Consumer tech lobbyist calls China tariffs a ‘poison pill’

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The White House might argue that its proposed tariffs on Chinese tech would punish the harvesting of American intellectual property while preserving the US economy, but don't tell that to the Consumer Technology Association's Gary Shapiro. The indus…
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Our digital future will be shaped by increasingly mobile technologies coming from China

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Since the dawn of the internet, the titans of this industry have fought to win the “starting point” — the place that users start their online experiences. In other words, the place where they begin “browsing.” The advent of the dial-up era had America Online mailing a CD to every home in America, which passed the baton to Yahoo’s categorical listings, which was swallowed by Google’s indexing of the world’s information — winning the “starting point” was everything.

As the mobile revolution continues to explode across the world, the battle for the starting point has intensified. For a period of time, people believed it would be the hardware, then it became clear that the software mattered most. Then conversation shifted to a debate between operating systems (Android or iOS) and moved on to social properties and messaging apps, where people were spending most of their time. Today, my belief is we’re hovering somewhere between apps and operating systems. That being said, the interface layer will always be evolving.

The starting point, just like a rocket’s launchpad, is only important because of what comes after. The battle to win that coveted position, although often disguised as many other things, is really a battle to become the starting point of commerce.  

Google’s philosophy includes a commitment to get users “off their page” as quickly as possible…to get that user to form a habit and come back to their starting point. The real (yet somewhat veiled) goal, in my opinion, is to get users to search and find the things they want to buy.

Of course, Google “does no evil” while aggregating the world’s information, but they pay their bills by sending purchases to Priceline, Expedia, Amazon and the rest of the digital economy.  

Facebook, on the other hand, has become a starting point through its monopolization of users’ time, attention and data. Through this effort, it’s developed an advertising business that shatters records quarter after quarter.

Google and Facebook, this famed duopoly, represent 89 percent of new advertising spending in 2017. Their dominance is unrivaled… for now.

Change is urgently being demanded by market forces — shifts in consumer habits, intolerable rising costs to advertisers and through a nearly universal dissatisfaction with the advertising models that have dominated (plagued) the U.S. digital economy.  All of which is being accelerated by mobile. Terrible experiences for users still persist in our online experiences, deliver low efficacy for advertisers and fraud is rampant. The march away from the glut of advertising excess may be most symbolically seen in the explosion of ad blockers. Further evidence of the “need for a correction of this broken industry” is Oracle’s willingness to pay $ 850 million for a company that polices ads (probably the best entrepreneurs I know ran this company, so no surprise).

As an entrepreneur, my job is to predict the future. When reflecting on what I’ve learned thus far in my journey, it’s become clear that two truths can guide us in making smarter decisions about our digital future:

Every day, retailers, advertisers, brands and marketers get smarter. This means that every day, they will push the platforms, their partners and the places they rely on for users to be more “performance driven.” More transactional.

Paying for views, bots (Russian or otherwise) or anything other than “dollars” will become less and less popular over time. It’s no secret that Amazon, the world’s most powerful company (imho), relies so heavily on its Associates Program (its home-built partnership and affiliate platform). This channel is the highest performing form of paid acquisition that retailers have, and in fact, it’s rumored that the success of Amazon’s affiliate program led to the development of AWS due to large spikes in partner traffic.

Chinese flag overlooking The Bund, Shanghai, China (Photo: Rolf Bruderer/Getty Images)

When thinking about our digital future, look down and look east. Look down and admire your phone — this will serve as your portal to the digital world for the next decade, and our dependence will only continue to grow. The explosive adoption of this form factor is continuing to outpace any technological trend in history.

Now, look east and recognize that what happens in China will happen here, in the West, eventually. The Chinese market skipped the PC-driven digital revolution — and adopted the digital era via the smartphone. Some really smart investors have built strategies around this thesis and have quietly been reaping rewards due to their clairvoyance.  

China has historically been categorized as a market full of knock-offs and copycats — but times have changed. Some of the world’s largest and most innovative companies have come out of China over the past decade. The entrepreneurial work ethic in China (as praised recently by arguably the world’s greatest investor, Michael Moritz), the speed of innovation and the ability to quickly scale and reach meaningful populations have caused Chinese companies to leapfrog the market cap of many of their U.S. counterparts.  

