Category Archives: Big Tech

Rapid action is needed to update how cross-border financial services are scrutinised and consumers protected as the sector becomes digitalised with "Big Tech" playing an increased role, European Union regulators said on Monday.

People are turning to social media and using smartphones to buy and sell shares, move money around bank accounts and make payments, a trend accelerated by the COVID-19 pandemic, leaving regulators playing catch-up.

"Digital finance has unlocked new synergies between financial and non-financial activities that potentially introduce systemic risk into the market for financial services," a joint report from the EU's banking, insurance and markets watchdogs said.

Cloud computing, or banks and other financial firms using outsourced providers for services, is booming, the report said.

It is sometimes unclear how to categorise some digital financial services under existing rules, creating uncertainty over data privacy, anti-money laundering safeguards, and how much capital they should be holding, the report said.

It called on the bloc's executive European Commission, which has opened a public consultation on digital finance, to take a "holistic" view of supervising financial services.

New "supervision structures" may be needed to capture transactions spread across "mixed activity" groups or MAGs, such as Amazon, Google, Meta's Facebook, Apple, and other Big Tech firms offering financial and non-financial services.

The crash of German payments company Wirecard demonstrated that complex arrangements within a group providing both financial and non-financial services create specific challenges for supervisors, the report said.

"The growing digitalisation and datafication of financial services necessitate closer cooperation between financial and relevant non-financial authorities," the report said.

The report said that regulatory action may be warranted given that some posting on social media are effectively advertisements.

"In securities markets in particular, the growth of digital trading platforms has coincided with new trends, such as social trading', or investment advice shared over social mediawhich brings new opportunities but risks as well."

Thomson Reuters 2022

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Digital Finance: EU Watchdogs Call for Rapid Action to Catch Up Big Tech - Gadgets 360

Big Techs role in facilitating a host of digital harms in recent years has become painfully clear: political polarization, consumer manipulation, discrimination-by-algorithm, worker insecurity, to name just a few.

The European Union has taken on a leading role in safeguarding citizens from these harms, first and foremost with the implementation of privacy standards and data protection law. Indeed, privacy has taken on a dominant position in the marketplace of public values in the digital age.

There are good reasons for this. Privacy is undoubtedly a core value of democratic societies, to be championed and cherished. It is the breathing room we need to engage in the process of self-development. But at this stage in our digital evolution, our heightened sensitivity to privacy, our fixation on data protection, may act as an obstacle to a digital Europe fit for all.

In fact, our focus on privacy may be unwittingly enabling, rather than hindering, the continued expansion of Big Tech into new sectors. This is what weve found in an ongoing European Commission-funded research project I am leading at Radboud University in the Netherlands, which is investigating the risks raised by the increased involvement of Big Tech in health and medicine.

Since at least 2014, all major tech corporations, including Alphabet (Googles parent company), Apple, Microsoft, Amazon, Facebook and IBM have moved into health and medicine. They have done so either by setting up partnerships with public research institutions on medical projects or by developing health-related applications themselves, including software for carrying out remote clinical studies, wearables for medical research, devices for home medical surveillance, artificial intelligence (AI) systems for diagnostics and prediction, or funding schemes for biomedical research.

These companies were also quick to offer digital support in the fight against the COVID-19 pandemic, most famously with the Google-Apple application programming interface (API) for digital contact tracing, on which most contact tracing apps in Europe, as well as other parts of the world, run.

To anyone who had been paying attention to this Googlisation of health, privacy and data protection issues were, from the get-go, potential red flags. Indeed, it is not difficult to conjure up horror scenarios of these companies getting hold of our personal health data and feeding it into a metaverse of increasingly more precise data profiles that could be used to target, surveil and manipulate us.

In response, data protection watchdogs were unleashed (with more or less success), and digital security experts began designing state-of-the-art privacy-by-design data exchange techniques specifically for collaborations between Big Tech and hospitals.

These efforts may be good deterrents. To date, there have been relatively few privacy scandals around Big Techs involvement in health and medicine. And privacy now seems to be a shared concern of companies too regardless of what their motives might be.

Google and Apples COVID-19 digital contact tracing protocol, for example, conforms to the stringent privacy-protecting criteria defined by leading privacy and security experts. First and foremost amongst these, it only works with decentralised data storage systems that keep our data on our individual phones rather than sending them to a central repository, thereby pre-empting any surveillance creep. It is precisely for this reason that many privacy experts, the European Data Protection Supervisor and most European states applauded and adopted the initiative when it was launched in April 2020.

But privacy is only the tip of the iceberg when it comes to the risks that the increased involvement of Big Tech in health and medicine raise. And the near exclusive focus on privacy has prevented much broader questions from being asked.

For example, will these companies become the new gatekeepers of the very valuable datasets they are helping to compile? These may be open access in the future, but there is no such guarantee.

Another crucial question is what role these companies will play in asking research questions and setting research agendas in health and medicine? Sergey Brin, previously the president of Google, has been open about the fact that a rare form of Parkinsons disease runs in his family and that this is why Google has invested in Parkinsons research. In the future, will Silicon Valley tycoons get a say in which global diseases receive attention and which wont?

And what kind of clash of expertise will we witness between medical experts and these tech companies, and whose expertise will prevail? The Google-Apple contact tracing API is a case in point. Some public health experts were unhappy with the API: decentralised storage is good for privacy, but not for the type of oversight of infections you want in a pandemic.

Ultimately, we need to ask how the health and medical sector will be reshaped by the growing presence of these actors. But also, and perhaps most importantly, as these companies move into virtually all sectors of society, from education and city planning to news provision, transport and even space exploration, we need to ask how society, as an aggregation of sectors, is being transformed.

These are questions that are concerned with health and medicine as a public good, who is involved in the development and distribution of this public good, and new configurations of power in a society that is increasingly digitised. These are questions that remain even if privacy and data protection are properly addressed.

This has to do with the fact that Big Techs business models are evolving. In health and medicine at least, the initiatives and partnerships that companies are launching are not about capturing as much data as possible and using it to target us with advertisements. To be successful, many of these initiatives do not require using data in ways that are privacy unfriendly. Actually, some of them do not require the use of data at all.

