GOOGL Mar 2020 1240.000 call

OPR - OPR Delayed price. Currency in USD
0.00 (0.00%)
As of 1:43PM EST. Market open.
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Previous close277.06
Expiry date2020-03-20
Day's range272.35 - 278.24
Contract rangeN/A
Open interest58
  • Fast Times at Innovation High, Part 1

    Fast Times at Innovation High, Part 1

    Imagine what you could learn about running your business and your life by studying great companies.

  • Bank of Korea Stands Pat Despite Virus Hit to Growth View

    Bank of Korea Stands Pat Despite Virus Hit to Growth View

    (Bloomberg) -- The Bank of Korea downgraded its growth forecast for the year on Thursday amid mounting evidence of an economic hit from the coronavirus, but left its key interest rate unchanged.The decision to keep the seven-day repurchase rate at 1.25% was forecast by 10 of 28 analysts surveyed by Bloomberg. The majority had projected a 25 basis point cut to a fresh record low. The bank now sees the economy growing 2.1% this year, down from a 2.3% projection in November, reflecting uncertainty over the impact of the virus.South Korea’s won, one of the region’s weakest currencies this year, initially strengthened against the dollar after the surprise rate hold announcement, but has since retraced gains. The yield on 10-year government bonds also steadied after earlier rising.The BOK’s decision to stand pat contrasts with the more aggressive response to the virus outbreak taken by Asian central banks from Indonesia to Thailand, and its own past rate cut following a virus outbreak in 2015. South Korea’s latest data shows the economy under pressure, as trade with China shrinks, sentiment plunges and the tourism industry reels. The government is working on an extra budget to beef up record spending plans for the year.The BOK said in a post-decision statement that it will judge whether to adjust the degree of monetary policy accommodation, while “thoroughly assessing” the severity of the coronavirus outbreak and its impact on the domestic economy. The bank also said it would raise the cap for cheap loans available to companies affected.“The BOK may cut rates after the government rolls out an extra budget in March, creating the impression that the two are working closely,” Meritz Securities Co. economist Stephen Lee said. “For now, providing support for small businesses while keeping the rate on hold is the optimal choice for the BOK.”The decision shows Governor Lee is more worried about the financial risks of low rates at the moment, and is waiting for clarity on data and the extent of fiscal stimulus before acting. Economists who projected a rate hold pointed to concerns about an overheated property market and high household debt, alongside a weakening currency. The BOK may have also wanted to preserve its limited policy room, having cut rates twice in 2019.Next StepGovernor Lee’s assessment of the epidemic’s impact at a post-decision press conference will offer clues about whether the BOK is likely to cut at its next meeting in April.“The BOK just can’t decide yet whether the virus has changed Korea’s economic trajectory,” said Park Hee-chan, an economist at Mirae Asset Daewoo. “There’s little doubt first-quarter growth will suffer, but it will take some longer-term assessment of the economy before the BOK returns to an easing mode.”The number of South Korea’s infections has spiked from just dozens to over 1,500 in the past week. Both exports and imports to China fell in the first 20 days of February despite the benefit of more work days, signaling that the virus is disrupting supply chains between South Korea and its biggest trading partner.BOK watchers will also watch Lee’s comments to see if he has other measures up his sleeve. In October, he said the bank was studying unconventional policy tools, but offered no details. Instead of addressing the media live, Lee will speak over YouTube to minimize the risk of contagion.(Updates with economist comment and market reaction)\--With assistance from Hooyeon Kim.To contact the reporter on this story: Sam Kim in Seoul at skim609@bloomberg.netTo contact the editors responsible for this story: Paul Jackson at, Jiyeun LeeFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Microsoft Joins Apple, HP in Scrapping Outlooks on Virus

