That’s a nice way of saying vulture capitalist.

Leo: And so maybe she’s being forced into this by the board and she doesn’t want to do it and so she’s making it really unpleasant.

Iain: No, I think she wants to make it work. This was her big move from Google to show that she can run a company after being sort of denied proper management, what she saw as proper management rolls within Google. And three years down the line well, you know, a bit more time maybe but I just—it’s got an aging user base, it doesn’t seem to know where it’s going.

Leo: What a great soap opera this is. I tell you, it’s just—

Ben: Well frankly, Starboard or whoever the managers are, you can call them vultures but as a shareholder I’d be certainly very pleased that they’re there. I mean the reality is that—

Leo: They’re saying cut bait, right?

Ben: Well there’s zero indication that Yahoo under its current direction has value in the long run frankly. And honestly I don’t think it’s necessarily Mayer’s fault. I think that she was the wrong hire. And I think she was the wrong hire because I think Yahoo hasn’t known what itself is for a long time. People think of Yahoo as being a tech company. The reality is that Yahoo started out by being a human curated list of the internet.

Leo: Right.

Ben: Which was so nontechnical they got their rear end kicked by Google. Because Google was a technical solution to indexing the internet. Yahoo was a human based solution.

Leo: I remember going to Yahoo’s offices when they were just starting out. And actually Jerry showed me the servers. And it was small enough that they had the servers on premises in a closet. He said, “There’s Yahoo.” I said, “Oh, there’s Yahoo (laughing).” And then mostly it was a lot of people, right, maintaining an index. There’s no way that can scale.

Ben: They’re a media company. They’ve been a media company and to hire Mayer was to misunderstand what Yahoo has always been in my estimation. And the fact that—

Leo: But I feel like they’ve had some decent products. Yahoo Mail is a decent product. Flickr is a decent product. A lot of people use those content sites. OMG and TV.com. They drive a huge amount of traffic.

Iain: I think the huge win in all this was Microsoft. Considering Microsoft very nearly paid $40—

Leo: They almost got them for $31.

Iain: Well, 40.

Leo: 40? (Whistles).

Iain: At one point the bidding was up to $40 a share.

Leo: Oh, man.

Iain: A couple of weeks later, so a couple of years later and it’s like that was the biggest bullet I’ve ever dodged.

Leo: Dodged a bullet.

Ben: That said, Microsoft would be up on their investment if they had bought it then.

Leo: Would they?

Ben: Because that would have included the Alibaba stake and stuff. So it would have been terrible strategically because they would have had this anchor tied around their ankles. But I mean, I can criticize Ballmer left and right but that deal is, people forget about that part of the deal.

Leo: They want $36 bucks now.

Ben: They would have backed into that profit to be clear. It was a terrible idea. That said, it wasn’t quite the financial disaster that—

Iain: It is weird the way these things work though because we had an article last week about this. You know that Apple actually made a colossal amount of money out of The Newton?

Leo: What?

Iain: Yea. Apple made at least $700 million dollars on the Newton.

Leo: On the Newton?

Iain: On the Newton. And the reasoning is this.

Leo: Well you’d never know that would you?

Iain: No, and somewhere in building and designing and selling the product they lost $100 million. But as part of that they needed processes to make the thing work.

Leo: ARM

Iain: So they bought a big stake in ARM which they then sold for $800 million dollars (laughing).

Leo: So the Newton was not profitable. But the fact that they had to invest in ARM and make ARM happen and made a lot of money.

Ben: You could say they made hundreds of billions of dollars because that helped ARM which eventually they used in the iPhone.

Leo: That’s true, that’s true. Basically what we’re saying is it’s a random walk and if you do well you just lucked out.

Ben: The rich get richer.

Leo: The rich get richer. Our show today brought to you by Audible.com. We know you like to listen. You’re listening right now but how about audio books? Have you ever tried audio books? I am so much a fan. This one’s an easy one for me. I’ve been an Audible customer since 2000, 16 years, long before TWiT even existed because I had a long commute. I had to drive to San Francisco every day. I’d spend 2-4 hours in the car every day. And frankly the only thing that saved my sanity was having great literature in the car. I listened to all 21 volumes of the Aubrey-Maturin series about a Napoleonic war era ship’s captain and his best friend the ship’s doctor, Aubrey and Maturin and what a great—from Patrick, not Patrick. Patrick O’Brien, yes. Wonderful books. By the way, they’re all on Audible. Just great stuff. That saved my life. I was sailing a ship the whole time I was driving back and forth (laughing). Great science fiction too. Look at Ender’s Game. That’s the 20th anniversary edition so it’s a dramatization that really comes to life. Man, there’s so many great volumes there. Here’s a way to get two of them for free. You’re going to go to Audible.com/twit2. Audible.com/twit and the number 2. That will get you a chance to sign up for the platinum plan. That’s two books a month plus the daily digest of The New York Times or The Wall Street Journal. You can cancel any time in the first 30 days. Pay nothing, but those books are yours. You get to keep them. You know, did you see that Hamilton book? They call it Hamiltome. That’s the story behind the musical. That’s sold out. You can’t buy that in bookstores. But you can get it free right now at Audible.com. That’s the nice thing about digital. Never runs out. You can never sell out digital copies.

Book Narrator: Property here, no connections. Alexander Hamilton 1780.

Leo: I’ve got to actually listen to this because I’m such a fan.

Iain: I was going to say, you’ve seen the musical?

Leo: Yea.

Book Narrator: On the origins of revolution, both national and musical, with---

Leo: There’s so many great books. You’ve got to go to Audible.com and take a look, browse around. You’re going to pick two. I know it’s hard. In fact the biggest problem with Audible is just you know, oh, I want to listen to that but I want to listen to that. Audible has a wish list where I load it up. I load it up with all the books I want to hear. The new Lisa Scottoline just came out. Here’s one, you know I just saw the David Foster Wallace movie. Really loved that with who is it? It’s James Franco and Seth Rogan interviewing James Franco. It’s the story of one of the greatest novelists, sad story too. Infinite Jest is a very long Audible book. But you can get it for free. There’s two ways you can listen. You can listen, there’s a three part version or you can get all 60, almost 60, 55 hours in one (laughing).

