Section 230 has become a mainstay of our political news cycle, as Senator Josh Hawley and other Silicon Valley skeptics wage daily war on the controversial law which leaves Big Tech platforms immune to liability for content posted by third-parties on their sites. Hawleys forceful condemnation of Big Techs special treatment by the governmentdespite the clear anti-conservative bias and progressive agenda of many of these companiesis a defining element of a particular, ascendant brand of conservatism.

But heated debates over Silicon Valleys special protection precede the Missouri populists arrival on the Hill by years. One of the most memorable crusades against Section 230s unintended consequences saw Sen. Rob Portman (R-OH) leading the charge on the Stop Enabling Sex Traffickers Acta hard title to argue within 2017-18. The bill became law with overwhelming bipartisan support. Only two senatorsunflinching libertarian Rand Paul (R-KY) and Section 230 coauthor Ron Wyden (D-OR)voted against.

SESTAs easy passage came despite the best efforts of Silicon Valley powerhouses like Google, and suggested that these companies old way of operating in D.C. was no longer viable. For a long time, tech giants could count on strong alliances with the Democratic establishment and the progressive movement, together with the pro-business Republican Partys overall aversion to regulation, to ensure general freedom from Washington interference. But a strong Republican House through most of the Obama yearsfollowed by Republican control of all three federal branches after the 2016 elections, and a reconsideration of free-market ideology within the GOPmeant that Silicon Valley needed friends in Washington whose names werent followed by (D-CA).

The Google Transparency Project released a landmark report in December of 2019 detailing the way Google went about making those new friends. It hinges, in large part, on a single person: six-year employee Rachel Whetstone was promoted to senior vice president for communications and public policy in May of 2011not long after a wave of Republicans took control of the House of Representatives. Whetstone is the granddaughter of Antony Fisher, founder of the libertarian mega-donor Atlas Network, and daughter of its current chairwoman. From the GTP report:

Shortly after Whetstone took on her new role, Google began making what would be annual donations to the group her grandfather founded. Google contributed between $25,000 and $99,999 to Atlas Network each year from 2012 to 2015. In 2016 and 2017, as scrutiny of the company intensified, Google upped its support to six figures, between $100,000 and $1 million, earning a spot in Atlas Networks Freedom Champions Circle.

In 2018, Google was again giving less than $100,000 to Atlas Network. But by then, it was also directly funding many conservative groups within the network.

In all, the report found that Google has given money toat least 22 conservative and libertarian organizations, the GTP analysis shows. They include the American Conservative Union, American Legislative Exchange Council, Competitive Enterprise Institute, Heritage Foundation, and the Mercatus Center. The report is worth reading in full.

It is no coincidence that infamously progressive corporate behemoth Google was throwing wads of cash at conservative groups at just the time that a majority Republican Congress was weighing legislation that might chip away at Googles bottom line. Even limited liability for third-party content could cost Google millions, and opportunistic appeals to market-minded Republicans on grounds of freedom and limited government might save substantial amounts of money in the long run.

But even this is just one small part of the bigger picture. Given SESTAs landslide passage, massive donations to conservative institutions may not have been the winning strategy that Google had hoped. Now, as a renewed animus against Big Tech takes hold of D.C. conservatives, another strategy is gaining traction among powerful but anxious tech companiesone focused not on money, but on manpower.

In April of 2019, the Senate Judiciary Committeecontrolled by Republicans and chaired by Ted Cruz (R-TX)rejected a Google witness for a hearing on free speech concerns on Big Tech platforms. The witness, Max Pappas, had just been hired by Google in March of 2017. Pappas was expected to make inroads into the conservative establishment. He had the background for it, after all: immediately before his arrival at Google, Pappas spent four years aschief economist and director of outreach for Ted Cruz. Though this episode hardly worked out in Googles favor, its indicative of the strategy that Google and other tech companies have been shifting toward in recent years: hiring staffers with strong connections in the D.C. conservative establishment, in hopes that those connections will prove more beneficial than impersonal donations to right-of-center nonprofits.

Pappas superiors, for instance, have resumes that ought to raise some eyebrows. Karan Bhatia is a vice president for government affairs and public policy at Google. He came to Google from GE, but before that he served as Deputy U.S. Trade Representative, among a number of other positions in the Bush administration. Bhatia, who heads up Googles D.C. office, remains well known in the citys conservative circles.

Another Google vice president for government affairs and public policy is even more intriguing. Mark Isakowitz has been at Google since October of 2019. Before that, he spent nearly five years as chief of staff to Sen. Rob Portman. The timeline is worth noting: in 2018, Isakowitz was chief of staff to a Republican senator pushing legislation that Google opposed with the full force of its lobbying machine; within a year, Isakowitz became a part of that machine himself. Other corporations are taking note, and testing out their own personnel-centered strategies.

Freddy Barnes spent six years as policy director for Rep. Kevin McCarthy (R-CA), during which time McCarthy was majority leader of the U.S. House of Representatives. Before that, he spent two years on McCarthys floor team while the congressman was majority whip. As of June, Freddy Barnes is employed in U.S. public policy at TikTok, a viral social media company suspected, with its Beijing-based parent company ByteDance, of feeding user information to the Chinese government. This suspicion has inspired serious talk in the federal government of banning the platform altogether.

Derrick Dockery worked for three years as business and intergovernmental coalitions director for House Speaker Paul Ryan (R-WI), following one year as communications and coalitions coordinator for the House Committee on Oversight and Government Reform and two in communications for Rep. Ryan. As of June, Derrick Dockery is employed in U.S. government affairs at TikTokrejoining Barnes, with whom he overlapped on Capitol Hill for six years (each serving one of the two highest-ranking members of the House).

David Urban was a senior adviser to Donald Trumps 2016 presidential campaign, and a key player in both the Republican National Convention that year and Trumps general election victory in Pennsylvania. Urban has been tapped for Trumps 2020 Advisory Committee, but the veteran politico will have to split his time between getting the president reelected and representing Chinese corporate interests: as of January, Urbans lobbying firm, American Continental Group, is on the take from TikTok.

These guys are relative newcomers to the scene compared to other Conservative Inc. transplants in Big Techespecially Chinese tech. Donald J. Morrissey has spent over 9 years heading up U.S. government affairs for Huawei, another Chinese corporation suspected of unsavory ties to the government in Beijing. Before taking over lobbying for the foreign tech giantwhose CEO is a former officer in the Peoples Liberation ArmyMorrissey worked on the staff of multiple Republican congressmen, as well as in other notable roles in the D.C. conservative establishment. Among other positions, he was the legislative director of the American Conservative Union.

Nor are these machinations limited to the United States. One of Huaweis top men in Canada is 36-year-old lawyer Alykhan Velshi. Velshis colorful career includes government posts, stints at the neoconservative Foundation for the Defense of Democracies, a host of hawkish op-eds at a multitude of outlets, and a year at the American Enterprise Institute.

These are some of the big fish, but the catalogue of Hill and nonprofit staffers who have landed in the tech world is enormous. Former Steve King aide Robert Babcock is lobbying for Google. Amazon lobbyist Darren Achord spent nearly a decade on the Hill working for Republican politicians, including Sen. Marco Rubio (R-FL) and Rep. Steve Scalise (R-LA), whom he served as deputy chief of staff while Scalise was majority whip. The list goes on.

Often, the efforts at personal networking have been targeted and direct. Such was the case with Sen. Mike Lee (R-UT). Once one of Googles most vocal critics in Washington, the chairman of the Senate Antitrust Subcommittee is now all but silent on Big Tech, and at times even openly defensive of it. This is no coincidence: the Tech Transparency Project has shed light on a concerted effort by Google to curry favor with Lee. Besides substantial donationsGTP counted at least $73,600 from tech-affiliated donors for Lees 2016 reelection campaigntech interests began actively recruiting personnel from Lees circle. Max Pappas had been a Lee ally, particularly in his time as executive director of FreedomWorks PAC. Bryson Bachman had been Lees chief counsel on the antitrust subcommittee; he was hired by Amazon in 2018. Meanwhile, Sen. Lees chief counsel on the judiciary committee, Mike Lemon, went on to become a senior director at the Internet Association.

The Internet Association is worth reflecting on here. It was formed in 2012, when the big players in Silicon Valley came together to form a lobbying group that would represent their shared interests in Washington. Google, as always, was a leader in the fieldthis was around the same time that the company was making its connections with the Atlas Network and other institutions of the right. Other giants like Amazon and Facebook were there at the inception, and the group quickly ballooned from 14 members to 40.

This rapid growth was thanks, in large part, to the success of its president and CEO, Michael Beckerman. Beckerman came to the job with plenty of relevant experience: roughly 12 years on Capitol Hill, in positions that included deputy staff director of the House Energy and Commerce Committee (i.e., the legislative body charged with the direction of U.S. internet policy) and chief policy adviser to the committee chair, Rep. Fred Upton (R-MI). For eight years, from 2012-2020, Beckerman used the skills and knowledge he had learned at the center of GOP leadership to navigate the ins and outs of tech policy in D.C., providing invaluable insight to Silicon Valley corporate interests. His new employers must be hopeful that the longtime D.C. power-player can bring that same inside perspective to their playbook in the capital.

As of this March, Beckerman is head of U.S. public policy at TikTok.

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The Conservative Inc. to Big Tech Pipeline - The American Conservative

Roku has established its position as a strong gatekeeper in streaming, poised to benefit from an influx in advertising, but it is also a small fish swimming in the vast ocean controlled by major tech firms.

Thats the mixed signal from MoffettNathanson analysts Michael Nathanson, who initiated coverage of Roku with a neutral rating and a 12-month price target of $145 on its shares. He issued a 62-page report to clients on Monday identifying the green lights and yellow flags he sees around the company. Roku shares are up about 9% in 2020 to date, having seen significant volatility as investors weighed the puts and takes of COVID-19. The stock was flat in mid-day trading Monday, at about $148.50.

As a major player in ad-supported video on demand [AVOD], Roku is well-positioned, Nathanson wrote in the report. As cord-cutting accelerates, we believe advertising dollars will flow to AVOD services as linear TV ad buyers look to extend TVs reach, leverage data targeting capabilities and control CPMinflation in a brand safe, big-screen, TV-like way, he wrote. By 2024, the total ad market in streaming will more than quadruple, Nathanson predicts, reaching about $14 billion from $3 billion in 2019.

As it has grown to reach more than 40 million U.S. households, Rokus importance in the entertainment ecosystem has only grown. It has had pay-TV-style carriage disputes with major programmers, indicating its willingness to assert its position. Last winter, it clashed with Fox Corp. on the eve of the Super Bowl before reaching a deal. This year, it has declined to accept terms from WarnerMedia or NBCUniversal to add their new streaming services, HBO Max or Peacock.

Roku has built a strong gatekeeper position among streaming media devices (we estimate it is in around 40% of U.S. homes), which is creating a near-term opportunity to extract significant value from OTT companies seeking their shelf space to grow, Nathanson noted. While its noteworthy that Roku is flexing its muscles, the analyst believes that kind of leverage is unlikely to last. The marketplace is incredibly fluid as Alphabet appears interested in re-positioning their floundering efforts and as large media companies consolidate the industry, he wrote.

Since the companys founding in 2002 by noted tech innovator and early Netflix engineer Anthony Wood, questions have hovered over Roku in terms of its strategic path. Specifically, many investors and industry observers have questioned whether it could survive as a small tree trying to grow in a forest of tech redwoods. During these years of skepticism in some corners, however, the company has transitioned from being a hardware maker to a more platform-oriented nerve center for streaming with a more diverse, global revenue mix. Its interface is now on one in three smart-TVs and it has ramped up its advertising efforts significantly.

Nathanson described the company as occupiers of an important, but small, piece of the connected TV landscape. Fundamentally, he continued, Roku is a small company in a marketplace packed with the worlds largest tech and media players who may not be willing to grant them the oxygen they need to flourish over time.

In 2019, total revenue for Roku reached $1.1 billion. Its platforms unit encompassing the share of subscription and ad sales it takes from activity on its platform accounted for 66% of that. Within platforms, Nathanson estimates, video advertising is the largest, and fastest growing, component, with 52% of total platform revenues.

In looking at the market today, there are two key questions for Roku, Nathanson wrote. 1) How well will it monetize this large and growing user base?, and 2) How wide is the moat that they have built over the long term?

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Roku Is A Strong Gatekeeper In Streaming, But Could Be Crushed By Big Tech Analyst - Deadline

A new policy-focused nonprofit that emerged from the recent wave of big tech scrutiny is calling for members of Facebooks Oversight Board to either step up or step down. In an open letter, Accountable Tech urges the five U.S.-based Facebook Oversight Board members to demand the Board be given real authority or quit their positions.

Each of you were selected to serve on this Board because of your outspoken commitment to free expression, human rights, and democratic values, the letters authors write. Now is the time to uphold those principles. We humbly ask that you refuse to be complicit in this Facebook charade that you demand sweeping and immediate changes, or walk away.