The most interesting component of the Chinese digital economy’s growth is that it is fundamentally more “pure” than the U.S. market’s. I say this because the Chinese market is inherently “transactional.” As Andreessen Horowitz writes, WeChat, China’s  most valuable company, has become the “starting point” and hub for all user actions. Their revenue diversity is much more “Amazon” than “Google” or “Facebook” — it’s much more pure. They make money off the transactions driven from their platform, and advertising is far less important in their strategy.

The obsession with replicating WeChat took the tech industry by storm two years ago — and for some misplaced reason, everyone thought we needed to build messaging bots to compete.  

What shouldn’t be lost is our obsession with the purity and power of the business models being created in China. The fabric that binds the Chinese digital economy and has fostered its seemingly boundless growth is the magic combination of commerce and mobile. Singles Day, the Chinese version of Black Friday, drove $ 25 billion in sales on Alibaba — 90 percent of which were on mobile.

The lesson we’ve learned thus far in both the U.S. and in China is that “consumers spending money” creates the most durable consumer businesses. Google, putting aside all its moonshots and heroic mission statements, is a “starting point” powered by a shopping engine. If you disagree, look at where their revenue comes from…

Google’s recent announcement of Shopping Actions and their movement to a “pay per transaction model” signals a turning point that could forever change the landscape of the digital economy.  

Google’s multi-front battle against Apple, Facebook and Amazon is weighted. Amazon is the most threatening. It’s the most durable business of the four — and its model is unbounded on two fronts that almost everyone I know would bet their future on, 1) people buying more online, where Amazon makes a disproportionate amount of every dollar spent, and 2) companies needing more cloud computing power (more servers), where Amazon makes a disproportionate amount of every dollar spent.  

To add insult to injury, Amazon is threatening Google by becoming a starting point itself — 55 percent of product searches now originate at Amazon, up from 30 percent just a year ago.

Google, recognizing consumer behavior was changing in mobile (less searching) and the inferiority of their model when compared to the durability and growth prospects of Amazon, needed to respond. Google needed a model that supported boundless growth and one that created a “win-win” for its advertising partners — one that resembled Amazon’s relationship with its merchants — not one that continued to increase costs to retailers while capitalizing on their monopolization of search traffic.

Google knows that with its position as the starting point — with Google.com, Google Apps and Android — it has to become a part of the transaction to prevail in the long term. With users in mobile demanding fewer ads and more utility (demanding experiences that look and feel a lot more like what has prevailed in China), Google has every reason in the world to look down and to look east — to become a part of the transaction — to take its piece.  

A collision course for Google and the retailers it relies upon for revenue was on the horizon. Search activity per user was declining in mobile and user acquisition costs were growing quarter over quarter. Businesses are repeatedly failing to compete with Amazon, and unless Google could create an economically viable growth model for retailers, no one would stand a chance against the commerce juggernaut — not the retailers nor Google itself. 

As I’ve believed for a long time, becoming a part of the transaction is the most favorable business model for all parties; sources of traffic make money when retailers sell things, and, most importantly, this only happens when users find the things they want.  

Shopping Actions is Google’s first ambitious step to satisfy all three parties — businesses and business models all over the world will feel this impact.  

Good work, Sundar.

Mobile – TechCrunch

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Apple spared from Trump’s trade war with China – for now

How Complete Beginners are using an ‘Untapped’ Google Network to create Passive Income ON DEMAND

The iPhone and other major tech products are safe from Trump’s brewing trade war with China. On Tuesday, the office of the U.S. Trade Representative revealed that it was slapping 25 percent tariffs on 1,300 products coming from China related to technology, transport and medical products. iPhone components were exempt from the list, but other […]

(via Cult of Mac – Tech and culture through an Apple lens)

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US’ proposed China tariffs would target robotics and satellites

How Complete Beginners are using an ‘Untapped’ Google Network to create Passive Income ON DEMAND

The US Trade Representative has published the list of Chinese products that would be subject to its proposed tech tariffs, and there are a few clear themes. The move would hike the costs of about 1,300 products, including industrial robots, communic…
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Smugglers Used Drones to Move $80 Million Worth of iPhones in China

How Complete Beginners are using an ‘Untapped’ Google Network to create Passive Income ON DEMAND

Chinese customs officials in Hong Kong and Shenzhen province closed in on a band of criminals who were allegedly using drones in a bid to smuggle thousands of refurbished iPhone models, according to a Reuters report. The Legal Daily reports that the highly-calculated operation’s value hovered somewhere around 500 million yuan ($ 79.8 million) worth of […]
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France, China, and Silicon Valley: The fight to dominate AI and the rise of tech nationalism

