While a cybersecurity vendor claimed that the data of more than 65,000 companies was exposed, Microsoft called this characterization “greatly exaggerated.”
Microsoft has acknowledged a customer data leak.
Microsoft said Wednesday that an unspecified amount of customer data, including contact info and email content, was recently left exposed to potential access over the internet as a result of a server configuration error.
Cybersecurity vendor SOCRadar, which reported the data leak to Microsoft, said in a blog post that data belonging to more than 65,000 companies was affected. Microsoft, however, said in its own post that SOCRadar “has greatly exaggerated the scope of this issue.”
Microsoft didn’t disclose specifics around the number of companies whose data may have been exposed in the leak or the amount of data involved.
The server misconfiguration was reported on Sept. 24, and the impacted server was “quickly secured” after that, according to Microsoft. Due to the configuration error, there was a potential that certain “business transaction data” could have been accessed without a need for authentication, Microsoft said.
The data corresponds to “interactions between Microsoft and prospective customers,” including around the planning and implementation of Microsoft services, the company said in its post.
Affected data may have included “names, email addresses, email content, company name, and phone numbers, and may have included attached files relating to business between a customer and Microsoft or an authorized Microsoft partner,” Microsoft said.
SOCRadar said that a “single misconfigured data bucket” was responsible the exposure of the data of the 65,000 affected companies, which the company said are based across 111 countries. The leak amounts to 2.4 terabyte of data, including 335,000 emails, and it involves more than a half million users, according to SOCRadar. The files are dated between 2017 and August 2022, the vendor said.
Microsoft disputed SOCRadar’s claims about the size of the leak, saying that an “analysis of the data set shows duplicate information, with multiple references to the same emails, projects, and users.”
“We take this issue very seriously and are disappointed that SOCRadar exaggerated the numbers involved in this issue even after we highlighted their error,” Microsoft said in its blog post.
The leak didn’t involve any vulnerability since it was solely caused by the server misconfiguration, the company said.
Kyle Alspach ( @KyleAlspach) is a senior reporter at Protocol, focused on cybersecurity. He has covered the tech industry since 2010 for outlets including VentureBeat, CRN and the Boston Globe. He lives in Portland, Oregon, and can be reached at email@example.com.
It’s international climate talk season, which means it’s international climate report season. Amid a flurry of analyses ahead of negotiations set to take place in Egypt next month, the International Energy Agency dropped its annual World Energy Outlook.
This year’s report is colored, like most everything else, by the war in Ukraine. Russia’s invasion has completely upended the energy market, affecting everything from gas to critical mineral prices. With tension mounting between the U.S. and China, and oil production cuts by OPEC+, pressures on the energy system will only grow. Oh, and the whole “we need to address the climate crisis” thing. Yeah, that’s also having an impact.
The IEA’s report goes deep on all these underlying conditions and what they’ve wrought to date, as well as what the future could hold. Among that depth, these are three key themes that have emerged that could shape the climate tech landscape over the coming decade.
Electrifying everything will completely reshape demands on the power grid. The IEA found that up to 214 million new electric vehicles could hit the road by 2030. Heat pumps will play a more significant role in heating and cooling as they replace gas furnaces, spiking energy demand even higher. And green hydrogen is expected to emerge from a fledgling industry today into one that could consume as much electricity as all aluminum production used in 2010.
Beyond electrifying new technology, some places will become wealthy enough to access traditional tech like air conditioning. All of which is to say that, according to IEA estimates, the world will add up to 7,000 terawatt-hours of electricity demand by the end of the decade. In (somewhat) more relatable terms, that’s equivalent to the current demand of the U.S. and Europe combined. Ensuring that we don’t fry the planet will mean that the world not only needs to retire existing fossil fuel infrastructure and replace it with renewables — it’ll need to go above and beyond.
If the war has made one thing clear, it’s that relying on a single country for anything is a danger. Russia has dramatically cut methane gas deliveries to the EU in retaliation for its support of Ukraine. The EU, meanwhile, has taken drastic measures to reduce gas demand as winter sets in, raising the risk of power shortages and high home-heating bills.
Gas is hardly the only supply chain concern. The IEA found that the critical mineral supply chain that’s crucial for the energy transition is also dangerously concentrated. To take one example, just three countries produce 91% of the world’s lithium. The IEA warned that the lack of diversification coupled with volatile (and largely rising) prices poses a serious geopolitical risk while also endangering battery and other technologies. Remember, we’re going to need more batteries, wind turbines, and solar panels to meet rising electricity demand.
There are signs that countries that have largely ignored a diverse clean energy supply chain are suddenly paying attention. Notably, the U.S. has launched a slew of programs and incentives, including many as part of the Inflation Reduction Act to encourage a homegrown clean energy industry, from mining to manufacturing.
The grumbling that net zero goals and policies to reach them drove the huge uptick in energy prices seems to be unfounded; the report found that “there is scant evidence for this.” Places with more power generated by renewables “correlated with lower electricity prices.” Implementing policies that improve home energy efficiency through fairly mundane measures like installing heat pumps and improving insulation are also saving people money. In fact, the report warns governments are doing “far from enough” on the energy efficiency front to protect people where energy costs are rising.
The Office of the Comptroller of the Currency is launching a new Office of Financial Technology early next year in response to the growth of fintech, the agency said Thursday.
The new office will “build on and incorporate” the Office of Innovation, which the agency started in 2016.
“Financial technology is changing rapidly, and bank-fintech partnerships are likely to continue growing in number and complexity,” said Michael Hsu, acting comptroller of the currency. “To ensure that the federal banking system is safe, sound, and fair today and well into the future, we need to have a deep understanding of financial technology and the financial technology landscape. The establishment of this office will enable us to be more agile and to promote responsible innovation, consistent with our mission.”
Some progressive senators have been urging the OCC to change its previous guidance, which gives chartered banks the ability to provide crypto custody, hold cash reserves backing stablecoins, and use blockchain and stablecoins to verify bank-to-bank payments. The senators say that the guidance exposes banks to “unnecessary risk.”
Meanwhile, more Wall Street firms and large banks are moving further into the use of cryptocurrencies.
Editor’s note: This post was updated significantly, as the wrong version was published in error.
The Biden administration just devoted $1 billion to turbocharging school districts’ efforts to electrify their bus fleets.
On Wednesday, the administration rolled out a new federal program to fund clean school buses in what could be an inflection point for their adoption. The first wave of grants, administered by the Environmental Protection Agency, will buy roughly 2,500 buses nationwide. Successfully electrifying the country’s remaining half-million school buses will require carefully designed incentives that give the industry a boost until it can stand on its own.
Last November’s bipartisan infrastructure law created a $5 billion pot of money to help schools buy clean school buses over the next five years. The grants will cover the full cost of new electric buses, which range between $300,000 and $400,000. (For comparison, a new diesel school bus is in the neighborhood of $200,000.) School districts can decide whether to purchase electric buses from traditional makers like Blue Bird or newer electric-only companies like Lion Electric.
