Into the fold? What’s next for Instagram as founders leave
By BARBARA ORTUTAY
AP Technology Writer
Wednesday, September 26
SAN FRANCISCO (AP) — When Kevin Systrom and Mike Krieger sold Instagram to Facebook in 2012, the photo-sharing startup’s fiercely loyal fans worried about what would happen to their beloved app under the social media giant’s wings.
None of their worst fears materialized. But now that its founders have announced they are leaving in a swirl of well wishes and vague explanations, some of the same worries are bubbling up again — and then some. Will Instagram disappear? Get cluttered with ads and status updates? Suck up personal data for advertising the way its parent does? Lose its cool?
Worst of all: Will it just become another Facebook?
“It’s probably a bigger challenge (for Facebook) than most people realize,” said Omar Akhtar, an analyst at the technology research firm Altimeter. “Instagram is the only platform that is growing. And a lot of people didn’t necessarily make the connection between Instagram and Facebook.”
Instagram had just 31 million users when Facebook snapped it up for $1 billion; now it has a billion. It had no ads back then; it now features both display and video ads, although they’re still restrained compared to Facebook. But that could quickly change. Facebook’s growth has started to slow, and Wall Street has been pushing the company to find new ways to increase revenue.
Instagram has been a primary focus of those efforts.
Facebook has been elevating Instagram’s profile in its financial discussions. In July, it unveiled a new metric for analysts, touting that 2.5 billion people use at least one of its apps — Facebook, Instagram, WhatsApp or Messenger — each month. While not particularly revealing, the measurement underscores the growing importance Facebook places on those secondary apps.
Facebook doesn’t disclose how much money Instagram pulls in, though Wedbush analyst Michael Pachter estimates it’ll be around $6 billion this year, or just over 10 percent of Facebook’s expected overall revenue of about $55.7 billion.
Facebook CEO Mark Zuckerberg has long seen Instagram’s promise. At the time, it was by far Facebook’s largest acquisition (although it was dwarfed by the $19 billion Zuckerberg paid for WhatsApp two years later). And it was the first startup allowed to operate mostly independently.
That has paid off big time. Not only did Instagram reach 1 billion users faster than its parent company, it also succeeded in cloning Snapchat’s popular “Stories” feature, dealing a serious blow to that social network upstart and succeeding where Facebook’s own attempts had repeatedly failed. Instagram also pioneered a long-form video feature to challenge YouTube, another big Facebook rival.
Recently, Instagram has been on a roll. In June, Systrom traveled to New York to mark the opening of its new office there, complete with a gelato bar and plans to hire hundreds of engineers. Only a month earlier, Instagram had moved into sparkly new offices in San Francisco. In a July earnings call, Zuckerberg touted Instagram’s success as a function of its integration with Facebook, claiming that it used parent-company infrastructure to grow “more than twice as quickly as it would have on its own.”
But Instagram has also been a case study in how to run a subsidiary independently — especially when its parent is mired in user-privacy problems and concerns about election interference, fake news and misinformation. And especially when its parent has long stopped being cool, what with everyone and their grandma now on it.
Instagram’s simple design — just a collection of photos and videos of sunsets, faraway vacations, intimate breakfasts and baby close-ups — has allowed it to remain a favorite long after it became part of Facebook. If people go to Twitter to bicker over current events and to Facebook to see what old classmates are up to, Instagram is where they go to relax, scroll and feast their eyes.
So, will that change?
“I don’t think Zuckerberg is dumb,” Akhtar said. “He knows that a large part of Instagram’s popularity is that it’s separate from Facebook.”
As such, he thinks Facebook would be wise to reassure users that what they love about Instagram isn’t going to change — that they are not going to be forced to integrate with Facebook. “That’ll go a long way,” he said.
Internally, the challenge is a bit more complicated. While Systrom and Krieger didn’t say why they’re leaving, their decision echoes the recent departure of WhatsApp’s co-founder and CEO Jan Koum, who resigned in April. Koum had signaled years earlier that he would take a stand if Facebook’s push to increase profits risked compromising core elements of the WhatsApp messaging service, such as its dedication to user privacy. When Facebook started pushing harder for more revenue and more integration with WhatsApp, Koum pulled the ripcord.
One sign that additional integration may be in Instagram’s future: Zuckerberg in May sent longtime Facebook executive Adam Mosseri to run Instagram’s product operation. Mosseri replaced longtime Instagrammer Kevin Weil, who was shuffled back to the Facebook mothership.
