Xiaomi and the Uncanny Valley of Adult Content

The concept of “Uncanny Valley” is a fascinating one. Postulated by a Japanese roboticist in the 1970s, it posits that as manmade creations like dolls and robots start resembling real humans, there comes a point where we get repulsed by their appearance. Here’s what it looks like.
One of the key theories behind why the Uncanny Valley exists is because it lies at the boundary between categories. Human or non-human. Alive or dead. Natural or manmade. 

Chinese smartphone giant Xiaomi is going to face something similar over the next few weeks and, possibly, months. I’m going to call it the Uncanny Valley of Adult Content. And feedback loops play a huge role in it.

It started with an explosive revelation about many of Xiaomi’s smartphones on 30 April by a security writer at Forbes, Thomas Brewster. 
When he looked around the Web on the device’s default Xiaomi browser, it recorded all the websites he visited, including search engine queries whether with Google or the privacy-focused DuckDuckGo, and every item viewed on a news feed feature of the Xiaomi software. That tracking appeared to be happening even if he used the supposedly private “incognito” mode.
The device was also recording what folders he opened and to which screens he swiped, including the status bar and the settings page. All of the data was being packaged up and sent to remote servers in Singapore and Russia, though the Web domains they hosted were registered in Beijing. Exclusive: Warning Over Chinese Mobile Giant Xiaomi Recording Millions Of People’s ‘Private’ Web And Phone Use, Forbes
Xiaomi put out a “live” blog post in response. Its India head, Manu Kumar Jain, put out a statement and a YouTube video in response to what he called an “INCORRECT NEWS ALERT”
Three things stand out when it comes to Jain’s responses. 
First, the fact that neither he nor Xiaomi actually deny collecting data related to the websites its customers visit, the searches they perform or even their actions in private or incognito modes. Instead, simply that all the data it collects is encrypted and anonymised.  
Xiaomi famously pledged to limit its hardware margins to 5% ahead of its IPO. Which meant that it staked its future and growth on making more money from services. Services like advertising. 
To enable that, most users have actually allowed Xiaomi to collect all this data. Which is why Jain’s statement contains the following line:
“It does not collect any user data that the user has not explicitly given permission or consent to.”   As far back as 2017, Xiaomi was touting a cross-platform advertising ecosystem based on its own customer data.
Owning the upstream data generators in both hardware and software, Xiaomi is able to collect data from numerous sources within its own system and then analyse the customers’ needs from these big data sources. This clearly sets the company apart from other martech competitors. 
Not only does it collect data 24-7 from the hardware and firmware on its devices, it has a sharp ability to identify different marketing scenarios. Xiaomi hardware has sensors, such as gyroscopes, GPS and barometers, which can be stacked to identify more accurately marketing scenarios within consumers’ lifestyles, including geolocation and other information as they engage in sports and other activities. With more IoT devices expected to come online—last year, Xiaomi released a web-linked rice-cooker—the picture of the consumer lifestyle will start to take on more definition. The Xiaomi data pivot, Campaign
India’s internet is rife with how-tos riddled with stories and videos about how Xiaomi’s customers can opt out of its tracking and advertising. It’s not easy.
But it’s the third aspect—the comments and responses from Xiaomi customers—that is the most fascinating part. Because it reveals the Uncanny Valley of Adult Content.
But why are so many of Xiaomi’s users angry at it for being shown adult content in their Xiaomi-made browsers in a post about Xiaomi’s furtive data collection from its phones? Perhaps because of this bit from the Forbes article.
When Forbes provided Xiaomi with a video made by Cirlig showing how his Google search for “porn” and a visit to the site PornHub were sent to remote servers, even when in incognito mode, the company spokesperson continued to deny that the information was being recorded. “This video shows the collection of anonymous browsing data, which is one of the most common solutions adopted by internet companies to improve the overall browser product experience through analyzing non-personally identifiable information,” they added. Exclusive: Warning Over Chinese Mobile Giant Xiaomi Recording Millions Of People’s ‘Private’ Web And Phone Use, Forbes
Users have been complaining about the presence of adult content and ads in Xiaomi’s browsers for years
But now they suddenly realize that—*gasp*—the reason they may have been targeted with adult content is because of their own browsing behaviour.
Users today are sophisticated enough to realize that they’re often targeted with ads because of their own profiles and behaviour. 
Xiaomi isn’t the first company to encounter this problem. Google faced it for years with YouTube’s India homepage, which often featured “soft” adult content even for new users. The reason most likely was YouTube’s algorithm displaying to most Indians the type of content that most Indians were watching.
Recommendations and targeting have been the domain of algorithms for years, whether it be for content (like YouTube) or advertising (like Xiaomi). Their feedback loops operate on the principle of giving a user more of what he or she already likes.
India used to be #3 in Pornhub’s country rankings till 2018, after which a government crackdown on some sites led it to fall to #12.
Two = Covid-19 lockdowns nearly doubling porn traffic from India.
Two = Xiaomi’s browsers showing adult ads and content.   The Forbes revelation just helped customers put two and two together. And it was uncanny.
No more cramped coach
  Ben   With airlines cramming as many people as they can into each flight to maximise revenue, keeping one’s distance in a plane is a challenge at the best of times. However, now, with social distancing being pushed by governments and industry bodies, the International Air Transport Association is recommending keeping flights a third empty.   This would allow airlines to fly while observing a form of social distancing. For instance, keeping the middle seat empty. But this could seriously hurt passenger load factor (PLF)—how much an airplane’s passenger carrying capacity is used. Flying at 66% PLF would translate to higher prices as airlines seek to break even and profit from flights. Low-cost carriers would be worst hit since they rely on cramming as many people as they can into flights.   Already, budget carrier Ryanair refused to fly if a middle seat is empty. PLFs of low-cost carriers are typically high. The PLFs for India’s top budget carriers hit between 93% and 84% in September last year. If budget carriers refuse to fly with the middle seat empty, this could be the lifeline that failing premium service airlines could grab onto.   For example, should AirAsia refuse to fly with the middle seat empty, consumers could then turn to Malaysia Airlines, which would be following this guideline. Similarly, Air India may benefit at the cost of low-cost carriers. This could be the key to attract customers to flagging national airlines. Likely, at a premium.   Your move Air India.
The blowback over buybacks