While the federal program and similar smaller-scale state programs are already accelerating demand, Duncan McIntyre, CEO of the electric school bus fleet operator Highland Electric Fleets, said he hopes the per-bus incentives shrink over time. He said that would stretch the next $1 billion in grants and “force the industry to stand on its own two feet.”
“In five years, our goal should be that the industry reaches a point where all new vehicles acquired are electric without grants,” McIntyre added, referencing the infrastructure law’s timeline. “What we don’t want is a program where everyone gets accustomed to free buses, and at the end of five years goes back to buying diesel again.”
It’s a delicate dance, though, given how small the market is right now. According to a World Resources Institute analysis in June, the U.S. has just 767 electric school buses delivered or in operation, though that number was already expected to swell before the infrastructure law funds were disbursed. As of June, school districts had committed to a total of 12,720, or around 3% of the country’s total fleet. A December 2021 contract between bus dealer Midwest Transit Equipment and commercial EV company SEA Electric accounts for 10,000 of those.
Greater demand is clearly there, though; the EPA initially offered $500 million in grants in May, but increased the amount to $965 million due to the overwhelming number of applications.
States are increasingly funding the clean school bus transition as well. Sue Gander, director of WRI’s Electric School Bus Initiative, said states have budgeted roughly $2 billion to help districts clean up their fleets. She said that in the short term, the combined incentives should support school districts’ huge demand and encourage manufacturers to get their supply chains and facilities up to speed to meet it.
In fact, she said there’s room for further federal incentives, especially ones for charging infrastructure specifically for school bus fleets. Doing so wouldn’t just keep buses on the roads; it could help fortify the grid. A bill introduced last month by Sen. Angus King would create a program to equip electric school buses with bidirectional vehicle-to-grid charging capabilities. That would allow buses to serve as backup power for the grid, and potentially even offset their upfront cost for school districts (assuming local utilities are amenable, that is).
However, in the longer term, she echoed McIntyre’s concerns that the market needs to eventually scale on its own.
“As the market matures, as we get closer to this total cost of ownership parity [with diesel buses], we’re going to need fewer and fewer incentives,” Gander said. WRI’s analysis found that parity is expected by roughly the end of this decade, even without factoring in incentives, due to drops in battery prices.
Beyond incentives, tighter diesel bus regulations could further spread electric school bus adoption. The EPA is weighing new tailpipe emissions standards for medium- and heavy-duty vehicles, which would include buses. California is also implementing a rule that would restrict the sale of diesel-powered buses and trucks, and other states are following suit. Gander said it’s a “key example” of the role regulations can play in fostering more widespread clean bus tech adoption. Getting it right could help cut more than 5 million tons of carbon pollution that school buses pump into the atmosphere each year.
Another crucial element is structuring incentives so the buses go to the communities that need them most. The White House said that school districts with low-income, rural, or tribal students represented 99% of the grant winners in this latest round, though it is not clear how future rounds of funding will be structured. At this point, the program makes good on the administration’s Justice40 initiative to ensure at least 40% of the benefits of federal climate, environment, and energy investments accrue in marginalized communities that have historically borne the brunt of pollution.
Taking diesel buses off the road is crucial to reducing transportation carbon emissions. But going electric will also cut down on air pollution that disproportionately impacts low-income communities and communities of color. Children in low-income communities tend to have higher than average rates of asthma, and both Black and Hispanic children are at higher risk of developing it than white children, regardless of their family’s income level. Exposure to diesel exhaust — such as via twice-daily school bus rides — exacerbates asthma and other respiratory problems.
“We want to approach this transition in an equitable way,” said Gander. “How are the incentives prioritized for disadvantaged communities? Those are the ones who have the hardest time trying to make the investments, and yet they’re the ones whose kids depend on the buses more and also are exposed to the worst of the air quality and the worst of the climate impacts.”
LendingClub’s earnings on Wednesday offered a worrying sign for fintech lenders — even as LendingClub itself holds what could be a key advantage during hard times.
The San Francisco company’s third-quarter earnings Wednesday of $0.41 per share topped analyst expectations. But the firm’s share price was still trading down by nearly 10% in after-market trading, some of which may be in response to gloomy fourth-quarter projections.
The firm sounded a warning about the market for the loans it originates and then sells to investors, an arrangement often called marketplace lending.
“As we anticipated, marketplace volumes were impacted by higher funding costs for certain loan investors, driven by rapidly increasing interest rates,” CEO Scott Sanborn said in the earnings release.
The company reported an 8% quarterly decline in the total value of its loan originations, driven by a decrease in marketplace loans.
Investors in consumer debt are seeking higher yields and getting pickier as interest rates rise. That has put a squeeze on marketplace lenders.
“Certain loan investors’ cost of capital is based on forward interest rate expectations,” Sanborn explained on the company’s earnings call. “As expectations go up, their cost of capital goes up and so does their yield requirements.”
LendingClub can reprice its loans to meet those higher funding costs over time, but Sanborn said the company needs to remain competitive against credit card rates, as the majority of its personal loans are people refinancing credit card debt.
LendingClub is not alone in relying on the marketplace model. Upstart, which reports earnings on Nov. 8, has already described constraints on its funding.
The good news for LendingClub is that it is no longer solely reliant on the marketplace. LendingClub last year completed a $185 million acquisition of Radius Bank, giving it the banking charter required to hold deposits and directly fund its loans.
While the $2.4 billion in originations that LendingClub sold to investors in the quarter is down about 15% from the three months prior, the $1.2 billion in loan originations that LendingClub is holding onto was a 13% increase.
LendingClub is now holding onto 33% of its loans, compared to 20% one year ago. The spread between the interest LendingClub is paying depositors and collecting from borrowers, or net interest income, climbed 89% year over year to $123.7 million last quarter.
“The benefits of our bank capabilities could not be more clear,” Sanborn said.
Still, the company is projecting $255 million to $265 million in revenues for next quarter, which would mark a decrease up to 16% from the $304.9 million it reported in the third quarter. That could be driving the negative initial reaction on Wall Street. LendingClub’s share price is down 54% from the start of the year but had shown signs of recovery, climbing 4% over the past month.
Sanborn last quarter compared LendingClub to a car reducing its speed while approaching a curve, with plans to accelerate coming out of it.
“We are in the curve right now,” he said. “But as we look further down the track I would note that some of the negative dynamics in today’s market will point to future opportunity. Most notably, record high credit card balances at record high interest rates should be a boon to our core refinance business. Our marketplace revenue has a proven ability to quickly rebound.”
A follow-up to the Quest 2 virtual reality headset is arriving next year, Meta said in its most recent earnings announcement. The device will be a consumer-grade headset unlike the recently released Quest Pro, which costs $1,500 and comes with mixed-reality features designed to be useful in the workplace.
