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Category Archives: Big Tech

Big Tech Still Loves The Oil Business –

Posted: September 15, 2020 at 3:08 pm

When Google earlier this year announced that it would stop making AI products for the oil and gas industry, prompted by a revelatory report by Greenpeace, it was a signal that, like banks, Big Tech may start distancing itself from the fossil fuel industry. But not everyone has been so suggestible: IBM just announced a partnership with Schlumberger in cloud computing. Tech and oil may still have a future together, and that might be good for everyone, even Greenpeace. The IBM-Schlumberger partnership, which also includes Red Hat, is focused on cloud services and aims to accelerate the oil industry's shift to a more digital mode of operation.

"The energy industry is transforming as organizations look for efficient new ways to power their operations, adopt digital technologies to create a competitive advantage, and innovate and integrate workflows to make faster and better decisions," the chief executive of Red Hat said in the press release announcing the tie-up.

Indeed, the energy industry is transforming, and the pandemic has been a sort of a kick in the backside to accelerate this transformation. As Covid-19 cases sent platform and field workers packing and emptied offices, many day-to-day operations in the industry went remote. This was possible thanks to digital technology, including cloud. In fact, some of the trends that the pandemic created may become long-term as they save costs at a time where every dollar matters.

It seems that oil and tech go pretty well together. IBM is not the only tech giant to team up with an oil major recently. Just a month ago, Microsoft opened up its cloud platform to Petrobras. The Brazilian company had been testing the platform even before the crisis, but when it struck, and the company had to have staff work from home, it fast-tracked the deployment of the platform, an industry executive told Bloomberg in August.

What these partnerships basically do for oil is they make exploration drilling a lot more accurate and production much more efficient. This is, of course, good for the industry because it ultimately saves costs. But accurate exploration drilling and efficient production is also good from an environmental standpoint: it means less drilling and cleaner drilling.

Microsoft was also a target of Greenpeace criticism in May when the organization published its "How Tech Companies are Helping Big Oil Profit from Climate Destruction" report that led to Google'spartialpullout from the oil and gas industry. Unlike it, Microsoft stood its ground.

Related: Citi Bank Sees $60 Oil In 2021

"The significance and complexity of the task ahead is incredible and will require contributions from every person and organization on the planet," the tech giant said in a blog post in January this year, in which it pledged to become carbon negative by 2030.

"That's why we are committed to continuing to work with all our customers, including those in the oil and gas business, to help them meet today's business demands while innovating together to achieve the business needs of a net zero carbon future. Continued improvement in standards of living around the world will require more energy, not less. It's imperative that we enable energy companies to transition, including to renewable energy and to the development and use of negative emission technologies like carbon capture and storage and direct air capture."

Some might say this is simply a justification for Microsoft's continued business with the oil industry, but the company certainly has a point: global energy demand, despite the pandemic, will continue rising over the long term. Every authority on energy, including the IEA, agrees that this demand will be impossible to satisfy with solar and wind farms alone. It makes sense, then, to help oil and gas companies become cleaner.

The IBM-Schlumberger partnership promises "seamless access to a hybrid cloud platform in all countries across the globe for deployment in any basin, for any operator," according to Schlumberger CEO Olivier Le Peuch. This would certainly help streamline many operations, and streamlining operations tends to reduce carbon emissions by its very definition. And there are other things with which Big Tech can help Big Oil: carbon trackers, for example, are all the rage now that investors are pressuring oil companies into making their carbon footprint public.

Greenpeace applauded Google's decision to stop making AI products for Big Oil. But the move meant Google willingly gave up Big Oil's business. The company is large enough to not feel any negative effect from this, perhaps. Still, it appears that at least two of Google's peers are of a more pragmatic bend. The industry's shift to a lower-carbon footprint hinges on digital technology. Some of it Schlumberger and the rest of the majors can develop on their own, but it's always betterand things happen fasterif you have help. The marriage of Big Oil and Big Tech has the potential to benefit everyone, not just the two industries involved in it.

By Irina Slav for

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Big Tech Still Loves The Oil Business -

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Big Tech is turning on one another amid antitrust probes and litigation – MarketWatch

Posted: at 3:08 pm

Battle royale evokes images of professional wrestlers engaged in a free-for-all brawl in which combatants eventually turn on one another until there is an eventual winner. With apologies to Hulk Hogan and Andre the Giant, Big Tech is taking on the same trappings as companies turn on one another amid multiple antitrust investigations and issues.

As the Justice Department, Federal Trade Commission, Congress and state attorneys general dig deeper into their probes, and as Apple Inc. AAPL, -1.12% and Epic Games Inc. duke it out in court, some of the companies targeted are taking a page out of the squared circle and turning on one another.

A quick recap: Facebook Inc. FB, +1.80% is targeting Apple amid its fight with Epic over 30% fees on the App Store. In TV commercials and brand messaging, Apple repeatedly takes swipes at the privacy policies of Facebook in its pursuit of targeted advertising. High-profile names in tech, meanwhile, question business systems at Google and Amazon ahead of charges against those companies that are expected soon. All the while, Big Tech employees and executives increasingly are grumbling about Microsoft Corp. MSFT, +1.08% seemingly getting a free pass from the Trump administration.

In a closed-door meeting with Facebook employees in late August, Chief Executive Mark Zuckerberg said Apple charge[d] monopoly rents which blocks innovation, blocks competition. He further upped the ante Tuesday, suggesting in an interview with Axios that the government should investigate the App Store. I think some of the behavior certainly raises questions, he said. And I do think its something that deserves scrutiny.

Not to be excluded, Microsoft claimed Apples threat to revoke Epics developer account would have far-reaching effects harmful to the videogame industry.

