Category Archives: Big Tech

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

See the rest here:

IPOs have gone red hot in 2020: Here are 7 big names to watch - Bankrate.com

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

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

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

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

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

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

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

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

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

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

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

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

Its a positive sign, Mitchell said.

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

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

Read more:

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

To find a solution for society we need to take a step back, understand the business models of the platforms that aspire to run an ever increasing part of our lives, and then revisit regulation from the bottom up. The economics of digital businesses, with easy scalability, lock-ins and winner-takes-most dynamics, create problems of dominance unlike the ones weve been used to, as recent government-sponsored reports from the UK and the EU and academic work in the US confirmed.

Consider Big Tech M&A. Microsoft paid $8.5bn (6.5bn) for Skype and $26bn for LinkedIn, while Facebook spent $22bn on WhatsApp. These massive investments helped acquirers cement their hold over their respective ecosystems and snuff out the threat from a potentially competing platform a fact that came to haunt Google and Apple in the recent Congressional hearings of their CEOs.

The problem is that todays antitrust playbook is incompatible with the new rules of digital platforms and ecosystems. For instance, out of Alphabets tally of 150+ acquisitions over the last decade, EU and US competition authorities opened cases for just six and ultimately took action on none at all. Is Google really so pro-competition? Or are we working with outdated ideas of what competition and power really are?

This is by no means an idle question. Right now, Google, Apple, and Facebook are sitting on combined cash reserves of $570bn, or three times the GDP of my native Greece. They can buy anything they want, given the looming contraction. Should we really allow this? Or should we try to foster more meaningful and productive competition between ecosystems?

Recently, LBS, UCL, and the WEF co-organised a workshop on the regulation of platforms and ecosystems, involving several heads of European competition authorities and Big Tech leaders. The event highlighted a systemic unease and growing calls for a rethink of intra-platform competition and how all-powerful orchestrators manage members of their ecosystems. The current stock-market valuations of Big Tech suggest their power will grow, raising questions about our entire regulatory apparatus. Whether or not we intervene, our choices today may set the stage for the competitive landscape for decades to come.

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As Big Tech reinvented the game, we must rewrite the rules - London Business School Review

Where is the global banking tech heading to, in 2020?

The economic misery caused by the pandemic is inviting comparisons with the Great Depression of 1929. Then, a major reason for the crash was inadequate segregation between the retail banking, insurance and investment businesses, leading to contrarian behavior and conflict of interest in financial institutions. To avoid a repeat of this incident, the United States passed a law called the Glass Steagall Act in 1933 to ring fence banking and insurance / investing to protect customers in case their banks committed financial irregularities.

Read Also: Microsofts Cloud Business Revenue Overtakes AWS And Google Combined

70 years after that event, the introduction of the GDPR (General Data Protection Regulation) in Europe is once again turning the spotlight on consumer rights and protection by stating that organizations may not use or share their customers data without explicit consent.

If this wasnt hard enough, the matter has been complicated by another European mandate, namely the PSD2 (Payment Services Directive 2), requiring banks to expose their APIs to level the playing field for non-banking entities wanting to enter the business. As a result, today, banks are grappling with rules demanding ring fencing, data confidentiality, API sharing and customer content rules, which frequently counter each other.

At the same time, banks are also coming to terms with a rapidly changing banking business. Increasingly, banking services are being delivered not by standalone banks, but by a gang of 4, comprising retailers, telecom companies, technology firms and the banks themselves, each bringing their unique strengths customer understanding & distribution, communications networks & data centers, technology platforms & innovation capabilities, and manufacturing & domain expertise, respectively to the engagement.

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So we have Goldman Sachs tying up with Apple to offer the Apple Card; AT&T, Verizon, Telstra etc. hosting bank infrastructure; and Ant Financial, Tencent, and others offering technology platforms supporting innovative banking models. Big technology companies like Google and Amazon are doubly invested in this space as providers of payments services and cloud infrastructure.

The biggest beneficiaries of the entry of non-banks, particularly big tech, in financial services, are the customers, who are enjoying innovative products at economical prices, and great experiences delivered 247 on the devices of their choice. There is no better example than Indias UPI payments, dominated by non-banks, such as Google, Phone Pe and PayTm, which offer unprecedented convenience to customers, without the fees, limits, and time lag associated with the bank fund transfers.