Accountable Tech is a progressive project founded by grassroots campaign organizer and director of the 2017 Tax March, Nicole Gill, and Jesse Lehrich, who served as foreign policy spokesperson for Hillary Clintons 2016 presidential bid. Lehrich worked on the Clinton campaigns response to Russian disinformation efforts that year, giving him a front row seat to emerging online threats to U.S. elections.

Facebook specializes in window dressing, Gill told TechCrunch. They have been touting the Oversight Board for years as this grandiose solution, but the platforms problems are more urgent than ever, and the Board is powerless.

A handful of other groups also signed the open letter, including the Center For American Progress Action Fund, Free Press and the Sierra Club. The letter cites findings from Facebooks recent civil rights audit that cast doubt on the boards real power and also notes the oversight bodys delayed timeline. First announced in late 2018, the board wont be up and running in time for the 2020 election.

Responding to criticism, the Facebook Oversight Boards head of communications Dex Hunter-Torricke defended the boards timeline as necessary given its mandate to evaluate many of the most challenging content issues on Facebook and Instagram. Hunter-Torricke added that the boards decisions on what content should be allowed or removed will be final and binding.

Building an institution capable of making thoughtful decisions on issues with enormous significance for communities around the world is something that takes time, Hunter-Torricke said. The Board is moving as quickly as possible to go operational, while acting with care.

Because it is ostensibly tasked with making decisions about what content should be removed from Facebook and Instagram, in theory the board could have played a role in ridding those platforms of election-related misinformation a looming threat with November around the corner. But restrictive bylaws coupled with a focus on reviewing content takedowns rather than content left up meant the oversight effort was widely regarded as toothless from the outset.

Board aside, Facebook is making some efforts to at least disseminate useful voting information to users, a defensive posture the company feels more comfortable in compared to playing offense against potential rule breaking. Last week, the company rolled out info labels on all voting-related posts from federal elected officials that link to vetted election information, a feature that will soon expand to all voting posts in the U.S.

In early June, Accountable Tech launched a memorable Facebook ad campaign targeting the companys employees on their own platform. The ads, which urged Facebook workers to hold the company to account, came a day after some employees staged a virtual walkout to protest a now-infamous post in which the president threatened to shoot people protesting the police killing of George Floyd.

Facebook also faced scrutiny recently for hosting Trumps false claims about mail-in voting and those falsehoods remain live on the platform without context or correction. These instances and others are cause for concern as the stakes for social platforms during the 2020 election inch higher and higher, worries made explicit by the open letters authors.

As we enter an unprecedented election seasonamid a global pandemic, an inflection point for racial justice, and a crisis of truthwe cannot accept Facebooks toxic status quo, much less a toothless Oversight Board that lends it a false air of legitimacy.

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Tech watchdog calls on Facebook Oversight Board members to demand real power or resign - TechCrunch

Last Wednesday, Twitter suffered the biggest hacking attack in its history. A scammer got into its system, probably by hacking the account of someone working in the company, and acquired some of the special privileges that internal staff possess in order to do their work. This enabled the intruder to take over the accounts of some very prominent Twitter users, including Barack Obama, though not interestingly Donald Trump, to send out invitations to donate Bitcoin to a particular cryptographic wallet that would then return twice the amount donated.

Youd have to be pretty dumb to fall for this, though apparently some people did. In fact, it was just a variation on a known scam-genre. What made it distinctive was the spoofing of accounts of prominent people.

We now know a bit about how this was accomplished, essentially via activating a password-reset process. Twitter says theres no evidence that most users passwords were compromised. Its less forthcoming about whether the direct messages (DMs) sent by the compromised accounts were accessed. If they were, this might turn out to be a really big deal because, scandalously, DMs are still not encrypted.

Although the scam itself was laughable, the implications for Twitter and the world are not. When it launched in 2006, Twitter looked like a rather sweet joke but it has now morphed into a blend of things, both positive and negative: the worlds newswire; a conduit for all kinds of good, bad and indifferent information; a battleground for what the Oxford scholar Philip Howard once called Lie Machines; and Donald Trumps megaphone.

So what happens on Twitter now really matters. In 2013, for example, a hacker took over the Associated Press account and falsely reported that there had been two explosions in the White House and that President Obama had been injured. The stock market briefly dropped like a stone.

The pandemic has made us realise the extent to which the internet is the critical infrastructure of 21st century life

One of the things the pandemic has done is to make everyone realise the extent to which the internet and the services that run on it has become the critical infrastructure of 21st-century life. A survey of 2,000 Americans conducted last week, for example, found that 77% of those interviewed said they dont know what theyd do on a daily basis without the technology; similar experiences are reported everywhere.

The kinds of lockdown weve experienced would have been impossible to manage in the pre-internet age. Take just one example. Last December, Zoom had 10 million daily meeting participants; by last month, that figure had grown to 300 million. Much the same is reported for Microsoft Teams, Google Meet, Ciscos Webex and other conferencing tools.

There are, however, a couple of major downsides to this massive increase in our dependence on the technology. The first concerns what security specialists call the attack surface the different points where a hacker can try to intrude on, and exploit, an environment. The key to computer security is to reduce the attack surface as much as possible. However, the pandemic has forced us to make it as large as possible.

We now have hundreds of millions of non-technical employees working from home on insecure laptops, using flaky (and often hackable) network connections to ferry sensitive or confidential data to and from their physical workplaces. In other words, the lockdown has created a hackers dreamworld an unimaginable forest of low-hanging fruit.

The result? Cybercrime is one of the fastest-growing businesses. An IBM spokesman was reported the other day as saying the company had seen a 6,000% increase in Covid-related spam at the height of the pandemic. A typical example (from US experience): an email dispatched to people who are desperate for PPP [the US Paycheck Protection Program]. It installs malware into their computers, steals all their information [and] says, If you dont pay us a ransom we will infect you and your family with Covid-19. Hospitals in Europe dealing with coronavirus patients have had ransomware attacks. The FBI is reporting a massive increase in attacks. And so it goes on.

Social media platforms are unable to control, effectively, the volume of conspiracy theory, disinformation and garbage

The second, and potentially more lethal, downside of the pandemic comes from the failure of social-media platforms to curb virus-related disinformation. It has become abundantly clear since 2016 that Facebook, Google, YouTube and Twitter are unable to control, effectively, the volume of conspiracy theories, disinformation and other garbage that pollute their privately owned public spaces.

At the root of this incapacity lie two factors. One is the sheer scale of the volume of content that has to be moderated; machine-learning technology can help with this but it is clearly not up to coping with the malign ingenuity of manipulative humans. The other is that the business models of the platforms, which prioritise user engagement, militate against more robust editorial control.

Given that, as societies try to recover from the pandemic, an alarming scenario begins to loom. It goes like this: a vaccine is invented and countries embark on massive vaccination programmes. However, conspiracy theorists use social media to oppose the programme and undermine public confidence in the vaccination drive. It will be like the anti-MMR campaign but on steroids.

What we have learned from the coronavirus crisis so far is that the only way to manage it is by coherent, concerted government action to slow the transmission rate. As societies move into a vaccination phase, then an analogous approach will be needed to slow the circulation of misinformation and destructive antisocial memes on social media. Twitter would be much improved by removing the retweet button, for example. Users would still be free to pass on ideas but the process would no longer be frictionless. Similarly, Facebooks algorithms could be programmed to introduce a delay in the circulation of certain kinds of content. YouTubes recommender algorithms could be modified to prioritise different factors from those they currently favour. And so on.

Measures such as these will be anathema to the platforms. Tough. In the end, they will have to make choices between their profits and the health of society. If they get it wrong then regulation is the only way forward. And governments will have to remember that to govern is to choose.

John Naughton is an Observer columnist

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Recovery from Covid-19 will be threatened if we don't learn to control big tech - The Guardian

By Julia Horowitz, CNN Business

Investors eyeing Europe for opportunities as it continues to recover from the Covid-19 pandemic have another reason to pump money in the region.

What's happening: European Union leaders have agreed on a blockbuster stimulus deal following almost five days of fractious discussions in Brussels, described as some of the most divisive in years. The 750 billion ($858 billion) recovery plan includes 390 billion ($446 billion) in grants to struggling countries in the bloc, with the rest of the money made available as loans.

That's lower than the 500 billion ($573 billion) in grants initially proposed by the European Commission. The headline figure was reduced to appease a group of fiscally conservative northern European nations Austria, the Netherlands, Sweden and Denmark known as the "Frugal Four."

But the agreement is still a huge show of unity and a big step toward the kind of strong fiscal coordination investors have long clamored for.

"With the biggest-ever effort of cross-border solidarity, the EU is sending a strong signal of internal cohesion," Holger Schmieding, chief economist at Berenberg Bank, told clients Tuesday. "Near-term, the confidence effect can matter even more than the money itself."

It bodes well that Germany and France the two largest economies in the bloc worked closely together on the initial proposal, Bert Colijn and Carsten Brzeski of ING added.

Investor insight: Though a deal had been anticipated by markets, assets in the region moved higher on the news. Benchmark stock indexes in Spain and Italy, which have been hit hard by the pandemic, both gained 2% in early trading, while the euro ticked up 0.1% to nearly $1.15. The currency has hit its highest level since early 2019 this week.

Societe Generale strategist Kit Juckes thinks some investors may take profits on the euro in the near term. But he believes there could be a "more meaningful rally" starting in September in light of the agreement.

European stocks which many investors have said are undervalued compared to their US peers could get a boost, too.

Remember: Analysts have noted that while high-frequency data suggests the recovery has stalled in the United States, activity is still improving in Europe, which entered lockdown sooner. That means corporate earnings could be due for a faster recovery, especially with lots of stimulus cash now available.

Demand for European equity funds picked up for the week ending July 15, according to Goldman Sachs. The investment bank described the deal as "welcome, supporting our view that the European economy is well placed to recover from the Covid shock."

"Given effective virus control, a strong rebound in the data and a favorable macro policy backdrop, we expect a steeper and smoother rebound in the Euro area than elsewhere, including the United States," economists Alain Durr and Sven Jari Stehn told clients Tuesday.

All things considered, second quarter earnings season isn't going as badly as expected. Should the trend hold, it could lend support to the spectacular rally in US stocks, even as cases shoot up across much of the country and investors give European assets a second look.

See here: Just 9% of S&P 500 companies had reported earnings as of last Friday. But 73% beat Wall Street's expectations of profit, according to FactSet analyst John Butters.

It's early, but data shows that second quarter earnings season is outperforming the five-year average "in terms of companies beating on the top and bottom line," said Nicholas Colas, cofounder of DataTrek Research.

Colas notes that margins in the tech sector are looking particularly robust, largely holding up despite the onset of a health and economic crisis.

Tech is the single most profitable US sector excluding real estate "by a long shot," he said. This could support those investors who have bet the huge run-up in tech stocks can continue, driving the Nasdaq up 56% from its March low. The index rose 2.5% on Monday.

"While one can question the tech sector's valuation, there is no argument that this group's profitability is in a league of its own," Colas said.

One example: IBM shares are up more than 5% in premarket trading after the company reported results Monday.

Earnings per share plunged 31% from the same period in the last year but that's not as bad as analysts had forecast. Cloud computing revenue was a bright spot, jumping 30% compared to last year.

Coming up: Microsoft and Intel are the other big tech names to post earnings this week. Amazon, Apple and Alphabet are due to report next week.

One of the tech industry's most highly anticipated IPOs is coming to China.

The latest: Jack Ma's Ant Group announced Monday that its public offering will take place in Hong Kong and on Shanghai's Star Market, China's answer to the Nasdaq, my CNN Business colleague Sherisse Pham reports.

The decision to shun Wall Street comes as Chinese companies are facing heightened scrutiny because of rising geopolitical tensions. And it's a vote of confidence in Hong Kong, whose status as Asia's premier financial hub is in doubt after Beijing imposed a controversial national security law.

A big deal: Ant owns Alipay, one of the most popular payment apps in China, and also offers online financial services such as loans, investments and credit scoring systems. The Hangzhou-based company is worth some $150 billion, according to CB Insights.

Ant is affiliated with e-commerce giant Alibaba, which raised a record $25 billion when it debuted on Wall Street in 2014 still the world's second largest IPO to date. The combined offering from Ant could also be one of the largest ever, the Wall Street Journal reports.

Watch this space: Ant's announcement coincided with news that the Hang Seng will get a new index to track the 30 largest tech firms that trade in Hong Kong. The company would very likely be included.

Coca-Cola, Lockheed Martin, Novartis and Philip Morris report results before US markets open. Snap and Texas Instruments follow after the close.

Coming tomorrow: Earnings from United Airlines, Chipotle, Microsoft and Tesla.

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Here's a new reason to invest in Europe - WICZ

Techs Big Four CEOs should be nervous as they approach a virtual July 27 hearing before the House Judiciary Antitrust Subcommittee.

