Good morning, and welcome to Protocol Fintech. This Friday: the Collison brothers’ mistakes at Stripe, what fintech CEOs had to say about earnings, and the rise of ransomware payments.

Off the chain

In today’s newsletter, you’ll hear what fintech bosses had to say to Wall Street, but what they didn’t say is also pretty significant. PayPal’s CEO didn’t say the word “crypto” once in his call with analysts to talk about earnings. Robinhood mentioned adding new tokens in its release, but that was about it. Even Block mostly skipped over bitcoin, except to say trading volume was down in Cash App. Their customers may still be buying and trading crypto, but it’s clear that big, publicly traded fintechs have decided that shareholders don’t want to hear about it.

Stripe’s big mistakes

Saying that it needed to build “differently for leaner times,” Stripe on Thursday laid off 14% of its staff, more than 1,000 people total. In a letter to employees, the leaders of the online payments company — which was valued at as much as $95 billion last year — detailed what led to the cuts.

Stripe made two "very consequential mistakes," co-founders Patrick and John Collison wrote.

• "We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown," the brothers wrote in an email to staff announcing layoffs. "We grew operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we allowed coordination costs to grow and operational inefficiencies to seep in."
• It's a lament similar to those made by leaders at Robinhood and Shopify when they laid off employees earlier this year: They hired rapidly in response to demand that, this year, slowed more quickly than expected.
• "Fintech companies were some of the biggest beneficiaries of the pandemic: with a lot of financial services moving online, they were growing the fastest," said Robert Le, a fintech analyst at PitchBook. "Because they were growing so fast, a lot of fintech companies hired the fastest as well."

Now company leaders are looking at a very different picture. "We are facing stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser startup funding," the Collison brothers said in the email.

• Chime is seeing the same concerns. The neobank cut 12% of its staff Wednesday, about 160 employees. "To ensure the long-term success of the business and as we look at current market dynamics, we are focusing our organization to be fully aligned with our company priorities," the company said in a statement.
• Brex, Opendoor, Dapper Labs, and Upstart also joined the long list of fintech and crypto firms to cut jobs this year.

It is easier to recover from mistakes when you have cash. The problem is that checks are much harder to come by these days.

• The $12.9 billion raised by fintech firms in the third quarter is down 64% from the same months in 2021, according to CB Insights.
• "A slowdown might be our new reality for a while," said Anisha Kothapa, a senior intelligence analyst for fintech at CB Insights, in an online seminar Thursday. Rounds are taking longer to close and investors are pushing back on valuations.
• Chime was expected to complete an IPO this year, and Stripe has long been rumored to be nearing a public debut given its size and valuation. But that market is ice cold, with IPO proceeds down 94% this year at $7.5 billion, according to Renaissance Capital.
• Stripe reportedly cut its internal valuation by 28% in July. The F-Prime Fintech Index tracking the value of publicly traded fintech firms is down about 75% year-to-date.

This is unlikely to be the end of layoffs — fintech or otherwise (Lyft also cut jobs Thursday, and Twitter’s mass layoffs have begun). A recent PwC survey found 81% of HR execs expect to reduce staff through either cuts or slowing hiring. Stripe may offer an example of how to do it with minimal blowback. The company received praise for the Collisons’ explanation and for a severance package that includes a minimum of 14 weeks' pay, according to the memo, as well as other assistance, such as immigration support for U.S.-based workers with visas. “We overhired for the world we’re in,” the letter said, “and it pains us to be unable to deliver the experience that we hoped that those impacted would have at Stripe.”

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On the money

On Protocol: Block beat earnings expectations, with strong growth largely fueled by its Cash App business.

Fidelity is edging closer to crypto. The company has opened the waiting list for Fidelity Crypto, a product aimed at retail customers.

Also on Protocol: Coinbase lost more users in the third quarter, but the decline wasn’t the disastrous drop that Wall Street was expecting.

PayPal and Apple have reached a truce. The two technology giants will begin accepting each other’s products in their respective payment ecosystems.

Kraken's NFT service is now live. The crypto exchange is beta-testing the marketplace for NFTs, which offers "gasless" transactions and an intuitive design.

Bill earnings beat the estimates. The company formerly known as Bill.com also acquired Finmark, a financial planning software provider for small and mid-sized businesses.