If Unreal Engine cannot support games for iOS or macOS, Microsoft would be required to choose between abandoning its customers and potential customers on the iOS and macOS platforms or choosing a different game engine when preparing to develop new games, Kevin Gammill, Microsofts general manager for Gaming Developer Experiences, said in a statement. Apples discontinuation of Epics ability to develop and support Unreal Engine for iOS or macOS will harm game creators and gamers.

Read more: Microsoft says Apples threat against Fortnite maker would hurt entire videogame industry

Complicating matters, Apple on Friday imposed changes to its App Store that could severely hamper game-streaming services from Google Stadia and Microsofts xCloud. Among the revisions to iOS 14, the latest version of the iPhone operating system expected later this month, one would require games offered in the service to be downloaded directly from App Store not from an all-in-one app like Alphabet Inc. GOOGL, +1.53% GOOG, +1.28% and Microsoft are offering.

In another wrinkle to the Apple-Facebook standoff, Instagram CEO Adam Mosseri on Friday told CNBC that the company strongly objects to a planned change to iOS that would impact how it and other mobile advertisers track users. On Thursday, Apple said it will delay until early next year changes to its privacy policy that Facebook and others claim will eviscerate advertising sales targeting users on iPhones and iPads.

Read more: Apple delays privacy policy change, much to the relief of Facebook, mobile ad sellers

Even those who helped create some of techs most important properties are aghast at what they have become. In August, YouTube co-founder Chad Hurley asked via Twitter if YouTube become the Amazon of video? If so, where is the Shopify of video?

What if I told you the obnoxiously high 30% App Store fee was a deal? This is the story of a video site that uses its size and power to take nearly double that, he wrote.

A long list of former Facebook employees and advisers among them, co-founder Chris Hughes, ex-Chief Security Officer Alex Stamos and venture capitalist Roger McNamee have commented with distress about the companys impact on society. Hughes went so far last year as to advocate breaking up the company.

A circular firing squad

The finger-pointing and name-calling belies long-simmering competition between four companies Apple, Google parent Alphabet, Inc. AMZN, +1.50% , and Facebook that are under scrutiny from a phalanx of investigative bodies over their business practices and vast influence in multiple markets. Antitrust experts jokingly refer to those under investigation as GAFA.

More important, the circular firing squad could portend a slew of forthcoming actions on the antitrust front: The Justice Department is expected to bring charges against Google as early as this month, a person familiar with the investigation told MarketWatch. The House Judiciary Committees antitrust subcommittee, meanwhile, could issue a report this month on its recommendations following its July 29 hearing on Big Tech, two people close to the situation told MarketWatch.

Fueling the acrimony is genuine concern from the far-right to the far-left. Big Tech is big oil. It is a bipartisan issue, Anurag Chandra, a partner at venture-capital firm Fort Ross Ventures, told MarketWatch. These guys have gotten massive. We have to get involved with public policy over privacy and use of personal data.

Google and Amazon would seem to be first in line for actions, he added. They create and operate forums, and then compete in them. By putting their thumbs on the scale, that sounds like grounds for antitrust actions.

Fueling the accelerated timetable is the increasing willingness among smaller companies to speak up against the Big Four.

You will also see non-GAFA companies air their grievances more publicly because they arent in danger of being punished with so much attention on their business practices, said Joel Mitnick, a former FTC trial lawyer who specializes in antitrust and global litigation. It is out in the ether now. What is more important is the entire regulatory machinery around the world is gearing up against the Big Four. The infighting is background noise.

A possible timeline

Google is likely to face charges as early as this month under the aggressive directive of U.S. Attorney General William Barr, according to a person familiar with the investigation and at least two recent reports.

The Justice Department and a group of state attorneys general may file antitrust lawsuits focusing broadly on how Google leverages its dominant search business to stifle competition, according to a Wall Street Journal report. At the same time, the Justice Department and state attorneys general are also investigating the pricing and operations of Googles Network division, a business that sells services that handle almost every step a digital ad takes, said a Bloomberg report.

Of course, the political calculus of such moves during a presidential election year could complicate matters, says V.C. Chandra. Im growing skeptical that we will see anything definitive regarding an antitrust action before the election, he said. The administration, despite its feelings about monopolization, needs a strong economy. A concrete action against Big Tech could drive down their stock and blunt market momentum that has been aided by tech companies.

Facebook is even more immune to imminent government activity between now and Nov. 3 because it is a political hot potato for both a get-out-the-vote push on its properties at the same time conservative groups and pages thrive on Facebooks digital platform, Chandra said. (In the same interview with Axios, Zuckerberg refuted a narrative that Facebook is an echo chamber for right-wing views.)

Despite the relatively civil relationship between Zuckerberg and President Donald Trump, it might only take a mild disciplinary action by Facebook over Trumps profile feed to raise his ire and prompt regulatory punishment, Chandra added. Last week, the company said it would ban new political ads in the week preceding Nov. 3.

Gaming the system

An already epic battle brewing in antitrust against Big Tech became downright Epic when the eponymous videogame maker sued Apple and Google in August. This has led to a pile-on of Apple by companies like Microsoft, Spotify Technology Inc. SPOT, -0.16% and Facebook over its App Store policies. Last week, Epic filed a preliminary injunction against Apple in its latest attempt to bring Fortnite back to Apple devices.

Many companies have huge components of their business reliant on mobile apps and the supporting toolsets, Adam Landis, CEO of mobile-analytics company AdLibertas Inc., told MarketWatch. Apple trying to block a major toolset should set anyone reliant on mobile apps on edge. Imagine waking up to find business operations halted or your apps no longer functional. I wouldnt be surprised if Facebook intends to lob a lawsuit of their own against Apple.

Apple countersued Epic on Tuesday, seeking punitive damages. The cases next hearing is Sept. 28.

Google, too, has been a lightning rod of criticism from longtime rivals.

Days after the congressional hearing in late July, Tripadvisor Inc. TRIP, -1.31% CEO Steve Kaufer called for further investigation into Googles search-ranking practices to rein in its deceptive efforts to [keep] users on Googles sites even if Google doesnt have the most relevant information.

