No one wins in a lawless land for tech companies

February 8, 2021
by Björn Jeffery
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SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on January 15th, 2021.

The uncertainty about what applies when infrastructure giants such as Amazon Web Services shuts down individual companies benefits no one.

In August 2017, after the riots in Charlottesville, USA, Cloudflare decided to shut down the Nazi site The Daily Stormer. Cloudfare is a company that provides cloud services and in a blog post, its CEO, Matthew Prince, explained his actions:

Like a lot of people, we’ve felt angry at these hateful people for a long time but we have followed the law and remained content neutral as a network. We could not remain neutral after these claims of secret support by Cloudflare.

Now, having made that decision, let me explain why it’s so dangerous.

Matthew Prince, CEO of Cloudflare

He then questioned his own decision, asking for guidelines that all companies could follow in similar situations.

Matthew Prince was clearly ahead of his time. But no clear directives or legislation have emerged since his statements.

Last week’s attack on the US Congress – and the actions of the big tech giants – illustrated the consequences of just that. When Twitter and Facebook shut down Donald Trump and also threw out a large number of other users, they did so based on their own policies.

Most recently, it was Amazon Web Services’ AWS turn when they shut down Parler, the right-wing app. The discussion that followed has been about both the tech companies’ role on the internet and about freedom of speech in general – should private companies be able to decide which sites can be hosted on their servers?

This is no small matter. AWS is one of the world’s most important internet companies. You probably use them every day without noticing it. Like Cloudflare, they belong to a category of companies that offer cloud services that enable the world’s largest sites to work.

These companies thus have enormous power. Starting a new website or app and not relying on any third party services is virtually impossible today. Everyone who builds something digitally is to some extent dependent on services similar to AWS.

And when they decide to close a service, the principle of their decision carries a lot of weight.

AWS itself has justified the closure of Parler by referring to its terms where it prohibits “activities that are illegal, that violate the rights of others, or that may be harmful to others”.

The fact that there has been no legislation can be partly explained by the slowness of politics. But regulating these types of services and businesses is anything but easy. The servers are often owned by US companies, but can be located anywhere in the world. Sites can also use cloud servers from many places at once, and have users from all over the world. No matter what one thinks of legislation or regulation, it is not obvious which body would even be appropriate to push through and ensure compliance.

It remains to be seen whether the events of recent weeks will lead to the kind of regulation that Matthew Prince asked for, four years ago. It is clear that the current situation creates an uncertainty that does not benefit any party.

In the near future, consequences in business is more likely. For Amazon, the political risk with AWS may soon become too great. They are already a major powerhouse in e-commerce and probably do not want to attract more attention for it. A possible solution for Amazon would therefore be to spin out AWS as a separate company instead. Last year, AWS had sales of $40 billion so the size alone could justify such a move.

Whatever happens, no one is happy with the current situation. While the world waits for order on these issues, tech leaders continue to question their own actions. As Jack Dorsey, CEO of Twitter, put it:

I do not celebrate or feel pride in our having to ban @realDonaldTrump from Twitter, or how we got here. After a clear warning we’d take this action, we made a decision with the best information we had based on threats to physical safety both on and off Twitter. Was this correct?

Jack Dorsey, CEO of Twitter.

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The storming of the Capitol is a failure for Twitter and Facebook

January 14, 2021
by Björn Jeffery
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SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on January 11th, 2021.

The fact that Twitter and Facebook closed down Donald Trump’s accounts doesn’t only reveal how arbitrarily their own policies are enforced – it also shows the failure of politicians in regulating them.

With two weeks left of Donald Trump’s presidency, what critics have constantly asked for over the past four years finally happened: his accounts on Facebook, Twitter and a number of other social networks were shut down. The companies justified their actions in a similar way – that Trump’s remarks threaten a peaceful and democratic transition of power in the United States to Joe Biden.

These are historical decisions. But they also reflect the lawless country that the tech companies are in, and what a difficult balancing act they have ahead of them.

In the absence of regulation and clear laws, tech companies have had to develop their own policies. The actions over the last few days, however, have shown how they are stumbling in the dark, seeking the public’s approval of how to deal with these issues in a consistent manner in the future. Just look at Twitter, where the threats of what could happen to Trump’s private account, which had about 90 million followers, often seemed to change with public opinion.