Take Apples ResearchKit software for example, which allows researchers to use iPhones as a means of collecting data for clinical studies. Apple does not need to see, control, analyse or in any way handle the data collected in order for the ResearchKit and the iPhone to become a new tool for remote clinical studies. No privacy issues at stake here.

Similarly, Verilys involvement in Parkinsons research seeks to develop new digital biomarkers for Parkinsons disease. These efforts will be successful if these biomarkers are accurate, in which case they may become integral to future Parkinsons research. There is no need to share data with third parties to achieve this, and so here, too, privacy is a non-issue.

In both these examples, what the companies seek to do is to become indispensable players in the future of biomedicine, and to accomplish this they do not need to breach any privacy or data protection rules.

In this context, conceptual approaches which focus almost exclusively on data privacy, such as surveillance capitalism and data colonialism, just as regulatory frameworks such as the EUs GDPR and privacy-by-design techniques, are insufficient, if not counterproductive. They risk only scratching the surface, and worse, facilitating the entrance of Big Tech via privacy friendly solutions into ever more sectors of society. The over-emphasis on privacy in our discussions and regulation of Big Tech draws our critical attention away from bigger questions about agenda setting, infrastructural power and new dependencies on a handful of companies across sectors of society,

What we need are approaches that reach beyond privacy risks and data protection. To do this, and drawing on political theorist Michael Walzers seminal work Spheres of Justice, my group at Radboud University has developed a conceptual framework that understands Big Techs push into ever more sectors as sphere transgressions.

Walzer argues that a just society is one where advantages or inequalities that exist in one sphere, such as having more money (market sphere), should not be translated into advantages in other spheres, such as access to better education (sphere of education).

Yet, what we are witnessing with the growing influence of Big Tech across sectors of society is the conversion of advantages these companies have acquired in the sphere of digital production (expertise in the development of digital infrastructure), into advantages in all spheres that undergo digitalisation be this health, education, public administration, transportation, etc. Such sphere transgressions are illegitimate, insofar as these companies do not have domain expertise proportional to their new level of influence in these different spheres, and because they are not accountable in a way that public sector actors are.

This framework moves beyond a narrow focus on privacy, to identify the risks of sphere transgressions on two levels. First, at the sectoral level, it enables us to ask how Big Tech is contributing to a reshaping of individual sectors. How do the values, norms and expertise that these companies bring with them, which typically promote technological efficiency and standardization, crowd out the traditional values and expertise that underpin a sector such as health or education values such as care and access based on need, or public health expertise which prefers centralised over decentralised oversight in a pandemic?

Second, it enables us to ask how Big Tech is reshaping society, as an aggregation of spheres. In what new ways are we becoming dependent on tech companies for the provision of public goods, and what kind of decision-making power does this confer them across society?

At Radboud, we have translated this framework into an open-data digital tool Sphere Transgressions Watch which allows users to track the presence of Big Tech in different sectors over time, and to contribute data on instances of sphere transgressions themselves. Our hope is that this tool will both raise awareness about this phenomenon among policy makers, the media and civil society, and that it will be used by other scholars to ask their own research questions. We hope that it will contribute to developing more robust governance frameworks for the digital age that move beyond a narrow focus on privacy and data protection.

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Beyond privacy: there are wider issues at stake over Big Tech in medicine - Open Democracy

In 2021, major big tech firms waged data wars against each other, and it was small businesses that got caught in the crossfire. Under the guise of a concern for privacy, Apple throttled small businesses' ability to market their products on Facebooks platform by restricting the information that ad platforms can collect.

Many already COVID-rattled businesses only just survived the pandemics economic onslaught. Now, a sudden spike in advertising cost and the loss of customer data placed an unnecessary strain on their bottom line.

2022 needs to be the year the Big Tech firms stop playing fast-and-loose with the small businesses they claim to support. Instead, we need universal, understandable data laws if we are to give small businesses a fighting chance during the next wave of COVID and beyond.

When COVID struck, we witnessed a 19 percent reduction in profitable businesses. Even as 2021 came to a close, as the worst appeared to be over, almost a quarter of business owners were still seeing a loss of revenue. Indeed, 34 percent of small businesses remain closed. Big techs data wars are merely adding salt to those economic wounds.

Last April, Apple announced a new privacy policy inviting users to opt-out of data sharing. In announcing this policy, Apple CEO Tim Cook criticized the tech industrys collection and sale of user data. This is surveillance, he argued, and serve[s] only to enrich the companies that engage in it.

Those companies he refers to are almost certainly Facebook and Google, two of Apples biggest tech competitors. What Apples CEO did with his announcement was fire the first shot in Silicon Valleys data war, depriving his competitors of the lifeblood of their business: data. In all this, though, it is the little man that suffers.

Lets be completely clear: Apple does not care about your privacy. Just a couple of months after their privacy law change, Apple was embroiled in an entirely different privacy scandal relating to its proposed scanning of our private photos under auspices of detecting illegal material. This signifies how selective Apple is when they choose to care about privacy.

Its new privacy policy rather spawns from a turf war between some of the worlds biggest companies. The effect is to make business harder for Facebook and Google, whose data management systems were thrown into disarray following the move. This data, which feeds directly into advertising, is vital for their business.

Nevertheless, Facebook and Google continue to bank record-breaking profits. While the policy change prompted immediate anger, both companies are able to afford technological workarounds. In the meantime, it is small businesses that suffer from the fallout.

In the post-COVID world, business has gone digital; Deloitte estimates that 44 percent of small to medium-sized businesses started using or increased their spend on digital advertising. Using advertising packages allows an average, not-technically-literate business owner to tap into the endless data that tech giants have at their disposal.

With 96 percent of U.S. users opting out of app tracking, advertising costs have sky-rocketed, whilst their accuracy has slumped. We estimate that our clients have seen their digital marketing costs increase from 15 percent to as much as 40 percent over the past 12 months. Given that Facebook is such a key part of many business owners' marketing strategies, they often have no choice but to simply pay the extra money for the same services.

Online stores that may not have repeat or long-standing customers rely on getting their ads placed strategically onto peoples social media fields. Now, theyre missing out on this vital source of revenue.

