Tech News: Virtual Real Estate Values Plummet in the Metaverse

Late last year, speculation around the metaverse fed into a crazy market for virtual real estate. Six months later, values have dropped 80%. What happened? Plus an update on Apple's battle with Ericsson and how some researchers were able to defeat a next-generation encryption strategy. 

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Episode Transcript

Speaker 1 (00:04):
Welcome to tech Stuff, a production from I Heart Radio.
Hey there, and welcome to tech Stuff. I'm your host,
Jonathan Strickland. I'm an executive producer with I Heart Radio.
And how the tech are you. It's time for the
tech news for Thursday, August four, twenty twenty two. And
first I thought I should follow up with the story

(00:25):
that I talked about a little bit on Tuesday, namely
that Apple has recently filed an emergency motion with a
court in East Texas arguing that it's human rights have
been violated in Columbia. And if you didn't hear that story,
you're pricing what the heck. So let's give a quick
overview of what is going on. So, Apple's products that

(00:48):
use five G make use of patented technology, and Ericsson
is the company that owns those patents. Apple doesn't want
to pay the licensing fees for the as patents from Ericson,
so it stopped. Ericson has reached out to several countries
asking the court systems of those countries to ban the

(01:08):
sale of any five G Apple products because those products
are infringing upon Ericson's patents. And it worked in Columbia.
So Apple filed an emergency motion about that, and then
a Texas judge said, look, just because you don't like
what's happening doesn't make this an emergency. You've got a
court date coming up, We're you're supposed to hash this

(01:29):
out with ericson. Just wait until the court date and
don't pull these shenanigans again. It's not an emergency if
you just want to have an earlier court hearing. Then
Apple filed another emergency motion, this time alleging that it's
human rights have been violated under the Universal Declaration of
Human Rights. Anyway, the bit I didn't talk about on

(01:51):
Tuesday was has been I hadn't even heard about yet,
is that this really is a bigger picture thing. It's
not just this one thing that that is absurd just
on the face of it. We have to look at
how absurd everything is. And according to Apple, Ericsson is
demanding a higher licensing fee for these five G technologies

(02:12):
than they should, that the price tag is exorbitant, it's predatory,
and that Apple doesn't want to deal with that, and
that was why Apple was going to take this whole
matter to court to hash it out, to determine if
those licensing fees were too high see Apple argues that
the five G patents that Ericson holds should be grouped

(02:34):
under fair, reasonably and non discriminatory or FRAND terms f
r A and d FRAND as a concept that's usually
brought up in anti competitive disputes. The argument is that
some patents are so important for general tech applications that
the holder of the patent should be compelled to license

(02:56):
them fairly to other parties, and refusing to do so
is akin to holding a monopoly over that technology. So
Apple is saying Ericsson is asking for way too much money,
which is why they originally asked to settle that dispute
in court. But then so so they go and do that,

(03:16):
right they get They get a court date which is
for several months from now, It's like at the end
of this year. But in the meantime, while that court
date is off in the distance, Ericson then stepped up
the pressure by getting Apple's stuff banned from sale in Columbia.
Ericson kind of did a blanket approach, and Columbia said, okay,
so it actually happened in Columbia. I don't think it

(03:38):
happened anywhere else. So In other words, what Apple is
saying is that Ericsson has overstepped, rather than waiting for
the court case to actually find out if in fact
the licensing fees are egregiously high or if they are fair. Further,
Apple is implying that Ericson knew that the court was
going to find that the fees are too high and

(04:00):
then decided to throw this Hill Mary pass to get
countries to ban the sale of Apple five G products. Uh,
and that this was a sign that Ericson was trying
to out muscle Apple, like to say, hey, if you
don't pay our licensing fees, you're not selling anything at all,
and that's gonna hurt your bottom line way more than
paying us what we're asking for. So Apple filed the

(04:22):
emergency motion in an attempt to get that original court
date moved up so that this could be resolved faster.
And the courts resent that because the courts say, this
is an emergency. That's not what emergency emotions are for.
That's not an emergency. Yes, you know there's this ongoing
dispute between these parties, but that doesn't meet the standard