Apple Inc.s AAPL, -0.20% Tim Cook, Amazon.com Inc.s AMZN, -1.26% Jeff Bezos, Facebook Inc.s FB, +0.45% Mark Zuckerberg and Alphabet Inc.s GOOGL, +0.12% GOOG, -0.16% Sundar Pichai can think of 5 trillion reasons why: Thats the collective market value, in dollars, of their companies. All but Facebook are worth at least $1 trillion.

The fab four have never been worth more, as they gobble up market share and expand into other segments through a flurry of acquisitions. As Apple hurtles toward becoming the first company to reach $2 trillion in market value, shares of Amazon and Alphabet catapulted to record highs after Mizuho analyst James Lee raised his price targets for both, citing jumps in cloud spending in the financial services, retail and health-care industries.

Read more: Amazon, Alphabet stocks rise toward records after Mizuho lifts price targets

See also: Apple $2 trillion? This chart might have you rethinking your investment

The steep ascent of Big Tech, which is fueling a resurgent stock market despite a deepening pandemic, underscores the enduring power of the industry as consumption of it escalates in a work-from-home economy.

This is particularly pronounced among the Mount Rushmore of tech, minus Microsoft Corp. MSFT, -0.51% . Their products and services have become essential for shopping (via Amazon and Google), entertainment (Apple and Googles YouTube), news and how-to tutorials (Google search), and socializing (Facebook). And that doesnt include sharp spikes in the use of smartphones (Apple and Google) and the cloud (Google, Amazon and Microsoft).

If anything, the pandemic has furthered Americans dependence on technology for groceries, goods, communication, entertainment, Rebecca Allensworth, a law professor at Vanderbilt University, told MarketWatch in a phone interview. This is a further opportunity to solidify power of these companies.

How the House Judiciary Antitrust Subcommittee interprets the growing financial power of techs Big Four, and how it sways the subcommittees calculus, remains a closely guarded secret. A staffer declined comment.

Since last June, the subcommittee has been investigating the dominance of a small number of digital platforms and the adequacy of existing antitrust laws and enforcement, Rep. David Cicilline, D-R.I., chairman of the subcommittee, said in a statement. Given the central role these corporations play in the lives of the American people, it is critical that their CEOs are forthcoming.

None of the companies scheduled to testify were willing to talk on the record, but representatives from at least two note a stark contrast between fostering competition and undercutting successful companies that are fueling the U.S. economy and global economic leadership. There is also a sense of Congress shifting blame from its own shortcomings and unpopularity to increasingly powerful tech companies and their influence in a divided society, these people said.

A resulting fear among the companies is potential damage to U.S. economic stalwarts at a time when China has made no secret about its plan to dominate the tech industry and industry standards.

This much is true: All four have been called into the principals office, Allensworth said, and for profoundly different reasons.

Facebook is caught in a vortex of bad news as the Federal Trade Commission mulls its No. 2 standing in digital advertising, aided in large part by its acquisitions of Instagram and WhatsApp. The spread of coronavirus has accelerated the shift in advertising from billboards, newspapers and radio to digital platforms like Facebook, Google and Amazon.

Ironically, antitrust regulators scrutiny comes amid a worldwide boycott of Facebook in July by hundreds of brands including heavyweights Coca-Cola Co. KO, +1.45% , Verizon Communications Inc. VZ, +0.93% , Starbucks Corp. SBUX, -0.30% , Unilever UL, +0.97% , and SAP SAP, +0.74% in protest of hate speech and misinformation that appears on the social media companys digital platforms.

Read more: Facebook considers banning U.S. political ads ahead of election, report says

See also: Here are the major brands that have pulled ads from Facebook

Last week, leaders of four of the organizations coordinating the #StopHateForProfit advertising boycott met with Facebook CEO Mark Zuckerberg, Chief Operating Officer Sheryl Sandberg, Chief Product Officer Chris Cox and others.

Facebook also faces immense pressure over its hands-off policy regarding political advertising, and is reportedly considering a ban on such ads ahead of the U.S. election in November. If it follows through, it could lose out on hundreds of millions of dollars, according to RBC Capital Markets.

Google, which reportedly hopes to avert an EU antitrust investigation into its planned $2.1 billion acquisition of Fitbit Inc. FIT, -2.17% by promising not to use Fitbits health data to help it target ads, appears to be in the crosshairs of Attorney General William Barr as well.

In the coming months, the Justice Department is expected to decide whether to file a lawsuit charging Alphabets Google with abuse of power in the market for advertising technology and search products. The government is also examining allegations that Google abused its dominance over search, according to published reports. Ultimately, a successful suit conceivably could reshape Googles business not to mention a large swath of the economy and put a throttle to several years of unfettered growth in Silicon Valley.

Google hinted in a recent 67-page filing that although it accounts for nearly 30% of spending in the digital ad market worldwide, it isnt enough to overcharge customers and squeeze competitors.

Apple, which is grappling with COVID-19s impact on its retail operations, could be vulnerable too over accusations of how it wields market power. Late last year, email app developer Blix said it had data showing Apple suppressed App Store rankings of products that compete with Apples own apps. In October, Blix sued Apple, alleging patent infringement and antitrust violations.

On its website, Apple says its App Store provides equal opportunities to developers to deliver their apps and services across iPhone, iPad, Mac, Apple TV and Apple Watch.

Amazon competes in a number of defined markets, antitrust experts such as Herbert Hovenkamp at the University of Pennsylvania point out. It is how the company interlinks those markets that has drawn the attention of antitrust investigators.

It all makes for an interesting intersection of politics, economic power and cultural ethos when Cook, Bezos, Zuckerberg and Pichai testify before Congress on July 27. But will it be enough to evince significant change? At least one legal expert continues to have his doubts.

Do they continue to act with impunity? Does the 2020 election change the calculus? There will be marginal changes on both counts, Andrew Jay Schwartzman, senior counselor with the Benton Institute for Broadband & Society, told MarketWatch. I dont see any signs the companies are compelled to make fundamental changes in the course they have been following.

Read the original:

Big Techs latest reckoning is coming as it continues to rack up record valuations - MarketWatch

Google, Facebook, Microsoft and other tech companies are joining the U.S. Chamber of Commerce to push back on the Trump administration's bid to bar foreign students from staying in the U.S. if their colleges are only offering online classes in the fall.

Why it matters: Big Tech and big U.S. business at large rely on attracting top minds from around the world. The companies argue that American education and economic health would suffer if international students are forced out.

Driving the news: The Chamber of Commerce is leading a brief in federal court, filed Monday morning, in support of Harvard and MIT, which sued the Department of Homeland Security last week.

What theyre saying: "These students contribute substantially to the U.S. economy when they are resident in the United States," the parties say in the brief, stating that they will be harmed if the administrations directive goes into effect.

Correction: Due to an editing error, this story mischaracterized the request being made in the brief. The parties want the judge to block or slow ICEs enforcement of the rule, not block ICE from slowing its enforcement. The story has been corrected.

View post:

Big Tech firms back suing Trump administration over rule that could drive out foreign students - Axios

WASHINGTON/BERLIN Finance officials from the Group of 20 major economies on Saturday vowed to resolve major differences over taxing big tech companies and reach a broad, consensus-based solution on international taxation this year.

The United States has been at loggerheads over the issue with Britain, France and other key allies, who have adopted or are considering digital service taxes as a way to raise revenue from the local operations of big tech companies.

Critics say those firms profit enormously from local markets while making only limited contributions to public coffers, but Washington contends the taxes discriminate against U.S. tech firms such as Google, Facebook and Apple Inc.

The Trump administration this month ratcheted up pressure on France over its 3% digital services tax, saying it would impose additional duties of 25% on French imports valued $1.3 billion but would hold off on implementing the move while talks continued in the Organisation for Economic Co-operation and Development.

G20 finance ministers and central bankers on Saturday acknowledged that the coronavirus pandemic had slowed work toward an international plan, but said they expected concrete proposals to emerge before their next meeting in October.

"We remain committed to ... overcome remaining differences and reaffirm our commitment to reach a global and consensus-based solution this year," they said after a virtual meeting.

After the meeting, German Finance Minister Olaf Scholz said, "Fair taxation of international companies and large digital groups is more urgent than ever."

French Finance Minister Bruno Le Maire said reaching an agreement by year end was "indispensible."

"The (pandemic) crisis proved that these digital giants were the big beneficiaries of the crisis. They must pay their fair portion of tax," he said.

(Reporting by Andrea Shalal in Washington, Christian Kraemer in Berlin, and Leigh Thomas in Paris; editing by Diane Craft and Cynthia Osterman)

Go here to read the rest:

G20 Finance Officials Eye Solution to Digital Tax Row This Year - The New York Times

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 20, 2020.

Lucas Jackson | Reuters

Investors are braced for a barrage of earnings news, and the debate in Washington around the next stimulus package may also be an important catalyst for markets since it has implications for the economic recovery.

Big tech names, includingMicrosoft, Intel, Twitter and IBM, are among companies reporting in the week ahead, as is high-flying Tesla. Blue chips Coca-Cola, Verizon, American Express and Travelers are also among the dozens of major companies releasing results.

Congress returns from its break and should pick up the pace of negotiations towards a new fiscal stimulus package, which is expected to address aid for state and local governments and enhanced unemployment benefits. Unemployment benefits, including the $600 additional weekly payment now going to millions, is expected to be a hot topic of discussion, as the benefit ends on July 31.

There are just a few items of note on the economic calendar, including existing home sales on Wednesday, unemployment claims data on Thursday and new home sales on Friday.

The spread of the coronavirus will also be closely monitored, as well as any signs of medical progress. The Lancet medical journal is expected to releaseearly stage human trial data Monday on a vaccine developed by Oxford University and AstraZeneca.

Investors also will be watching the market's own dynamics in the week ahead. There is tension within the market between the bubbly run-up of tech and momentum names on the Nasdaq, and the broader market, or S&P 500, which is basically still flat for the year. The Nasdaq is up 17% year to date, but in the past week lagged other indices, turning in a loss, while the Dow and S&P 500 were both higher.

The Nasdaq's outperformance came to anabrupt end Monday, and it has lagged since then. In dramatic fashion, the index rose sharply to new highs, with many big tech names and Tesla also hitting highs. Within the same session, there was a massive reversal in the index and in tech and momentum names, and they closed sharply lower.

Now strategists are watching to see if the froth will be let out slowly or blow off in a big move that takes the rest of the market with it.

"We expect the push and pull of the Nasdaq to continue and have sustained volatility, in our view, throughout the earnings season," said Julian Emanuel, head of equity and derivatives strategy at BTIG. "Volatility could be to the upside, as well as the downside, but in our view, in aggregate, the Nasdaq is likely to correct."

Emanuel said the volatile reversal in the Nasdaq does not bode well for the Nasdaq, and it could see a 10% correction. There's been a surge of retail activity in some of the frothiest names, such as Tesla, which surged from about $1,000 at the end of June to a high of $1,795 during Monday's session. It is since about $300 per share lower.

"The combination of public participation and just incredible valuations makes the sector very, very vulnerable. ... It's the sector with the highest earnings expectations," said Emanuel. "There's virtually nothing that management can say at these valuations that's going to create further upside to these names."

Tesla and Microsoft report earnings Wednesday, and Twitter reports Thursday.

As Congress heads back to Washington in the coming week, expectations are rising that the fiscal stimulus package could be slightly more than Republicans were previously expected to approve.

When Congress broke for the July 4 holiday, there was a big divide on how much stimulus should be added, on top of the $2.4 trillion already adopted. The Democratic proposal was for $3 trillion, while Senate Majority Leader Mitch McConnell said no more than $1 trillion. Now the gulf has narrowed, but House SpeakerNancyPelosi said the $1.3 trillion under discussions is not enough.

Cornerstone Macro's Andy Laperriere said the package could now be $1.5 trillion or more, more than he expected just several weeks ago. He said more money is now expected for state and local governments, local schools, public health, virus testing and payments to support individuals..

"Republicans really want to use this bill to encourage and incentivize businesses and schools to open. But I think the big thing is a month ago, the top priority of Republicans was to keep this bill small," he said.

One of the most controversial elements of the CARES stimulus package was the $600 weekly payment to people who were already collecting unemployment.

The payment is likely to be significantly reduced and then ultimately phased out, but that will only come after compromise."There's going to be some lines-in-the-sand issues, and this is one of them," said Laperriere, head of policy at Cornerstone.

President Donald Trump has said he won't sign the bill unless there is a payroll tax cut, which was previously rejected by Congress. Payroll taxes are paid by both employers and employees, and they fund government programs, including Medicare and Social Security.

Strategists said the market could react to the deliberations if they take longer than expected, or the funds are viewed as insufficient.

Michael Schumacher, Wells Fargo director of rate strategy, said the bond market will focus on how quickly the government plans to payout the stimulus and also the degree to which the Treasury will ultimately have to increase auction sizes to pay for it.