Last years tech war shows that what we need is a universal model for handling data, so that the bottom lines of ordinary businesses are not left to the mercy of Big Techs feuds and whims.

This does not mean inviting governments to implement strict, top-down controls on tech companies. Indeed, this could prompt further stress for the small businesses that use online advertising.

Even GDPR laws in Europe have not been effective in this regard; to sidestep these laws, Facebook simply moved their UK user base to American data provisions. Loopholes around laws will always be found so long as there is no consistent globally actionable policy.

We need all tech companies to be on the same page when it comes to privacy to prevent this jostling for reputation on customer security. So long as Apple, Google, and Facebook go their own ways on privacy, marketers will be deprived of large and valuable sets of user data and small businesses not the giants will be the ones to suffer.

So, in 2022, lets not repeat the mistakes Apple made this year. Data standards need to be universal, transparent, and reliable. This way, small businesses, of which 99.9 percent of American small businesses are, dont have to suffer at the hands of a Big Tech power struggle ever again.

Brendan Egan is a serial entrepreneur and founder and CEO of Simple SEO Group, a boutique digital marketing agency.

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2022 must be the year that Big Tech's data wars end | TheHill - The Hill

Bad weather threatens the future of a farm in a variety of ways. Rain, of course is welcome; a prolonged downpour, however, is liable to drown or wash away a newly sown crop. Rapid changes in temperatures are also dangerous. Cold snaps easily kill wheat, soybeans and corn, while heatwaves will incur stunted growth. Then there are the less obvious hazards: the high winds that knock over flimsy steel-roofed outbuildings, or the freak lightning that kills livestock in their hundreds every year.

While many of these dangers cannot be avoided by your typical farmer, some can be anticipated by simple attention to the daily weather forecast up to a point. These predictions, the product of complex physics-based simulations of the Earths atmosphere and the expertise of an army of meteorologists, are accurate to the day in plotting the movement of storm fronts and pressure systems over hundreds of miles. What theyre not good at, though, is nowcasting, predictions of differences in temperature or precipitation in hourly timespans over areas measured in single square kilometres.

You dont need weather models. All you need is your data.Peeyush Kumar, Microsoft Research

Such forecasts would form a more effective early warning system for farmers than what they have right now and now it looks like they could obtain it, thanks to a new AI model from Microsoft. Using elements of machine learning and deep learning to parse data from historical weather data, mainstream forecasts and dozens of IoT sensors, DeepMC is able to make predictions on how the weather will change in a local area over a matter of hours. Tests of the model found that its temperature predictions were accurate up to 90% of the time, with 1,000 people and businesses already making use of it. Its deployment in so many locations, explains one of its creators Peeyush Kumar, is testament to how easy the system is to use.

You dont need weather models, says the scientist from Microsoft Research. All you need is your data. And you put your data into this model and this model can be entirely black box. You know, this can be entirely black box to the level where youre just pushing on a few knobs to see which one works better.

DeepMC isnt unique. Dozens of models have been released in recent years claiming to master the problem of nowcasting that conventional forecasting has hitherto failed to crack. The factor holding meteorologists back has been their lack of access to the kind of computing power capable of making such predictions, explains Andrew Blum, author of The Weather Machine. Self-learning models offer a quantum leap in post-processing for the field, allowing it to smash through its historical day a decade advance in efficiency to something that could touch the lives of billions of people around the world. After all, the ability to predict rainfall with precise certainty doesnt just inform when the washing gets hung on the line, but also when crops are planted, planes fly, and when calls for evacuations are made.

Unsurprisingly, Big Tech has been eager to invest in such solutions, with firms such as Google, Raytheon and IBM all producing their own AI-assisted forecasting models. And yet, while these algorithms could trigger untold efficiencies across innumerable value chains, they could also accelerate a trend toward privatisation within weather forecasting that threatens to balkanise the profession. Since the early 1960s, national meteorological organisations have made a special effort to share data and improvements in forecasting capabilities. As the initiative in collecting both passes to the private sector, more of it threatens to become proprietary and deepen inequalities within the overall system.Atmospheric sensors forming part of a DeepMC deployment. The Microsoft system aims at nowcasting precise changes in microclimates, promising to grant farmers greater agency in how they manage their holdings. (Photo courtesy of Microsoft)

Meteorology is hardly a field untouched by automation. The amazing weather forecasts we have today are not because of machine learning, or AI, explains Blum. Rather, theyre the result of the work of atmospheric physicists to model the entire Earths atmosphere using equations.

The first such simulations in the 1980s were crude by todays standards, held back as they were by the limited computing power and relatively thin sensor data. Present-day forecast models, though, can tap into the supercomputers orders of magnitude more powerful than anything that has come before. Even so, the framework underpinning these models has remained roughly the same. Theres no self-learning about it, says Blum. On the contrary, he adds, these models are tuned very much by hand.

That was still largely the case when the first edition of The Weather Machine was published in 2018. Since then, meteorology has been inundated by AI researchers trying to boost forecastings accuracy by area and time. And theyve been embraced by national weather organisations. We must use automation to handle the surge of observing platforms, said Eric Kihn, director of the Centre for Coasts, Oceans and Geophysics at the US meteorological agency NOAA, in a recent interview. That priority is fuelling a hiring spree for computer scientists and ML experts at the institution. Whether inviting commercial and academics to join us, or embedding NOAA scientists with a partner, were hoping to harvest knowledge that exists outside of NOAA and embed it with our mission-focused teams.

That enthusiasm has been matched at the UKs Met Office. Last year, it collaborated with scientists at Alphabets subsidiary DeepMind to devise a model capable of predicting the timing and character of precipitation to within a couple of hours. Predicting rainfall to that level of accuracy is a fiendishly difficult task for conventional forecasting methods. Between zero and four-ish hours, it takes a little bit of time for the model to stabilise, explains Suman Ravuri, a scientist at DeepMind. It also happens to be an area in which, if youre a meteorologist at the Met Office thats issuing flood warnings that might happen in the near future, you care about.