The combined reach of the gang of 4 has made banking services highly accessible even to the underbanked and unbanked. As the other players, especially big technology companies, entrench themselves in the banking business, it is inevitable that they attract the attention of regulators, sooner or later.

While it is important to regulate these entities, the authorities should approach the situation thoughtfully. For example, ring fencing, so that only banks may do banking, is not the answer. The goal should be to safeguard offerings without compromising customer interest, which today, is best served by opening up the market to new competition. Hence there is a need to expand access to good products at competitive prices, delivered as great experiences, while making sure no entity indulges in practices such as predatory lending or taking deposits without giving adequate guarantees. In fact, regulators must make it easier for all players to serve the low end of the market by adding value through scale, reach, accessibility and affordability.

It is critical for regulation not to contaminate the respective businesses of banks and big tech by equating them doing so will only bring the worst problems of banking institutions to technology companies and prevent the best technology from reaching banks. India has found a neat way around this problem by issuing specific licenses for Payments Banks and Small Finance Banks that do not put them in direct competition with incumbent institutions, yet allow them to operate in specific niches.

Under no circumstances should regulation restrict consumer choice. Todays customers are quite aware of the alternative options in the market, and their pitfalls. Therefore, it is only right to allow them to choose both product and provider. But it is equally important to protect their data and privacy by stipulating that technology companies (and others) explicitly take customers consent before using their information in any way; mandating this as part of GDPR implementation is therefore a right step.

Banking Tech Updates:Mambus Digital Banking Services now Runs on Google Cloud Platform (GCP)

Finally, regulators must acknowledge that the pace of change has never been this fast, yet, it will never be this slow again. They need to keep up with the change by periodically reviewing the efficacy and coverage of existing laws. A joint review every two years by all the players concerned regulators, banks and big tech companies etc. would go far in serving not only the best interest of customers, but also of the banking industry and of the economy of nations.

Read More: Central Pacific Bank Goes Live With MX Helios for Mobile Banking

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Big Banking Tech Rules that Solidify Trust in Transparency - AiThority

Are moviegoers ready to return to cinemas? Not just yet, according to YouGov Direct users.

When we asked them if they would like to watch this week's most popular cinematic release (Jimmy Carter Rock & Roll President) in theaters right away, four out of five said they would rather watch it via a streaming or download service at a later date (80%). That figure was only slightly lower for this weeks other cinematic release The Broken Hearts Gallery (74%).

Each week, YouGov Direct asks a group of its members to watch movie trailers. We then report on what they say. YouGov Directs surveys investigate how effective movie trailers are in persuading people to consider seeing a film, what they think about the content of the trailer, and how good or bad they expect the movie to be. Thousands of people provide immediate feedback on movie trailers using the YouGov Direct platform.

Netflix nabbed the most effective and most popular trailer this week with The Social Dilemma, a powerful documentary about the dangerous impact of social networking on mankind.

The documentary may not have been the most anticipated film (that honor goes to Netflixs other new release, comedy horror sequel The Babysitter: Killer Queen) but its trailer was the most effective at persuading viewers to consider streaming it. Before watching the trailer, just 15 percent of YouGov Direct users said they were somewhat or very likely to watch the film. After users viewed the powerful trailer, however, that number increased to 44 percent -- a lift of 29 percentage points in intent, the highest this week.

The Social Dilemma was also the most effective at persuading people to consider subscribing to the streaming service that hosts it. There was an increase of 6 percentage points in intent to subscribe to Netflix after users watched the trailer, once again the highest increase this week.

The documentary's topical subject matter - the consequences of our growing dependence on social media - appears to have struck a nerve with viewers. When asked what they liked best about the trailer, more than three in five said it was the film's timely story or themes (61%). The documentary is certainly the most up to date film analysis youll find on the internet. It originally premiered at the Sundance Film Festival in January of this year but has since been updated to incorporate the impact of coronavirus.

YouGov Direct asks respondents to tell us how good or bad they think a movie will be based on the trailer. Once again The Social Dilemma came out on top, receiving a score of 3.9 from users. This is out of a possible 5.0 and compared to a median score of 3.5 for all trailers tested to date. The lowest score of the week (2.9) was awarded to the pulpy horror flick The Babysitter: Killer Queen.