Iain: Cross country trips.

Leo: Yea. You know I feel like it’s good to get long books because you’re getting your money’s worth, right? If you buy books by the pound, this is for you. Audible.com/twit2 your first two books are free. Many hours of pleasure await you with some of the best books in the world. Audible.com/twit2. We thank them so much for their support. And for keeping Leo from going bazoodies on his drive home. All right. F8 was this week. We all watched Mark Zuckerberg on stage on Tuesday with his killer drone, oddly named Aquila.

Iain: Oh no, Aquila’s the really big.

Leo: Well that’s the big drone. That’s the one with the wingspan of a 737. Looks strangely like a B1 Bomber. Now it’s just, it’s harmless, it’s just going to spread the internet.

Iain: By lasers.

Leo: (Laughing) Mark’s kind of like an Elon Musk. I think he’s got great vision. But he also I think lives in a bubble, an interesting bubble. He’s not like you or me.

Iain: I’ve got to say I was actually at the conference and it got almost distasteful at one point when he was talking about, “There’s 1.6 billion people out there who don’t have access to the internet because they’ve got 2G connections.” Well hang on. They probably don’t have access to clean water, electricity, enough food. You know, diarrhea kills 2,000 children a day around the world. I don’t think those people’s priority is checking their Facebook feed. Sort of frowny face, lost another one today.

Leo: But it’s not the internet he’s offering because Facebook’s what is it called, the Basics?

Iain: Free Basics.

Leo: Free Basics is really Facebook plus a Wikipedia, some woman’s health stuff.

Iain: It’s about a hundred sites. They are actually opening it up now.

Leo: Are they?

Iain: To allow more sites on there but it’s primarily a tool for getting people on Facebook. Which you know, getting the world wide up is a laudable goal in its way but I prefer the Bill Gates version of keeping people alive rather than allowing them access to tweets and pokes. It’s, yea.

Leo: Lots of free stuff. This is a top ten list from Wired Magazine aptly titled 10 Things Facebook’s Given Away to Take Over the World. Cassandra is a NoSQL database, a flat file database that Facebook created that’s for big scale. Google’s done some more things giving away some of its tools. Hadoop. I didn’t know this. Hadoop came out of Yahoo. Facebook apparently took it mainstream. And of course now Microsoft is taking on the Hadoop banner. Hip Hop Virtual Machine. What?

Iain: Yea, they’re kind of pushing it to make the turn I think on that one.

Leo: It translates PHP into machine language (laughing). It’s a PHP compiler I guess. But a very strange name. Oh, I get it. It’s a retronym. It’s HHVM which they call the Hip Hop Virtual Machine. I don’t know what the HH is. Box and Wikipedia both do it. Data centers, they open sourced their—

Iain: They did a huge amount of work.

Leo: That’s actually pretty impressive.

Iain: Yea that is.

Leo: They call it the Open Compute project so how to design an energy efficient data center.

Iain: This was a completely mucked up deal on HP’s business plans but in a good way.

Leo: Well yea because they wanted to sell servers and everybody’s buying commodity servers, building their own using Facebook’s design. Google does the same thing too though.

Iain: Yea, they build their own hardware. But I mean one thing Facebook has been very good on is open sourcing a lot of these designs. We saw this, I know I still want to say Aquila, but the other two net extension technologies they’re talking about. The redesigning cell towers and redesigning aerial systems. They’re open sourcing that as well. All the telco gear is going open source.

Leo: Facebook’s also building its own switches.

Ben: The Google point is important though because the reason, what makes the Open Compute project so brilliant strategically is Google had and especially as countered as a significant advantage, their expertise in building data centers and buying all the component parts and really reimaging what it meant to be a data center. And Facebook you know, 5, 6 years ago when they started Open Compute project, it was a classic strategy move and just brilliantly executed. You know the leader is fully integrated, has a superior solution. So what we’re going to do is we’re going to commoditize it. We’re going to make it completely open. We’re going to give people, induce competition in all these various areas and give it away. And the net result is actually as of, I believe earlier this year, Google actually joined the Open Compute project.

Leo: Ah. That’s great.

Ben: And Google has previously open sourced some things but it’s been stuff that’s been well developed and is out there and they get less of an advantage from it. When they joined the project they actually contributed I can’t remember what the certain thing was, I don’t have it right in front of me. But they contributed something that they were actually actively working on that previously they would have viewed as a differentiator for themselves. And the reality is Facebook has completely commoditized that advantage for Google via the Open Compute project. So it’s achieved Facebook’s strategic goal. And in the meantime, yea, it’s a big problem for Cisco. It’s a big problem for a lot of these data center providers.

Leo: And look at this. They’re building their own networking gear. This has to terrify Cisco and Juniper and others. And not only that, they’ve open sourced the design so it’s not like I’m going to build one of these switches but somebody in Asia might and sell it very cheaply, right? In a way I kind of applaud. This is pretty impressive that they’re giving this away.

Iain: I think Ben’s spot on on this. It served their interest but it also served the interest of the wider community so win win.

Leo: But that’s business, right? If business is done right, of course they have a responsibility to be a profitable business to their stakeholders. But if it’s done right it also benefits the world.

Iain: Google complained about this because that’s exactly what they did with web main. They circled on the established market and they gave it away for free. And they vastly expanded the amount of storage everyone had.

Leo: What’s amazing is we have always know how disruptive technology is to old line businesses. But what’s so interesting is it’s moving so fast now, it’s disruptive to other technology businesses. We live in a world of disruption.

