09 Apr 2018

James Murray from the Impractical Jokers talks about the future of VR

James Murray is a funny man. A producer, actor, and writer, Murray is best known as Murr on the show Impractical Jokers. I spoke to him for a Technotopia interview about the future of TV, VR, and media and he has a lot to say.

His dream? To offer immersive experiences to his audiences using VR, a dream that he thinks is still far off. Until the VR experience is out-of-the-box easy, he said, there isn’t much hope for the medium. He’s a funny guy and this is one of my favorite interviews.

Technotopia is a podcast by John Biggs about a better future. You can subscribe in Stitcher, RSS, or iTunes and listen the MP3 here.

09 Apr 2018

Facebook urged to make GDPR its “baseline standard” globally

Facebook is facing calls from consumer groups to make the European Union’s incoming GDPR data protection framework the “baseline standard for all Facebook services”.

The update to the bloc’s data protection framework is intended to strengthen consumers’ control over how their personal data is used by bolstering transparency and consent requirements, and beefing up penalties for data breaches and privacy violations.

In an open letter addressed to founder Mark Zuckerberg, a coalition of US and EU consumer and privacy rights groups urges the company to “confirm your company’s commitment to global compliance with the GDPR and provide specific details on how the company plans to implement these changes in your testimony before the US Congress this week”.

The letter is written by the Trans Atlantic Consumer Dialogue, and co-signed by Jeffrey Chester, the executive director of the Center for Digital Democracy in the US and Finn Lützow-Holm Myrstad, the head of the digital services section at the Norwegian Consumer Council.

“The GDPR helps ensure that companies such as yours operate in an accountable and transparent manner, subject to the rule of law and the democratic process,” they write. “The GDPR provides a solid foundation for data protection, establishing clear responsibilities for companies that collect personal data and clear rights for users whose data is gathered. These are protections that all users should be entitled to no matter where they are located.

“We favor the continued growth of the digital economy and we strongly support innovation. The unregulated collection and use of personal data threatens this future. Data breaches, identity theft, cyber-attack, and financial fraud are all on the rise. The vast collection of personal data has also diminished competition. And the targeting of internet users, based on detailed and secret profiling with opaque algorithms, threatens not only consumer privacy but also democratic institutions.”

Zuckerberg caused confusion about Facebook’s intentions towards GDPR last week when he refused to confirm whether the company would apply the same compliance measures for users in North America — suggesting domestic and Canadian Facebookers, whose data is processed in the US, rather than Ireland (where its international HQ is based), would be subject to lower privacy standards than all other users (whose data is processed within the EU) after May 25 when GDPR comes into force.

In a subsequent conference call with reporters, Zuckerberg further fogged the issue by saying Facebook intends to “make all the same controls available everywhere, not just in Europe” — yet he went on to caveat that by adding: “Is it going to be exactly the same format? Probably not. We’ll need to figure out what makes sense in different markets with different laws in different places.”

Privacy experts were quick to point out that “controls and settings” are just one component of the data protection regulation. If Facebook is truly going to apply GDPR universally it will need to give every Facebook user the same high privacy and data protection standards that GDPR mandates for EU citizens — such as by providing users with the right to view, amend and delete personal data it holds on them; and the right to obtain a copy of this personal data in a portable format.

Facebook does currently provide some user data on request — but this is by no means comprehensive. For example it only provides an eight-week snapshot of information to users about which advertisers have told it they have a user’s consent to process their information.

In denying a more fulsome fulfillment of what’s known in Europe as a ‘subject access request’, the company told one requester, Paul-Olivier Dehaye, the co-founder of PersonalData.IO, that it would involve “disproportionate effort” to fulfill his request — invoking an exception in Irish law in order to circumvent current EU privacy laws.

