Australia’s top spy says Chinese tech is too good to be allowed near Canberra’s key infrastructure and that’s a hard truth China’s state media will find harder to spin

Melbourne, Australia train station

  • Australia’s chief spy says Chinese telecoms are a threat to critical infrastructure and that’s why they were banned from Canberra’s growing 5G network.
  • That news may not come as a surprise to China, but the Ministry of Commerce and the Global Times expressed some shock, confusion, and hurt this week.
  • The problem China faces is this: it has built an incredibly elaborate and successful technocracy with state-embedded digital brands like WeChat, but uses them to help monitor its own population. Those efforts are likely to make it difficult for China to gain the trust of other countries.

The top spy in Australia has explained why Huawei and ZTE have been barred from the country’s 5G network and China is unimpressed.

Mike Burgess, the director-general of the Australian Signals Directorate, said in Canberra on Monday that the ban on Chinese telecom firms like Huawei Technologies and ZTE was in Australia’s national interest and would protect the country’s critical infrastructure.

It is the first time the nation’s chief spy has publicly explained the move since August when Australia made the call  to block the Chinese telecom giants from supplying equipment to the nascent Australian 5G network.

Burgess said that the stakes “could not be higher” and that if Australia used “high-risk vendor” supplies then everything from the country’s water supply and electricity grid to its health systems and even its autonomous and semi-autonomous vehicles would be compromised.

In response, a miffed, but totally unsurprised China on Tuesday again called on Australia to drop “ideological prejudice” and “create a level playing field for Chinese companies doing business in the country.”

Australia is a member of the so-called “Five Eyes” intelligence-sharing alliance alongside Canada, New Zealand, the UK, and the US, and while Australia is also a close trading partner, there is certainly an understanding to follow the US on sensitive intelligence issues that can compromise the alliance.

So that obviously puts the kibosh on allowing any access to critical infrastructure for any companies aligned with the Chinese state.

And since the Chinese government has been leveraging the state’s position, role and function within its growing portfolio of world-beating mega-tech companies, the decision out of Canberra to err on the side of caution — and  Washington — would have surprised precisely no one.

But that didn’t stop China from responding the way it did.

In a restrained retort from the English language tabloid, The Global Times, China accused Canberra of being part of a US-led global conspiracy to leave Chinese tech companies behind. 

“Australian officials and think tanks in recent days continued to raise security concerns over Chinese companies’ operations in the country and have made accusations about China stealing its technologies, in what Chinese analysts say is an attempt to, in collaboration with other Western powers, derail China’s steady rise in telecom and other technologies,” the Global Times noted. 

Foreign Ministry spokesman Lu Kang said at a press briefing on Tuesday, that “the Australian side should facilitate the cooperation among companies from the two countries, instead of using various excuses to artificially set up obstacles and adopt discriminatory practices.”

Read more: China has started ranking citizens with a creepy ‘social credit’ system — here’s what you can do wrong, and the embarrassing, demeaning ways they can punish you

Back in August Marise Payne, the Australian foreign affairs minister, said the move was not targeted specifically at Huawei and ZTE, but applied to any company that had obligations clashing with Australia’s national security.

In response, China’s Ministry of Commerce released a statement chilling in its brevity: “The Australian government has made the wrong decision and it will have a negative impact to the business interests of China and Australia companies.”

China is Australia’s largest trading partner and 30% of Australian exports end up in the Middle Kingdom, it’s a bit of a fraught relationship when the US is also the isolated Pacific nation’s most important and closest military ally. 

Huawei is the largest maker of telecom equipment worldwide, and in Australia for that matter too. But its sales here are still a fraction of the broader economic ties between the two countries, and it is China that has historically been unwilling to open much of its own telecom markets to foreign companies.

Describing Australia’s ban on Chinese telecommunication companies as “discriminatory” and based on manufactured “excuses,” China on Tuesday called on Australia to drop its “ideological prejudice” and “create a level playing field for Chinese companies doing business in the country.”