Ben: It’s what Google did with Android. The reality is it’s in your interest to understand as a company where your differentiation comes from. You want that to be exclusive and you want to commoditize everything else in your value chain because that makes your piece more valuable, makes your piece more expensive depending on whether your price is attention, whether your price is time, whether that price is money. So no, it was a brilliantly executed strategy and by the way Google added a new rack specification that includes 48 volt power distribution in case you were wondering. But it’s the same thing with the Open Compute thing. Yes there’s lots—not Open Compute. Free Basics. You can certainly be critical of it for lots of different reasons and I think the India aspect of it was very interesting particularly the ideas of digital colonialism and all that tapped into India’s history with the British Raj and all that sort of thing which I think Facebook was not nearly as aware of as they should have been. And were kind of oblivious to this. But it doesn’t ipso facto make what they do being wrong. I mean the Open Compute project, it’s a good thing. And the fact that it benefitted Facebook along the way is worth understanding. It goes both ways. For one let’s not overpraise Facebook. Just as we shouldn’t have overpraised Google for Android. And nothing was more galling than the iPhone Android stuff. People going on and on about how Google is some intrinsically good company because they’re open. No, they’re open because it served a strategic interest. But let’s not go to the opposite side either and say this is a bad thing because it serves their interest. Well, they’re a big company. It’s what they do. And let’s understand that but let’s not make moral judgements in either direction, either good or bad.

Iain: Yea, I mean I agree with you on an awful lot of that. I think what worries me about Free Basics and this was something that they actually said last week. They said of the people that use it, 50% will buy an independent data plan within 30 days. And that’s saying basically that this proves our point. That once you get people excited about the internet, then they’ll get on.

Leo: They’ll see the value of the real internet.

Iain: Yea but it did also make me thing that you know, well, yea, but it also kind of demonstrates the point that Free Basics sucks. Giving you access to a couple hundred websites.

Leo: A couple of weeks I tried this. Now I have to get the real thing.

Iain: Yea, exactly.

Ben: It’s like what we talked about before with the tradeoff stuff. I mean everything’s a tradeoff. And the Free Basics, you know Facebook’s position is well, it’s Free Basics or nothing. Or it’s like, and you can see it’s kind of unfair to say Facebook ought to give the whole internet and every site whether or not that site has optimized itself for Free Basics which is a key part of being a part of Free Basics. That you’re not—I mean the average web page is like multiple megabytes in size. Which it’s not financially viable to give that away for free. It’s just not. But on the flip side, well, who’s making the decisions? Who’s doing this sort of thing? So again, you can argue both sides but I don’t think it’s particularly valid—well, I mean there’s no having your cake and eat it too. It’s like everything. There are tradeoffs and is it better to have nothing or is it better to have something?

Iain: Yea but Free Basics is as it stands only works at the moment if they’ve got an internet connection they can access in the first place. I think what’s interesting about Facebook’s sort of quest is that it has the Aquila drones. It has the ability to go to places where there is no internet access. Now that I think is going to be A, very handy. It will be handy for the people who are given the internet access. I just question whether it’s—

Leo: I have to defer to Om Malik who’s been very—a friend about the opposition. As has, by the way, the Indian government which has banned Free Basics. He says it’s a form of kind of information colonialism.

Iain: Yea, we’re kind of guilty on that front.

Leo: He says you can’t really understand why it’s so anathema to Indians. But we had to face this kind of colonialism in person and we’ve seen this before. Come one, it’s free. No, try it. You’ll like it. Well the first time.

Iain: No, and he wasn’t the only person. Facebook isn’t the only company that has run up against this. Mark Andreessen made a number of staggering poorly worded tweets about this and then had to make apologies.

Ben: Staggeringly poor is understating it.

Iain: (laughing) Well it’s like you saw the first one. Stop digging. Come one, Mark, stop digging. You’re supposed to be the smart one on this. And then another one came out. I was like for God’s sake.

Leo: I think he said something like—I found his apology but let me see. He’s probably deleted the original offensive remarks.

Iain: It wouldn’t surprise me because I can’t remember exactly what he said.

Leo: How is that opposition to imperialism? We’re there for you. Something like that.

Iain: It was just like—now the Brits have got a really bad reputation here and justified in many ways. But you know, it doesn’t—understandably a lot of people in India are very, very touchy about this sort of thing because it hasn’t worked out great in the past. And yea, we gave them the railways but also mass famines. It kind of swings around about.

Leo: Let’s see here. So I guess what we should really talk about is the bots. Because that was one of Facebook’s big announcements. This is not the first time Facebook has announced, “Hey, we’re going to do poke. Or we’re going to do Facebook home.” Or a variety of products that serve Facebook’s interests but did not pique the interest of consumers. This is, you know we’ve all been looking at messaging as a platform. It’s pretty clearly a powerful platform in countries like Japan and China where—have you used WeChat? You’re in Taiwan so I don’t know if WeChat is as big in Taiwan.

Ben: No, Line is the big one here.

Leo: Line is the one. But both of these are chat platforms that allow you to do things like buy tickets and you know, a whole lot more, right?

Ben: Not really. Frankly the—

Leo: Is it overstated here in the West?

Ben: It is overstated. I actually don’t think Facebook’s announcement, and I think Facebook should have framed it better. Because what’s interesting here is not necessarily bots. But the reason they talk about bots is bots is kind of the developer angle on this.

Leo: They’re the apps that sit on the platform which is messaging.

Ben: Well also maybe. The way WeChat works in China for example, and WeChat is by far the most developed here, is actually—so if you’re a business rep you can get what is called an official account. And an official account, the vast, vast, vast, vast majority of them you can build sort of bot type framework on it. But few do because it doesn’t make sense. And that’s for web use.

Leo: Yea, I heard that. So it’s just really a portal into a website.

Ben: It all has its purposes in the WeChat UI. And what makes the WeChat, what makes this powerful is the context that’s delivered by We Chat. WeChat knows who you are. WeChat has payment attached. WeChat knows your location. Like there’s all this context that WeChat provides. So what it allows is you can have these very lightweight interactions with businesses whether it be buying something online. Whether it be ordering dumplings down the street. Whether it be interacting with government services, like all the government various agencies like the water utility is on WeChat. You can do all this stuff via WeChat and the reason again it’s powerful is like if you go to a mobile webpage, you have to enter your credit card information. You have to say who you are. Like there’s so much friction there. But by being in WeChat there’s no friction. It’s very easily discoverable. Here QR codes are a big thing. You can just scan it. It’s super easy. Everyone knows what it’s for, what it’s used. And there’s no friction. It reduces all the friction in these interactions. The reason why I think this is so misunderstood in the US is I’ve been writing about messaging for a very long time. I think my third or fourth ever post was about messaging. But it’s always been about the WeChat or the Line or in the case Messenger. Because the fact of the matter is the reason this area is interesting is because WeChat for example has built what is effectively an OS on top of the OS. Like these messaging apps are the browser on top of Windows. And the reason that’s interesting is the browser is what broke Windows in the long run, right? Because you no longer were locked in. And—

Leo: How is it different than a browser though? Sounds like it’s just another kind of browser.

