Daily Archives: November 13, 2021

Nov 13th 2021

THE HONG KONG office of FTX, a cryptocurrency exchange, is a place where basic needs come second to business. Food and booze lie around desks fitted with six screens each. Sam Bankman-Fried, its boss, says he sleeps four hours a night on a bean bag next to his deskif hes lucky. He sees little difference between breakfast and dinner, apart from which restaurants are open for delivery.

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His restlessness mirrors that of crypto markets, which never sleep. But it also reflects the speed at which the two-year-old firm is growing. Last month FTX announced a $420m funding round that valued it at $25bn, just three months after investors gave it a price tag of $18bn. The deal featured the crme de la crme of the investment universe, including BlackRock, the worlds largest money manager, OTPP, a $170bn Canadian pension fund, and Temasek, a sovereign fund from Singapore.

FTXs funding feast is symptomatic of investors growing appetite for crypto startups, especially those that are creating the tools to build a blockchain-based future. In the first nine months of 2021 they raised $15bn in venture capital (VC), five times their tally for the whole of 2020. In the third quarter 12 crypto unicornsstartups valued at $1bn or morewere born, a record. The heady times remind some venture capitalists of the dotcom era. But theyre not sure whether they are partying like its 1994or 1999.

One trigger for the capital flows is the rising demand for digital monies from retail speculators. That is influencing VCs to back crypto wallets and exchanges. Investors are also betting that, as regulation becomes clearer, institutions will take it more seriously, stirring demand for crypto tax advisers, analytics firms and asset custodians, says Matt Burton of QED, a VC firm. Red-hot indicators such as the bitcoin price, which flirted with a record $69,000 this week, are turbocharging excitement.

The industrys boundaries are expanding, too. Blockchain startups are promoting new forms of financial services (decentralised finance), digital ownership (non-fungible tokens, or NFTs) or incentive models (as in gaming, where users can earn crypto as they play). NFT ventures have raised $2bn so far this year, up from $31m in 2020. Four-fifths of VC deals have been early-stage rounds.

Most intriguing is the entry of new investors. Successful crypto firms are reinvesting cash into younger ones. The most prolific is Coinbase Ventures, the investment arm of Americas largest crypto exchange, which sealed 24 deals in the past quarter. On November 5th FTX and other firms launched a $100m gaming fund.

Deep-pocketed investors from mainstream finance are also pitching in. They include well-known venture funds, such as Andreessen Horowitz, an early backer of Facebook and Skype. SoftBank, a trigger-happy Japanese group, made six crypto deals in the past quarter. They also feature some hedge funds and asset managers. Such investors helped complete 15 rounds of more than $100m in the last three months. Together these accounted for two-thirds of total VC money spent.

Shan Aggarwal, who runs Coinbase Ventures, says the craze recalls the dotcom boom of the 1990s, when investors rushed to back the firms that would form the foundations of the web economy. In one respect the current era is even more impressive: while the internet bubble was mostly nurtured in Silicon Valley, the bitcom boom spans Asia ($1.4bn raised this quarter) and Europe ($1.1bn) in addition to America ($3bn). Crypto unicorns are cantering ahead in Africa and Latin America, too.

Whether it will produce successes like todays tech giants is still an open question, though. Its early days. The bounty garnered by crypto firms in 2021 amounts to 16% of the sum raised by fintech firms and 3% of that raised by startups at large. Big deals have buoyed the average size of investment rounds to $21m, triple the level of 2020, but the median, at $4m, is small.

Some valuations look silly: in September Sorare, a fantasy-football game played on the blockchain, closed a $680m round that valued it at $4.2bn, or 22 times salesmore than Facebooks multiple when it did its initial public offering. All of which suggests that some investors will make out like bandits, while others will get their fingers burned. For good or ill, more sleepless nights beckon.

