Category: Web/Tech

Microsoft is now the world’s most valuable company

Microsoft’s current market cap has overtaken Apple’s, after living for nearly a decade in the shadow of the Cupertino company.

At the time of writing Microsoft’s intra-day Market Cap is now 751.88B, higher than competing company Apple Inc. which is now 749.75B, by more than 2 billion dollars.

Amazon (currently 741.90B) and Apple were dubbed the world’s most valuable tech companies by Market Cap earlier this year as they crossed the $1 trillion mark. With Microsoft now overshadowing all three, including Alphabet Inc, the firm now looks to be the most valuable tech company…

Investors are concerned about slowing revenue growth at the so-called FANG companies (Facebook, Apple, Netflix and Google), a club of high flyers Microsoft has traditionally been excluded from.

Now they are betting company spending on cloud services and software will remain strong as companies strive to increase efficiency and productivity, while Facebook and Google are increasingly coming under scrutiny for their consumer data practices.

Microsoft’s cloud segment, in particular, is expected to do well, with Office 365 the lead programs in the market for cloud-based productivity tools, while Azure services for storing data and running apps in the cloud is in a solid second position to Amazon’s AWS. Microsoft is also increasingly relying on a steady subscription business which is less subject to volatility.

Here is the full story.

Those new service sector jobs

The DAWN Café is an upcoming trial project that will test an inclusive working environment. The café will seemingly be staffed with robots that will wait on you by bringing you your coffee and asking if you need anything. But if you think this is another example of robots coming for our jobs, you would be mistaken. Embedded within the robots are real intelligence: they’re operated remotely by people with severe disabilities who often can’t leave their bed.

Here is the story, via Dustin Palmer.

Hedge fund and tech questions that are rarely asked

COWEN: Given all the data that search companies and some of the other major tech companies have, why aren’t they bundled with hedge funds?

SCHMIDT: What do you mean by bundled?

COWEN: Well, literally in the same company. You’d have a tech company and a hedge fund, and there would be a synergy because the hedge fund would use the data generated by the tech company for investment. So the hedge fund would have that data first. We don’t see that in the market.

And:

COWEN: The major tech companies have done very well, of course, but if we imagine some world in the future where some tech companies are at or near insolvency, and if we think maybe they have a fiduciary responsibility to sell off the information they hold on people, is that a regulatory problem we will need to address?

Obviously, a successful tech company is not going to do that. They would wreck their franchise.

SCHMIDT: Yeah, so the problem that you’re posing is, we have a company that has a great deal of useful information that’s also bankrupt.

COWEN: Right.

Those were my questions to Eric Schmidt.

Coasean Skies

Air taxis and delivery drones may soon make the airspace between 200 and 5000 feet above ground level much more valuable. How is this airspace to be regulated? In a very good new paper Brent Skorup draws on Coase, Demsetz, and Ostrom and the law, economics and history of regulated commons to suggest new approaches.

[T]he technological shock—the commercialization of air taxis—will create novel urban airspace scarcity and collective action conflicts. When intended uses conflict, how should airspace be allocated? This is an old problem: the transformation of a common-pool resource in the face of intensive new uses for that resource.

…For traditional aviation, air traffic management is centralized and relies on complex collaboration between airlines, the general aviation industry, air traffic controllers, and regulators. Aircraft routes, payload, slot fees, airport locations, billing, and safe separation between aircraft are all highly regulated components of this interconnected system. Massive economic distortions result from the regulated rationing of airspace and terminal access. Low-altitude airspace (i.e.,200 feet to 5000 feet above ground level) offers a relatively blank slate to explore new models for air transport and to avoid command-and-control mistakes made in the past in aviation.

…Section IV introduces a different idea: that the FAA instead delimit geographic tracts of low-altitude airspace and assign exclusive use licenses to those tracts via auction for a term of years. Flight path, speed, terminal locations, aircraft size, UTM technologies, and pricing choices would largely be delegated to the tract licensees. Finally, Section V explains why this approach, which draws on real-world examples from spectrum auctions and other federal asset markets, may offer more competitive UTMs and dynamic efficiencies for low-altitude air transit. This auction approach also allows aviation regulators to focus less on scientific management of airspace and UTM interoperability and more on aircraft safety, dangerous weather, and inspections.

Why chess has remained popular, and why the internet is hard to predict

Those are the topics of my latest Bloomberg column, here is one excerpt:

It turns out that chess is oddly well-suited for a high-tech world. Chess does not make for gripping television, but the option of live viewing online, supplemented by computer analysis or personal commentary, has driven a renaissance of the game.