If Congress keeps to its schedule, it needs to approve the package before the end of the month, when it heads to another recess for the entire month of August.

Monday

Earnings: IBM, Halliburton, Zions Bancorp, Cal-Maine Foods, Steel Dynamics, Royal Phillips

Tuesday

Earnings: Coca-Cola, Lockheed Martin, Texas Instruments, Snap, CIT Group, Novartis, Synchrony Financial, UBS, Philip Morris, Paccar, Prologis, United Airlines, Intuitive Surgical, Capital One, Interactive Brokers, Teradyne, iRobot, Canadian National Railway

8:30 a.m. Philadelphia Fed nonmanufacturing PMI

Wednesday

Earnings: Microsoft, Tesla, Discover Financial, CSX, Chipotle, Whirlpool, Kinder Morgan, Equifax, Northern Trust, Biogen, Nasdaq, Check Point Software, KeyCorp, Baker Hughes, Thermo Fisher, Canadian Pacific Railway, Netgear, Suncor

9:00 a.m. FHFA home prices

10:00 a.m. Existing home sales

Thursday

Earnings: AT&T, Travelers, Intel, Twitter, Blackstone, ETRADE, Dow, Union Pacific, American Airlines, Citrix, Kimberly-Clark, Alaska Air, Freeport-McMoRan, Hershey, PulteGroup, Mattel, Verisign, AutoNation, AllianceBernstein, Fifth Third, AutoNation, Roche Holdings, Reliance Steel, Air Products, Daimler, Unilever, Nucor, Quest Diagnostics, Yamana Gold, Skyworks Solution

8:30 a.m. Initial claims

Friday

Earnings: American Express, Verizon, Honeywell, Schlumberger, Equinor, Bloomin' Brands

9:45 a.m.Manufacturing PMI

9:45 a.m. Services PMI

10:00 a.m. New home sales

More:

Earnings and fiscal debate could be catalysts for stocks in the week ahead - CNBC

Exxon Mobil Corp. altered the North Texas business landscape when it moved its corporate headquarters from New York City to Irving in 1989, instantly establishing the oil giant as the regions largest company by revenue.

In the three decades since, its reign at the top has been largely unchallenged as Exxon went on to become the worlds most valuable company. It first gained that lofty title in 2005 and again as recently as 2013, before being pushed aside by the rise of big tech.

By the end of last year, though, it tumbled all the way to 18th in a global ranking, according to an analysis by PricewaterhouseCoopers.

This year, Exxon is at risk of losing the top spot in The Dallas Morning News annual ranking of the 150 largest public companies headquartered in North Texas.

Exxon and the rest of the oil and gas industry are staggering from a mighty one-two punch: a pandemic that zapped energy demand and an oil production standoff between Russia and Saudi Arabia that drove prices down to $20 a barrel earlier this year. Oil prices are now in the $40 range.

Oil averaged $57 a barrel last year, enough to keep Exxon atop The News ranking, despite shedding close to $24 billion in revenue.

Of the nearly two dozen oil and gas companies headquartered locally, just over half managed to pump out a profit last year as the U.S. shale boom lost its sheen. Three other energy companies in last years ranking went bankrupt and sold off assets before 2019 ended.

In all, 113 North Texas companies saw revenue rise last year, including 72 that eclipsed the $1 billion mark, according to data compiled by Bloomberg for The News. A handful even had banner years with triple-digit revenue growth. Plano-based Sharing Services Global Corp. led the way, raising its top line by 923.85% year-over-year.

This year, few companies are escaping the COVID-19 economic fallout. Most are cutting staff and capital spending, slicing employee and executive salaries, and delaying or canceling dividend payments to shareholders. Next years ranking will likely become a battle of survivors.

For Exxon, 2019 is already a distant memory overshadowed by a health crisis thats creating economic havoc across the globe. To control COVID-19, states like Texas enacted stay-at-home orders, bringing car, truck and plane travel to a screeching halt.

Early on, someone joked that because of the stay-at-home orders, they were getting three weeks to the gallon, said Bruce Newsome, a Haynes and Boone lawyer with more than 20 years experience in the energy field.

Demand is just beginning to bounce back. The four-week average gasoline supply is now less than 10% below levels from a year earlier, compared with 44% lower in April, according to Energy Information Administration data.

Texas oil and gas companies are accustomed to boom-and-bust cycles.

Coming into the pandemic, producers had to crank out 100 million barrels of oil a day globally to keep prices steady, said Kumar Venkataraman, a finance professor and academic director of the energy program at Southern Methodist University.

When prices dropped and people stopped traveling, global demand fell to around 82 million barrels of oil a day, leaving producers with an excess supply.

Many of the U.S. independent producers as well as major oil companies who respond to the economics of producing oil have cut down their supply, Venkataraman said.

At roughly the same time, an oil price war broke out between Russia and Saudi Arabia when Russia refused OPECs request to cut oil production. By March 23, oil prices had plummeted to $21 a barrel and even briefly turned negative on April 20.

By July, OPEC and U.S. producers had cut supply to about 90 million barrels a day, Venkataraman said.

Exxons revenue had already fallen 8.5% last year, from $279 billion in 2018 to $255 billion. In the first three months of this year, just before the pandemics deepest economic pain, the companys revenue came in at $56 billion or nearly $7.5 billion less than the same period a year earlier. It recorded its first quarterly loss in 32 years.

Based on its performance so far, Exxons 2020 revenue is projected to slide to $176 billion, an astonishing $80 billion drop, according to a June estimate by JPMorgan analysts. Exxon reports second-quarter results July 31, potentially giving a clearer picture of the pandemics toll.

So barring a significant second-half surge in oil prices, who stands to move up in The News ranking? Its one of the regions newest Fortune 500 companies.

McKesson Corp., an Irving-based pharmaceutical distribution company that relocated its headquarters from California in 2019, has been on an uptick due to the COVID-19 pandemic. It saw 12% revenue growth in the first three months of this year as a result of branded drug price increases and pandemic-driven orders from retail pharmacies.

Its $214 billion in revenue for the 2019 fiscal year grew to $231 billion for its 2020 fiscal year, which ended March 31. McKessons 2019 fiscal year results were included in The News ranking.

For Exxon to retain its No. 1 status, the oil and gas explorers 2020 revenue will have to top $231 billion.

It would not surprise me if the revenues of McKesson are higher than they are for Exxon, said Bud Weinstein, an economist and associate director of SMUs Maguire Energy Institute.

This is again a reflection of the problems facing the energy sector and the falling demand for energy and energy products, while at the same time, McKesson and other companies that are into medical products like pharmaceuticals, their stocks have held up pretty well.

AT&T, the regions perennial runner-up to Exxon before McKessons arrival, could also pass up the oil king. Bloomberg analysts estimate AT&Ts 2020 revenue will come in between $170 billion and $179 billion. Hitting the high end of the range could push Exxon down to third.

But AT&T is facing headwinds of its own. When it released first-quarter results in April, AT&T said its revenue was down $2 billion from the same period last year $42.8 billion vs. $44.8 billion. And in June, the company embarked on a $6 billion cost-cutting plan that includes closing 250 stores and cutting 1,300 jobs.

While the coronavirus increased use of AT&Ts broadband and wireless networks and its content platforms, it also hit the companys advertising revenue.

A third of AT&Ts business is through Turner Broadcasting System, which includes television channels such as CNN, TNT and Cartoon Network, said Bloomberg Intelligence analyst John Butler, who closely follows AT&T. Warner Bros. television and film production was also halted due to the pandemic.

Theres been a big advertising revenue recession, Butler said. Satellites have been under pressure from cord-cutting, and now with the loss of sports programming, [COVID-19] is not only hitting the advertising markets hard, but its also hitting paid TV.

Both small and large oil companies are feeling the pandemic pinch.

Law firm Haynes and Boone has monitored North American oil and gas producer bankruptcies since 2015. Over the past five years, 226 producers filed for bankruptcy, according to the firms data. Texas producers accounted for 106 of those.

The energy industry was already having to change going into the pandemic, and this is going to accelerate that change, Newsome said.

In the past month, Fort Worth-based Lilis Energy and Oklahoma City-based fracking pioneer Chesapeake Energy sought bankruptcy protection. Oil major Royal Dutch Shell PLC wrote down the value of its assets by up to $22 billion on June 30, citing lower energy prices and a lack of demand during the pandemic. BP PLC did the same in early June.

Oil and gas assets are valued on how much a company holds in reserves. Reserves are estimated on an anticipated price of a barrel of oil. Companies reduce the value of assets when oil prices fall below predictions, said Michael Cooper, a Haynes and Boone energy lawyer who has worked in the industry for more than 40 years.

Cooper said he expects Exxon to eventually do the same, as even the oil patchs biggest players prepare for an uncertain future.

Theres no way I see this being like it has been in the past, Cooper said. Itll be a slow recovery. Slower than anything weve seen in the past.

Exxon did not respond to The News interview request, but CEO Darren Woods addressed the pandemic during a call with investors in late May when the company cut its spending in the oil-rich Permian Basin.

On average, we estimate that global demand for oil in 2020 to be down roughly 10%, Woods told investors. We expect demand for natural gas to be down less than 5%.

With the industrys boom periods in mind, Weinstein said he wont be surprised if Exxon loses the top spot and then regains it in the future after COVID-19 economic disruptions level out.

Exxons not going away, Weinstein said. Energy is kind of the lubricant for the national and global economy.

*J.C. Penney, Dean Foods, Pier 1 and Tuesday Morning filed for bankruptcy in 2020.

**Alliance Data and Howard Hughes Corp. moved their headquarters out of D-FW during 2019.

**Addus HomeCares employee total is as of Dec. 31, 2018.

****TPG Pace Holdings merged with Accel Entertainment in November 2019 and its headquarters moved to Illinois.

Fluor Corp., Hallmark Financial Services Inc. and Tandy Leather Factory Inc. delayed filing 2019 annual reports.

See the article here:

Exxon has topped North Texas' biggest-companies list for 3 decades. Now there's a challenger to the throne - The Dallas Morning News

In just three years since its launch outside of China, TikToks popularity has skyrocketed.

The video-sharing social media platform is the No. 1 app on the Google Play Store and number two on Apple App Store, and has been downloaded more than 165 million times by US consumers. The app is now a source for everything from viral dance routines to pranks on the President, and has propped up the plush lifestyles of teen influencers living in Los Angeles collab houses.

But TikToks success and its status as the first Chinese-owned social media platform to garner widespread adoption outside its home market is looking increasingly tenuous.

US officials say theyre considering banning the app over security concerns related to TikTok and its parent company, Beijing-based internet company ByteDance, following a similar decision by India. In the meantime, at least one US corporation is already taking action to restrict use of the app on company phones. The situation has TikTok scrambling to try to prove its reliability.

At the same time, the company joined other big tech firms in pulling out of Hong Kong after China imposed a controversial national security law. And TikToks competitors have proven eager to pounce on its challenges and try to win over its audience with similar offerings.

One of the things that troubles me about it is, its something that is counter to the spirit of the internet, said Mark Lemley, a law professor at Stanford who teaches internet law.

I think something significant is lost there if the only apps we get are US apps or apps from approved countries. We lose out as consumers on technology that people like but in the long run the US also loses out economically, because we have been the great driver of the Internet.

TikTok has already lost access to one of the worlds largest digital markets.

India banned TikTok and 58 other Chinese apps last month following a border clash between India and China, citing a threat to sovereignty and integrity. The app had been downloaded in India more than 660 million times since 2017, and some of its top stars live in the country.

Now, Trump administration officials are considering a similar measure.

Secretary of State Mike Pompeo told Fox News Laura Ingraham earlier this month that the White House is looking at banning Chinese apps, including TikTok, and said US officials are taking this very seriously. Pompeo added that people should only download TikTok if you want your private information in the hands of the Chinese Communist Party.

On Wednesday, Pompeo said, we hope to have a set of decisions shortly with regards to the app.

Were working through a process where all the relevant agencies and the private sector are getting to say their piece, Pompeo said in a live interview with The Hill. Whether its Tiktok or any of the other Chinese communications platforms, apps, infrastructure, this administration has taken seriously the requirement to protect the American people from having their information end up in the hands of the Chinese Communist Party.

US politicians have repeatedly criticized TikTok, accusing it of being a threat to national security because its parent company is based in China and could be compelled to share data with the Chinese government. TikTok has called the concerns unfounded and security experts say its not clear that the app presents a true national security concern.

Talk of the potential ban also comes amid larger tensions between the United States and China over technology.

Its not just the Trump administration lawmakers, including Missouri Republican Sen. Josh Hawley, have also introduced legislation that would ban TikTok from US government devices. Both Democratic and Republican national committees have warned their staffs about using the app.

Wells Fargo on Monday banned its employees from using the app on company devices because of security concerns.

