Uber sheds light on operations ahead of IPO

Uber is not a company which shares huge insights into its business traditionally, but a filing ahead of a planned IPO has unveiled some very interesting details.

In chasing its long-awaiting debut on the New York Stock Exchange, the curtain has been pulled aside and the cogs laid bare. $11.27 billion in revenue across 2018, 42% growth on 2017, net income of $997 million and 91 million active users around the world. This is a company which will attract some interest from the market, though an adjusted EBITDA loss of $1.85 billion might concern some.

“Building this platform has required a willingness to challenge orthodoxies and reinvent – sometimes even disrupt – ourselves,” said CEO Dara Khosrowshahi. “Over the last decade, as the needs and preferences of our customers have changed, we changed too. Now, we’re becoming different once again; a public company.”

With an IPO comes a lot more information on a company as executives attempt to woo potential shareholders. The S1 form filed with the Securities and Exchange Commission has unveiled some very interesting details.

Starting with the customer base. Uber currently has 91 million active users across 700 cities around the world, though this number also include Uber Eats. This is a 33% increase compared to the previous year as the numbers show increasing momentum over the last three years.

With a presence in 63 countries, Uber estimates it serves roughly 2% of the population across this footprint, clocking up 26 billion miles in journeys across the year. This might sound like a monstrous number, though it is in fact less than 1% of the total, with the team pointing to significant headroom for growth. In fact, Uber estimates the total addressable market is a $5.7 trillion opportunity in 175 countries.

On the R&D front, Uber has been very aggressive, investing $1.5 billion across 2018 in autonomous vehicles, flying cars, which is known as Uber Elevate, and other ‘technology programs’. The autonomous and flying cars portion of the pie was $457 million. Future tech will clearly play a significant role in the future of the business, with some suggesting the firm will not make a profit until autonomous vehicles have been integrated into operations.

At the end of the final quarter of 2018, Uber estimates there are roughly 3.9 million drivers on the platform, earning $78.2 billion since 2015. In 2018, Gross Bookings grew to $49.8 billion, up 45% from $34.4 billion in 2017, while revenues grew 42% to $11.3 billion. Clearly the drivers are the biggest expense of the business, though with autonomous vehicles there will major challenges alongside the profit gain.

“Along the way to a potential future autonomous vehicle world, we believe that there will be a long period of hybrid autonomy, in which autonomous vehicles will be deployed gradually against specific use cases while Drivers continue to serve most consumer demand,” Uber stated in the filing. “As we solve specific autonomous use cases, we will deploy autonomous vehicles against them.

“Such situations may include trips along a standard, well-mapped route in a predictable environment in good weather. In other situations, such as those that involve substantial traffic, complex routes, or unusual weather conditions, we will continue to rely on Drivers.”

The future might be autonomous, but that dream is likely to be a very long-time away. For drivers that might be worried about becoming redundant, there are some glimmers of hope. Autonomous vehicles will take a long-time to be accepted across the mass market, some customers will refuse to use them in the first instance, while certain situations will continue to demand human intervention; the technology simply isn’t there yet.

While there are rumours about the total valuation of the company, some are suggesting a $100 billion target while others point closer to $120 billion, Uber executives are remaining quiet.

Privacy International points GDPR finger at Facebook

An investigation from privacy advocacy group Privacy International on the flow of personal information has questioned whether Facebook and its advertisers are violating Europe’s GDPR.

To date there have not been any major challenges using the data privacy regulation. There have of course been numerous violations of user privacy, but as these incidents occurred prior to the implementation of GDPR, the old-version of the rules and punishments were used. This investigation from Privacy International could prove to be a landmark.

The investigation itself questions whether Facebook and the app-developers which use its platform for data collection and user identification is acting responsibly and legally. Using the Facebook Software Development Kit (SDK), data is automatically sent back to the social media giant, irrelevant as to whether consent has been collected, or even if the user has a Facebook book account.

“Facebook routinely tracks users, non-users and logged-out users outside its platform through Facebook Business Tools,” Privacy International states on its website.