Luther Lowe, senior vice president of public policy at Yelp Inc. YELP, +1.18% , told MarketWatch he was pleasantly surprised to see House members grill Google for allegedly stealing content from developers, such as restaurant reviews from Yelp.

Read more: Fortnites impact could be Epic on antitrust investigations of Big Tech

Why not Microsoft?

Through all the infighting and accusatory claims, Microsoft has been notably excluded from antitrust talk which is surprising given its long and tortured history with federal antitrust investigations. During the Microsoft investigation more than 20 years ago, the government dropped the effort to break up the tech giant before eventually settling the case with a consent decree.

For more: Big Tech was built by the same type of antitrust actions that could now tear it down

By the time the government reached a settlement with Microsoft, however, many years had passed and the tech market had seen the emergence of new markets for mobile and cloud, as well as the transformation of Microsoft into a cloud and gaming behemoth.

Ultimately, federal authorities were successful in changing Microsofts behavior toward competitors, prompting it to soften its ruthless ways and indirectly fomenting competition in the emerging fields of search, social media and e-commerce. The man leading the push acknowledged that historical record in a speech in June 2019.

The governments successful antitrust case against Microsoft arguably paved the way for companies like Google, Yahoo, and Apple to enter the market with their own desktop and mobile products, said Makan Delrahim, the Justice Departments antitrust chief, told MarketWatch in an interview late last year.

Which brings us to today, and Microsofts unique standing. The company last week was awarded a 10-year, $10 billion cloud-computing contract by the Defense Department over Amazon, and it is a favorite to acquire video-sharing service TikTok.

Those developments have left many in tech wondering if Microsoft, as well as Facebook and Oracle Corp. ORCL, +2.52% , have been favored by the Trump White House while Amazon and Google are punished for political reasons. (Amazon CEO Jeff Bezos owns the Washington Post, a fierce critic of the president, while Google has largely ignored entreaties from lawmakers to testify until recently.)

Antitrust lawyer Paul Swanson points out Microsoft does not run big-time marketplaces for apps (like Apple and Google, for example) or for advertising (such as Google, Facebook, and Amazon) or for goods (like Amazon).

What makes the Big Four so interesting, he says, is they dont just have market power in the markets where they compete they created and control the forum for competition, and then (at least for Amazon and Google) they compete within those competitive spaces that they operate and control.

Its a little like Microsoft in the 90s, which controlled the forum (Windows) for competition among third-party software developers (Novell, Netscape) and used its control over the forum to favor itself in competition with those developers (WordPerfect, Explorer v. Navigator), Swanson said.

After taking on a lot of water in antitrust litigation back then, Microsoft seems to have charted a more careful course, he said.

A lone voice of dissent toward Microsoft, aside from Amazon over the government contract, is Slack Technologies Inc. WORK, +0.15% It filed a competition complaint in Europe in July.

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A top Washington analyst weighs the risks of antitrust actions against Big Tech – CNBC

Posted: at 3:08 pm

Paul Gallant, managing director of the Cowen Washington Research Group

H/O: Paul Gallant

A View from the Top is a Q&A series exclusively available onCNBC Pro. CNBC reporters will regularly speak with a business leader about decision-making, investing and industry news.

It's still anyone's guess whether and when U.S. law enforcement will bring antitrust charges against the nation's Big Tech companies, but Paul Gallant, a managing director of the Cowen Washington Research Group, has been trying to determine the odds.

Gallant has been closely tracking the tech scrutiny ofAmazon, Apple, Facebook and Google parent Alphabet as federal and state enforcers probe their businesses for potential violations of the U.S. antitrust laws. Along the way, he's analyzed the likelihood of enforcement action against the four giants. In a November report, Gallant and his colleagues predicted the chances of antitrust lawsuits from federal or state enforcers depending on the outcome of the 2020 presidential election. What they found was:

Gallant's prediction that Google will face an antitrust lawsuit may soon pan out. The New York Times and Washington Post reported that Attorney General William Barr is pushing the Antitrust Division to announce a case against Google by the end of the month.

In a late August interview, Gallant said certain factors could still change the calculus of his predictions for the other tech companies. Epic Games' recent lawsuit against Apple alleging anti-competitive behavior, for example, could turn the tide against the smartphone maker if the suit serves as a "catalyst" for other opponents to air their own grievances, Gallant said.

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Feds can’t scapegoat Google and Big Tech as anti-trust targets forever – New York Post

Posted: at 3:08 pm

It seems that every week is a big week for Big Tech these days. Sometimes hitting record highs, sometimes taking a big hit.

But I wouldnt be worried about market jitters. The real Sword of Damocles for Big Tech could come as early as this week, when a supposedly free-market Trump administration could launch a landmark lawsuit against one of the biggest and most successful companies not just in technology, but in any industry ever created on American soil.

The company is Google, the worlds greatest search engine, which has been in the crosshairs of politicians of both parties. Barring something dramatic, it will soon be the target of litigation brought by the Trump Department of Justice and many states attorneys general for alleged antitrust abuses.

Google doesnt fit the classic definition of an antitrust target by costing consumer money its a free service for consumers that makes much of its money on advertising. But what makes Google enticing for class warriors is its size ($1 trillion market cap), massive profitability and omnipotence as everyones favorite search engine, which also allows it to allegedly play dirty.

Its been accused of skewing search results to advertisers and giving top billing to search results that favor progressive political thought, not to mention mining user data for its business.

Given the politics of the moment, Google may be the first, but probably not the last, tech company to get roasted at the hands of the government not for doing anything terribly wrong, mind you, but for simply being too big and successful and the latest whipping boy for politicians in both parties.