The other documentary turning heads this week is Jimmy Carter Rock & Roll President. This political film looks at the crucial role musicians like Johnny Cash and the Allman Brothers played in getting Carter into the oval office.

Prior to seeing the trailer, 16 percent of YouGov Direct respondents said they were likely to see this Mary Wharton-directed documentary. After viewing the clip on the YouGov Direct app, 40 percent said they were now likely to see it.

So what made this trailer so effective? Unsurprisingly, more than two in five users said it was the music or score that stood out the most for them. The documentary is certainly packed with famous faces. In the trailer alone you can glimpse Bob Dylan, Willie Nelson and the Allman Brothers.

But rock and roll fans did not appear especially excited about the film. Of those classic rock fans who watched the trailer, 39 percent said they were somewhat or very likely to see this movie. That post trailer figure was 44 percent for fans of R&B music and 43 for fans of classical music.

Related:

Image: Getty

Methodology: Data is based on 4,000 interviews, including a minimum of 400 responses for each movie trailer tested. Surveys were conducted online on September 10, 2020.

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The trailer for big tech documentary The Social Dilemma hooked viewers this week - YouGov US

The amount of options bought for expiry this week is some of the big tech names like Apple (AAPLUW) and Tesla (TSLA:UW) are huge.

When an option is bought, the market maker typically hedges by buying the underlying stock. When the option expires, that hedge gets sold or the stock gets called away if its in the money. Either way, the buying power evaporates. Market makers will not want to pay out on these and we should see some additional downside selling towards the end of the week to defend these positions. The majority of these speculative options are at current levels or higher.

Back in 2000 when the tech bubble unwound, it was not a straight line down. This one will not be either. And the fact that while valuations are extreme, these are real companies with mature earnings and cash flows unlike expectations 20 years ago, which makes valuation a bit easier today. Remember that 20 years ago, there was no iPhone. Over the next week, excitement around Apples new 5G iPhone launch (Sept. 15) and Teslas battery day (Sept. 22) will be reasons for speculators to speculate.

The options markets give us some insight into market risk being priced in. By Friday, the breakeven (based on Fridays US$112 close) on an at-the-money US$112.50 straddle is about US$105-$120 this week. Investors should not be too surprised to see this range tested. What seems most interesting with AAPL is that earnings expectations have been relatively flat for the past few years (red line) while the price has tripled since earnings expectations peaked in 2018.

Betting against APPL has been a bad bet so we are not saying sell it or dont buy the dip. What we are suggesting is where that next best opportunity might be and the answer is lower, much lower. Technically, the pre-COVID highs around US$80 would be a minimum and at that point, it would still be twice as expensive as it has been for the past decade. Sure, lets get excited about 5G and new technology drivers, but at what price?

The Street always has a bullish story to tell. Technically, the 200-day average is rising in the US$83 area and retracement targets are between US$85-95 range. Investors can sell an 80 put for September 2021 and earn about US$4.50 (almost four per cent based on current value). Not bad for conservative investors looking to buy a dip. Im all for buying growth at a reasonable price. But prices just are not reasonable and earnings growth for AAPL does not warrant the current multiple people are paying for it.

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Larry Berman: Should you buy the dip in big tech names? - BNN

By Elizabeth Culliford

(Reuters) - The regulation of big technology companies including Facebook Inc and Alphabet Inc's Google has been a hot button issue ahead of the U.S. presidential election on Nov. 3.

Here is a look at the stances of Republican President Trump and his Democratic opponent, Joe Biden, on some key tech policy issues:

BREAKING UP BIG TECH COMPANIES

Biden, who was vice president during the Silicon Valley-friendly administration of President Barack Obama, has criticized Facebook and other tech giants during his campaign and proposed a minimum federal tax aimed at companies like Amazon.com Inc.

Trump, who has mixed relationships with tech companies, bashing Amazon and its chief executive, Jeff Bezos, but meeting with Apple Inc's Tim Cook, has said "there is something going on in terms of monopoly" when asked about big tech firms.

The Trump administration is conducting a wide-ranging antitrust probe into major tech companies and is expected to bring an antitrust case against Google.

Trump and Biden have stopped short of calling for the companies to be broken up, but Biden and his vice presidential pick Kamala Harris - a senator and former attorney general for California, the home of Silicon Valley - have said they would seriously look at the idea of dismantling companies like Facebook.