(04:46):
necessary for it to be an emergency. So the courts
have so far declined to acquiesce to Apple's requests, and
I feel like that extra context was needed because my
report on Tuesday, I feel like that was really harsh
against Apple specifically. Honestly, I don't feel like there are
really any good guys in this one. I feel like

(05:09):
Ericsson's movements were not great. I feel like Apple's movements
were also not great. So I'm not willing to say
one party is definitively the bully and the other ones
definitively the victim, but rather to say like, no one
here has behaved particularly well, except perhaps for the judge
who keeps telling folks to stop putting up nonsense in

(05:32):
their courtroom. Now it looks like we're in another big
real estate bubble burst situation, which probably is something you
didn't expect me to talk about on a Tech Stuff episode.
But in this case we should actually call it a
fake estate situation instead of real estate situation. Also, I
should add I totally stole fake estate from a sub

(05:53):
creddit at some point that's not mine. I wish it were.
I wish I had thought of fake estate instead of
estate now. Anyway, the the virtual real estate I'm talking
about is stuff that's related to the metaverse. So last year,
specifically around November, when Facebook changed its name to Meta Metaverse,

(06:14):
hype was really on the rise. It was skyrocketing, and
we saw a lot of ridiculous land rush like behavior,
some of it ranging around stuff like n f T s,
which really had peaked earlier, but still we're a big
topic of conversation, and also to things like cryptocurrency. And

(06:35):
then we saw people purchasing virtual plots of land on
something that doesn't actually exist yet. By that's something, I
really mean a fully realized metaverse. The virtual blocks of
land can exist on actual platforms, meaning there may be
servers out there that host the virtual landscape that people

(06:55):
are purchasing. I'm not suggesting that the the virtual plots
don't exist at all, that it's just an idea and
not you know, on a server somewhere, but you can't
really use them for anything other than kind of acting
like a placeholder, at least not as far as the
metaverse is concerned, because there is no metaverse yet. According
to the Information the Journal of the Information, prices for

(07:19):
virtual lots have dropped by eighty percent over just six months. Now.
There are several different ways we can look at this.
One would be to engage in schaden freuda. If you
happen to be someone who does not care about virtual
land grabs, you didn't participate, you have no stake in that,
and you saw people going bonkers over it, maybe you're

(07:40):
feeling kind of pleased with yourself and a little happy
at their you know, misfortune as they see the investment
they make dropped by. Another reaction is to feel a
little sympathy for people who are swept up in the
excitement of the metaverse through no fault of their own. Really,
I mean, there was so much hype. I mean, they
didn't lacked the use of critical thinking, so I guess

(08:03):
you could argue that was some what their fault. But
when you are in a hype cycle, it can be
hard to see reality. And some folks just got carried away,
and my heart does go out to those And then,
of course there's a range of other reactions you could have.
I personally find myself going back and forth between being
snarky schadenfreuderman and being kind of feeling a lot of

(08:25):
compassion for the people who were hit by this. And
we've seen a lot of related markets take a few
hits this year, right, n f T s were kind
of the canary in the coal mine, because even before
we got to the whole meta stuff, people were already
starting to lash back against n f T s. I
feel like n f T S came too hard, too quickly,

(08:49):
at too many different people, and the reaction was rejection,
especially in places like the video game community. That was
that was kind of a litmus test for how certain
population would reject the n f T value proposition. I
think there was a really enthusiastic investor community around n
f t s, but a lot of the rest of
the world just said, Yo, this is kind of stupid.

(09:10):
And now, to be clear, I am not saying n
f T s are inherently stupid. I think there can
be legit uses for n f T s. However, I
will say I think n f T speculation is stupid.
I think that treating it like a commodity is stupid.

(09:31):
I don't think ultimately that's the right way to use
n f t s, but that was the way that
that got the spotlight, and we saw such ridiculous examples
of it, and to this day it's still happening. It's
just happening on a smaller community. Right, we also saw
cryptocurrency values tank and then virtual real estate prices tank.

