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The Model Y will be a test of Tesla’s popularity

Elon Musk often says the key to Tesla’s success is how people talk about the company. “Great word-of-mouth is why Model 3 is the best-selling electric car, despite no advertising or paid endorsements,” he wrote in September 2018. The company repeatedly admits this, too — in its most recent 10-K filing with the SEC, Tesla said word of mouth, along with media coverage, “have been the primary drivers of our vehicle sales leads,” which is how and why the company eschews traditional advertising.

But Tesla, still coming off a volatile 2018, has recently made changes in the name of cost-cutting that put this basic tenet of the company in some jeopardy. With Tesla closing many of its stores and shifting sales to an online-only model, the company will also be more reliant on good word of mouth than ever before. If any damage to its reputation has been done, it might become obvious soon, because Tesla is about to reveal — and potentially start taking preorders for — its second mass-market car on Thursday, the Model Y compact SUV.

While it’s not due until 2020, the early reactions to the Model Y will be crucial, both from customers and from investors. And right now, even before the event, it’s a fairly known quantity. The new compact SUV will share about 75 percent of the same components as the Model 3. It will cost about 10 percent more than the Model 3, Musk said, and will offer slightly less range and similar performance.

In its first full year of production, the Model 3 became the best-selling EV in the world, and helped save Tesla from death. With demand for that car potentially fading in the US, and car sales expected to have a down year, the Model Y could eventually help pick up the slack while generating cash for Tesla in the short term. But that only happens if Tesla’s “great word-of-mouth” is still potent.

Elon Musk’s The Boring Company Unveils Test Tunnel In California
A Tesla Model X riding through the tunnel in Los Angeles that was carved out by The Boring Company, one of Elon Musk’s other companies.
Photo by Robyn Beck-Pool/Getty Images

2018 was a rollercoaster year for Tesla, from Musk trying to take the company private, to being sued by the Securities and Exchange Commission for securities fraud related to that effort, to the CEO smoking pot on Joe Rogan’s show — all while the company tried frantically to get Model 3s out the door in vast quantities.

But the wild ride is apparently far from over.

Tesla started 2019 by announcing layoffs and abruptly killing its referral program. For years, Tesla had given customers a referral code that they could then pass along to other potential new buyers. The more people who bought Tesla cars using your code, the more perks you could get, from free charging at the company’s Supercharger stations, all the way up to a free second-generation Roadster.

The referral program was “adding too much cost to the cars, especially [the] Model 3” though, Musk said in January. So he killed it.

The decision was mostly met with indifference, even mild encouragement from major Tesla boosters. If anything, it served as an example of how the company’s supporters could respond favorably to a surprise change, even if it involved something that many of them directly benefited from.

A more recent decision sparked more passionate responses. Tesla announced at the end of February that it was finally ready to make and sell the long-awaited $35,000 Model 3, an affordable electric car that was part of Musk’s original “master plan” for the company, published in 2006. Closing most of the company’s stores and switching to a completely online sales model was how Musk was able to finally achieve this goal, and it also allowed Tesla to lower the price on its other cars.

Normally, that might be seen as a good thing. But many customers who purchased Teslas before the price drops felt jilted.

One of the most vocal critics was comedian Chris Titus, who complained to his 125,000 Twitter followers on March 2nd about how his wife bought a Tesla two days before the prices dropped. “@elonmusk lost a loyal customer,” Titus wrote. “[T]he people that supported you, praised you and cared about you [sic] dream got boned.”

Anger about the price cuts bubbled up in China, too, which is the world’s largest market for electric cars. After Tesla cut prices on all its models there, a number of owners protested at the company’s store in the Hunan Province capital city of Changsa. The upset owners wrapped the store in a banner that apparently translated to “don’t buy now, buy tomorrow at a discount.”

Meanwhile, another set of owners protested outside a Supercharger station and a store / service center in Taiwan following the price cuts.

Even Fred Lambert, the editor in chief of Tesla-boosting blog Electrek, criticized Tesla’s abrupt pricing change. “Tesla’s pricing structure makes them look like amateurs,” he wrote on March 4th.