Meta snuck the detail into a paragraph concerning the ballooning costs of developing its vision for the metaverse. “Conversely, our growth in cost of revenue is expected to accelerate, driven by infrastructure-related expenses and, to a lesser extent, Reality Labs hardware costs driven by the launch of our next generation of our consumer Quest headset later next year,” the company wrote.
Meta’s AR and VR roadmap has been shifting of late, though the company has long hinted at an eventual successor to the Quest 2, which has sold an approximate 15 million units per estimates from industry tracker IDC.
For the quarter, the Reality Labs division, which includes AR and VR hardware as well as software platforms like Horizon Worlds, incurred a loss of $3.7 billion, up from $2.6 billion a year ago and increasing by nearly $1 billion from fiscal Q2. Those losses contributed to a more than $10 billion expenditure on the metaverse in Meta’s last fiscal year, which ended in December. The costs are rising, too, though Meta says there is a light at the end of the tunnel as it plans beyond next year.
“We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year. Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run,” the company wrote.
Brad Gerstner, CEO of activist investor Altimeter Capital, recently called on Meta to cut its head count and limit metaverse spending to $5 billion a year.
It’s impossible to raise the dead. But Mobileye’s Wednesday IPO demonstrates that the market to list public companies hasn’t lost all of its vital signs just yet.
Mobileye stock had a nice first day, rising nearly 40% to close at $28.97. The Intel-controlled company sold roughly $860 million worth of stock at the IPO and sold an additional $100 million to General Atlantic. It priced the issue at $21, a dollar above the top end of the $18 to $20 a share it was hoping to get.
Intel CEO Pat Gelsinger was careful not to call Mobileye’s return to the public markets a capital raise at an event earlier this week, describing it instead as a decision designed to move it into the market.
There’s truth to what Gelsinger is saying: The original reason Intel planned the IPO was for financial engineering — to unlock for Wall Street the value in the fast-growing autonomous driving unit while the rest of Intel figures out how to correct years of dysfunction. Two separate stocks, but still one company (Intel controls Mobileye still).
Intel had once hoped to bank a valuation of $50 billion but later revised that down to $30 billion before settling on the roughly $20 billion market value that it actually managed to achieve. For context, Intel bought the then-public Mobileye for $15.3 billion in 2017.
In a lot of ways, Mobileye’s was a textbook IPO for Wall Street. Mobileye ticked all of the boxes a banker would need to in order to achieve a successful offering in previous years, including lots of investor interest during the road show, pricing above the range, a healthy pop on the first trading day.
The market has changed this year. IPOs have dried up, with the amount of cash raised plummeting to the point where Renaissance Capital called 2022 the slowest in the firm’s history. Mobileye listed at a time of uncertainty — among chip companies themselves but also the broader economy.
But it doesn’t really matter how much Mobileye is worth on paper to Intel. The veteran chip manufacturer set up the IPO so Intel would receive a $3.5 billion dividend from the proceeds. But because the valuation was much lower than anticipated, Intel will receive less cash than it once hoped.
AWS executive Pravin Raj, one of several of the cloud giant’s top leaders named in a discrimination and harassment lawsuit by a former employee, is leaving the company, AWS confirmed.
Raj co-led the company’s professional services arm, a troubled division that former employees alleged was rife with bullying and other cultural problems, with much of the bad behavior reportedly perpetrated by Raj. An internal report, based on conversations with fewer than 100 ProServe workers, found no evidence of such claims.
A lawsuit filed against Amazon by former employee Cindy Warner named Raj as one ProServe exec “whose discriminatory and harassing conduct has been complained of by several other employees as well,” per the suit.
The North Atlantic right whale is among the most endangered species in the world, having been hunted to near-extinction over a century ago. Fewer than 350 remain in the wild. While whaling is thankfully no longer a concern, the big-mouthed beauties now face a new threat: the offshore wind industry.
Reaching the Biden administration’s goal of developing 30 gigawatts of offshore wind by 2030 will require a huge uptick in boat traffic and infrastructure being built. Yet at the same time, North Atlantic right whales are in the midst of an “unusual mortality event,” which the National Oceanic and Atmospheric Administration largely attributes to “rope entanglements or vessel strikes.” Underwater noise pollution is also a major concern due to the damage it can do to whales’ hearing and behavior. That could put the whales and other wildlife at risk if the wind industry doesn’t take proactive measures.
The need to monitor right whales as well as other wildlife that calls the areas around offshore wind farms home has already spawned the development of new climate tech. For instance, offshore wind developer Vineyard Wind and startup incubator Greentown Labs launched an accelerator program for three companies developing the tech to protect whales and other marine animals. The startups’ techniques to save the whales include aerial drone systems for sea inspection and night-vision cameras that can be customized to work on offshore turbines.
The federal government is getting in on the act, too. The Department of Energy (and the state of Maryland) has funded marine mammal research group SMRU Consulting’s work on a “coastal acoustic buoy for offshore wind.” The buoys can detect the high-frequency calls of the right whales to pinpoint their location. That could allow a developer to stop or minimize noisy pile driving used to install turbines in the seabed.
To protect the whales from further harm, NOAA and the Bureau of Ocean Energy Management jointly released a strategy on how to balance the competing priorities of conservation and renewable energy development. It’s so far just a draft that amounts to little more than saying, “let’s research and be in touch about how much of a risk offshore wind is to these endangered animals.” But its very existence highlights that this balance should be top of mind for both the public and private sector.
Whether the tech and federal efforts will be enough to keep whale populations from dropping even further as construction picks up, however, remains to be seen.
A version of this story appeared in Protocol’s Climate newsletter. Sign up here to get it in your inbox twice a week.
The Federal Trade Commission announced Monday it has ordered alcohol-delivery service Drizly, and its CEO James Cory Rellas, to boost the company’s security posture after a breach exposed the data of roughly 2.5 million customers.
The inclusion of Rellas in the FTC’s complaint marks an escalation of the agency’s attempts to deter potential company wrongdoing by holding executives personally responsible for it.
According to the FTC, in 2018, a Drizly employee posted company cloud credentials to GitHub, which allowed hackers to use Drizly servers for crypto mining for a time. Drizly said it had put protections in place to try to prevent that sort of incident, but the company wasn’t even requiring employees to use two-factor authentication on GitHub and didn’t monitor its network for unauthorized access and stealing of data.
Then in 2020, the FTC said, “a hacker breached an employee account, got access to Drizly’s corporate GitHub login information, hacked into the company’s database, and then stole customers’ information.”
The agency said that Drizly, which is a subsidiary of Uber, must get rid of “unnecessary data,” limit its future collection of consumers’ information, narrow who can access data, train employees on security, and more. Rellas will even carry obligations with him if he takes certain jobs with other big companies.
The focus on Rellas comes as Democratic commissioners on the FTC in recent years have argued that company executives will be more likely to follow the law if they know they’ll be personally on the hook for misdeeds. In practice, however, companies have protected their leadership and insisted chief executives may have overseen a particular incident without knowing much, or anything at all, about it.
