The chips are gone

The Big Story

Going on a chip run

The global semiconductor shortage is making painfully clear to companies and governments around the world that, well, the semiconductor industry needs to get a lot bigger.

• A group of CEOs — including AMD's Lisa Su, Intel's Bob Swan and Micron's Sanjay Mehrotra — wrote a letter to President Biden urging him to "include in your recovery and infrastructure plan substantial funding for incentives for semiconductor manufacturing."
• It's more than just laptops and cars at stake, they wrote: Semiconductors "enable the technologies needed to realize your Build Back Better goals, including smarter and safer transportation, greater broadband access, cleaner energy, and a more efficient energy grid, while also providing high-paying jobs for Americans and strengthening our advanced manufacturing base."

President Biden plans to sign an executive order calling for a review of the industry. "The review will be focused on identifying the immediate actions we can take," press secretary Jen Psaki said, "from improving the physical production of those items in the U.S. to working with allies to develop a coordinated response to the weaknesses and bottlenecks that are hurting American workers."

• The administration's primary focus seems to be the car industry, which makes sense given that it's both a huge industry in the U.S. and one of the hardest-hit by the shortage.
• The review will also include "advanced packaging, critical minerals, medical supplies and high-capacity batteries, such as those used in electric vehicles," Bloomberg reported.

A review is not a plan, of course, and a plan is not a thriving semiconductor industry. In the long run, it seems likely that the U.S. won't be the only country to invest in semiconductor manufacturing — the EU is considering a deal with TSMC or Samsung to build an advanced foundry in the region — so supply might stop being an issue even if reliance on other countries is harder to overcome. But whatever happens, the current shortage is going to keep being painful for a while.

IPOs

It's a match!

Bumble had quite a first day on the public markets, jumping more than 63% and valuing the company at more than $14 billion. So let's look at what could go wrong, shall we?

Here at Source Code we love a good corporate Risk Factor. And since we forgot to do it when Bumble filed its S-1, let's look at the unique perils of being a dating app in 2021:

• Switching is easy. The dating game is a fluid one, and apps rarely stay hot for long. (Just ask OkCupid.) Plus, the company wrote, "consumers have a propensity to try new approaches to connecting with people and to use multiple dating products at the same time." People are more loyal to getting laid than they are to using Bumble.
• Reputation disappears fast. (Just ask Robinhood.) Bumble's women-in-charge approach to dating apps has been a big part of its appeal. But that means its "brands and reputation may be negatively affected by the actions of users that are deemed to be hostile or inappropriate to other users or disempowering to women or by the actions of users acting under false or inauthentic identities," according to its S-1.
• Real-world problems are a bad look. "When one or more of our users suffers or alleges to have suffered any such harm either on our platform or in person after meeting on our products," that comes back on the platform, it wrote. (Just ask Airbnb.) And when it comes down to it, it added: "We cannot control how our users engage if and when they meet in person after meeting on our products."
• Data-privacy laws could change things. "We process a significant volume of personal information and other regulated information both from our employees and our users," Bumble wrote. Keeping up with a patchwork of laws is difficult at best.

Bumble's a perfect test case for an increasingly important kind of company, dealing in both online and offline life but only really able to control what happens online. It's an eternal question for dating apps: How do you care for your users when you're connecting them outside your app? And actually that's a meaningful one for everyone else to start asking, too.

Books

The Valley in the library

Anna Kramer writes: Wonderful new technology always has a price, and the rise of the Libby app is the latest object lesson. If you don't know Libby: It's a cute virtual app for borrowing ebooks from your library, and it has become A Thing for basically everyone who has ever read a book.

Libby's growth has also contributed to a serious financial problem for public libraries. The crux of the issue: Ebooks are much more expensive than physical books, so more people reading digitally means way more spending for libraries.