    Microsoft Joins Apple, HP in Scrapping Outlooks on Virus

    (Bloomberg) -- Microsoft Corp. became the latest tech giant to reduce its quarterly outlook based on the outbreak of a novel coronavirus that’s slowing production of computers and crimping sales of an array of consumer services and electronics.In a statement Wednesday, the company said it doesn’t expect to meet earlier guidance for fiscal third-quarter revenue in the Windows personal-computer software and Surface device business because the supply chain is returning to normal at a slower pace than expected. Last month, Microsoft gave a wider-than-usual sales target -- $10.75 billion to $11.15 billion -- for that division, citing uncertainty related to the spread of the deadly respiratory virus.The world’s largest software maker joins iPhone maker Apple Inc. and PC company HP Inc. in cutting estimates because of supply-chain disruptions related to the virus, known as Covid-19. Merchants who sell on Inc. also are trimming ad spending on the e-commerce giant’s marketplace, seeking to moderate demand amid worries they may run out of inventory of Chinese-made goods. Questions about the virus’ economic ripples had already sent the S&P 500 Index down by 6.6% this week; Microsoft’s acknowledgment that the PC market is being hit reinforces investor concerns about broader consequences, said Dan Ives, an analyst at Wedbush Securities.“It fans the flames on Corona worries,” Ives said. “Apple and Microsoft now confirm the negative impact the Street had feared.”In recent days, anxiety has mounted about the spread of the virus outside of China, where it originated. For the first time, more cases were reported in countries other than China in the past 24 hours, the World Health Organization said late Wednesday, a significant development as new cases spread around the globe, with South Korea, Italy and Iran particularly hard hit. Globally 2,771 have died and 81,317 people have been infected.As component makers and tech-gadget assembly companies in China continue to face production slowdowns due to quarantines and shuttered factories, U.S. technology companies are reported to be scrambling for alternatives. Microsoft and Alphabet Inc.’s Google are looking at manufacturing facilities in Vietnam and Thailand, the Nikkei Asian Review reported Wednesday.Microsoft shares declined about 2% in late trading following the announcement. The stock has fallen in four of the last five trading sessions, along with the broader market, on concerns that the spreading health crisis could hurt the global economy and the technology sector. The shares had been trading at all-time highs earlier this month. Shares of Intel Corp., the biggest PC chipmaker, and rival Advanced Micro Devices Inc. also fell in extended trading, as did PC makers Dell Technologies Inc. and HP. Dell reports earnings Thursday.The reduced forecasts come as Covid-19’s impact spreads through global companies in a range of industries. Booking Holdings Inc. on Wednesday said room nights booked would drop 5% to 10% in the first quarter, compared with analysts’ estimates for an increase of 5%. The company said cancellations are rising.For Microsoft, demand for Windows operating-system software is strong and has been in line with the company’s forecasts, according to the statement. The rest of the company’s outlook for the current quarter remains unchanged. On average, analysts were predicting total sales of $34.6 billion for the period ending in March, according to estimates gathered by Bloomberg. The More Personal Computing unit typically generates more than a third of Microsoft’s annual sales.Microsoft will have to account for supply issues with its Surface devices and lost software sales from Windows on PCs made by other manufacturers who may be facing the same production and parts challenges in China. The Redmond, Washington-based company is also preparing to release a new generation of Xbox video-game consoles in the fall, and will need to work through setting the final production lines and then building up inventory ahead of that release, a process that could be affected by lingering shutdowns in China.The spread of the virus outside of China also raises the chances of impact of work shutdowns, quarantines, store closures, and conference and meeting cancellations in other countries where technology and other global firms have a significant presence.To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.netTo contact the editors responsible for this story: Jillian Ward at, Andrew PollackFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Etsy Gives Optimistic Annual Sales Forecast on Free Shipping