Overheard, earnings edition

It was a busy day for earnings Thursday, with PayPal, Block, and Coinbase reporting. Here’s what we heard on their calls with analysts.

PayPal CEO Dan Schulman is bracing for a lump of coal from shoppers. “Given a challenging macro environment, slowing ecommerce trends, and an unpredictable holiday shopping season, we are being appropriately prudent in our Q4 revenue guide,” he said.

Meanwhile, Block CEO Jack Dorsey crowed about the growing number of Cash App customers using its debit card and banking services. “Everything that you need in your financial life you can find within Cash App,” he told analysts. “So that is the goal. That's what we're focused on. And I think we have the best strategy to get there.”

Coinbase CEO Brian Armstrong defended the decision to launch the company in the U.S. even though it sometimes felt like “we're at a disadvantage, and [it] caused us to move more slowly than foreign competitors. But I think it's the right long-term bet. … Regulators don't always act quickly, but they do eventually act. And we'll see that regulatory clarity here in the U.S. and we’ll see, hopefully, a more level playing field emerge over time.”

The chart

Ransomware payments have been rising steadily over the past decade, according to FinCEN. From around $10 million in 2011, the size of payments has soared to more than half a billion dollars in 2020. Bitcoin is the most common form of ransomware payment, according to FinCEN.

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In today’s uncertain economy, many companies are struggling to maintain the predictable revenue streams necessary to support day-to-day operations, as well as support future growth. At the same time, leaders are looking to solve a wide range of business problems that directly affect the bottom line, ranging from increasing productivity to improving customer satisfaction to raising retention rates. The right technology, and strategic use of automation, can help leaders meet the challenge of each of these seemingly overwhelming obstacles.

Protocol sat down with Randy Littleson, chief marketing officer at Conga, to talk about how revenue lifecycle management can help organizations create predictability, even in an unstable economic environment.

Many organizations have large volumes of manual paperwork and cumbersome processes that can impact productivity and the customer experience. How does this also impact revenue growth?

Organizations have two major customers: the employees of the company internally and the customers of the company that are impacted by this work externally. If your processes are manual, they are likely disconnected, manual, slow, and cumbersome, which means a high risk for human error and a negative impact on your brand. Often, how quickly you can turn around a proposal or a quote and actually engage a business can be key to landing the business, which means speed has huge implications on revenue.

Your processes also have a big internal impact, such as not being able to tell where things are stuck in the process and employees wasting time — and getting frustrated — with unclear processes. Also, salespeople may be discounting products without proper approvals and negatively impacting profits and margins. Without clear processes, you may also be selling or configuring products that your supply chain can’t deliver or even a configuration that won’t work. Not to mention, every minute your employees spend shepherding the process or triaging issues means time not spent earning business with more customers.

The implications of manual paperwork and cumbersome processes are pretty huge, both internally and externally. Ultimately, it comes back to revenue, which is fundamentally what Conga is all about. We help unify disconnected processes through automation. Conga reduces the complexity so that you can, in turn, increase the predictability around your revenue.

You mentioned the impact on employees. Do cumbersome processes also decrease employee engagement and retention as well?

Absolutely. I’ve worked in companies where there was so much grumbling about the time wasted and painful processes that it just zapped the productivity from everyone, especially salespeople. Because salespeople are compensated based on bringing in business, it’s excessively frustrating for a salesperson to feel that they’re wasting time fighting internal manual processes — time that could be better spent producing revenue for the company and compensation for themselves. Why wouldn’t they go to another company where they have less friction, can be more productive, and can earn more money?

When people leave a company, especially salespeople, it gives you much less revenue certainty and predictability, which is the holy grail when you are accountable for revenue. You build an expense plan and investments that hinge on your ability to bring in the expected revenue. When you have turnover, you not only lose the producing salespeople, but also have an unpredictable decrease in revenue due to the churn in relationship and handoff issues.

From your experience working with companies of all sizes across industries, what is the key to improving the revenue lifecycle journey?

The first thing is unification. The revenue lifecycle starts with the salesperson proposing a quote, negotiating, and signing an agreement. Once the contract is in place, you need to deliver on the agreement, such as delivering a product or providing access to software. Many businesses are moving to a subscription model given the inherent benefits in revenue predictability. With this comes an added emphasis on renewing and expanding relationships with customers, which completes the lifecycle as this leads directly back to proposing and quoting new business. Unfortunately, for most businesses today, the various phases are typically disjointed and disparate, so you need to unify the steps so there is a more efficient process and all key people are kept in the loop.