After several months of research, DeepMind and the Met Office devised a deep learning model named DGMR capable of plugging that gap. A form of General Adversarial Network, the system used before and after snapshots of radar readouts and other historical sensor inputs to learn the most likely direction and intensity of rainfall to within just two hours. Subsequent tests by a team of 58 meteorologists found DGMR to be more useful and accurate than conventional forecasting methods up to 89% of the time.

As a recent investigation by Wired found, however, not all AI systems can beat the traditional one-two punch of physics-based models and the nous of a grizzled meteorologist. Such was the case in predicting waterspouts, spinning columns of air that appear above bodies of water, usually in tropical climates. One study recently concluded they could be forecast with greater accuracy by human forecasters than their AI counterparts. Research by NOAA also found that meteorologists were between 20-40% more accurate in their predictions of rainfall than the conventional physics-based models, with ominous implications for those AI systems reliance on outputs from the latter.

DGMR also has its limitations. One meteorologist who has researched nowcasting in Brazil recently criticised the model as having parameters unsuited to the climactic conditions of her region. Many studies that change parameterisations inside the model, they are made in the higher latitudes, Suzanna Maria Bonnet recently told Natures podcast. Its not applied for our tropical region. It changes a lot of the results.

Were quick to sing the praises of the possibilities of machine learning but when it comes to modelling the atmosphere, nothing beats traditional physics.Andrew Blum, author

While Ravuri has stated previously that DGMR still needs work before it can be deployed on a wider scale, he says the problem of adaption to different countries is eminently solvable with access to new sources of radar data. I actually got in touch with that researcher on the Nature podcast, and shes gotten me in touch with another person who might have access to Brazilian radar, adds Ravuri. I cant say whether or not the model will work well, [but] Im sneakily optimistic.

Nevertheless, it touches on another problem afflicting AI-based weather forecasting: hype. Many of the press announcements and coverage of AI breakthroughs in nowcasting, explains Blum, simply do not sufficiently acknowledge the innate strengths of local meteorological teams using conventional forecasting methods. Were quick to sing the praises of the possibilities of machine learning, he says, but when it comes to modelling the atmosphere, nothing beats traditional physics.Comparison between a historical radar animation and a prediction by DeepMind's nowcasting model, DGMR, on its direction of travel (Photo courtesy of DeepMind.)

It was this awareness of its own lack of expertise, explains Ravuri, that prompted DeepMind to reach out to the Met Office in the first place. Without them, we would have solved a problem that no one cared about, he says. The meteorologists, they dont care what technology is behind XYZ. All they care about is [if] these predictions improve your decision-making.

In time, these kinds of collaborations may be all for the good. For Blum, though, theyre also part and parcel of a much larger trend within weather forecasting toward privatisation. The past few decades have seen companies such as Accuweather, Weather Underground and DTN mine climate data and then repackage it into tailored forecasts for private consumption for other corporate entities and interested individuals. All of these firms provide a valuable service but, like almost every other type of private organisation, they operate in the interest of shareholders and those willing to pay for their services.

This has always been at odds with the general spirit of weather forecasting shared by national meteorological organisations since the early 1960s. After all, a forecast for the West Coast of the United States doesnt make much sense if it doesnt incorporate sensor data on weather fronts in eastern China. Consequently, meteorologists from all over the world have made a special effort to pool their expertise and data through supranational organisations like the World Meteorological Organisation, creating what one of its former directors has described as the most successful international system yet devised for sustained global cooperation for the common good in science or any other field.

Accuweathers subscription-based forecast hasnt toppled that system, but the growing collaboration between national weather organisations with more powerful big tech firms like Microsoft, Google and Amazon might make it more difficult to hold the former accountable to principles of transparency and the free exchange of data. The proliferation of AI-based forecasting models could be the tip of the spear in that regard.

For his part, Kumar remains sceptical. The tradition of global cooperation and transparency in forecasting is more than matched in AI research, he explains. As a result, while there are cases where companies jealously guard their algorithms from public scrutiny, its hard to hold IPs, or even protections, around specific models.

The same cannot so easily be said about the nuts and bolts of forecasting. Since the 1980s, advances in forecasting have been reliant on access to generations of supercomputers more powerful than the last. Building and maintaining these vast machines, however, has become extremely expensive. And while organisations such as the ECMWF are still investing billions to do exactly that, privately owned cloud platforms maintained by the likes of Amazon and Microsoft have become increasingly attractive alternatives.

How using computing clouds to monitor natural ones will impact the wider profession of forecasting remains unclear to Blum. While the author acknowledges that the likes of AWS, Google and Microsoft Azure provide an important service to millions of customers on a daily basis, using their resources to perform research and analysis functions in forecasting means the meat of the work is one step further away from the public scientists doing it and a notch less control than they had once before. Even if that results in more accurate predictions for everyone from farmers to airport traffic controllers, says Blum, it means putting yet one more thing in the hands of Amazon and Google.Read more: Want more on technology leadership?

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Greg Noone is a feature writer for Tech Monitor.

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Big Tech is coming for the weather - Tech Monitor

UK government is on the hunt for an expert to help shape relations with the likes of AWS, Microsoft and Google, a role that includes a remit to "fulfil partnership opportunities" with the megacorps and "deliver against their needs and demands."

The Head of Big Tech Expertise role is based within the Digital and Tech Policy Directorate of the Department of Culture, Media and Sport (DCMS) - the heart of the Governments strategic policy-making and industry engagement on all things relating to tech and digital.

"Are you interested in the way Big Tech shapes other UK economy and society? Do you want to work with the most powerful technology companies in the world (sic)," the job ad asks.

The ideal candidate will be an "inquisitive" sort that is "self motivated" to work across Whitehall the civil service for non-Brit readers helping the digital economy to grow.

"The Unit works across Whitehall to create a strategic and coordinated approach to Government's relationship with the biggest tech companies, fulfil partnership opportunities and deliver against the needs and demands of this hugely exciting portfolio of companies."

During the selection process, recruiters will assess against the following behaviours: seeing the Big Picture (cough); communicating and influencing; delivering at pace; working together.

A decade ago, UK government was telling anyone that would listen it was going to loosen the stranglehold major tech companies had on the public sector. Fast-forward 10 years and it feels like that battle was lost. Mostly, the same familiar names are still milking the taxpayer, with the major addition of tax efficient AWS.