For one thing, computer evaluations have made watching more intelligible. Even if you barely understand chess, you can quickly get a sense of the state of play with the frequently changing numerical evaluations (“+ 2.00,” for instance, means white has a decisive advantage, whereas “0.00” signals an even position). You also can see, with each move, whether the player will choose what the computer finds best.

In essence, some of the suspenseful stupidities of low-level video games have been infused into eggheady chess. You can indulge your inner Pac Man without feeling guilty about it.

At first it was thought that online viewers would favor rapid and blitz chess, which are (as you might expect) more fast-paced. In fact, the slower games, including contests of five hours or more, have not put viewers off. If you are sitting at your office desk, you might wish to glance at the position every few minutes or so. A slower game means you can do that without missing much of the action, and yet still most of your work will get done. If the game is heading to a climax, you can pay full attention for that short period.

Fortunately, the software programs that evaluate the games and players are not yet infallible. So if Stockfish (one such program) indicates that your favorite player is far behind, you can hold out a slim hope that the software is wrong. “Creating artificial suspense” is one of the killer apps of the internet.

There is much more, including a discussion of basketball and trash talking, do read the whole thing.

Hey, wait a minute!

In November 1931 Churchill also published an article entitled ‘Fifty Years Hence’ in Maclean’s Magazine, in which he made some absurd predictions — that we would grow only those parts of chickens we wanted to eat, for example — but also some astonishingly accurate ones.  ‘Wireless telephones and television…

That is from the new and excellent Andrew Roberts, Churchill: Walking with Destiny.  It is true of course that the fifty years prediction was off.  Here is the Churchill essay.

Japan is not yet the land of robots

Japanese hotels and banks are, by global standards, heavily overstaffed despite the country’s demographic crunch. Most supermarkets have not embraced the automated checkouts common elsewhere, nor airlines self-service check-ins. The offices of Japan’s small and medium-sized enterprises are among the most inefficient in the developed world, chides McKinsey, a management consultancy.

Japan has an elaborate service culture, which machines struggle to replicate. Japanese customers, especially the elderly, strongly prefer people to machines, says Yoko Takeda of Mitsubishi Research Institute, a think-tank. Employment practices make it difficult to replace workers. And while gimmicky robots abound, Japan struggles to develop the software and artificial intelligence needed to enable them to perform useful tasks, says a report by the Ministry of Economy, Trade and Industry (METI), the cockpit of Japan’s post-war miracle. So while the reception at the robot hotel is automated, seven human employees lurk out of sight to watch over customers and avoid glitches. Robots still cannot make beds, cook breakfast or deal with a drunken guest who will not pay his bill.

Here is more from The Economist.

My Conversation with Eric Schmidt

Self-recommending, here is the audio and video.  Here is the video, here is one excerpt from the dialogue:

COWEN: So you receive an offer to run Google. Why were you so skeptical about Google at first?

SCHMIDT: Well, I assumed that search wasn’t very important, and I assumed the ads didn’t work. I was so concerned about the ads that, after I accepted the offer — because it just seemed like it was interesting, and a lot of luck comes from doing things that are interesting, and sort of creating your own luck — I hauled the then–sales executive, whose name was Tim Armstrong, who you all know well, and I said, “Tim, prove to me that these ads work.”

So they showed me a set of ads, and they looked pretty foolish to me. So I said, “Well, let’s go find the finance person,” of which there was one, and the accounting system was done on QuickBooks. I said, “Prove to me that people are paying for these ads,” and they did.

We then did an ads conversion in the first year, which was called Project Drano, where we basically took three different ads databases, which were simple compared to today’s databases, and merged them into one. And I was terrified, absolutely terrified that the ruse that we had — because we had fixed pricing on our ads — that people would discover that our ads were not worth anything.

So I organized what I called the cash restriction period, where the only thing you could do if you wanted to spend money, is you could only spend money on Friday at 10 AM, and you had to come to me to justify it, which very much shuts down spending.

So we get to this conversion, we turn the thing over, and of course, we didn’t bother to build into the tools. We had no metrics. We didn’t know what was going on. I’m going, “Oh my God, the company is bankrupt. My first year, I’ve done a terrible job. What will the board think?” I did my best to notify everybody we were going to go kaput.

The auction produced a price that was three times higher than the previous prices. Very interesting. So much for the cash restriction period, and the rest is history.