“[Facebook] are really arguing ‘we are too big to comply with data protection law’,” Dehaye told a UK parliamentary committee last month, discussing how difficult it has been to get the company to divulge information it holds about him. “The costs would be too high for us. Which is mindboggling that they wouldn’t see the direction they’re going there. Do they really want to make that argument?”

Whether that situation changes once GDPR is in force remains to be seen.

The new framework at least introduces a regime of much larger penalties for privacy violations — beefing up enforcement with maximum fines of up to 4% of a company’s global annual turnover. So the legal risks of trying to circumvent EU data protection law will inflate substantially in just over a month.

And Facebook has already made some changes ahead of GDPR coming into force (and likely to try to comply with the new standard) — announcing it’s shutting down a partnership with major offline and online data brokers, for example.

“Consumer groups and privacy groups, human rights groups, civil rights groups will all probably be watching how GDPR is implemented,” Finn Lützow-Holm Myrstad tells TechCrunch. “And will be ready to probably go to court to establish that these are fundamental rights for European citizens at the moment. So we’re definitely going to pay attention.

“But obviously we really want the industry to work with us and to take this seriously because if they don’t there will be a very negative spiral of court cases and a chilling effect for consumers because they will be afraid of using these services. And they will be caught in the middle because of the lack of options that they have when it comes to these services. And I don’t think that’s good for anyone. So we really hope that this is sign of change — real change — from Facebook.”

The company remains under huge pressure following revelations about how much Facebook user information was passed to a controversial political consultancy, Cambridge Analytica, by a developer using its platform to deploy a quiz app as a vehicle for harvesting personal data without most users’ knowledge or consent.

Facebook has said as many as 87M users could have had their data passed to Cambridge Analytica as a result of them or their friends downloading the app in 2014.

Zuckerberg is due to give testimony on this and likely wider issues related to privacy and data protection on his platform to US politicians this week.

One line of questioning might well focus on why Facebook has so studiously ignored years of warnings that it was not adequately locking down access to user data on its platform.

The Norwegian Consumer Council actually filed a complaint about Facebook app permissions all the way back in 2010, writing presciently then: “Third-party applications should only be given access to the information they need in order to function. Facebook should not be able to renounce responsibility for the way in which third parties collect, store or use personal data. As a facilitator and operator Facebook must take direct responsibility for the applications available on the platform.”

Myrstad says Facebook’s historical response to these sort of privacy complaints has been “sadly very, very little”.

On the contrary, he says the company has made it “really, really difficult to opt out of their tracking, their profiling”. He also describes Facebook’s default settings as “a nightmare” for people to understand. In terms of GDPR compliance, he says he believes Facebook will need to make changes to their business model and alter default settings — at very least for users whose data gets processed via Facebook Ireland.

“They will definitely need to have much better consent mechanisms than they do today. Much less take it or leave it,” says Myrstad. “I think there will be a discussion also in Europe, and I think it’s not yet written in stone yet how this will turn out, but we definitely also think that the amount of tracking that Facebook does by default on other websites will need an actual explicit consent — which there is not today. It’s not possible to opt out of the tracking.

“You can opt out of behavioral advertising but that’s not the same as opting out from tracking. And I think the way they do that today is not in line with GDPR… I think they will actually struggle [to comply]. They’re already struggling under current law in Europe. So they will need to make some fundamental changes to their business model.”

At the time of writing Facebook had not responded to a request for comment.

09 Apr 2018

Following Singapore, Philippines regulator forces Grab to delay closing Uber’s app

Grab has given the Uber app a stay of execution in yet another market as regulators across Southeast Asia continue to investigate the merger deal announced between the ride-hailing companies last month.

Fresh from extending the closure date a week in Singapore, Grab has done the same in the Philippines, a spokesperson confirmed to TechCrunch. This extension follows an order from the Philippine Competition Commission (PCC) made over the weekend, and it now means that Uber’s app will cease running in the country on April 16.