Ive seen this before with the banks after the 2008 financial crisis, though at least the banks created the financial crisis that led to the Great Recession some 10 years ago. Big Tech ushered in an economic renaissance and helped keep our economy from falling into another Great Depression during the pandemic.

I say this not as a Pollyanna about tech or any big company using its might to push for laws that benefit its bottom line (see the support Big Tech gave to net neutrality, which was essentially a free ride on cable operators backs). I have no doubt that there are plenty of lefty programmers out there working for Google or Facebook or Twitter who would love to push political commentary that seems to support their wokeness, though for some reason, Im never at a loss for commentary that appeals to my libertarian leanings.

And yes, I worry about my privacy, as any American who read Orwell would about centralized power keeping tabs on us all.

But Google or Facebook or Apple isnt the government; theyre tracking my web searches to sell me stuff, which is why I keep getting ads for chin-up bars and hairy-chest dad-bod hoodies. (I bought one as a birthday gift for my pal and Fox Business colleague Neil Cavuto.)

Sorry, Im more worried about politicians looking for an easy scapegoat to make us all forget the real problems we have to face in the months and years ahead and destroying an American business success story. It doesnt take a Karl Rove political genius to figure out that politicians on both sides of the aisle have screwed up stuff royally during the pandemic, and yet Im supposed to believe a crackdown on Google for showing preferences in its search engine to its advertisers will help cure COVID or get the economy running full steam ahead.

It will obviously do neither, and will make achieving the latter a lot more difficult. A little context: Apple, Amazon, Alphabet (Googles parent), Microsoft and Facebook are the largest companies in the stock market and their strength and size only grew during the pandemic. Tech represents about 12 percent of GDP, and $1.3 trillion in wages, according to Price Waterhouse.

That may make them a monopoly in the eyes of Elizabeth Warren, but it also made them a massive employer, a payer of a lot of taxes and a useful and cheap tool for consumers during a difficult time.

The football season is now upon us, and like many fans of the sport, it couldnt come soon enough for me. But the games number crunchers are worried. COVID forcing many stadiums to go fanless is one concern with football being able to produce decent revenues this season. So are plans by the NFL to politicize the game.

I spoke with some football business executives and heres how they broke down the leagues difficult finances in 2020. Football is a $16 billion-a-year sport, with about $8 billion of its revenues coming from television rights, according to John Tatum, CEO of the Dallas-based Genesco Sports Enterprises.

So keeping decent television ratings is key. The lack of excitement from the crowds will likely turn away some viewers. Another likely turnoff: Decisions by the NFL Commissioner Roger Goodell to embrace social-justice slogans on the field and even on helmets as the season opens this week.

Football fans may be all in on social justice, but if history is any guide, they also hate politics being part of the game. The last time the NFL embraced political messaging, with widespread kneeling by players, TV viewership fell dramatically. But at least the league had fans in the stands to make up the difference.

Which means woke football could be a money-losing proposition.

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Why big tech stocks can weather the storm – Financial Times

Posted: at 3:08 pm

Calling a market top has wrongfooted pundits through the ages, but this weeks first correction in large US tech stocks since March has stirred the debate again.

Given the outsized influence that tech names and other growth stocks hold over the S&P 500 blue-chip index, their performance from here matters greatly for the broader equity market and for any investors tracking Wall Street with exchange traded funds.

Recent buyers of big tech stocks, alongside retail punters and institutions involved in speculative equity call option activity, are enduring the most heat at the moment. The tech-heavy Nasdaq 100 index has taken a hit and measures of market volatility remain elevated. A further shake-out of option trades means stocks are likely to remain choppy. To add to the mix, US presidential and congressional elections are just weeks away.

So far this has not rattled broader investor sentiment too badly. Fund managers largely agree that the market had been in need of a healthy correction to blow some of the froth off Big Tech and provide a fresh buying opportunity at more attractive prices.

This attitude also reflects a level of comfort among tech investors. A buyer of the March low in the Nasdaq 100 a bet which appears to have been led by hedge funds at the expense of other traditional managers holds a gain of nearly 60 per cent, even after the latest bout of selling. Investment portfolios that have ridden the tech and growth stock juggernaut for much of the past decade, and particularly from early 2016, have a far bigger cushion to soften short-term blows.

One big problem for those keen to bet on a bigger tech correction: what is the alternative? Tech still offers solid growth prospects and the potential for a significant return on equity. It still looks good for a while yet, reflecting the acceleration of digital trends for business, education and households in the wake of the pandemic. The premium for owning best-in-class stocks is arguably justified, given a business cycle supported by low interest rates and modest inflation pressure over the next few years.

Even in the event of a vaccine for Covid-19 arriving, shifts in behaviour inspired by the pandemic will keep rewarding innovation and disruption qualities that define tech companies.

Still, elevated valuations require vindication in the form of robust earnings growth over the coming quarters.

Before the latest wave of selling, the tech herd had effortlessly propelled price-to-earnings multiples a common valuation measure for equity leaders and the Nasdaq 100 into the danger zone associated with the dotcom bubble. For example, the US equity team at Citigroup calculates that once lower corporate tax rates are factored into valuations, the top 10 US tech companies are trading at a trailing 12-month price-to-earnings ratio of 75 times, almost precisely in line with the turn of the century.

It is natural, therefore, to draw comparisons with the crashes that followed other market peaks, particularly those of 2000 and 2007. But those market heights were followed by a protracted decline in earnings growth over ensuing quarters, whereas the hit from the pandemic appears less extensive. Wall Street analysts expect a recovery during the second half of 2020 that gains momentum into 2021.

The safest bet, perhaps, is for a middling performance from here. Aside from valuation concerns, certain tech names with strong business models may have to contend with a stronger antitrust regulatory line from governments in the coming months. The prospect of higher corporate taxes and even levies on windfall profits is serious.

But here is what keeps Wall Street bulls going: Unless earnings decline noticeably and prove high valuations wrong, stocks do not drop in any persistent way, observes Nicholas Colas, co-founder of DataTrek.