Ben: Well it is in a way because it delivers all this context in a very frictionless way. Like the difference between—I can on WeChat, so I can open up WeChat. Not now because WeChat’s different in China than outside China. But say I’m hungry. I can open up WeChat. I can go near me. I can see there’s a dumpling place around the corner. I can go to that place. I can go into that site which again is just HTML and CSS. I can make my order. I can click buy. Because WeChat knows where I am. It knows who I am. And it has my payment information attached. It’s all the context that makes it super frictionless.

Leo: See I love this idea.

Ben: No, it’s amazing.

Leo: Is this where Facebook is headed?

Ben: That’s exactly where they’re headed with Messenger. And Messenger, they want to get this context and deliver it. The reality though is that one of the ways you could deliver it is via bots but the fact of the matter is at least in the beginning and if you go to the WeChat example, most of it isn’t bots. And I personally convinced that all the bot hype is wishful thinking for the most part. That it’s going to be—

Leo: They’re kind of clunky. I subscribe to a few bots here through CNN.

Ben: The value is going to all accrue to Facebook. Just like the value all accrues to WeChat.

Leo: Why would CNN even—I mean I guess you get more eyeballs, right? And so the images have seemed to have disappeared. Maybe that’s another problem with the fact that after a while it expires.

Ben: The media companies are on there because they’re desperate.

Leo: Yea. They’re just trying to get audience. So this has got a little carousel. And then you can query it. You can read the story that will bring you to a webpage. You can get a summary which I think is going to come from chat. And then there’s something called Ask CNN which I don’t want to get in a dialogue with CNN but maybe, I don’t know what.

Iain: Well the other thing is they demoed this at the actual keynote.

Leo: You couldn’t ask for more.

Iain: They tell you what the headlines’ going to be and then you can ask for more information. But I’m deeply skeptical about this move from Facebook simply because they touched on it slightly. That this has to have a human working behind it as well. It’s not totally an AI system.

Leo: Ok, so I take Olympics.

Ben: That’s not Facebook’s problem though. Facebook in the long run, their value will come from buying the platform. And so like you can, it’s on the individual businesses to have that backend. Unfortunately most of the demoes are terrible demoes of what’s valuable. I actually thought the best demo was the 1-800-Flowers demo. Like you can envision a world—

Leo: Buying flowers. Yea.

Ben: Yea well for example, you could see a flyer or something. And it has a QR code around Mother’s Day. Or maybe it was an advertisement or something. And again, people mock QR codes in the US just because it’s never been implemented properly. QR codes are a huge thing in China. They’re used everywhere. And the reason they’re easy is everyone knows where to use them. They’re used in WeChat, right? Like there’s no—that’s always the problem. What app do I use?

Leo: What do I do with it, yea? Do I just take a picture? Then what?

Ben: Well this way it would work for Facebook theoretically in the long run is say you see an ad for Mother’s Day. You open up Messenger. Boom. You scan it. Now you’re in an application you use to order flowers. And you’re like going to order roses for your mom. Oh, like what’s the address? You get this kind of—you just put in the information. It already has your payment information. It already has various aspects about you maybe because it’s Facebook it already knows your mom and where she lives. I mean who knows? But you have all this context where it’s a trivial transaction. You don’t have to go download an app. You don’t have to go to a website. You don’t have to enter your credit card information. Like there’s lots of friction that can be removed. And chat is better than calling on the phone. Zuckerberg said it. Who wants to sit on hold?

Leo: I’m not convinced of that. In fact it just seems like one more way companies can put off having any interaction with me with some automaton. I would rather talk to a person if you don’t mind.

Ben: You’re stuck in the bots thing. Again, bots is one possible implementation of this platform. And frankly I think Facebook screwed up by over indexing on the bot thing. Because what makes Messenger interesting, what makes WeChat interesting has nothing to do with bots. Bots are an implantation detail. And frankly I think the vast majority of Silicon Valley is missing the boat on this because Silicon Valley gets so wrapped up in scale and in technical solution when what’s interesting about—the real work that needs to be done here is actually going to like businesses and getting them online. And getting them, like their stuff integrated. And no one wants to do that because it doesn’t scale. It’s not a VC type of business. And so everyone’s trying to put a VC business framework around this opportunity when the fact of the matter is the opportunity is pretty exclusive to Facebook. And people I think just really, really hope there’s the next app thing or whatever. But I’m not—

Leo: Well here’s Poncho the Weather Cat. They showed this one off. I said, “Hello.” And it went, “Zzz. Purr. Huh? What time is it? Oh, hi. I’m Poncho. A Weather Cat.” And I have buttons. I don’t actually have to type which I frankly like. And it says, “Weathercat? Or Um, okay.” And I said, “Weathercat?” It says, “A cat that tells you the weather.” “Oh.” “Anyway why don’t you tell me where you are? I need to know so I can give you the forecast. If you’re on a phone you can send me your location, too.” So I typed in the city. “Oh, Petaluma. Right now it’s clear there. Is this the location you want?” And I will click the button Yep! And then I guess from now on—“May I send you weekday morning weather update at 8am? Or just tell me when you’d like to get morning forecasts.” Yea, yea, send it to me at 8:00 am. That sounds good. So great. So I’ve had an interaction which actually I guess I’m going to get bothered every morning.

Ben: It’s a lot like Microsoft Clippy. That’s what so great about all this.

Leo: It’s very much like Clippy, isn’t it (laughing)?

Ben: The bots are only going to be interesting right now.

Leo: Wait a minute. “Are you sensitive to pollen? Do you have fancy hair? Should I send you frizz or pollen alerts?”

Iain: This is the problem, you see. I think companies go into this in a half assed fashion. They’ll risk annoying more customers than they actually do get along with.