Elsewhere, Grab shuttered the Uber app in its six other markets in Southeast Asia today as planned, two weeks after the merger deal was confirmed. As for UberEats, that app will live on in the region until the end of May, after which it will be folded into GrabFood.

It appears that Grab didn’t count on Southeast Asia’s being so intent to probe the tie-up.

The Competition and Consumer Commission of Singapore (CCCS) said last month that it had “reasonable grounds” to suspect that the deal may fall foul of section 54 of Singapore’s Competition Act, while the PCC voiced similar concerns last week.

“This move by Uber in the Philippine market leads to further substantial concentration of what is, to begin with, an already highly concentrated ride-sharing market. This virtual monopolization of the market by Grab can harm the riding public,” the organization’s chairman Arsenio M. Balisacan wrote in a statement.

That was countered by Uber, which argued that it is no longer in business in the region.

“Uber exited eight markets, including the Philippines, as of Monday. Now, I look after 10 markets, instead of 18. Our funding is gone. Our people are gone. We don’t intend to come back to these markets,” Brooks Entwistle, head of Uber’s Asia Pacific business, told the PCC at a hearing on Friday, according to Rappler.

If Uber is gone, who will run the app? That’s a valid question raised by the Land Transportation Franchising and Regulatory Board (LTFRB) in the Philippines, which pointed out that consumer safety could be compromised without customer services and other Uber teams.

For now, Grab is stepping up and running the Uber app at its own cost, the company has confirmed. That may keep the lights on, but Grab-operating the Uber doesn’t really address the core issue of the PCC which is competition between two players. On that count, Uber has already left the building.

An excerpt from Grab’s (long) statement to the PCC is below:

Considering that Uber has exited the region on 25 March and clearly stated during the public hearing its incapacity to fund the operations in the Philippines, the parties have agreed to keep the Uber app operational with Grab bearing the costs, to give drivers and consumers time to adjust to Uber’s departure. In the spirit of cooperating with the PCC, Grab has also agreed to continue to bear the costs of the Uber app extension (from March 25 to April 8) until April 15, 2018. Our understanding from the PCC is that this interim arrangement, which was fully explained to the PCC, is not a breach of its Order.

Grab wishes to clarify that, although the Uber app continues to operate, it has limited functionality and little or no support. Grab noted that the LTFRB has expressed concerns pertaining to customer support and safety issues arising from Uber’s limited operations. Grab wishes to stress that this interim arrangement is only for the purposes of satisfying what the PCC appears to require until Grab is able to discuss with the PCC.

We hope that the PCC will sit with the parties to hear their sides and give a fair assessment of the concerns expressed by both parties and that any other action taken would take into account the practical hurdles that may lie across the parties’ paths.

The full read — for those who like regulatory filings and responses to them — can be found here.

09 Apr 2018

Leap Motion’s new AR headset prototype is high-res, low-cost and a little bug-eyed

Leap Motion has been in kind of a weird place for quite a while now. They’ve raised north of $100 million for their tightly-focused computer vision work hell-bent on replicating real-time hand movements, like, really well. Their work has all been very convincing in demos, but after eight years, the company itself still feels like a bit of a demo.

Today, the SF startup is seemingly expanding its ambitions in the AR/VR space with the announcement of a new augmented reality headset which it likely won’t productize. Project North Star is just a prototype reference design, but the company is open-sourcing its schematics and, despite the fact that it makes the wearer look like a giant bug, it seems fairly interesting.

The startup says that the low-cost headset can be built for under $100 at scale. The savings here versus other AR headset systems relies on the simplicity of the optical system which promises a high quality experience in a form factor that’s hardly low-key but is on-par with the bulk we’re used to seeing in most of today’s ugly VR headsets. The dual 1600×1440 LCD displays run at 120 hertz and bring a combined 100 degree field-of-view image into the user’s periphery. The headset also integrates the necessary hand-tracking sensors of course.