The Democratic commissioners and would-be FTC reformers, for instance, long complained that the agency didn’t depose Mark Zuckerberg following the Cambridge Analytica scandal in the investigation that led to a $5 billion fine for the company. Earlier this year, the FTC, now under the leadership of Big Tech critic Lina Khan, named Zuckerberg personally in a complaint to block Meta’s acquisition of VR company Within.
The FTC, however, soon dropped him from the suit when he agreed not to buy the VR company in a personal capacity.
FBI director Christopher Wray said Monday that newly disclosed charges against Chinese intelligence officers are the latest example of China’s efforts to gain an unfair economic advantage over U.S. companies, particularly in the technology sphere.
Two Chinese intelligence officers are accused of attempting to “obstruct, influence, and impede a criminal prosecution” of a China-based global telecommunications company, U.S. attorney general Merrick Garland said during a news conference Monday. The company was not identified. The complaint against the two intelligence officers was unsealed Monday in the U.S. District Court, Eastern District of New York, Garland said.
The Washington Post reported that the complaint’s details mirror those of a case previously brought against Chinese telecom equipment giant Huawei. The federal government has for several years increased restrictions on sales and use of Huawei tech inside the U.S. and the company was indicted in 2020 on accusations of conspiring to steal trade secrets from U.S. businesses.
During the news conference, Wray called the case further evidence of “the Chinese government’s flagrant violation of international laws, as they work to project their authoritarian view around the world, including within our own borders.”
In this case and “thousands of others,” China’s government has been found working to “undermine U.S. economic security and fundamental human rights, including those of Americans,” Wray said.
“We also see a coordinated effort across the Chinese government to lie, cheat, and steal their way into unfairly dominating entire technology sectors, putting competing U.S. companies out of business,” he added. “Their economic assault and their rights violations are part of the same problem. They both flout the rule of law. And one of the purposes of the Chinese government’s repression is to make it easier to steal our innovation.”
For instance, he said, the Chinese government has repeatedly tried to “silence anyone who fights back against their theft.” The case disclosed Monday is another example of this tactic by China as it showed an “attempted obstruction of an independent judicial process to give underhanded help to one of their companies accused of breaking our intellectual property laws,” Wray said.
In July, Wray warned U.S. businesses about the threat from China’s hacking program, which he said is “bigger than that of every other major country combined.” At the time he described the Chinese government as “set on stealing your technology — whatever it is that makes your industry tick.”
During the news conference Monday, Wray cited a statement he’d made previously that the FBI is opening a new case related to Chinese intelligence roughly every 12 hours.
The newly disclosed case comes amid rising tensions between the U.S. and China, including around access to technology. The U.S. earlier this month introduced export controls meant to prevent China from acquiring technology related to advanced chips.
One cybersecurity expert has predicted the chip technology blockade would lead to an increase in retaliatory hacking by the Chinese government aimed at IP theft.
Last week, Bloomberg reported that technologies that could be used in quantum computing, along with artificial intelligence software, might be the Biden administration’s next targets for export controls.
Marqeta is rolling out seven new tools that would help businesses offer more banking services, the company said Monday. It’s a significant expansion beyond its core business of issuing cards.
The products, called Marqeta for Banking, would enable clients to offer new capabilities, including bill pay, direct deposit, and free ATM access, the company said.
Marqeta’s bid to expand beyond its core card-issuing business by offering ways for businesses to process financial transactions could expand its revenue and customer base, but also puts it in competition with a range of banking technology providers.
“I’ve said this many times in the past — that every company’s going to become a financial services company,” Marqeta CEO and founder Jason Gardner told Protocol. “This is just an extension of that: How do we help our existing customers become financial services companies?”
The new suite of products also includes ACH features and bank-account verification through a Plaid integration. Marqeta for Banking would enable clients to offer instant funding to customers.
Coinbase, Branch, and Fold are among the first clients to use the products. Sanchan Saxena, vice president for retail product at Coinbase, said the crypto company used the Marqeta platform to allow customers to earn crypto rewards and make crypto purchases.
Gardner said Marqeta designed and launched the new products based on an understanding of the loyalty that consumers are known to have for banks.
The company focused on building “features and functions” to help businesses “better create loyalty and affinity with their customers,” he said.
“You have a lot of affinity and loyalty to a bank,” he said. “It’s sort of weird, but they have your money. You probably have had the same financial institution for many, many years. There’s no reason to change. And companies have figured out that I can create pretty significant loyalty by creating a very well-designed experience for my customers.”
Apple is raising the prices of several of its subscription services: The company began charging $10.99 for Apple Music on Monday, a $2 per month price increase. The price for Apple TV+ is also being increased by $2 to $6.99 per month, while the company’s Apple One subscription bundle now costs $16.95 per month, $2 more than before. It’s the first time the company has increased the price tag of its entertainment subscriptions since it launched Apple Music in 2015.
Apple is also increasing prices for discounted subscriptions, including annual and family plans, where available. 9to5Mac, which was first to report the news, has a detailed breakdown of all the changes, as well as a company statement that blamed the Apple Music price hike on increased licensing costs. “In turn, artists and songwriters will earn more for the streaming of their music,” an Apple spokesperson told the publication.
Apple’s spokesperson also argued that the Apple TV+ price increase was justified because of the company’s ramped-up content slate. The company isn’t alone in its strategy of passing rising costs onto the consumer. Google announced a price hike of its YouTube Premium family plan last week, and Disney+ prices are going up in December. And the price increase for Apple Music could give other music subscription services, including Spotify, cover to follow suit.
However, the price increase also comes just a week ahead of Netflix’s introduction of a lower-priced, ad-supported tier. That plan is priced the same as Apple TV+ after today’s price hike. Before those changes, Netflix’s cheapest plan was twice as expensive as Apple’s offering.
There have been unconfirmed reports that Apple is looking to introduce an ad-supported Apple TV+ plan as well.
After months of legal wrangling, the SEC finally agreed to release documents that Ripple says could shed light on the agency’s thinking on crypto as it pursues a lawsuit against the crypto company. The case, over whether XRP is a security, remains closely watched, as it could set a legal precedent affecting the entire industry.
The crypto powerhouse’s leadership marked the win by ripping into the regulator now widely viewed as the industry’s nemesis.
“The SEC wants you to think that it cares about disclosure, transparency and clarity,” CEO Brad Garlinghouse said in a tweet. “Don’t believe them. When the truth eventually comes out, the shamefulness of their behavior here will shock you.”
An SEC spokesperson said the agency had no comment.
The SEC and Ripple have been embroiled in a legal battle since 2020, when the agency sued the crypto company for alleged securities laws violations. The SEC has argued that Ripple failed to register roughly $1.4 billion worth of XRP, the cryptocurrency used on the Ripple network, as securities.