Due to concerns about TikToks privacy and security controls and practices, and because corporate-owned devices should be used for company business only, we have directed those employees to remove the app from their devices, a statement from a Wells Fargo spokesperson said.

The Wells Fargo decision came after Amazon told employees to delete TikTok from work phones but Amazon quickly backtracked on the request, saying it had been sent in error.

For its part, TikTok says it operates separately from ByteDance.

TikToks head of US public policy Michael Beckerman said in a statement to CNN there is a lot of misinformation about TikTok right now.

The company says it stores US user data in Virginia, with backup in Singapore, and we work to minimize access across regions, Beckerman said. TikTok also hired an American CEO earlier this year, Disney veteran Kevin Mayer, a move widely seen at least in part as an effort to win over US lawmakers.

But it appears even those steps may not be enough to alleviate the security concerns that threaten to undermine its growth, so the company is now considering a corporate restructuring aimed further distancing itself from China.

The changes could include establishing a headquarters for the video app outside of China or a new management board to distance the service from the country, according to The Wall Street Journal.

The company is also quickly expanding its presence in Washington DC. Beckerman said the company is creating so-called Transparency Centers in the nations capital and in Los Angeles so that lawmakers and invited experts can see for themselves how we moderate content and keep our users data secure.

We remain fully committed to protecting our users privacy and security as we build a platform that inspires creativity and brings joy for hundreds of millions of people around the world, a TikTok spokesperson said in a statement to CNN last week.

Stanfords Lemley said the apps dedicated teen fanbase could also end up proving helpful.

Is there a revolt among the teenagers of the world? Lemley said. I say that jokingly, but only half jokingly. If a bunch of congressmen go to their teenagers and say theyve banned their favorite app, there might be a lot of pushback and that could matter.

Facebooks efforts to overtake TikTok with a copycat app have so far been unsuccessful, but new bans could change that.

Days after India banned TikTok, Facebook-owned Instagram began testing its own app, Reels, in the country. On Friday, Instagram said its preparing to launch reels in the United States and 50 other countries, just one week after it began testing the platform in India.

Indian companies are also looking to benefit. One homegrown video-sharing app, Roposo, said that before the TikTok ban was announced, it had recorded 50 million downloads since its 2014 launch. After the announcement, the company said it received another 22 million downloads in just two days.

And while TikTok is still fully functional in the United States, some creators on the app are already trying to transition their audiences to other platforms, including Instagram and YouTube, in anticipation of a ban.

YouTube plans to launch a competitor to TikTok, called Shorts, by the end of the year, according to The Information.

Continued here:

Here are all the battlefronts TikTok is currently fighting on - KTVZ

This week, Im going to spend a fair amount of time talking about one story, but only because I think that its premise bleeds into the same underlying concept (and challenge) that face other large, industry-wide projects. Also, there are interesting things happening in the virtual desktop space, and there seems to be a lot more crossing-the-street when it comes to tech in the retail and capital market spaces. Lets get to it.

Back in 2017, the International Swaps and Derivatives Association (Isda) announced that it would work on defining processes and procedures in trading to a standard, machine-readable format, known as the common domain model, or CDM. At the time, Isda CEO Scott OMalia had this to say: The system as it stands is creaky, over-complicated, and outdated, [which increases] cost and compliance burdens for all market participants. New technologies can alleviate many of these problems, but first we need a reform of current standards and practices.

The idea makes sense: post-trades plumbing is everything that Isda says it is, and the CDM couldtransform data reporting across derivatives trading. Yet trying to solve one old problem inevitably runs into two others: how much it will cost, and who is going to pay for it? While Isda estimates that the CDM could save broker-dealers $3 billion a year in reconciliation costs,the bill for upgrading banks infrastructure could run into nine figures.

This week, Barclays released a new paper that addresses this issue, and puts the onus on exchanges and financial market infrastructures (FMI), such as clearinghouses. The banks director of research and engineering, Lee Braine, tells WatersTechnology that some banks are having trouble making a case internally for a project that promises to produce savings on post-trade processes, but generates no revenue. If an FMI leads the charge on driving adoption by offering new products or services that require CDM compatibility to access, that could help convince banks, he suggests.

The business-case challenge is not to persuade all the broker-dealers to migrate off existing functioning internal systems. It is merely to add new services, and thats an easier sell, says Braine, who, for my money, might be the best person to talk to in the capital markets on the subject of future technology.

Some reticence on the part of the banks is, perhaps, understandable. After all, the history of capital-markets technology is replete with projects that promise the world in terms of efficiency, but require up-front investment to make them a reality. Few end up achieving those goals.

For the CDM, a critical mass of banks is needed, and as our colleagues at Risk.net reported last year, the project is seeing patchy participation coming from the sell side. On the Isda calls, I would expect a healthy number of nine to 10 banks engaged, but there are less than half that. It doesnt work with just one or two banksit needs critical mass, one source told Risk. Isda refuted that tally, but it also didnt provide a number for how many banks were on the calls.

The Barclays paper lays out eight options that the industry could take to tackle inconsistent data and processes, as well as duplicated data, in the post-trade lifecycle.Its definitely worth giving this article a read, as it also features awhos who of the heavy hitters in this area. But, again, the key is going to be bank buy-in. From the story:A senior executive at another investment bank talks of the vast amount of money it would take to reconfigure post-trade plumbing and argues savings might not be felt for decades. He says: The cost of moving off your existing expensive legacy to this new stuff, the business case is like 20 years payback you cant quite justify the economics.

I also want to hit on two things that have nothing to do with that CDM story, but also track with the notion that the best laid plans of market-structure experts often go awry.

Naturally, the Consolidated Audit Trailaka, the CATcomes to mind. In 2012, following the 2010 Flash Crash, the US Securities and Exchange Commission (SEC) approved Rule 613, mandating the National Market System exchanges to begin work on a comprehensive audit trail of market activity. A full decade after the Flash Crash, the CAT is now live after a litany of delays and issues creating the actual platform. In private, when you talk to ops and compliance folks at the broker-dealers, theyre nonplussed, to say the very least, with the way it has been carried out.

With this thing finally starting to creak forward, were still going to have to wait some time to see if the output was worth the effort.

I also cant help but think about the Australian Securities Exchanges (ASX) distributed-ledger technology (DLT) replacement of its Clearing House Electronic Subregister System (CHESS). (That a lot of acronyms in one sentencesorry.) If successful, in the equity market it would be a major breakthrough of that technology in one of the major asset classes, said Axel Pierron at consultancy Opimas back in 2017. At the end of June the exchange operator set a new go-live date of April 2022, which amounts to a 12-month delay from the original target. Obviously and fairly, the pandemic was cited as a reason for the delay. But its also true that when the idea of a DLT replacement was first unveiled in 2016, market participants complained that implementing a shared-ledger environment wouldnt address their current needsits a technology shift that doesnt bring any upgrade at this point, Pierron told WatersTechnology.

When asked directly about participant concerns about the need for a DLT replacementagain, in 2017Cliff Richards, general manager for equity post-trade services at ASX, said he understood these concerns, but there was appetite for the project as exchange clients were also examining the potential of the technology.

Its that last point that is interesting. Yes, at the height of blockchain mania in 2017, financial institutions of all stripes were looking at DLT, either individually or as part of a consortium. But since then, some firms are having second thoughts about the value of DLT-based platform replacements.

You have to understand something about me: I care most about the people who work in tech and data, so I often wont look to defend these sweeping industry projects because at the end of the day, its tech and ops who most often take it on the chin.

Hey, weve got this wonderful initiative that will save your bank a lot of money down the line, but its going to cost some upfront investment and hundreds of working-group calls.

Oh, cool, just what I need because I dont have much going on, except for these 12 other reg reporting projects, were trying to switch out our OMS, our CEO wants us to explore blockchain technology, the PMs want me to integrate a half-dozen alternative datasets, everybody is bitching that this new vendor analytics platform that we bought doesnt integrate with our EMS, and theres an effing pandemic going on and everyone is working remotelyyou know, except for me, because I have to come in and make sure the goddamn lights stay on. So please, do tell me about this wonderful new idea you have for the exciting world of post-trade technology.

The CDM, CAT, CHESS, as well as any number of regulatory initiatives will ultimately make the markets stronger, more efficient, and saferif successful. From my seat, it feels like the industry often hitches its wagon to an idea, and then figures out what comes next as it goes. While that works well for exciting internal innovation projects that generate alpha for an individual firm, industry projects too oftenit would seem to meget stuck in the mud because theres limited excitement about these projects among the bank tech and ops rank and file, and theyre the ones ultimately charged with building the plumbing for these projects.

Ive also never worked in tech and opsI just drink with themso feel free to tell me if Im way off base: [emailprotected].

Moving on, as far as the day-to-day is concerned, interdealer broker Compagnie Financire Tradition (CFT) is considering moving to a fully virtual-desktop environment, after making a big investment in remote-working technology during the coronavirus pandemic. After shipping hardware to about 600 employees during the months of March and April, Yann LHuillier, CFT group chief information officer, had this to say to Jo Wright: I reviewed the costs and found we spent the equivalent of two-and-a-half years of work in a month. Everyone was on it, including me, building laptops and PCs and anything else we needed to work remotely. It was intense.

One other interesting thing from that story is the fact that IT staff still had to be in the office due to those unforeseen problems. We had issues one evening when we lost power on a number of PCs and we thought we had a network outage or something. It happened that it was the cleaning staff who knocked down a power supply, LHuillier said.

That shit does actually happenthats crazy. (Imagine the fear that must sweep across a cleaners face after they disconnect a power strip and see a bunch of monitors shut off.)

Also, last month, Mike Dargan, head of group technology at UBS, told Jo about how the firm migrated staff to a VDI setup some years ago, and Dargan says it gave the investment bank an edge during lockdown. Thats also a really informative and entertaining read.

Our veteran market data reporter Max Bowie gave his thoughts on how the industry is warming up to on-demand data as new technologies are coming to the forefront.

Max also wrote about how alt data provider Apteo has rolled out a new platform called Predictive Insights, which provides key indicators of a companys financial performance. The vendor anticipates it will help the company to broaden its client base and expand its business to sectors outside financial services.

From the story: Apteo has built a foundation of core functionality that can be used regardless of the data type being interrogated or the industry that the client works in, and can be tailored to the needs of financial professionals or people working in other sectors.

This particular part of the story jumped out for me because it loosely ties into two other stories we published this week. The first one was about how Finos, the open-source nonprofit, is looking to expand into the retail banking space; the second was about how alt data provider TruFactor, which first specialized in urban planning and ad targeting for telco companies, is now in talks with buy-side firms as it looks to expand into the capital markets.

I was thinking that as more banks and asset managers turn to the major public cloud providersthanks in part to the industrys embrace of open-source tools and APIsand as the alternative data space continues to explode, were going to see tech and data providers look to expand their sectors of coverage and not be so industry-specific.

Max says that he believes were seeing the emergence of generic business intelligence solutions that anyone from any background can use for any function, and integrate any dataset.Max has a lot more experience than me, so Ill let him have the final word. See you next Sunday.

See original here:

The Problem with Big Ideas (and Some Ramblings on Virtual Desktops & Tech's Blurred Lines) - http://www.waterstechnology.com

In the last decision of the 2019-2020 supreme court term, Trump v Mazars, John Roberts outdid himself in being John Roberts. He authored a 7-2 decision in which he appears to stand up against Donald Trumps lawlessness, by clarifying that Congress can issue subpoenas for Trump financial documents. However, the congressional power is constrained by a new, vague, four-part test for courts to use in approving subpoenas for presidential documents. Roberts grandly reaffirmed congressional power to investigate the executive branch in theory, while making it harder in practice. He presented himself as the sober, rule-of-law judge, calling balls and strikes in the childish conflict between Congress and the executive branch while giving himself more power.

Yet theres one big silver lining in Mazars: while shifting power from Congress to the courts in executive branch investigations, it gave Congress a huge green light for investigations into big corporations. According to the logic of the opinion, Congress is at the peak of its power when investigating economic behavior in service of prospective legislation.

Democratic Congress members should seize the moment. Trump is a major problem, but so too are corporate monopolies, and we need Congress working at full capacity to keep our democracy from both being devoured and drowning. In other words: we need Nancy Pelosi and the House judiciary committee to take the hammer that the supreme court just gave them and use it to investigate corporate malfeasance, and then pass major new legislation to rein in corporate and monopolistic abuses.

Will the big tech leaders dictate the terms of engagement, or will Congress?

The opinion came down just in time for one of the biggest congressional corporate showdowns in a decade. On 27 July, the congressional antitrust subcommittee is holding a major hearing with Jeff Bezos, Mark Zuckerberg, Sundar Pichai, and Tim Cook, the capstone of a year-long investigation into big tech companies. It is the first major antitrust investigation in 50 years. The goal of the investigation and the hearing is to understand how these famously opaque companies work, and to propose major new legislation in order to curtail abuses that are not currently illegal, but bad for our democracy and economy.