(09:52):
And we've seen this play out in grand scale with Meta. Right.
If you look at Meta and you look at how
Meta has to communicate it's approach to developing a metaverse,
that's kind of, again an early example of the difficulties
that are across the entire landscape. You know, Zuckerberg actually

(10:15):
tried to get ahead of that fairly early on. He
cautioned investors that the creation of a fleshed out metaverse
was going to take many years and a ton of investment,
billions upon billions of dollars of investment. But I think
shareholders get antsy when they just start to see how
big the costs and losses are out of the reality

(10:35):
labs division at Meta. Now does that mean does all
this mean that virtual real estate is dead in the water,
that we're not going to hear about ever? Again? No,
I don't think so. I think what we're seeing is,
you know, what someone might call a market correction, or
that we've seen the hype peak and now we're on
the downside slope of the hype cycle. But eventually, I

(10:58):
think we're gonna see things level out and then climb
at a more sustainable rate. It seems pretty clear that
we are going to get something that we might call
a metaverse. We might get several some things that we
call metaversees, and that real estate is going to matter
when those somethings emerge, right, because if people are actually

(11:21):
going to these metaverses to interact with one another, having
a a position, a stance within that virtual space will
be really important because otherwise you will miss out on
any kind of interaction you could have there. So if
you're a business, then yeah, I guess it does make
sense to think about this. I just don't think it
made sense to pour enormous amounts of money in an

(11:45):
unproven and and not ready market so quickly. Uh So,
I figured it will take a little bit longer before
things start to look stable enough to support a robust
virtual real estate market, but we will get there, I'll so.
As for me, I'm just gonna live in a real
world hut somewhere, just the real world, not the virtual world,

(12:07):
and I will remain blissfully ignorant of all the virtual
mansions and sky palaces and underwater villain layers and whatever
else folks might make in the metaverse. Y'all have fun. Uh,
it's not for me, alright. One thing that is for
me are several more news stories. But before we get
to those, let's take a quick break. All fifty states

(12:36):
attorneys general here in the US, so the attorneys general
for each of our fifty states. It's a confusing thing
to even have to say. They have all united to
fight a common enemy robo calls, specifically, in this case,
robo calls coming from foreign numbers. So a few years
ago we saw a real movement to curtail robo calls

(12:58):
and spam calls within the United States. The government would
require carriers to incorporate tools designed to detect and prevent
these kinds of calls, to create databases to help UH
cut back on robot calls and spam calls. And those
requirements first applied to the major carriers because they held
the bulk of the responsibility. They also had the most

(13:21):
capability to respond quickly, and then the smaller carriers were
given a bit more time to comply. They were still
expected to comply, they just didn't have to do so
at the same speed as the major telecommunications companies, and
now this new push is to task what are called
gateway carriers. These are telecommunications companies that field calls from

(13:44):
outside the country, so foreign calls that are coming into
the United States, and they are tasked with the the
responsibility of determining whether or not the calls are legal.
If the calls are not legal, then they should be blocked.
Josh Stein, the Attorney General for North Carolina and one
of the leaders of this effort, said that the team

(14:06):
plans to hold phone companies responsible for allowing a legal
traffic to pass over US phone signals. And you might
wonder how all this is going to be managed, And
I don't know, but I am in favor of having
fewer fishing and spam calls hit my phone, So I
hope whatever plan is put into place works. SpaceX says
that it's next generation of Startling satellites, which the company

(14:28):
uses to provide Internet service to satellite customers, will be
quote invisible to the naked eye when at their standard
operational altitude end quote. This move is in response to
the global astronomy community, which has grown concerned that huge
networks of small satellites will block views of the Cosmos
and interfere with terrestrial observations of the universe. And I

(14:51):
think this is Startling getting ahead of any regulations that
would otherwise force the company to change how it does business.
As to how Starlink has achieved this all, I don't
have any details. If I had to guess, I would
say that this next generation of Startling satellites are going
to be a little bit smaller and may be placed
in a slightly higher orbit than earlier satellites, and that's