    Etsy Gives Optimistic Annual Sales Forecast on Free Shipping

    (Bloomberg) -- Etsy Inc. reported fourth-quarter gross merchandise sales that beat analyst estimates and gave an optimistic forecast for 2020, signaling the company’s free-shipping initiative has begun to pay off. Shares jumped more than 10% on the news.Gross merchandise sales, or GMS, a key metric for the e-commerce industry, increased 33% to $1.66 billion in the period ended Dec. 31, the Brooklyn, New York-based company said Wednesday in a statement. Revenue jumped 35% to $270 million. Analysts, on average, estimated $1.6 billion in GMS and $264.8 million in revenue, according to data compiled by Bloomberg.For 2020, Etsy projected GMS, or the value of the products flowing through the website, of as much as $6.4 billion, compared with analysts’ projection of $6.04 billion. The company also said revenue would be $1.04 billion to $1.06 billion, which topped Wall Street’s projection of $1.02 billion.“ and our sellers had a great holiday season,” Chief Executive Officer Josh Silverman said on a conference call. He said the company’s marketing efforts, including its holiday television campaign, helped drive those sales. Cyber Monday and Tuesday -- the days after the U.S. Thanksgiving holiday weekend --- saw the highest daily levels of gross merchandise sales ever for the company, he said.Net income declined to $31.3 million, or 25 cents a share, from $41.3 million, or 32 cents, in the period a year earlier.Prior to Wednesday’s results, there were doubts over Etsy’s free-shipping initiative for its U.S- based customers, which wasn’t progressing as planned. The company requires all sellers on its platform to offer free shipping for orders of more than $35 to be prioritized in search results. But sellers didn’t pass on 100% of the savings from free-shipping to buyers.Chief Financial Officer Rachel Glaser acknowledged the initiative’s shaky progress. Helping sellers better plan their pricing strategies to not absorb free shipping costs and expanding buyer knowledge about the program will take time, Glaser said on the call.The company also introduced a new advertising service in 2019, where Etsy uses sellers’ ad budgets to promote their brands on Etsy’s website and on Google Ads. It announced an update to the service Wednesday by introducing Offsite Ads, in which Etsy will use its budget to promote sellers’ brands on multiple platforms including Google, Facebook and Instagram. If sellers make a sale through such an ad, they pay a fee of 12-15% of the order value. The fee is capped at $100 per order.Etsy shares jumped to a high of $57.50 in extended trading after the results were released. The stock closed at $50.69 in New York and has declined 26% in the past 12 months.(Updates with CEO comments in the fourth paragraph.)To contact the reporter on this story: Nikitha Sattiraju in New York at nsattiraju@bloomberg.netTo contact the editors responsible for this story: Molly Schuetz at, Andrew Pollack, Anne VanderMeyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Booking Shares Slip on Weak Guidance Linked to Coronavirus

    Booking Shares Slip on Weak Guidance Linked to Coronavirus

    (Bloomberg) -- Booking Holdings Inc. gave a bleak outlook for the first quarter due to the spreading coronavirus that’s put a damper on global travel.The Norwalk, Connecticut-based online travel operator said room nights booked would drop 5% to 10% in the first quarter. Analysts were looking for an increase of 5%, having already lowered their expectations from earlier projections of 8% growth in mid-January. The company also said revenue would decline as much as 7% in the current period from a year earlier.“The coronavirus has had a significant and negative impact across our business during the first quarter,” the company said in a statement Wednesday.Booking has seen an increase in cancellations, a reduction in new bookings and pressure on average daily rates from the virus, the company’s Chief Financial Officer David Goulden said on the earnings call. “As you will know, it’s not possible to predict where and to what degree outbreaks of the coronavirus will disrupt travel patterns,” he added. Booking expects growth declines will continue through March.The Covid-19 virus, which is on track to becoming a pandemic, sent the stock market tumbling 6% over two days earlier this week, and the travel sector is among those worst affected. Airlines have halted flights, hundreds of hotels have been shuttered and tourism reports estimate billions of dollars in visitor spending will be lost this year. The virus was first reported in China, but has since spread across Asia and into Europe and the Middle East. Its scale and spread has already dwarfed the SARS outbreak and health officials in the U.S. are bracing for an outbreak at home. Booking shares have dropped 19% this year and rival Expedia Group Inc., which has less direct exposure to China, has shed about 6%. Booking slid 2.4% in extended trading after the report.China is by far the world’s largest source of travel, with more international departures than any other country, said Nicholas Wyatt, head of research and analysis for travel and tourism at GlobalData. “This is an extremely difficult thing to put a number on because we don’t know how long it’s going to go on for, how long restrictions will be in place for or how long it will take for consumer confidence to return,” Wyatt said.More than 20% of Booking’s room nights were generated in the Asia-Pacific region last year, according to Cowen & Co. Kevin Kopelman, an analyst at the firm, said he expects “the whole year to be impacted.”But it’s not just China. Booking is also “heavily exposed to travel disruptions in Europe, where it has a room-night exposure of over 50%, while in China it’s about 15%,” through its partnership with and ownership of Agoda, according to Bloomberg Intelligence analyst Rik Stevens.A recent report from consulting firm Tourism Economics estimates the U.S. will lose 1.6 million visitors from China as a result of the coronavirus, a 28% drop for 2020.In the fourth quarter, before the virus erupted, Booking did better than expected. The company, formerly known as Priceline, reported revenue of $3.34 billion, topping the $3.27 billion analysts were projecting. Room nights booked grew by 12% in the period, the company said in a statement, compared with the average analyst projection for an increase of of 9.47%. Profit excluding some costs was $23.30 a share, also better than forecasts.Aside from the virus, Booking is also being squeezed by Alphabet Inc.’s Google and home-share startup Airbnb Inc.Last year, Google redesigned its hotel search function which pushed online travel companies down in search results and means they are no longer getting as many free clicks from travelers. Earlier this month, Expedia Chairman Barry Diller said Google was an “existential” threat to online travel agents. Airbnb also is a formidable competitor as the dominant player in the alternative accommodation market, forcing Booking to pumping resources into its vacation rentals segment to keep up. This is the fastest growing part of its business and now makes up 20% of total revenue. Booking, which is most well-known in Europe, has been running brand campaigns in the U.S. to drive customers toward its non-hotel listings.(Updates with CFO comments in fourth paragraph)To contact the reporter on this story: Olivia Carville in New York at ocarville1@bloomberg.netTo contact the editors responsible for this story: Jillian Ward at, Molly SchuetzFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Google defeats conservative nonprofit's YouTube censorship appeal