One big mystery surrounds the hearing: will the big tech leaders dictate the terms of engagement, or will Congress? In the past, when big tech has been allowed to design its own investigations, the results have been embarrassing: remember when Zuckerberg appeared before the Senate, orchestrated a day of five-minute questions, refusing followups, and senators started begging him to support their pet legislation?

It is critical that this hearing be conducted in a way that allows the subcommittee to grill each CEO individually, with time to dig into matters and serve followup questions. Big tech, on the other hand, wants the hearing to be anticlimactic, to turn this meaningful and important moment into an embarrassing one for Congress. Which will it be?

This is where Congresss subpoena power comes in. Because of the legal clarity provided by the Mazars decision, Congress holds the upper hand in any negotiation. It can demand whatever format it needs to pursue a real, fact-based, serious investigation. If Bezos says no, hell see a subpoena on his desk, and courts ready to enforce it.

Because the format hasnt been announced, it is possible that the big tech companies are playing chicken, threatening to pull out if they dont get the cushiest possible format limited questions, all the CEOs on one panel. But Mazars makes it clear that their threats are bluffs: the supreme court said Congresss power to hold them accountable is broad and indispensable.

The limits on this power that Roberts imposes due to Congress investigating the executive dont apply in the corporate setting at all. In this big tech investigation, Congress is operating right at the heart of its investigative role.

Last summer, the committee sent the big tech companies a series of queries about how their businesses operate. The companies answered some questions but were hiding the ball on others. Answers to these, and other questions, play a critical role in informing prospective legislation. The antitrust subcommittee is actively considering what new antitrust laws should be passed; it is their job and responsibility to ask.

Do we cede more power to the monopolists, or does Congress make clear who is in charge?

The chair of the antitrust subcommittee, David Cicilline, has been fierce and unbowed in his investigations. When Bezos said he wouldnt testify, Cicilline tweeted: We have asked Mr Bezos to testify before the US Congress about Amazons troubling business practices and false statement, and we expect him to do so. Whether he does so voluntarily or by subpoena is his choice. But the subpoena decision is not up to Cicilline: due to House rules, the decision to issue a subpoena falls to Pelosi and the House judiciary chairman, Jerry Nadler.

We know what a good hearing looks like: each CEO alone, in person, with sufficient time for Congress people to develop real lines of questioning, and plenty of opportunities for followup. The inverse is true: a bad hearing is all the CEOs together, with five minutes per Congress member.

Do we cede more power to the monopolists, or does Congress make clear who is in charge? What we dont want is theater: a hearing where four of the most powerful men in world history show up in theory, but use format to avoid hard fact questions and follow up, get the veneer of being good citizens and, with a big wink and nod to the rest of us, tell everyone who is really in charge.

The precedent matters here, too. If Congress folds when one CEO demands theater instead of investigation, what do you think the next CEO will do? Weakness begets weakness.

One of the big reasons for the hearing in the first place is that big tech has way too much power and has become a private, for-profit regulator of our communications system, our markets, and our democracy. If Congress submits when big tech asks for kinder, gentler questions, the symbolism is too on the nose for comfort.

Congress should use all the power the court just gave it.

Read more:

Congress has the legal power to investigate Silicon Valley. Let's make it count - The Guardian

The Global Alliance for Responsible Media (GARM), an alliance of advertisers, media companies, and Big Tech, have decided to find a mutual definition of hate speech. Social media companies have been under heavy criticism from politicians and legacy media outlets over their hate speech policies in recent times andGARM hopes that a mutual definition of hate speech across the industry will help address the supposed issue of moderation.

GARM was created in 2019 during the Cannes Lions Festival to help members with brand safety. Members include Big Tech companies such as Google, Facebook, and Twitter, legacy media companies such as NBC, and big advertisers such as Unilever and Procter & Gamble.

Advertising associations such as the Interactive Advertising Bureau and the Association of National Advertisers, and executives from ad agencies are also part of the alliance.

Over the past few months, GARM has been collaborating with big advertisers to create standards that address brand safety. They say an ad appearing next to harmful content compromises brand safety.

Double your web browsing speed with today's sponsor. Get Brave.

According to Axios, Carolyn Everson, Facebooks VP of Global Marketing Solutions, alerted advertisers of GARM plans through a note. Everson told advertisers that the alliance had identified areas that need immediate action, such as definitions of harmful content.

GARM has arrived at 11 standard definitions of harmful content, which focus on hate speech and acts of aggression. The alliance plans to align on those definitions in August.

Everson also told advertisers that Facebook would soon be providing an update on how it ensures ads do not appear next to harmful content.

GARM, which is a member of the World Federation of Advertisers, holds a lot of meetings to discuss issues in the world of advertising. What the alliance recommends are not rules that all members should follow. The recommendations are simply standards the industry should consider to tackle various challenges.

Additionally, social media platforms still maintain the right to moderate hate speech in whatever way they see fit. However, most of them seem committed to GARM.

A Twitter rep said that it is an active GARM member, supports the movement towards industry standards and frameworks for content monetization, and is committed to ongoing work with industry leaders to find solutions to promote healthy public conversation.

YouTube said it remains committed to working with GARM and the industry to identify and treat harmful content in a consistent way in order to build a more sustainable and healthy, digital ecosystem for everyone. However, as the spokesperson noted, it still has the right to implement its own unique hate speech policies, and can, in some cases, define hate speech more broadly.

More here:

Advertiser alliance, media companies, and Big Tech to collude and create a definition of hate speech - Reclaim The Net

Bitcoin and Big Tech do not concern each other historically, but that is about to change during the Julys earnings session.

The benchmark cryptocurrency is moving at a snail-like speed as it remains stuck inside a $300 trading range. The parameters are pretty low for an asset that typically moves wildly on a day-to-day basis. Its impatient daytraders are therefore jumping the ship to seek opportunities in parabolic crypto assets like LINK, XLM, and others.

Despite blanketed by a long-term bullish narrative that envisions its price at $100,000, Bitcoin is not showing any enthusiasm to make that happen.

The last three months, instead, has seen the cryptocurrency tuning itself to a string of macro narratives, including an escalating COVID pandemic, the central banks stimulus policies, and fears of an economic slowdown. That has brought Bitcoin close to acting like a stock market.

And it is, indeed. The cryptocurrencys short-term correlation with the S&P 500 reached an all-time high last week. Barring few exceptions, it moved hand-in-hand with the US benchmark index, suggesting that its interim market outlook entirely depends on how the US equities will perform.

That is what brings Bitcoin in the proximity of the Big Tech a make-believe index of technology stocks belonging to top companies like Apple, Alphabet, Facebook, Netflix, and Amazon.

Big Tech shares at a $7 trillion valuation cover 23 percent of the S&P 500. Meanwhile, they are also 40 percent of the Nasdaq Composite index. On the whole, the so-called FAANG stocks are 18 percent of the entire US stock market.

A recent Bank of America survey found that US tech and growth stocks received more positive bets than any other sector during the Q2, be it Bitcoin or the lower-risk US government bonds. As a result, their stock rates hit record highs in recent days as investors treated them as a haven during the coronavirus-induced lockdown.

That explains why a tech-heavy Nasdaq Composite outperformed its benchmark S&P 500.

But it appears the tech party is coming to an end as investors grapple with a rising number of infections in the US, followed by another lockdown. The BofA survey pointed the same after the first US states started reversing their reopening plans in the face of COVID threats.

Jefferies Global Equity Strategist Sean Darby earlier this week switched his position on Big Tech from modestly bullish to modestly bearish. The analyst said that he sees a minor stock pullback as the S&P 500 and the Nasdaq Composite trades based on an old fractal.

Calling the tech stocks overvalued, Mr. Darby cited the Four Horsemen scenario of the 1990s. In it, four stocks Microsoft, Oracle, Dell, and Cisco Systems were dominating the stock market, adding that FAANG is making a similar trajectory as previous bubbles.

The BofA survey also stated that Big Tech is now the most overcrowded trade, something that is running ahead of its true valuations as investors seek haven against low-yielding bonds. That amounts to a correction big or small.

That brings attention back to Bitcoin. The cryptocurrency is practically trading cluelessly without a strong narrative. But as the Big Tech slumps during the earnings session next week just as Netflix plunged on Thursday after releasing its financial results it will bring the S&P 500 and Nasdaq down in unison.

Bitcoin, like a mute follower, risks falling downwards under the same setup.

Original post:

'Big Tech' Pullback Explains Why Bitcoin Rally Has Paused in Q3 | NewsBTC - newsBTC

Dow Jones Industrial Average rises 10 points

The Dow climbed 10.50 points, or 0.04%, to 26,085.80. The S&P 500 slid 0.94% to 3,155.22. The Nasdaq Compositefell 2.13% to 10,390.84. Stocks reversed course as a rally in major tech names which briefly pushedthe S&P 500 into positive territory for the year fizzled out.

Shares of Microsoft ended the day down 3.09% while Facebook, Netflix Alphabetand Apple also closed lower.Big Tech started rolling over after the S&P 500 briefly turned positive for 2020. "No sentient human could look at some of the super-cap tech stocks and say the latest move wasn't anything other than a momentum-driven melt-up rally," says one trader. Wall Street also lost its footing after California Gov. Gavin Newsom ordered indoor operations for fitness centers, malls and places of worship, among others, to shut down amid rising Covid cases.

Pfizer and German biotech BioNTechSEwere granted fast track designation by the FDA for two of the companies' four vaccine candidates against the coronavirus. Pfizer and BioNTech said they expect to start the next phase of the vaccine trial later this month with 30,000 subjects.

JPMorgan Chase and Citigroup are among the companies set to report earnings on Tuesday.

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Here's what happened to the stock market on Monday - CNBC

In the earlier days of the Covid-19 pandemic, many of the countrys public health departments, still reliant on fax machines, were woefully unprepared for the massive amounts of data they needed to process. Looking for a tidy private sector solution to a messy government problem, the Department of Health and Human Services (HHS) paid a shadowy Silicon Valley company with ties to the Trump administration to build something new. That company is called Palantir Technologies, and if you dont know much about it, thats by design.

Palantir specializes in data-gathering and analysis, most of which it does for government agencies. It has about $1.5 billion in federal government contracts alone, including, recently, with the Space Force and the Navy. Now, as new Covid-19 case numbers break records daily, Palantir is trying to help organize the information with a new platform called HHS Protect, which will be run by another private company called TeleTracking. This partnership has effectively replaced the Centers for Disease Control and Preventions (CDC) National Healthcare Safety Network, per the Trump administrations orders to hospitals to stop reporting their information to it. HHS Protect, which is not accessible to the general public, is now the only source for this information.

Today, the CDC still has at least a week lag in reporting hospital data, Michael Caputo, assistant secretary of the HHS for public affairs, told the New York Times. America requires it in real time. The new, faster, and complete data system is what our nation needs to defeat the coronavirus.

Palantir, the architect of this complete data system, isnt a household name like its Palo Alto peers, but the 17-year-old company founded by Peter Thiel is one of the most valuable private companies in Silicon Valley. That anonymity is a feature, not a bug: Palantir does most of its work for the government, including national security and intelligence operations. In recent years, headlines about the company have stressed its access to everything about all of us, which privacy advocates have long criticized. Palantirs data-mining software has been credited with killing Osama bin Laden (a claim that has never been confirmed) and blamed for tearing unauthorized immigrant families apart.

Now the notoriously secretive surveillance startup that the White House is entrusting with the nations coronavirus data is about to go public.

Palantir was founded in 2003 by venture capitalist and Paypal co-founder Peter Thiel along with Joe Lonsdale, Stephen Cohen, Nathan Gettings, and Alex Karp, its eccentric CEO who has a law degree and a PhD in neoclassical social theory and keeps 20 identical pairs of swimming goggles in his office. The companys name comes from J.R.R. Tolkiens palantri, which are magical orbs that let their possessors see anything happening in the world at any time. The name fits, too, as Palantirs vision has always been to create software that can mine and analyze large and disparate data sets, putting them all in one place and finding connections between them.

The company came together not long after 9/11, when Palantir was pitched as a tool that could have identified and stopped the hijackers and would prevent similar attacks from happening in the future. Sure enough, by 2011, Bloomberg Businessweek was calling Palantir an indispensable tool employed by the US intelligence community in the war on terrorism. The magazine added, Palantir technology essentially solves the Sept. 11 intelligence problem.

Indeed, the CIA was one of Palantirs earliest investors through its venture capital arm, In-Q-Tel (yes, the CIA has a venture capital arm). It was Palantirs only customer for years as the company refined and improved its technology, according to Forbes. By 2010, Palantirs customers were mostly government agencies, though there were some private companies in the mix. Having managed to quietly work its way toward a $1 billion valuation, it was then one of the most valuable startups in Silicon Valley. By 2015, Palantir was valued at $20 billion.

