A Tech IPO? In This Economy?

Illustration for article titled A Tech IPO? In This Economy?

Photo: DOUG KANTER / Stringer (Getty Images)

Wall Street is abuzz with the news of two new tech IPO filings—called S-1s in the parlance —for crypto exchange Coinbase and cloud host Digitalocean. These two companies are doing solid business even during the pandemic. After all, what can people do when stuck at home but trade bitcoin and play with new websites?

But why these companies and why now?

Coinbase has been threatening to go public for almost a year now, starting last July when the company hinted at SEC filings that would make it one of the first decentralized financial companies to take part in a decidedly centralized process. “On July 9, 2020, Reuters reported that Coinbase was preparing to go public on the stock market sometime in the next several months, either in late 2020 or early 2021,” wrote Bitcoin Magazine last July. “The spokesperson for this announcement did so under complete anonymity, and with the proviso that the company as a whole would not comment officially on either this story or any rumors or speculation surrounding it.”

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Crypto fans aren’t worried about the IPO’s effect on prices, however. Given the archaic nature of the IPO in general, many believe it’s a way to settle more firmly in the financial firmament.

“I think they are trying to go listed to gather more public funds to liquidate their financial position,” said crypto trader and founder of Smartportfolio.io, Andrew Se. “And they are trying to do it while the market is good. I’m not sure if they can pass the audit requirements, though.”

Some crypto fans are excited about the legitimacy this brings to the space.

“Coinbase going public is a fantastic milestone for the crypto industry,” said Ouriel Ohayon, CEO of ZenGo. “It brings it to the forefront of bespoke retail and industry. It will, however, add an extra layer of complexity and compliance requirement to Coinbase, which will be X-rayed even more than before in a space already heavily monitored.”

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Others are excited about going to the moon. “Fees too high for me personally but they gonna make BANK. It’s a buy,” wrote Openedge_4gl on Reddit.

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The Digitalocean IPO is a bit more straightforward. Digitalocean is a cloud hosting company similar in part to Amazon’s AWS or Microsoft’s Azure. They are a smaller company by any measure, and the plan to go public takes them out of startupville and places them squarely alongside bigger players.

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“DigitalOcean intends to list its common stock under the ticker symbol ‘DOCN’ on the New York Stock Exchange. The number of shares to be offered and the price range for the proposed offering have not yet been determined. The offering is subject to market conditions, and there can be no assurance as to whether, or when, the offering may be completed or as to the actual size or terms of the offering,” the company wrote in its filing.

The goal is to raise $100 million for the company, which most recently raised $50 million at a $1.15 billion valuation.

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But the more interesting question is, why now? The pandemic has poured gasoline on the stock market—which, we need to remember, is not the economy—in the belief that future returns will be far greater once everything returns to somewhat normal. In normal situations, the stock market as well as a desire to take part in the stock market reflects current conditions. The dot-com boom and bust arose when internet startups came to power, and many of the worst bubbles appeared when investors felt a fear of missing out on the next big thing.

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More companies aren’t going for IPOs for a few reasons. First, there’s a sense that this isn’t the right time. With an overheated market full of retail (aka Robinhood) investors, your chances of seeing a sane market run-up are slimmer. The result could be a huge crash in stock price almost immediately —not something boring old Wall Street wants.

Further, a company like Coinbase is unique in that it is one of the few alternative finance companies to have the legal cover to go public. SEC guidelines are very onerous and the audits before IPO are strenuous. Coinbase itself is doing well by any measure, hitting a profit of $322 million on revenues of $1.2 billion in 2020. Digitalocean, with $300 million in revenue in 2020, is in the same realm although not as frothy as Coinbase.

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So the simple answer is that these IPO outliers are portents of what is to come as much as a reflection on current market conditions. In fact, 2020 was a massive year for IPOs, especially thanks to so-called SPACs or special purpose acquisition companies, which are essentially shells that go public in order to acquire a certain non-public company. Imagine a hermit crab that scuttles into an empty home and you get a general idea.

So yes, in this economy tech is going big on Wall Street. What that means for the retail investor is more boom and bust and, obviously, it means big payouts for already-wealthy C-level folks and investors. And, in the end, isn’t that what we’re all looking for?