And of course, the interest-rate environment of 2020 is unprecedented. True, the Nasdaq 100 trades around a hefty 40 times earnings for the next 12 months, according to the CME Group. But turn that PE ratio upside down to get the earnings yield for these stocks, at 2.5 per cent. Unlike 2000, this proxy measure of returns sits well above the current 1.4 per cent on offer from the 30-year Treasury bond.

That makes it hard to call time on big tech and the equity growth bull run. A meaningful decline would require a profound shift in well-established economic and financial trends. It would also require a break in monetary policy that few consider to be realistic. Ultimately, other sectors of the stock market will play catch-up with tech only when there is evidence of a broader economic recovery and the rekindling of inflation pressure. Dont hold your breath.

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The six biggest tech stocks have lost more than $1 trillion in value in three days – CNBC

Posted: at 3:08 pm

The six biggest tech stocks have lost more than $1 trillion over the last three days alone, but it's really just a dent coming off a huge rally that peaked last week.

Apple, which hit a $2 trillion market cap on Aug. 19, is down about $325 billion in that time period. Microsoft's down $219 billion, Amazon fell $191 billion, Alphabet cratered by $135 billion, and Tesla, which fell 21% on Tuesday to mark its worst single-day loss in its history, is down $109 billion in the last three days. Finally, Facebook is off by $89 billion.

"In general, if you think about the market cap loss over the last 3 days for Apple, it's about $325 billion. To help put that in perspective, that's about 1.5 Salesforces, and equivalent to Apple's projected revenues for the next calendar year," Jefferies' Jared Weisfeld told CNBC's "Fast Money" on Tuesday.

Despite the huge number, it's worth keeping in perspective given the tech giants' massive rise in value this year.

At the beginning of 2020, the six largest tech companies were worth about $5 trillion. On Wednesday, Sept. 2, they peaked with a value of $8.2 trillion. After Tuesday's close, they have a combined market cap of $7.1 trillion. While it's a big loss over a few days, these six companies are still worth $2.1 trillion more than they were at the beginning of the year -- despite the global coronavirus pandemic and record job losses in the U.S.

"I certainly haven't sensed any panic with clients and investors I've spoken with over the past couple of days... but no doubt about it the large cap tech has led us lower and today's action was certainly dramatic evidenced by Apple dropping below the $2 trillion market cap," Weisfeld said.

CNBC"s Robert Hum contributed to this report.

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Big Tech wants a bigger pie in India, but it just can’t seem to bypass Mukesh Ambani – Economic Times

Posted: at 3:08 pm

By Ari Altstedter and P R SanjaiBig Tech is clamoring for a bigger piece of Indias booming internet space, but that increasingly seems to mean going through the countrys richest man, Mukesh Ambani.

Ambanis Reliance Industries Ltd. is said to be offering to sell a stake of about $20 billion in its retail business to Inc., Bloomberg News reported this week. If Ambani succeeds in pulling off such a deal, it would mark another victory for the billionaire, who in recent months has secured $20 billion of investment in his digital unit from marquee names including Facebook Inc. and Google Inc.

The mere possibility of an Amazon investment reveals not only Ambanis market clout, but also how Indias business climate is changing as Prime Minister Narendra Modi cranks up nationalist rhetoric while the nation hurtles toward the first annual economic contraction in 40 years. Having seen multiple regulatory roadblocks thrown in their way, a tie-up with a powerful Indian ally has never looked more crucial for the worlds biggest internet companies. And no business person carries more heft in India -- known for its complicated bureaucracy and red tape -- than Ambani.

Better to CooperateI suspect the government somewhere is signalling that its better for multinational companies to come in with some Indian partner, said Arun Kumar, an economist and the Malcolm Adiseshiah Chair at the Institute of Social Sciences. So Amazon might decide its better to cooperate with Reliance than compete against it.

The 63-year-old Indian tycoon has identified technology and retail as future growth areas in a pivot away from the energy businesses he inherited from his father who died in 2002. Retail is the next frontier for Ambani, whose ambitions include creating a home-grown e-commerce giant like Chinas Alibaba Group Holding Ltd.

Lifes MantraIn one 33-minute address to the nation recently, Modi used the word self-reliance 17 times. The corona crisis has taught us the value of local manufacturing, local markets and local supply chains, Modi went on to say. Local is not only our need it is also our responsibility. Time has taught us that we will simply have to make local our lifes mantra.

Even so, India is increasingly important to Silicon Valley because its a one billion-plus person market thats still largely untapped. China is dominated by homegrown e-commerce players and largely shuts out global tech companies, while established markets in the West offer limited growth opportunities.

Though Amazon is already Indias largest e-commerce player, its ability to compete with domestic firms was hamstrung by an abrupt rule change in 2018 that limited foreign players to operating as e-Bay style marketplaces, rather than selling their own stock.

Entering E-CommerceNot long after, Ambani announced that his own sprawling conglomerate, Reliance Industries, would make an entry into e-commerce, leveraging its control of both Indias largest mobile carrier and biggest network of brick-and-mortar stores.

In response, Amazon tried to bolster its presence on the ground with an investment in Indias second biggest physical retailer, cash-strapped Future Group. But the rules restricting foreign ownership in that sector meant its investment was too little to halt Future Groups slide into financial distress.

Last month, it was Ambani who was waiting to snap up the majority of the companys operations for $3.4 billion. Faced with a regulatory disadvantage and a competitor only seeming to grow stronger, its not hard to see why Amazon might be tempted to make a peace offering now.

Reliance has brick and mortar, logistics, warehousing, and now online build out with its recent deals, said Chakri Lokapriya, chief investment officer at TCG Asset Management in Mumbai. It will take years of operational infrastructure for Amazon or other multinational companies to recreate that, and hence Reliance Industries is the preferred partner choice for their entry into India.