The scenario basically seems like Leap Motion needed a wide field-of-view headset that integrated the necessary sensors to demo their hand-tracking tech and realized that there wasn’t anything out their that fit the bill entirely, so they built their own.

“We hope that these designs will inspire a new generation of experimental AR systems that will shift the conversation from what an AR system should look like, to what an AR experience should feel like,” Leap Motion CTO David Holz wrote in a blog post.

The company has released a host of very intriguing videos over the past several weeks that highlight the company’s work on adapting its hand-tracking tech for augmented reality. What they’ve shown off is deeply convincing.

Leap Motion has always been a startup that I’ve liked quite a bit because they focused on something with a tight unwavering gaze and they are clearly far-and-away the best at what they do as a result. Nevertheless, the company is an SDK built for hardware that isn’t far out of the dev kit phase itself. That couldn’t be more evident than with this AR thing it’s building, which looks better than a lot of hardware out there now and — as a result — showcases that the AR headset market has years before it reaches any semblance of maturity.

09 Apr 2018

A well-fed workforce is a happy workforce — City Pantry raises £4M for its catering marketplace

City Pantry, the office catering marketplace to make it easy to order in food for staff, company events and meetings, has restocked its funding.

The London-based startup has raised a new £4 million round led by Octopus Investments with participation from existing investors and Newable Private Investing — capital it plans to use to expand into more cities across the U.K. over the next 18 months.

Founded by Stuart Sunderland in 2013, City Pantry set out to improve the catering options open to companies in London. Its marketplace connects local caterers to businesses who need quality food delivered to their offices or to cover events, meeting and regular team meals.

When the startup first launched, Sunderland viewed its main competitors as traditional corporate caterers, sandwich retailers, pizza delivery places, and to a lesser extent, the newer breed of restaurant delivery companies such as Deliveroo and Uber’s UberEATs.

“While we’ve all seen the phenomenal growth of online food delivery in B2C over the past few years, food to businesses lags significantly behind,” he says, noting that legacy relationships with caterers and “the unique pressures of ordering for larger groups make innovation and progress slower”.

City Pantry claims to now serve over 20,000 meals per week to the employees of more than 500 companies, including Google, Amazon, PayPal, Slack, Spotify and Unilever. The marketplace has on-boarded 300 popular London restaurants and caterers.

This, says Sunderland, is evidence that City Pantry is successfully bridging the gap between the type of food options consumers have become accustomed to and what is traditionally available in the world of corporate catering.

More broadly, he says the company is tapping into a growing demand from employees for “greater workplace wellbeing”. This in turn is seeing employers wanting to offer more than just a good salary.

Grant Paul-Florence, Head of Intermediate Capital at Octopus Investments, echoes this sentiment, arguing that City Pantry is “uniquely placed to satisfy the growing appetite for high quality, hassle-free workplace meals, which organisations are increasingly demanding as they work to build an attractive company
culture”.

Meanwhile, I’m told the startup has made a couple of significant hires in the last 12 months: Kate Miller (previously McKinsey, Google, and HelloFresh) has joined as CCO, and Sharon Lee (previously DHL, Elster Group, SushiDaily) has joined as COO.

09 Apr 2018

Bitmovin scores $30M Series B for ‘next-gen’ online video software

Bitmovin, the online video software and infrastructure company founded by two of the creators of the MPEG-DASH video streaming standard, has raised $30 million in Series B funding. The round is led by Highland Europe, with participation from existing investors Atomico, Constantia New Business, Dawn Capital, and Y Combinator.

The company says the new round of funding will be used to scale its product R&D, field engineering and sales teams worldwide — with the aim being to expand its global customer base of TV streaming providers, internet companies and social media companies. The Series B brings total funding for the 2013-founded company and Y Combinator alumnus to $43 million.