“App developers share data with Facebook through the Facebook Software Development Kit (SDK), a set of software development tools that help developers build apps for a specific operating system. Using the free and open source software tool called ‘mitmproxy’, an interactive HTTPS proxy, Privacy International has analysed the data that a number of Android apps transmit to Facebook through the Facebook SDK.”

After testing dozens of different apps, Privacy International claims 61% automatically transfer data to Facebook the moment a user opens the app, while others routinely send Facebook data that is incredibly detailed. Some of these users may be logged out of the platform or might not even have a Facebook account in the first place. Developers tested include travel comparison app Kayak, job search company Indeed and crowd-sourced search service Yelp.

Looking at the Kayak example, not only was information transferred back to Facebook once the app was opened and closed, but also during each stage of the search process. In the example Privacy International gives, the user selected a flight from London Gatwick to Tokyo between December 2 and 5, Narita Airport was then selected, before another search was conducted searching for hotels for two adults in the city. All of this information was sent to Facebook without prompt, despite Kayak claiming, ‘don’t worry, we’ll never share anything without your permission’, when the user signs in.

Alone this information is useful, but not incredibly so. However, when you consider the huge number of apps which will be sending information back to Facebook, an incredibly detailed picture of the user can be built. Using the other apps tested in this investigation, Facebook could also learn or make assumptions about the user’s religion (Muslim Pro), music interests (Shazam), salary and disposable income (Indeed Job Search) and interest in physical activities (MyFitnessPal). All of this information could be used to feed incredibly personalised advertisements to the user.

The big question which remains is whether this could be perceived as a violation of GDPR. Facebook has stated it released an update to the SDK which allowed developers to suspend the automatic data transfers, though this was only for version 4.34 and later. With the Opt-out section (the Google advertising ID) automatically turned off, some might suggest the user is being led as opposed to asked.

Another factor which could work against Facebook is the collection of data on users who do not have Facebook accounts; this is much more suspect. As per GDPR, a company has to have a specific and justified reason to collect personal information. It does appear Facebook is collecting information on users despite having no purpose or valid reason to do so.

With fines for violating GDPR up to 3% of annual turnover, the stakes are very high. This could prove to be one of the first tests of the rules, designed to protect the privacy of the general public, and few will be surprised Facebook is a central character in the story. With the social media giant seemingly antagonising many governments around the world, we suspect there will be a queue forming to have a swing with the sharp GDPR stick.

Google bids adieu to Allo

Google has finally called it a day on Allo, its attempt to compete with WhatsApp, to focus on its Messages product.

The concept of Allo was an interesting one to say the least, but it never took off. Launched back in September 2016, Allo made use of the artificial intelligence capabilities in Google. The platform included a number of features geared around making the app smarter which, if used excessively enough, meant you wouldn’t even have to message someone yourself. The dream was to take the unnecessary you out of the conversation.

And it didn’t work out well for Google.

Investments in the platform were frozen earlier this year, with many of the features being migrated across to the Messages platform. This is a product area which will get more attention at the expense of Allo, Google’s version of 15 minutes of fame.

“Thanks to partnerships with over 40 carriers and device makers, over 175 million of you are now using Messages, our messaging app for Android phones, every month,” Google said on its blog. “In parallel, we built Google Allo, a smart messaging app, to help you get more done in your chats and express yourself more easily.

“Earlier this year we paused investment in Allo and brought some of its most-loved features – like Smart Reply, GIFs and desktop support – into Messages. Given Messages’ continued momentum, we’ve decided to stop supporting Allo to focus on Messages.”

Users can export any contacts and conversations to the Messages platform, but in March 2019, Allo will say goodbye.

As far as we can see Allo failed for one reason. Google tried to steal market share in the messaging space by over-engineering the idea. For a messaging platform to be successful, it doesn’t have to be overly complicated, it just has to work. WhatsApp is not complicated, but it works and has scale. Google tried to be Google, and it didn’t work.