Jum
  Crisis-stricken airlines across the globe have begged for bailouts to preserve hundreds of thousands of jobs. In wealthy America, they asked for cash grants and low-interest loans. In the emerging market of the Philippines, they called for central bank guarantees so risk-averse commercial banks open up credit lines.   Any course of government action seems like a choice between evils.   Sure, airlines are crucial to jumpstarting economies once Covid-19 restrictions are lifted. However, the bailouts using taxpayers’ money would be easier to stomach if airlines had not spent their cash flow during boom years on stock buybacks. That’s money they could’ve set aside as buffer funds for times of economic shock.     Meanwhile, small businesses with thin margins and weeks-to-months of runway have rarely been able to access bank financing due to strict requirements like collateral.    The bailouts have revived criticism of stock buybacks, which are a popular way to return value to company shareholders.   When a company repurchases its stock from the market, the move shrinks its number of shares outstanding. Not only does this tend to pump up the stock price (law of supply and demand), it also means that every shareholder is entitled to a bigger chunk of the earnings payout.   While that’s just the nature of business, company executives who have been granted stock and stock options as perks through the years are said to have abused the practice to line their own pockets.   Here’s an example of the biggest home improvement products retailer:
On a conference call with investors in February 2018, Home Depot chairman and CEO Craig Menear and his team mentioned their “plan to repurchase approximately US$4 billion of outstanding shares during the year.” The next day, Menear sold 113,687 shares, netting US$18 million. The following day, he was granted 38,689 new shares, and promptly unloaded 24,286 shares for a profit of US$4.5 million. The stock-buyback swindle, The Atlantic 
According to Business Insider, three of America’s biggest airlines collectively spent US$33 billion buying back shares in the last seven years, which could almost cover the US$36 billion they need to pay employees for this entire year.
We don’t know the exact figure for airlines in the Philippines, but a quick Google search shows budget carrier Cebu Pacific revived a US$40 million buyback program in 2018 and announced another buyback in 2019. What’s surprising (err… eyebrow-raising): legacy carrier Philippine Airlines announced its own US$40 million stock buyback program that was to be financed by “retained earnings” in March, even as the Philippines was preparing to enforce a strict quarantine policy to quell Covid-19 cases.   The US has already approved a US$50 billion bailout for airlines—half in cash grants and half in low-interest rate loans. Yet to decide on local airlines’ plea, Philippino authorities may have no choice but to go for the lesser evil of credit guarantees. Still evil, though.   In the meantime, while postponing stock buybacks is what’s needed at this time, doing so would make the already volatile equities markets even more so. In the US, a research firm says corporate buybacks have been the net source of money propping up the market since the 2008 financial crisis
The Oracle has spoken   Savio
Even the stock buyback bonanza by airlines was not enough for the Oracle of Omaha to keep the faith. Warren Buffett has sold his firm’s stakes in four major US airlines, warning “the world has changed” for the aviation industry due to the coronavirus crisis. Buffett’s Berkshire Hathaway pulled out the $7 billion or $8 billion it had invested in Delta Air Lines, American Airlines, Southwest Airlines, and United Airlines—“even at a substantial loss.”
Real estate developers and the act of holding breath underwater
Vandana   Real estate developers in India are playing a game of “who blinks first?” with buyers. On Thursday, India’s top developers said they do not see property prices tumbling. This is contrary to normal logic. Wouldn’t a slowdown force them to lower prices to attract buyers?   No, they say.    And why not? The paucity of funds means projects will remain unfinished and, thus lower supply, is what they argue. This is contrary to various reports saying developers are sitting on a huge amount of unsold inventory.    How much? A cool Rs 3,70,000 crore.   So, if buyers are going to wait and watch, and sellers aren’t slashing prices, who will blink first? Developers will have no choice but to slash prices to get rid of the existing inventory and generate cash flow for their ongoing projects.   But India’s real estate sector has defied logic before.   Developers have been sitting on surplus inventory for the last couple of years. Yet, prices have not corrected to a level where demand would come gushing in. The house price-to-income (HPTI) ratio rose to 61.5 in March 2019 from 56.1 in March 2015, according to RBI’s residential Asset Price Monitoring Survey. A higher ratio means houses are less affordable. This time may be different though. HDFC Chairman Deepak Parekh says he expects prices to drop by 20%.
“The next six months are going to be extremely tough. You need liquidity. Get the cash flows coming by selling properties at whatever prices you get. Don’t sit on completed properties,” Parekh had said in a video call, attended by about 6000 developers. Coronavirus lockdown: HDFC’s Deepak Parekh says property prices may fall 20%; suggests measures for survival, Business Today
Cheap oil, cheap plastic

Nadine   Remember when, several days ago, Olina wrote about the resurgence of single-use plastic bags, because people think it’s safer than re-using the same cloth bag to go shopping?   The plastic trash mountain keeps growing. We’re not just adding bags, the Coronavirus is also holding up recycling across Asia because, in large parts, it’s dependent on human collection and sorting.   To make matters worse,
“Crashing oil prices could also see a glut of cheap virgin plastic flooding the market and reducing the competitiveness of recycled material.” Plastics pile up as coronavirus hits Asia recyclers, Nikkei Asian Review 

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