Leo: I actually have had Poncho on. I turned it on my SMS messenger. And I turned it off after a day because it was really annoying.

Ben: What Iain said is super-duper important. Say it again, Iain. Leo missed it.

Iain: I was just saying that basically I think a lot of companies are going to rush into this and they’re going to put out badly thought out software.

Leo: Well that’s what always happens.

Iain: It’s going to run, it’s going to annoy normal people—

Leo: Remember farm apps? Remember all those apps?

Iain: Well yea, but I mean you mentioned—

Ben: But the problem is—I completely agree.

Iain: Even now—sorry. Go ahead, Ben. Sorry.

Ben: No, no, no. I’m ranting about this. Because I think Facebook screwed it up. And the reason they screwed it up is I think there is a real opportunity here by everyone. Not just you, Leo, but everyone is thinking about what they said about Messenger is being about bots and the opportunity is not about bots. That may be the developer opportunity but that’s not the real promise of what they can do with Messenger here. And the concern is like you don’t get—ask Twitter. You don’t get multiple chances to make a first impression. And these implementations are terrible. People are all about bots and AI. This is the discredited form of AI. The idea that we can anticipate every possible action and give an answer to it. I’m annoyed.

Leo: (Laughing).

Iain: I mean it also tied into Facebook’s goal of becoming an AI company and they’re still a bit—

Ben: But these aren’t AI.

Iain: No, no exactly. This is sort of how were billing it at the conference was “Ok, our AI systems aren’t there yet, but stick with us, baby, because we can make this work” And I don’t think they can at the moment. I mean they’re still reading form the fact that they were, “Oh, yea, we’re going to build an AI which can defeat a human player at Go,” and then Google did it a few months later.

Ben: Mark Zuckerberg posted about it and literally within 12 hours Google posted what they did. It was hilarious.

Iain: I know it was hilarious. It’s just like you couldn’t make this stuff up.

Leo: So what should Facebook do? I mean I agree with you. It’s not about the bots. Or it’s not about these kinds of bots. So Facebook needs to go out and start talking to businesses and getting them signed up? Is that?

Ben: That’s the long run—yea, for sure. Getting any sort of multi-site network off the ground is devilishly difficult so Facebook has to sell this benefit to businesses. There’s lots of reasons the Chinese market is different. Actually one of the things that is really interesting about the Chinese market is—probably the most famous flame out of a Western company in China is Groupon which went in there with a bunch of Western managers and just got obliterated. And they got obliterated in part by all these imitation sites that spring up. The largest of which is still around. But a ton of money went into it. And a lot of this money went into like going out and having sales forces going in to all these business and wiring them up with like computerized cash registers and tracking stuff so they can take advantage of these coupon offers and all this. And a tremendous waste of money. This kind of gets to some of the stuff we talked about earlier. Just a huge waste of money. What would happen though is when these new services, these new generations, called oto in China, it’s kind of like these—whether its food delivery, whether it be with the WeChat stuff, the payments, what happened was all these small and medium sized businesses had all this technology already in place that was helpfully put there by all the VC’s funding Groupon and all their clones. So in some respects they were more primed to leap forward in that respect which is kind of an interesting, one of those interesting unintended consequences sort of stories.

Leo: Snapchat horror film. I think Snapchat—no? I think it’s an interesting medium.

Iain: I’m just remembering the film of Super Mario Brothers and just as weak as I suspect we’re going to see.

Leo: Allison Raskin has done well, a Snapchat horror film. I mean this (laughing)—it’s on Snapchat, right? It’s not off Snapchat. I don’t know. This is a screen grab I guess of it from Space Odyssey Films.

Iain: Yea, you know, sometimes Hollywood and tech just don’t go together and you’re just—

Leo: Did I wake you? I don’t know. I think this is interesting. It’s quite a medium we got here, this Snapchat thing.

Iain: Yea well they’re also sort of pivoting around trying to find—

Leo: So is Vine I might point out.

Iain: Yea, I was going to say, Snapchat’s suffering a bit in that they’re needing to pivot away from what they’ve been known for. So they’ve got to expand out some new areas.

Leo: So you don’t think this is kind of, just kind of native, somebody figured it out? This is something Snapchat kind of pushed somebody to do? It’s not like Allison just said, “Hey, this would be kind of cool.”

Iain: It’s possible it went either way. But I know the company is desperately looking for a way to maintain its valuation.

Leo: Right, right.

Ben: I don’t know. I think Snapchat—Snapchat’s pretty powerful. Their numbers are off the charts.

Leo: They’re amazing, yea, yea. For kids. You know it’s hard to keep kids engaged. And I don’t think it’s really fully in the company’s hands frankly, their future. They just kind of have to hope that people like Allison Raskin will continue to create interesting content and then people find other ways to use it.

Ben: The way they have evolved is really interesting. I mean because where they started was Facebook had like, there was a hole in the market. Facebook has always been kind of from day 1, and about this week has been about your public persona and public representation of yourself. And that left space in the market for kind of your private persona. And Snapchat filled that. And over tie Snapchat has expanded out of that. They added, there’s the stories feature which are public to anyone who follows you. And is kind of like TV. And now with the latest update you can actually save and it will go through stories. And you can see how maybe an ad might fit in there. They have the Discover which is professionally produced content which has massive engagement numbers. You talk to any of the publishers that are in there and it’s huge. And again, and now with professional content there’s maybe a better fit for professionally produced advertisements. The challenge for Snapchat is the engagement numbers are fantastic. It’s an amazing place to be to own this sort of private communication. There’s a couple circumstances. One, just generally are they going to be able to spread internationally? Because this space is filled by apps like Line or Kakao or WhatsApp frankly in other countries. And to kind of take this full circle with the Tesla Apple stuff, there’s a brand promise of Snapchat which is this sort of we don’t, it is private. And to get effective advertising where they’re going to have to do more tracking and more targeting. Which by the way they changed some of their policies with the latest update, the privacy policy in terms and conditions and stuff to make it clear this is going to be happening now. That’s going to be the real challenge for them. I think it’s a product that is here to stay. But to pull off the monetization is going to be tricky. But that said, you know, they’ve really executed really quite brilliantly now. The big concern, I’ve made this joke on multiple media and platforms so I’m sorry to reuse it but I like it.