Big Tech has become more powerful, not less, particularly so in the past 20-plus months since the pandemic revolutionised the world of work and education, forcing more businesses and governments to digitise processes.

So what can a public sector person rubbing shoulders with execs at Big Tech as the Head of Big Tech Expertise expect in the way of financial remuneration? There's no lunch budget for starters, unless the successful applicant is willing to use their own salary to finance it. That salary? Up to 58,207 annually for someone based in London, or up to 52,968 for someone located elsewhere in the UK.

Here's the full ad. Applications close on 7 February. Those with added snark need not apply.

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Head of Big Tech Expertise? Believe it or not, it's a UK.gov vacancy for a Whitehall job - The Register

It is no secret that Microsoft's incentive for entering the video game space from the very beginning was in response to the threat posed to the PC (and hence to Windows) by Sony's successful PlayStation line. Bill Gates saw the potential of home consoles to become a gateway and nexus for all home entertainment, one that could ultimately replace the home computer.

Flash forward two decades later. After a mildly successful start, the Xbox brand seems poised like it has never been before to take the lead in the home console space, with a flurry of high-profile acquisitions in the last few years -- most notably of ZeniMax Media (which owns Bethesda) and of course most recently of Activision Blizzard, maker of popular franchises like Call of Duty, World of Warcraft and others.

While dominance of the video game industry would be a nice additional feather in Microsoft's cap, there are broader implications at play here, with media consumption on a level never seen before and a shift in the way entertainment media is distributed and consumed - i.e., streaming. Today's gaming audience dwarfs that of just a few decades ago, and the current generation of gamers is the first that grew up with internet-enabled gaming machines, something that was introduced shortly before Microsoft entered the fray back in the sixth console generation with the original Xbox.

This current gaming generation is one that is defined by a gaming-centric culture, with other forms of entertainment such as movie and tv streaming revolving in a kind of orbit around games. And here we get to the crux of why big tech is so motivated to get in on the gaming space: as an entry point to our entertainment lives and a bridgehead toward grabbing not only our gaming dollars but also our music and television streaming dollars as well.

Readers have almost certainly become familiar with the term "Metaverse" of late. It is a reference to the digital worlds that some believe will be the future of the internet, with digital life becoming integrated with real life in the physical world. While some may find this notion disconcerting, that is the direction some think big tech is steering things with the metaverse concept, as each tech giant vies to grab a central role in it. And video games have become pathway a into our living rooms, and from there into our digital spaces, with well over 2 billion people on planet now playing video games regularly.

All this is part of the vision Microsoft leadership saw all those years ago, at the turn of the 21st century when the internet was just really beginning to take off and unalterably change our lives, with video games just beginning to get in on the net's potential. The struggle between Sony and Microsoft has been fierce and certainly interesting throughout the years, with the two vying for a central place in the living room. Where it will all lead in terms of how we experience media, and how our lives as digital citizens will be impacted, it is too early to tell.

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Video Games Are the New Battleground for Big Tech - OnMSFT.com

In a year filled with notable market phenomena, one of the more notable of 2021 was the dramatic divergence between US and Chinese tech stocks, states Jesse Felderof The Felder Report.

While the former consistently surged to set new highs, the latter crashed, giving back all of its gains since the onset of the pandemic and then some.

The popular reasoning for the crash in the Golden Dragon China Index (HXC) argues that the Chinese government crackdown on many internet-based businesses was responsible for a major reset in the valuations of the associated equities. While this may be true to some extent, it is also true that the downturn in the Chinese credit cycle may have played a major role, as well.

It is also true that there is now bipartisan support in Washington for a crackdown on Big Tech here in the US. Of course, it wont look exactly the same as Chinas crackdown but the impetus for both is very similar, if not identical. However, just as for Chinas tech stocks, a major shift in monetary policy may be even more ominous for the valuations of US tech stocks, as represented by the Nasdaq 100 Index (NDX).

In fact, more than anything else the expected future direction of the Feds balance sheet may help to explain the recent weakness in the stock market, which has been led by the tech sector. And if the Fed follows through with its forward guidance in this regard, the valuation reset in big tech stocks may be only just beginning.

Learn more about Jesse Felder atTheFelderReport.com.

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Are Big Tech Stocks Following in the Footsteps of Their Chinese Counte - Moneyshow.com

On Thursday, Apple is expected to announce its highest sales and profit ever.

Ever since Apple's value blew past a trillion dollars a few years ago, analysts and tech industry experts alike have frequently wondered aloud, "How much larger can it get?"

We'll get an answer Thursday, when Apple announces its fiscal first-quarter sales and tells us how many iPhones, Macs and other products it sold during the holiday shopping season. Apple has built a lot of its business around this period, timing product launches -- like those of its well-reviewed iPhone 13, its revamped MacBook Pro laptops, its latestiPads,AirPods 3 and theApple Watch Series 7-- to maximize sales as people hunt for gifts for family and friends. After the quarter's December close, investors pushed Apple's shares so high that the company's valuetopped $3 trillion for the first time, despite ongoingsupply shortages for chips and other technology.

On average, Wall Street analysts expect the quarter to deliver new all-time financial records of $1.88 per share in profit on $118.38 billion in revenue, according tosurveys published by Yahoo Finance. Though that's impressive, Apple isn't expected to show as much growth as it did in the 2020 holiday shopping season. That's when the iPhone 12, Apple's first 5G-compatible device, helped push the company's profit up 30%, while sales jumped more than 17%.

Stay up-to-date on the latest news, reviews and advice on iPhones, iPads, Macs, services and software.

That wasn't all, though. Apple has continuously said over the past year that its Mac computers and iPads were seeing record demand as well, in part thanks to the company's highly anticipated new M1 "Apple Silicon" chips. That technology scored well among reviewers, including CNET's, who ran tests that showedperformance improvementsandincreased battery life. "It was zippy," CNET's Andrew Hoyle wrote of using the newMacBook Pro to process high-detail photos.

Now analysts are broadly expecting 2021's holiday shopping season to mark another record for Apple.

