Data Ethics in Gaming (Philosophy Friday #2)

on september 14 2021 the securities and exchange commission announced that app annie inc a leading alternative data provider for the mobile apps industry and its co-founder and former ceo and chairman bertrand schmidt have agreed to settle securities fraud charges for engaging in deceptive practices and making material misrepresentations about how app annie's alternative data was derived app annie and schmidt have agreed to pay more than 10 million to sell the matter which is the sec's first enforcement action charging an alternative data provider with securities fraud okay everybody hello and welcome since the news about app annie broke there were a lot of people very upset and outraged at app annie which to some degree is understandable i had a little bit of a different take which i published through a blog post on this issue called on app any alternative data and the sec and clearly it was popular i was looking at my stats and it just like spiked up when i published that blog post

but first of all welcome everybody to philosophy friday this is our second episode and we actually have a guest with us speaking lars do say many of you may know him if you've been following our content but today we are going to be talking about this issue which is data usage and ethics in gaming and you know it's kind of a larger issue it's not just about what are sort of acceptable practices when it comes to market intelligence but there's also a bigger picture around data that impacts privacy at like the the device level with phones with apple and google for example impacting idfa and even further with the data by companies that may be in competitive situations to their customers note that it was just announced that appgloven has just acquired mopub for example so anyway with us we do have brett novak ceo of liquid and grit also a big consumer of alternative data

to create research reports bret are you compromised well i am slightly compromised in that we have a partnership with sensor tower that i wanted to add before we get going okay and i should probably add that i run one of the sites that provides you know what alternative data i run gamedatacrunch.com which aggregates public information from steam and some other sites and just puts it all together out there um and i i don't make any money from that site or anything if anything i spend a little money on it every month i just kind of run as a public service but that's kind of my connection to this whole world as i run very red-headed step child to something like app annie for the pc market right but in terms of lars your background game developer technologist consultant and i'd say just overall good guy right with a lot of deep insights into gaming president of level up labs so you definitely want to check that out as well as lars's blog fortressofdoors.com so definitely check that out and just uh

like a caveat as well for myself so i actually do also partner with sensor tower to use their data and if any of you follow my newsletter use use sensor tower data also app annie has sponsored some of my events before i partner with them at times to do like certain podcasts and things like that so and i just kind of like them too like the people at censor tower whether it's you know randy nelson or the folks at app any there's a bunch of folks there who i really like so you know a little bit compromised as well just just to be clear yeah well i mean i think that kind of just represents kind of the state of things is that why does this data exist in the first place it's because there's a deep deep abiding hunger for data in the industry when people talk about data they mean various different things and we should be very clear what we mean here like we're not talking here about you know targeted at least in this case like targeted personal data about like what your mother-in-law had for breakfast based on her instagram account so that

we can sell her ads for whatever you know we're talking more specifically about what everyone wants to know is how much money did this game sell and more importantly how much money can i expect my game to sell and what can i put in my pitch deck to convince an investor to give me money by proving that there is a market for what i'm making and i'm not just insane enough to lunch right and historically that data has been a very low quality or not available and in the past i would say five to ten years there's been this explosion of let me give you an example okay so like ron gilbert um the original designer of the monkey island series like he has a blog called grumpy gamer and like there i forget which article it is but you talked about like what it used to be like back in the day like when lucasarts would ship like dave the tentacle or um or um secret or like monkey island 2 or whatever you would put out the discs and they're probably like floppy disks back then maybe not even compact disc but it didn't really matter you put it in a box

you'd ship it out and then a couple months later you'd find out if you sold anything right you know like that's the publisher themselves figuring out their own data right let alone how much money everybody else is making so unless you know and that's actually kind of the history of i don't want to completely speak out a turn i might be getting my history crosswire but certain companies got big back in the day and became these like really powerful movers in like the pc games industry and the rest of the industry by basically having a finger in everyone's sales data um i forget if it was activation or electronic arts that kind of or or some other pc game publisher i really wish i was smart enough to just remember it just like that but there was one of them that was a major publisher at the time that they cemented their position by just knowing what anyone was selling right and that made them just absolutely invaluable as a distributor right and as the world moved from physical and retail to the world of digital you started to have it like sales became much more instant they

became much more tractable everyone who was selling directly and had direct relations with the customer knew exactly how much they were selling to their own customers which was the first revolution is like the creator the publisher themselves knowing how much they had sold directly because they weren't going through retail and just hoping they got reports back and then you had um developers who are not like cutting on royalty shares starting to get reports because it used to be just like you just kind of like this you didn't have an audit clause you kind of just trust that your publisher is giving you the money you deserve and a lot of times they were getting screwed over right and so then you now get to the place where it's like we have all these top seller charts and there's all this information out there that even for someone who is not plugged into the ecosystem at all just through public data combined with a little bit of private data and a little bit of insight and knowledge of how the industry works can deduce a shocking amount of information right and um and then you have places like app and there's like well if i just partner with enough people i'll just get