And from Eric:

We did all sorts of things. My favorite example is that we would interview people to death. We interviewed this one gentleman sixteen times, and we couldn’t decide. So I picked a random number, which was half, and I said, “We should have a max of eight, and if we can’t decide after eight . . .” We’ve since done a statistical analysis, and the answer today is four to five interviews.

And here is my bit on Eric:

COWEN: Now early on, you were an intern at Bell Labs, and also PARC, which belonged to Xerox, and I think of those two institutions as stemming from earlier glory years of American science.

Is it fair to think of your career as in some sense, you’re the person who spans those two eras, the Bell Labs-PARC era of doing things, and then the tech era of manipulating information, and that your ability to bring expertise from those two areas together is what has made you a unique figure? Is that a fair assessment of how you fit into the picture?

And there is this bit:

COWEN: How did it influence you having a father who was a famous economist? He wrote on balance of payments crises. What did you draw from him? Did that have a role in using so much economics in Google?

SCHMIDT: Well, what’s interesting is, I asked my father, “If you’re such a good economist, why are we not rich?”

I very much enjoyed doing this event, which was for Village Global, a new venture capital firm.  Here is a Village Global post on lessons from the event.

China sentences of the day

With the Internet, too much information leaks out about the failings of governments. Thus, they are unable to “rule by persuasion” and are increasingly reduced to relying on sheer force. As a provocative example, Gurri believes that the Chinese government now is more dependent on force than it would be without the Internet.

That is from Arnold Kling reviewing Martin Gurri’s forthcoming The Revolt of the Public and the Crisis of Authority in the New Millennium.

Will a low price actually prove good for crypto?

That is the topic of my latest Bloomberg column, here is one bit:

Now the time has come for crypto to go on a diet. No more easy money. No more thoughts about ICOs leading to quick riches. The rhetoric is shifting toward a more cautious or even apologetic tone. The corresponding reality can perhaps be one of greater focus and relevance.

We’re at the point where crypto finally has to prove its social worth. But what might that mean? Imagine using crypto as a medium of micropayments to pay for media on the internet. Or perhaps you’ll use the blockchain to verify your identity, rather than telling some stranger on the phone the last four digits of your Social Security number. Or how about a system for self-executing, zero-cost contracts? (For example: I will give $10,000 to a charity if 10 other people do.) Maybe the burgeoning field of virtual reality will rely on crypto to support some of its transactions, starting with virtual sex, which the major banks might stay away from. Alternatively, I might use crypto assets to send money to Mexico, avoiding the steep charges from current money transfer systems. In the more utopian visions, crypto leads to the rise of entirely self-governing systems, powered by the blockchain.

And this:

By the way, if you are confused by the terms “proof of stake” and “sharding” (and others), that is probably a good thing. As the tech guru Stewart Brand is reported to have said, the proliferation of terminology in crypto is a sign that new ideas and possibly important new technologies are afoot.

Stay tuned…

Amazon search is getting worse, especially for classic books

Just type in “Gulliver’s Travels,” and the first page will not show any editions you actually ought to buy.  And there are so many sponsored ads for mediocre, copyright-less editions.  If you type in “Gulliver’s Travels Penguin” you eventually will get to this, a plausible buy for the casual educated reader.  And wouldn’t it be nice if someone told you the $156.31 Cambridge University Press edition is by far the best choice? — full of marginal annotations!

MR sentences to ponder

Also, I finally had a chance to meet Tyler Cowen and tell him that his blog played a bit part in how I ended up dating my now-wife. Back when we were messaging on OKCupid (to clarify: my wife and I were messaging; I have not contacted Tyler Cowen on OKC), I wanted to establish my Internet-nerd bona fides, so I mentioned that I’d been linked by a prominent economics blog. She mentioned that she had been linked by a very prominent economics blog. It was Marginal Revolution, both times. (Her post: on taking oneself seriously. My post is lost to history, but I believe it was about the causes and consequences of onion futures being illegal.)

Since Cowen is an expert on many topics, it should come as no surprise that he’s an export on MR lore, so he informed me that at least one couple has gotten married on the site. One economic story you can tell about the last hundred or so years is that, as economies globalize, we compete head-to-head with more people, and need to define our domains ever more narrowly if we hope to be #1. Apparently “used Marginal Revolution to get married” was, in fact, far too broad a domain for me to have any hope of excelling.

That is from Byrne Hobart, with the essay mostly on his recent visit to Bloomberg and the Bloomberg AI panel.