This article appeared in the Finance & economics section of the print edition under the headline "The bitcom boom"

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Will the craze for crypto startups ever produce the next tech giant? - The Economist

Google is being fined 2.4 billion (2.1 billion) for hindering competition in the EU after a 2017 decision has been upheld on appeal by the general court of the European Union. This is a saga dating back over 15 years, in which the European Commission has been accusing the tech giant of using its search results to give preferential treatment to its comparison shopping service over those of competitors.

The fine, of which a share will directly go to the UK by virtue of the EU withdrawal agreement, is also a vindication of the long fight against big tech by competition comissioner Margrethe Vestager. She suffered a crushing defeat in July 2020 when the same court overturned a 13 billion fine imposed on Apple for an elaborate but legal tax avoidance scheme.

But this time, the tide has turned and the message is clear: the regulators will not allow Google and its fellow tech giants to steer consumers towards their own products. They may now have to re-think their entire business models as a result. The internet as we know it in which most services are free to use but consumers pay by giving away their private data may come to an end.

Everything started in 2005 when a British couple, Adam and Shivaun Raff, developed Foundem, a new service for comparison shopping. Google had its own comparison service named Froogle (now Google Shopping), although by its own admission in 2006 in an internal document, it simply doesnt work.

Foundem found itself demoted from Googles search results. Unless you specifically searched for it, it would only appear after several pages of browsing. Without consumers redirected from the dominant search engine, Foundem never really took off.

Having suspected that Google was restricting competition, Adam and Shivaun Raff attempted to convince the company to allow them some visibility. In 2009, they gave up and brought a complaint to the European Commission against Google for abuse of dominant position.

Over the years, several other comparison services such as Expedia and Yelp joined the complaint. They had also attempted to compete with Google, only to see their websites suddenly relegated to the bottom of the search results by the dominant search algorithm.

Then Google competitors in other markets started accusing the American company of anti-competitive practices. One complaint was about Google forcing the pre-installation of free Google software on Android phones, for example. Another was about Google forcing advertisers to use the companys services if they wanted to take out ads on YouTube. In all, Google is fighting a long series of similar cases on appeal against the commission.

This is where Googles fine over Froogle becomes really serious. It is is far from being the largest imposed by the European Commission, but it may be the most consequential because the upcoming appeal cases are likely to use this one as a precedent.

Internet companies like Facebook and Google get their revenue by monetising the data of their customers to show them search and display advertising that is relevant to them. They build an estate of companies for example Google Search, Google Maps, Google Shopping and YouTube and try to make sure that when consumers leave one service they stay in the estate.

The estate of Google is called Alphabet, and 80% of Alphabets revenue comes from Google ads. The problem arises when a company like Google tries to keep consumers on their estate by hindering competitors.

Google and other tech giants know almost everything about us because they gather information from so many different sources. The logic of the current judgement is that those sources should work as separate entities.

In the future, your Google Maps or flight comparison experience may not use the information Google owns about you, or alternatively the company would have to share the data with competitors. At the same time, Google may not be able to pre-install any of its services on Android phones, and may be forced to give consumers a fair choice of alternatives to Gmail, Maps or YouTube.

This case also confirms divergent approaches to competition policy in the EU and US. The main objective of competition policy, both in the US and Europe, is to protect consumers.

But in the US, the competition authorities concluded in a similar case in 2013 that the behaviour of tech giants does not hurt consumers. Their intuition was that what makes Google rich is what makes consumers happy, that consumers do not mind handing their personal data to this company as they get tailored advice in exchange.

Of course, it may seem that consumers do not care about giving away privacy simply because they are not aware of how much Google knows, and of how much money they make out of their data. For instance, when people started to notice that what is now called Meta, the estate of Facebook, was looking for ways to earn money from WhatsApp users, it caused quite a stir.

European regulators have taken a radically different approach. Their reasoning dates back two decades, since they first fined Microsoft for pre-installing Media Player and Internet Explorer with then-dominant operating system Windows 95.

The same essential objection has now been applied to Google. By blocking competitors from entering the market, consumers lose the benefit of potential innovations. With that logic, we enjoy the free services of Google simply because we have no idea how much better the alternatives could be if they got a chance to develop.