Next, you need to automate, which reduces the potential for human errors and speeds up the processes. Third, you need to gain intelligence about what is happening in the process so you know where there is risk, opportunity, compliance issues, and obligations. With all three — unification, automation, and intelligence — you increase predictability and, ultimately, customer lifetime value, which is the amount of business from a single customer over the lifetime of the relationship.

How does automating processes improve business outcomes for companies?

When you automate, you remove delays; you are no longer waiting on someone to do the previous step, because automation moves the process from one step to the next. You also reduce the risk of manual error. For example, when you create a proposal, you have to pull in certain data elements such as account name and address, key contact, etc., maybe out of your CRM system. When you automate the creation of the proposal, you guarantee the right data is the right spot.

Automation also ensures consistency and standardization. The more automated the process is, the more you ensure that it’s going to be consistent every single time, whereas with a manual process, three different people may do it three different ways.

A lot of times in business, the first mover is the key to winning. If you can be quicker and timelier, you have a better chance of winning the business. Automation ultimately makes it possible to improve the customer experience through speed, combined with consistency, predictability, and accuracy.

When you talk about improving the customer experience through automation, are you referring to the external customer or employees?

Both. When you automate processes, the employee experience is more seamless with less friction, which improves retention. If I’m working on a proposal or quote for an external customer, I can improve their experience, in terms of fewer delays and improved accuracy, with automation. With manual processes, there is a risk that customers discover an error that both lowers their trust in our company and negatively impacts the revenue, but automation helps to address these challenges.

Can you share how a customer’s lifetime value mindset helps improve revenue growth? How can an organization move to this approach?

Customer lifetime value mindset and revenue growth management are inextricably tied together. When you unify disparate processes by automating and adding intelligence, you maximize your customer lifetime value. This is mainly accomplished by sharing data and intelligence across the various processes — helping to smooth renewal execution, identify cross-sell opportunities, ensure consistency in terms across expansion opportunities, and more.

Many organizations adopt a subscription model which necessitates a customer lifetime value approach, which aligns your people, processes, pricing, and metrics. Your compensation models are then focused around that notion of a subscription and that continuous delivery of value and revenue. Consumers benefit as well because the subscription provider must keep earning their business.

Is the subscription model the only way to move to the customer’s lifetime value mindset?

No. However, it is a big catalyst. As more and more companies adopt a subscription model, the experience becomes more customer-value focused to earn the business — customer service itself changes from being seen as a cost center to a driver of the relationship necessary to ensure renewals and expansions — which is a win-win for both sides. Aligning your people, your organization, and where you compensate people around this whole overall notion is key to creating the customer lifetime value mindset.

Organizations in compliance-driven industries often face extra challenges and steps. How can a revenue lifecycle approach help these organizations ensure compliance while improving outcomes?

Companies with compliance requirements must have controls and governance over all of their processes. Everything we have talked about — unifying, automating, and adding intelligence — bakes controls into the process, reduces manual errors, and removes disparate one-off processes, which are the enemy of compliance. Automation is an easy way to standardize your processes throughout your day-to-day execution, which ensures compliance.

What is the benefit of using an API-based platform for revenue lifecycle management?

From a business perspective, the fact that Conga offers APIs throughout our products doesn't fundamentally change the value we can deliver. We have some customers that don’t use the APIs. However, APIs offer the ability to go an extra level by embedding the functionality into your workflows and your processes. It offers new ways to leverage the functionality.

For example, if you need to use the rich capabilities in Conga for pricing, configuring, and electronic signatures, APIs allow you to access the functionality directly inside your application instead of going into our applications. APIs give our customers dramatic flexibility to integrate other applications and data to use technology to solve their biggest business problems.

What specialized technical skills are required to customize the API?

We use RESTful APIs, which are widely accepted industry standards, making it easy for organizations that use APIs for other products to use the same processes while businesses that are new to APIs can relatively easily figure it out.

What role does collaboration play in revenue lifecycle management? How important are real-time tools?