"The performance seen by Apple in the quarter was despite an unprecedented chip shortage out of the Asia supply chain," Wedbush analyst Daniel Ives wrote in a Monday message to investors. Despite Apple's established position as one of the world's most highly valued companies, Ives says he still expects to see Apple's "renaissance of growth" continue and its shares "outperform."

An Apple spokesman declined to comment ahead of the company's earnings report.

CNET named the iPhone 13 an editors' choice.

No matter what Apple says in its financial report Thursday, the results will be seen as a bellwether across the tech industry, and potentially beyond. But that report may prove an outlier as other companies struggle with supply and worker shortages, disappointing already dour Wall Street investors worried byfurther inflation,COVID-19's continued impact on the world, andsaber rattling between Russia and the USover Ukraine.

"Given resilient iPhone and Mac demand, we see Apple as a high-quality 'flight to safety' name to own during market volatility," Cowen analyst Krish Sankar wrote in a note to investors. He too labels Apple's stock at "outperform."

Apple has long operated one of the most successful supply chains, particularly as it navigated disruptions from the COVID-19 pandemic. Even so, Apple's executives have said they believe the company haslost out on billions of dollars in sales due to silicon chip shortages and manufacturing problems amid seemingly ceaseless demand.

Rod Hall, an analyst at Goldman Sachs, said he's "slightly cautious" about Apple's prospects, considering tech's continuing challenges with the global supply chain. In a note to investors, he warned that even though Apple may have been able to manage the chip shortages better than most, he'll be closely listening to executives as they give commentary on a post-earnings conference call.

Read more: US government warns that chip supply crunch remains dire

Apple has also largely escaped the scrutiny that tech giants like Alphabet (ne Google) and Meta (ne Facebook) have faced over how their respectiveadvertising-heavy business models erode people's privacy and trust in big tech.

Whatever Apple announces Thursday, it'll come at a time when investors are questioning Big Tech's future. Netflix shares have plunged more than 35% this year, driven in part by the company's own predictions last week that it would add far fewer subscribersthan expected in the first months of 2022. Electric-car giant Tesla's stock, meanwhile, plummeted nearly 28% from$1,199.78 per share at the start of the year, driven in part by the company's struggles to put out new cars.

The new MacBook Pro, released last fall, scored good reviews at CNET.

The iPhone remains king at the Cupertino, California-based company, even as Apple fans and industry watchers dissect each of the company's new product lines and business moves.

Last year, the iPhone represented 52% of the company's $365 billion in revenue, a slight increase from the 50% it represented in 2020 and a slight decrease from the 54% in 2019. That's part of Apple's seemingly endless conundrum: Its position as one of the largest companies ever is tied to the iPhone's success.

Apple has tried to build on that success, announcing ambitious services offerings, including the$5 per month Apple TV Plus, the $5 per month Apple Arcade and the$10 per month Apple Fitness Plus. Its other iPhone add-on-type products like the AirPods headphones andApple Watch wearable have performed well too, analysts say.

Rumors suggest that Apple's next big product launch will be a headset, potentially coming this year or next. Many tech executives believe that headsets from Apple, as well as those fromMicrosoft, Meta, Sony, Google and Magic Leap,could represent the next step in computing beyond the phone. And many companies have already begun preparing.

Apple's lineup of products is steadily growing.

Over the past year, tech executives from game companies to social networking giants to, yes, even Apple have begun publicly discussing a new term for the types of experiences these headsets will make possible: the metaverse. That's a catchall description of apps and experiences people can share in connected virtual worlds like a video game.

The metaverse "is an attempt to redefine our entire relationship with the internet, from virtual communities to ownership of digital content. It snakes into gaming, cryptocurrency, NFTs, teleconferencing software and 3D scanning. It's... a lot," CNET's Scott Stein wroteabout what he expects from the technology this year. "A year ago, nobody even talked about the idea of a metaverse. Now it's spread across countless news stories."

For Apple, though, the metaverse may represent more than the next step in computing: It may finally be the product to take the financial crown from the iPhone.

But don't expect CEO Tim Cook to spill the beans about his plans while speaking with analysts on a conference call Thursday. Those reveals are typically reserved for Apple's splashy events, whether in person or entirely virtual, asthe events have been during the pandemic.

Apple CEO Tim Cook is typically tight-lipped on conference calls with analysts.

Instead, when analysts and investors wonder how much larger Apple will get, what they'll mean is how many more iPhones can Apple sell, as well as maybe iPads, Macs, Apple Watches, AirPods and all sorts of other tech, including the company's (in)famous $19 polishing cloth.

"We'd expect a bullish installed base update," Morgan Stanley analyst Katy Huberty wrote in a message to investors, citing upbeat reports from Apple throughout the past year. Though she also rates Apple's stock at "outperform," she'll be listening for any other signs of how the pandemic and supply chain are affecting the company.

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Apple may reveal its biggest quarter ever after iPhone 13, AirPods 3 and MacBook Pro launches - CNET

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ZhongAn Online P&C Insurance Co. Ltd.'s (OTCPK:ZZHGF) (OTCPK:ZZHGY) (6060.HK) ties to Alibaba (BABA) (9988.HK), one of its three big-name parents, have served the online insurer well over the years by acting as a major conduit for new business. But in a country where regulators can quickly make life hard for businesses, Beijing's growing wariness of expansion by the country's technology giants into a wide range of sectors means this partnership could be at risk.

ZhongAn, China's first online-only insurer created in 2013 by Alibaba-affiliated Ant Group, Tencent (OTCPK:TCEHY) (0700.HK) and Ping An Insurance (OTCPK:PNGAY) (2318.HK; 601318.SS), last week fanned concerns about a potential weakening of its Alibaba ties after Ant revealed it trimmed its stake in the digital insurer to a little more than 10% from about 14%. Following the sale, the three parents each roughly hold 10% of ZhongAn, whose latest market value stood at HK$42 billion ($5.39 billion).

ZhongAn shares tumbled 6% last Tuesday after Ant first revealed its plan to trim its stake in a filing to the Hong Kong Stock Exchange. The stock has since recovered, likely helped by Ant's separate statement to media saying the transaction stemmed from a "normal course investment decision" and the strategic relationship with ZhongAn "will continue."