The general court of the European Union has vindicated the view of the European Commission that Googles behaviour is anti-competitive. Google may try to appeal to the European court of justice, but the general courts verdict is likely to remain the guiding principle for the years to come, with major consequences for consumers.

If tech giants cannot earn money from their current business model, they may have to find other sources of revenue, either charging directly consumers or by creating a more transparent system in which consumers are aware of the value of their data and sell it freely. Whether the US will follow suit, and with whom the UK will choose to align if antitrust policies start to diverge radically across the Atlantic, are now the next big questions.

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Google loses appeal against 2.4 billion fine: tech giants might now have to re-think their entire business models - The Conversation UK

Friday 12 November 2021 4:20 pm

Nearly half of Britons no longer trust Big Tech companies to safeguard their personal data, according to new research that was shared exclusively with City A.M. today.

Only one in four Brits believe Big Tech firms have their best interests at heart, according to a survey by cloud solution provider NexGen Cloud.

This comes amidreportsthat tech titans are facing increasing scrutiny in the public eye, with a growing number of regulators starting to crack down on Big Techs dominant grip over society.

Theresearchuncovered serious misgivings about data privacy among consumers, with the majority of respondents (66%) concerned about how tech giants are able to collect and use their personal information.

The study also found respondents are concerned about the excessive power and influence that Big Tech companies have accumulated. Indeed, nearly half (51 per cent) believe tech giants hold too much control over their personal lives, while the majority (75 per cent) agree that large tech firms have gained excessive power over the technology market.

Worryingly, the research highlighted the negative impact that Big Techs market dominance is having over consumers, with 60 per cent of Britons admitting that they feel like there is little choice but to use technologies provided by tech giants.

Despite the monopoly that large tech firms have over the market, 36 per cent of respondents said they made a conscious effort to spend their money with smaller competitors when buying or using technology.

The study also highlighted a strong consensus among respondents that more needs to be done to rein in Big Tech, with 72 per cent believing there is a need for tech giants to be regulated more tightly.

A growing number of consumers mistrust tech giants with their personal data and feel threated by the insidious control they exert over their personal lives, said Chris Starkey, founder and director,NexGen Cloud.

Regulating Big Tech companies must therefore take on a new and almost existential urgency to address this imbalance of power globally, he told City A.M. this afternoon.

Big Techs unnatural monopoly of the market and increasing civic power poses a looming threat to the core aspects of democracy, and our study highlights consumers vulnerability and resignation to the excessive power held by large tech corporations.

Now, there is a critical need for the industry to restore consumers foundations of trust in technology, and this must begin by building a fairer and decentralised digital landscape, Starkey concluded.

The cloud solutions provider commissioned an independent survey among 2,000 UK adults revealing consumers growing mistrust in big technology firms.

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Exclusive: Half of all Brits no longer trust tech giants with their personal data - City A.M.

It was bad enough that the consumer price index was up 6.2% in October from a year earlier, and that prices rose 0.9% in only one month. But you have probably encountered your own sticker shock at the supermarket or other places, with much higher price increases.

How can you protect yourself from a decline in your buying power? Mark DeCambre explores the use of bitcoin as a hedge against inflation.

More bitcoin BTCUSD, +1.36% and cryptocurrency coverage:

Heres a chart showing the rise of Nvidia Corp.s NVDA, stock over the past year, compared with the S&P 500 Index SPX, +0.72% and the Invesco QQQ Trust QQQ, +1.05%, which covers the tech-concentrated Nasdaq-100 Index NDX, +1.04% :

It has been an excellent 12 months for the broad stock market, but Nvidias performance has been breathtaking. And if we look back three years, the result for the maker of graphics processors has been even more impressive:

Mike Feibus explains Nvidias strategy to keep it ahead of its competitors.

Jeff Reeves shares five catalysts that might push Nvidias stock even higher.