Once a customer wants to buy your product, many different roles must collaborate on the process through the negotiation phase, especially sales and legal. Finance also makes sure that the discount is approved and not going to affect the company’s revenue margins negatively. All internal parties must be able to easily collaborate back and forth with the agreement negotiation, such as seeing the customer’s proposed changes and understanding the legal department’s position.

By using automation and real-time tools, you can standardize the process and reduce delays as well as let salespeople know which clauses in the agreement are non-negotiable and which are flexible. When the redlining is visible to everyone in real time and the approvals are automated, the processes become much quicker and smoother.

Why is it important for businesses to adopt revenue lifecycle management solutions in the near future? What benefits can they expect to experience by doing so?

With clouds on the horizon in the economy, revenue predictability and certainty are critical. While those clouds are closer and more ominous in some industries, we all see them right now. It’s important to increase your revenue certainty and predictability so you can plan out expenses and margins to make the best possible business decisions. With all the supply chain issues in recent years, you also must be sure that you can actually deliver what you are proposing to a customer. If you can’t, then you risk hurting the relationship.

Amid current economic uncertainty, every business is moving to a stage where we need to do more with less through improved efficiency and automations. When you move to a lifecycle management solution, your organization gains the predictability that it needs all the time, and especially right now.

Learn more about Conga and how strategic automation can support predictable revenue in uncertain times at https://conga.com/.

Good morning! Twitter offering perks and check marks to people who pay is akin to Citizens United, allowing people and companies with money to buy ever more influence. And though none of this is a foregone conclusion, if you’ve used the internet, you know how these things go.

Pay-to-play Twitter

It’s not Elon Musk’s Twitter. It’s the people’s Twitter. At least, that’s what the world’s richest man is pitching with his reworking of Twitter Blue and verification on the platform. But Musk’s promise of “[p]ower to the people” for $8 per month raises questions about what kind of power and which people — and how they’ll wield it.

The new Twitter Blue will be its own feudal system, Protocol's Brian Kahn writes. Charging people for certain features on Twitter is itself automatically limiting who can access them. But it’s not the cost that delineates the haves from the have-nots; it’s the features themselves.

• Musk tweeted that the perks include “priority in replies, mentions & search.” This is ostensibly to weed out spam, though if you saw the number of bitcoin scams in my open DMs already, you would know this is bullshit.
• He also said Twitter Blue users will have the ability to post longer video and audio, and sources told The New York Times that Twitter is working on a way for people to pay to be able to DM what the company deems Very Important Tweeters.

Those who pay for Twitter Blue are paying for power. Including the check mark as a perk is a nice troll and all, turning a derisive symbol into something that can be bought with cash rather than cachet. But it’s the other features that will consolidate power in paying customers’ hands.

• Getting priorities in replies and mentions means Twitter Blue users will drive discussion.
• On a basic level, it’s easy to imagine gangs of verified trolls piling up in politicians’ mentions to bury good-faith discussion.
• It’s also possible that enterprising sowers of disinformation will find a way to get verified as, say, the White House, given the Biden administration is still undecided on whether it should give Musk [checks notes] the people’s money for a blue check mark.

But Twitter Blue also offers tech leaders a chance to further shape the world.

• Those leaders already have enormous influence through their companies in shaping how the world works. Twitter Blue would allow them to consolidate power and messaging.
• Priority in search also means those already able to broadcast their views to a wide audience and be the loudest voices in any conversation on the platform will widen the gulf even further.

Musk approvingly retweeted crypto investor Erik Voohrees saying “charging $8 for premium Twitter experience means Twitter becomes the product again, instead of you. And if $8 is too much, you're free to remain as the product.” And that pretty neatly sums up the new Twitter world order.

​On the chopping block

Elon isn’t the only one planning big cuts to his workforce. (Twitter's are supposed to happen by 9 a.m. PT this morning.) If you’re not scaling back, you’re in the minority of HR chiefs, according to a new Pulse Survey from PwC.

How broad are cuts right now? Four out of five chief HR officers across sectors told PwC they were reducing their workforce “to a great extent,” Protocol Allison Levitsky reports.