    Google defeats conservative nonprofit's YouTube censorship appeal

    Google persuaded a federal appeals court on Wednesday to reject claims that YouTube illegally censors conservative content. In a 3-0 decision that could apply to platforms such as Facebook , the 9th U.S. Circuit Court of Appeals in Seattle found that YouTube was not a public forum subject to First Amendment scrutiny by judges. It upheld the dismissal of a lawsuit against Google and YouTube by Prager University, a conservative nonprofit run by radio talk show host Dennis Prager.

  • Sustainable Investing Also Is Risk Management

    Sustainable Investing Also Is Risk Management

    (Bloomberg Opinion) -- Investors’ personal values are fine when selecting stocks, but those values can also operate as a risk screen or a strategy to evaluate company risk, says this week's guest on Masters in Business, Brian Deese, global head of sustainable investing for BlackRock Inc., which manages more than $7 trillion in assets. Deese helps the firm use environmental, social and governance (ESG) factors as a risk measure across all of the firm's holdings.During the past few years, ESG has also been a source of alpha, generating above-market returns for investors. Whether this is driven by a heavier weighting in technology stocks among ESG funds or is a function of the positives of ESG is, arguably, unknown. We discuss how solar and wind have become the fast growing sustainable energy source in the U.S. Renewables, including hydro and nuclear, now account for more than 35% of U.S. energy production. The biggest changes coming in energy include efficiency improvements, decarbonization and electrifying transportation.Deese worked in the White House as President Barack Obama’s senior adviser for climate and energy policy. He helped to negotiate the Paris Climate Accord and was one of the key architects of the rescue plans for Chrysler and General Motors. His favorite books can be seen here; a transcript of our conversation is here.You can stream and download our full conversation, including the podcast extras, on Apple iTunes, Overcast, Spotify, Google, Bloomberg and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.Next week, we speak with fellow Bloomberg Opinion columnist Danielle DiMartino Booth, founder of Quill Intelligence, a research and analytics firm, and author of "Fed Up: An Insider’s Take on Why the Federal Reserve is Bad for America."To contact the author of this story: Barry Ritholtz at britholtz3@bloomberg.netTo contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”For more articles like this, please visit us at now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Spreading Virus Heaps Pressure on Bank of Korea: Decision Guide