In the annals of majestic propaganda, it’s low-key bluster coming as it does from the world’s first digital dictatorship, as Business Insider UK’s Alexandra Ma describes here.

It’s just that not getting your tech-giants invited to global infrastructure parties is one of the unforeseen costs of setting up the greatest, most powerful intelligence-collection systems ever devised.

That success makes it hard for the Chinese government and its state-owned media to credibly look surprised, hurt, or bewildered when such a decision is made.

Read more: Australia’s former foreign minister let slip how casually easy it is for China to tell another country what to do

China’s vast data-collection platforms — WeChat alone has more than a billion users — are harvesting ever-deeper and more granular material on behalf of the state.

That’s great news for China’s state machinery when it comes to monitoring the population, but it’s a double-edged sword too, and wielding it has its price.

According to Danielle Cave, a senior analyst at the Australian Security Policy Institute’s International Cyber Policy Centre, requiring Chinese citizens, organisations and companies to support, cooperate with and collaborate in intelligence activities, of course, comes at a cost to China.

“And that cost will be the international expansion plans of Chinese companies—state-owned and private— which have been well and truly boxed into a corner.

“The CCP has made it virtually impossible for Chinese companies to expand without attracting understandable and legitimate suspicion. The suspicion will be deeper in countries that invest in countering foreign interference and intelligence activities, Cave wrote earlier this year in The Strategist.

Most developed countries, including Australia, fall into that group and will come to fear the potential application and reach of China’s technical successes. 

But then again, there are a good few states out there that could be willing to risk being watched by China, if they can use China’s tech to watch their own populations.

For now the Global Times insists that “such accusations are baseless.”

“They are in line with the Australian government’s overall approach toward China — a tougher approach that (is) derived from suspicion about China rise’s (sp) that they perceive as threat, a fantasy to contain China’s further development and ideological prejudice against China.”

It might be infuriating, but taken from this perspective it is a mark of sheer awe and respect for China’s technocratic achievements that Australia has balked at letting Huawei loose inside its critical networks.

SEE ALSO: Australia’s former foreign minister let slip how casually easy it is for China to tell another country what to do

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These 3 charts show why there’s more good days ahead for e-commerce — and more bad times for traditional retailers (AMZN)

jeff bezos

  • Traditional retailers have been struggling, in part due to competition from online rivals.
  • That competition is getting tougher; online stores are continuing to gain share against their brick-and-mortar counterparts, Morgan Stanley details in a new report.
  • Worse, the pace of online retail’s share gains is increasing, according to the report.

Traditional retailers have already lost billions of dollars worth of sales to online rivals such as Amazon.

Unfortunately for them, things may soon get worse.

Online stores are continuing to steal sales from their brick-and-mortar counterparts. The bad news for traditional retailers, is that e-tailers’ market share gains are increasing, according to a new report from Morgan Stanley.

“We expect e-commerce to continue to accelerate,” Morgan Stanley analysts Kimberly Greenberger, Brian Nowak, Simeon Gutman, Vincent Sinisi, and Lauren Cassel said in the report.

American consumers are likely to spend about $2.6 trillion on what Morgan Stanley calls “core” retail products, which excludes building materials, cars, gasoline, and those sold outside of actual stores. Of that amount, about 20% will be spent online, according to the report. That’s up from about 18% last year and just 12% in 2014.

But e-commerce’s share will be even higher next year, hitting 22.4% of retail sales, according to Morgan Stanley. Overall core retail sales are only expected to grow only about 1% next year, much slower than e-commerce is expected to grow. That means online retail’s gains will largely come at the expense of brick-and-mortar stores.

E-commerce's share of US retail spending, according to Morgan Stanley

The pace is increasing

That’s bad enough, but the bigger problem for brick-and-mortar retailers is that the pace at which online stores are gaining share in the retail market has been increasing in recent years.

Read more: Amazon has spooked its investors — these 4 charts show why its growth is slowing

Earlier this decade, e-commerce was gaining about one percentage point of market share each year. In 2013, for example, its share went up about 1.13 percentage points — or 113 basis points — to about 11% of retail sales. In 2014, it rose another 1.1 percentage points.