• That’s not just layoffs: the 81% of CHROs who said they were cutting staff included those who are doing so by offering early retirement, not backfilling positions as employees leave, and freezing hiring. The number of execs who said they were doing layoffs has declined since PwC’s August survey, according to PwC’s workforce strategy partner Julia Lamm.
• Companies have been so “panic-stricken” about finding talent in the last two and a half years that these methods of getting rid of employees have fallen out of focus, Lamm said.

Amid the cuts, companies are still hiring. The so-called labor market paradox that surfaced in PwC’s Pulse Survey in August — where companies were both cutting staff and staffing up — is still in effect.

• This time around, 44% of execs said they expected to continue hiring for “specific skill sets” in order to support growth in the next 12 to 18 months.
• “They’re being more cautious,” Lamm said. “They’re looking to rebalance their workforce to make sure they have the skills they need for the future.”

Read more: 81% of CHROs say they’re cutting head count

Heat pumps to the rescue?

The Biden administration announced $9 billion in funding Wednesday to improve home efficiency, which could help support the installation of up to 500,000 heat pumps. There are some major challenges facing the technology that money can be used to tackle, Protocol’s Lisa Martine Jenkins writes.

We need heat pumps to help decarbonize home heating and cooling. The electricity-powered systems — which keep homes comfortable by pushing heat into the home in the winter and pulling it out in the summer — will be crucial in weaning the world off of fossil fuels.

But there's a challenge: Installing the units on a timeline in keeping with net zero goals will require both a robust supply chain and well-prepared labor force.

• Neither of these are fully in place in the U.S. — but the Defense Production Act and Inflation Reduction Act represent opportunities to build them out.

Heat pump supply chains need to be more resilient. The U.S. currently relies largely on foreign suppliers of heat pumps, leaving the White House’s goal vulnerable to supply chain complications like those brought on by Russia’s invasion of Ukraine.

• The DOE is planning to devote an initial $250 million, which isn’t part of the $9 billion, to encourage more heat pump manufacturing.

A larger workforce is also required to install those heat pumps. The DOE also said it’s putting together a discussion between “labor, businesses, and other key stakeholders” to determine how best to spend another $260 million, also not part of the $9 billion, on workforce development for energy efficiency.

Read more: The path to more heat pumps

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People are talking

Pateron Chief Product Officer Julian Gutman thinks video is the next big step for creators on Patreon:

• “It’s the biggest modality of sharing we have on the platform. It’s the format of the internet today.”

Uber whistleblower Mark MacGann told reporters at Web Summit that Uber’s culture appears to be improving, but he doesn’t have faith in its current business model:

• “My message to Uber is: 'you've done well, [but] you can do it so much better [because] the current model is absolutely not sustainable.”

• “I felt like saying, ‘Welcome to the club.’”

Making moves

It's a big day for Twitter, with 3,700 or so staff expected to lose their jobs by by 9 a.m. PT this morning. The company has temporarily closed its offices in preparation, and is already facing a class-action lawsuit over the layoffs.

And the cuts keep coming. Stripe is laying off 14% of its staff, its co-founders said yesterday, as the fintech startup must start "building differently for leaner times." And Lyft will lay off about 700 employees, or 13% of its workforce. It’s the second round of layoffs for Lyft; the company let go of 60 people in May.

Amazon is pausing hiring for its corporate workforce "for the next few months."

Affected and need a job? AWS, TikTok, Automattic, and others are still hiring!

Megan Quinn stepped down as Niantic COO. “I joined Niantic to help build an exec team,” she told Protocol’s Janko Roettgers via email. “There’s an incredible leadership bench in place now that gives me the flexibility to spend more of my time on my personal investing and broader board portfolio.” She remains on Niantic’s board

Jaime Waydo is the new chief technology officer at WHOOP, a fitness wearable company. Patrick Carroll is also the new chief medical officer at the company. Waydo previously worked at Apple and autonomous vehicle company Cavnue, while Carroll worked at Vida Health and Hims & Hers.

Meta India head Ajit Mohan is leaving the company to join Snap. TechCrunch reports he will serve as the president of the company’s Asia-Pacific business.

Twitter canceled Chirp, its developer conference, which was slated to take place in San Francisco on Nov. 16. Not exactly surprising.

In other news

A growing list of advertisers are pausing spending on Twitter. Concerns with how content will be moderated are among the reasons, The Wall Street Journal reports.

And Elon Musk is attempting to save $1 billion per year on infrastructure spending at Twitter, Reuters reported.