The concept of simplicity winning over an industry should be a very familiar one for Google, as it is what the entire enterprise is built on. The Google search engine might be an impressive feat of engineering behind the scenes, but presented to the user it is a simple, functional and accurate search engine. Google has set its place in the search world with a simple product and no-one else can compete.

We wouldn’t want Google to stop experimenting with weird and wonderful ideas, some great products have emerged while the ludicrous Loon is starting to gather pace, but you have to take the rough with the smooth when you let your imagination run wild. This is one example of Google having better ideas.

Instagram unveils new feature, but is it worth your time?

This week Telecoms.com has 16 year-old Shannon O’Connor joining the team for work experience, and today is an assessment of Instagram’s new feature to moderate time spend on the app. Here are her thoughts. 

Earlier this week, Instagram’s CEO Kevin Systrom has confirmed an all-new ‘time spent’ usage insights tool in a questionable bid to improve users mental wellbeing.

Instagram is yet to comment on the ‘Usage Insights Tool’ so plans have not yet been confirmed for what the new feature will provide for its users. However, it is assumed that users will receive an outlook into the ‘daily tally’ of their minutes spent on the app whilst also receiving an alert to remind them of their daily limit.

So it seems Instagram has taken upon a whole new responsibility as a social networking app to provide services to tackle the amount of time we spend on our phones. Possibly it feels liable to take matters into its own hands when thinking about the negative impacts extended minutes online can have on teenagers and young adults like myself.

But how far will Instagram go in combatting the amount of time young adults spend on the internet?

It has been found in recent studies from the Pew Research Centre that 17% of US teens feel platforms such as Instagram harm relationships resulting in less sincere interactions. Similarly, 15% of those taking part suggested that social media distorts reality (giving many an unrealistic view of other people’s lives). A further 14% believed that teens spend too much time on social media.

This parallels with the increase in mental health problems. In the 21st century more people continue to struggle to moderate usage. In the past 25 years young people in Britain who have dealt or are dealing with anxiety/depression have risen by a climatic 70%.

The Royal Society for Public Health surveyed young people about the effects of social media through the #StautusOfMind campaign. Over 1,400 14-24 year olds were interviewed. The final results shockingly suggested that social media was ‘more addictive than cigarettes and alcohol’.

We sat down with a member of the Informa office, Tom McCormick, to hear his views on the new feature and how he thinks it may impact society among various age groups. We came to the following conclusions:

  • The content users find themselves engaging with could possibly be more damaging to mental health than the amount of time being spent on Instagram
  • If the feature was to be made into an add-on feature it would most likely become redundant as those such as himself would not invest in downloading it
  • From the perspective of a parent, those aged 20 to 40 would find no benefits in controlling the time period in which their child spent engaging on the app
  • ‘Reflective Content Moderation’ could derive better benefits for users in the long term

The alternative ‘Reflective Content Moderation’ tool was something that we believe to be more valuable. In theory, individuals who found themselves pro-actively seeking negative content may find themselves in a much more depressive state than those who found themselves viewing positive images from friends and family. If a parent had control over the content their child was seeing, the benefits that could derive from it could be far more substantial than tracking the amount of minutes spent online.

But this led to me consider if a teen would like their parent’s to accurately track their behaviour or track the amount of time that they spent on the app. Social media sites were designed to be a creative space where individuals could express themselves freely in whatever way they felt was appropriate.

Surely any implications made by the social site would purely be a window dressing; teens will always utilise their social platforms in the way they want to. For some, Instagram has failed to provide a secure and positive environment for teens to express themselves in, possibly being one origin of teen mental illness battles. It continues to give off an impression that it cares about its users; in actuality its investment in this feature is perhaps only a PR stunt to give the impression of responsibility

Furthermore, it could be said that the tool may provide a possible stop to financial development. Instagram has seen a steady increase in numbers since December 2016 when it hit 600 million. With an added 100 million users every four months, the app is now set to hit one billion this month. But now with the added burden of a potential decrease in usage minutes, advertisers could decrease investments in the app.

We will have to see whether Instagram rolls out this new feature in the next coming months or whether it makes changes; surely a track of content would be more useful than time spent on the app.