But in 2016, it gained about 2 percentage points of market share. This year, Morgan Stanley expects it to gain 2.3 percentage points and then to add another 2.4 percentage points next year.

E-commerce retail market share gains, chart from Morgan Stanley

Perhaps most worrisome for retailers, e-commerce sales tend to spike in the fourth quarter. The holiday period tends to be the most important time of year for retailers, because it’s when they typically see the lion’s share of their sales. The fourth quarter can often be the key factor in whether a retailer posts a profit or a loss for the year.

Online sales saw a big boom in the fourth quarter last year. The portion of total core retail sales accounted for by e-commerce vendors jumped more than four percentage points. Because of that rise, e-commerce sales in the holiday period hit nearly 21% of core retail sales — more than three percentage points higher than they accounted for the whole year.

Morgan Stanley is expecting a similar rise this year, forecasting that online sales will account for 23.3% of core retail sales this holiday season.

E-commerce market share gains by quarter 2016 to 2018, chart from Morgan Stanley

That could spell bad news for traditional retailers, many of which are heavily laden with debt, have closed slews of stores, and have already seen slowing sales.

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Google will use your Roomba’s house map to improve your smart home

The company behind the Roomba robot vacuum, iRobot, has announced a partnership with Google that will allow the tech giant to utilize the autonomous vacuum’s ability to digitally map its user's home.

Using a combination of photos and spatial data, the iRobot Roomba i7+ is able to create a detailed floorplan of a home, allowing its users to create cleaning schedules or issue specific room-based commands via the integrated Google Assistant functionality.

Google hopes to leverage this map data in order to make the user’s smart home more “thoughtful”. While specific functionality hasn’t been detailed, some potential use cases given include a much easier setup process and more intelligent automation.

For instance, once your connected products have access to your home’s floorplan, they’ll be able to ‘figure out’ if they are in the kitchen, the living room and so on. This could make it quicker to set up a connected light globe, door lock and more on a companion app.

Google knows where you live

Naturally, there are some concerns to be had over one of the world’s biggest data-mongers also gaining access to a detailed map of your home, but Google promises this isn’t as sinister as it sounds.

Google’s director of smart home technology, Michelle Turner, told The Verge that the data “doesn’t help current Google products” and “isn’t getting fed into some larger morass of Google information”, which implies that it won’t be used for the company’s ad-targeting network.

While the map created by your Roomba gets saved to iRobot's servers, the low-res photos the droid takes never leave the device itself. Regardless, you won't be forced to share your floorplan with Google as the option is completely voluntary.

from TechRadar – All the latest technology news

iPhone X and iPhone 8 get Apple’s controversial processor throttling feature

Apple began rolling out iOS 12.1 yesterday, adding some great features like group FaceTime calls and over 70 new emoji. Hidden within the excitement, however, is a release note that mentions the Cupertino firm has added its controversial performance throttling feature to the iPhone 8, the iPhone 8 Plus and the iPhone X – something the tech giant earlier said would likely not be necessary.

This feature, which made headlines through the end of 2017 and well into 2018, uses an algorithm to reduce the performance of an aging iPhone to protect the electrical components inside and prevent the device from prematurely shutting down.

Losing memory

When the 2017 flagships launched last year, Apple said that the “models include hardware updates that allow a more advanced performance management system that more precisely allows iOS to anticipate and avoid an unexpected shutdown”. 

However, according to the iOS 12.1 release notes, the new update “adds a performance management feature […] for iPhone X, iPhone 8 and iPhone 8 Plus”. Apple’s support page has also been updated with the same language.

There’s a silver lining, though, as Apple allows users to disable the feature, which was included in the iOS 11 release. If you aren’t a fan of your year-old iPhone’s performance being throttled, head to Settings > Battery > Battery Health and check the message below Peak Performance Capability. Note that you’ll see a clickable “Disable” option only if your device’s battery isn’t able to cope.