Leo: No, no reuse. Nobody knows what you’re doing.

Ben: Well I mean you talk about turnover. Turnover can refer to revenue but in Snapchat it refers to their executive brains. And that you know, there is a question about Evan Spiegel, does he have it in him to build a business, not just build a really good selling product.

Leo: That’s a hard thing. We’re going to take a break, wrap this up. We’ve got a few more things to talk about. Our show today brought to you by Gazelle. If you’re in the market for buying a new gadget or selling your old gadget, this is the place to go. Gazelle has a variety for sale including the 6S the 6S Plus, iPads, Samsung Galaxy phones, each device fully inspected, backed by a 30 day return policy. Sold without carrier contract. You’re going to get a great price. And you can even get financing now. Gazelle has added financing by Affirm. You give them your basic information during the checkout process and you’ll get approved instantly with easy monthly payments of 3, 6 or 12 months through bank transfer, check or credit card. Just check the box that says financing with Affirm. It has never been easier to buy a new device. They even offer 12 month warranties through Assurant for cell phones and iPads. Covers water damage, cracked screens, hardware defects and more. G-A-Z-E-L-L-E. And of course it’s still the best place to go to sell your used stuff and get top dollar. You’re guaranteed for 30 days. You lock in that price from them which means you have the flexibility to decide any time in that 30 days whether you’re going to take their offer or not. They can’t change the offer. Although I have to tell you, they’re really good about upping the offer. Twice now I’ve used ` that they’ve actually given me more money than they offered because they said, “No, no this is better than you said.” G-A-Z-E-L-L-E to buy, to sell, give new life to used electronics. Trade them in for cash or buy certified pre-owned. There’s nothing better. Keep it in the back of your mind when you’re ready for a new one or the kids are or you drop a phone. G-A-Z-E-L-L-E, Gazelle.com. I don’t know anything about this. Somebody called the radio show and said, “Do you know Dubai is putting high speed LiFi into their streetlights?” LiFi is really weird. It’s LED lights that blink and transfer data. It’s not Wi-Fi. Yea, well it’s kind of like how fiber optic works. It has potential very high speed in the labs. It was invented by a Scottish—

Iain: As many good things are.

Leo: Professor, yes, at University of Edenborough. He gets 224 gigabytes a second over this network. Now of course it’s not going to work with many smartphones. You have to have a smartphone that can see the light and transmit the light. But apparently many new smartphones are starting to include this LiFi capability. And Dubai has plans to get this all over in their street lights by the end of the year. It’s the first kind of wide scale test of L-I-F-I, LiFi.

Iain: And you can see, I mean Dubai has the kind of money to put into this kind of project.

Leo: Yea, it’s good to get a test.

Iain: It’s going to be interesting to see how it works in the real world. I mean I’ve looked at various parts of this and it’s a really cute idea. If it works as specified it’s going to be very, very good indeed. But I’d like to see a—

Leo: Yea, it reminds me of YMAX. Remember how excited we got about YMAX? And it turned out to be—

Iain: Yea, that’s great how YMAX worked out.

Leo: It’s a flop. And yet if this works I mean it’s really, really intriguing. I think the key is going to be you’ve got to get this stuff into phones here. Professor Harold Hass who’s at a TED talk explaining his LiFi.

Iain: I mean TED is—

Leo: I know (laughing). Apparently the latest, this is according to a journal from the UAE, the latest crop of smartphones are LiFi enabled and can connect through the use of the camera sensors. Older models and non LiFi enabled products will have to use a dongle. It’s invisible to the naked eye. It’s all ultraviolet or infrared range. I don’t know anything about it. I just thought I’d ask you guys.

Ben: I don’t know. It’s core as of now, April 2016 there are no phones with LiFi support.

Leo: So this will be a good idea someday. Perhaps. Maybe, maybe not.

Iain: In the meantime I’d like a flying car, please.

Ben: I mean so many, it’s so easy to evaluate products in a vacuum but the reality is nothing exists in a vacuum and that’s why—

Leo: I use YMAX all the time as an example of that, right? It looked like a good idea.

Ben: That’s why we’re running X86 processors even though, based on an instruction set that is not that efficient. But for accountability, yes I know technically is risk on the inside now. But the fact of the matter is, is that compatibility and all those sorts of things are product features just as much as what’s on the spec sheet are. And I would strongly suspect that would be the case with this. That we’ll get some evolution of Wi-Fi and the wireless that we already have. And we’ll be happy with it.

Leo: Are people running out to buy the new Kindle Oasis, Amazon’s newly announced Kindle is $290 dollars. And apparently has got great battery life. I don’t know why you would ever buy this.

Iain: Too good battery life. I’m sorry, 20 months battery life?

Leo: Yea.

Iain: Who needs 20 months battery?

Leo Yea, I know.

Iain: Are you going to be stuck on a desert island with no hope of rescue in sight? Well thank goodness I’ve got my e-book reader.

Leo: It’s got an ergonomic hand grip. Now how much would you pay?

Iain: Well in that case just take my money now.

Leo: What I’ve also found is I don’t think people—I think this is a category that’s dying, isn’t it? Everybody’s got readers on their phones and tablets. Are people buying stand along readers?

Ben: That’s exactly why they need to go high end. Because the people who are buying this are people who highly value having a dedicated reader. And they value it for lots of reasons. It could be battery life. It could be usability or you know it could be they like the e-ink display. But in any niche market you’re better off going high end than you are—

Leo: Increase the profit margin.

Ben: Well yea, yea. That’s what people value. The people who are still buying e-readers really wanted an ink reader and they are much more likely to pay for the best possible ink reader. Anyone who is worried about price is just going to use their iPhone anyway.

Leo: Well I admit I bought a Kindle Voyager because I wanted a 300 dpi screen.

Iain: My wife’s got a very, very basic e-reader which gives a great battery life and it doesn’t cost very much so she can read it in the bath.

Leo: You can get a Kindle for $80 bucks. And right, if she drops it?

Iain: If she drops it you know it’s just like, well it’s a bit of a pain in the backside but what can you do?