the truth and then i can sell the truth back to people and there's just this deep need for that information because otherwise you're like what kind of game can i make i don't know has anyone ever succeeded making that kind of game write these huge basic questions that will determine which things get invested and which projects get green lit is really hard to do in an absence of data and in an absence of data what happens instead is you get basically opinion laundering where it's like games with women in them don't sell it's like what's your basis for that mr ceo the truth because i know everything right you know and so like and then you could go like well actually um i i think there's plenty of evidence that they do sell if you look at this and um that can have a major change you know that that's how you can have these big paradigms anyway yeah lars i i think you know it's kind of funny because the original intent for me writing like a blog post on appiany was i i was actually initially writing it to kind of troll execs and say without this app any data what would execs do how would they form any opinion

on anything because this is basically like no exact wants to say a game is good or bad until they see the data and so so it's not a good one at least it started off kind of as a joke but then you know got a little bit more serious as i kind of dug into the issue but i thought i could also just inform the audience of like what happened so what is this app annie issue right and so you kind of alluded to it but basically what happened is app annie has a service called connect and with connect mobile apps basically send their data to app annie who would then provide some like analytics and dashboarding features for their customers but probably more valuable was also that if you use connect you could get like a big discount on the overall app annie suite of services which you know it's not not cheap it's it's you know real it's kind of expensive so you're paying with your data basically to some degree yes now the issue though the the reason why the sec got upset was that

the connect data was then actually used to form the intelligence estimates so the way that app annie makes the the revenue estimate or the downloads estimate is supposed to be algorithmically derived right so if it's derived by an algorithm or something else that's fair but and also you know surprisingly they can use private company data legally but it's the public company data because what the sec is concerned about that's really nuanced the sec is concerned about hedge funds using this for insider trading right right like if you get that data and then you can provide a more accurate estimate then ahead of an earnings call you're like okay i know what's going to happen here you can trade against that yeah and i want to unpack that real quick just because of the technicals it's like it's like that is to clarify to clarify it's only that the sec is concerned about the public companies because sec

focuses on public companies but at least according to what you the writing it broke the terms of service of connect so it did it did violate things for non-public companies but non-public company companies are outside the purview of the sec right okay so one of the things that's really interesting there is what do we talk about when we say they used private information like let me give you some examples of how you can use private information one of the simplest ways to do it is like okay things are algorithmically derived well from what algorithm typically what's done is there's some public signal that's out there about a game like um a good example is um people on steam will do what they call the box slider method which is they look at the number of reviews the game has received they know that the more sales it has the more people there are to review it so there's some multiplier between like 20 and 100 depending on what the policy is today of what the true number of owners might be right and that's a very crude way of

estimating right there's an algorithm it sucks but it's an algorithm and then one way you can use quote unquote private information is if you know what the sales for your own game are you can see what the output of that algorithm is for your own game and adjust your little coefficients that way and you can scale that up for however complicated algorithm you have like okay so we take the number of reviews and we take the number of followers and we take the number of chart positions and the phase of the moon and whether i'm wearing boxer shorts today and you know and you put it all in with some chili spice and then out pop's number and then if you know enough private data points you can basically fit the curve right and so the question is how are you using the private data are using it to validate your model then there's a question is it machine learning where you basically just have the giant machine learning blob like have access to all this private data and figure out an algorithm but one thing we found with machine learning is sometimes it will just if it's overfitted it will just output its inputs as output like instead of like working out an

algorithm it's just like oh the number for this game i trained on is this and you ask what its number is so here it is so um that's another way if private information can be used and i don't know nearly as much about the sec of how it cares about that but it seems like almost total logical that it's like you can't validate your algorithms without using private data but then the question is like do you just report the private data as is or do you do it in a way that it's just like it's it's too close or what's what's the deal yeah so they were they got in trouble for actually adjusting the internal estimates right so they know what let's say activision's number is and then they adjusted it to be closer right so that that was the issue now i think the other thing that people in the in our industry should be aware of so what's the implication for the industry and i think the scary part now is that like the sec wasn't just saying hey app annie you guys are gonna be in trouble so the scary part was where they're

indicating hey hedge fund if you use i see the data you are going to be in trouble now so to your point lars so you said why do people in the games industry use this data well they want to know what games to green light they want to know what games to make they will use this for m a research right so then the danger is what if the sec now says okay hey you know um zynga you used you know appdata.com whatever that service is i mean append is clean now but if you use a service that's compromised in some way against the way that you know that the against sec complaint then you could get in trouble right like you would be penalized and so through the poisonous tree and we're sending us back to the dark ages right right so i think that's the thing that we have to watch out for as an industry

and then more broadly speaking but wouldn't that be only if zynga was investing so i i think that right if they use that if they use the data for the sec right i mean yeah if they use the data for mna but like let's say they used it to green light a game project i mean who knows then this comes into a further discussion later which we could talk about is like how far do we think the scc is going to go for for the audience purposes m a means mergers and acquisitions right right you know i guess the danger is that if there is a sec overreach and they really start to try and get into everyone's business then they they could nail you for a bunch of stuff if you're using an alternative data provider that is compromised so that's like the danger so there could be a chilling effect whether there is whether there is regulatory action or not right and so one thing i think is important to talk about is like the kind of general discourse about data

is everybody hates big data and they're the big evil people in the tech communities is how like the average person on the street feels about it and in my opinion kind of rightly so um i think there is some nuance to be had about these data providers for gaming purposes because remember this is not what your grandmother had for breakfast today so that we can send her you know 5g conspiracy ads right you know that's not really what this is about it's like a lot of times this doesn't even involve private data about individual player accounts although that can be used in some of these data services and we can get into that like my whole stick on game data crunch is my site is not the most useful of all of them but it's kind of the simplest and the cleanest because it only just re-reports and re-aggregates information that's already 100 public um and um but i think we want to talk about why it's important to have accurate data about game sales like box office sales of movies is public information like