I think its worth keeping in mind that Palantir sees itself not alongside Uber, Twitter, and Netflix, but alongside Raytheon, Lockheed Martin, and Booz Allen, said the Intercepts Sam Biddle, who has covered Palantir for years. Palantir wants to be a defense contractor, not a Silicon Valley unicorn.

Palantir has grown into a company with roughly 2,500 employees, most of them engineers who write the software that collects data, and embedded analysts who work on site with Palantirs customers to make sense of it. Company culture has been described as cult-like, big on T-shirts and Care Bears, and more Google than Lockheed. Employees are called Palantirians.

One of Palantirs product demonstrations, as described in Bloomberg Businessweeks 2011 article, presents a fictional example of the softwares capabilities: A terrorist leaves a trail of data across Florida, including one-way plane tickets, condo rentals, bank withdrawals, phone calls to Syria, and security camera footage from Walt Disney World. Taken separately, these details dont add up to much, but Palantirs software ties together thousands of databases across various agencies and helps clients see connections across them. In this case, actions that are innocuous on their own are much more suspicious when combined, and the CIA could identify and stop a terrorists plan to attack a theme park.

Again, that was a hypothetical product demonstration, but Palantirs technology has been credited with saving its financial institution customers hundreds of millions of dollars, being used to detect Chinese spyware on the Dalai Lamas computer, thwarting Pakistani suicide bombers, and unraveling Bernie Madoffs Ponzi scheme. Its customers have included the CDC, police departments in America and abroad, and large corporations like JPMorgan and Home Depot. Palantir even sued the US Army in 2016 to force it to consider using its intelligence software after the Army chose to go with its own. Palantir won the suit, and then it won an $800 million contract.

Despite its high valuation and lucrative contracts, however, Palantir has yet to make a profit.

Palantirs work, the government agencies that contract it, and the relative lack of details about the companys inner workings mean its often seen as secretive, all-knowing, and even malevolent. Seven years after touting Palantirs terrorism-fighting abilities, Bloomberg Businessweek ran a feature on the company with the headline Palantir Knows Everything About You. In a book with the phrase destroying democracy in the title, Robert Scheer called Palantir a monstrous government snoop, mining our most intimate data. The companys software has been criticized for its dragnet ways, pulling in records about millions of innocent people so it can catch a few possible criminals.

Palantirs data-mining software is used to analyze vast amounts of personal data held by the federal government to make determinations that affect peoples lives with little to no oversight, said Jeramie D. Scott, senior counsel for the Electronic Privacy Information Center (EPIC), which successfully sued Immigration and Customs Enforcement (ICE) to get records on its work with Palantir. Palantir analyzes databases containing telephone numbers, email addresses, financial data, call transaction records, and social media information. ... The documents EPIC obtained showed that ICEs Palantir-based databases could analyze call records and GPS data as well as conduct social network analysis of the information linking different individuals.

The company suffered one of its first rounds of bad press in 2011 when a hacker discovered it was part of a proposal to Bank of America to sabotage Wikileaks. In response, Palantir issued a public apology, created a Council of Advisors on Privacy and Civil Liberties, and suspended but did not fire the engineer responsible.

The post-9/11 world that Palantir was born into in 2003 then changed considerably in 2013 when leaks from Edward Snowden revealed that the National Security Agency used the directive of protecting the country at all costs in order to mass-collect the phone records of millions of Americans, leading to widespread outcry and some reforms. Palantir denied working with the NSA on that particular project but has worked with the agency on others, according to an internal video that was leaked to BuzzFeed News.

Palantirs work with various police departments across the country has also brought renewed scrutiny to the company, especially in light of recent protests against police brutality. Palantirs software powers the Los Angeles Police Departments predictive crime program, called Operation LASER, which tries to identify and target potential criminals for increased surveillance. The program ended in 2019 amid doubts that predictive policing was an effective crime deterrent, as well as criticism from civil rights organizations that it unfairly targeted minority communities. Its hard to get exact numbers on how many police departments Palantir has contracts with, but New Orleanss and New Yorks police departments are known customers, and Palantir boasts on its website of its work with the Salt Lake City Police Department.

Palantir declined Recodes request for comment, but the company has said its technology is built with protections for privacy and civil liberties. While the companys software obviously collects and works with data for its clients, the company says it doesnt collect or use any of that data for itself.

Palantirs less-than-great public image has come with some consequences. In the past few years, nonprofits have dropped Palantir as a corporate sponsor, and students regularly protest Palantir-related campus events and recruiting sessions. In an op-ed for the Washington Post, Karp noted that a small group of protesters regularly assembles outside Palantirs offices, and hes said that his own home is the site of near-daily protests. He has a personal security guard at all times. The Investor Alliance for Human Rights criticized Palantirs work with the government and ICE, saying it was failing to fulfill its human rights responsibilities and noting that its use of personal data came with legal risks and could be in violation of state laws.

That reputation has followed Palantir even as its technology seems to be doing some good during the Covid-19 pandemic. The company is providing its services at almost no cost to the United Kingdoms National Health Service (NHS), but headlines focused on how much patient data the company was getting access to in order to do that work and what it would do with it. The NHS has also provided patient data to other companies, including Microsoft and Amazon.

Stateside, theres HHS Protect another example of Palantirs expansion into how the government collects and manages data and whom it trusts to do it (and, it seems, whom it does not). A spokesperson for HHS told NBC News last month that ICE would not have access to HHS Protect and that all information in it was de-identified anyway. But some politicians have still expressed their concerns about if and how patients personal health information will be protected, and that it wont be shared with other federal agencies. Theyve specifically cited Palantirs work on the project as one of their issues.

Our concerns that HHS Protect could be misused in this way are compounded by the fact that Palantir has a history of contracting with ICE, including two active awards worth over $38 million in total, they said in a June letter to HHS Secretary Alex Azar.

Palantir is also controversial because its co-founder and board chair, Peter Thiel, is controversial. Thiel, who was one of Facebooks first outside investors and maintains a position on its board of directors, has seen his share of criticism over the years, but the libertarian billionaire really came into the public eye in 2016 when he revealed himself as the money behind Hulk Hogans privacy lawsuit against Gawker (which would ultimately kill the site) and an early Trump supporter.

As most of liberal Silicon Valleys big names publicly came out against Trump, Thiel was one of relatively few public figures who supported his candidacy. After speaking at the Republican National Convention, he gave the Trump campaign $1.25 million, and when Trump won the election, New York magazine said he was poised to become a national villain. Thiel has been rewarded for his support: He was chosen to be a member of the presidents transition team; in the early days of the Trump presidency, Politico dubbed Thiel Donald Trumps shadow president in Silicon Valley; and Thiels chief of staff and protg, Michael Kratsios, served as the White Houses chief technology officer from 2017 until this month, when he was named acting undersecretary for research and engineering at the Department of Defense. Thiels Trump support is said to have changed going into the 2020 election, however, and he hasnt donated to Trumps campaign since October 2018.

Due, in part, to Thiels Trump links, the company has faced a new round of scrutiny. Its contract with ICE caused numerous civil rights organizations to blame Palantir for helping the agency find and deport unauthorized immigrants. While other companies were ending their relationships with certain government agencies over purported ethical concerns, Palantir renewed its ICE contract in 2019 despite reported opposition even from its own employees, some of whom left the company over it. Palantirs CEO, on the other hand, has said its not his companys place to decide how its software is used.

For a while, it suited Palantir to paint itself as this lean and mean secretive startup, said Biddle, who used to work at Gawker. Now that theyre established and have clearly weathered popular outrage over their work with ICE and a lifetime association with Peter Thiel, its time to cash in.

Karp famously and repeatedly said that he would never take his company public, believing that staying private gave Palantir an edge its public company competitors didnt have.

The minute companies go public, they are less competitive, Karp said in 2014. You need a lot of creative, wacky people that maybe Wall Street wont understand. They might say the wrong thing all the way through an interview. You really want your people to be focused on solving the problem.

But Karp has seemed more amenable to the idea in the last few years. When Palantir added its first female board member in June, a public filing seemed all but certain according to California law, public companies must have at least one female board member. Palantir filed its initial paperwork with the SEC on July 6 in a confidential filing that allowed it to avoid revealing much about its inner workings to the public. Twitter, Uber, and Spotify, among other startup giants, have done the same thing. Theres no timeline for when the company might actually go public.

Despite Palantirs enormous valuation, the company has reportedly never made a profit and struggled to live up to its hot startup image, as the Wall Street Journal said in 2018. Bloomberg reported last year that Palantirs valuation had plummeted to half, maybe even a quarter, of its 2015 peak, as investors wrote down the value of their holdings and the company offered discounted shares to employees to boost morale. Big corporate clients such as Coca-Cola, American Express, Hershey, Nasdaq, Home Depot, and JPMorgan have dropped the service, as has the NSA, according to BuzzFeed News.

But 2020 has been mostly good to Palantir, if to no one else. The company says its on track to make $1 billion in 2020 and turn a profit for the first time. It has that $800 million contract with the Army and is said to be increasing its corporate customer base with its Foundry product, which requires significantly less time, money, and employees to set up than the companys custom-built solutions. Meanwhile, as evidenced by its recent work with HHS, the pandemic has increased worldwide demand for its software. Investors and employees alike have been itching for a return on their investment for years, and now might be the best time to make their wishes come true.

The market right now is crazy, Ashu Garg, a partner at venture capital firm Foundation Capital, told Recode. Theres a junk rally for tech stocks in the public markets, and most tech stocks are very richly valued without a lot of discrimination around quality.

Going public will mean Palantirs opaque business practices will have to be more transparent, and the company may not be able to simply wave off public outcry over its work as it has in the past. But experts and advocates seem to doubt much will really change on either of those fronts.

Going public might make some additional information public, but it does not guarantee oversight or accountability, Scott said.

Garg doesnt think Palantirs work with agencies like ICE and the resulting bad publicity will be too much of a detriment in the market, given how interwoven that work is and has always been with the companys business model not the case for, say, the Facebooks and Ubers and Zooms of the world.

Palantirs core business, and probably its most profitable business, is its government business especially work for three-letter agencies and the Department of Defense, Garg said. I dont think thats going to change.

What remains to be seen, then, is if Palantirs ability to marry 21st-century Silicon Valley disruption to 20th-century defense contracting will live up to its valuation when it hits the stock market. At a time when Big Tech companies are trying to make their data collection practices more transparent and say theyll give consumers more control over them (and are facing increased pressure from lawmakers to do so), Palantir has been able to keep much of its work with our data secret. A successful IPO will only give it more reasons and opportunities to do so.

Open Sourced is made possible by Omidyar Network. All Open Sourced content is editorially independent and produced by our journalists.

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How Palantir and Peter Thiel might lead the biggest tech IPO of the year - Vox.com

As the COVID-19 pandemic keeps people home, the demand for virtual care services appears to be on the rise. And one company that's benefited from that is TeladocHealth(NYSE:TDOC). The New York-based healthcare company's been a hot investment this year, with its share price surging 160% so far in 2020 -- well above the near-flat returns the S&P 500has produced thus far.

While it's tempting to jump aboard the bandwagon, there's one big reason long-term investors should think twice before buying in, and it has nothing to do with valuation. It's the company's lack of moat.

Moat is something Warren Buffett fans are familiar with: It refers to a company's ability to hold a competitive advantage over its peers. The billionaire investor values companies that enjoy a large moat, because it means they'll be able to ward off competitors.

Image source: Getty Images.

In Teladoc's case, there's not much moat there -- and that could make competition a worry for investors in the years ahead, especially as telehealth and virtual care services grow in popularity. Connecting physicians to patients remotely can be as easy as using Skype or Zoom.

Teladoc's low-cost Everyday Care costs $75 for people without insurance to access a doctor and even less if an insurance provider picks up a portion of the tab. One of the company's main competitors, Amwell, offers urgent care visits for $79.And patients who want a yearly subscription can sign up with One Medical (NASDAQ:ONEM), which for $199 annually offers access to physicians via video and the ability to book in-person appointments at more than 85 locations across the country.

Every industry has competitors, but as telehealth and virtual care services become more popular amid the COVID-19 pandemic, even more could join in. Right now, Teladoc remains on the rise; on April 29, Teladoc reported year-over-year sales growth of 41%. There was also a 92% increase in visits, and memberships rose by 61%. High growth numbers like that could raise eyebrows and attract companies from other industries like the tech sector.

Tech giantAmazon (NASDAQ:AMZN) announced this month that some of its fulfillment centers would be getting healthcare centers as it partners with Crossover Health. It's a pilot program that will involve setting up 20 centers in five states, and more could be on the way if it's successful. With the company's technical resources and capabilities, enabling these offices to offer virtual care wouldn't be too much of a stretch. And while the service is currently only for Amazon employees, it's just the latest sign of big tech showing an interest in the industry.

Google parent Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), for example, has invested in One Medical, and its employees also use the company's services.