Leo: This is only 4.6 ounces.

Iain: You know, but that’s a lot of money for an e-book reader.

Leo: It’s the lightest and thinnest Kindle ever.

Iain: For a single use device that’s just—

Leo: That does seem like a lot. I think you nailed it. I think—well done. Once again, Ben, that’s why we have you on. If you’re going to have a small, niche market, go for the high end. Build a Tesla not a Toyota. And finally—

Ben: The months and months is only with the cover.

Leo: Right, the cover is a battery as well. It’s like a Mophie case. It covers the battery as well, so that’s why you get extra. But who would buy the cover?

Ben: I don’t know, maybe you’re going on a long trip. Maybe you’re traveling the world. Maybe you’re a sailor at sea. I don’t know. They probably have electricity but like, there probably is some market or if there’s not then they’ll stop selling it and they’ll be ok. But hey, people who are buying these devices are by definition not average customers anyway so.

Leo: A little public service warning. Microsoft is—I’m sorry, Apple has decided to not update QuickTime for Windows even though there are existing security flaws in it.

Iain: And not tell anybody about it. It’s shameful.

Leo: Oh, and by the way, if you use Adobe Premier or other video editors you have to have it. You can’t just take it off. I actually know a couple of people who’ve said, “Well I’ll just put it on when I need it. I’ll take it off when I don’t.”

Iain: The only reason we knew about this—I got a call from TrendMicro’s PR people saying, “We’re just sending you over something now. Can you take a look at it?” And they were like, they led off with, “We found two critical flaws in QuickTime. Oh, and by the way you should probably take QuickTime off because Apple’s not supporting it anymore.” And that led to—

Leo: What?

Iain: Hang on a second. So I checked with Microsoft. Checked with Apple. Didn’t get a response from either of them but Microsoft at least did return the phone call. But Apple has been absolutely quite on this. And it took US CER actually to put out a warning about this.

Leo: The Computer Emergency Response Team. Wow.

Iain: Yea. And they put out, after the TrendMicro report came out, they put out a report saying “QuickTime has got to go.” But Apple has said nothing. They’ve left all their customers dangling in the dark after 21 years of building this software which isn’t the best software in the world anyway. And then just to say, “Well, ok, we’re not going to support it but I know there’s some critical flaws but just don’t make us say it because it’s really embarrassing.” And it’s just, you know, screw them.

Ben: Frankly it puts all Apple’s rhetoric around the iPhone sort of stuff like, “Oh, you really do care about security? Tell me more.”

Iain: Yea.

Ben: Because it yea, I completely agree with Iain. Ok, I get that this happens. Sometimes software needs to be deprecated. But then it’s on you to put out—Apple has a big megaphone as we know, they were willing to use it for the iPhone to say how much they care about security. Well, if you really care about security then use your big megaphone to tell people that you’re exposing them to a real security risk. And this is a genuine risk where people—again, we’re dealing with digital here. People can use these bot networks, here’s your bots, to infect computer, to scan computers everywhere, see what’s involved, take advantage of the vulnerability and take their information. And it’s Apple’s fault. And frankly it’s super hypocritical and it really bothers me. I mean Apple has lots of security issues. I was ranting on Twitter this week about the mobile dialogue you get on your Mac asking for your iCloud password. And it pops up all the time. And any third party app could pop open an identical mobile password. It’s bad security. And that’s for your iCloud account. The fact of the matter is Apple—as much as I support this because of the principle of the matter, Apple has an awful lot of hypocrisy going on when it comes to security because they have a lot of bad practices. And this is just the latest example of it.

Leo: I think it’s time we allowed texting in moving theaters.

Iain: Get out. Just leave immediately. I’m sorry.

Leo: Variety was interviewing Adam Aron the new head of AMC, which is a big theater chain in the United States. And you know they’re just having a normal interview and he says, “Well we’ve really got to get millennials back in the theatre.” And then he says, “Yea. We should allow texting and cell phone use. When you tell a 22 year old to turn off the phone, don’t ruin the movie they here please cut off your left arm above the elbow. You can’t tell a 22 year old to turn off their cell phone. That’s not how they live their life. So we’re going to allow it. We have to figure out a way to do it that doesn’t disturb the audiences. Maybe we’ll have a specific auditorium just for texting.” (laughing).

Jason Cleanthes: There’s an update to the story.

Leo: The update is when that came out, AMC tweeted, “No. We were wrong.”

Iain: Yea, groveling apology as well.

Leo: I’m sorry (laughing). Oh, man.

Iain: I’m sorry, using a mobile phone—see, I went to the Star Wars film recently and some absolute git was using a tablet. He was right in front of me.

Leo: (Laughing) I’m writing my review for my blog.

Iain: And you’re trying to watch the film. And he said, “Oh, I’m just writing something.”

Leo: I’m just writing a little review.

Iain: You paid to watch a film. Show some respect for everyone else that’s there that wants to watch the film. It just drives me up the wall. It’s like people who buy sweets with crinkly wrappers in cinemas. They should be shot. I have a hardline on this.

Leo: Wow. How do you feel about popcorn eating? Wow.

Iain: Well, popcorn eating, you can kind of get away with it although what is that stuff they pour over it over here? That fake buttery stuff?

Leo: No, it’s real butter. Trademarked. Real. Butter.

Ben: One they were talking about having a specific movie and theater is what they were advertising. If you were objecting to this you could choose not to go. Two they could make the last two rows allow cell phones.

Leo: That’s not a bad idea.

Ben: I don’t understand why people are getting—

Leo: There’s got to be—it’s a huge problem. I guess it’s a huge problem.

Ben: They’re having a problem attracting young people, yea.

Leo: But for instance the last time I went to a movie they had three, not one, not two, but three different ads saying put away your phone before the movie. I mean it’s obviously out of control. People are doing it and fights are breaking out. I don’t know.

Iain: Well it also helps not having phones or hardware in plain site is an anti-piracy thing as well.

Leo: I think it has something to do with that as well.

Iain: But I’m sorry. We really should be teaching some people to put away the phone at some point.