(15:13):
how they are quote unquote invisible to the naked eye.
According to UK supply chain management company Fleet Assist, electric
vehicles on average are twenty two percent less expensive to
service compared to similar internal combustion engine vehicles. The firm
says that some factors that likely contribute to this lower
cost of maintenance are things like electric vehicles have fewer

(15:35):
moving components, so there's less stuff that wears down through
normal use. On average, it takes thirty three percent less
time to repair or maintain e vs than I sees
for comparable jobs, so that means labor costs are also
down and e V parts are frequently less expensive than
I see parts. Again because the design tends to be

(15:57):
simpler with fewer moving parts. However, Fleet Assist warrens that
we might not see this go on forever, right, We
might not see that EVY expenses are lower than I
see expenses at the garage, because there's a thought that
garages are going to increase their prices in order to
maintain profitability. Like the garage is not going to say, well,

(16:21):
cost less for us to do the work, so I
guess we'll just make less money. They might say it
costs less for us to do the works, less charge more,
so we can make more money. So while EVIS would
continue to be easier to work on compared to I
c ES, the advantage from a cost to consumer perspective
might dwindle over time. Streaming digitally has asked an interesting question,

(16:42):
what happened to HBO max original movies that just plane disappeared?
The piece mentions several Warner Brothers films that were on
HBO Max but aren't there anymore. And HBO is part
of Warner Media, which now in turn is owned by
Discover and just in the interest of full disclosure, once
upon a time, Discover was my corporate overlord. This was

(17:03):
several years ago, however, and all of this has led
to speculation that Discover is planning on making some big
changes to its streaming strategy, which we should hear more
about today. The company is going to hold its earnings
call for Q two two. Analysts expect that we should
hear at least something about a new unified streaming service.
Maybe Discovery Plus will lump in HBO Max underneath it

(17:27):
and it'll appear as a tab. There's also an expectation
that we're going to see a massive change in production
that anything that would overlap between HBO and Discover that
is like you know, reality television and stuff that's going
to be smoothed out so that Discover becomes kind of
the reality TV side and HBO becomes the more fictional side.

(17:47):
So it could be that some reality series that are
under HBO go bye bye. Also, it sounds like we're
going to move away from producing expensive content just for
streaming platforms. One big example of that is the film
bat Girl. It was supposed to be released to HBO Max,
It was in post production. It has now been shelved

(18:10):
probably forever at least indefinitely, and the reason for that
is David Zaslov, the CEO of Discover, doesn't feel like
the reward of streaming this content is worth the expense
of producing it. This is expensive stuff, and if you're
gonna make expensive stuff, you should darn well be releasing

(18:30):
it to theaters and getting money there. So I think
this is a case where Zaslov said, Yeah, it's not
worth pouring more money into bat Girl to fix it
because it had been testing poorly reportedly. Uh, let's just
not worry about it. Let's cut it as a loss.
There's also a general feel that Zaslov is going to

(18:51):
be holding some layoffs later on down the road and
and kind of whittled down the organization. Uh. I know that.
I've seen a lot speculation on that. I'm kind of
curious to see what happens. There's a lot of HBO
content I actually really like, and I'm kind of worried
about whether or not such stuff will continue to be produced.

(19:13):
A lot of it ends up being produced for the
cable channel as well as the streaming service, so we'll
have to see. Zaslovs a cable guy. That's where he
comes from, and that's where he's done the bulk of
his leadership so maybe I don't know. I don't know
how to predict. I do worry about some of the
smaller UH departments and companies that Warner Media owns, and

(19:38):
whether or not those are long for this world. I
suspect we might see some of those gets sold off
in the months to come. Well, I've got a couple
more stories that I want to talk about, but before
we get to those, let's take another quick break. Chinese

(20:01):
mega company Tencent wants to increase its steak in game
developer UBI Soft or you be soft, whichever pronunciation you prefer.
I'll probably go back and forth between the two, because
I'm a mercurial imp. Now. I did a couple of
episodes about ubi soft last year. I kind of detailed

(20:22):
the history of the company as well as how it
recently had to go through our reckoning due to allegations
of a corporate culture where harassment and worse had been
tolerated for years, really really ugly stuff. The company has
kept a fairly low profile since then, with a lot
of layoffs and and firings of people who were associated