Ripple rejected the claim. The case, which has dragged on for more than a year and a half, centers on the SEC’s argument that most cryptocurrencies should be regulated as securities.
Ripple has hit back at this argument by citing former SEC director William Hinman’s 2018 speech in which he said ether is not a security. His comments sparked a rally in ether’s price and appeared to endorse the broad view of most in the crypto industry that digital assets aren’t securities.
Hinman was a member of the SEC leadership around the time that the agency filed the lawsuit against Ripple. (He stepped down at the end of 2020 and is now an adviser to a16z.)
Ripple demanded that the SEC also release emails and other documents related to the way the Hinman speech was discussed internally. The SEC rejected that demand and appealed a federal judge’s order for them to comply.
Ripple finally prevailed last week. “Over 18 months and 6 court orders later, we finally have the Hinman docs,” Ripple general counsel Stuart Alderoty announced in a tweet.
The documents remain confidential “at the SEC’s existence,” he said, adding, “I can say that it was well worth the fight to get them.”
The potential impact of the disclosures is unclear on the case, which is expected to drag on until early next year.
Marc Fagel, a former SEC regional director in San Francisco who represented clients in the crypto industry when he moved to the private sector, said the regulator took “aggressive approach on protecting the confidentiality of its internal deliberations,” which he argued are “irrelevant to the legal merits of the Ripple case.”
“But obviously the vociferousness of its battle to withhold them suggests there may be something problematic or embarrassing within,” he told Protocol.
This story was updated to clarify Hinman’s time at the SEC.
Carbon removal will likely play some role in reaching net zero. But doing so will require huge amounts of energy. It takes around 1,200 kilowatt-hours to remove a ton of carbon from the sky using direct air capture. That could be a barrier to widespread use, according to MIT Energy Initiative’s senior research engineer Howard Herzog.
The carbon removal industry expects to scale to capture billions of tons per year. That could put it in direct competition with renewable needs for other purposes like, say, keeping the lights on. (For reference, the average American home uses a little less than 900 kilowatt-hours of energy per month.) Capturing “just” 1 billion tons would essentially require all of the carbon-free energy that’s available today, including nuclear.
The high energy use also hides carbon removal’s true cost, according to Herzog, who did the energy use analysis and is skeptical the industry can reach its target price point of $100 per ton.
DAC’s high energy use points to the value of decarbonizing everything as fast as possible. One ton of carbon that doesn’t make it into the atmosphere today is one less to remove tomorrow. And that means less conflict over future renewable energy.
A version of this story appeared in Protocol’s Climate newsletter. Sign up here to get it in your inbox twice a week.
Chief finally has a clubhouse in San Francisco, but don’t call it a coworking space. The 8,600 square feet do include conference rooms, one-person Zoom rooms, and open-plan seating, but it also has a bar, lounge seating, and — like Chief’s other clubhouses in New York, L.A., and Chicago — a piano.
“To me, what the piano represents is ‘this is not a coworking space,’” Chief co-founder Lindsay Kaplan told me on a tour of the clubhouse in advance of its official opening Thursday. “This is a place where you can sit back and take meetings in a very laid-back manner.”
Unlike the Wing, the women-focused coworking space and club that shut down this summer after a six-year run, Kaplan and co-founder and CEO Carolyn Childers are still much more interested in building and supporting Chief’s network than boosting its physical amenities.
That’s why Chief’s main offering, curated, 10-member “Core” peer groups that meet monthly with an executive coach, will still take place virtually.
“What we most optimize for is finding the right and perfect 10 people for you to be with,” Childers said. “Even in San Francisco, that might be somebody outside the city.”
Before Chief expanded outside of New York, the groups still met in person, but applicants who said they wanted to join for the space didn’t tend to make it off the waitlist. The network is about the peer group, and the space is more like “the container that it can happen in IRL,” Kaplan said.
The network is more closely modeled after the Young Presidents’ Organization, the 72-year-old network of under-45 chief executives who help each other work through professional and personal challenges. YPO is all about its network and doesn’t have spaces of its own, Childers said.
Kaplan and Childers also got inspiration from Carole Robin, a longtime facilitator of the popular “touchy feely” course at Stanford, in thinking through “how you create the right level of, frankly, vulnerability that you need to get to in order to truly work through things,” Childers said. “The Core [group] truly does get to a place of being able to talk to what’s really happening for you, both personally and professionally, because those two things very much mesh.”
That said, the clubhouse is also a place where members can host guests, hold their board meetings, and — yes — take Zoom calls. Ten percent of Chief’s 20,000 members live in the Bay Area, but when Chief was planning its next clubhouse, San Francisco was also the most requested city by members who don’t live in the Bay Area. In other words, Chief members in cities such as Boston and D.C. wanted a clubhouse in San Francisco where they could visit while in town.
Despite that, Childers and Kaplan try to more closely emulate a Harvard alumni club, which have clubhouses with “great amenities,” Kaplan said, but most of the real benefits come from being a part of a vast, powerful network. But with a mission to change the face of executive leadership, the women-focused atmosphere might also feel like something more approachable — Kaplan recalled a similar feeling of camaraderie with other women trying on clothes in the communal dressing room at the old New York department store Loehmann’s.
“It kind of reminds me of this intimate space,” Kaplan said. “If you tried on something and you went in front of the mirror, all the women around you were, like, ‘Honey, that looks good.’”
The risk is climbing that both Russia and China may look to bring an escalation in major cyberattacks against the U.S. and Western Europe, following Russian losses in Ukraine and the U.S. chip blockade against China, according to cybersecurity and geopolitics expert Dmitri Alperovitch.
“What I do think we’re about to enter is probably one of the most dangerous times that we’ve had in the history of the cyber domain, when it comes to our infrastructure here in the West — both because of what Russia may be doing against us, as well as China,” said Alperovitch, the co-founder and former CTO of CrowdStrike, on Wednesday during a livestream Q&A with The Washington Post.
When it comes to Russia, an increase in major cyberattacks against the West is looking a lot more likely as “we are entering a new phase of the conflict” over Ukraine, he said.
Russian President Vladimir Putin is “starting to realize that the war is not going well for him,” Alperovitch said. “He’s steadily losing territory, including territory that he has recently tried to annex. And that may mean that he’s going to be much more willing to confront not just Ukraine, but also the West.”
In terms of targeting the West, “Cyber probably is going to be his first weapon of choice,” said Alperovitch, who is currently the co-founder and executive chairman of Silverado Policy Accelerator, a Washington think tank. The U.S. and Western European nations have provided substantial support to Ukraine, including weaponry, following Russia’s invasion of the country in late February, which Alperovitch had predicted two months before it occurred.
Meanwhile, China may be jumping into the fray, too, in response to the recent U.S. move to block Chinese access to advanced chip technology, according to Alperovitch.
The U.S. chip blockade, he said, is “a declaration of economic war,” and “I doubt that they will take it sitting down.”
China’s leadership is currently preoccupied with this week’s Communist Party congress, Alperovitch noted.