That likely didn’t sit well with Instagram’s founders, Akhtar and other analysts said. Now that they’re gone as well, Mosseri is the most obvious candidate to head Instagram.
“Kevin Systrom loyalists are probably going to leave,” Akhtar said.
Which means Facebook may soon have a new challenge on its hands: Figuring out how to keep Instagram growing if it loses the coolness factor that has bolstered it for so long.
Opinion: That Leaked Google Video Demonstrates the Limits of AI
By Mark A. Jamison
The leaked video of Google’s executives soothing Googlers (Google’s name for its own employees) after the 2016 presidential election shows how unaware one of the world’s best informed companies can be.
Kent Walker, Google senior vice president for global affairs, explained that the election results show that “fear, I think, not just in the United States, but around the world is fueling concerns, xenophobia, hatred, and a desire for answers that may or may not be there.” The executives appeared completely confident that almost all Googlers uniformly were offended by the election, thought disparagingly of anyone who voted for the president, and believed that others’ opinions are simply wrong.
This is called living in a bubble.
The shock and dismay in the video raise a question: How could people that work for an organization that is (1) thought to have more or nearly more information than any organization in history, and (2) reputed to have world-leading artificial intelligence (AI) have been in such a bubble?
It’s a lesson in the limits of AI and big data. Google and other tech companies do have indeed unprecedented, massive amounts of data. And they are constantly working to improve what they know about people’s wants so that they can place ads more effectively than anyone else. The companies appear quite proud of these accomplishments, and rightly so.
But their leadership appears to have massively missed what voters would do on Election Day. And based on the Google execs’ choice of words and emotions used to describe the roughly 48 percent of the voters who voted differently than (apparently) every Googler, they seem to have missed what many of those 48 percent are like. While I have not met the vast majority of Trump voters, I have yet to meet one that fits the descriptions embraced in the video.
Why did vast amounts of data and unprecedented analytical powers fail to penetrate the worldview bubble? The answers provide a window into the limitations of AI.
AI and big data are good at predicting outcomes when the future will be a lot like the past. When the world changes, the algorithms — the set of instructions that tell the computers what to do — are caught flat footed because AI learns only from past data. This is why racial and gender biases appear prevalent in AI systems.
AI has no intuition, creativity or empathy. Most AI systems are based on statistical analysis that assign probabilities to future events. They lack the ability to make judgments based on alternative understandings of how the world might work. They lack surprise. And they cannot gain an understanding of people by feeling their emotions.
And AI has no curiosity. It is unable to interpret and answers only the questions it is asked. If the user lacks sufficient insight to ask the right question, AI at best provides results that are nonsensical in the user’s worldview.
This limited scope of AI presents a challenge for systems and organizations that are built around it. Humans are not very good at rethinking worldviews when they are challenged. As John Kenneth Galbraith is reputed to have said, “Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof.”
This is true for big data projects: Gartner’s Nick Heudecker recently tweeted that the failure rate of big data projects is around 85 percent, and that the problem is with people, not technology.
If AI provides what appear to be illogical answers, execs and AI practitioners alike are tempted to ignore the results or twist the algorithms until the answers align with prior beliefs. It takes something more than AI for people to gain insight and wisdom. It takes humility and open engagement.
What can be done? Those relying on AI and big data should seek diversity and engage with people who make them uncomfortable. As Heineken demonstrated with its “Worlds Apart” ads, human interaction across viewpoints can make worlds of difference, even more than can AI and big data.
People who are worried that AI and big data give companies insurmountable market power can relax. Clearly these technologies are powerful, as demonstrated by the financial successes of tech companies. But the video demonstrates that the technologies are no more perceptive than the human minds that design them.
People in bubbles fail to appreciate the meaning of evidence that contradicts their worldviews. That is the market opportunity for the entrepreneurs and investors that are poised to dethrone today’s tech leaders.
ABOUT THE WRITER
Mark A. Jamison is a visiting scholar at the American Enterprise Institute and the director of the University of Florida’s Public Utility Research Center, where he is also Gunter Professor. In 2012, he consulted for Google on whether its search engine is a public utility. He wrote this for InsideSources.com.
Opinion: Startups May Be the Biggest Losers in Qualcomm-Apple ITC Fight
By Rachel Wolbers
With growing anxiety about trade, the International Trade Commission should be a force for stability and predictability in trade disputes, protecting American companies from unfair competition by foreign entities.
