Data Sheet—Wednesday, March 23, 2016

Let’s start with the FBI, which believes it can get into the notorious San Bernardino shooter’s iPhone without Apple’s help after all. No one looks particularly great here. For Apple, if it turns out its encrypted phone isn’t impenetrable, that’s not the greatest development. For the FBI, how likely is a judge to grant its next request after its never-mind maneuver on Monday?

Then there was what by all accounts appears to have been a snoozer of an Apple product event on the same day the FBI called off its showdown with Apple. I’ve been to many Apple events in the last decade, and not each one is scintillating. So the company gets a pass now and then for underwhelming its fans. The release of a new, smaller iPhone seems particularly unnewsworthy as a kind of stasis seems to be apparent at Apple. For now.

A few observations I gleaned from a report by Bernstein’s Toni Sacconaghi, who has been watching Apple longer than I have:

* At Apple’s “last event in September, CEO [Tim] Cook stated that the company was ‘firing on all cylinders’ and highlighted Apple’s strength in China in the previous quarter.” On Monday Cook said nothing about financial performance. Make of that what you will.

* Could it be that Apple’s “new willingness to trade off current hardware profit margins to volume and drive its installed base” has to do with wanting to better monetize its services? Cook has increasingly discussed Apple’s services of late.

* “Apple stated that Apple News has 50 million active subscribers, which is a relatively underwhelming figure. Given its installed base of 1 billion total devices (and perhaps 500 million to 600 million unique iOS users), 50 million subscribers represents penetration of only about 10% for a free service.”

Here’s some more Data Sheet tech news to start your Wednesday.

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BITS AND BYTES

Google amplifies cloud pitch. The Internet giant is adding at least a dozen data centers over the next 18 months to improve its chances of winning big deals against its two larger rivals (in this space at least), Amazon Web Services and Microsoft. The revelation comes on the heels of several high-profile customer wins for the Google cloud group, including Apple, Disney, Home Depot, and Spotify. Google brought in VMware co-founder Diane Greene last year to overhaul its strategy. (Bloomberg, Wall Street Journal, Fortune)

How GM finds cyber vulnerabilities in its cars. The automaker is emulating the "bug bounty" programs run by tech giants such as Google and Microsoft, which encourage friendly hackers to disclose security gaps. As cars become smarter through sensors and software, concerns over the potential for hacking are growing. (Wall Street Journal)

Apple isn't buying its British chip partner, at least for now. The company is denying an ArsTechnica report that it is close to buying Imagination Technologies, a U.K. company that helps Apple design graphics processors for the iPad and iPhone. Apple did hold acquisition talks with struggling Imagination, in which it holds a 10% stake, but it isn't moving forward "at this time." (Fortune)

China's Huawei ramps up mobile payments initiative. The huge smartphone maker has tapped domestic card processor China UnionPay to dramatically expand the locations where people can use Huawei smartphones as a form of payment. Huawei leads the Chinese market in shipments, so its service should be a credible competitor to Apple Pay. (Wall Street Journal)

Red Hat claims $2 billion in annual revenue. That would make it the first open source software company to cross that benchmark. Red Hat CEO Jim Whitehurst said the corporate migration to cloud computing services is helping the cause. (Fortune)

Oracle sues Hewlett Packard Enterprise. Oracle claims that HP Enterprise and one of its services partners, Terix Computer, improperly sold technical support contracts for its Solaris operating system. Oracle's contracts require customers to buy this sort of maintenance directly. The software giant has pursued similar cases successfully in court. (Wall Street Journal)

It's official: Streaming services are taking over music sales. The Recording Industry Association of America reported that streaming services such as Spotify generated $2.4 billion in revenue last year, eclipsing sales from digital downloads. That was about one-third of the industry's total retail revenue. It took more than a decade to reach this point. (Fortune)

THE DOWNLOAD

Do banks need a financial cloud of their own? Not only are many banks and other financial institutions ready for the cloud, some are pushing Amazon and potentially other cloud providers to build cloud services specifically for their own needs. “Finclouds,” if you will.

Privately, executives at these institutions point to Amazon’s GovCloud—a set of computing, storage, and networking services set up especially for use by federal and state government agencies. GovCloud runs on its own set of Amazon data centers and there are strict hiring parameters. It is basically a segregated AWS cloud—Amazon prefers the term “gated community”—built for that specific, albeit very large set of clients. As Fortune's Barb Darrow reports, financial services companies wonder why AWS can’t build something similar for them.

IN CASE YOU MISSED IT

The current state of artificial intelligence, according to Nvidia's CEO
by Andrew Nusca

Upstart Domo unleashes real-time business management dashboard
by Heather Clancy

Amazon sues star executive who defected to Target by Phil Wahba

Banks are using biometrics to detect scammers by Jeff John Roberts

Gamification pioneer tackles business goals management
by Heather Clancy

Snapchat hires marketing measurement experts by Kia Kokalitcheva

Intel Extreme Masters shatters eSports records by John Gaudiosi

Identity verification startup Jumio will sell to Facebook co-founder Eduardo Saverin by Kia Kokalitcheva

ONE MORE THING

New Jersey may ban texting while walking. It's a matter of pedestrian safety. (Fortune)