The financial media has made plenty of hay out of trillion-dollar-plus market capitalizations for Microsoft Corp. MSFT, +1.29%, Apple Inc. AAPL, +1.43%, Amazon.com Inc. AMZN, +1.52% and Tesla Inc. TSLA, -2.83%. But which big tech giants might join that group? Daniel Newman looks at three companies that might break into the megacap group of tech stocks.

More from Daniel Newman: Amazon, perpetually bashed by politicians, is taking on big social initiatives, and investors should reward it

Some investors believe a long period of high inflation will favor value stocks generally those of mature companies that trade low to expected earnings and which may feature attractive dividend yields. If youre a believer in the value thesis, Mark Hulbert has a list of 10 stocks for you.

Read on: Inflation is boosting prices and stocks heres why that isnt a surprise

If you hire a company to provide complete care to an elderly loved one, two things you want are assurance that the patient wont be neglected and that you will be able to get in contact with caregivers easily. Eleanor Laise looks into complaints by customers and regulators that InnovAge Holding Corp. INNV, +5.81%, the well-connected elder care provider that went public in March, hasnt been doing its job.

Related: They promise so much. Are those Medicare Advantage TV ads for real?

President Joe Biden plans to sign the $1 trillion infrastructure bill on Nov. 15. Claudia Assis explains how the new spending can accelerate the transition to electric vehicles.

More on the infrastructure bill:

Tonya Garcia profiles Brilliant Earth Group BRLT, +30.67%, which recently went public through a successful offering of shares, and follows an ESG-friendly approach to the diamond trade by tracking the stones from their production until they get to customers.

Its trucking, and heres why.

MarketWatchs How To Invest series continues, as Alessandra Malito explains how to set up a financial plan for university tuition.

Employers are feeling the pinch in the tight-labor economy a record 4.4 million people quit their jobs in the U.S. in September.

Jon Picoult has advice for employers desperate to add good new staff member: Treat job applicants the same way you do your customers, not with these infuriating indignities.

Another source of workers? Democrats plan revamp for green cards in possible win for tech sector, as Republicans object

Jim Blankenship has a guide to an expanded information source for people planning for retirement the Social Security website.

More on retirement and planning for it:

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Weekend reads: Can bitcoin protect you from inflation? - MarketWatch

Is social media good or bad? Are those behind the explosion of technology meant to bring us together, actually driving us apart? Is it true that the younger generation views social media in an entirely different way than do baby boomers? Is it even possible for tech giants to get a handle on the disinformation flooding their social media sites?

The Truth Has a Voice Foundation recently hosted a movie and discussion of the impacts of social media at the Salida SteamPlant. Courtesy photo

These and other questions were part of a panel discussion during an Oct. 21 event at the SteamPlant.

Truth Has a Voice Foundation, along with co-sponsors Colorado Mountain College and Central Colorado Humanists, held a showing of the documentary, The Social Dilemma, at the SteamPlant. This powerful film was the focal point for a panel discussion following the viewing of the film.

The panel discussion was focused on the local impacts of social media and was moderated by Leslie Matthews. A video of the panel discussion is now available on the Truth Has a Voice Foundation website, truthhasavoicefoundation.org. The documentary itself can be viewed on YouTube or Netflix.

Panel members left to right in photo, included: Kelsey McNeill, a mental health specialist with Solvista Health; Michelle Pujol, an MBA in International Management with extensive experience in the digital marketing and operations industry (who manages social media for Ark Valley Voice); Dr. Libby Stuyt, a licensed psychiatrist with expertise in addiction and brain functioning; and two Salida High School students, Stella Veazey and Kalister Banghart, who brought an important current youth perspective to the discussion.

If you would like information on future Truth Has a Voice Foundation events, please contact Cheryl Brown-Kovacic at president@truthhasavoicefoundation.org.

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'The Social Dilemma' Basis for Candid Discussion on Impacts of Social Media - by Jan Wondra - The Ark Valley Voice