Leo: Well that’s kind of what these ads said is that you paid money, it was a Coke ad. You paid money to have a Coke, have some popcorn and watch this on the big screen. What are you looking at your little screen for? Knock it off.

Iain: Yea and it can be incredibly annoying for everybody else.

Leo: I don’t care.

Iain: We should just be teaching people that sometimes you need to put the phone down.

Leo: Maybe.

Ben: Oh, whatever. Eat your vegetables. What we need is—

Leo: (Laughing) Right on.

Iain: (Laughing) Touché.

Ben: What is needed in the US and I’ve heard that now some theatres do have this, but is assigned seating. This whole like you line up and rush in to find the best seat is ridiculous and barbaric. Like you should be able to buy your seat ahead of time, specify where it is like you do on an airplane which is the way it works I think in most countries in the world. And on there, then if you had that in place, you could enforce this sort of thing. You could have like certain rows are cell phone enabled or allowed or some rows aren’t or some theaters are. I don’t know. I think this over reaction’s ridiculous. And frankly, I don’t know. It’s like the eat vegetables thing. Like maybe some people want to do this. Why am I worried about what other people do in a movie theater that I’m not in and I’m expressly choosing—would I want to go into that movie theater? No. I want to watch the movie. But I don’t know, this whole outrage thing really kind of annoyed me. I don’t know. Let people do what they want. If people want to go to a theatre and look at their cell phone, more power to them.

Leo: I want a Real Butter faucet in my house.

Ben: More power to you, Leo.

Leo: (laughing) every kitchen should have a little faucet that your turn on that has Real Butter coming out of it. And then you can put it on everything. You Brits, you put—what is that custardy stuff in a can that you put on things?

Iain: What the spray?

Leo: No, no it comes in a can. It’s custard.

Iain: Oh, Bird’s Custard.

Leo: Yea.

Iain: Oh, that’s delicious.

Leo: No, that’s worse.

Iain: No, no, no, no, no, no, no, no, no. Bird’s custard, custard with a little bit of a skin on it that you pour over an apple crumble.

Leo: That’s so much worse than a butter faucet.

Iain: It just like slurps its way out. It’s delicious.

Ben: Iain’s exactly right. If you’re going to just like kill yourself—

Leo: Go all the way, right?

Iain: Yea.

Ben: No, exactly. Don’t waste those precious calories on internet, or movie popcorn fake butter crap.

Leo: $29.99 on Amazon. Butter flavored. It’s buttery. It’s not butter, it’s buttery flavored popcorn topping.

Iain: When they say butter flavored it’s just like—

Leo: It comes from a farm. The Wabash Valley Farms.

Iain: I’m sure. Let me guess. It’s handmade by pushing the button on the industrial machine that makes it.

Leo: $30 bucks a gallon. Now I just need the faucet and I’m set.

Iain: Good grief.

Leo: I could get a pump.

Iain: Maybe I am being a grumpy old man about this cinema thing. But. It’s like people that go to gigs and will spend the whole time at the gig recording it on their smartphone. I just want to slap it out of their hands.

Ben: No, I agree with you. For sure, they’re talking about having theatres where it was expressly allowed. So you know what you’re getting into, right? Of course in a normal movie I want the option to be able to go to a movie without these damn young kids on their phones Snapchatting. But yea, I don’t know. It’s the whole like—I don’t know. That’s what annoyed me about it is like no one was saying we’re allowing cell phones in all movie theaters. It was a proposal to allow it in some showings for some theaters.

Leo: You are just so contrarian now. You’re defending this.

Ben: (Laughing) I know. I don’t know. Maybe.

Leo: It’s a whole new Ben Thompson, ladies and gentlemen. Ben is the greatest. Stratechery if you want to read his stuff. There’s free posts every week but you also can pay for the newsletter. I do. It’s worth it. Really insightful. Ben, it’s always a pleasure. Thank you for getting up a little early and spending some time with us this afternoon.

Ben: I’m happy to be here. The second time with Iain. It was a great time.

Leo: You guys are great together. Was it last time when the Apple thing broke? I think it was.

Iain: I think it was, yea. No, it’s always good hanging with you, Ben. I was going to say, you’re up really early for local times.

Leo: Wow. Ben’s a great guy but you’ve got a whole day ahead of you, Ben.

Ben: I do. I do. I feel I might take a nap.

Leo: That’s what I would do. Go back to bed. Iain Thomson writes for The Register, theregister.co.uk. Great to have you also. Once again thanks for—

Iain: Always a pleasure.

Leo: Making the trip up. I hope you enjoyed the cake.

Iain: I haven’t even begun to eat it.

Leo: Our 11th anniversary episode. I’m off to the plane. I’ve got to go fly to Vegas. We’ll be broadcasting from the National Association of Broadcasters, the NAB show, starting tomorrow 10:00 AM Pacific, 1:00 PM Eastern time. Our coverage begins. I will be doing Triangulation at 11:00 AM Pacific tomorrow. Matthew Wood will be my guest. He’s a supervising sound editor at Skywalker Sound. He did the sound for the latest Star Wars movie. He’s also the voice of General Grievous in Episode 3 and in fact did the sound for I think the middle trilogy as well. So we’ll talk about movie sound on Triangulation tomorrow at NAB. We’ll be there. I’m going to only be there for Monday but in the Live You booth if you’re there come by and say hi but we will continue to broadcast from the NAB show all week. So Megan and Jason will be there for TNT and a whole lot more. Thanks to our producer, Jason Cleanthes. Great job, Jason. Thanks for all of you for watching. We do—I want to say Triangulation. We do TWiT every Sunday, 3:00 PM Pacific, 6:00 PM Eastern time. We have been now for 11 years. I didn’t realize we started at 3:00 PM Sunday afternoon. It’s never changed. Something to be said for longevity. That’s 2200 UTC. Please stop by and say hi. Watch us live. Join us in the chatroom but if you can’t, on demand audio and video always available after the fact for all of our shows at twit.tv or get it at your favorite podcast app or your TWiT app. They’re on every platform. Just make sure you get it every week. That way you won’t miss an episode. Thanks for being here. We’ll see you next time. Another TWiT is in the can. See you in Vegas! Bye-bye.