The tech companies have had many years to clarify their rules so that everyone, including Donald Trump, understands what applies. They could have shown that breaking the rules earlier has consequences. But while companies have worked on their internal rules and regulations, they have at the same time allowed disinformation and conspiracy theories to receive millions of views – completely unchallenged. It is a late awakening that is happening.

For example, Reddit shut down a notorious forum where Trump’s supporters discussed the alleged election fraud. Apple’s App Store and Google Play shut down the right-wing network Parler, which has been around since 2018, because they did not moderate the discussions in their app well enough. But in order to gain credibility in these matters, it is of course also important to first take care of your own issues. Youtube, owned by Google, is responsible for millions of views of conspiracy theories. Here, the company has so far chosen not to act.

This is therefore a situation that the tech companies have largely put themselves in. And it is urgent to find sustainable solutions. The alternative is for politicians, who should no longer be able to close their eyes after the storming of the Capitol, to do so for them. That would probably not be to Silicon Valley’s advantage – the politicians’ competence in these matters has historically proved to be lacking.

Because even if the problems culminate now, they are not new. Politicians have neglected their responsibility to regulate these companies for more than ten years.

So far, much of the discussion in the US has been about Section 230, which regulates the responsibility of tech companies for what is said on their platforms. Trump just got his first veto, in which he tried to get the legal protection revoked, overruled by the Senate.

The politicians, however, could have done a lot that does not concern this particular law. They could have been more forward-looking. They could have blocked new acquisitions that reduce competitiveness. They could have legislated on data ownership so that consumers could easily switch to new digital services. This would have enabled new companies to start and become competitive without having to start from scratch.

Instead, much in the US and the EU has been about lawsuits over events that have already occurred, such as anti-trust. But the same politicians who now question this particular concentration of power, were the same ones who approved Facebook’s acquisition of Instagram and Whatsapp. They approved Google’s purchase of Youtube, Nest, and most recently Fitbit. The biggest policy reform on the European level – GDPR – has been accused of being toothless and lacking the resources to be effective. As a consumer, you notice it mainly through more pop-ups on the web.

In Sweden, we follow the EU agenda to a large extent. But there is room for national initiatives here too, even if they have so far been largely absent. Denmark, for example, has its own tech ambassador whose mission it is to create better relations with the tech companies and understand Silicon Valley to a greater extent. There is nothing similar in Sweden, but when the expertise is lacking with politicians, maybe it could be something to look at? During the Christmas weekend, we learned that our own Prime Minister never even shopped online. Before we get elected officials who prioritize – or even use – technology, we are unlikely to be at the forefront of these issues.

There is therefore a great risk that the lawless country – in which politicians neither understand nor are able to legislate tech companies in a clear way – is allowed to continue to grow almost unhindered, and where faltering tech companies will have to try to develop and enforce their policies.

Left, squeezed between tech companies and politics, are we – the consumers. The ones who see the surreal pictures from Washington DC on Facebook or Instagram. Without many of us even reflecting on how the two things are connected.

This analysis was first published in SvD Näringsliv, in Swedish, on January 11th, 2021.

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Opened 300 restaurants in one day – without any kitchens

December 26, 2020
by Björn Jeffery
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SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on December 24th, 2020.

An American Youtube star opened 300 new restaurants in one day. Without either staff or premises. The phenomenon “ghost kitchens” is expected to reshape the restaurant world – and already exists in Sweden.

“Ghost kitchens” – or “cloud kitchens” as they are also called – can simply be described as a restaurant kitchen without its own front of house. Instead, the owner relies entirely on food suppliers such as Foodora, Wolt or Uber Eats. Where the food is made does not matter, as long as it tastes good and is delivered as planned. And that is what makes “ghost kitchens” so successful, and its emergence so logical.

The first wave of home delivery, which came five or six years ago, was mainly about getting well-known restaurants and restaurateurs to join the food apps. Then it was all about trying to drive people’s behavior towards starting to use these services.

In the second wave, customers had begun to become loyal users, and could search directly in the apps for the type of food they wanted. In some cases, the search results became more important than the original brands.

This week we saw the beginning of the breakthrough for the third wave when MrBeast – a 22-year-old Youtuber from North Carolina with nearly 50 million subscribers – opened 300 hamburger restaurants across the United States. In a single day. Without either restaurant staff or kitchens.

The food is made by various chefs around the United States, whom MrBeast has probably never even met. He then uses the food delivery services to get the food delivered, but keeps the customer relationships in his own channels. And that’s the main reason for the immediate success, as the new app MrBeast Burger went up as number one on the US App Store. He handles the marketing all by himself via his Youtube channel to his fans for no money at all.