Bitmovin came about as a spin-off from research we did together at the the University of Klagenfurt, in Austria. During our PhDs we co-created the MPEG-DASH video streaming standard, which is used by YouTube, Netflix, Hulu, etc. amongst many others today, and which is used in total for more than 50% of the peak internet traffic,” says Bitmovin CEO Stefan Lederer, who founded the company with CTO Christopher Müller. “The research evolved into the company, with the help of angel investors including senior people at Cisco, Netflix, Accenture, Drupal and DropBox”.

Two years after Bitmovin turned from academic research into a commercial entity, the startup went through Y Combinator as a member of the summer 2015 cohort, which Lederer says was perfect timing. “We also won our first U.S. customers at the same time, which then made the move to California a much easier transition to make. Y Combinator really helped us as founders that started from a technical background. They helped us refine our go-to-market strategy and make products out of the technology that we had created”.

Today the company has offices in Austria, London, New York, San Francisco, and Hong Kong. The Bitmovin CEO says there is more to come following this round as the explosion of high quality online video content shows no signs of slowing.

The Bitmovin platform — broadly consisting of video compression, playback and analytics APIs — feeds into a growing trend that is seeing consumers expect online video to match the quality and user experience of Netflix and Amazon’s video streaming services. In turn, companies are finding that building an in-house solution can be prohibitively expensive and is prone to becoming obsolete as new codecs come onboard and older video infrastructure technology becomes obsolete.

“Our technology makes it possible to get high quality video to audiences wherever they are and whatever device they may be using – levelling the playing field with traditional media owners and broadcasters,” he explains. “The focus is really on efficiency and performance, making video load faster, stop buffering, increase quality, and reduce the amount of bandwidth one needs to see high quality video.

“We are different from the existing vendors as we are deeply developer and API focussed, with a passion for innovation and disruptive technologies. That’s our background, we are engineers, and we like to build the best products. Thus we’ve been the first ones in many new technologies on the market, setting the bar on performance and efficiency of video streaming”.

On the technology side, recent Bitmovin announcements include the ability to use AI to encode videos more effectively (learning, scene-by-scene how each video is treated so the next one is handled more quickly) and a new video player that can reduce the load time on a typical HTML page by a second.

“We’re also proud to support a new royalty-free codec called AV1, which came out last week (backed by Apple, Bitmovin, Facebook, Google, Microsoft and Samsung, amongst others). It shifts the tectonic plates in video because it’s the first time that online video innovation will be possible without making payments to a pool of incumbent, traditional media and consumer electronics companies. It helps opens the playing field to internet companies to, potentially, take more of the lead in video entertainment. It also means more predictability as companies will not be affected by changes in patent pools,” says Lederer.

To that end, the Bitmovin founder says customers include Sling, Periscope, The New York Times, ProSiebenSat.1, Red Bull Media House, FuboTV, RTL and iflix. “We are getting a lot of interest in the market, with a lot of new customers. Just last year we had a revenue growth of 3.5x, and we expect similar growth this year, which is great, but at the same time we want to make sure we continue to provide the best service and products to our customers. So we invest heavily in our engineering, solution and support teams, to maintain our DNA as an engineering and developer-first company,” he adds.

09 Apr 2018

China’s SenseTime, the world’s highest valued AI startup, raises $600M

The future of artificial intelligence (AI), the technology that is seen as potentially impacting almost every industry on the planet, is widely acknowledged to be a war between tech firms in America and China.

In a notable side-note to that battle, China now has the world’s highest-valued AI startup after SenseTime, a company founded in 2014, announced a $600 million Series C investment round. A source with knowledge of discussions told TechCrunch that the round values the company at over $4.5 billion, while it is also raising an extension to this round. That marks a hefty increase on the company’s most recent $1.5 billion valuation when it raised a $410 million Series B last year.

SenseTime CEO Li Xu said the company plans to use the capital to expand its presence overseas and “widen the scope for more industrial application of AI.”

Beyond the high figures involved — the round is a record fundraising for an AI company worldwide — SenseTime’s investment efforts are notable because of the names that have backed it.