“But once they get past the Congress and the changes that Xi Jinping is implementing within the party, I think you will see retaliation both against American companies in China as well as potentially through cyber operations, to try to compensate for the loss of access to technology with IP theft,” he said.
Update: The first sentence of this article was reworded to better describe the type of cyberattacks involved.
Ye could own Parler before the end of the year, according to Parler COO Josh Levine.
“This transaction will get closed very quickly,” Levine told Protocol on Wednesday. “There’s nothing to stand in the way of that except that, you know, we just [have] to go through the process of assuring it’s done correctly.”
Levine declined to provide information on the acquisition price or which banks are working on the transaction. He did, however, describe it as “the best possible outcome we could have had.” This acquisition deal is unlike the Musk-Twitter saga because it involves two friendly parties, and Parler is a private company, Levine said.
On Monday, Ye, formerly known as Kanye West, agreed to purchase Parler, the social media platform popular among conservatives and which launched in 2018. He had been attending fashion shows in Paris with conservative pundit Candace Owens, whose husband, George Farmer, is the CEO of Parler.
In an interview later that day, Ye said the Parler acquisition was motivated by his experience being “kicked off” Instagram and Twitter. Ye made anti-Semitic remarks on both platforms, prompting Twitter to lock his account and Instagram to delete his post and place other restrictions on his platform activity.
Ye has only doubled down on his anti-Semitic rhetoric in recent days. When asked whether any of Ye’s statements would or could lead to Parler backing out of the deal, Levine said he wouldn’t comment on anything Ye said in his personal life.
In the two days since the news of the acquisition broke, Parler has seen four times as many new users sign up as it did in the preceding month, Levine told Protocol. He also said the company wants to expand beyond politics by recruiting new users who are musicians, athletes, and comedians. Parler currently has around 70 employees, he said.
“That alignment with his brand and his brilliance in promotion and the people he can attract to this site are the perfect fit for us moving forward,” Levine said. Parler is working through the details of how the acquisition will affect its leadership team, according to Levine.
Major ISPs have consistently offered poor neighborhoods and communities of color slower base internet speeds than more affluent, white neighborhoods, despite charging all of these communities the same price for service, according to a new investigation by The Markup and The Associated Press.
The news organizations studied 800,000 internet offers from AT&T, CenturyLink, Verizon, and Earthlink across 38 cities and found that the worst deals — factoring in speed and price — were offered in poorer and less white neighborhoods. “Residents of neighborhoods offered the worst deals aren’t just being ripped off; they’re denied the ability to participate in remote learning, well-paying remote jobs, and even family connection and recreation—ubiquitous elements of modern life,” the report reads.
The investigation sheds light on the fact that worse broadband service in poor communities doesn’t necessarily equate to lower costs. In one instance, the investigation found that AT&T customers in a middle-class community of color in New Orleans were provided with just 1Mbps of download speed, even though the FCC defines broadband as having a minimum of 25Mbps. In a mostly white, wealthier neighborhood in the same city, internet speeds were “almost 400 times faster,” the report found. But residents of both neighborhoods paid the same $55 a month for service.
The ISPs mentioned in the report didn’t deny offering different speed rates for the same price, but said it’s not because they’re intentionally discriminating. “Any suggestion that we discriminate in providing internet access is blatantly wrong,” AT&T spokesperson Jim Greer told The Markup. An executive for the industry group USTelecom, which represents Verizon, attributed the speed and price discrepancies to the fact that “legacy technologies can be more expensive.”
The disparities in service provision were found to be especially felt in formerly redlined neighborhoods. The investigation also found that CenturyLink’s service produced some of the biggest price disparities, with residents of the same city being offered pricing as different as 25 cents per Mbps and $100 per Mbps depending on where they lived.
“It isn’t just about the provision of a better service. It’s about access to the tools people need to fully participate in our democratic system,” Chad Marlow, senior policy counsel at the ACLU told the AP and Markup. “That is a far bigger deal and that’s what really worries me about what you’re finding.”
Running a monopoly chip business has its advantages, especially as the rest of the industry is pushed into turmoil — the result of a rapid, significant reversal in demand for consumer chips and U.S. efforts to block semiconductor tech sales to China.
For Dutch semiconductor manufacturing equipment maker ASML, things are not so bad. The company is the exclusive manufacturer of tools that use extreme ultraviolet lithography tech, which is necessary to print-cutting edge chips.
ASML said early Wednesday when it held an earnings conference call with investors that some of its customers — Intel, Samsung, and TSMC, for example — had delayed equipment delivery dates. But, according to CEO Peter Wennink, customers “never cancel,” even amid a recession.
“What we’ve always seen in recession or downturn — that I’ve seen in the last 25 years — customers never cancel,” Wennink said on the earnings call, according to a Sentieo transcript. “They ask for a rescheduling of the shipment. And that’s basically depending on their capex plans and on the depth of the recession, about the ability to finance it depends whether it’s a few months out or a few quarters out.”
What does tend to happen, Wennink said, is that customers ask ASML to delay the delivery of the tools, pushing them out a certain period of time to more favorably suit whatever adjustments the chip manufacturers have had to make to their expansion plans.
Reading between the lines, it appears Wennink is talking about the fact TSMC recently downgraded its factory and tool spending plans to $36 billion from $40 billion to $44 billion earlier this year; Micron made cuts to its capital spending plans, as did Intel.
ASML is in an enviable position compared with some of the other tool makers. Located in the Netherlands, it can operate outside of the increasingly hawkish U.S. view of China and its ability to buy American chip technology.
Sales of the advanced EUV machines are blocked to Chinese customers, but only because one of the crucial submodules is manufactured by a San Diego subsidiary of ASML, and without that submodule the EUV machines would be unable to operate. The U.S. muscled the Dutch into themselves blocking the exports of the EUV systems to China as a result.
Other chip equipment makers are not likely to fare as well as ASML. At the same time as some consumer end markets for chips have dropped off sharply, the U.S. has introduced sweeping new restrictions on chip tech exports, ranging from blocking chips with specific computational throughput to preventing U.S. citizens and companies from servicing or supporting chip equipment machines already in China.
The fresh export restrictions caused Applied Materials to issue a revenue warning last week, cautioning investors that the damage would extend into the next quarter too. For American chip equipment makers, China represents roughly a third of their sales, though some of that revenue is tied to equipment or services that aren’t covered by the new restrictions.
But a lot of tools are subject to the new rules and — perhaps more importantly — so are the personnel needed to service and support existing equipment. The expensive, complex machines needed to perform the various aspects of chip manufacturing require consistent monitoring and upkeep, which has morphed into a lucrative business for the equipment makers.
To put a fine point on it, according to The Economist, Goldman Sachs now estimates that overall the new U.S. export restrictions could cost Applied, Lam Research, and KLA $6 billion this year, or nearly 10% of their projected sales.