However, MrBeast has not been quite as innovative as it sounds. He himself is just one of many celebrities that Virtual Dining Concepts – the company behind MrBeast Burger – works with. For example, you can also buy chicken from the rapper Tyga or cookies from Mariah Carey.

The difficulty with this model is maintaining quality. Many restaurant chains has as a concept that the food should taste the same no matter where you eat. That is difficult to achieve if the kitchens work with different ingredients and ways of cooking it.

That an individual restaurateur can be attracted by the concept is not surprising. Becoming a franchisee with one of the big chains is often expensive. Building your own chain of physical restaurants around the country is even more expensive. Avoiding these costs, and being able to be a so-called virtual kitchen for several different brands, can therefore be appealing. Because if you still do not have a front of house – why limit yourself to one kitchen, or one brand?

For the consumer, on the other hand, it becomes unclear who actually cooked one’s food and where it comes from. On the other hand, how many people today know where the food at their favorite restaurant comes from?

The phenomenon “ghost kitchens” also exists in Sweden. For example, if you have ordered food from Singapore Spice in Stockholm, you may be surprised to hear that it does not exist as a restaurant. It’s just a brand used for Asian food. The same kitchen on Östermalm also makes Italian food under the Nonna Donna brand. Maybe you have ordered from both without noticing anything. That is the whole point.

It is easy to see in front of you how Swedish influencers pick up on this trend and drive the big breakthrough. Swedish consumers are now used to ordering food and having it delivered to their homes. The question is more about what to eat than from whom. And it is basically the same question (“What should I shop?”) that has created a completely new professional category as an influencer on Instagram and Snap. It is therefore not entirely unbelievable that we will soon see people like Bianca Ingrosso, Kenza Zouiten and Therése Lindgren make their entrance into the Swedish restaurant world.

You click, Foodora delivers, and Bianca Ingrosso is suddenly also a restaurateur for the next generation. It will be difficult for an average restaurant to compete with her 1.2 million followers on Instagram – and with her credibility in the target group.

This analysis was first published in SvD Näringsliv, in Swedish, on December 24th, 2020.

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The situation for Apple resembles a two-front war

December 26, 2020
by Björn Jeffery
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SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on December 18th, 2020.

“We’re standing up to Apple for small business everywhere.” That is what Facebook wrote in a series of full-page ads in American newspapers this week. The situation for Apple is now beginning to resemble a two-front war when both Silicon Valley and the media world attack from different directions.

In recent years, Apple has taken an increasingly clear stance on transparent data management. Their view is not to store data from users – unless they know about and accept it. But in order to gain acceptance, one must also ask the question. This is the issue for Facebook, which has had a long conflict with Apple regarding these matters.

In Apple’s new operating system iOS14, the company will ask if you want to allow data collection from each app. If the user says no, the accuracy of the ads will be worse for instance. This is a minor issue for Apple, which does not have ads as its business model, but for competitors such as Amazon, Google and Facebook, it could be devastating. The accuracy of the ads deteriorates radically. And especially for Facebook, this is bad and also the timing, as they are pressured by a new major political investigation.

So what do the small businesses mentioned in the ads have to do with this? Not much really. But as so often, tech giants use them as a front to protect their own interests. Apple recently did the same with smaller app developers. Now it is Facebook’s turn, when it claims that small businesses will have a 60 percent worse effect on their ads if the change is implemented. That could be true, but don’t think for a second that this is where Facebook’s real problem lies in this issue. It is that the company itself, as a direct consequence, risks selling fewer ads. Small and medium-sized companies today account for the majority of the company’s revenues.

This week, Apple also got other worries, albeit from elsewhere than Silicon Valley. A lobby group calling itself the Coalition for App Fairness (CAF) announced that a large number of media companies have joined as members, including the New York Times, the Washington Post and the Financial Times. CAF is pursuing the issue of “Apple Tax”, which is what the detractors call the 30 percent fee that Apple charges in the App Store for purchases made there. Among the members of CAF you will also find Epic Games (which makes the game “Fortnite”), Match Group (which owns Tinder), and Swedish Spotify.

