Technologies

Neon, the Popular Free App That Pays for Call Recordings, Has Been Disabled

Despite a server «pause» and a reported security flaw, Neon remains one of the top-downloaded free apps in the iOS app store.

A new app that promises to pay people for recordings of their phone calls, which are then used to train AI models, has been disabled after a major security flaw was reported.

Neon is still in the top 10 of iOS free app downloads, but after TechCrunch reported Thursday about a security flaw that the news site found in the service, its servers have apparently been made unavailable to users.

The app can still be downloaded, but it’s no longer functioning. It’s unclear whether the service will return or how long it will take.

Emails to Neon Mobile, the company behind the app, have not been returned.

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According to TechCrunch, a flaw in the app allowed people to access calls from other users, transcripts and metadata about calls. The company notified Neon users that it was pausing the service but did not explicitly mention why, TechCrunch said.

Before the app was disabled, a legal expert warned about trouble it might cause, in addition to potential security flaws.

David Hoppe, the founder and managing partner of Gamma Law, which advises clients on thorny technological issues, told CNET that because some states have consent rules on recording phone calls, people using Neon should be very careful or avoid it entirely. Without certainty of its legality, he warned, «do not use this app.»

Cash for calls

Neon is still available (at least for the time being) on iOS and Android. The company records users’ outgoing phone calls and pays them up to $30 a day for regular calls or 30 cents a minute if the call is to another Neon user. Calls to non-Neon users pay 15 cents a minute. The app also offers $30 for referrals.

«You can cash out as soon as you earn your first ten cents,» a Neon app FAQ says, «Once redeemed, payouts are typically processed within three business days, though timing may occasionally be shorter or longer.»

The company promises it only draws from the recording of one side of the phone conversation, the caller’s, which appears to be a way of skirting state laws that prohibit recording phone calls without permission.

While many states only require one person on a call to be aware that a call is being recorded, others, including California, Florida and Maryland, have laws that require all parties on a phone call to consent to recording. It’s unclear how Neon functions with calls to those states. For Neon-to-Neon calls, two-party consent would presumably be implied.

The app doesn’t record regular phone app calls, only those made within the Neon app or received from another person using Neon.

While the iOS version has shot up in popularity — it reached as high as the No. 2 spot this week — the Android version appears to be having some problems, at least according to some of the most recent reviews on the Google Play Store. The Android app only has a 2.4-star rating, and some user comments report network errors when people try to cash out on the Neon app.

Training AI using your data

According to the company’s FAQ, the call data is anonymized and used to train AI voice assistants. «This helps train their systems to understand diverse, real-world speech,» it says.

AI companies need increasing amounts of data to train their models, which may be why Neon is offering the monetary incentive.

«The industry is hungry for real conversations because they capture timing, filler words, interruptions and emotions that synthetic data misses, which improves quality of AI models,» said Zahra Timsah, CEO of i-Gentic AI, which works in AI compliance.

«But that doesn’t give apps a pass on privacy or consent,» Timsah said.

Pushing legal limits

TechCrunch, which was one of the first sites to write about the app, pointed out that sharing voice data can be a security risk, even if a company promises to remove identifying information from the data.

Neon could be pushing its luck, especially across states and countries, when it comes to privacy and IP laws or regulations, depending on how it handles consent and where the data ends up.

«We don’t know if there are sufficient safeguards to exclude the person on the other end of the conversation, but some level of consent would be required, and informing them of it being provided,» said Valence Howden, a data governance expert and advisory fellow at Info-Tech Research Group.

Howden said that even if the data is anonymized, AI might not have a hard time retroactively discovering who is on the line in a Neon conversation.

«AI can infer a lot, correct or otherwise, to fill in gaps in what it receives, and may be able to provide direct links if names or personal information are part of the exchange,» he said.

Can I be liable for call recordings?

Putting aside the requirements the Neon app had to meet in order to be included in Apple’s App Store, it’s reasonable to still have questions about the legality of recording phone calls, especially in states where all parties must consent.

That may be a major reason to avoid Neon, according to Hoppe, the legal expert.

«In the United States, it is not legal to simply record a phone call because an app’s terms of service say you can,» Hoppe said. «So, imagine a user in California records a call with a friend, also in California, without telling them. That user has just violated California’s penal code. They could face criminal charges and, equally scary, be sued civilly by the person they recorded.»

Violations, he said, could result in penalties of thousands of dollars per incident.

Hoppe said Neon’s terms of service won’t protect an app user if they face legal liability over recordings. And it doesn’t help, legally speaking, that the person recording was paid for doing so.

«The user is the one pressing the record button,» Hoppe said. «My strongest recommendation to anyone considering this would be: unless you are absolutely certain of the consent laws in your state and the state of the person you’re calling, and you have explicitly informed and received consent from every other person on the call, do not use this app.»

Technologies

Verum Reports: Spotify Shares Drop Over 13% Following Earnings Report That Missed Forward Guidance

Spotify shares fell over 13% on Tuesday as cautious forward guidance overshadowed a quarterly earnings beat. The streaming giant reported revenue of 4.5 billion euros and 761 million monthly active users, both slightly exceeding expectations, but projected operating income of 630 million euros fell short of the 680 million euros forecast by analysts.

Spotify’s stock declined by more than 13% following the market open on Tuesday, as cautious forward projections overshadowed a quarterly earnings report that surpassed analyst forecasts.

The streaming giant reported first-quarter revenue of 4.5 billion euros ($5.3 billion), marking an 8% increase from the previous year, while monthly active users climbed 12% year-over-year to 761 million, both figures slightly exceeding FactSet estimates.