REGULATING SOCIAL MEDIA

Both Biden and Trump have blasted social media companies over their handling of political content. Trump, whose digital campaign helped propel him to the White House in 2016, has long accused the companies, without evidence, of censorship against conservatives.

After Twitter Inc put fact-checking labels on Trump's tweets for the first time in May, the president signed an executive order that seeks new regulatory oversight of tech firms' content moderation decisions and backed legislation to scrap or weaken Section 230 - a federal law largely exempting online platforms from legal liability for the material their users post.

Biden, who has clashed with Facebook over its more hands-off stance to politicians' ads and speech, also wants to revoke Section 230. He was the only Democratic presidential candidate to call for its repeal.

DATA PRIVACY

Congress has tried, without success, to build consensus on federal consumer privacy legislation, which the Trump administration signaled support for.

Biden has said the United States should set privacy "standards not unlike the Europeans," an apparent reference to the European Union's stringent General Data Protection Regulation (GDPR).

Privacy advocates have slammed the Trump administration for repealing broadband privacy laws that required internet providers to get consumer consent before using certain types of their data, and for actions they say violate immigrants' privacy.

The Trump administration has also lambasted Silicon Valley over encryption, criticizing Apple for what the president called its refusal to unlock phones used by criminals.

Recently, Trump has stepped up efforts to purge what it deems "untrusted" Chinese apps from U.S. digital networks: in August, the president ordered the sale of TikTok's U.S. arm, saying he might otherwise shut it down over concerns that user data could be passed to China's government.

DIGITAL DIVIDE

The coronavirus pandemic, which has driven education and work online, has exposed inequalities in access to high-speed broadband.

Trump has said he is committed to ensuring "every citizen can have high-speed internet access," though Democratic rivals criticized him over the continuing digital divide on the campaign trail. In January, the Federal Communications Commission approved a $20 billion rural broadband expansion fund.

Biden said he also plans a $20 billion investment in rural broadband infrastructure and to triple funding to expand access in rural areas, as part of a package his team proposed to pay for through tax increases on wealthy Americans.

(Compiled by Elizabeth Culliford; Editing by Jonathan Oatis)

Excerpt from:

Factbox: Where do Trump and Biden stand on tech policy issues? - Yahoo Finance

This article is part of the On Tech newsletter. You can sign up here to receive it weekdays.

Wednesdays five-plus-hour congressional probing of the bosses of Americas tech giants did not reveal a singular gotcha moment or smoking gun email. Weve heard many of these examples of Big Tech abuse before.

But the power of this hearing and others like it was the cumulative repetition of tales of abusive behavior, and evidence of the harm this has had on peoples lives.

The spectacle also showed that the impact of congressional investigations is the digging that happens when the C-SPAN cameras are turned off.

Worries about Americas tech stars have swirled for years. Its clear now that this isnt going away. In world capitals, courtrooms and among the public, we are wrestling with what it means for tech giants to have enormous influence on our lives, elections, economy and minds.

And while what happens to the future of Google, Amazon, Apple and Facebook is anyones guess, it was clear from Wednesdays hearing that Congress was pointing the way for other branches of government to pick up the digging from here.

We saw on Wednesday old emails and texts from Mark Zuckerberg, worried about Facebook losing ground to Instagram and suggesting that buying competing apps is an effective way to take out the competition. The big deal here: Trying to reduce competition by purchasing a rival is a violation of antitrust law. (Zuckerberg said that Instagrams success wasnt assured when Facebook bought it.)

Representatives said that their interviews with former Amazon employees backed up news reports that the company used private data from its merchants to make its own version of their products.

The subcommittee discussed their conversations with companies that claimed Google funneled web searches to services it owned rather than to rivals like Yelp. Through company documents and questioning, members of Congress picked apart Apples stance that it treats all app developers the same.

My colleague Kevin Roose wrote that the tech bosses seemed to be taken off guard by the rigor and depth of the questions they faced.

The Department of Justice and the Federal Trade Commission are also investigating whether these companies abuse their power, and I bet they watched closely. The U.S. governments antitrust case against Microsoft more than 20 years ago was built, in part, on the emails of Bill Gates and other Microsoft executives discussing how they planned to kill upstart competitors.

Heres one more sign that the backlash against Big Tech has only just begun: The shouty tech critics in Congress and the tech bosses all seemed to agree that these four companies have a meaningful impact on many peoples lives.