You thought crypto winter was bad? Try the real, potentially harsh winter about to hit Europe. Shutting down a key segment of the crypto industry could be one solution to the crisis, officials believe.
EU members should consider cracking down on crypto mining to help the region cope with a severe energy crisis caused largely by the disruption of the war in Ukraine, the body’s executive arm said this week.
“In case there is a need for load shedding in the electricity systems, the member states must also be ready to stop crypto-assets mining,” the European Commission said in a report.
Crypto mining energy consumption has “more or less doubled compared to two years ago,” the report said, adding that when “harnessing the use of cryptocurrencies and other blockchain technologies in energy markets and trading, care must be taken to use only the most energy efficient versions of the technology.”
The report called crypto’s proof-of-work consensus mechanism — which is used on the bitcoin blockchain, the most popular crypto ecosystem — “outdated.”
The commission cited the Ethereum network’s “long-awaited switch to proof-of-stake consensus mechanism,” which is expected to cut the second-largest blockchain’s energy consumption by 99%.
The switch, known as the Merge, was completed last month and “shows that the crypto world can move towards a more efficient system,” the report said.
Targeting crypto mining in a push to drastically cut energy consumption makes sense for the EU, given the difficulties of making similar reductions at major industries. Miners have cited the flexibility they have in shutting down and spinning up their operations based on the cost and availability of energy as an advantage compared to other industries, and argued that they can actually help stabilize grids and lower the cost of energy.
The EU has also been moving to introduce rules for the fast-growing crypto industry, highlighted by the recent approval of the Markets in Crypto-Assets Regulation, which is expected to become law in 2024.
Somewhat good news for the planet: Global carbon dioxide emissions are set to grow less than 1% this year, according to a new report from the International Energy Agency. The rise of renewable energy and electric vehicles are helping slowly bend the emissions curve, but there’s still a lot of work to do.
In actual numbers, carbon dioxide emissions are projected to increase by 300 million tons in 2022 to a grand total of 33.8 billion tons. That growth is a lot less than 2021, when they climbed nearly 2 billion tons. (Last year’s rapid rise in emissions was due in part to the global economic recovery following pandemic lockdowns.)
The report credits this year’s increase in emissions to power generation and the aviation sector, as travel continues to rise to pre-pandemic levels. Russia’s invasion of Ukraine is also making natural gas more expensive. That’s impacting the European Union’s energy security, and the bloc and other countries are turning to coal as a cheaper (but dirtier) alternative. The IEA reported that coal use will rise 2% this year, resulting in 200 million more tons of carbon ending up in the atmosphere.
But this uptick in emissions tied to coal use is “considerably outweighed by the expansion of renewables.” A total of 700 terawatt-hours of renewable generation came online in 2022, a record increase. The IEA said that offset 600 million tons of carbon pollution, an amount that’s roughly on par with Canada’s annual emissions.
The group forecast that the world is on track for “consistent improvement” when it comes to transitioning to clean energy and that last year’s big emissions increase was a COVID-19-related blip. IEA executive director Fatih Birol said in a statement that “policy actions by governments are driving real structural changes in the energy economy. Those changes are set to accelerate thanks to the major clean energy policy plans that have advanced around the world in recent months.”
The IEA highlighted the Inflation Reduction Act as one of a number of government policies that could transform how electricity is generated. Venture capital is also flowing toward climate solutions that could further speed up decarbonization in other sectors.
Some regions are doing better than others and are poised to make greater progress in the coming years. The EU is actually on track to see its carbon emissions fall this year, despite the increase in coal use. The IEA expects that to be a temporary uptick and that 50 gigawatts of renewable projects expected to come online in 2023 will help put coal on the decline again. China’s emissions are set to stay flat, in part due to weaker economic growth and deployment of renewables (though this summer’s hydropower-killing drought hurt zero-carbon energy generation).
It’s not all good news, though. Oil-related emissions grew more than any other fossil fuel sector, in part because many countries lifted travel restrictions and commuters returned to the road. Nearly three-quarters of this increase is due to aviation, specifically international travel. And with sustainable aviation fuel still far on the horizon, that sector’s path to decarbonization remains out of reach.
While smaller growth in emissions is a step in the right direction, the world ultimately needs emissions to fall rapidly to keep the Paris Agreement’s targets in reach. Global carbon emissions need to drop 55% by 2030 to ensure the world has a decent shot at limiting global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit). Blowing past that target will put millions more people at risk of facing climate change-fueled disasters. The modest increase in carbon pollution this year means the amount that the world will need to cut in subsequent years this decade will be that much steeper.
Correction: An earlier version of this story misspelled Fatih Birol’s name. This story was updated on Oct. 19, 2022.
Crypto winter doesn’t appear to be scaring away investors in the burgeoning NFT and blockchain gaming space. According to a new report from investment bank Drake Star Partners, crypto-related gaming companies accounted for roughly half of the last quarter’s private financing, or about $1.2 billion.
So far this year, investors have poured more than $3.4 billion into NFT and blockchain gaming companies. That’s remained steady for the past nine months, despite around $2 trillion of value disappearing from the crypto market since its November 2021 high.
“While the Crypto market continued to be under pressure, investors continued to show strong interest in blockchain gaming companies,” the company wrote. “Half of the total amount raised and 40% of all financing rounds for private gaming companies were investments in blockchain gaming.”
The blockchain gaming sector, which includes both collectible NFT projects and also games built entirely around blockchain technologies and cryptocurrency, continues to grow as Web3 hopefuls ride a wave of hype created around the metaverse. But so far, very few of these games have attracted more than a few thousand players, and the mainstream adoption and popularity of these technologies remains very much in question.
Earlier this month, crypto app platform DappRadar said it recorded fewer than 40 people interacting with proto-metaverse platform Decentraland’s smart contracts, after which Decentraland’s parent company clarified that about 8,000 people log in every day but mostly do not do anything blockchain-related. On the other end of the spectrum is Meta, the most high-profile company to plunge headfirst into Web3 with plans to build an interoperable, immersive metaverse. Yet even Horizon Worlds, Meta’s flagship social platform, has seen declining monthly users from 300,000 people per month in February to less than 200,000 this month.
As for NFTs, trading volume for the digital tokens has fallen 97% from its record high in January of this year, according to Bloomberg. NFT projects have also faced vocal backlash from the broader game community, a trend that does not appear to be abating any time soon even as more companies try to dip their feet into the market.
Sony this month launched a new loyalty program called PlayStation Stars in which players can earn digital collectibles for buying and playing games on the platform. When asked whether the program would be selling or offering NFTs, a PlayStation representative was emphatic in stressing to The Washington Post that it was not entering the crypto space: “It’s definitely not NFTs. Definitely not. You can’t trade them or sell them. It is not leveraging any blockchain technologies and definitely not NFTs.”
Without much fanfare, Oracle has now poured roughly $850 million into Arm server chip design startup Ampere since its inception in 2017, according to SEC filings.