mostly sort of asterisks and but like a lot of people just kind of take that for granted that we just know how much money every movie made now we don't necessarily know what the dvd sales were and we certainly don't know how much they made on netflix or hulu or anything like that they keep that real tight-lipped and i wish again that i had like my homework perfectly done and i could remember the hard-fought war it took to get box office disclosures like that wasn't something that just movie execs did out of the goodness of their hearts like there was real organizing to make that happen and a lot of horse rating politically that like had to get that to be a thing that everyone just takes for granted now but the point is that um the effect of that is that um it's better for everyone in the movie industry to know what box office sales are because the default position of everyone working in a space is um i'm not going to show me mine but you show me yours right i want all your information i'm not going to give you any of mine right and um

that leads to all kinds of economic inefficiencies because people walk around with like biases about what they think sells that's completely different from what's in the market it takes years for them to catch on to new trends because they can't see them and they don't explore underutilized niches because they don't realize how big they are because they can't see them at all and they only go after the biggest most obvious things that you can see without data um because that's just what's there i mean that's what happens in a kind of dark world where you just you just have this fog of war over um what is succeeding in the market and the people it's worse for is the people at the bottom right is is like the big companies have ways of knowing what's selling enough to make their decisions right if nothing else because there's partnerships under the table and they have ways of just brute forcing that information themselves but there's huge information asymmetry at the bottom of individual creators and also the developers these publishers hire like a

big problem often is like um you know you will have no id you you are a developer you're making a game for a big aaa publisher and they lie to you about what your sales are and you have no recourse you don't know if they're telling the truth this has happened countless times before and then they and then they use it to stiff you on royalties and so a lot of times those come out when these data leaks have come out is a lot of publishers get sued because finally it becomes out in the open what people are actually making and um and they're like we sold twice as much as you said we did so where's my royalties dude right and so um information asymmetry is a classical concept in economics about one of the massive differences in in leverage between different people supplying um services in in the industry is if one side has better information than the other they can use that to just basically extract enormous amounts of value from them and so i think it's really important to underscore why there is a craving for this data and

it's not just because um bobby kotec wants to put another couple zeros on his salary it's as if not more important for people at the bottom to have these commodity services that anyone can use to get these data because like there were less efficient but also more gate kept services before they had worse data but it was available to less people you had to pay like huge numbers a huge amount of money a year to subscribe which was nothing to the bottom line of a big triple a company um but nowadays like with with like steam spy i mean before it kind of like degraded in quality but like and then on all these new game analytics service and app annie and sensor tower um on mobile you know like it it kind of level the playing field a little bit in a world that is famously on level anyway i'll shut up now yeah no i i totally agree like the i mean although i i might disagree with you a little bit lars in the sense that i think that without appearing or sensor tower i i'm not sure if the big companies would know

what to do like at least on the mobile site right like they like they paid the the big fees to to get that data and then that i i do think that that's probably the information asymmetry is like the the small studio who may not be able to afford at any or sensor tower is a little bit at a disadvantage but that's true i do see a lot of the the bigger students like this is why i make fun of the execs because they'll look at the data and they'll be like okay go copy that go copy that go copy that well i think the mobile industry is interesting too because it's so dialed in right like the margin between failure and success is fairly thin it's all about like get to that one cent profit margin and then just rank that volume yeah yeah right and so like that's why you saw such hunger for these analytics on mobile before you saw it on pc and console it still helps in pc and console but it's not like as life or death as it is there on mobile right you know at least in my opinion brett how mad should we be at at benny

like there was a fair amount of folks who were outraged right like but in your opinion you know how mad should we be well well i just yeah well before i answer that i do want to sort of reference what what you've been talking about i mean i don't think that the that sensor down have many people look at them as as the big bad data companies i think in this case it's that they put across a a partnership and a proposal to say hey we're we're going to exchange information for your data and we're not going to use your data to build our algorithm and then if you read exactly what the sec said it says and this is important behind the scenes however schmidt also directed a small number of employees to use actual app performance data in ways that were prohibited by the connect terms of service to force the model generated intelligence estimates

closer to actual figures before they were delivered to subscribers end quote so it's it it's not there's two different discussions i think that we need to have is one is just general data right done collected in ethical means in agreed upon by our society right that's something that you seem to be doing lars i know you know we stand for here at liquid and grit and then the other is telling somebody that you're not going to do something and then doing it to provide data for other people right and then that has implications to the public market and that's where the fcc uh got involved right and so i'm no yeah and so i think in in this case the in this case there was some things that the sec is claiming actually happened where schmidt told a couple of people it wasn't by mistake i think when i originally thought of my answer for this it was well how did this happen and was this my mistake and i generally am somebody who

tries to live by the creed of be curious not judgmental and so that was sort of my initial take on it but here it kind of clearly says that there was some uh intent behind it to break the code of connect terms of service right and in that case it seems like the the community should be upset about it but of course it happened in 2018 and the nct sec has come in and basically served the potential punishment for it so i i guess in this case of what schmidt did in 2018 i think that the community the mobile gaming community can be upset about it the the next question is well was anything hap did any zap any do anything about it yes they did they removed schmidt from their board and as ceo in 2018 the sec has filed a 13 million penalty on them and so you know like i think that the community