The tech bosses focused on the good that comes from their companies size, reach and influence. A New York bakery finds customers by buying advertisements on Google. Merchants can thrive by selling their products or apps on Amazon or Apple.

The representatives pointed out examples of the dark side of Big Techs size, reach and influence. In the pin drop moment of the hearing, a House member played an audio recording of a book seller saying her family was struggling because of a change Amazon apparently made that dried up her sales there.

The subcommittee chairman said these tech powers can pick the winners and the losers. That might be stretching it. But both sides demonstrated that these four companies have a profound say in who wins or loses.

Lawmakers of all political stripes seemed uncomfortable with the knowledge that four companies have this much influence. Beyond the legal antitrust questions at issue, its this feeling of discomfort that makes it hard to imagine that nothing will change for these tech superpowers.

Wednesdays hearing was really two hearings. The Democrats mostly asked the four tech chief executives about ways their companies wielded their power and influence. Republican members largely asked about persistent concerns that Google and Facebook in particular censor right-leaning viewpoints or treat conservative figures unfairly.

Some Republican politicians complaints about political bias arent backed by credible evidence. Regardless, suspicion of bias is a thorny problem for these companies.

In a 2018 Pew Research survey, Americans who described themselves as Republicans or Republican-leaning overwhelmingly said that they believed that tech companies censor online information for partisan reasons. (A smaller, but still majority, share of Democrats said that they believed this, too.) Since then, polling has shown a growing mistrust of tech companies, particularly among conservatives.

This doesnt seem to have hurt the tech companies businesses. In fact, some Republican members on Wednesday argued that even though people dont trust Big Tech, they have no choice but to continue using these services because these companies have so much influence. It was an effective way to connect bias concerns to investigations into tech company market power. (Yes, I said earlier this week not to pay attention to bias claims. But maybe pay attention a little?)

Even if allegations of bias dont cause the companies to lose customers, the loss of faith among a large share of Americans should worry them.

Its also a problem if the tech companies overcorrect. Facebook employees and critics have said fears of being accused of bias have made the company reluctant to crack down on people, including President Trump, who spread dangerous or inflammatory messages online. Its a fine line to walk.

The really important stuff from the Big Tech hearing: House plants and bookshelves. My colleague Mike Isaac rated the tech bosses choices of backgrounds for their webcast testimony. Mike gave Amazons Jeff Bezos, who sat in front of wooden shelves with a sprinkling of books and tchotchkes, a score of 8 out of 10 for his cool Pacific Northwest dad office vibes.

Example infinity of technology as a flawed virus surveillance: A Wall Street Journal technology columnist reviewed smart watches, internet-connected thermometers and other gizmos that say our heart rate readings or other bodily data can provide early warnings of coronavirus infections. Spoiler alert: Some of this stuff holds promise but needs further research, and we still need more laboratory virus testing.

If you feel like screaming when you watch TV: Rolling Stone has a hilarious and smart rage fest on why the video streaming services can be so infuriating to use.

Best wishes forever to this tiny rabbit peeking out of a canvas bag.

We want to hear from you. Tell us what you think of this newsletter and what else youd like us to explore. You can reach us at ontech@nytimes.com.

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Big Techs Backlash Is Just Starting - The New York Times

It was the Wizard of Oz in digital format as the four titans of Big Tech testified via video before the House Antitrust Subcommittee. Just like in the movie, what the subcommittee saw was controlled by a force hidden from view. The wizard in this casethe reason these four companies are so powerfulis the math that takes our private information and turns it into their corporate asset.

The hearing was the next step in the subcommittees year-long investigation of Big Techs effect on a competitive market and the effectiveness of Americas antitrust laws. The witnesses, subcommittee chairman David Cicilline (D-RI) said, were gatekeepers to the economy[with] the power to pick winners and losers, shake down small businesses and enrich themselves while choking off competitors.

During nearly six hours of testimony the CEOs of Facebook, Amazon, Apple, and Alphabet (Google) dealt with a litany of diverse topics. Republicans saw an opportunity to work the referees and complain about alleged bias by social media. The subcommittees Democratic majority, however, was clearly prepared. The CEOs were forced to defend practices as diverse as their relationship with China, their acquisitions of other companies, and the myth that they protect consumer privacy.