Principally that’s Alibaba, the $429 billion e-commerce giant, which led this Series C round and is reportedly now SenseTime’s largest single investor, according to Bloomberg.

Beyond that, U.S. chipmaker giant Qualcomm signed up last year — seemingly as an early participant in this round — while Singapore’s sovereign fund Temasek and China’s largest electronics retailer Suning, which has taken investment from Alibaba, entered the round as new backers. Indeed, Suning’s push to for its store of the future, which was started by that Alibaba investment, uses SenseTime to power its facial recognition payment at staff-less checkouts and also for customer analysis using big data systems.

“SenseTime is doing pioneering work in artificial intelligence. We are especially impressed by their R&D capabilities in deep learning and visual computing. Our business at Alibaba is already seeing tangible benefits from our investments in AI and we are committed to further investment,” said Joe Tsai, Alibaba’s executive vice chairman.

SenseTime said it has more than 400 customers across a range of verticals including fintech, automotive, fintech, smartphones, smart city development and more that include Honda, Nvidia, China’s UnionPay, Weibo, China Merchants Bank, Huawei, Oppo, Vivo and Xiaomi.

Perhaps its most visible partner is the Chinese government, which uses its systems for its national surveillance system. SenseTime process data captured by China’s 170 million CCTV cameras and newer systems which include smart glasses worn by police offers on the street.

China has placed vast emphasis on tech development, with AI one of its key flagposts.

A government program aims to make the country the world leader in AI technology by 2030, the New York Times reported, by which time it is estimated that the industry could be worth some $150 billion per year. SenseTime’s continued development fees directly into that ambition.

“AI is really changing every profession and every industry. There’s almost nothing that won’t be touched by AI,” investor Kai-Fu Lee, formerly the head of Google in China, said at a TechCrunch event back in 2016.

Even two years ago, the potential was evident, with Lee explaining that teaching, medicine and healthcare were obvious areas for disruption.

Perhaps the main difference between the state of AI development in the U.S. and China is that, in America, much of the technology is being developed in big tech firms like Amazon and Google. In China, however, companies like SenseTime and its rival Megvii (which develops the Face++ platform) are independent entities that operate with the financial backing of giants like Alibaba.

09 Apr 2018

Here’s the new trailer for Solo: A Star Wars Story

Yesterday afternoon, word started spreading that a new — and perhaps final — trailer for Solo: A Star Wars Story would land this evening. Sometime during American Idol, they said… of course without saying exactly when.

Turns out: now.

You can see it here:

I had my doubts after the last trailer, but I’m loving this one. Donald Glover as young Lando is just perfect.

The trailer roll-out for Solo started a bit later than most expected, presumably because of the relatively late director swap out. Ron Howard took over the film’s metaphorical cockpit in June of last year — about four months into production — after the original directors Phil Lord and Christopher Miller (also the directors of The Lego Movie, Cloudy with a Chance of Meatballs, and 21 Jump Street) were taken off the project. Howard’s changes, while still mostly a mystery, reportedly involved weeks of reshoots.

Howard tweeted at the end of March that his edits were “locked” – as of this morning, meanwhile, they were mixing the musical score.

Whatever Howard ended up changing, the film will almost certainly end up as yet another point of debate amongst the fanbase. When you’re tinkering with the backstory of a character like Han Solo (and Lando!), with fans that have watched the originals a billion times, contention is a given.

09 Apr 2018

Tencent and education startup Age of Learning bring popular English-learning app ABCmouse to China

Tencent is teaming up with Los Angeles-based education company Age of Learning to launch an English education program for kids in China. ABCmouse, Age of Learning’s flagship product, has been localized and will be available as a website and an iOS and Android app in China, with Tencent handling product development, marketing, sales and customer support.