Netflix usurps Spotify as leader for app revenues

It might be hording a ridiculous amount of debt, but Netflix is ranking in the cash as it tops the tables for non-game app revenues.

Estimates from Sensor Tower, puts the content giant above the likes of Line and Tinder in the list, with revenues of $510 million, a 138% year on year increase, while last year’s leader Spotify drops out of the top ten completely. In fact, it has been a good year for video apps as Tecent Video and HBO Now also populate the list, hammering home the mobile video revolution.

While some might turn their nose up at the idea of the app economy, if Sensor Tower’s estimates are anywhere near accurate, the money is starting to stack up. Over the last 12 months, the team believe the app economy grew by 35% taking the total up to $58.6 billion, with mobile games continuing to dominate, accounting for roughly 82% of the total revenues.

And while Android might be the dominant operating system worldwide, Google’s inability to navigate the choppy waters of Chinese regulation is seemingly hurting. The Apple App Store collected $38.5 billion of the pot, almost double that of Google Play. China is one of the lucrative markets when it comes to mobile gaming fortunes, though it’ll be interesting to see how quickly this split evens out over the coming years.

It would be fair to assume mobile gaming’s dominance over the revenues will start to decline as the connected economy starts to take shape. Spending money through apps is becoming normalised as the variety of ways you can burn cash starts to increase. The App store is collecting the lion’s share of revenues thanks to its presence in China, but as money starts to increase in non-gaming apps, you should see the Android global market share dominance take a strangle hold of the revenues.

Video apps are of course an easy place to point to as an area which will erode the mobile gaming dominance over revenues, though other non-gaming areas such as transportation (Uber), takeaways (Just Eat), retail (Asos), entertainment (Odeon) and travel (Booking.com), will also take a bigger share. The smartphone is controlling more of our daily life and the paranoia around spending money through apps is starting to disappear.

That said, for the moment mobile gaming does continue to rule. Sitting at the top of the pile is Mixi’s Monster Strike, while Honor of Kings take second place. Candy Crush Saga is another which features in the top 10, an impressive feat considering the game has now been around for five years.

If you nail an idea, there certainly can be longevity in the app economy as many of the games in the top 10 predate 2017, though 2016’s biggest fad, Pokémon Go, failed to register a presence on the list. Niantec Labs might have been trying to reignite the flames throughout 2017, but the Sensor Tower estimates put Pokémon Go in the same bracket Los Del Rio, Leicester City Football Club and William Shatner.

Uber CEO promises to be good from now on

In a public letter to the whole of London Uber CEO Dara Khosrowshahi struck a conciliatory tone while vowing to appeal the recent decision not to renew its license.

Transport for London’s decision late last week sparked widespread response from petitions against the decision to applause for cutting the upstart internet company down to size. Uber’s initial response was defiant but Khosrowshahi, who let’s not forget recently replaced the founder of the company precisely because of the bad press he was generating, has tried to inject a dash of humility into his company’s public position.

You can read Khosrowshahi’s tweet and public letter below. While not explicitly detailing any measures he seems to be holding out the olive branch to TfL and asking what he can do to fix this. It’s hard to believe he hadn’t been made aware of TfL’s issues with Uber long before the decision was announced and last week’s announcement seems to have achieved what we presume was one of its desired outcomes – to get his attention.

Khosrowshahi has previously written a widely-leaked internal memo that you can also read below, in which he stressed that Uber needs to show greater humility and learn from past mistakes if it wants to move onwards and upwards.  

London Mayor Sadiq Khan recently did a radio interview in which he somewhat passive-aggressively accused Uber of being aggressive by threatening to take legal action. The interviewer quite rightly asked what’s aggressive about that but received no answer.

As we discussed in our recent podcast, the TfL move seemed to be a hard negotiating position and now Uber is quite rightly trying to take the heat out of the situation while simultaneously canvassing public support and banging on about how much it cares about London Uber drivers and passengers. Now that the posturing is out of the way hopefully that can all get together and do a deal to get Uber back in business on terms agreeable to London.