Block beat earnings expectations, with strong growth largely fueled by its Cash App business. Traders sent shares up more than 12% after-hours Thursday.

Coinbase reported 8.5 million transactions in the third quarter, down from 9 million the quarter before. The “Street was expecting a train wreck, and it was slightly better than feared,” Wedbush analyst Dan Ives told Protocol’s Ben Pimentel.

Instagram creators will be able to mint and sell their own NFTs. Meta is testing the feature on a small group in the U.S. so far.

Nvidia introduced a new AI ecosystem that will help develop speech AI models in multiple languages. Meta and Google are building similar products.

The Meta Oversight Board will issue guidance on how Meta should handle referrals from so-called Internet Referral Units, the divisions within police departments that refer content to be taken down from tech platforms.

Protocol analyzed the text of China’s Xi Jinping’s National Congress address. China’s president emphasized decarbonization, economic self-sufficiency, and strengthening China’s military.

Where is Do Kwon? The co-founder of Terraform Labs who is thought to be on the run may now be in Europe, Bloomberg reports.

Confessions of a meme stonker

Alexander Hurst turned $15,000 into $1.2 million during the pandemic. But, like many recreational investors, he found it hard to stop — beating himself up about the gains he failed to capitalize on, rather than celebrating the wins, and eventually losing it all. "If I had invested wisely and carefully into safe, dividend-yielding assets that I could borrow against to buy a place to live, I could most likely have financed a modest, middle-class lifestyle indefinitely. It could have been a perpetual writing grant to myself," he writes in a confessional piece for The Guardian. "Instead, I became more frantic than I had ever been when I had far less."

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Hello, and welcome to Protocol Entertainment, your guide to the business of the gaming and media industries. This Friday, we’re exploring how the Quest Pro VR headset can be used for virtual production and what that tells us about the future of Hollywood.

What the Quest pro tells us about Hollywood’s future

Now that Meta’s Quest Pro is shipping, it’s worth keeping an eye on what early adopters are doing with the headset. One of the people at the bleeding edge of VR experimentation is former Nickelodeon executive Chris Young, who already posted a few very impressive Quest Pro videos to his LinkedIn feed in recent days.

Young was in charge of Nickelodeon’s Entertainment Lab the last time we met, where he was trying to figure out how to use VR and virtual production tools to change the way Hollywood produces animation.

• Nickelodeon shuttered those efforts in early 2020 following the Viacom-CBS merger, but Young wasn’t deterred. Now he’s toying with real-time virtual production work in the confines of his own four walls.
• As part of these efforts, Young has been experimenting with ways to capture and reuse real-life environments. “I’ve been slowly, when I have the time, building out an accurate digital twin of my house,” he told me.
• This week, he posted a video that shows him walking through that digital twin of his home and then using the Quest Pro’s controller to erase the digital layer and reveal the “real” version underneath.
• It’s a bit hard to describe, but pretty mind-blowing to see. You can check out an extended version on YouTube!
• “Technically, it was relatively easy to do,” Young told me. But without the Quest Pro’s color pass-through feature, it wouldn’t have been nearly as effective.
• Not only was recording this type of footage harder with the Quest 2, but also the result just wasn’t the same. “It was obviously black and white, and kind of broke the illusion,” Young said.

Motion capture has also been top of mind for Young. Studios regularly use massive motion capture stages, with actors wearing those weird-looking black spandex suits with white dots on them to capture data that is then used for visual effects.

• At home, Young has been using a pared-down version of that technology, which includes Xsens motion-tracking sensors, the Unreal engine for live virtual production, and his family members in starring roles.
• With the Quest Pro, he was able to film a real-time performance of a family member goofing around in his living room while wearing a colorful VFX space suit.
• “What really stood out to me was not just how cool it was to see a color character in a color environment, just instantaneously, but then how robust the tracking is in that headset,” he told me. “How glued down those characters were.”

Young shared a bit of the secret sauce behind the video with me, which involved making use of the Quest Pro’s multitasking and networking capabilities.

• Young had both the Xsens tracking software as well as the Unreal game engine running on PCs in his home office. To connect to those machines, he simply used the Quest Pro’s wireless Air Link feature. “Being able to pop out of the VR experience that I was fully immersed in [and] have the power of my PCs in another room available to me to make the changes on the fly” was a game changer, Young told me.
• “Access to virtual desktops in pass-through is probably the killer app right now,” he said.