Regulatory LimboFacebook may have made a similar calculation. Its plans to turn its wildly popular WhatsApp messaging platform into a nationwide payments system have been stuck in Indian regulatory limbo for more than two years now.

Meanwhile, Reliance is pushing ahead with its own payment system, with its almost 400 million mobile subscribers as a built-in user base. But since their deal, Facebook and Reliance have announced that WhatsApp will at least be the main platform for Ambanis online grocery store, his flagship e-commerce offering, ensuring the social networking giant has a toehold in the Indian e-commerce market it covets.

Google, meanwhile, has announced plans to roll out a low-cost phone with Ambani which will run on its Android operating system. Previously Ambani had been selling his own low cost phones, which ran on a different operating system. Google, like Facebook, may have decided it was better to work with Ambani than against him. Amazon may wind up doing the same.

Business in India is taking the monopolistic approach, said Mathew Antony, managing partner of Aditya Consulting, a boutique legal advisory firm in Mumbai. It is increasingly becoming evident with the Facebook and similar investment deals that the large foreign business investments into the country is by default having a first right of refusal at the Reliance doors.

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Big Tech wants a bigger pie in India, but it just can't seem to bypass Mukesh Ambani - Economic Times

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When Tech Giants Want to Play Banker – The Regulatory Review

Posted: at 3:08 pm

In financially uncertain times, regulators should be attentive to Facebooks plan to issue a cryptocurrency.

Brace yourself: A new financial crisis is on the way. In addition to the economic effects of the novel coronavirus pandemic, economic experts predict that other financial troubles will arrive sooner rather than later as the world economy, struggling to get out of the 2008 recession danger zone, is now stuck in a deep low-growth curve. Financial regulators should be more cautious with local and global markets behavior and act before time runs out.

In 2019, China signaled the acceleration of its efforts to create a national cryptocurrency in response to Facebooks endeavors to issue its own digital currency, Libra. Facebook announced a goal to reinvent money for the internet age, creating a global financial system based on its own cryptocurrency.

Although the media mainly expressed concerns over data collection practices within this race, I assert that regulators must also address serious and urgent financial regulation issues when considering the current worldwide financial instability, especially with the growing importance of digital payment methods and currencies due to social distancing practices.

This urgency arises from the fact that China, the worlds second economic power, is still rushing to keep up with Facebooks effort over the issuance of a cryptocurrency as if Libra were a threat. If Libra is in fact a menace to Chinas power, then regulators should acknowledge this peril and respond efficiently to avoid dragging the economic growth curve deeper in depression.

More objective issues, however, should prompt U.S. monetary and financial regulators overseeing Facebooks activity, such as the Federal Reserve System, to take action on the Libra project. To appreciate basic insights on how a cryptocurrency can jeopardize economic stability, compare the Libra plan to Bitcoins growth as an important cryptocurrency in the past decade. The Libra may become too powerful and economically unpredictable if issued.

Considering Bitcoins market strength, Libra may become too big to fail. Currently, the market capitalization of Bitcoin is around $190 billion, and the value of the 30 most valuable traded cryptocurrencies exceeds one-third of the market capitalization of Facebook. Moreover, around 5 percent of Americans invest in Bitcoins. If Bitcoin failed or suddenly became regulated in a way that limits its operation, it would undoubtedly have a substantial impact in the local financial system.

Facebook has over 2 billion monthly active users, while Bitcoin has only about 7 million active users. If only 1 percent of Facebooks active monthly users invest in Libra, it will already surpass the number of Bitcoin investors. Hence, if users already consider the Bitcoin system too big to fail, with a 2008 bailout-like call for the former largest Bitcoin exchange that faced bankruptcy in 2014, the hypothetical failure of an even larger Libra could shake the global economy.

For this reason, senators at a U.S. Senate Committee on Banking, Housing and Urban Affairs hearing in July 2019 questioned Facebook executives over the plan to create Libra. Although the hearing centered on the illicit possibilities of digital currencies, senators expressed the concern that Facebook could become the largest banking institution overnight. As several senators suggested, the major problem is that the company would shift its businesss main objective to currency provision, thus shifting the existing too-big-to-fail concern from the core of the financial sector to the tech area.

Although Facebook walked back plans for Libra in April 2020 in response to stakeholder pressure, opting instead for Libra to act more like a digital payment than a global monetary alternative, concerns remain about the projects scope.

Taking into account the Bitcoin outcome, Libra has real potential to reshape the financial system in an unpredictable way. The emergence of Bitcoin has already hindered central banks ability to regulate the financial system, due to a new technological system that regulation can hardly reachthe blockchain. Also, businesses, industries, and services beginning to accept cryptocurrencies as a payment method has hampered central banks abilities to regulate their national currency.

In addition, if the other three big tech companies decide to stand in competition against Libra, what could happen to the U.S. financial system? The four major U.S. tech companies together have a market capitalization of around one-fourth of Chinas GDP. Considering such values, such a worst-case scenario could change the global economy beyond modern predictions or expectations.

Accordingly, in a U.S. House Committee on Financial Services hearing last year, Federal Reserve Chair Jerome Powell reportedly expressed the same concerns when addressing the Libra plan. Powell signaled consternation about financial stability and consumer protection, considering the size of Facebook and the unforeseeable effects of the currencys issuance on the market.

Crypto-asset advocates, on the other hand, claim that Bitcoin could actually be a way out during financial crisis, as Bitcoins system exists unbound by any particular national economic system. Bitcoin might function as a safe haven for investors in unstable market environments. At the same time, Libra developers advertise that the projects mission is to promote economic empowerment and financial inclusion, ultimately leading to financial stability by increasing consumer welfare and strengthening national economies.

In any case, innovation should be welcomed and viewed with optimism. Prudence, however, is a virtue that regulators should fully exercise, especially in times of uncertainty.