The new partnership extends Tencent’s involvement in ed-tech, which already includes a strategic investment in VIPKID, an online video tutoring platform that connects Chinese kids with English teachers and competes with QKids and Dada ABC. ABCmouse, on the other hand, uses videos, books and online activities like games, songs and stories to help kids study English.

The Chinese version of ABCmouse includes integration with Tencent’s ubiqutioius messenger and online services platform WeChat, which now has more than one billion users, and its instant messaging service QQ, with 783 million monthly active users. This makes it easier for parents to sign up and pay for ABCmouse, because they can use their WeChat or QQ account and payment information. It also allows families to share kids’ English-learning progress on their news feeds or in chats. For example, Chen says parents can send video or audio recordings of their children practicing English to grandparents, who can then buy gift subscriptions with one click.

Though you probably haven’t heard of it unless you have young kids or work with elementary school-age children, Age of Learning has built a significant presence in online education since it was founded in 2007, thanks mainly to the popularity of ABCmouse in schools, public libraries and Head Start programs. Two years ago, Age of Learning hit unicorn status after raising $150 million at a $1 billion valuation from Iconiq Capital.

Jerry Chen, Age of Learning’s president of Greater China, says there are more than 110 million kids between the ages of three to eight in China and the online English language learning market there is “a several billion dollar market that’s growing rapidly.” He points to a recent study by Chinese research agency Yiou Intelligence that says total spending on online English learning programs for children will be 29.41 billion RMB, or about $4.67 billion, this year, and is projected to reach 79.17 billion, or $12.6 billion, by 2022.

The localization of ABCmouse will extend to the design of its eponymous cartoon rodent, who has a more stylized appearance in China. Lessons include animations featuring an English teacher and students in an international school classroom and begin with listening comprehension and speaking before moving onto phonics, reading and writing. Tencent-Age of Learning products will also include speech recognition tools to help kids hone their English pronunciation.

In an email, Jason Chen, Tencent’s general manager of online education, said that the company “reviewed several companies through an extensive research process, and it became clear that ABCmouse had the most engaging and effective online English self-learning curriculum and content for children. Age of Learning puts learning first, and that commitment to educational excellence made them a perfect fit for our online English language learning business.”

 

08 Apr 2018

Amazon isn’t to blame the Postal Service’s woes, but it will need to innovate to survive

In the past week, the 45th president has Twit-tacked Amazon three times and, potentially, cost their shareholders over $40 billion in market cap or just more than one Greek economy.

At the heart of our current President’s criticism is a claim that Amazon is making a mint and leaving a *failing* U.S. Postal Service holding the bag. It’s not a new critique from the Twitterer-in-Chief, but it is one that’s worth unpacking given the crippling effect technologies have had on the USPS — where email is even more reliable than a carrier undeterred by “snow nor rain nor heat nor gloom of night.

Is it failing?

“Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer?” This infantile question was posed by President Trump on Twitter in December 2017. While it’s not clear what exactly prompted Trump’s criticism,  the tweet did spark a wave of debate as to whether the Postal Service is indeed failing and, if so, whether Amazon is to blame.

First of all, it’s true that the Postal Service is “losing billions of dollars a year” – $2.7 billion in 2017, to be more precise. In fact, the Postal Service has been losing money for over a decade. And the USPS does have a curious relationship with Amazon. While competitors UPS and FedEx charge the e-commerce giant $7-$8 per package, USPS only charges for $2 for the service. However, as with most stories, that of USPS is more complicated.

USPS and Amazon

The USPS-Amazon relationship may be seen as “dumb” by the 45th president, but to many it’s a piece of shrewd business on the part of the Postal Service. As of 2017, Amazon was USPS’s biggest customer, and an intelligent way for the independent agency – that traditionally made its money by having a monopoly on first class mail – to get a piece of the increasingly profitable package delivery pie. It’s not the first time that the Postal Service has tried to muscle its way in on the growing package delivery industry. Back in 2010, the entertainment company Netflix accounted for $600 million from its DVD subscription service. Of course, the Netflix DVD delivery service is fast fading and being replaced by on-demand streaming; and Amazon look to be preparing their own delivery service. It seems that the USPS may have to prepare itself to be jolted by another wave of disruption.