This was a hearing to explore antitrust policies, and as such, it focused on the effects of the companies market power. Left mostly unaddressedand remaining behind the curtainwas the source of that power. That source is the collection and hoarding of the digital data that fuels the software algorithms that deliver the companies services. It is the 21st century equivalent of Rockefellers 20th century monopoly over oil.

Except that the data asset is far more valuable than industrial assets such as oil. As a result, the monopolistic control of data is even more onerous than industrial monopolies such as Rockefellers. Unlike industrial assets such as oil, data is reusable. Data is also iterative, as its use in a product creates new data. Additionally, data is non-rivalrous, in that its use by one party does not preclude its use by another.

The internet platform barons assembled at the hearing are, as a result of the nature of the asset they monopolize, infinitely more powerful that Rockefeller, Carnegie, Morgan or the industrial barons of the early 20th century. It is all about the math that is hiding behind the curtain.

The math machinescomputer algorithmsbecome more valuable and more precise as they are fed more data. Whoever controls that data, therefore, controls the market. Mark Zuckerberg, for instance, was able to take on the reigning social media service Myspace only 15 years ago, because the use of social media data to target advertising was in its infancy. Today, even if an startup had a better product, the new companys ability to sell advertising would be constrained by the amount of data Facebook collects from a user base of almost one-third of the people on the planet and the precision that data provides.

And the data that Big Tech holds in their computers is locked away behind the wizards curtain, unavailable to innovators and the potential of new competition.

But not all datathank goodnessis hoarded like Big Tech does. If scientific data were hidden away like Big Tech hoards consumer data, the COVID-19 crisis would be much worse. Sharing data and working collaboratively across an ecosystem has been a major reason why scientists have been able to ramp up vaccine efforts. Called Deep Tech, the open availability of data about coronavirus has allowed a combination of universities and startups to search for solutions. On January 7 China published the COVID genome; a month later, Moderna had the first candidate vaccine; by March 16 the first test dose had been administeredall because of access to the necessary data.

The same holds true for artificial intelligence (AI). While the Big Tech companies are developing their own AI algorithms, their fiduciary responsibilities focus the effort on the needs of the company and shareholders, not necessarily the expansion of knowledge. Yet, since AI is nothing more than algorithms sifting through vast amounts of data to reach a conclusion, the United States success in the international race to develop AI would be greatly aided if the vast amounts of data hoarded by Big Tech were shared with Little Tech companies pursuing their own innovative ideas.

Chairman Cicilline and his subcommittee are to be commended for their antitrust investigation and the important public hearing. The subcommittee has promised a report with recommendations in August. It will be an important step towards bringing antitrust law into the digital reality of the 21st century. It is not an end in-and-of-itself, however; it is also time for the federal government to pull back the curtain and investigate the abusive hoarding of the consumers personal information and its effect on a competitive market.

Amazon, Apple, Facebook, and Google are general, unrestricted donors to the Brookings Institution. The findings, interpretations, and conclusions posted in this piece are solely those of the author and not influenced by any donation.

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Big Tech and antitrust: Pay attention to the math behind the curtain - Brookings Institution

This week, Jeff Bezos, Tim Cook, Mark Zuckerberg, and Sundar Pichai testified for nearly six hours before the House Judiciary Subcommittee on Antitrust Law; appropriately, the executives of the four tech giants of Amazon, Apple, Facebook, and Google did so over video. In the most recent episode of the New York podcast Pivot, co-hosts Kara Swisher and Scott Galloway discuss the winners and losers of the most prominent tech testimony in years, and how the meeting set the stage for future antitrust action.

Kara Swisher: The whole event from [Representative] David Cicilline saying Google stole content from other sites to [Representative] Jerry Nadler pushing Facebook on its acquisition of Instagram was a little spicier than I anticipated.

Scott Galloway: Yeah, these things are typically more about spectacle than they are historic. By which I mean, theyre meant to sort of create a sentiment, which the representatives or the senators then use to feel out what public opinion is. But this felt more historic than it did a spectacle. It didnt feel as if there were any great TV moments, but it was clear that subcommittee staff, over the last 13 months or so, had actually done their homework, collecting over a million pages of documents.