If now is a time for economic awareness to endure a long financial winter that may arrive, it is also time for regulators to focus maximum attention on initiatives that may destabilize the financial system. In addition, regulators must follow up and understand quickly adjustments to these technological innovations, such as Facebooks recent pivot on its vision for Libra, to achieve proactive oversight of substantial financial ventures before it is too late.

Gustavo Costa is a 2020 LLM graduate of the University of Pennsylvania Law School.

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When Tech Giants Want to Play Banker - The Regulatory Review

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IPOs have gone red hot in 2020: Here are 7 big names to watch –

Posted: at 3:08 pm

The coronavirus pandemic may have put a damper on the stock market for a while, but the bull market has come roaring back and with it, the initial public offering, or IPO, market. Investors should expect the last part of 2020 to remain strong, say experts, with the market expected to debut a number of big names such as Airbnb and Snowflake.

While a shaky market typically shutters the window for new capital, especially for marginal firms, this years crop of IPOs seems to have been a bumper one, at least in tech areas. The market has been on a tear, and IPO sponsors are looking to take advantage of investors increasing appetite.

The IPO market is on fire, says Michael Gray, partner at law firm Neal, Gerber & Eisenberg in the Chicago area and head of the firms private equity, venture capital and growth companies practice. With the caveat of some key risk areas, Gray doesnt see a slowdown in the IPO market this year.

While the market remains strong, companies are looking to go public, with major venture capital or private equity companies looking to debut their portfolio companies on the market. But is this a case of large investors cynically looking to cash out and slide through a closing door while the market stays strong, or really playing offense with the expectation of a healthy market?

The latter, says Sam Hendel, president and portfolio manager at Levin Easterly Partners in New York City. Theyre hitting the funding window when they need to hit the window, and its not just about a cash grab while the market holds up. Everyones concerned about COVID, but these companies are doing well and they want to go public.

I think theres a longer-term opportunity to take advantage of the market here, says Gray.

Theres nowhere else to put your money right now with interest rates being virtually zero, says Gregory Sichenzia, founding partner at law firm Sichenzia Ross Ference in New York City. Because of this, there is a lot of momentum in the market and companies are ready to take advantage of that.

However, the strongly bullish move in the market since May has given some investors pause, and many are pointing to this melt-up as a case of 1999-2000 all over again. But in 2020s haul of potential IPOs, many dont see the bubble valuations that characterized the dotcom stocks.

The companies that were seeing going public in the tech world today are performing, says Ed Zimmerman, chair of the tech group at law firm Lowenstein Sandler in New York City.

The pandemic may have dampened some spirits, but it hasnt always put a hit on companies, especially those in the tech sector, such as software-as-a-service (SaaS) stocks. In some cases, the pandemic has actually strengthened the hand of some tech companies, accelerating the market dynamics, such as digitalization, that make them a more valuable investment.

With many normal sectors such as hotels, airlines and energy hit by the pandemic, tech companies are the clear winners in the current COVD-19 world, says Frederik Mijnhardt, COO and CTO of equity advisory firm Secfi in Amsterdam. Crowding-in of investors in tech stocks has contributed to inflating share prices and valuations.

So without a huge negative effect from the pandemic sometimes the reverse and solid performance, some major IPOs appear close to hitting the market. They include:

While this housing-sharing app hasnt been unaffected by the pandemic, its more resilient than some traditional peers. At one point in 2020, bookings had fallen by 90 percent, but the company has seen a remarkable rebound, enough to encourage the company to file in mid-August for an IPO.

This cloud data company has been hot in 2020, and its valuation has increased dramatically. This IPO received a vote of confidence from Berkshire Hathaway via a $250 million pre-IPO investment. While Berkshires legendary investor Warren Buffett typically stays away from IPOs, one of his key investors likely made the buy.

This food delivery app likely benefited significantly from the pandemic, at least in the short term, as stay-at-home diners hit it up to bring restaurant food to them. The company looks like it might debut in the fourth quarter.

This secretive data-mining company is about to go public via direct listing, an unusual way to get onto the market (recently used by Slack and Spotify) that doesnt involve raising money from investors. The company is set to debut in a few weeks.

This grocery-delivery app is looking to debut, but it might not make it to market in 2020. Still, plenty of eyes are on the quickly growing company and expect it to debut in the not-too-distant future.

This project and productivity software company is also going public via a direct listing, and wont raise money in its debut. Its looking to reach the market by the end of September.

This free trading app mainly for stocks and crypto is one of the most popular investing platforms in the brokerage industry, with millions of users signing up. During the pandemics early days, it became a poster child app for stay-at-home parents and those who wanted in on the action. The extent of those stories may be overblown, but theres no question that the pandemic made Robinhood the face of the industry for many.

While those are some of the brand name IPOs, many others fly under the radar, and theyre popular among a sophisticated kind of trader. Theyre called SPACs, and these IPOs may be even hotter than those of big tech companies.

SPAC stands for special purpose acquisition company, and theyre also known as blank check companies. They raise money from investors, often in the area of a few hundred million dollars, and then look for an acquisition in the private market. SPACs have a deadline to find a deal (often a couple years), and if they dont consummate a transaction they have to return the money to investors who own the stock. In the interim, the funds in the SPAC may earn a pittance.

By total capital raised, SPAC IPOs in 2020 have already surpassed the performance of 2019, when the market as a whole was strong. Exactly 82 SPACs have gone public in 2020, as of September 9, according to Renaissance Capital, and theyve raised a record $31 billion, with a few months left in the year still to go. Noted investor Bill Ackman brought one public in July with more than $4 billion to invest.

This years total performance dwarfs last years, when SPACs raised about $13.6 billion, an already strong showing from an oddball niche followed mostly by pros.