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Parler Sues Amazon Over Supposed Antitrust Violation

Illustration for article titled Parler Sues Amazon Over Supposed Antitrust Violation

Photo: Hollie Adams (Getty Images)

Parler is now suing Amazon after the company—along with fellow tech giants Apple and Google—refused to continue hosting the “free speech” platform in the wake of last week’s violent rush on the U.S. Capitol.

This news comes after Amazon gave Parler about a day’s notice that it would be booted from its web hosting service—Amazon Web Services—by midnight this past Sunday. In an email from the AWS Trust and Safety team that Buzzfeed News managed to obtain, the company explained that it had seen “a steady increase in this violent content on your website, all of which violates our terms,” and that it “cannot provide services to a customer that is unable to effectively identify and remove content that encourages or incites violence against others.” (In response, Parler CEO John Matze announced in a Fox News interview that the site could be down “for a while.”)

In the suit, Parler supports its grand claims of an antitrust violation with, well, not a whole lot. For starters, it claims Amazon is in breach of contract for failing to provide 30 days’ notice before pulling the plug. This is, at best, a willful misreading of AWS’s terms, which are publicly available, and which give Amazon the option to revoke service at any time without notice if “you are, or any End User is, in breach of this Agreement.” Must have missed that section of the contract before escalating thing to Washington’s Western District Court. Whoops!

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More puzzling, the suit claims Amazon didn’t boot Parler for its role in the Capitol riots that left five people dead, the various unmoderated posts which threatened violence ahead of that event, or the even more rampant threats that proliferated on the site afterwards. No, instead, the primary purpose, according to Parler, was because Parler was gaining too much of an edge on Twitter. As the docket reads:

When Twitter announced two evenings ago that it was permanently banning President Trump from its platform, conservative users began to flee Twitter en masse for Parler. The exodus was so large that the next day, yesterday, Parler became the number one free app downloaded from Apple’s App Store. […] AWS’s decision to effectively terminate Parler’s account is apparently motivated by political animus. It is also apparently designed to reduce competition in the microblogging services market to the benefit of Twitter.

What Amazon would possibly gain by acting on Twitter’s behalf is left a mystery. And while there’s truth to the fact that retrofitting Parler’s existing codebase and hardware would be time-consuming and possibly more expensive than it’s worth, the claim that “without AWS, Parler is finished as it has no way to get online,” at best ignores the long history of websites that existed prior to cloud computing.

Parler goes onto explain that AWS isn’t only violating the Sherman Antitrust act by taking its site down, but that it is “committing intentional interference” on the economic advantage that Parler was expected to gain, “given the millions of users” that were expected to flock to Parler “in the near future.” That seems unlikely to hold water, given that even this bit of speculation is undercut by Parler’s removal from both the App Store and Google Play Store.

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We’ve reached out to Amazon for comment on… all of this, and will update the piece when we hear back.

Parler Forced Offline After Amazon Pulls Hosting Services

Illustration for article titled Parler Forced Offline After Amazon Pulls Hosting Services

Screenshot: Fox News

Parler has gone offline after Amazon made good on its promise to drop the controversial social media site from its AWS web hosting services. Amazon pulled the plug at 11:59 p.m. Pacific time, saying that Parler wasn’t properly moderating its content and the violence being called for on the site posed “a very real risk to public safety.”

Parler CEO John Matze announced on his site early Monday that service would likely be interrupted for a while and he called Parler his “last stand on the internet.”

“I wanted to send everyone on Parler an update. We will likely be down longer than expected,” Matze wrote early Monday. “This is not due to software restrictions—we have our software and everyone’s data ready to go. Rather it’s that Amazon’s, Google’s and Apple’s statements to the press about dropping our access has caused most of our other vendors to drop their support for us as well.”

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Matze, a self-described libertarian, said on Sunday that absolutely nobody wants to do business with him and that large tech companies like Apple and Amazon are colluding to “stifle free speech” by booting Parler from their platforms.

“Every vendor, from text message services to email providers to our lawyers, all ditched us on the same day,” Marze whined to Maria Bartiromo on Sunday during a phone interview on Fox News.

Parler shot to the top of the Apple App store on Saturday after President Donald Trump was permanently banned from Twitter, leading his neo-fascist followers to look for an alternative social media site. Trump gave a speech on January 6 that incited a riot at the U.S. Capitol, leaving five people dead, and Twitter said it banned Trump to reduce the likelihood of the president inspiring more violence.