How Complete Beginners are using an ‘Untapped’ Google Network to create Passive Income ON DEMAND


As new products and services have emerged throughout the history of capitalism, it hasn’t been unusual to see geographic clusters emerge that become an industry’s center of gravity. But the era of artificial intelligence has triggered an unusually direct response from countries that want to be at the center of a technology they see as b…Read More
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Smugglers used drones to sneak $80 million worth of phones into China

How Complete Beginners are using an ‘Untapped’ Google Network to create Passive Income ON DEMAND

China's Legal Daily reported today that officials in the country just shut down a major smartphone smuggling scheme. A total of 26 suspects were arrested in connection with the plot. The individuals allegedly used drones to string two cables between…
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Smugglers Used Drones to Transport $80 Million worth of iPhones from Hong Kong to China

How Complete Beginners are using an ‘Untapped’ Google Network to create Passive Income ON DEMAND

We have seen smugglers use a variety of innovative ways to smuggle hundreds of iPhones across borders. The sheer popularity of iPhones and the difference in their price in major regions has made them a favorite commodity among smugglers. This is perhaps most evident in China and Hong Kong, with new iPhones carrying a far lower price tag in Hong Kong than in China.  Continue reading
iPhone Hacks | #1 iPhone, iPad, iOS Blog
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Chinese Customs busted 26 suspects who used drones to smuggle iPhones into China

How Complete Beginners are using an ‘Untapped’ Google Network to create Passive Income ON DEMAND

A group of 26 suspects were arrested in China for smuggling almost USD $ 80 million worth of smartphones into Southern China from Hong Kong. Suspects were able to transport upwards of 15,000 devices in a single night, which were mostly refurbished iPhones, (according to the Chinese Customs’ report) across the border that divides Hong Kong from mainland China. Drones confiscated by authorities in Shenzhen on March 29 – Via Reuters Drones were used to run 200-meter (660-foot) lines across the border and small bags, which held up to 10 smartphones each, were quickly carried through…

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If You Jaywalk in China, Facial Recognition Means You’ll Walk Away With A Fine

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Residents of Shenzhen don’t dare jaywalk.

Since April 2017, this city in China’s Guangdong province has deployed a rather intense technique to deter jaywalking. Anyone who crosses against the light will find their face, name, and part of their government ID number displayed on a large LED screen above the intersection, thanks to facial recognition devices all over the city.

If that feels invasive, you don’t even know the half of it. Now, Motherboard reports that a Chinese artificial intelligence company is partnering the system with mobile carriers, so that offenders receive a text message with a fine as soon as they are caught.

The system is just one cog in the vast surveillance machine that the Chinese government has been building over the last several years. Its aim is in part public safety and security, but the information on citizens’ whereabouts and activities will also feed into China’s national social credit system.

The social credit system, which will roll out in 2020, is intended to rate individuals according to a national scoring system for how trustworthy a citizen each person is. Citizens with a low score might be refused certain jobs, pay more for certain services, and according to China’s National Development and Reform Commission, even be banned from traveling. According to Fortune, that travel restriction could kick in from a wide range of offenses, from spreading fake information about terrorism to smoking on the train.

It’s like an Orwellian fever dream, we know.

The facial recognition scheme may a humdrum, run-of-the-mill aspect of life for citizens who have no expectation of privacy. But in fact, it does seem the Chinese people care about privacy. After the CEO of Baidu, China’s largest search engine, publicly said, “If they [Chinese] are able to exchange privacy for safety, convenience or efficiency, in many cases, they are willing to do that, then we can make more use of that data,” a heated online uproar ensued.

Still, we don’t blame you if the concept of social credit feels unsettling. It’s not exactly likely that the Chinese government will be transparent about how they decide what leads to deductions or restrictions. Human Rights Watch (HRW) states that “the near future for human rights appears grim” in China, given the country’s history of muzzling free speech and punishing those who speak out against the government; though HRW makes no mention of the social credit system, it’s possible that the system could lead to a continuation, or exacerbation, of these practices in the future.

Yes, the technology deployed around China could be useful. But the nation’s unsettling track record serves as a reminder of how its power could easily be abused.

The post If You Jaywalk in China, Facial Recognition Means You’ll Walk Away With A Fine appeared first on Futurism.

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