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1 big thing: The pitfalls of personalization

Netflix orginal series "Stranger Things." Photo: Netflix.

Concern over how Netflix tweaks promos for individual users highlights the challenges internet companies face when deciding just how much to personalize their services.

Driving the news: Stacia Brown, an audio producer and Netflix user, pointed out on Thursday via Twitter that it appeared Netflix was explicitly overplaying the role of black actors in her feed, leading her her to wonder if it was targeting customers based on race.

  • Further exploration through the thread revealed even more instances of relatively marginal black characters in movies and TV shows that shared a similar coincidence.

Why it matters: Netflix says its artwork personalization algorithms aren't based on race, ethnicity, gender or location, but on a user's viewing behavior, reports Axios' Marisa Fernandez.

  • However, it's hard to say if viewers' preferences on genres or even minority actors have been picked up by algorithms that then personalize promotional artwork.

The other side: Cindy Holland, VP of original series, said at the Television Critics Association’s summer press tour in July that "demographics are not a good indicator of what people like to watch” on Netflix.

  • "The artwork may highlight an actor that you recognize, capture an exciting moment like a car chase, or contain a dramatic scene that conveys the essence of a movie or TV show," per a Netflix blog post from 2017.

Yes, but: Sometimes the tension goes the other way. Facebook no longer lets advertisers exclude users based on demographics, in part to prevent discrimination in hiring or other areas.

  • It also removed the ability to target people based on whether they are interested in a same-sex romantic interest.

Our thought bubble: In many cases, that's clearly a good thing. Job listings that only target men would be bad, as would housing listings that seek to exclude people of color.

  • But what about a company that wants to boost its diversity by reaching out to folks with underrepresented backgrounds. What, for example, is the online analog to recruiting at a job fair at a historically black college?
  • And the restrictions can have other downsides. Groups that provide services to the LGBT community, for example, have said that removing the ability to target the people they serve makes their online advertising a lot less effective.

Bottom line: There aren't always easy answers here, but without a lot of forethought, it's easy to go wrong.

Go deeper: Read the full story here.

2. EU pushes U.S. over privacy pact

European data regulator Věra Jourová. Photo: Emmanual Dunand/AFP/Getty Images

U.S. officials have entered the second day of discussions with their European counterparts in Brussels over the status of the Privacy Shield agreement, which allows Europeans to file complaints about how U.S. companies are using their data, Axios' David McCabe and Shannon Vavra report.

Why it matters: U.S. companies prize the agreement because it lets them easily host the data of European citizens stateside despite the differing regulatory regimes on the two sides of the Atlantic. This is the first time the arrangement is being reviewed since Facebook’s Cambridge Analytica data scandal triggered a privacy reckoning in the U.S.

  • To satisfy European concerns, the Trump administration appointed an acting ombudsperson for the agreement and new members to a civilian privacy oversight board, known by the acronym PCLOB, which deals with law enforcement access to data.
  • The Federal Trade Commission recently settled with companies that made false claims about their involvement in the Privacy Shield certification process.

What’s next: On Friday, the group is expected to tackle "developments concerning the collection of personal data by U.S. authorities for purposes of law enforcement or national security," per the European Commission.

  • Although the administration confirmed an acting ombudsperson, the role remains technically unfilled, and Europeans are pushing for that role to become permanent and independent from the administration.
  • The newly appointed ombudsperson still serves in another role in the State Department.

The bottom line: Depending on how the talks go, the European Commission's concerns could be reflected in a formal report expected by the end of November.

3. Apple gears up for the holidays

Photo: Apple

Apple's mid-range iPhone XR goes up for pre-order Friday, while the company has scheduled an Oct. 30 event in New York to introduce more gear.

The details: The iPhone XR uses a lower-end screen technology and lacks some of the camera and other features of the Apple XS, but also comes with a less daunting price tag. It will hit store shelves next week, but pre-orders began at midnight.

Separately, Apple is holding an event in Brooklyn where the company is expected to introduce new hardware. The most likely candidate is an iPad that trades the physical fingerprint-reading home button for Face ID and an edge-to-edge screen.

  • Other possible new product introductions are a rumored MacBook Air replacement, an updated Mac Mini and the AirPower, which is a wireless charging panel that Apple teased last year but has yet to introduce.
4. Uber tests new on-demand labor service

Uber drivers could soon do more than shuttle passengers or food orders in their cars. The company is quietly testing a new service, Uber Works, for on-demand labor for businesses, according to the Financial Times.

The bottom line: After driving and food delivery, Uber wants to see if it can harness its massive labor pool for other purposes, Axios' Kia Kokalitcheva writes. It could also burnish its image with new lines of business as it prepares to go public likely next year.

  • Yes, but: Not all of Uber's seemingly natural new projects have worked out — it shuttered its e-commerce delivery service, for example.

Details: Uber has been testing the new project in Chicago, after a brief experiment in Los Angeles, according to the FT.

  • It’s pitching the service as short-term staffing and labor for other businesses, such as waiters for events.
  • The tests so far have not involved current Uber drivers, according to the report, which also notes that it could end up not being a full-fledged business.

Déjà vu: Uber is far from the first company to think of offering on-demand labor to other businesses.

  • For example, TaskRabbit offered a similar service years ago, which at one point accounted for 40% of its revenue, but eventually shifted its business customers to its main service.
  • Exec also aimed to provide on-demand help with errands and tasks to businesses, but sold that segment to rival Handy just 2 years later, reportedly for $10 million.   
5. Amazon Go homes in on San Francisco

It was only a matter of time before Amazon Go, the online giant's futuristic new cashier-free stores, made it to San Francisco. Amazon is slated to open its first store in the city’s Financial District, according to records obtained by the SF Chronicle.

Why it matters: After directly contributing to the decline of a number of brick-and-mortar stores and chains through the benefits of e-commerce, Amazon now wants to own physical retail, too — but with its own twist of being cashierless, Kia writes.  

  • Its other forays into physical retail include its purchase of Whole Foods and its chain of Amazon Books.

Not the first: A number of other startups are developing automated stores or tech to sell to retailers so they can automate on their own.

  • Standard Cognition and Zippin, for example, have already each opened a location in San Francisco.
  • Even WeWork has been testing similar tech at one of its San Francisco offices, where it hopes to make purchasing snacks easier for its tenants.

Yes, but: Some still have their doubts about Amazon Go

6. Take Note

On Tap

  • Preorders begin for the iPhone XR (see above).

Trading Places

  • Accel marketing and communications partner Larry Yu plans to leave the VC firm.
  • Harbor has hired Sujay Jaladi, formerly head of information security at Ripple, to be its chief information security officer.

ICYMI

  • Micron is buying out Intel's stake in a flash memory joint venture. (Reuters)
  • Square introduced a new terminal designed to process credit card and contactless payments. (Fast Company)
  • Atlassian shares fell after its quarterly earnings report amid a large loss the company attributed to recategorizing its debt. (MarketWatch)
  • PayPal topped quarterly sales and earnings estimates. (CNBC)
  • Android manufacturers will have to pay Google a surprisingly high fee in Europe to include Google’s Play Store and other mobile apps, according to documents obtained by The Verge.
7. After you Login

Even Pokémon are screaming in 2018.