Oracle’s stake in Ampere appeared to grow by more than $400 million earlier this year, after Oracle disclosed that it had invested $300 million in convertible debt issued by Ampere in fiscal 2022 and acquired more Ampere stock from an undisclosed investor for $127.8 million, according to the company’s proxy statement filed with the SEC.
Last year, Macom Technology Solutions, which divested its Arm chip business that became Ampere, said that it had sold its equity interest in Ampere to a buyer affiliated with Oracle for $127.7 million.
Ampere declined and Oracle did not respond to a request for comment.
The size of Oracle’s bet on Ampere became clear in March after Oracle blamed a wider-than-expected operating loss, in part, on Ampere, Protocol reported earlier this year. At the time, SEC filings revealed that Oracle had invested $426 million in the company, and including Ampere in its operating losses implied a stake of 20% to 50%, according to accounting rules.
Part of Oracle’s earlier investment in Ampere included another $300 million payment in an equity fundraising round in March of 2021, and an agreement to purchase tens of millions of dollars worth of server chips designed by Ampere. The most recent proxy statement indicates Oracle has purchased $50.9 million worth of Ampere chips in fiscal 2022, including a $21.6 million against a $25 million prepayment Oracle made in fiscal 2020.
Ampere’s founder and CEO, Renee James, also sits on Oracle’s board. Oracle has been quietly investing in Ampere since 2017, and prior to the investment James, who has served on Oracle’s board since 2015, was considered an independent board member. James was formerly president of Intel.
Ampere designs chips based on Arm technology and has made slow inroads into the data center CPU market, which is dominated by Intel and AMD. This market has long been dominated by Intel, but over the last few years it experienced manufacturing and other difficulties that led to delays launching new products, allowing AMD to pick up a bigger chunk of server chip sales and creating room for new entrants.
According to Jefferies, Ampere holds roughly 0.6% of cloud CPU instances, while AMD commands 17%, and Intel has 77.2% share. Graviton, Amazon’s in-house server CPU, has 4.2% share, though the company doesn’t sell its custom chips to other cloud vendors.
Netflix wants to extend its nascent gaming efforts to PCs and TVs, and it’s looking to launch its own cloud gaming service to do so, VP of game development Mike Verdu confirmed at TechCrunch Disrupt on Tuesday. “We’re very seriously exploring a cloud gaming offering,” Verdu said.
“We’ll approach this the same way as we did with mobile — start small, be humble, be thoughtful — but it is a step we think we should take,” Verdu added. “The extension into the cloud is really about reaching the other devices where people experience Netflix.”
Netflix’s cloud gaming ambitions don’t come as much of a surprise: The company has been looking to hire multiple staffers to build its own cloud gaming infrastructure, as Protocol was first to report in August.
Verdu didn’t share many additional details, but suggested the company was looking to launch more than just casual games on TVs. He declined to say whether Netflix would build its own game controllers like Google has done for its failed Stadia service, but he said the titles wouldn’t rely on TV remotes for input.
Netflix has released 35 games for mobile devices thus far, and the company said Tuesday as part of its earnings release that it had an additional 55 games in its pipeline. Fourteen of those games are being built by Netflix’s own studios, Verdu said, adding that the company was going to launch an additional studio in Southern California soon. The studio will be led by Chacko Sonny, who previously served as executive producer for Activision Blizzard’s Overwatch franchise, according to a Netflix spokesperson.
Verdu called Netflix’s expansion into gaming a pivotal moment for the company, but admitted that it was a slow and deliberate multiyear effort. However, the company may already be seeing some rewards from those efforts. “We’re seeing some encouraging signs of gameplay leading to higher retention,” the company wrote in its letter to investors Tuesday.
Update: This post was updated on Oct .18, 2022, with additional details on Netflix’s new Southern California studio.
Note: Protocol is owned by Axel Springer, whose CEO, Mathias Döpfner, is on the board of Netflix.
Shares of crypto-friendly bank Silvergate Capital fell by more than 20% Tuesday after its earnings report showed a decrease in deposits and its leadership announced a delay for a major stablecoin project.
The California-based company is one of the top providers of banking services to exchanges and other crypto companies, a market that has seen its digital tokens lose more than $2 trillion in value over the past year during a so-called crypto winter.
Silvergate reported earnings per share of $1.28 against expectations from Wall Street of $1.45, according to Zacks Investment Research. The deposits Silvergate holds from digital asset companies fell to $12 billion on average during the quarter, down about 13% from the previous quarter.
Adding to its pain, the bank’s big stablecoin project will not meet its goal of launching this year, President and CEO Alan Lane said on the company’s analyst call. Silvergate in January purchased the assets of Meta’s failed Diem blockchain project with plans to use the technology to launch a U.S.-dollar-backed stablecoin.
“Unfortunately, we no longer expect that to happen this year,” Lane said.
The technology is ready to go but the firm is “working with regulators and policymakers and making sure we get this right,” Lane said.
Lawmakers in the House of Representatives have been negotiating for months on a bill to regulate stablecoins, but nothing has advanced.
Outside of that initiative, one of Silvergate’s key products is a network that allows crypto exchanges and other clients to instantly transfer funds. But payments on the Silvergate Exchange Network fell by 41% on the quarter, to $112.6 billion.
“Volumes were mainly impacted by trends in the broader industry, specifically within stablecoins, as volumes from stablecoin issuers, such as USDC, saw a sizable drop in market cap during the quarter,” Lane said.
Lane said the company expects usage of its network won’t always be closely tied to crypto market values. “We remain confident in the power of the platform and the opportunities for expansion within the network,” he said.
Silvergate has grown its deposits from under $1 billion a decade ago to more than $13 billion, largely through providing banking services to crypto companies. Wall Street investors rewarded it during boom times for crypto last year, with Silvergate’s share price peaking near $220 in November.
The firm hadn’t been hit as hard on Wall Street as other crypto-focused companies in the first half of the year. Its share price climbed following its second-quarter earnings in July.
But some analysts were beginning to have doubts. Wells Fargo warned in a downgrade a couple weeks ago that the growth outlook for Silvergate Capital as a “pure-play crypto banking solution” is limited during a crypto winter.
Research firm Keefe, Bruyette & Woods still held a positive “outperform” stance on Silvergate in a report following earnings Tuesday, but noted that “outflow was more than we expected, and overall digital asset activity clearly slowed in Q3 as measured by SEN transfers.”
Lane told analysts that the recent moves by Mastercard, BNY Mellon, and BlackRock to expand crypto offerings should be taken as a positive sign for the industry.
“There is a lot of institutional adoption that is still coming — none of these things are live yet, they’ve all been an announcement about things to come — so we could not be more optimistic on the long-term trajectory,” Lane said. “But these things take time to play out.”
Correction: The original version of this story cited erroneous timing for the release of Wells Fargo’s research report on Silvergate. This story was updated on Oct. 19, 2022.