Then there was the curious situation in February, where Tesla held a call with reporters to discuss the news of the $35,000 Model 3. The call was not made public, which rankled investors, because Musk shared details that they said were material to the company’s stock price. (For example, Musk announced on that call that it was unlikely Tesla will turn a profit in the first quarter of 2019.)

Many in the investor community complained about this decision, especially traders who are betting against the company, known as “short sellers.” But one noted booster of Tesla also spoke out. Gali Russell, the founder of financial internet talk show HyperChange TV (and the YouTuber that Musk infamously turned to during a quarterly call with Wall Street analysts last year after complaining about “boring bonehead questions”) said on Twitter that the move was “super frustrating,” and said it “completely [went] against democratization of information and financial markets.” This time, Musk capitulated, telling Russell that it was a “mistake,” and Tesla posted a recording of the call to its website shortly after.

Much of this could be taken as cranks simply voicing their displeasure on Twitter. But there is some data backing up the apparent change in sentiment around Tesla. In an Axios-Harris poll of 18,228 adults conducted between November and January, Tesla’s ranking slid across a number of categories. It dropped from being the 14th most trusted company out of 100 to 46th. The company’s “character” ranking fell from 7th to 57th, and its “ethics” ranking slid from 5th to 56th.

Musk’s capricious nature is also wearing thin with some shareholders. The recent impulsive decisions, and especially the resulting blowback, were enough to make Alex Chalekian, the CEO of investment advisor firm Lake Avenue Financial, sell his shares in Tesla.

“That’s not good PR. You’ve got to remember, this is their whole company. They don’t advertise,” Chalekian said in a phone interview with The Verge.

Chalekian, who says he put a deposit down for the Model S “right away” when he saw the concept unveiled in 2009, says he bought shares in the company when they were still trading at around $30.

But in the last few months, he became worried by the number of executive departures and erratic announcements. The recent backlash made him feel like Tesla’s “aura” is in danger. “I do love driving my [Tesla]. Don’t get me wrong. I’ve loved it for years. But if now you start to get a new generation of car owners that are out there and are upset — they’re not going to be helping you with your future sales,” he says.

Russell agrees that Tesla botched the communication of the store closings and subsequent price drops in an interview with The Verge, calling them “sudden and not explained well.”

That said, Russell doesn’t think upset customers have a serious basis for complaints. “They all bought the product at the price they paid because they thought it was a good value, and now the company’s dropped the prices and it’s an even better value,” he says. “I understand the frustration, but if the biggest problem a company I invest in has is that customers are so frustrated because the prices are dropping, that’s a testament to the pace of innovation of the company.”

Tesla partially reversed course earlier this week when it announced it would halt the store closings. But that, in turn, will also raise prices again. Musk has said customers have until next week before all of Tesla’s cars (except the $35,000 base Model 3) will cost 3 percent more.

The Tesla website’s teaser for the Model Y unveiling event.
Image: Tesla

A true test of the impact of all this consumer whiplash could come when Tesla unveils the Model Y on Thursday. If Tesla follows the same playbook it used for the Model 3, the company will likely start taking pre-orders for the Model Y soon after the unveiling.

But while the Model 3 quickly racked up hundreds of thousands of preorders (and hundreds of millions of dollars) in in the weeks after it was unveiled in 2016, there’s no guarantee that the Model Y will be met with the same enthusiasm. There are already signs that demand for the Model 3 has tapered off in the US, too, where Tesla’s vehicles are no longer eligible for the full federal tax credit for EVs. The Model Y will be slightly more expensive, while competition in the electric SUV space is mounting quickly. And with fewer stores, it will rely more heavily than ever on Tesla believers to spread the good word.

These factors have some Wall Street analysts skeptical. ”A Model Y announcement so shortly after the $35k [Model 3] suggests that consumer reaction toward the $35k Model 3 may not have been as strong as the company had hoped,” RBC Capital analyst Joseph Spak wrote in a note last week.

Morgan Stanley’s Adam Jonas wrote this week that Tesla is “undergoing multiple transitions with sales momentum slowing, shift to online channels, management changes, setting a foot into China and the early Model Y unveil among other developments.”