The Quest Pro may not be able to replace Hollywood’s production gear just yet, with Young noting that there are simply not enough creative tools for professionals available to date.

• “Right now, there’s no Adobe Creative Suite for VR,” Young said.
• Once those tools arrive, creative professionals will be jumping onto the VR bandwagon to incorporate headsets like the Quest Pro into virtual production workflows, Young predicts.
• However, Hollywood shouldn’t wait for this kind of technology to be polished to explore it, he argued.
• “If you’re in a big studio and you’re not buying every piece of new tech that’s coming along, it’s like waiting to see if email is going to be a thing,” Young said.

And perhaps you won’t even need a studio. Every time a new piece of technology comes along, people predict it will democratize Hollywood and revolutionize the world of film production. With VR, such a prediction could, for once, actually come true.

“Somebody just has to get in there and be the next Mike Judge and do the next ‘Beavis and Butt-Head’ with this tech,” Young said, adding, “Is the Quest Pro going to change the world? Maybe not. But does it have some things in there that might be a part of the thing that does change the world? Most definitely.”

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In January of this year, an Instagram account dedicated to British music posted a 21-second clip of a music video by a U.K. drill rapper named Chinx (OS). Within two days, Instagram took it down.

The lyrics to the song, Secrets Not Safe, make reference to a real-world gang shooting, and Instagram removed the video under its policy against inciting violence. The original poster appealed the decision, and the clip was restored, but eight days later, it was removed again.

It’s the kind of thing that happens millions of times a year on Instagram, not to mention on the rest of the web. But what makes this particular post notable is how it got on Instagram’s radar in the first place — not by way of automated detection or user reports, but via a referral from the police.

In recent years, the London Metropolitan Police and other so-called Internet Referral Units have pummeled platforms including Facebook, Instagram, and, most notably, YouTube with notifications about content that supposedly violates those companies’ terms of service but that isn’t necessarily illegal. The Met’s IRU has placed a particular emphasis on music videos. Last year alone, the unit reportedly recommended YouTube take down 510 music videos, and YouTube complied nearly 97% of the time.

Critics have argued the IRU operates in a dangerous legal no man’s land, where law enforcement agencies use platforms’ own terms to circumvent the judicial system in an affront to free speech. Even so, the prevalence of these units has only grown, with similar divisions popping up in Israel and across Europe. Even where formal IRUs don’t exist, some platforms, including Facebook, have dedicated channels for government agencies like the U.S. Department of Homeland Security to flag content.

But the Chinx (OS) video stands to be a turning point in this relationship between platforms and police. Earlier this year, Meta referred the case to its Oversight Board, which will soon decide the fate of the post in question. The board’s accompanying recommendations could also help answer a much bigger question facing Meta and other tech giants: How can they most effectively push back against growing pressure from law enforcement without sacrificing public safety?

“What the Oversight Board does will have consequences not just for Facebook, but for governments,” said Daphne Keller, director of the Program on Platform Regulation at Stanford's Cyber Policy Center.

The rise of IRUs is a relatively recent phenomenon, with the Met’s so-called Operation Domain initiative, which focuses on “gang-related content,” having launched in 2015. That same year, following the Charlie Hebdo attacks in France, Europol stood up its own IRU division.

But the biggest test of what IRUs could get away with — and how tech platforms were enabling them— came in a 2019 case out of Israel. In that case, two human rights groups asked the Israeli Supreme Court to shut down the country’s so-called Cyber Unit, arguing that this "alternative enforcement" mechanism violated people’s constitutional rights. The court ultimately rejected the petition last year, in part because of Facebook’s failure to tell users it was removing posts in response to Cyber Unit referrals. Without that information, the plaintiffs couldn’t prove the Cyber Unit was responsible for alleged censorship. Besides, the court reasoned, Facebook voluntarily removed the posts under its own terms.

To civil liberties experts, the case illustrated the role tech companies’ decisions play in shielding IRUs from accountability. ”If law enforcement can hide beyond this veil of, ‘It’s just company action,’ they can do things, including systematically target dissent, while completely severing the ability for people to hold them accountable in court,” said Emma Llansó, director of the Free Expression Project at the Center for Democracy and Technology, which is funded in part by Meta and the Chan Zuckerberg Initiative.