Image: Apple

While adding the performance throttling feature was a necessary move, according to Apple, to future-proof iPhones, the company faced a series of class action lawsuits and was fined €5 million in Italy for keeping the feature under wraps till it was exposed by Geekbench

At least now Apple is being a bit more upfront about it, and we won’t be surprised to find the newly launched iPhone XS, iPhone XS Max and iPhone XR join the list further down the line.

[Via The Verge]

from TechRadar – All the latest technology news

Henry Cavill is bewitching in first official clip of Netflix’s Witcher series

Almost two months ago, it was announced that Netflix's upcoming TV adaptation of The Witcher books had finally found a super leading man in Henry Cavill, who's recently been joined by actresses Freya Allan as Ciri and Anya Chalotra as Yennefer.

Today, the streaming service has given us our first official look at the former Man of Steel in full costume as Geralt of Rivia. Lasting a succinct 23 seconds in total, the short clip features Cavill in what appears to be a costume and makeup test set against a black background. 

The actor walks slowly walks into frame, looks straight into the camera, and then proceeds to take a drink from a flask – a potion perhaps? 

Fan reactions to the short video have been mixed, with many commenters bemoaning the quality of the actor's wig and his young, clean-shaven appearance. 

It's worth noting, however, that Netflix's adaptation of The Witcher will reportedly be closer to the original source material by Polish novelist Andrzej Sapkowski, which follows a much younger version of Geralt than the one featured in the video game series from developer CD Projekt Red.

Currently in the pre-production phase, there's still plenty of time for the fantasy show's creators to fine-tune the actor's hair and makeup. We'll know more once the series officially heads into production in the coming months.

from TechRadar – All the latest technology news

The investor behind Thread and Chargemaster is looking to raise $100 million

Thread Team (Ben Phillips, Kieran O'Neill, Shaunie Brett)

  • Startup backer Beringea plans to raise up to £80 million ($100 million) in new funding.
  • Beringea is a long-established investment company in the UK and the US, and has backed startups including men’s fashion service Thread and electric car charging company Chargemaster.

Beringea, which has backed men’s clothing startup Thread and electric car charging firm Chargemaster, plans to raise up to £80 million ($100 million) in new capital by issuing new shares.

The investment firm runs two publicly listed funds in the UK, known as venture capital trusts (VCTs), which invest in fast-growing startups and which any investor can put money into. This is slightly different to traditional venture capital funds, which are closed to direct public investment and have limited lifecycles.

The firm plans to raise the funding from December for its two VCTs listed on the London Stock Exchange, adding to its current $700 million (£549 million) under management across the US and the UK.

Beringea managing partner Stuart Veale said the company had an initial target raise of £60 million ($77 million), but would consider another £20 million ($26 million) depending on demand.

Read more: A mysterious Chinese fund that promised £600 million to UK startups fired its CEO and there’s no sign of the cash

Beringea’s portfolio of startups includes Chargemaster, which provides charging points for electric cars and was acquired by petrol giant BP in June for £130 million. It also backed online watch retailer Watchfinder, acquired in June by Swiss luxury goods retailer Richemont. More recently, Beringea backed Thread, a popular app that helps men buy clothes tailored to their particular taste.

Veale said Brexit uncertainty had not impacted Beringea’s deal flow and, while there is no guarantee the firm would hit its target, the company had successfully raised millions in previous years.

“We’re seeing a strong flow of new investment opportunities, we’re definitely up on where we were last year,” he said. “There is always competition for good investments, and we continue to see a really strong flow… We’re still pretty confident.”

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Investors are worried about Amazon — these 4 charts show why its growth is slowing (AMZN)

Jeff bezos

  • Investors are concerned about Amazon’s growth rates.
  • Sales growth in the company’s core e-commerce has slowed and the company warned that it could post disappointing revenue results for the holiday quarter.
  • Amazon is running into the “laws of large numbers,” Morgan Stanley analyst Brian Nowak said in a report Wednesday.
  • The company is so dominant in so many areas that it’s finding less and less room to grow, he said.