now can move on from that and and and say okay well that happened and then the next question is is is this happening elsewhere is to your point joseph and how responsible are we as a consumer of the data to know that the data is coming from ethical means like that that's a difficult question to answer because that's what you talked about later in the in the article that you wrote which is really interesting is that lawyer saying well uh you know hedge fund you need to know where your data is coming from and it's like well how the heck are you going to know that i mean app and is not going to tell you or any of these service providers are really going to tell you all the data that's going into it just like google doesn't tell us what their algorithm comes from or all these other so like that's their that's how they make money apparently the sec is giving them like you know here's what you need to check for like a check well and then i i'm gonna call the sec hopefully i don't trade any stock so i can but

if you want to have it be publicly available information then that should that should include that should um preclude anything that costs a lot of money because app handy is not cheap so saying that app annie is publicly available information i think is where the sec needs to check their own self at the door because app annie's hundreds of thousands of dollars a year that's not publicly available information that's that's information that hedge funds can get that everyone else can't and so if you want it so the way to get around it i think is to just say that if you have to pay for it you know then directly it's not public here's the thing because like and i pointed this out in that blog post but like if you go to a penny's website they have this section called trust and insurance and this is literally like a hey hint you know nudge nudge watch out but you know quoted quoting from like this this uh post that they that they

published they they here let me just read it to you it states we are also advising the market that they should proactively ask their data providers whether they are doing the following leveraging confidential public company data kind of emit use of confidential public company data no manual data estimate all alterations are taking place proving fully authorized and explicit contractual consent for each use of confidential public company data so it's like what i read into that is that it seems like i mean i i don't know it seems like at band is saying hey i think some of the other guys are still doing this stuff and based upon what the sec saying you guys could get in trouble you better check right well so what's interesting is that i don't know if i read it that way but yeah okay go ahead lars i'm sorry i read it similarly but something else as well yeah which is no what is there something else

well there's something else that i'm reading into it is that they they don't need it anymore right like in 2018 they they use the information to produce an algorithm that's more accurate right yeah and it's like okay well now we don't need it but some other people may and so there's a little bit of an interesting tone there where they use this information to prove their algorithm they've obviously moved past using it they don't need the algorithm anymore right like i mean they don't need the information anymore they have the algorithm well i can speak from experience a little bit about what it's like to construct systems like this and the temptations you have right yeah um so one thing that's interesting to me is that there's also the angle of did they violate the trust of people who are like well i'll give you my data in exchange for a discount right or whatever but you're not going to go tell my competitor that i made 1.2 million dollars last year are you exactly like the last decimal point like yeah they can have the same average within the same error bars as everybody else but like that's the terms i think i'm giving this data under and then if they're going out there and they're like yeah

this game made exactly as much money you know because that gets us a better fit and we're just gonna have we're just gonna have fred back in this you know just go into the sql database and just plug that right in to just you know make our you know because the algorithm is a little bit of an outlier there normally you know just get a little tighter there you know and so i mean i think that's where it gets really fuzzy where you get into machine learning and like what counts as manual right you're doing everything with a computer like you're not literally like holding bits in your hand like what does it mean to do something manually because you can over fit a machine learning curve as tight as you want hands off with a script right you know like you can you can make a a curve that looks like an elephant and just fit your magical algorithm sauce to it you know and so i think what that and this kind of comes with like you know when you have um

i don't i don't want to cast shade on the scc's like technical savvy but it kind of reminds me sometimes of like when senators are like grilling facebook and they're like asking like the dumbest questions you know what i mean is it's like like like what does it meaningly say to like manually just it's like i think the idea to have in mind which makes sense to me is you have the algorithm the algorithm produces outputs and then someone's like oh well i can make this info better if i just override it with the true data right that makes sense but you can also do an algorithm that does that right and hide that it's doing that and make it all automatic so that's kind of um i thought i have but then i mean how would you ever prove that it's complicated but going off on more to the angle of using public and private information so there is for instance in the pc and console game space you know i made game data crunch because of frustrations i had with the existing systems that like everyone wants to know how much money someone's making right

and i was like we just need to get a really good understanding of the public data we're 100 sure of we know exactly how many reviews a game has we know exactly what it's ccu's concurrent users are we know exactly like what it's user stories we know these are facts they're not just like there was so much made up sauce that we would check against true data and would be totally wildly off they were like let's just get like our facts down first and then someone can build a model on that right and that was my mission and now i'm kind of obsolete because now there's plenty of other people coming out making better sites than mine which is fine it gives me more time to do other stuff but um i'm arriving at the point here the point is that um there's um an example of a service that i think has kind of a brilliant business model that's one of these new sites that's coming along it's called ndbi which stands for indie business intelligence and one of the major problems when you're in the console and pc space is especially with consoles is your your

game's on like 10 different stores and all of their reporting mechanisms are like from the stone age like sometimes you're getting like emailed a pdf with your sales you know and like the sub regions of the same of the same distributor will be like different formats so just knowing how much money your game made to the penny accurately from each region is like someone's like at least part-time job at your company just harmonizing all these reports so in dbi what they do is like we will create a little machine that will hook into all of your different publisher accounts distributor accounts harmonize that give you a beautiful dashboard that tells you how much money you made in may right across xbox and playstation and nintendo switch and steam and god and epic and all of that so you don't have to like waste your time on that oh by the way now we have all your information you know now we know down to the penny everything about you and they're completely upfront about this right so it's like okay clearly