• Just like with Netflix and Spotify, book publishers used the move to digital media to change the way they sell ebooks, from a fixed-cost model to a subscription one. Libraries now rent digital books by the number of checkouts or by the length of time they hold an edition, or both, and almost never own them outright. In the end, public libraries spend way more for every digital book copy than the paper equivalent.
• Book publishers can price ebooks however they like because there are almost no rules governing how it works. The technology is just too new for Congress to muster the energy, though the American Library Association is engaged in some lobbying to change that. (See here for more of the nitty gritty into the publishers vs. libraries narrative.)

If you've got a sense of deja vu reading this, you're right on the money. We hear versions of this story all the time: A new app transforms the way we engage with the world, saving people in a moment of crisis, and oh wait someone has an ulterior motive somewhere, and there's no regulation to stop it from happening.

• Think Uber fundamentally changing transportation only for many drivers to end up just scraping by, or Spotify making music exploration utterly seamless while artists get a smaller cut of the profits.

A MESSAGE FROM PHILIPS

One thing we have realized is that COVID-19 has accelerated three transformational trends that already existed before the pandemic, but are now dramatically reshaping healthcare: the concept of a networked healthcare system, the increasing adoption of telehealth, and the idea of virtual care and guidance. At the same time, we have seen consumers becoming much more engaged in their personal health and that of their families.

Read more

People Are Talking

Microsoft supports legislation making Google and Facebook pay for news, Brad Smith said:

• "The legislation will redress the economic imbalance between technology and journalism by mandating negotiations between these tech gatekeepers and independent news organizations."

Steven Sinofsky raised an eyebrow at the whole thing:

• "Old enough to remember when Microsoft thought competitors lobbying for Microsoft to be regulated was at the very least 'bad taste.'"

And Google's Kent Walker had a similar response:

• "Microsoft's take on Australia's proposed law is unsurprising — of course they'd be eager to impose an unworkable levy on a rival and increase their market share. But in its eagerness, Microsoft makes numerous claims that have been thoroughly and independently debunked."

On Protocol: It's crazy that people have to turn to the internet to help pay their bills, GoFundMe's Tim Cadogan said:

• "They need help with rent. They need help to get food. They need help with basic bills. It's nothing fancy. It's the basics. That's what people need help with to get through this period."

Making Moves

David Schneider is now a general partner at Coatue Management, heading over from ServiceNow.

Medium staffers are unionizing, with a group of 140 employees set to be represented by the Medium Workers Union in conjunction with the Communications Workers of America.

Speaking of unions: SAG-AFTRA, the group that represents people in movies, TV and elsewhere, is now planning to cover content "created by certain types of influencers."

In Other News

• On Protocol: Facebook's transparency report shows what Facebook wants you to see. The company released granular detail on what content it removed last quarter, but it left an awful lot of data out.
• The Facebook Oversight Board could work with other tech platforms. Co-chair Helle Thorning-Schmidt said if the project is successful with Facebook, other platforms "are more than welcome to join."
• On Protocol: PayPal wants to be an all-in-one super app. But CEO Dan Schulman has his work cut out. (Also, subscribe to Protocol | Fintech, which launches next week!)
• The Biden administration asked to pause proceedings on the WeChat ban. As with the TikTok case, the administration said it needed more time to review the cases.
• Virginia is about to get its own version of the CCPA. The state's Consumer Data Protection Act, partly modeled on California's bill, passed the state Senate unanimously and is expected to be signed into law soon.
• Disney+ now has 95 million paid subscribers. But annual revenue per user dropped 28% year-on-year, as many of the new subscribers are on cheap tiers in India and Indonesia.
• On Protocol: A history of VLC, which turned 20 years-old this month. It's been downloaded more than 3.5 billion times, but it's remained a labor of love rather than a cash cow for the developers behind it.
• Waymo and Cruise are leading AV testing in California. But while Waymo vehicles drove 56% fewer miles in 2020 vs. 2019, Cruise's mileage only dropped by 7%.

One More Thing

The pig at the joystick

It's so passe to refer to gamers as "dudes in their mom's basement." Especially when it turns out that the gamer you think is a person might instead be a pig pushing a joystick with its snout and absolutely crushing it at Pong. And unlike most gamers, the pigs were even trained to put things away when they were done.