SPACs may offer an interesting possibility for investors. They let investors see what deal a company signs, allowing them to bail on the deal if they dont like the acquisition. Hendel calls it a free look at what the sponsor finds.

But SPACs can have some downsides, too. And many dont complete a transaction. In fact, since the start of 2015, less than half of publicly traded SPACs have consummated a deal.

SPACs what happens if they clock out before they can roll out a company? asks Zimmerman. They may close deals, but they may catch falling knives to complete their mandate.

That is, they may rush to buy an unattractive stock just to get a deal done. So while SPACs may be the province of more sophisticated investors, that doesnt make them sure-fire moneymakers.

The biggest risk to the IPO market is general weakness in the stock market. Funding for IPOs is some of the first to dry up as the market gets frothy, so IPOs depend on a stable climate. Thats not exactly the setup we are likely to see two months before a highly contested presidential election.

While many experts remain quite bullish, theyre not being naive about the risks to the market.

Im bullish on the market with the caveat that theres a lot of major risks, says Gray, noting the election specifically. But he notes: The liquidity created by the Fed and other governments cannot be ignored. Stimulus will make a massive difference to keeping the market going.

Zimmerman thinks the election will be enormously important for the markets, and it has the potential to throw stocks in one direction or the other. He says IPO sponsors need to think carefully about the timeframe for their investments and how they might deal with fallout from November.

Hendel also remains bullish: Well be strong right up into the election and maybe after, with a pause around the election.

If capital dries up, that could lead companies to take an alternative path to get into the public market, says Meredith Beuchaw, head of mergers and acquisitions at Lowenstein Sandler. Companies are prepping for potential disruptions, even if they dont come to pass.

Companies are finding creative ways to get to market IPOs, SPACs, she says. Theyre dual-tracking an entry into public markets, perhaps through a merger or acquisition.

And of course, everyone sees the potential for the COVID-19 pandemic to disrupt things further. But that doesnt keep many market watchers from being ultimately bullish. They advise watching investors reception to upcoming IPOs to judge the overall tone of the market.

I dont see a slowdown in IPO activity, says Gray.

If the market as a whole holds up, IPOs should continue to hit the market and remain robust. While there are no guarantees, investors have shown an abnormally high level of animal spirits as the government and the Fed have flooded the market with liquidity. However, coronavirus outbreaks and the uncertainty of continued government stimulus pose potential risks to the IPO market continuing to burn brightly.

And as with any stock, if youre buying it, you need to carefully analyze it. Novice investors are often best served by sticking to a broadly diversified index fund.

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IAB Tech Lab’s Project Rearc Chugs Along On Open Standards, But The Browser Makers Are Wildcards – AdExchanger

Posted: at 3:08 pm

Teamwork makes the dream work at the IAB Tech Labs Project Rearc. But where are Google and Apple?

Sixteen ad tech companies and agencies pledged their support for Rearc on Tuesday, including GroupM, GumGum, Index Exchange, LiveRamp, MediaMath, Neustar, OpenX, Oracle Data Cloud, The Trade Desk and Xandr.

The purpose of Project Rearc, which the IAB first announced in February at its Annual Leadership Meeting, is to serve as a coalition to develop a set of agreed-upon principles that will eventually turn into tech standards companies will be able to use as the basis for developing privacy-preserving solutions that dont rely on cookies or mobile ad IDs.

Phase One of that process, which was completed in mid-July, involved defining the scope of the problem. Now, the Tech Lab is accepting proposals for specs and talking through the submissions within its technical working groups.

The plan is to circulate draft standards by the middle of Q4 so that theyre available for companies to start putting them into practice and building solutions in the first quarter of next year.

But the elephants in the room arent sitting at the table: the big browser makers.

While the IAB Tech Lab and the ad industry toils away on Project Rearc, a set of parallel but somewhat different discussions are happening at the World Wide Web Consortium, where the browser makers dominate the conversation.

The key question I have about whats happening at the W3C is whether Google and Apple are going to fracture open standards or lean in and collaborate with each other, said Jordan Mitchell, SVP of privacy, identity and data at the IAB Tech Lab. Were looking for the latter, of course, for the browser and OS platforms to come together and support open standards although unfortunately were not seeing it yet.

But there is some history of collaboration between the big tech platforms Google and Facebook more so than Apple, to be fair and the advertising industry. Google and Facebook both participate in multiple IAB Tech Lab working groups, and after what felt like multiple lifetimes, Google did publicly support and eventually integrate with IAB Europes Transparency and Consent Framework.

I agree that these companies need to be involved, Mitchell said. But we do know that theyre paying close attention to these issues; for a lot of these large companies it just takes some time before they can show support for an open standard.

The hope is that even companies that have been aloof toward the ad industry in the past, such as Apple, will work together to support consumer privacy and accountability in some capacity.

On Monday, for example, a group of ad trade organizations, including the Tech Lab and the newly-formed Partnership for Responsible Addressable Media, wrote a joint letter to Apple CEO Tim Cook requesting a meeting to talk over the industrys concerns about the IDFA changes that will be introduced as part of iOS 14 in 2021. Apple recently agreed to delay enforcement of its AppTrackingTransparency framework, originally slated for mid-September, until early next year in order to give developers more time to prepare for the change.

Its a positive sign, Mitchell said.

But, by the same token, Apple hasnt updated its documentation since the delay was announced, including its developer program license agreement, and there are a lot of questions that remain about how the IDFA permissions dialogue will function. For example, how will Apples opt-in framework operate under GDPR and with existing consent management platform integrations?

There are so many ambiguities, but as long as ambiguities exist, therein lies the opportunity for all of us to try and work together on open standards, Mitchell said. As with all technology standards, we need a broad set of industry stakeholders involved, and everyone needs to understand the policy impacts and the business impacts.

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IAB Tech Lab's Project Rearc Chugs Along On Open Standards, But The Browser Makers Are Wildcards - AdExchanger

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