One-Two Punch of Email and a Financial Crisis

The Postal Service’s first major battle against the age of innovation came with the rise of email, and it didn’t take the beating that you might expect. Despite the fact that in 2002 the majority of Americans used email, the Postal Service still managed to make profit between 2003 and 2006. During this time, people were still writing letters, sending greetings cards and, perhaps most importantly, bills were still sent by post.

It wasn’t until the 2007 global financial crisis that the Postal Service took a hit that, arguably, it still hasn’t recovered from. After thousands of businesses suffered from the crisis, they started to cut back on expenses wherever possible, and one such place was mail. Back in 2000, nearly two-thirds of bills were delivered by USPS, and the total revenue from bill payments in this year was estimated at between $15 and $18 billion. Between 2006 and 2010, USPS volume fell by 42 billions pieces, with 15 billion of those being caused by electronic billing.

And if that weren’t enough, the rise of social media further confounded USPS’s problems. Between 2010 and 2014, postcard volume fell by 430 million. As more and more people began logging into Facebook, Instagram and Snapchat to send virtual Christmas cards and birthday wishes, fewer people were sending mail, and therefore fewer profits for the agency that had had its fair share of knocks in the 21st century.

Photo courtesy of Flickr/André-Pierre du Plessis

Innovating within a Risk-Averse Government

To suggest that those in charge at the Postal Service have been idly watching as new technologies disrupt and threaten the agency would be unfair.

It is an organization that looks to engage with the latest technology. For instance, in 2014, it released a white paper on the impact that 3D printing could have on the industry and how the Postal Service could benefit; and again in 2015 it released another on the Internet of Things. Both papers were clearly commissioned with a degree of prescience, being published before either technology had begun to pervade the public consciousness.

Unfortunately, though, forward-thinking initiatives such as these have been blocked before they can enter the action stage. USPS’s status as a quasi government entity may have its benefits, such as a monopoly on all first class post, but in return Congress has a say in how the agency is run. It can outline the products and services provided by the Postal Service, and set its prices. However, unlike other Federal agencies, USPS receives no funding, and hasn’t done since 1982.

In 2016, the Postal Service wanted to make the most of its relationship with Netflix and other video rental business, but the proposal was blocked by the Postal Regulatory Commission. In 2013, USPS attempted to end Saturday letter delivery – a change that would have saved $2 billion a year. The proposal was blocked by Congress. And in 2016, it was ordered to lower the cost of postage stamps from 49 cents to 47 cents, resulting in a $2 billion annual cost.

At the heart of the troubled USPS-Congress relationship lies the problem. A big existential question mark hangs over the Postal Service’s head: what exactly is it? With 2.7 million people working for it, it’s the biggest employer in the US (Walmart, by comparison had 2.2 million as of 2017). It also delivers to remote locations that private companies like FedEx and UPS won’t touch. For these reasons, it exists out of necessity. There are also those who want to see the Postal Service fully privatized or even abolished, believing it to be an outdated relic of nostalgia.

Understandably, those within the Postal Service are equally unsure as to what they should be. On one side, they’re being encouraged to innovate and drive up profits, and on the other they’re being blocked making the changes necessary.

As it stands, the USPS motto “neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds” still holds true. Their resilience through massive shifts in consumer behavior is nothing short of remarkable.

They are at the service of the American people, and so it’s up to them to decide what they want it to be. Although it may be true to say the Post Office is losing money thanks to Congress and cutting Amazon a more-than-fair deal, its importance is far more nuanced and complex than he gives it credit. And without the Postal Service, it would be more than just Amazon that would be losing out.

As the world moves to more and more virtual communication channels it will be fascinating to see USPS evolve.