That said, SUVs currently account for 49 percent of the US car market, according to JD Power, and more than half of customers who bought a vehicle in the $30,000 to $50,000 price range purchased an SUV. So even if customers are angry, or just less sure than ever about what Tesla’s next moves might be, the numbers could (maybe even should) still work out in the Silicon Valley automaker’s favor — something Ross Gerber, president and CEO of investment advisor Gerber Kawasaki and a shareholder of Tesla, agrees with.

“The amount of people who can afford a car geared toward an income of $50,000 is exponentially greater than if you’re only making cars for people who make $120,000,” Gerber tells The Verge. “So you open up a market that is just enormous.”

New Chrome Extension Aims to Make the Web Less Toxic

Jigsaw, which is owned by Google parent company Alphabet, on Tuesday released Tune, an experimental Chrome extension that lets users hide the types of comments they consider toxic. It is available for Mac, Windows, Linux and the Chrome OS.

Tune builds on the same machine learning (ML) models that power Jigsaw’s Perspective API to rate the toxicity of comments.

Tune users can adjust the volume of comments from zero to anything goes.


Jigsaw's Chrome extension Tune

– click image to enlarge –


Tune is not meant to be a solution for direct targets of harassment, or a solution for all toxicity, noted Jigsaw Product Manager C.J. Adams in an online post. It’s an experiment to show people how ML technology can create new ways to empower people as they read discussions online.

Tune works for English-language comments only, on Facebook, Twitter, YouTube, Reddit and Disqus. Comments in other languages will be shown above and hidden below, a threshold that’s predefined.

Tune’s ML model is experimental, so it still misses some toxic comments and incorrectly hides some nontoxic comments. Developers have been working on the underlying technology, and users can give feedback in the tool to help improve its algorithms.

Fear and Loathing Over Tune

“We have no idea how to police the Internet, so consequently we’re going to turn it over to a robot,” quipped Michael Jude, program manager at Stratecast/Frost & Sullivan.

“You don’t know what it’s doing with the data it collects. You don’t know who built it. You’re giving up the freedom to make your own determinations,” he told TechNewsWorld.

“If one decides to utilize social media, one is tacitly agreeing to access a certain amount of dissent, hate speech, whatever,” Jude pointed out. “As a famous comedian once said, you pays your money and you takes your chances.”

How Tune Works

Tune is part of the Conversation-AI research project and is completely open source, so anyone can examine the code or contribute directly to it on Github.

“The more granular the APIs are and the more open the controls, the better developers can tune the Conversational AI algorithms to generate less false positives and false negatives,” said Ray Wang, principal analyst at Constellation Research.

However, Tune will require an increasing amount of data for fine-tuning. Users have to sign up to provide access to the Perspective API.

Comments read are not associated with users’ accounts or saved by Tune. Instead, they are sent to the Perspective API for scoring and then deleted automatically once the score is returned.

There are two ways of submitting feedback: by clicking About>Feedback, where the account’s user ID is included in the feedback report; or by submitting a correction to how a comment is scored. For corrections, the text of the comment and the user’s answer are stored for training the ML system, but the submission is not linked to the user’s ID.

Free Speech Issues

As with earlier attempts to manage or control online comments, Tune is likely to spark a debate about freedom of speech.

“In the movie Zorro, the Gay Blade, a woman told the military commander of a town who tried to stop her from protesting that the rules of the town were that anyone could say anything they liked in the town square,” Jude recalled.

“The woman is right!” the commander responded. “She can say anything she likes. Arrest anyone who listens.”

Still, “some seem to believe that free speech means you have to listen to what they say,” remarked Rob Enderle, principal analyst at the Enderle Group.

“Even though that’s incorrect, it doesn’t reduce their belief that their own words should be inviolate,” he told TechNewsWorld.

The Tune technology “is a good-faith way to address a real problem, and it will learn and improve over time,” maintained Doug Henschen, principal analyst at Constellation Research.

“Tune puts the control in the hands of the individual,” he told TechNewsWorld. “The comments are still being posted, and therefore aren’t curbed, but users are choosing not to see them. That’s their right.”

With bots and spam factories churning out fake content, Tune “is the answer to taking back some control to enable free speech,” Constellation’s Wang noted.

Tune “lets you get rid of the trolls who have a disproportionate voice,” he said. “It will also curb folks who put out the same content multiple times in comments.”