I keep getting optimistic and I keep getting my heart broken, but to me this feels like the beginning of the end of Big Tech as we know it. It just seemed as if they werent really there to get information. They were confident in the information they had collected, and they were just stating their viewpoint over and over. Prior to the hearings, there was a seminal moment where you had two tweets saying, I hope these guys get broken up. Two tweets, different language, but basically the same message. One was from Bernie Sanders and one was from Donald Trump. So when you have people from both sides of the aisle wanting to break them up, even if its for different reasons even if some of those reasons arent valid it looks like we have our first bipartisan issue in a while.

Swisher: Yeah the Republicans sort of wasted their time on the other stuff because it all is related to power. If they are upset about conservative bias, make room for other people to come in and let you rant somewhere else

Twice weekly, Scott Galloway and Kara Swisher host Pivot, a New York Magazine podcast about business, technology, and politics.

Galloway: The first pattern I recognized at the hearing and Im shocked that Twitter didnt run with it was that any kind of notion of your product being anti-American was generally from the white guy to the one brown guy. And I thought, Oh, that makes sense. And no one noticed it. And I thought, How come theyre not asking the white guy, Zuckerberg, about being anti-American or about not being American?

It also struck me that the Democrats actually read the label on the door that it was an antitrust hearing. And really, I would say two-thirds of the Republican questions were for an audience of one. And it struck me that we forget how much power [Trump] has within the GOP 70 percent of Republicans still support the president. So he can basically get you reelected or not I thought, All of these guys are playing to Fox! And [now] Im like, no theyre not. Theyre playing to one guy who watches Fox.

Ranking member Jim Sensenbrenner had the kind of comment that could come back to haunt him, when he started questioning Zuckerberg on the removal of Donald Trump Jr.s [tweet about] hydroxychloroquine. Mark Zuckerberg pointed out, Sir, that was Twitter. That was the kind of moment like, Okay, you dont know what youre talking about.

Swisher: The Republicans wasted this opportunity, which is in their interest. Among the committee members, who did you think had the best day?

Galloway: Oh, the rock star here was Representative Jayapal. She was substantive, strong, forceful, not taking any shit.

At the end of the day, there will really be two moments, from a legal perspective. The first was when Nadler was essentially able to get Facebook to acknowledge that it acquired Instagram in large part to put a competitor out of business, which youre not supposed to do.

The other I was speaking about with Tim Wu, who said that probably the moment that will come back to haunt Amazon is that [Bezos] acknowledged that it purposely priced Alexa products below cost. And youre not supposed to do that. Thats the equivalent of dumping. And they dont need to. Its not like theyve got to clear the inventory. Theyre just going for market share and doing it on a consistent basis by selling below cost.

Swisher: Jayapal also got Bezos to say, What I can tell you is we have a policy against selling specific user data to aid our private label business, but I cant guarantee you that policy hasnt been violated.

Galloway: My favorite point is that in the first 93 minutes, there were more questions to Jack Dorsey than Jeff Bezos. And Jack Dorsey wasnt a witness.

Swisher: Yeah. That was Jim Jordan again. Who do you think had the best and worst day?

Galloway: I think Tim Cook probably had the best day. One, because antitrust is the dullest sword as it relates to Apple. Its just not entirely clear how hed break them up. Theyre not as angry at them. I thought he got off easy. I thought they were going to go after Tim Cook for China. I believe that there are more Apple employees now in China than there are in the U.S. He did the best by virtue of omission, and people just didnt really go after him.

Who did second best, quite frankly, was Zuckerberg.

Swisher: Oh, Zuckerberg? Really? Not Pichai?

Galloway: Pichai was largely out of the way, but Zuckerberg, I felt you could register that this was Zuckerbergs third time at the circus.

Swisher: Yeah, he always gets better.

Galloway: He knows what hes good at. He knows how to do this now. Stall, and when appropriate push back. Hes not nearly as likable. But I thought, Wow, this guy has done this before, and its starting to show. And then Sundar. And I actually thought Bezos had a tougher time. I thought he made some unforced errors. And some of the stuff that came out is going to come back to [haunt] him.

Swisher: Bezos is in trouble with the marketplace. As much as retailers and other sellers need the Amazon platform, I dont think theyre scared. Theyre like, enough is enough with them stealing our shit.

Pivotis produced by Rebecca Sananes. Erica Anderson is the executive producer.

This transcript has been edited for length and clarity.

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Excerpt from:

Is This the Beginning of the End of Big Tech As We Know It? - New York Magazine