If a company lacks a moat, it'll likely need to compete on price. That should be a big concern for Teladoc investors, given that the company's been in the red every year. With more competition, its sales growth could taper off quickly, and the company may need to invest more in generating revenue. That means that not only would its top line slow down, but its expenses would accelerate, leading to a net negative impact on the bottom line that could put Teladoc even deeper in the red.

And without strong sales numbers, investors will be left looking at profits -- which could quickly make Teladoc an undesirable investment to hold.

A lack of moat is one reason to sell Teladoc, and the company's astronomical valuation is another. With no profits and shares trading at 25 times revenue, the company carries a hefty premium for investors who buy the stock today. Even though Teladoc is likely to continue growing at a good rate for the foreseeable future, long-term investors need to be aware of the risk of holding on to the healthcare stock for too long.

Things can change quickly in the world of tech, and five years from now the company may be battling for market share with tech giants like Alphabet and Amazon. Tougher times may be in store, and that's why I'd avoid investing in Teladoc today.

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The Biggest Problem With Investing in Teladoc - The Motley Fool

In early 2019, I had the privilege of presenting my ideas on regulating tech platforms to several staff members on the Senate Judiciary Antitrust Subcommittee. I told the staffers that I was worried about whether antitrust, which can address certain anti-competitive conduct by the platforms, could be counted on to police the misappropriation of data from third-party content providers, or the self-preferencing of their own brands or applications to their hundreds of millions of users. I recommended sector-specific regulation to address this conduct, as have other important voices, from Public Knowledge to the Stigler Center.

I also presented my ideas at the Federal Trade Commissions platform competition hearings in October 2018. Both there and at the Antitrust Subcommittee, I was called back for private briefings with staffers.

Nothing ever came of my ideas. I figured getting legislation passed would be a long shot, but I also thought my ideas were good and necessary, given the way the platforms exploit gaps in our consumer-oriented and price-fixated antitrust laws.

Flash forward to the summer of 2020. Through a LinkedIn email, I learned that a recent staffer on the Senate Judiciary Antitrust Subcommittee was recruited by Amazons public-policy arm this month. I took to Twitter to express my dismay, and quickly learned that another staffer on the Senate Judiciary Committee was recruited by Facebooks competition policy arm in May 2020.

These two staffers are now working for the tech platforms, and presumably against my ideas, after having heard my ideas in a private setting.

It is important to note right here that I have no beef with these fine folks. Indeed, given the substantial time I invested twisting their arms in support of platform regulation, I have no reason to think they were acting in bad faith or that their actions (or lack thereof) were affected by these offers. My beef is with the process, and the way the platformsby offering jobs to government officials tasked with regulating the platformsare interfering with democracy.

To understand how, lets start with a clear-cut hypothetical: Would we ever allow a defendant to make a job offer to a member of the jury? If the juror believed that she could curry favor with the defendant by voting to acquit, the job offeror even the prospect of an offercould create a conflict. For the same reason, we wouldnt allow a defendant to threaten a juror, for fear that the threat could taint the outcome of a trial. (The same logic applies to a plaintiff.)

Lets try another thought experiment: Should a target of an ongoing antitrust investigation by the Federal Trade Commission (FTC) or Department of Justices Antitrust Division (ATR) be permitted to hire away key staffers on the investigation team? Or should the target be permitted to fund a position at an academic center that recruits the staffer? These also seem problematic, as the prospect of an offer by the target could induce the staffer to modify his investigation or recommendations in favor of not pursuing an antitrust complaint.

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One final experiment: Would we permit the target of a congressional inquiry on monopoly (and monopsony) abuses by dominant platforms to hire away key staffers on congressional committees tasked with investigating the platforms? This is also problematic, as the prospect of a job offer could induce a staffer to refrain from recommending to her representative or senator that the platform should be subjected to new regulations.

The optimal policies here are complicated by the fact that policy staffers have developed specialized skills, about both the industry and antitrust generally as well as the lobbying process, that could be valuable to the platforms under investigation. Denying such mobility into the private sector with a complete ban on recruitment would deprive the staffer of reaping the fruits of his or her labor.

But theres a strong public-interest motive to deny this free exercise of movement from government to the corporate sector if it conflicts with proper corporate regulation. And that appears to be whats happening.

NOTWITHSTANDING ITS dull content, LinkedIn has a nifty tool that allows searches for people who currently work in one place and previously worked somewhere else. For example, type in Department of Justice Antitrust Division Amazon, and you get back 65-odd results. (Results may vary slightly based on who conducts the search and where the search is performed.) Click the all filters drop-down, and choose Amazon as the current company. The results are narrowed to eight employees. A similar search reveals 10 and 11 current employees at Google and Facebook, respectively. The table below reports the number of people currently employed at Amazon, Google, or Facebook based on these queries.

In several instances, the same worker can be represented multiple times in the tablefor example, if she worked at two (or more) government agencies before moving to the platform. It is possible that LinkedIn is generating matches that are close but not equal to the search terms. It bears noting that in many of these cases, the worker held a stint at a different employer before moving on to the platform. The table is meant to be illustrative and hopefully replicable.

When the keyword antitrust, or in the case of DOJ, the keywords antitrust division are removed from the initial query, the results are unsurprisingly larger. To restrict the results for DOJ and FTC, I impose a second filter for prior employer.

According to LinkedIn, 41 current Amazon employees previously worked at DOJ; 54 current Google employees previously worked at DOJ; and 48 current Facebook employees previously worked at DOJ. Without some benchmark or standard, it is hard to judge whether these numbers are intolerably high. But there is no doubt that the two recent episodes of poaching mentioned above are not outliers. Instead, they appear to be part of a larger pattern by the platforms of poaching government officials in the agencies and congressional committees that have jurisdiction over them.

That this stealthy form of influence peddling happens all over governmentread Jessie Eisingers The Chickenshit Club to learn about the corruption in financial servicesdoesnt mean it is not insidious here.

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The platforms are in the crosshairs of multiple investigations, including by DOJ, state attorneys general, and the House Judiciary Committee. Amazon, Facebook, and Google picking off staffers charged with overseeing them erodes public trust in these institutions, and potentially undermines the investigations, to the extent it influences the conduct of the staff.

Other costs of permitting such poaching are less obvious. For example, knowing that she could be courted by a platform with deep pockets might encourage a staffer to develop certain skills or seek out positions that maximize the chances of being courted. Shes taking the job in the hopes of getting scooped up to take another job, in other words. Poaching a government official is similar to a killer acquisition: Staffers are acquired precisely to undermine potential oversight.

The revolving door could also affect government procurement, to the detriment of smaller rivals and to the benefit of Big Tech. In November 2016, Amazon hired the former chief acquisition offer of the General Services Administration (GSA) in the Obama administration. During 2017, Amazon reportedly privately advised the GSA on the launch of a new digital portal for government purchasing of commercial items and office supplies. Some rivals complained that as written, the bid would favor Amazon. After maintaining that the project was on hold because of the pandemic, in June GSA abruptly announced that Amazon, alongside Overstock and Fisher Scientific, won the bid. All three winners have their own private labels, which could disadvantage independent sellers.

IN FAIRNESS, the House Subcommittee on Antitrust is holding a hearing on July 27 to examine the dominance of tech platforms, and it plans to issue recommendations soon. And Sen. Elizabeth Warren (D-MA) has outlined several policy ideas, including breaking up Big Tech. But nothing today prevents Amazon or Google or Facebook from buying off entire antitrust agencies and congressional committees. I dont begrudge any individual staffer who jumps at the offer. The point is that if we allow such offers without any guardrails, some people will end up taking them. That it happens so frequently is an indicator that we must reform the poaching processbut how?

Theres a strong public-interest motive to deny this free exercise of movement from government to the corporate sector if it conflicts with proper corporate regulation.

Lets begin by paying government officials more, to narrow the income difference between keeping your government job and jumping ship. Additionally, we could offer government officials job security and suitable pensions, so making a career out of public service is not seen as an inferior alternative to the private sector. In The Chickenshit Club, Eisinger explains that SEC officials are reluctant to bring cases because of a challenging legal environment; the same can be said for antitrust. A more radical idea would be to offer bonuses to agency officials (or maybe just division heads) based on judgments or jury awards against a platform, as a means to incentivize them to bring riskier cases.

Sen. Warren has a policy piece on pointof course she doestitled End Washington Corruption, which calls for longer cooling off periods for former government officials. Current law mandates a period of one year before former senior government officials work on projects that they worked on in government. Warrens plan would restrict the ability of corporate lobbyists to enter government jobs for six years, and would ban companies from hiring former senior government officials for at least four years.

Whats not clear is whether the four-year ban pertains only to full-time hiresthat is, whether companies may hire former senior government officials indirectly (by the hour) via law firms or lobbying firms. If thats the case, then an agency head could still deliver huge benefits to former or would-be clients via nonenforcement (or other means) and then be rewarded via future payments as billable hours. And were right back to the underenforcement problem.

Every day that passes in which Congress fails to deliver protections for independent merchants and content creators is a victory for the platforms. Regardless of its potential gaps, Sen. Warrens anti-corruption plan is a good start. We might not get platform regulation until we address the revolving door in Washington.

The views expressed here are those of the author, and do not represent the views of his employers. Singer does not currently work for or against Amazon, Google, or Facebook in any pending litigation or consulting matter.

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As the Revolving Door Swings - The American Prospect

By Simon Axon, EMEA Financial Services Industry Consulting Director at Teradata.

COVID-19 has changed banking, possibly forever. But as banks wrestle with the pandemic and its after-effects they must also focus on a bigger imminent threat to their existence and its not from FinTechs.

Among the many impacts of the global pandemic has been a significant shift in the way consumers and businesses go about their banking. Mothballed branches and social distancing have accelerated the use of online and mobile banking driving what McKinsey has found to be a20% increase in digital engagementand a 50% decline in the use of cash.

Many may be surprised that these moves have not benefitted Fintechs, but, according todata from Finbold, downloads of fintech apps have actually fallen during the crisis with leading challenger banks Monzo and Revolut both seeing slides of around 20% in March. This confirms what I have suspected: the FinTech threat has always been a distraction from the real challengers to todays banks.

That threat comes from Big Tech; Google, Amazon, Apple, Baidu and Tencent among others. These huge and wealthy businesses are already deeply integrated into the lives of consumers and businesses. The top 20 tech firms are valued at almost $6 trillion, getting on for double that of the top 20 financial services firms at$3.3 trillion. They have the money, the ambition and the technology to completely change the face of banking in ways that fintech could not. They can do it almost overnight, and they are preparing to do so now.

The power and wealth of Big Tech is virtually unlimited. They can disrupt and dominate whole economies with digital platforms that touch every aspect of our lives. Data fuels their business models as they seek to understand and monetise every aspect of individuals behaviour. Collecting, acquiring, owning and processing data is the modus operandi of Big Tech. The list of industries up-ended by these behemoths grows daily; music, publishing, retail, gaming, film, communications already with transport, healthcare, education and even government now feeling their impact.

There is no doubt that banking and financial services are next on the list. Chinese technology firms are already deeply engaged in financial services. Social Media leader Tencent already derives28% of its revenues from payments. US firms are beginning to see the benefits and to provide their users with payment services. Google, Apple, Microsoft and Amazon are looking beyond on-site digital payments to take definitive steps into financial services. Apple has launched a credit card which can be opened within 30 seconds;Google is launching a current accountand Facebook is trying to develop its own digital currency.

The threat from big tech is not new, but it is rapidly sharpening, driven by both by investor demands and by the fallout of the COVID crisis.

Traditional banks room to maneuver is severely constrained by the increased risk and responsibilities deriving from their role in restarting economies post-COVID. Concerns about the risk attached to government-mandated business loans are widely voiced. Business risk stems not only from defaults, but the resource intensive, logistically challenging and expensive efforts to secure repayments. COVID-19 loans threatens to become aPR disasteras they erode trust and reputation of banks forced to chase small businesses for repayments they cannot afford.

Big Tech, by contrast has had a good COVID crisis. As millions have suffered lockdowns and been forced to work, shop, socialise and entertain themselves from home, not only have tech firms seen revenues rise, but they have cast themselves as consumer champions. The tech-lash which saw trust in tech erode towards the end of the last decade, seems to have evaporated.

There is a clear and present danger to banks and the shape, ownership and purpose of the Bank of the Future hangs in the balance. The combination of the growth in influence, spending power and ambition of Big Tech, with the dislocation of the economy caused by the coronavirus pandemic, creates a dangerous scenario for banks. The window of opportunity to transform and meet the evolving demands of customers has all but closed. Bold thinking and decisive execution are needed now if banks are to survive in positions where they can shape their own future.

The coming battle will be about data. Banks have it, Big Tech covets it. The side that is best able to protect, understand and utilise it as an asset will prevail. Data is both the prize and the key to success in this battle, and my next article will outline how banks can value and leverage the data advantages they have to win this war.

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Big Tech is Poised to Pounce on Banking - Global Banking And Finance Review