The algorithms appear to be working well for Google on its sites that accept comments, Wang noted, and “releasing the tech to others is a good first step.”

Tune’s Threat to Social Media

Social media is all about eyeballs, and the more controversial a statement is, the more eyeballs it will draw to a page.

That raises the question of whether the use of Tune might spark a backlash from social media sites.

“I don’t think social media sites would damn their own users for trying to control what they see,” Constellation’s Henschen said.

They might in fact see Tune as helpful, because “content owners do have an obligation to try to address hate speech and the like, but doing so at scale is expensive,” he noted.

Perspective can be fooled through clever use of language, but Google resolved some of the early issues that arose.

However, another group of researchers last summer published a paper that said all proposed detection techniques could be circumvented by adversaries automatically inserting typos, changing word boundaries, or adding innocuous words to speech. They recommended using character-level features rather than word-level features to make ML speech detection models more robust.

The Tune ML model is still immature, so “I expect to see a lot of issues like this crop up,” Enderle said. Once it has matured, however, it “should be able to deal with these efforts to compromise it effectively enough to make gaming the system a waste of time.”


Richard Adhikari has been an ECT News Network reporter since 2008. His areas of focus include cybersecurity, mobile technologies, CRM, databases, software development, mainframe and mid-range computing, and application development. He has written and edited for numerous publications, including Information Week and Computerworld. He is the author of two books on client/server technology.
Email Richard.

If you think Facebook has no competition, just ask Telegram

Telegram claims it gained three million users during Facebook, Instagram and WhatsApp outage.
Telegram claims it gained three million users during Facebook, Instagram and WhatsApp outage.

Image: Chesnot/Getty Images

Facebook is often seen as an untouchable behemoth in the social media realm, a site so big that no competitor can come close. But if you trust Pavel Durov, the founder of messaging app Telegram, even a simple stumble from Facebook like a few hours of outage can have pretty serious consequences for its user base. 

On Thursday, shortly after Facebook, Instagram and WhatsApp came back online, Durov said on his Telegram channel (via TechCrunch) that “3 million users signed up for Telegram within the last 24 hours.”

The figure is notable even for Facebook, which boasts more than 2.3 billion monthly active users. Durov never directly ties the Facebook/Instagram outage with the influx of users to Telegram, but he does throw a jab at Facebook by saying that Telegram has “true privacy and unlimited space for everyone.”

Image: Stan Schroeder/Telegram

Telegram is a very different app from Facebook and Instagram; its closest competitor is Facebook’s messaging app WhatsApp, which also suffered from the outage on Wednesday and Thursday. 

Durov left his first project, the social media site Vkontakte (an immensely popular Russian Facebook clone), after hinting that he hadn’t been able to keep his customers’ data private from the Russian authorities. Shortly after that, he left Russia altogether and started privacy-focused Telegram, which had more than 200 million active users in March 2018. Durov often publicly calls out his competitors, including WhatsApp, for not doing enough to protect their users’ privacy. 

Telegram made headlines in January 2018 when a leaked document detailed the company’s plans to launch a massive initial coin offering (ICO), to the tune of $1.2 billion. But after reportedly having secured $1.7 billion in private funding, the company called off the public token sale. 

As for Facebook, Instagram and WhatsApp, all appear to be working normally now, though perhaps with a small portion of users checking out the grass on the other side of the fence. 

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Samsung is working on ‘perfect full-screen’ devices with selfie cameras under the display

Samsung is working on making the entire front of its phones a screen, with no need for bezels or a camera cutout of any kind. Yonhap News Agency reports that the company’s vice president of its display R&D group, Yang Byung-duk, said that “though it wouldn’t be possible to make (a full-screen smartphone) in the next 1-2 years, the technology can move forward to the point where the camera hole will be invisible, while not affecting the camera’s function in any way.”

The comments come less than a month after Samsung announced its latest flagship, the Galaxy S10, which is the company’s first phone to have a “hole-punch” cut out from its display for the selfie camera. Yang called the S10’s Infinity-O display a “milestone” for the company, but suggested that Samsung eventually plans to place the selfie camera under the display itself, removing the need for any cut out or pop-up mechanism.