Ant's reduction of its ZhongAn investment comes as Chinese regulators seek to stop big private enterprises like Alibaba and Tencent from growing too powerful. Ant, in particular, should know the perils of messing with the government, after Beijing forced the company to halt its massive $34 billion IPO in Shanghai and Hong Kong at the last minute in late 2020.

That ambush not only dealt a big blow to Jack Ma, the celebrity founder of Alibaba and Ant's controlling shareholder but also kicked off a broader crackdown on private businesses that the government perceives as too powerful. Alibaba has hardly been alone in attracting Beijing's wrath, with Tencent and other Chinese tech giants also becoming targets of regulatory actions.

Ant's ZhongAn share sale is just the latest chapter in an ongoing story reflecting its recent woes. Just last Thursday, China's official Xinhua news agency published a communiqu from the Communist Party's discipline agency saying authorities must "show no mercy" in rooting out corruption linked to the "disorderly expansion of capital." The verbal salvo followed the airing of a program on state TV the day before that implied Ant's involvement in a corruption scandal.

As part of the campaign to keep big businesses in check, the government is pressuring Alibaba, as well as Tencent, to shrink by divesting assets, especially outside their core areas. Ant reduced its stake in Zomato, an Indian food delivery company, last year, while Alibaba is reportedly in talks to sell its stake in Weibo (WB) (9898.HK), the Chinese equivalent of Twitter. Tencent, meantime, recently sold most of its stake in JD.com Inc. (NASDAQ:JD), the second-largest online retailer in China, and trimmed its interest in Sea, the largest internet company in Southeast Asia.

ZhongAn's ties with its big-name parents are not just financial but also synergistic. Its flagship product is insurance to cover costs for returning goods sold on Taobao, Alibaba's online shopping service. ZhongAn also relies heavily on Alibaba platforms to sell its products under a cooperation agreement. It uses Tencent networks in a similar way but to a much lesser degree. Ping An provides ZhongAn with asset management services, and the pair have also jointly developed an auto insurance scheme.

Regulatory scrutiny aside, the business collaborations are a bit of a double-edged sword for ZhongAn. Although using its parents' resources helps ZhongAn generate sales, it also adds to costs. In the first half of last year, fees paid by ZhongAn to Alibaba and its affiliates for use of their platforms amounted to 7% of gross written premiums, the equivalent of top-line revenue for insurers.

Its dependence on third-party platforms has made it difficult for ZhonogAn to turn a profit from writing insurance policies, which it only achieved for the first time in the first half of last year despite growing rapidly since its inception.

So, for its longer-term profitability, it makes sense for ZhongAn to reduce its reliance on services from other companies, including Alibaba. But a complete break with its parents, which in theory could occur if they fully sell their ZhongAn stakes, wouldn't be so desirable either because they could quickly turn into direct competitors.

Now that ZhongAn has shown how lucrative online insurance can be, Ping An will continue to try to beef up its own efforts in that space. Alibaba also operates an online insurance brokerage platform called Antsure through Ant, while Tencent has a similarly named affiliate called Wesure. Those businesses attract huge traffic thanks to the dominance of their parents. As middleman brokers, Antsure and Wesure don't compete with ZhongAn, which offers its own insurance policies. And ZhongAn would probably prefer to keep it that way.

Investors appear to believe that it's business as usual for ZhongAn for now, given the quick recovery of the company's stock after last week's initial selloff.

ZhongAn shares have lost more than half of their value since their market debut in 2017 as they, like other Chinese fintech stocks, have borne the brunt of the regulatory crackdown on their sector. But ZhongAn's stock still commands a price-to-earnings (P/E) ratio of more than 40. Among other online insurance businesses, broker Waterdrop Inc. (WDH) isn't profitable yet and isn't expected to stop losing money anytime soon, meaning it has no P/E. Turning to another metric, ZhongAn also trumps Waterdrop in terms of its price-to-sale (P/S) ratio of 1.8 based on 2020 revenue, compared to Waterdrop's multiple that barely surpasses 1.

Yet, it's hard to predict how much further Chinese regulators will go to rein in big tech to contain its dominance. That means it's hard to rule out the possibility that Alibaba and Tencent might be forced to sell all their ZhongAn shares. To shield from this risk, the best way forward for ZhongAn is to keep its head down and continue working to wean itself from its big tech parents.

Disclosure: None

Original Post

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

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ZhongAn's Big-Tech Ties In Focus As Alibaba-Linked Ant Trims Stake - Seeking Alpha

By Cecilia Kang and David McCabe, The New York Times

Lawmakers on Capitol Hill are readying a major push on bills aimed at restraining the power of the countrys biggest tech companies, as they see the window of opportunity closing quickly before the midterm elections.

In a significant step forward, a Senate committee Thursday voted to advance a bill that would prohibit companies such as Amazon, Apple and Google from promoting their own products over those of competitors. Many House lawmakers are pressing a suite of antitrust bills that would make it easier to break up tech giants. And some are making last-ditch efforts to pass bills meant to strengthen privacy, protect children online, curb misinformation, restrain targeted advertising and regulate artificial intelligence and cryptocurrencies.

Most of the proposals before Congress are long shots. President Joe Biden and top Democrats in Congress have said addressing the industrys power is a high priority, but numerous other issues rank even higher on their list. These include passing voting rights legislation, correcting labor and supply chain constraints, enacting a social services package and steering the nation out of the COVID-19 pandemic.

Still, the next few months are probably the last best chance for a while. After that, attention will turn to the midterm elections, and Democrats, who support the efforts aimed at tech in far greater numbers than Republicans, could lose control of Congress.

This is a problem that has been brewing for a long time, and its become pretty obvious to everyone, said Sen. Amy Klobuchar, D-Minn., who has led the push for tougher laws on the tech companies. But when you get to the fall, it will be very difficult to get things done because everything is about the election.

Congress has unified around a growing concern about the technology giants over the last several years. Still, dozens of bills have failed to pass, even as many other countries have beefed up their regulations for the industry.