(20:45):
with that scandal. Anyway, they are now looking at ten
Cent coming in and buying up more of the company. Now.
Tencent already owns about five percent of ubi Soft and
reportedly wants to increase its steak in ownership so that
it becomes the largest single shareholder in the company. Ten
Cent also has a stake in a lot of different companies,

(21:06):
and particularly in video games, and reportedly one reason for
this move to increase its hold on Ubisoft is that
ten Cent wants to focus more of its resources on
global markets, and one potential reason for that is that
within China there's been a bit of a crackdown on
the video game industry, with the Chinese government taking the

(21:28):
stance that games can potentially be harmful and thus should
be regulated. So that might explain why ten Cent is
wanting to take this this extra steak. No telling yet
if this is going to happen. The family that Ownscent
of Ubisoft would have to agree to sell it, so
we'll have to see if that happens, but maybe Tincent

(21:51):
will make an offer that they can't refuse. We'll have
to see. Finally, one of the scary realities of the
oncoming quantum computing era is that the encryption methods we
rely upon today will at some point become useless now,
for this to happen, you first have to design to
write algorithm for a sufficiently powerful quantum system. But if

(22:15):
you were able to do that using quantum computing, you
could break standard encryption so quickly that it would be trivial.
So another way to think about this is that at
some point these systems will be powerful enough and have
the correct algorithm necessary to create the equivalent of a
skeleton key that can unlock every luck in existence, and

(22:38):
there will be no more secrets or something. So knowing this,
computer scientists for years now have been working on developing
new encryption systems that, in theory, would foil quantum systems.
So this is like the next generation of encryption. To
keep systems safe even in an era of quantum computing,

(23:00):
this means it requires a totally different approach than the
way a lot of encryption works right now. And one
of those approaches, called psych s i k E, which
by the way, is short for super singular isogeny key encapsulation,
was looking pretty promising. The U s Department of Commerce
has a National Institute of Standards and Technology. That's the

(23:23):
that's the entity in the United States that UH that
credits standards in tech. They held a competition, and the
competition had the goal of creating the next generation encryption
schemes capable of holding off quantum superiority and PSYCH and
made it through several stages of the competition. It was
doing really well, and then some researchers, using a perfectly

(23:46):
ordinary standard computer with a single processing core, found a
weakness in psych's algorithm design. Now I am not going
to pretend that I understand what happened and as sure
as heck, and not going to try and describe it
because I would just muck it all up. But I
will say that using a mathematical approach, the researchers were

(24:08):
able to predict and then retrieve encryption keys from the algorithm.
So this would be like getting hold of any key
coming out of this system and being able to make
an instant copy of it. Uh, at least for that
particular encryption method, So it is not secure. The PSYCH
creators said they were surprised by the researchers approach. This

(24:29):
was something they hadn't anticipated, so they were kind of
surprised to learn about the weakness of their design. They
hadn't looked at it from that perspective. And I think
of this kind of like if you were to build
something that has really strong strength against compression, really strong strength,
real well spoken there, Jonathan, anyway that you could compress

(24:50):
it and this thing would hold up really well. But
someone ends up coming after your your structure using a
shearing motion, and it turns out your structure is not
secure against shearing. Yeah, it was really strong against compression,
but not strong against this other kind of attack, and
the whole thing crumbles. That's kind of what we saw here.

(25:10):
I think of this as actually a great story. It's
one of the illustrates the making robust solutions is hard
to do, and that we need to put them to
the test or else we find ourselves dependent upon a
flawed system that's sooner or later someone's going to figure
out how to exploit. So it's better that we find
out something isn't going to work early on, rather than

(25:32):
not figure that out, implement it, and then find out
the hard way later, especially when you think that if
someone is really clever and they exploit a system, they
might not let anyone know about that until things have
really reached a catastrophic point. So this was a good thing.
It does, however, illustrate the challenges we face moving forward
in the quantum era. And that's it for today's episode.

(25:55):
Hope you're having a great day a great week. If
you have suggestions for future topics, reach out me. One
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(26:18):
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