like i mean that's the kind of service like you would want to pay for like you're already paying you know some junior staff member just to crunch all your horrible pdf and excel files you know out of this donate into your own database just so you can know how much money you made um so you would gladly a lot of people just gladly give them all of your data for them to do this work for you and then pretty much like in no time at all once like they've launched like i expect they will have just so much true private data and once you have true private data you can fit just shockingly accurate curves right like especially with services like steam that emits so much public data like you can fit just shockingly accurate curves um because if you know what the number one game is making and the number five game and the number 10 game guess what the distribution is a power law fit to a paragraph it puts out these attributes you don't even need to do any machine learning right if you can just sign number one number five number 10

number 15 number 100 as a customer and if they're gonna get like way more than that i mean like they just have shockingly accurate data and time series data too um so that they can tell you that for any day of the year without having to just regurgitate anyone's information they just have so much power to fit a curve right i don't i don't do any of that stuff because i just i mean i i'm kind of afraid to have people's private data for one um just for the compliance and the liability you know but i've done it privately just like for myself and like some friends data who you know let me sign a little nda to look at their stuff and it's like i can get pretty good estimates you know um to fit a curve you know just from a couple of data points so just imagine what someone who has everybody's data for every day of the year can do without having to do any equitable manual adjustments anyway just wanted to yeah maybe we could speak to since you're we're talking about various sources of data you're talking about certain public sources of data whether it's you know and before you mention things like the number of comments and

things like that which you can use to adjust that parallel distribution but what about things like for example you know some companies did get in trouble earlier for things like using trojan horse apps like you know on android oh this is your hey download this free flashlight app or vpn app and by the way in when the permissions come up you know it's like you're giving away every you know you're sold check you know like everything so like what do we think about that there's also things like email you know so there's some free email services that are you know really good email services for free but then then they're they're reading your email and they're like oh that your apple iap receipts nice you know and then they can take that data like do you guys have any thoughts in terms of what's cool to use what what do you think would be acceptable in terms of uh you know data privacy at an individual level as well as some of the public stuff that you had mentioned lars

well i can tell you right off the pc games industry is like pc players are so sensitive to that there was a big like i'll give you two two anecdotes the first one is red shell which was this tracking software that was in a lot of popular indie and some professional games um a couple years ago and it was for advertisement attribution right because like a really like there's a famous quote like half of the money i spend on advertisement is wasted the trick is knowing which half right like knowing did i actually get a return on this ad right and so there was this ad there was this spyware called red shell that you could ship with your game and it like was like some kind of tracking pixel stuff so when someone sees your ad on some site that's like stored somewhere in your computer and then when you play the game red shell can connect the dots that you saw that ad and then they would report that back to the developer and like people just freaked out about this like they freaked out hardcore like review bombs like i mean it just was not worth the bad publicity

and so i mean and i was the end of that company basically you know um so in in pc i mean you couldn't have a more viral like violently opposed crowd so it almost doesn't matter what's right it's just bad business sets you know and i and i kind of come down like i'm very sympathetic to the view like i mean when i was started off like i mean and the pc crowd can be like really really really really really suspicious to the extent that it's very common in games to just like report back analytics like this many people died on level one right this many people died on level two and they died here so i can like balance my game right like crash reports and windows and all that um i got a lot of flack for having just one of those dumb little just game analytics things in one of my games right i mean i i just close it you can disable it you know it like even got to the point where it was opt in when the game started you know but like people would still yell at you for that like you're selling my private date aren't you and it's like who am i gonna sell the fact that you died on level three two you know i mean and then i eventually just removed it

because i found out that it's like i felt like i thought speculatively that i would need that data and then it's like turned out to be more of a hassle to collect and process than i actually got any advantage of so i just removed it all but um in pc they're super hostile to it in console i mean i feel like in console people do whatever they want because how is anyone gonna know um for better and for worse right you know what i mean like probably reporting all kinds of stuff about you and it's the console you have no control whatsoever you know um i think people should be in principle my principle is people should be completely upfront about what data they're collecting and allow people to opt out and i think we've got a kind of a boil the frog situation where apps just demand all of your privileges and you just click ok and i think that's kind of bad um that's that's my thoughts on the subject right uh you know i i generally think this is a positive turn for mobile gaming i mean we're blessed to be able to make games for a living and make a good amount of money for it and i think that we have

gotten a little bit all of us a little bit uh reckless with some of the information that we gathered from our our end consumer and i think that it's awesome that we're of course correcting that whether it be through in this case a little bit of guidance from the sec but in other cases we're doing it apple's doing it as well and and there's other areas of the industry that's just doing it on their own i know for example a lot of game producers themselves are giving percentages of gotchas and percentage of chess and and all these different information to players to make it like more transparent about what they're going to get this i mean that's a little bit different but that's just that's just where i think things are headed i generally am excited about that because i think that the mobile gaming industry is very innovative we're we're very intelligent we have a lot of resources we can find virtuous ways of gathering information and i for example did a podcast

