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Data Sheet—Wednesday, December 21, 2016

Something is rotten in the state of the global supply chain.

The technology industry has spent years touting two great virtues: It makes amazing products, and it has mastered a feat of modern manufacturing unheard of in yesteryear. Companies like Apple and Amazon design products in California (and other West Coast locales) and then send the drawings to China, where prototypes quickly are refined, packaged, and shipped around the world to be sold.

And yet, even as the next U.S. President rails against outsourcing, offshoring, and other sins his own businesses have committed, that vaunted supply chain keeps coming up short.

Amazon has all but run out of its Echo speakers and bite-sized Echo Dot devices. All year Amazon has known the Echo would be its hottest Christmas gift. Heck, I know for a fact I facilitated the sale of 20 or so units in Aspen, Colo., this summer when attendees at Fortune’s Brainstorm Tech conference whipped out their phones during my interview with Dave Limp, head of Amazon’s device business, and made an order.

Amazon’s not alone. No company manages its supply chain more dominantly than Apple, a master at applying tremendous financial leverage to ensuring it gets what it wants when it wants. And yet, its mostly well-reviewed new wireless AirPod earbuds were unavailable until recently. Apple’s site showed a six-week wait on Tuesday. Instant gratification also is in short supply for Google’s high-end smartphone, the Pixel. A model I explored buying listed a three- to four-week delay before shipping.

All sorts of reasons might explain the shortages. Head-scratcher though it would be, Amazon might have badly underestimated Echo demand. Apple likely had trouble manufacturing enough AirPods to its satisfaction, a common problem for new Apple products. And Google seems to have been encouraging scarcity for a product that is meant more to demo than to be dominant.

Whatever the reasons, it’s a reminder that designing, making, marketing, selling, and delivering product is more art than science. The device companies did their best and came up short. Now it’s Santa’s turn.

Adam Lashinksky


Google demotes Holocaust deniers: The company updated its algorithm to address the alarming trend of hate or hoax sites appearing at the top of search results for topics like the Holocaust. Google says it wants to “surface more high quality, credible content on the web.” (Fortune)

AI powerhouse comes to Mountain View: Deep Mind, a London-based division of Alphabet famous for its artificial intelligence work, will dispatch a team to Google’s U.S. headquarters. The new team will work as their own unit apart from an existing AI unit known as Google Brain. (Bloomberg)

Mini rebellion at IBM over Trump: An angry engineer launched a petition to protest IBM CEO Ginni Rometty’s recent outreach letter to the President-elect. The petition complains the letter is a betrayal to IBM’s value of diversity and inclusion. About 100 IBMers have signed. (Fortune, The Intercept)

The unlikely early winner in drone delivery is… It’s not Amazon and it’s not Google leading the race to deliver by drone. Instead, it’s humble retailer 7-11 who has already delivered dozens of packages—mostly medicines—to real-life customers in Reno, Nevada. (Recode)

Uber’s self-driving cars a menace to cyclists: A spokesperson acknowledged Uber is working on a programming issue that leads the company’s autonomous vehicles to make illegal right “hook turns,” which are a common cause of collisions with bicycles. (Fortune)


Online criminals are robbing advertisers blind with counterfeit websites. Russian scammers have built the most lucrative ad fraud operation on record, according to security researchers at the fraud-fighting firm White Ops.

The cybercriminals developed an army of automated web browsers, dubbed “Methbot” by the researchers, which stole millions of dollars per day from the biggest advertisers on the web, according to White Ops. (Fortune)


Oracle Manager Quits After Co-CEO Joins Trump Transition by Barb Darrow

Morgan Freeman Is Mark Zuckerberg’s Robot Butler by Kerry Close

SiriusXM Wins Appeal in Turtles Copyright Case by Jeff John Roberts

Families of Orlando Shooting Victims Sue Tech Giants Over ISIS by Kerry Close

The Russian Methbot Scam Is Just the Tip of the Ad Fraud Iceberg by Mathew Ingram


T-Mobile CEO talks of his love of swearing and making AT&T a super-villainFortune‘s Aaron Pressman offers highlights from a Harvard Business Review piece by John Legere in which the telecom executive explains the business strategy behind his rants and raucous behavior. The strategy relies on the public’s newfound appetite for candor (or crassness), and the desire for a narrative of good guys and bad guys. (FortuneHarvard Business Review)

This edition of Data Sheet was curated by Jeff John Roberts.
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