    Spreading Virus Heaps Pressure on Bank of Korea: Decision Guide

    (Bloomberg) -- The Bank of Korea is facing mounting pressure to cut its interest rates to a fresh record low as the coronavirus slams the brakes on early signs of a recovery in domestic demand and trade.Of 28 economists surveyed by Bloomberg, 18 expect the BOK to lower the policy rate by a quarter percentage point Thursday. The country’s soaring number of virus infections tipped the case toward action for many of them. The rest forecast no change.South Korea Coronavirus Cases May Peak at 10,000, JPMorgan SaysA rate cut would mark a sharp turnaround from the central bank’s guarded optimism little more than a month ago over the likelihood of the economy regaining momentum this year. It would also be a repetition of the BOK’s response to another virus outbreak in 2015.Economists arguing against a rate cut this week suggest the central bank will wait for the government to act first. The risks of fueling an overheating housing market, encouraging more household debt and putting more pressure on the currency are among the main reasons they give.Maximum AlertSouth Korea’s economy faces an emergency, according to President Moon Jae-in, who has put the country on the highest possible alert to fight the epidemic. The country now has more than 1,000 confirmed coronavirus cases, the most behind China. Across pockets of the country people are essentially trapped in their homes.Trade with China, Korea’s biggest export market, is down sharply, as its neighbor struggles to restore industrial capacity after virus factory closures. Fears of contagion and weakening consumer sentiment will curb spending and leisure activities both in China and Korea. Travel alerts on visiting South Korea could also hammer its tourism industry.Economists have been cutting their growth projections for Korea this year, with some now forecasting a quarter-on-quarter contraction in the first three months. At the meeting, the BOK will also revise its forecasts of 2.3% growth and 1% inflation for this year, with any downgrades reflecting the expected fallout from the virus.Should the bank hold off on a rate cut this time, the new projections may give an indication of the likelihood of action merely being delayed till the next meeting.Moon MoveThe Moon administration has already pledged action. Finance Minister Hong Nam-ki said earlier this week that the government will work swiftly to put together an extra budget proposal, a stark reversal from earlier this month when he played down the possibility.Most economists think the planned government action won’t be enough to stop the BOK from showing its own extra commitment to support the economy as the epidemic spreads.The BOK acted with a rate cut when another coronavirus, Middle East Respiratory Syndrome, hit the nation in 2015. The economic toll is expected to be larger this time as the number of infections has easily surpassed the number of cases during MERS, though the number of fatalities is still much lower at this stage.“Korea is especially vulnerable to supply-chain disruption,” S&P’s Asia-Pacific chief economist Shaun Roache said in a report. “We expect the Bank of Korea to cut its policy rate twice this year to 0.75% with a substantial fiscal easing also helping to offset the external drag.”Comments by BOK chief Lee Ju-yeol after the decision should shed further light on the bank’s thinking. Reflecting efforts to minimize the spread of the virus, the governor’s media conference, usually held live at the bank’s Seoul headquarters, will be broadcast via YouTube with only a couple of press representatives present.\--With assistance from Whanwoong Choi.To contact the reporter on this story: Sam Kim in Seoul at skim609@bloomberg.netTo contact the editors responsible for this story: Paul Jackson at, Jiyeun LeeFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Google to invest over $10 billion in 2020 on U.S. data centers, offices

    Google to invest over $10 billion in 2020 on U.S. data centers, offices

    "These investments will create thousands of jobs - including roles within Google, construction jobs in data centers and renewable energy facilities, and opportunities in local businesses in surrounding towns and communities," Chief Executive Officer Sundar Pichai said in a blog post. Last year, the company said it would spend over $13 billion on data centers and offices in the United States in 2019.