yesterday with chris williams the head of insights for aristocrat digital and i loved how he put it he said we have tons of players who are more than happy to give us information recommendations insights about their about our games when we ask them they they come in droves to help us they're for free right as long as we're upfront with them and i love that framing of it is it's it doesn't have to be binary where getting data is evil and not dating getting data is is positive right i think that there is a world of being 100 transparent about what data we're collecting if you want to be collect if you want that data to be collected if you want to give additional insights well you know do you want to give your opinion right surveys are a perfect example of that if you ask somebody and they can opt out of it maybe they want to tell you something

so i am generally um optimistic about this and particularly just because i think the mobile gaming industry is is so good at innovating it's so good of changing and figuring things out so in general i i see change particularly positive you know change like this for the end user as a good thing so yeah i from my perspective like i actually maybe i'm a little bit different from other people but i i want people to have my private data like i don't want to see an ad about dog food i want to like if i'm trying to buy like a you know if i'm trying to buy a new hard drive or whatever i'd prefer that someone just show me an ad about something i'm looking for and i just don't think there's a lot of a lot of my private data that i really care about to be honest with you so if people yeah i agree it's like it's like everyone's so like what do you what is it that i mean lars said this it's like dude like you're not the most special snowflake in the world like if everyone knows everything about me i mean it's like it

would be awkward but it's not like you know i mean it's like my counterpoint is like sometimes like it is there's a really question whether we really need the data you know and also like in ways people are harmed when their data is required like there's very good examples of like right but that's different than gathering the data that's two different things right and that's what i'm saying is like the association with getting data being bad i think is is an assumption right and obviously it's built off of a lot of well no i mean like i said i mean like i'm with joseph on this it's like in some ways i kind of want to feed my data into the system i mean i i don't want to see like i i'm like when people like oh the algo i'm like dude i love the algo you know how many things that algo has sent me like i watched on youtube or i'm like that is the coolest thing i would have never thought of right like i'm watching just like formula one documentaries and mike tyson's story like i don't even know how i got down this road but i am

so happy that algo figured it out and everyone's like oh the algo knows you and yeah i mean sometimes the algo sends me to like strange places and i gotta course correct it but but i'm i guess you know i'm just not i mean the counterpoint is like the dad who found out that his daughter was pregnant from target um because it was sending her targeted ads for but he later apparently apologized for it because he he algo was right right like he well the point is it's like why does target know this about her at all right like like but why does and then and then maybe she didn't want her dad to know but he found out again that's the positive target no i i think i think we need to like examine again that's the usage of the data being evil not that the data getting the data if the usage of the data is in a positive means well i mean i think i think i think it's not the gathering if they if they gather data that she's pregnant and did nothing

about it well but the thing is once something is gathered there's the temptation to use it like i think like but that's but that's but those are two different things if they had just figured it out because she because if she bought a pregnancy test and now they know that she's potentially pregnant right right well the thing is they don't necessarily need to do anything about it then that's then then that's what is collecting data like is sending that to the advertisement department collecting the data or not let me let me bring this back to the app handy question right where we had should we be mad at app annie the other question is should we be surprised right i am not surprised that someone who acts has access to private information is tempted to use it because that is what competition is going to drive you to because if app annie doesn't use it sensor tower is going to use it right and they're in direct competition with one another and i think that's kind of the issue is it's like you know there's this argument that like all technology is used is neutral like you know and it's just like it's the like i can use a hammer to build a house so i can use it to kill a person right i can use a

chainsaw to cut down a tree i can use to kill a person thing is hammers and chainsaws are terrible murder weapons guns and poison are great murder weapons and they're designed specifically to murder people you know and we can have an argument i will agree with you that generally speaking if people have access to data they will use it for advantage i mean that you know very famously amazon you know a company i consider generally very a great company generally ethical company but using their customers data on what sells well the you know the amazon basics they competed against their customers using their customers data so i will say that you know even great companies right will misuse data so that there is to some degree you know i mean yeah i i personally like i just don't think there's anything interesting about my my personal life but maybe that that's just i'm just speaking about my own personal situation so like you know like i mean a good

example is just like i mean i am a very there's nothing super like the worst thing that ever happened to me with ads is i got married in an eastern orthodox church and i'm ethnically norwegian and on the day of my wedding i received ads for norwegian brides for russian men and i'm like because you know russians are orthodox right and i was just like you got some facts right about me and you completely missed the point about what i need right now today you know yeah that's the worst thing that ever happened to me but you know i have some family members you know i know of like that have problem like i i know a relative has a problem with the stalker right and i know people who have had other issues you know where like privacy is a much higher stakes issue for them like if it's all just about like i get some crappy recommendations i'm not very much harmed but if and like i'm a public figure my name is out there my email address is out there anyone who wants to contact me and contact me you know what i mean but if like i'm the kind of person who if certain things get out about me like

it has bad consequences for my life and those kind of things can be inadvertently revealed about me to people who shouldn't know about that because i bought a pregnancy test at target i mean obviously i would not have a need to purchase one um but like you can kind of get that it's it's like yeah i i buy that like for example there was that but then but but i guess these are things that you opt into right okay go yeah yeah did you know that she was opting into that that when she went into she has a credit card right which opts her into having data collected about her when she buys things okay well i mean she thought with cash there would be no attachment to her to the information right i mean i think this is a little bit like the bitcoins not your not not your keys not your coins kind of argument where it's like it's up to you to well like ignorance is no excuse for the laws of the universe kind of argument it's like i i totally get what you're saying but it's like if i'm a 17 year old girl and i'm pregnant i might not even know that that is the rules of the world because it's