Unfortunately, the ITC is too often a place for American companies to harm fellow American competitors. Qualcomm’s patent dispute against Apple, and by extension, Intel, is an egregious example of this. Unfortunately, if the ITC sides with Qualcomm, the ruling would most severely affect American startups and consumers, proving again the proverb “when elephants fight, it is the grass that suffers most.”
The ITC was set up as a quasi-judicial federal commission to investigate unfair trade practices. Unlike federal District Courts, the ITC’s only available remedy to companies is a so-called exclusion order, which prevents the importation of goods that infringe valid U.S. patents. This is a mighty power, because no matter how trivial a patent might be to a product, the ITC can bar it from being sold in the United States.
The threat of an exclusion order is particularly concerning for startup component makers. If you run a small company that manufactures a unique type of glass used on iPhones, the dispute between Qualcomm and Apple has nothing to do with your product, but your business could be crippled if the ITC excludes some iPhones because of a separate patent issue. Since the typical smartphone uses technology based on more than 250,000 patents, there are a lot of potential small component makers that could be hurt by the exclusion of an iPhone.
Aside from the threat of an exclusion order, a decision in favor of Qualcomm could hurt startups and competition in the tech industry more generally. Apple and Qualcomm may be locked in heated legal battles in courtrooms worldwide, but the recent ITC case is particularly anti-competitive. Qualcomm isn’t looking for an exclusion order on all iPhones, only the iPhones that contain modems produced by Intel — its only competitor in the market. If Qualcomm is successful in blocking Intel modems, it will regain monopoly power in the modem market, driving up prices for consumers and creating increased barriers to entry that can stifle future innovation.
Startups affected by this decision will not just be those trying to make components for smartphones. These types of modems are used in a variety of devices that rely on cellular communications. As 5G is rolled out, Qualcomm modems will have a huge potential market in burgeoning industries like autonomous vehicles, smart cities and the Internet of Things. As startups innovate in these spaces, Qualcomm should not be allowed to use its market dominance to bully companies into unfair licensing agreements.
It is clear that if the ITC issues an exclusion order on iPhones containing Intel chips, it won’t be in the public interest. Stifling competition and disproportionately harming startups and consumers never is.
ABOUT THE WRITER
Rachel Wolbers is the policy director at Engine, a nonprofit organization that advocates on behalf of startups. She wrote this for InsideSources.com.
Opinion: Trump’s Latest Tariffs Create a Case for Hypocritical Treatment of the Tech Industry
By Michael McGrady
Tim Cook, the dynamic CEO of Apple, has political savvy. This truth is evident, provided the tariff carve out that Cook secured for his Apple Watch, AirPods and Mac Mini products.
After President Trump announced a new round of 10 percent tariffs on $200 billion worth of Chinese imports, the administration positioned itself against significant components of the tech industry while advocating for ones willing to submit to government demands.
Apple, sadly, joins a class of companies willing to risk long-institutionalized supply chains for the praise of the Trump administration. We can’t discount Cook’s decision making or corporate stratification to advocate for his own business and no one else; however, Trump’s actions in carving out critical products from tariff rounds brings up the case of favoritism.
Under Trump’s latest round of tariffs, the 10 percent levy on thousands of products is intended to go into effect in late September. The tariffs cover products such as seafood and semiconductor components. Companies like Apple are covered by tariff exemptions for wearable consumer tech products (i.e., the FitBit, Garmin smart watches, and the over-hyped Apple Watch). The remainder of the tech industry is at significant risk when we consider the fact that tariffs will still have a negative effect.
Trump has levied tariffs on parts of the tech industry that make up the “cloud.” The cloud is the term used to describe hardware endpoints, software and other areas of information technology that require a connection to the internet.
This is a significant issue because these tariffs are ultimately taxes on data centers and other physical cloud industry components. American computing firms import parts from Chinese companies to build the physical IT infrastructure needed to host the data and information for millions of users and thousands of businesses.
Firms like Cisco, Dell, Hewlett-Packard and Juniper Networks develop cloud computing systems for various industries and consumer demographics. These firms, and others like them, also create massive data centers to host proprietary and client IT systems. For example, Amazon Web Services provides a “virtual server,” or a cloud server, for businesses to run critical programs or build complex IT systems without the necessary on-site hardware.
Given the unusual cross-industry nature of this segment, artificial increases in costs (i.e., tariffs, taxes, levies and duties) could force increases in price. Specifically, a levy will increase the cost of manufacturing a particular component, the shipment of such a component, the mid-level assembly or sale of the component, and the final transaction.