  • U.S. Stock Market Appears Most Vulnerable to Virus Shock

    U.S. Stock Market Appears Most Vulnerable to Virus Shock

    (Bloomberg Opinion) -- The stock market with the most to lose from a wider coronavirus outbreak is the one in the U.S.Global markets sold off on Monday and Tuesday on reports that authorities are struggling to contain the virus, which has now spread to more than 30 countries and increasingly threatens the global economy. Until this week, the declines in global stocks seemed to be driven by proximity to the virus’s epicenter in China, but it’s becoming increasingly clear that few markets will escape harm if the virus isn’t contained.What’s not clear is which stock markets would suffer the sharpest declines. That obviously depends on how the crisis unfolds — where the virus spreads, how many people are affected, the impact on regional economies and trading routes, and so forth. But it also depends on the extent to which markets have already digested the potential risks, and by that criterion, the U.S. stock market appears particularly vulnerable.  To see stock investors at their most carefree, take a look at the NYSE FANG+ Index. It’s a pantheon of the Great Disruptors – 10 companies that many investors believe are poised to dominate their respective industries. In order of market value, they are Apple Inc., Inc., Google parent Alphabet Inc., Facebook Inc., Alibaba Group Holding Ltd., NVIDIA Corp., Netflix Inc., Tesla Inc., Baidu Inc. and Twitter Inc. As a group, they are among the most extravagantly priced stocks in history, even for growth stocks.By any measure of price relative to earnings, the FANG index is nearly as expensive as the Russell 1000 Growth Index was at the peak of the dot-com mania two decades ago — or even more so. The price-to-earnings ratio of the FANG index is 34 based on analysts’ estimates of this year’s earnings per share, which is just 6% cheaper than the comparable P/E ratio for the growth index in March 2000. Other measures are even less flattering. Based on last year’s earnings, the FANG index’s P/E ratio jumps to 55, or an 8% premium over the comparable ratio for the growth index. And using an average of inflation-adjusted earnings over the last 10 years, it jumps again to 73, or a 16% premium over the growth index.Investors value the FANG index’s revenue even more than its profits. The price-to-sales ratio of the FANG index is 5.9, or 41% higher than the growth index’s P/S ratio of 4.2 in March 2000. Suffice it to say, when it comes to the FANGs, the market appears to have little concern for the risks around coronavirus or anything else.The reason that’s a potential problem for the U.S. is that eight of the 10 stocks in the FANG index are American companies. Remember that stocks in broad-market gauges such as the S&P 500 Index or Russell 1000 Index are weighted based on their market value. Therefore, as the market value of the stocks in the FANG index has spiked relative to others, so has their weighting in broad-market indexes. Those eight U.S. stocks represent less than 1% of the Russell 1000 by number, but they now account for more than 13% of its market value. That more than anything else explains the wide gap in the valuation between U.S. and foreign stocks. The P/E ratio of the Russell 1000 is 29, based on an average of inflation-adjusted earnings over the last 10 years, which captures the growth of both earnings and stock prices during the decade. By comparison, the P/E ratio of the MSCI ACWI ex USA Index, a gauge of global stocks excluding the U.S., is 19. That’s a premium of 53% for U.S. over foreign stocks, the largest since the data series begins in 1998.  If the virus turns out to be a serious and sustained threat to the global economy, markets are likely to rethink stock prices, including those of companies in the FANG index. And the higher the valuation, the greater the potential for downward revision. That may seem unlikely to investors who view the FANGs as the ultimate blue chips, capable of navigating any environment, but no company is an island. Apple, the largest of the FANGs by market value, has already warned that it will miss sales forecasts because of coronavirus-related disruptions in production and demand for its products.More important, blue chips don’t necessarily provide more safety, particularly when valuations are stretched. In the late 1960s and early 1970s, for example, investors piled into U.S. growth stocks, driving up valuations of companies with fat profits, a key measure of quality. In the ensuing sell-off sparked by the 1973 oil crisis, the most profitable 30% of U.S. stocks, weighted by market value, tumbled 48% from January 1973 to September 1974, including dividends, according to numbers compiled by Dartmouth professor Ken French. Meanwhile, the cheapest 30% of U.S. stocks by price-to-book ratio, which are widely viewed as lower quality, declined 28% during the same period.It happened again during the dot-com boom in the late 1990s. Investors’ renewed obsession with growth stocks drove up the valuations of highly profitable companies. In the ensuing bear market sparked by the collapse of internet companies, the most profitable 30% of U.S. stocks fell 32% from April 2000 to September 2002, while the cheapest 30% of U.S. stocks declined just 10%.  So there’s a lot riding on whether the U.S. disruptors can navigate the risks around coronavirus, not just for their own investors but also for those betting on the broad U.S. stock market. It makes sense that overseas markets took the first hit, but if the virus isn’t contained soon, don’t be surprised if the U.S. stock market turns out to be hit the hardest.To contact the author of this story: Nir Kaissar at nkaissar1@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Nir Kaissar is a Bloomberg Opinion columnist covering the markets. He is the founder of Unison Advisors, an asset management firm. He has worked as a lawyer at Sullivan & Cromwell and a consultant at Ernst & Young. For more articles like this, please visit us at now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Google Takeover Target Trimmed Assets to Avert FTC Review