put in this giant terms of service that i'm not i'm i don't read and they don't expect me to read and so they know they can get away with this stuff right and i think there's kind of a little bit of a difference between this like perfect libertarian freedom to contract and people actually living in a world where they have truly and honestly opted into all the things that they have opted into by default just because of the the way we've kind of greased the skits is kind of my position yeah and i mean i the the point i was trying to make is that like there was a wall street journal article about how tick tock can determine if you're like you know um lgbtq in like 10 minutes or something like that right favorite like specific like like they can determine if you're a japanese presbyterian metal fan in like four videos right so like exposing that data to other people sure that that's bad but i i think there are so there's probably you know some good use of privacy other people you're exposing that to the chinese communist party right you know what i mean it's like if i'm exposing like if i'm like liking

um videos about a certain thing like about certain dissident things and i have i don't know say uyghur family in china i could have inadvertently revealed that you know and that maybe had some stakes for me you know um and it's not necessarily obvious to me that when tick tock is asking for permission for this isn't that that i'm signing up for my my my you know my my grand uncle back in qin yang to be you know pulled into a concentration camp you know i mean this is kind of an extreme example but i mean all of these things have happened in certain place right okay so i i think the the takeaway for me is like use of private data com complicated issue probably getting way off course because yeah no because i think the biggest difference is is the associate the attachment to an individual right because in app annie's case it's just revenue numbers right right and in the cases that you were talking about it's associated with a person right like if

you detach the the uid from all the things that we just talked about then none of those things can happen right you're just end up being a number on a mobile device right and that that will that will never sort of not happen because once you once you open up tick tock and you do something with enough data they can pretty accurately define who you are right like once i watch five different things i'm not a snowflake right i'm a i'm a snowflake that's very similar to a lot of other snowflakes and once i watch the five things like the giants well boom you live in san francisco or you live in san francisco area it's like you have x percent okay now i do this like you just start piecing these puzzles together and you kind of they're gonna they're gonna be able to get a picture of who you are i think the biggest difference is that connection of okay this is lars right well let me let me let me ask your opinion on this because i'm interested when you think about this is when steam

spy first came out a big counter argument made against it was i run a game development company in russia or turkey or mexico or whatever like like countries where there are you know alleged criminal gangs that operate right people are gonna like i think it was um the guys who made uh the space game purple space program like their publisher who actually has kind of a bad reputation was like criminal gangs are going to kidnap us now because they know we have a lot of money right and um steam spy's argument was basically like it's been six years no one was kidnapped so that was probably bs but like i mean at the time it sounded like kind of a i mean i didn't know how i felt about it at the time i mean it seems like it was bs and they were probably making that argument in bad faith another example of this is in norway everyone's salary information is public um it's like a really radical policy that they have um out of a very egalitarian sense of it's like because that way you can negotiate better like it's good for workers because they can negotiate better against their employers

but then the kind of argument is it's like if you ever like take a vacation to the wrong spot like you're gonna get kidnapped because they know exactly how much money you make you know um and so i think what do you what do you think about that brett um specifically the the game company saying like bad stuff's gonna happen to us because people know how much money we made uh yeah that's a difficult question i mean fear-driven uh policy is uh obviously pretty important um topic right now on a a a larger level um or not fear driven right i mean we we kind of so i i think that trying to get accurate data about those things is really important because you can use that claim for anything right i mean you can throw that out with i mean i'm just referencing kovid right like what are the details of kovid every state's debating the the the importance of it right and the implications of it right we're having this massive debate on is it is it worth doing this is it worth

doing that is it worth doing this and so i i think you have to be careful on both ends and you and you you can and it's hard to make a policy based off of one data point from one company from one opinion because that's obviously very inaccurate data now it could be 100 true and it seems very severe so in this case it's like well even though it's inaccurate and one data point it's fairly severe so we should probably do something for that one person but um you about what's going on with the census right now this is like circles it back to like public policies right now this census it only comes out every 10 years right and it says like huge long-term projects like use census data for like all kinds of research this year the census has been like for privacy reasons we're not going to tell you like the same amount of granular data on anything lower than the county level so like the the neighborhood or the block level you're not going to know any information they're basically just going to make it up so you get like absurd situations where like an empty lot has like 15

people living there um or whatever just because they're like kind of like obvious getting information because they're like afraid that people could connect it to people's personal identities and like a bunch of researchers are like super mad about this because they claim that that argument is spurious and the census is always operated this way and now there's this big giant gaping what's going to be a 20-year gap in data where we basically can't make all sorts of like so many research projects are basically thrown in the trash can because we no longer know that granular data and the argument for doing it was to protect people's identities because people could work it out what do you what do you all think about that i don't care about anyone having my personal data so i'm more on the you know i i think i'm more crazy so i know what do you think read i mean again i think it comes back to the usage of the data right because the data itself and the knowledge of the data alone is is not i think bad right like i don't think