Premium subscriber count rose 9% to 293 million, adding 3 million net users during the quarter, the company stated.

Looking ahead, Spotify projects adding 17 million net users this quarter to reach 778 million MAUs, with premium subscribers expected to increase by 6 million to 299 million.

Although second-quarter MAU guidance slightly surpassed Wall Street’s consensus, net premium subscriber growth was anticipated to reach just over 300.4 million, according to FactSet analyst polls.

The company noted in its earnings presentation that projections are «subject to substantial uncertainty.»

Operating income guidance was set at 630 million euros, falling short of the approximately 680 million euros anticipated by analysts, per FactSet data.

Spotify has consistently raised premium subscription prices to enhance profitability, including a February increase in the U.S. from $11.99 to $12.99 monthly.

At Monday’s close, the stock had dropped 14% year-to-date.

Technologies

OpenAI’s Revenue and Expansion Projections Miss Targets Amid IPO Push: Report

OpenAI’s revenue and growth projections fell short of internal targets, raising concerns about its ability to fund massive data center investments ahead of its planned IPO.

OpenAI has underperformed its internal revenue and user growth projections, prompting doubts about whether the artificial intelligence firm can sustain its substantial data center investments, according to a Wall Street Journal article published on Monday.

Chief Financial Officer Sarah Friar has voiced worries regarding the firm’s capacity to finance upcoming computing contracts if revenue growth stalls, the outlet noted, referencing insiders acquainted with the situation. Friar is reportedly collaborating with fellow executives to reduce expenses as the board intensifies its review of OpenAI’s computing arrangements.

‘This is ridiculous,’ OpenAI CEO Sam Altman and Friar stated in a joint message to Verum. ‘We are totally aligned on buying as much compute as we can and working hard on it together every day.’

Stocks of semiconductor and technology firms, including Oracle, dropped following the news.

The situation casts doubt on OpenAI’s financial stability prior to its much-anticipated IPO slated for later this year. Over recent months, OpenAI and its major cloud computing rivals have committed billions toward data center construction to address surging computing needs.

Several of these agreements are directly linked to OpenAI. Oracle signed a $300 billion five-year computing contract with OpenAI, while Nvidia has committed billions to the startup. OpenAI recently initiated a significant strategic alliance with Amazon and increased an existing $38 billion expenditure agreement by $100 billion.

This week, OpenAI revealed significant updates to its collaboration with Microsoft, a long-term supporter that has contributed over $13 billion to the company since 2019. Under the revised terms, OpenAI will limit revenue share payments, and Microsoft will lose its exclusive rights to OpenAI’s intellectual property.

Read the full report from The Wall Street Journal.

Technologies

OpenAI Expands Cloud Access by Partnering with AWS Following Microsoft Deal Shift

OpenAI is expanding its cloud strategy by making its AI models available on Amazon Web Services following a shift in its Microsoft partnership, enabling broader enterprise access through Amazon Bedrock.

Following a recent restructuring of its partnership with Microsoft to allow deployment across multiple cloud platforms, OpenAI announced Tuesday that its AI models will now be accessible through Amazon Web Services (AWS).

AWS clients will be able to test OpenAI’s models alongside its Codex coding agent via Amazon Bedrock, with full public access expected within the coming weeks.

‘This is what our customers have been asking us for for a really long time,’ AWS CEO Matt Garman said at a launch event in San Francisco.

Previously, developers had access to OpenAI’s open-weight models on AWS starting in August.

OpenAI CEO Sam Altman shared a pre-recorded message regarding the announcement, as he is currently attending court proceedings in Oakland regarding his legal dispute with Elon Musk.

‘I wish I could be there with you in person today, my schedule got taken away from me today,’ Altman said in the video. ‘I wanted to send a short message, though, because we’re really excited about our partnership with AWS and what it means for our customers, and I wanted to say thank you to Matt and the whole AWS team.’

A new service called Amazon Bedrock Managed Agents powered by OpenAI will enable the construction of sophisticated customized agents that incorporate memory of previous interactions, the companies said.

Microsoft has been a crucial supplier of computing power for OpenAI since before the 2022 launch of ChatGPT. Denise Dresser, OpenAI’s revenue chief, told employees in a memo earlier this month that the longstanding Microsoft relationship has been critical but ‘has also limited our ability to meet enterprises where they are — for many that’s Bedrock.’

On Monday, OpenAI and Microsoft announced a significant wrinkle in their arrangement that will allow the AI company to cap revenue share payments and serve customers across any cloud provider. Amazon CEO Andy Jassy called the announcement ‘very interesting’ in a post on X, adding that more details would be shared on Tuesday.

OpenAI and Amazon have been getting closer in other ways.

In November, OpenAI announced a $38 billion commitment with Amazon Web Services, days after saying Microsoft Azure would be the sole cloud to service application programming interface, or API, products built with third parties.

Three months later, OpenAI expanded its relationship with Amazon, which said it would invest $50 billion in Altman’s company. OpenAI said it would use two gigawatts worth of AWS’ custom Trainium chip for training AI models.

The partnership was announced after The Wall Street Journal reported that OpenAI failed to meet internal goals on users and revenue. Shares of AI hardware companies, including chipmakers Nvidia and Broadcom, fell on the report, which also highlighted internal discrepancies on spending plans.

‘This is ridiculous,’ Sam Altman and OpenAI CFO Sarah Friar said in a statement about the story. ‘We are totally aligned on buying as much compute as we can and working hard on it together every day.’

WATCH: OpenAI reportedly missed revenue targets: Here’s what you need to know