    Google Takeover Target Trimmed Assets to Avert FTC Review

    (Bloomberg) -- Something unusual was underway in early 2010 at Invite Media, a Philadelphia-based advertising technology startup. Under normal circumstances, it collected money from marketers and used it to buy digital ads. But over two days that spring it suddenly began paying for a wave of ads without waiting for checks to come in, using its own money instead. The company also paid off all its outstanding bills regardless of their due dates, sending its bank account balances plunging.It would normally be irrational for a company to burn cash unnecessarily, but in this case burning cash was the whole point. Invite’s co-founders were finalizing a deal to sell the company to Google, and reducing Invite’s assets was a key part of their preparation. By drawing down its bank account, Invite could reduce its total assets to a low enough level that the companies could avoid submitting their deal for review to the Federal Trade Commission, according to three people familiar with its finances.“What we did was we collected as much accounts receivable as possible and immediately paid out everything we could so we didn’t have enough money on the books to trigger the FTC stuff,” Michael Provenzano, one of the company’s co-founders recalled in an interview. Provenzano said he effectively went to the company’s bank and said, “We need you to be okay with our account dropping to a dollar.”The strategy worked. Google bought the company for around $80 million in 2010. It didn’t ask the FTC for pre-approval under the Hart-Scott-Rodino Act, which requires that companies do so when making acquisitions large enough to raise competitive questions.Now that the market power of Google and other huge tech companies has come under new scrutiny, the FTC is re-examining hundreds of deals that, like Invite, didn’t spark its interest when they happened. Officials at the commission now say they may have missed the significance of some deals that were small enough to avoid Hart-Scott-Rodino review when they happened.FTC officials began scrutinizing these deals as far back as last fall, when they met with a representative from a startup that had been bought by a large tech company in a deal that wasn’t reviewed at the time but could be scrutinized now, according to a person familiar with the matter who asked not to be named discussing private conversations. Mark Rosenberg, a researcher at a Yale University antitrust group, pegged Invite as “absolutely a viable candidate” for review under the new special order. He also flagged Google’s acquisition of the Apture, Amazon’s purchase of Blink, and Facebook’s purchase of Beluga and Gowalla.The market for online display ads was a multibillion-dollar opportunity for Google, and its success in developing advertising technology was a primary way it became one of the world’s most valuable companies. Acquisitions were key to this transformation. Google purchased the advertising exchange DoubleClick for $3.1 billion in 2007, and the mobile advertising company AdMob for $750 million in 2009.Both deals prompted antitrust reviews, with accompanying costs.  “The review meant we had eight months of limbo that ended up being really hard because we didn’t know what was going to happen,” AdMob founder Omar Hamoui said, according to an excerpt of the book “Mad Men of Mobile.” “I had gone from an overwhelming high to a crushingly disappointing low, which was extremely frustrating.”In retrospect, Invite had been serving as an important independent piece of the advertising market. As a startup, it had created a software tool, called a demand-side platform, to make it simpler for marketers to buy ads online. The service allowed them to shop for advertising space on multiple platforms at once. Ad purchasers didn’t need to go to Google for ads and Yahoo for banner ads – Invite could help marketers find the best deal at a given time and buy from either platform.After acquiring Invite, Google made the startup’s tech a core piece of its suite of ad tech tools. By doing this, Google removed the neutral layer that separated it from ad buyers, according to Bill Demas, who led one of Invite’s main competitors for many years. The edge Google got from combining tools like Invite into a single product amounted to an “unfair advantage,” he said. “It was a very prescient acquisition because it was done so early.”A spokeswoman for the FTC declined to comment. In an emailed statement, a Google spokeswoman said that “former Google employees have created more than 2,000 startups, including companies like Pinterest, Quip and Instagram - that’s orders of magnitude more than the number of companies we’ve acquired. We have a long track record of working constructively with regulators and answering questions they have about our business."Provenzano said he remembers being given a spreadsheet of tasks to accomplish before the deal could close. One of the key tasks: drawing down the company’s bank account. Provenzano was sure about how and why this was done, he said, “because I moved the money.”Provenzano said he couldn’t remember whether Google instructed Invite on how to avoid the additional scrutiny, nor could David Horowitz, an Invite board member. But Horowitz said the company would have taken its cues from Google. Another person close to the deal confirmed that the company worked to avoid Hart-Scott-Rodino review, but declined to speak on the record for fear of offending Google.It is legal for companies to lower the size of a deal or cut down on assets to avoid Hart-Scott-Rodino review, according to Paul Jin, a partner at the law firm Goodwin Procter. “It could cause the FTC to say I don’t like that, it’s suspicious,” he said, but he added that isn’t against the commission’s rules and is fairly common.Two of Invite’s four co-founders – Nat Turner and Zach Weinberg – founded another startup called FlatIron Health, with significant financial backing from Google Ventures. They sold it for $1.9 billion to healthcare giant Roche in 2018. Both declined to comment, as did Jason Harinstein, the man who helped drive the Invite acquisition for Google. He currently serves as FlatIron’s chief financial officer.It is not clear what the FTC hopes to achieve with its review of past acquisitions. The commission has held open the possibility of unwinding past deals. Given the ongoing investigations by the FTC and the Department of Justice, it may instead issue a report of its findings, according to Daniel Crane, a law professor at the University of Michigan. That report could provide fodder for a larger investigation or for Congressional legislation, he said.Demas, the former Chief Executive Officer of Turn, the Invite competitor, said the deal “frightened” his team. But it took a few years for the consequences to play out, as Google integrated Invite’s software into its own codebase. Eventually, Google began to prevent competitors like Demas from selling its ad inventory, leading business to slow.There were concerns about Google’s market power at the time. The FTC conducted a wide-ranging investigation into Google’s search advertising business, but closed the case in January 2013 without fining the company. “The evidence did not demonstrate that Google’s actions in this area stifled competition in violation of U.S. law,” the FTC said at the time. Demas said that the FTC summoned him to Washington some months later to discuss Google, but nothing seemed to come of it. He said government officials are at a disadvantage trying to keep up with a field evolving as quickly as advertising technology. “They really knew their stuff,” said Demas, of the FTC lawyers he met with. “But you have to anticipate some of these moves.”Demas’s company struggled in the years after Google’s acquisition of Invite. Turn cut staff in 2015, and two years later sold itself to a subsidiary of a Singaporean telecommunications firm for about half the price of its valuation in 2013, when it had been considering an IPO.Invite’s co-founders felt they had lucked out by selling before Google bought one of its rivals, according to Provenzano. “I don't know what would have happened if we kept going forward. Obviously we would have been competing with Google,” he said. “Why go through that battle?”To contact the author of this story: Eric Newcomer in New York at enewcomer@bloomberg.netTo contact the editor responsible for this story: Joshua Brustein at jbrustein@bloomberg.netFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Bloomberg