“Because these technologies empower the productivity and innovation potential of all downstream sectors of an economy, the application of tariffs raises their costs, which lowers their consumption and use, which leads to lower economic growth,” Stephen Ezell of the nonprofit Information Technology & Innovation Foundation said in an email. Ezell, the organization’s vice president for global innovation policy, co-authored a report on how the tariffs would directly impact the tech industry.
“A 10 percent tariff levied on Chinese ICT imports would slow the growth of U.S. output by $163 billion over the next 10 years, and a 25 percent tariff would slow output by $332 billion,” Ezell said.
According to his report (written with colleague Caleb Foote) titled “Why Tariffs on Chinese ICT Imports Would Harm the U.S. Economy,” tariffs on these classes of products will directly affect American households negatively.
“For an average American household, a 10 percent tariff on Chinese ICT imports would mean that after 10 years, its annual household income would be $150 less than it would have been without tariffs, and under a 25 percent tariff, $306 less,” Ezell and Foote wrote.
These increases in costs will have far-reaching direct and indirect effects that range from shrinking bottom lines to customer retention issues due to higher prices at the final output.
ABOUT THE WRITER
Michael McGrady, a political consultant, is executive director of McGrady Policy Research and an internationally published libertarian journalist. He wrote this for InsideSources.com.
Is that selfie edited? Why it may matter for women viewers
Perceptions of photo editing affect thin ideal internalization
OHIO STATE UNIVERSITY
COLUMBUS, Ohio – There’s a surprising upside to the fact that many people edit their selfies on Instagram and other social media sites to enhance their appearance.
A new study found that when women believed that selfies of thin and sexualized women had been edited, viewing these images had less negative impact on one aspect of their mental health.
Many studies have found that viewing thin and sexualized images of models or others can lead women to put more value on being slender themselves – a line of thinking called thin ideal internalization, said Megan Vendemia, lead author of the study and doctoral candidate in communication at The Ohio State University.
This internalization can in turn lead to eating disorders or other psychological problems.
But this study found that women were less likely to internalize the thin ideal if they believed the pictures they viewed were edited.
“Women see the edited photos as less authentic and it reduces the negative effect these images can have on them,” Vendemia said.
“They know that the online images might not reflect an offline reality.”
The study also found that participants judged women negatively for sharing edited pictures of themselves online. Furthermore, participants evaluated the women who shared the thin, sexualized images more negatively when they believed the women were peers instead of models.
Vendemia conducted the study with David DeAndrea, associate professor of communication at Ohio State. It appears online in the journal Body Image and will be published in a future print edition.
The research involved 360 female college students from one university who were told the study was designed to determine how people evaluate images that appear on popular social media sites like Instagram.
They all viewed the same 45 selfies, taken from public Instagram accounts, of thin women in revealing clothing. Some of the photos had icons, placed by the researchers, that indicated the image was edited in Photoshop and/or included an Instagram filter.
Half of the women were told that the images were of other students at their college, while the others were told the images depicted New York City models.
And half of each of these groups saw collections in which nearly all the photos were marked as being edited. The others saw collections containing only a few photos labeled as edited.
All participants then completed a variety of measures, including one on thin ideal internalization. This asked how much they agreed with statements like “Thin women are more attractive than other women.”
Results showed that the more that participants perceived that the photos were edited, the less they internalized the thin ideal. As expected, participants were more likely to believe the photos labeled as edited had been modified. But they also thought many of the non-labeled photos were edited.
“The photos are less influential if women see them as being edited,” Vendemia said. “So cues that images have been altered could potentially reduce the negative effects of thin ideal images.”
The more that the viewers thought the selfies were modified, the more they thought the women took their photos just to show off, to make others jealous and to brag, results showed. Participants also rated the women with edited photos as less intelligent and less honest.
And participants gave harsher evaluations to their peers than they did for models.
“Participants tended to be more forgiving of professional models than their own peers on social media sites for the exact same behavior,” she said.
“They thought models were sharing selfies for more altruistic reasons, such as to motivate others or promote health.”
The results suggest that women should be cautious about what selfies they share of themselves on social media.
“You may not get the same positive reaction from your friends as would a model who posted a very similar picture,” Vendemia said.
But the good news of this study is that as social media users become more sophisticated in how they view photos, they may be able to avoid some pitfalls.
“Just being aware of the amount of photo editing that goes on diminishes women’s endorsement of the thin ideal when they view pictures of slender people,” she said.