The pressure is now increasing on Apple. While dealing with the high-profile lawsuit with Epic Games, where the game developer claims that Apple is abusing its dominant position in the mobile apps market, a long series of political processes are underway to examine whether the company has acted as a monopoly. The fact that more and more well-known companies are raising their voices shows that this is not an individual dispute between Apple and a game developer, but a major structural issue that probably will need to be resolved politically.

Among the smaller developers, criticism has been aimed at Apple for several years, but very few have been willing to speak about it in public. The risk of ending up in conflict with their most important – and perhaps only – marketplace has been too great. The importance of several large companies joining CAF is therefore great, as each individual developer is less exposed.

When it comes to advertising, Apple has undoubtedly chosen a smart strategy. By positioning itself as the user’s best friend regarding data, it has also set hooks for its competitors. It is difficult to sell ads without the data, and the iOS platform is incredibly important for all advertisers.

However, it should be remembered that this is a relatively new strategy for Apple. In 2010, they bought a company called Quattro Wireless for $275 million. It then laid the foundation for Apple’s own advertising system – iAd – which they had until the summer of 2016. In four years, they have gone from selling ads themselves, to making life difficult for all other advertising networks. That this matter is solely about the users’ best interests is therefore, to say the least, a beautification.

Apple and Facebook have – despite all the quarrels – one thing in common. They look after their own interests first, but prefer to talk about the users and small businesses that benefit from their success.

This analysis was first published in SvD Näringsliv, in Swedish, on December 18th, 2020.

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Dylan has millions of reasons to thank Spotify

December 26, 2020
by Björn Jeffery
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SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on December 9th, 2020.

Artists often complain about the payouts from Spotify – but this week Bob Dylan had reason to thank them instead. Spotify has boosted the value of his song catalogue, which has been sold for around $300 million.

During the early 2000s, the music industry looked rather gloomy. They had major problems with illegal downloads, and record sales went downhill. From 1999 to 2014, the record industry lost around 44 percent of revenue.

Then came Spotify, which launched in 2008. It was not only the start of a huge Swedish success story in tech, but also changed how the music industry and songwriting work. The business model fundamentally changed.

Simplified: When you previously bought a CD, the record company, the artist, and the songwriters all got their share of the pie. The more records you sold, the more money you made. But it also meant that if you did not release any new records, earnings were limited.

On services such as Spotify and Apple Music, the business model is instead based on the amount of listening. This means that old songs can keep on generating new money. An artist like Bob Dylan, who has millions of fans around the world, is also quite predictable when it comes to the number of streams. The number of people who listened to “Like a Rolling Stone” last year is probably about as many as the year after. It makes it easier to calculate the value of the old music rights. In the last five years, music catalogues have sold for up to 20 times higher than the annual royalty income.

This predictability has created a completely new market where old rights are now being bought and sold actively, not infrequently by new listed companies such as Hipgnosis and Round Hill Music. The goal is not only to manage the music, but in many cases also to work together with the songwriter, who sometimes retains a share of the rights, to increase the number of listens.

The fact that Bob Dylan is now selling his entire song catalog to Universal Music Publishing Group for an estimated $300 million is a telling example. The deal won’t be the last in the mega-trend that has now begun to sweep through the industry. Stevie Nicks and RZA from the Wu-Tang Clan, among others, have previously sold parts of their rights in 2020.

Investing in these assets is attractive. In a market where interest rates are low, there is risk-willing capital to invest in more unconventional places. In recent years alone, the rights companies Concord, Primary Wave and Hipgnosis have jointly spent over $3 billion on buying music catalogues.

The growth for the companies come from that streaming is gaining ground. In some countries, it has barely begun. In Japan, the CD has a market share of 69 percent, while streaming is 19 percent. In Sweden, the corresponding proportion for streaming is over 90 percent.

The companies that buy these rights thus believe that listening to music in countries like Japan will follow the Swedish development. It is also believed that more money will be paid out from other types of music services over time – for example from YouTube or Tiktok. Music rights then become digital commodities, which can be valued with the help of data, and refined through marketing.

Selling music rights in this way is not always uncontroversial. Pop star Taylor Swift has in the past year been in a very public feud with the music profile Scooter Braun, who bought Swift’s previous record company and thereby much of the rights to her music. Braun recently resold the rights to Shamrock Capital, a company owned by the Disney family. Taylor Swift will now make new recordings of her songs, to try and avoid others capitalizing on what she considers to be her music.

As Bob Dylan himself once said – in the song that has over 140 million listens on Spotify – “the times they are a-changin ‘”.