This isn’t the first time Samsung has spoken about its plans to produce an all-display device. In a presentation given in October last year, the company said it was working on four interrelated technologies to maximise screen sizes; under-display fingerprint scanners, under panel camera sensors, haptic display technologies, and in-display speakers (similar to the LG G8’s vibrating OLED screen).

Despite Samsung’s ambition, it’s become a rarity for the company to be first to market with new technologies such as these. Multiple Chinese-made phones included in-display fingerprint sensors before the feature made its way to Samsung’s flagship, and Honor’s View 20 was the first phone to feature a hole-punch display (although, as Yang notes, the S10 was the first to do it with an OLED panel). Vivo and other Chinese handsets have also produced full-screen devices by moving the cameras around back (and adding a rear display), adopting slider designs, or by creating pop-up mechanisms that hide the selfie camera inside the phone.

Yang doesn’t give any further details on when Samsung’s “perfect full-screen” phone might be ready, except to say it won’t be ready within the next one or two years. Whether that means they’ll be ready in three or thirty years is anyone’s guess.

China is about to overtake America in AI research

In July 2017, China’s government published an ambitious policy paper, outlining how the country would become the world leader in AI by the year 2030. But by some measures China has already succeeded in this goal — a decade ahead of schedule.

A new study shows that China’s output of influential AI research papers will soon overtake that of the US, the world’s current number one in AI research. The finding suggests that China’s plan to expand its AI capabilities with the help of generous government investment in both educational facilities and private industry is paying off.

In terms of sheer volume of AI papers published each year, China surpassed America back in 2006, but critics have pointed out that quantity does not necessarily equal quality. China’ has well-documented problems with scientific fraud, and in AI there is a stereotype of Chinese research as incremental. For these reasons, some have suggested that counting the sheer number of papers is not necessarily a meaningful metric for AI achievement.

But new research from the Seattle-based Allen Institute for Artificial Intelligence (AI2) accounts for this by measuring not just the number of papers, but how often they are cited, a good shorthand measure for influence in the wider community.

After analyzing more than two million AI papers published up until the end of 2018, the Allen Institute found that China is “poised to overtake the US in the most-cited 50 percent of papers this year, in the most-cited 10 percent of papers next year, and in the 1 percent of most-cited papers by 2025.”

The researchers found that America’s share of the most-cited 10 percent of papers declined from a high of 47 percent in 1982 to a low of 29 percent in 2018. China’s share, meanwhile, has been “rising steeply,” reaching a high of 26.5 percent last year.

Two graphs from AI2 showing China and America’s share of top 10 percent and top 1 percent of most-cited papers.
Credit: Allen Institute for Artificial Intelligence

Oren Etzioni, a professor of computer science and CEO of the Allen Institute, told The Verge that this research “refutes” the stereotype of Chinese contribution to AI as incremental.

“Clearly, the quality of Chinese papers is high and getting higher,” said Etzioni over email. “Of course, one might argue that citation statistics could be influenced by more Chinese scientists citing each other, but if you look at the list of Best Paper Awards you’ll see several Chinese entries there which represents the absolute cream of the crop.”

The Institute’s does note, though, that when it comes to the number of Best Paper awards in computer science — a somewhat “idiosyncratic” measure which depends on the ebb and flow of trends and interests in various fields — the US is still “firmly ahead.”

These findings should make for interesting reading for the US government. Although analyzing research is only a single metric when it comes to measuring the overall AI output of any country, academics and industry experts have warned for years that America needs to do more to maintain its lead.

Last month, President Trump signed an executive order intended to spur investment in AI, but the order was vague, with few concrete goals, and included zero new funding for research. Other countries’ national AI strategies have included government investment ranging from $20 million (in Australia and Denmark) to nearly $2 billion (in South Korea).

More importantly, Trump’s initiative failed to address what many see as the biggest challenge in the field: attracting global talent. The number of top-flight AI researchers is limited, and the current US approach to immigration is the opposite of what’s needed.

As these new figures from the Allen Institute show, the development of cutting-edge AI is now very much a global affair, and isolationism will not help anyone. “We need more funding,” says Etzioni, “and even more importantly, the administration has been discouraging talented students from coming and staying in the US.”