that there's much bad about it it's the application of the data that i think is where there needs to be serious serious consequences and and overview of it right i mean in this case the app annie the the situation was a bunch of hedge funds guys probably got a little more rich than they did last year which is like super rich so like super rich between rich right like the application of this data i mean to your point though there could have been large people getting murdered in mexico right so yeah i mean i think right and it didn't happen and we also can't live in a world of of um you know complete fear of everything bad happening we need to mitigate and we need to stop but i would say that you know the i would say that lars i'm actually more going on your side because like in the end of the day i care about making games and i think we all care about making games is a living because it's a wonderful privilege to be able to

do this i feel so blessed to do this every single day and at all costs i think and and the goal of it is to make people happy do we need to know that it's a 45 year old man in norway who's playing my game to do that no we don't need to know that so if i had to make a hard decision right now about whether or not the data was super like necessary i would say no and i'd add to that that i feel like i mean necessity is the what is it the mother of innovation and mobile gaming is super innovative so if you shut this door if people say hey this is really offending us and we shut the door on it what i'm saying is i generally feel that mobile gaming is gonna adjust it's gonna pivot and say okay maybe we ask you maybe we ask you for your opinion maybe we have everyone who plays our game fill out a survey and get a thousand coins and and then we say we're going to use this data to inform the next product innovation right like so if i had to

make a call right now lars i i would say that it is erring on the side of um just being careful about the end users like well-being right all right guys so i thought we could wrap it up with one last question really around kind of like the sec what we think they're gonna do and one thing that for me was a little bit of a red flag was this was the sec investigating activision blizzard over workplace practices disclosures things like that and sure you can say that the sec is investigating active division blizzard because some of those workplace practices may have impacted like if there wasn't enough disclosure could have impacted you know the stock price things like that but in my opinion i also think it's it it also kind of indicates more of an expansion in terms of the scope of the sec and i don't know maybe i'm just being a little bit paranoid but

wondering what you guys think when i when i listen to some of these lawyers talk about how for example now the sec is kind of indicating to hedge funds you guys better watch out you know and then the next logical step is that game companies are going to need to watch out if they're using a service that's been compromised in some way and then you know they i i think you know even for there are a number of public companies using customer data in various ways and so like the scope of the sec potentially could expand quite a bit something that worries me a little bit just because i i'm just generally i'm not i'm not libertarian but i do like smaller governments if possible but what do you guys think it's interesting to me because it's like it seems to me like a sign of using whatever enforcement mechanism is around to just like i mean i put a square peg into a round hole just to get the job done kind of thing like like the activation blizzard thing is interesting it's like i wouldn't admit like sec is there to like basically like prevent finance fraud and like it was set up in like new deal in the wake of the like

great depression right and like so i'm a little confused about like exactly what they're like i think it's good that we're going after companies that are abusing their employees and doing all this harassment but that seems kind of i don't know all the executive agencies exactly what their bailwick is and whose job is what but it seems more like is that like a national labor relations board or department of justice or something kind of thing like people are committing what might even be actual like cr prosecutable crimes like i don't imagine like the the money cops going in because it's damaging shareholder value right and that's like the justification for going after these people it's like i understand like any port in a storm like get people justice but like it does feel a little the activision blizzard feels a little weird to me that it's it's like the money police who are who are gonna fix this problem i think the argument there the sec is potentially making is that hey if you as a leadership team heard about some stuff you should have disclosed it you should

have said hey we got a bunch of people that's interesting discriminating against or sexually harassing you know i mean although i've never ever in the history of any like you know um financial filing ever seen a company that that disclosed something like that ever but well like what is it like the equivalent of it's like okay we dumped a bunch of we found out that one of our that one of my vps like dumped a bunch of toxic waste into the lake and then i covered it up right and then when it comes out on a 60 minutes report the share price tanks and so like like a along with an actual crime i've also like just against humanity in the lake i've also committed fraud right is that basically the argument here that it's like similar i think i think so i think it's similar yeah i mean i i can support that it's like it's a little weird that like round peg square hole kind of thing it's like i support people getting justice wherever they can um i do like want to make sure that like

we use the departments we have for the purpose they have i understand that that's kind of like um i'm gonna wish for a lot of other things while i'm at it you know um but the the sec becoming like a de facto like data broker regulator is interesting i don't know enough about it to have opinions um you clearly do um like i'm not sure who would regulate that otherwise um just because i don't know enough about the executive departments all right brett any final thoughts yeah i mean it just seems to me that it's just new for us because mobile gaming is now becoming an industry where we have so many public companies in it and it seems like the sec wanted to get their name in the newspaper that they're looking into mobile gaming and we have an eye on mobile gaming because now it's it's the point where mobile gaming is hot right and and it's hot in the public market and so i think they wanted to throw their name out there and say oh we looked in this looking at that i feel like it's kind of like going after capone for tax evasion where you know he did a bunch of stuff but

the way you can actually make it stick is getting him for it's like where the irs has that form when you fill out your taxes it's like uh can you disclose uh how much money you made from illegal activities you know like who's never gonna fill that out it's like it's like the irs are not actually it does it does it's like there's a forum to feel like it's like so that it's like if you can't get you on the crimes get you on not paying taxes for the crimes yeah why didn't you report that yeah all right well i think we'll wrap it here everybody pretty far-ranging conversation today a lot of cans of worms opened hopefully you found some value in our conversations today and for everyone then yeah catch us next time everybody catch y'all later bye [Music]

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