But Parler faced new pressure in the wake of the attempted coup at the Capitol to crack down on extremist calls to violence, something that Apple gave the service 24 hours to do before it was pulled on Sunday.

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“Well, like I said, they claim that we somehow were responsible for the, you know, what they call the insurrection on the sixth, which, you know, we’ve never allowed violent…. we’ve never allowed any of this stuff on our platforms,” Matze said.

You know, we’ve never allowed any of this stuff on our platform. And we don’t even have a way to coordinate an event on our platform, so they somehow want to make us responsible.”

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To be clear, Apple has never blamed Parler for the violence that took place on January 6. The company, like dozens of others, was just jolted awake to the fact that allowing pro-fascist speech on its platforms might literally inspire a coup and bring down duly elected leaders of the U.S. government, such as president-elect Joe Biden.

Bartiromo went into a weird tangent on Trump’s attempt to legislatively destroy Section 230, something that Matze previously opposed. But Matze now says he thinks Section 230 should be abolished, a weird position for someone who’s tasked with moderating a website where he could potentially be held criminally liable without Section 230.

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Matze also touched on Amazon’s threats to boot Parler on Sunday, complaining that he didn’t have enough time to find alternative hosting.

Amazon is the largest cloud storage vendor in the world, and we use them to host our servers, you know, hundreds of them, hundreds of servers. And they gave us… basically they said you have 24 hours to get all of your data and to find new servers,” Matze told Bartiromo.

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“So, you know, where are you going to find 300 to 500 servers in the 24 hour window, and how can you send all of the data from everybody out to them in a 24 hour period? It’s an impossible feat. You know, we’re going to handle the best we can to get back online as quickly as possible. But, you know, this is… there’s just some things that are almost basically impossible.”

What kind of content will people now miss with Parler offline? One video that was popular before the site went offline was made by a QAnon adherent who cut together old Trump soundbites to make all subtext an explicitly neo-fascist text.

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“January 20th will be remembered as the day the people became the rulers of this nation again,” the video shows Trump saying, with splashly graphics with things like “the hour has arrived.”

Oddly enough, that’s a real thing that Trump said, but it was from his infamous first inauguration on January 20, 2017. The video ended with a graphic of the United States with the date January 20, 2021 and the QAnon slogan WWG1WGA, which stands for Where We Go One, We Go All.

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There was also content on Parler like this message from Milo Yiannopoulos, a far right troll who was booted from Twitter in 2016 for harassment.

Illustration for article titled Parler Forced Offline After Amazon Pulls Hosting Services

Screenshot: Parler

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Parler is partially owned by Fox News personality Dan Bongino, a fact that was never mentioned during Matze’s interview with Bartiromo on Sunday. Parler has also taken money from Rebekah Mercer, a far right financier of pro-Trump radicalism. Mercer is also the daughter of Robert Mercer, a cofounder of Cambridge Analytica.

While Matze’s company is clearly fighting for its life, Parler is also likely struggling from poor management. You see, Matze isn’t the brightest bulb, as they say. When Matze described how he was feeling on Sunday, he summed it up nicely.

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“It’s not just frightening, it’s actually extremely scary,” said Matze.

Correction: This article originally included a typo in QAnon’s slogan. The real slogan is “Where We Go One, We Go All” not “Where We Go One, We Do All,” a much more fun sounding slogan if we’re being honest. Gizmodo regrets the error.

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It’s Not Just You, AWS Is Down Right Now

Illustration for article titled Its Not Just You, AWS Is Down Right Now

Photo: Philippe Huguen (Getty Images)

Amazon Web Services—or just AWS, for short—suffered a massive outage on Wednesday that left a ton of apps, sites, and connected devices relying on the hosting giant completely in the dark.

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Amazon’s status page and the popular site Downdetector both point to the outage happening around 10:00 am. Since then, countless apps, sites and connected gadgets have reportedly been affected, with companies like Adobe and Roku both telling customers earlier today that the outage impacted their products.

While Amazon didn’t give a reason for the apparent outage—or a timeline of when we can expect it to be resolved—the company did note that the issue is apparently localized to North America:

We continue to work towards recovery of the issue affecting the Kinesis Data Streams API in the US-EAST-1 Region. For Kinesis Data Streams, the issue is affecting the subsystem that is responsible for handling incoming requests. The team has identified the root cause and is working on resolving the issue affecting this subsystem.