This analysis was first published in SvD Näringsliv, in Swedish, on December 9th, 2020.

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Acquired for $27 billion – but Slack loses out

December 26, 2020
by Björn Jeffery
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SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on December 2nd, 2020.

$27.7 billion may sound expensive. But it is not the buyer Salesforce who pays the really high price in this deal – it is the seller, Slack.

It is notoriously difficult to sell enterprise IT to large companies. The sales processes are long, the agreements are large, and the integrations are complex. The communication tool Slack has experienced this in recent years.

The company has long been a Silicon Valley favorite where more tech-savvy companies moved their communications at the expense of regular meetings and emails. There was no doubt that they picked the right trend – it did not take long before users began to use “slack” as a verb. There was talk that Slack could become the new platform for business services.

But in order to continue to grow, the company needed to broaden the customer group and bring over more traditional customers to this way of working. There was, however, a certain skepticism. Why should we sit and chat with each other in front of a computer, when it works perfectly well to keep working as we do today?

Then came the coronavirus. Suddenly it became abundantly clear why digital communication in real time was preferable. But while companies like Zoom suddenly experienced explosive growth, Slack failed to take advantage of what should have been their major breakthrough.

Instead, it was companies like Microsoft with their Teams product – which in many ways is a Slack clone – that got a boost. They did not have a better product, but large companies already had Microsoft products in place. You could just turn on Teams and get started.

Slack established the behavior, but did not succeed in fully capitalizing on it and still made big losses during the first half of 2020. The company’s share price never reached its opening price at IPO until rumors of the acquisition came out.

This is where Salesforce comes into the picture – a software giant from San Francisco with a market capitalization of around $206 billion. They are best known for their sales support tools, but offer a wide range of cloud services to marketing and sales companies. What was missing from their portfolio, however, is the everyday collaboration between the employees – what Slack does best. Salesforce’s own product, Chatter, has never succeeded in establishing itself as a worthy competitor.

What Salesforce is good at, though, is selling. And like Microsoft, they already have very many large companies on the customer list. By adding Slack to the portfolio, you significantly facilitate the sales process, and thereby solve Slack’s biggest challenge. They can now accelerate their growth and seriously take on the fight with Microsoft.

Corona exposed both Slack’s greatest strengths and their weaknesses. The product was right. The user behavior was right. But it became too difficult to establish this new way of working for large companies on their own. Instead of becoming the new generation platform for future business services, Slack is now one of many products within an established market leader.

Given that – and despite the incredible purchase price of $ 27.7 billion, many people probably feel that Slack has not fully lived up to its potential in a market that so far has only scratched the surface of how big it could become.

And remember this: In 2012, Facebook bought Instagram for $1 billion. Back then, they were a photo app with no major revenue, and people were wondering what they were paying for. Just eight years later, they are valued at over $100 billion. And most importantly – Facebook bought out its competition. Salesforce pays dearly today, but is probably reasoning in the same way as Facebook did then.

This analysis was first published in SvD Näringsliv, in Swedish, on December 2nd, 2020.

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Apps are abused – and it’s their own fault

December 13, 2020
by Björn Jeffery
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SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on November 29, 2020.

SvD’s exposé of the app companies shows how difficult it is to prevent and catch those who exploit children. But the fact that the technology is used in a way that was not intended is no excuse. Instead, it should be the starting point for a larger process of self-criticism.

“We can do better,” say Facebook and Twitter. “We have tightened security,” claims Star Stable. “Delete is our default,” promises Snap.

Self-criticism mixed with big words, but in the end it turns out to be worth very little. Preventing individuals, organizations, or nations from using their platforms in a harmful way is difficult, as SvD’s exposé has shown. And yes – it is difficult. But it is not a law of nature that these services needed to be so difficult to protect from people with bad intentions from the beginning. The companies themselves have – consciously – chosen to accept the negative side effects that have arisen when designing their platforms.

Take the company Snap for example. A large part of their service, Snapchat, is about sending messages that are temporary and disappear after a short time – an idea that was later copied by both Instagram and Twitter. The ephemeral is the charm.

But the ephemeral also has immediate limitations – not least from a security perspective. This is also why police say that Snapchat is the online pedophile’s favorite app – an insight Snapchat should have thought of when creating it. Because it is obvious. And when you still choose to build the service in this way, Snap has down prioritized that risk.