What the Oversight Board does will have consequences not just for Facebook, but for governments.

The Chinx (OS) case presents another test, and a chance for Meta to do things differently. Though the board didn’t specify which police agency requested the removal, according to its summary, the U.K. police warned Meta that the video in question “could contribute to a risk of offline harm.” The company appeared to agree and removed the video not once, but twice, after it was restored on appeal. But the decision clearly didn’t sit well with Meta. It referred the case to the board because, the company wrote in a blog post, “we found it significant and difficult because it creates tension between our values of voice and safety.”

The board has since asked for comments on the cultural significance of drill music in the U.K., and also on how social media platforms in general should handle law enforcement requests about lawful speech.

The case has drawn attention from leading civil liberties groups and internet governance experts, including CDT and the ACLU, which have both submitted comments to the board urging it to recommend stronger safeguards against the growing creep of IRUs. “Government-initiated removals — especially those that rely entirely on private content policies to take down lawful content — are a danger to free expression,” reads one comment by the ACLU and Keller.

There is, of course, good reason for the government and tech platforms to communicate. Law enforcement and government agencies often have better insights into emerging threats than platforms do, and platforms increasingly rely on those agencies for guidance.

The Met, for its part, has said it “works only to identify and remove content which incites or encourages violence” and that it “does not seek to suppress freedom of expression through any kind of music.” The agency also touted the effectiveness of the program in comments to the U.K.’s Information Commissioner’s Office, writing, “The project to date has brought to light threats and risk that would otherwise not have been identified through other policing methods.”

But these systems are also ripe for abuse, Llansó said. For one thing, companies may not always feel empowered to reject law enforcement referrals. “There can be a sense within a company that it’s better to be seen as a constructive and collaborative player, rather than one that’s always rejecting requests,” she said.

The fact that these requests are happening out of public view also prevents users from understanding how government agencies are seeking to censor them, and provides no recourse for them to challenge it. “From a company-centric perspective there’s potentially a lot of benefit to having people with expertise, including law enforcement, know about material you want to take down from your service,” said Llansó. “From a user-centric perspective it’s an entirely different story.”

In the U.K., where the Met’s IRU has focused on drill music specifically, these referrals may also disproportionately target Black communities engaged in entirely legal speech. “It's so subjective,” said Paige Collings, a senior speech and privacy activist at EFF, who recently wrote about the fraught relationship between the London Police and YouTube. “It's really racially oriented, racially driven.” Collings points to the widespread use of rap music in court as evidence of a “much wider structural issue” of police attempting to use songs as evidence. “It's not a testimony or evidence of crimes,” Collings said. “[Songs] are artistic expressions.”

Both CDT and the ACLU are calling on the board to urge Meta to notify users when their content is removed in response to a law enforcement request, and to publish detailed reports about these takedowns. Collings also believes platforms should publish examples of the content that’s being removed and list the formal and informal relationships it has with law enforcement units.

The ACLU and Keller also recommended that Meta be more discerning about which law enforcement agencies it trusts and refuse fast-track reporting channels to IRUs that make bad faith or inaccurate referrals. The Internet Archive has, in the past, called out IRUs for making faulty referrals, including the French IRU, which the Internet Archive said improperly flagged over 500 URLs as terrorist propaganda in 2019. “Governments should have, and maybe do have, an obligation to not be so sloppy about this,” Keller said.

While the board’s recommendations aren’t binding, the fact that Meta referred this case to the board at all suggests that the company is looking for help — or at least, backup — as it decides how to handle such requests in the future. And the volume of requests could soon increase. Under Europe’s Digital Services Act, platforms must have “trusted flagger” programs, like the one YouTube already runs, which allows law enforcement agencies and other public and private entities to refer content for removal.

For Meta and other companies operating in Europe, figuring out how to deal with this potential uptick in referrals without stifling users’ ability to speak freely is becoming increasingly urgent, Llansó said. The board’s recommendations stand to give Meta cover for changes it may have wanted to make anyway. “This case could be a way for [Meta] to get the fact that this is happening out on the record,” said Llansó. “If Facebook does want to roll out more transparency, they could use some political backing for that.”