The issue also affects other services, or parts of these services, that utilize Kinesis Data Streams within their workflows. While features of multiple services are impacted, some services have seen broader impact and service-specific impact details are below.

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We’ll update as new information becomes available.

Amazon Faces Allegations It Harvested and Stored Sensitive Voice Data

Illustration for article titled Amazon Faces Allegations It Harvested and Stored Sensitive Voice Data

Photo: Denis Charlet (Getty Images)

Amazon is being hit with a class-action suit alleging that the tech giant’s severs are storing biometric voice data from countless callers, in contravention of an Illinois privacy law.

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At the center of the suit is Amazon Connect—a suite of call-center software that Amazon Web Services began licensing out under since 2017. One of the companies Amazon partnered with in order to offer this call-center service, Pindrop Security, specialized in creating what are known as “voiceprints,” which can be used to identify and “authenticate” callers by the cadence of their voice. These specific vocal quirks—much like an iris scan, a finger print, or a facial scan—fall under the umbrella of “biometric data” under Illinois’s Biometric Information Privacy Act (BIPA.) There’s a chance that Amazon ran afoul of the state law by collecting that data without obtaining callers’ consent, storing it on AWS servers, and failing to publicly disclosing its data retention policies.

The three plaintiffs behind the suit came into contact with Pindrop’s tech when they called the customer support line for John Hancock, a major life insurance provider, and were told that they were “no longer required” to use a PIN number to sign in, thanks to Pindrop’s ability to authenticate their calls based on sound alone.

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“AWS knowingly intercepted the telephone calls made by Plaintiffs to John Hancock and collected and stored Plaintiffs’ biometric data harvested from those calls, [and] Pindrop knowingly accepted and analyzed intercepted telephone calls to collect and store Plaintiffs’ biometric data,” the suit says.

It then goes on to explain that Pindrop offers its “biometric data software” as a service, and then distributes that software (and the resulting data) to its customers for a hefty fee, all without any consent on the caller’s behalf. Because the three plaintiffs behind the suit are Illinois-based, they were able to point out that this sort of profiteering directly violates some of the core tenants of BIPA. “Pindrop does not tell Plaintiffs it is profiting from its harvesting of their biological information, nor does it obtain their consent. Even if it did obtain consent—though it did not—Pindrop’s practice of profiting from Plaintiffs’ biometric data is a BIPA violation,” the suit claims.

Importantly, the suit identifies exactly why covert recording and storage of biometric data is not only creepy but dangerous (emphasis ours):

When a passcode is used as a security measure, in the event of a data breach an individual may simply change the passcode to prevent unauthorized access to the individual’s compromised account. By contrast, when call centers or customer service personnel use voice biometrics for authentication, in the event of a data breach there is nothing an individual can do to prevent someone from using the individual’s voice biometrics to gain unauthorized access to the compromised account.

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Even though this suit involves three Illinois residents invoking the state’s privacy legislation, a judge for their home state’s Southern District Court dismissed this case against Amazon and Pindrop last month, on the grounds that neither company “purposefully directed their activities at Illinois citizens.” The fact that the three callers were based in Illinois wasn’t enough to grant the state jurisdiction, since they were making calls to a Boston based life insurance provider that happened to contract out to two corporations—Amazon and Pindrop—that were both incorporated in Delaware. As a result, today’s suit is effectively a mulligan on the first, but filed in Delaware’s District Court.

When contacted by Gizmodo, Andrew Schlichter, one of the lead councils on the case simply said “We believe that the law was violated, and look forward to bringing the claims to trial before a jury.”

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This isn’t the first time that BIPA’s been invoked against a major tech player. Last year, Apple was hit with a similar class action alleging the company unlawfully stored the countless voiceprints collected from people using Siri every day. Just a few months earlier, Google was hit with a similar class action suit over its Google Assistant feature. At the time, the company tried to dodge the claims by (incorrectly) alleging that the plaintiffs needed to prove real, tangible harm coming from this sort of voiceprint collection—something that’s notably not required under the Illinois Supreme Court.

We’ve reached out to representatives at AWS and Amazon, and will update this piece when we hear back.

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