The gaming industry is in a similar situation. All trends point towards allowing players to participate in the creative process and interact with each other. It is fun and gives rise to an incredible creativity and sense of belonging among many. But when you are allowed to create freely, risks also arise. As in the incredibly popular children’s game Roblox, where you could witness what looked like a gang rape. It’s a very small part of a game where millions of people participate every day, but it’s still there.

I have experience from the gaming industry myself, where we made products for children. I understand the allure of riding the trends to create more fun and more viral games. At the same time, I also remember the conversations we had in parallel – the ones about whether we could guarantee children’s safety. If we could be sure that our games could not be abused in any way. And when we came to the conclusion that we could not be sure of that – then we refrained from building that kind of game. It is possible to say no, even as a tech company.

Should you then never be able to design games or services where there is the slightest risk? Yes, of course. But you can also prevent the risks that arise.

You can add enough resources to minimize them from the beginning. Security in games and services is often pitted against simplicity for users. But that is an oversimplification. There are countless examples of successful games and services that do not have as big problems with this as Snap does. On the contrary, innovating here could be a competitive advantage. One would have wished that the same amount of creativity and resources be put into finding new solutions for this problem, as there is in creating new game concepts.

We should stop accepting the “it is difficult” as an excuse for tech companies’ self-inflicted problems. The responsibility begins with the design of the product. That is where the difficult questions need to be answered – not when services and games are already in the hands of children.

This analysis was first published in SvD Näringsliv, in Swedish, on November 29, 2020.

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Here’s the Trump fans’ new favorite app – without “censorship”

December 13, 2020
by Björn Jeffery
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SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on November 22, 2020.

Censorship. Oppression of opinion. Freedom of speech. The American right does not mince words after Twitter started marking inaccuracies from Donald Trump. As a counterforce, a new wave of radical social networks is emerging – with its own rules that better suit their opinions.

Should social networks allow untruths on their platforms? This issue has been topical and hotly debated for several years. Challengers like the Parler app ask a new, more complex question: What is even untrue from the beginning? Or perhaps rather – which truth suits us best to portray?

After the US presidential election, the social network Parler rushed up that charts as number one on the App Store. It became a haven for conservatives who neither accepted the election results, nor how Twitter applied its new election policy.

Parler is a pretty tacky Twitter clone that has been around since 2018, even in Sweden. It was initially a home for users – often right-wingers – who had been thrown out from regular social networks. Parler positioned itself as a place that stood for “freedom of speech”, but it did not take long before those mocking the site were thrown out themselves.

Now Parler has gained momentum in the United States, thanks in large part to a push from of many leading politicians and conservative thinkers. Radio presenter and Fox News anchor Mark Levin recently tweeted: “Hurry up and follow me on Parler. I may not stay on Facebook or Twitter if they continue to censor me“. Former presidential candidate Ted Cruz wrote “let’s end Silicon Valley censorship“.

There is much to suggest that these are empty threats. Social networks are often described as a meeting ground for people. But for many, they are rather used as a megaphone. And the megaphone does not fulfill its function if no one hears what is being said.

Politicians and professional thinkers will therefore not dare to drop out of any established channels until they are sure that their reach is maintained. Thus, it will take a long time, if it happens at all. According to the New York Times, right-wing conservatives are also among the most successful in spreading their posts on Facebook.

The lifespan of social networks often depends on the business model they have. Making money is not easy. For example, it took Twitter four years as a listed company before it presented a single quarter of profit. Parler’s challenge will be to find advertisers who want to showcase their brand in this environment. Companies like Disney have previously pulled its ads from Fox News after controversial statements were made there. How will they look at advertising among right-wing extremists who have been banned from other sites?

If the ads do not cover the costs, they may have to rely on the users paying themselves instead. But there are few examples in the world where it has worked in this category. Parler will therefore likely have a hard time on that front as well.

The question marks about the business model make it even more interesting to look at where Parler’s money is coming from. In Silicon Valley, many people tend to think it’s okay to take money from a Trump supporter like Paypal founder Peter Thiel, who advocated a radical political reorganization, without the company itself getting such a stamp. Even scandal-ridden entrepreneurs such as the founder of the HR company Zenefits, Parker Conrad, has successfully raised a lot of money for new companies. But in the case of Parler – given the overly clear link to the Republican Party – the funding could almost be seen as a direct political investment.