Amazon’s extra-large size may finally be catching up with it.

The tech giant has seen slowing revenue growth in its core online retail business in recent quarters. Last week, it reported disappointing overall sales for the third quarter and warned that its fourth-quarter results might fall far shy of Wall Street’s expectations.

The problem the company is running into is that it already dominates the e-commerce market, particularly in the US, and there isn’t a lot of room left to grow, Morgan Stanley analyst Brian Nowak said in a research note on Wednesday.

The “laws of large numbers are likely playing a role here,” he said.

Amazon already accounts for a huge portion of US e-commerce

One area where you can see that factor coming into play is in Amazon’s market share, Nowak said. The company has consistently gained share over time and now accounts for about 30% of all US ecommerce spending, he estimated.

Read more: Amazon’s stock falls 9%, as disappointing revenue, guidance seem to outweigh standout Q3 earnings

But in recent years, the rate at which it’s gained share has slowed markedly. It’s on track to gain about a percentage point this year and likely will do about the same next year, according to Nowak. By contrast, between 2014 and 2015, its share went from 22% to 25%, according to his research.

Amazon's share of the US ecommerce market, according to Morgan Stanley.The influence of Amazon’s size can be seen in a related area — its contribution to the overal US retail market. The company alone accounted for about 69% of all the growth in the retail market — online and offline —last year, according to Nowak. It’s on track to account for about 72% of that growth this year.

But again, the company is so big and already contributing so much, that it’s finding it more difficult to grow from here. It was easier in the past. The portion of overall retail growth accounted for by Amazon ballooned in recent years; it was at just 17% in 2014, according to Nowak’s research.

Portion of US retail growth attributable to Amazon, according to Morgan Stanley

Prime growth is slowing down

The influence of Amazon’s size can also be seen in data that’s much more particular to the company itself, Nowak said. Perhaps most importantly, it can be seen in the growth in US membership in its Prime subscription program.

Between the end of 2014 and the third quarter of last year, the percentage of US households that were Prime members more than doubled from 23% to 50%, according to Nowak. That portion jumped 10 percentage points in the nine months from January 1 to the end of September 2017.

By contrast, in the last year, they’ve only nudged up two more percentage points.

Portion of US households with a Prime account, according to Morgan Stanley research

The slowing of Prime membership additions is important to the company’s overall growth, because on average, Prime members tend to spend 2.7 times as much on the site as do non-members. The fewer Prime members it adds, the less Amazon’s revenue gets boosted by such big spenders.

Nowak sees evidence of Amazon’s growth becoming a factor in one final area — the number of times its mobile app is being downloaded. Among e-commerce apps, Amazon’s is the top dog in terms of downloads by US users; it saw 20.8 million downloads in the three quarters of this year.

But its number of downloads was down by 1 million in that time period compared with the amount it tallied in the same period a year ago. Meanwhile, Walmart, which has the no. 2 e-commerce app, gained ground. Its app was downloaded 13.7 million times in the first nine months of this year, which was up by 4.7 million downloads from the same period last year.

US downloads of e-commerce mobile apps for the last three years, from Morgan Stanley

“We see Amazon continuing to drive dollars online … but expect [its North] American retail revenue growth to decelerate,” Nowak said in the report.

Nowak has an overweight rating on Amazon’s shares.

Investors have been growing nervous about Amazon’s growth

Amazon’s growth rate has been a big concern among investors and analysts since it released its third-quarter results last Thursday. Although the company’s profit blew away Wall Street’s expectations, it missed analysts’ revenue expectations by about $500 million. Worse, it warned that its sales in the fourth quarter will come in somewhere between $1 billion and $7 billion, below what Wall Street had projected.

Amazon’s shares have been hammered since then. Even after gaining back 4% on Wednesday, they’re still down more than 10% since the close of trading right before the report.

But the recent report and selloff may have simply amplified earlier fears. Amazon’s stock has fallen sharply since hitting a peak in early September and topping $1 trillion in market value. In the eight weeks since then, the company lost about $250 billion in market capitalization.

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