When Biden took office last year, he promised to inject more competition into the economy, particularly in the tech sector. He appointed vocal tech critics to lead antitrust agencies, and this month, his press secretary said Biden was encouraged to see bipartisan interest in Congress in passing legislation to address the power of tech platforms through antitrust legislation.

Bruce Reed, White House deputy chief of staff, and Brian Deese, director of the National Economic Council, met Wednesday with executives from companies including Yelp and Sonos, which have lobbied for antitrust action against the tech giants. They discussed the difficulties that entrepreneurs, brick-and-mortar retailers, and other businesses face competing in sectors dominated by a few large platforms, White House officials said. The administration said it anticipated working with Congress but has not endorsed any of the specific legislation aimed at the companies.

Complicating matters is that even though the two parties widely agree that Congress should do something, they often disagree on what that should be.

In the past few years, dozens of privacy, speech, security and antitrust bills have withered amid disagreements over how to balance protecting consumers while encouraging the growth of Silicon Valley. Some bills, such as those that address online content moderation, are especially polarizing: Democrats have called for measures that would push the companies to remove from their sites more misinformation and content that contributed to real-world harm. Republicans have backed laws to force the companies to leave more content up.

Everyone has a bone to pick with Big Tech, but when it comes to doing something, thats when bipartisanship falls apart, said Rebecca Allensworth, a Vanderbilt Law School professor who specializes in antitrust law. At the end of day, regulation is regulation, so you will have a hard time bringing a lot of Republicans on board for a bill viewed as a heavy-handed aggressive takedown through regulation of Big Tech.

The bill that the Senate Judiciary Committee advanced Thursday, for instance, could prevent Amazon from steering shoppers to its Amazon-branded toilet paper and socks while making it harder to find comparisons for those products from other brands. It could force Apple to allow alternatives to Apple Pay within iPhone apps. And it could prevent Google from putting its own services such as travel prices, restaurant reviews and shopping results at the top of search results.

Introduced by Klobuchar and Sen. Charles Grassley, R-Iowa, the legislation aims to address concerns that a handful of tech giants act as gatekeepers to digital goods and services. Alphabet, Amazon, Apple, Facebook and Microsoft have a combined market capitalization of more than $9 trillion. Several Republicans voted in favor of the bill, which passed 16-6. Although Mike Lee, R-Utah, repeated a consistent party talking point of unintended consequences to future businesses that can be swept under the law, others said the threats posed by tech giants outweighed those worries.

Sen. Ted Cruz, R-Texas, voted in favor of the bill and emphasized that his greatest concern was how giant social media companies have moderated content. He and other Republicans on the committee said they believe companies such as Apple, Google and Facebook have censored conservative voices by banning apps such as Parler, a right-wing site, and by taking down accounts of conservative figures.

It would provide protections to content providers that are discriminated against for the content they produce, Cruz said. I think that that is a meaningful step forward.

Klobuchar described the vote as a historic and important moment as the first antitrust bill aimed at tech to advance out of the committee.

As dominant digital platforms some of the biggest companies our world has ever seen increasingly give preference to their own products and services, we must put policies in place to ensure small businesses and entrepreneurs still have the opportunity to succeed in the digital marketplace, she said.

But she acknowledged there is much work ahead for her and Grassley to persuade congressional leadership to support final passage of legislation.

Consumer groups and a coalition of dozens of tech startups back the bill. Some consumer advocates have compared the legislation to a law that forced monopoly TV providers to offer all networks access to cable customers. That action, they say, did not lead to the demise of the cable television business, but kept monopoly providers from shutting out competition.

Consumers will benefit from this bill by making it easier to install, choose and use alternative apps and online services, said Sumit Sharma, a senior researcher for tech competition at Consumer Reports, enabling both consumers and small businesses to more easily switch between ecosystems by mixing and matching services from different providers.

Silicon Valley lobbyists have fought the bill in published opinion pieces, ad campaigns and one-on-one appeals. Sundar Pichai, CEO of Googles parent company, Alphabet, and Tim Cook, CEO of Apple, have called lawmakers to oppose the bill.

The companies lobbyists have argued that the legislation could make it harder to ward off malware and bugs in devices and could make their services less useful. In a blog post Tuesday, Googles chief legal officer, Kent Walker, painted a dire vision of the impacts that it and other bills could have: The company may have to stop including a map of vaccination sites in search results if the law passes, he said. It may have to stop blocking spam in Gmail. It may not be able to show someone searching for medical help clear information and instead be required to direct you to a mix of low-quality results.

The companies have also said the proposals focused on their bigness would hurt small businesses. In recent months, Amazon has urged the merchants who sell products through its marketplace to contact lawmakers with concerns about the bills.

Brian Huseman, Amazons vice president of public policy, said in a statement that the legislation could imperil the companys ability to offer Prime shipping benefits to those sellers or allow them onto its platform at all.

Klobuchars bill in particular targets a growing business for Amazon: competing directly with those outside merchants by offering its own products, such as its Amazon Basics line.

Amazon argues that many major retailers, including Costco and Walmart, do the same thing. The bills authors are targeting common retail practices and, troublingly, appear to single out Amazon while giving preferential treatment to other large retailers that engage in the same practices, Huseman said. Sens. Dianne Feinstein and Alex Padilla, two Democrats from California, repeated the companies arguments, saying the Silicon Valley giants were being unfairly targeted by a bill that could help the rise of rivals in China such as TikTok and Tencent.

Klobuchar said tech companies have lobbed misleading attacks. They dont like our bill, she said. You can see the ads on TV.

Before Thursdays session, Klobuchar and Grassley proposed changes that they said would address concerns about user privacy and hindering subscription services such as Amazon Prime. The new version also appeared likely to cover TikTok.

Even though Klobuchars bill moved beyond the Judiciary Committee on Thursday, its sponsors face the steeper challenge of getting 60 senators to support it. In the House, advocates of the antitrust bills also need to get enough Republicans on board to account for Democrats who oppose the proposals.

Theyve talked about the cascade of legislative possibilities, said William Kovacic, a former chair of the Federal Trade Commission. None of it has happened. And the clock is running.

This article originally appeared inThe New York Times.

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Efforts to Rein in Big Tech May Be Running Out of Time - Good Times Weekly