Recently, we also received evidence of just this when Rebekah Mercer told us that she was one of the financiers. In a statement, Trump supporter Mercer said that “he ever increasing tyranny and hubris of our tech overlords demands that someone lead the fight against data mining, and for the protection of free speech online.“

A statement that is a bit rich coming from from a person who was associated with the biggest data scandal in modern times. The Mercer family, where Rebekah is the daughter, was also the financier of the controversial company Cambridge Analytica – the company that collected data from Facebook from 2013 onwards.

Parler’s newfound emergence, however, raises the question of whether social networks will become increasingly closed in the future. Are they open squares where dissidents meet, or groups that only show what you already believe in – so-called filter bubbles? That criticism is common even for social networks like Facebook and Twitter today. But there they are often an unintended consequence. With Parler, they are the whole point.

This analysis was first published in SvD Näringsliv, in Swedish, on November 22, 2020.

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Apple’s response is a cynical move with no effect

November 18, 2020
by Björn Jeffery
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SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on November 18, 2020.

The Apple Tax. That’s what critics usually call the fee that the company charges developers when they sell through the App Store. Now it is cut in half for the smallest players, all to appease the court of public opinion. The cost for Apple? At best, it can be seen as a rounding error on their bottom line.

The dispute with Epic Games over the cost of Apple’s services has now become a lawsuit starting in May next year. The underlying question is whether individual developers should be able to offer their own payment solutions via the App Store, or whether they must use what Apple offers.

It may sound like a technicality, but there are billions of dollars that run through these systems where Apple takes 30 percent of all revenue. The fee is now cut in half for companies with revenues of up to $1 million.

The change comes at a sensitive time for Apple, as sales of their flagship product, the iPhone, are not growing as strongly as before. Instead, more and more focus has been placed on the company’s services – including iCloud for storage, the music service Apple Music, and the App Store itself. And it is the latter that is by far the largest and most significant among them.

It is also in this context that one should understand the quarrel with Spotify – a company that is not only forced to give almost a third of all iOS revenue to Apple, but also directly competes with one of its most important services, Apple Music. The company has also packaged Music together with its other services at a lower price directly in the operating system – something that Spotify does not have the opportunity to do. Unsurprisingly, Spotify was not impressed by Apple’s announcement.

Apple often talks about how much money the company has paid out to developers – more precisely $155 billion until this year. What is much less talked about is how that money has been distributed among the developers. The reason for this is that the distribution is very top heavy.

One of many examples of how the biggest developers take a very large part of the pie, and the long tail of hundreds of thousands of developers share what is left, is the Finnish gaming company Supercell. They are behind games like Clash of Clans and Clash Royale and have revenues of just over $5 billion over the past three years, most of which comes through Apple.

Seen in this light, today’s proposal from Apple is not as generous as it first seems. Reducing the fees for the smaller developers will probably be appreciated by many. It will also position Apple as a company that stands on the side of small businesses, something that could be used in the upcoming lawsuit. But since the change only affects developers with relatively low revenues, the cost to Apple will also be low. Probably virtually invisible, given their huge revenue overall.

This is a smart – but cynical – move by Apple. The company keeps Epic Games and Spotify at arm’s length, and ties the smaller developers closer. And they do it without it costing them almost anything.

This analysis was first published in SvD Näringsliv, in Swedish, on November 18, 2020.

Closing Discobelle.net

November 16, 2020
by Björn Jeffery
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The Daily

About eleven years ago, a few friends of mine and I started a music blog called Discobelle.net. It was a spin-off from what was originally a house music club, a radio show, and then eventually a Swedish house music blog. The .net-version was in English, and thus had the possibility of reaching a bigger audience.

And it did. In fact, it was a part of launching a whole genre of electronic dance music.

This was pre-streaming, and MP3s were the format of choice. This combined with the speed of blog posting created a shortcut to the DJ community that hadn’t existed before. It happened several times that I posted an exclusive track during the day, and heard it being played in the club that same night. This could happen because DJs were switching from strictly playing vinyl, and incorporating digital music into their sets. The timing was perfect.

Last week we announced that we are going to close the site down. Since then we have received an outpouring of love and appreciation from the community that we were a part of for so many years. Here are a few examples:

Discobelle was never a commercial venture. And it serves as a reminder that passion projects can matter deeply and become hugely influential. From the backrooms in Southern Sweden, to the rest of the world.

I leave you with a nostalgic mix that A-Trak put together a few years ago. The sound of Bloghaus!