Welcome to Tech Nations Sensemaker – a weekly newsletter dedicated exclusively to covering the tech giants
Here’s what you need to know this week:
- Amazon lost ground in the grocery wars
State by state
- Facebook’s Oversight Board issued its (non) decision on Trump
- Apple spilled company secrets in its Epic lawsuit
- Google backtracked on office work
- Tencent tried to prevent the forced divestment of US gaming assets
- Microsoft looked for a new font after 14 years of Calibri
- Amazon faced security questions over mesh network
It’s easy to see Amazon as invincible. The most sprawling of the tech states posted its second best quarterly results this month, smashing analyst expectations for both earnings and revenue in almost every category. But food was an exception. Sales at the company’s food stores, dominated by its Whole Foods chain, fell by 15 per cent. And Amazon Fresh, its online delivery arm, has struggled to grow market share in the US and the UK.
It’s only going to get tougher. More than $14 billion has been invested into a new generation of instant grocery delivery businesses like GoPuff, Getir, Gorillas, Weezy and Dija, the FT reports. These promise to deliver groceries in as little as 10 minutes – with some using a network of “dark stores” across urban centres. This could leave even less market share for Amazon.
Why – despite all its advantages – isn’t Amazon closer to dominating such an important sector?
- Delivering groceries sucks. Unlike general merchandise, food is irregularly shaped and has multiple temperature requirements. It’s also “vulnerable” (to use an industry term), meaning if you pack it in the wrong order it’ll be squashed. “If you excel at delivering general merchandise and you want to get into online groceries, you’re definitely swimming upstream,” one former grocery exec told us.
- No refrigerated vehicles. Unlike Ocado, Amazon Fresh drivers generally don’t deliver products in refrigerated cars, instead relying on Amazon Flex drivers to put frozen items in cool boxes. This has contributed to poor reviews on Trustpilot. “The problem with Amazon’s offering is the quality of the service it operates,” HSBC wrote in a recent note. Or, as one expert told us, “It’s Uber for food.”
- No data advantage (yet). Alexa is great for gathering data on shopping preferences. But consumers aren’t yet using their Alexa enough for food shopping to generate particularly useful insights, industry experts told us. What’s more, Amazon has unbundled much of its voice technology, cutting its competitive advantage.
Don’t write off Bezos. Amazon now has 3 “contactless” stores in the UK where customers can shop without using a till. Israeli start-ups have developed smart shelving which could achieve the same effect – but the development is genuinely innovative. “Never underestimate Amazon,” says one former top executive at a grocery competitor. “They will learn from their mistakes. They are incredibly serious about automation. They are very serious about food.”
Facebook’s Oversight Board has upheld Facebook’s decision to expel former President Trump from the platform but said an “indefinite” ban was inappropriate. The judgment effectively punts Trump’s future back to Mark Zuckerberg and Sir Nick Clegg and arguably raises more questions than it answers. As Kara Swisher’s podcast (with guest Alan Rusbridger) points out, we still don’t know why Facebook allowed Trump to violate its terms well before the Capitol attack. Or how far Trump’s “newsworthiness” gave him leeway to post hate speech. Or whether Facebook decided to keep Trump’s page up despite the ban so that advertisers could continue targeting his followers.
Given that the board had a specific remit to guide Facebook on how it should handle “political leaders”, it’s noticeable that these questions remained unanswered. Last week we hosted a Thinkin on this subject with guests including former digital minister Baroness Nicky Morgan, tech advisor Poppy Wood and Dr Heidi Beririch, of the Real Facebook Oversight Board. You can watch it here.
Microsoft is searching for a new font to replace Calibri, its default font for Office applications since 2007. Calibri was supposed to be called Clas, its designer recalled last week, but the name was nixed after a Greek advisor pointed out that “clas” meant “to fart” in that language. Now, five fonts are vying to be the Calibri replacement. To us, they sound like locations on the Shipping Forecast: Tenorite, Bierstadt, Skeena, Seaford, and Grandview. Jon Hill, Tortoise’s Creative Director, is not impressed. “If, as Roger Black says, fonts are like clothing for your ideas, this is like choosing from a selection of five very similar grey suits” he told us. “Dull”.
Amazon’s Echo speakers – as well as its Ring doorbells – now have the ability to communicate with each other. The new tech, called Sidewalk, means that if your neighbour’s mobile or smart speaker is out of range of its own wifi, it can jump onto yours – without your consent. Zak Doffman, an expert on cybersecurity, told us that the risks of letting someone else onto your network outweighed the benefits. But Amazon sees the tech as a boon for Prime Members. It imagines a future in which a customer could walk from her house to the station and be continuously connected to Wifi via a string of other people’s Amazon devices. If it works, cellular would become irrelevant.
Google: Labour policy
Google is backtracking on compulsory office work. In April this tech state told employees to come back to the office at least three days a week, describing an “office-centric” culture as key to creativity. Perhaps spooked by the possibility that employees could jump ship, Google has now adopted a more relaxed approach. According to The Information, an internal Google message board shared a picture of a person crying, labelled “Facebook recruiters”.
Apple: State secrets
The Epic Games Inc. vs Apple Inc. court case continued to disclose embarrassing information about both companies, as well as about third parties such as Microsoft (which can’t be pleased at the development). Revelations this week include the news that Apple failed to notify 128 million iPhone users that they had downloaded thousands of malicious apps in 2015, and that Microsoft’s Xbox games console has been loss-making for its entire history (asked why Microsoft continued to sell the console, Lori Wright, an Xbox VP, said that it was “critical” to supporting services like XBox Game Pass). For a detailed analysis of the trial and the issues involved, read the Verge’s account here.
Tencent: National security
Tencent is reportedly in talks with the US Committee on Foreign Investment (CFIUS) over its ownership stakes in two huge US game developers: Riot and Epic Games. The crucial issue is whether data collected by the two games companies could be accessed by the Chinese giant. If Tencent can’t convince CFIUS that the data is ring fenced, it may be forced to divest its US gaming assets. If successful, any solution could provide a model for how large Chinese companies operate in the US going forward.
And finally…The Responsible AI Forum at Waddesdon
On 10 June Tortoise and Lord Rothschild are hosting a stellar all-day event with the aim of setting out an agenda for the development and deployment of AI as a responsible technology. Keynote speakers include Masayoshi Son, founder of Softbank, Demis Hassabis, founder of Deepmind, and Helle Thorning Schmidt, former prime minister of Denmark and co-chair of the Facebook Oversight Board – among many others.
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