    Toyota Invests $400 Million in to Deepen Driverless Pact

    (Bloomberg) -- Toyota Motor Corp. invested $400 million in to strengthen its ties with the Chinese provider of driverless-car systems.The investment extends the companies’ partnership formed last year and pushes’s valuation to more than $3 billion, the startup said in a statement. The pact enables a “deeper integration” of’s technology with Toyota’s vehicles.“It will enable us to make the commercialization of autonomous-driving vehicles faster,” Chief Executive Officer James Peng said in an interview with Bloomberg TV. “We will put more money into building up the fleet.”Automakers are striking pacts with driverless-system providers to gain expertise and fend off competition from technology companies seeking to enter the transport business. For, a relationship with Toyota is a vote of confidence as it seeks to take on U.S. rivals such as Alphabet Inc.’s has two testing sites in California and it runs a pilot service with Hyundai Motor Co. in Irvine, Orange County, that provides rides to members of the public. On Wednesday, the company announced a service to City of Fremont employees, offering last-mile rides in its autonomous vehicles between a local transport hub and some of Fremont’s public buildings.Toyota required no exclusive access to the technology and is open to partnering with other automakers, Peng said.Last year, Toyota and announced a pilot project on public roads in Beijing and Shanghai, using Lexus RX vehicles and’s autonomous driving system. The companies now plan to explore further cooperation in mobility services.The coronavirus outbreak has had a “limited” impact on, which has resumed some testing and business operations in China, Peng said.Founded in 2016,’s investors also include Sequoia Capital China and IDG Capital. The total size of the newest funding round was $462 million, with existing investors putting in $62 million.To contact Bloomberg News staff for this story: Chunying Zhang in Shanghai at;Ed Ludlow in San Francisco at eludlow2@bloomberg.netTo contact the editors responsible for this story: Young-Sam Cho at, Ville Heiskanen, Angus WhitleyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Tesla’s Autopilot, Cell Phone Use Blamed in 2018 Fatal Crash

    Tesla’s Autopilot, Cell Phone Use Blamed in 2018 Fatal Crash

    (Bloomberg) -- U.S. crash investigators faulted Tesla Inc.’s Autopilot system and the driver’s distraction by a mobile device for a fatal accident in 2018 and called on Apple Inc. and other mobile phone makers to do more to keep motorists’ attention on the road.Tesla was heavily criticized for not doing enough to keep drivers from using its driver-assist function inappropriately. American regulators, which have guidelines but no firm rules for the emerging automated driving systems, were also attacked by the safety board.“It’s time to stop enabling drivers in any partially automated vehicle to pretend that they have driverless cars, because they don’t have driverless cars,” National Transportation Safety Board Chairman Robert Sumwalt said.The hearing was a searing critique of how Tesla and other carmakers have introduced new technologies that automate aspects of driving but still require constant human supervision, and of the National Highway Traffic Safety Administration’s light-touch approach to regulating the safety of those systems.Even though the Tesla SUV in the 2018 crash in northern California had previously veered toward a concrete barrier, the driver, an Apple employee, allowed the semi-autonomous system to essentially steer itself as it passed that same location and moved toward a highway barrier, the NTSB concluded. The driver failed to intervene because he was distracted, likely because he was playing a game on a mobile phone provided by his company, which lacked a policy prohibiting employees from using devices while driving, the NTSB found.The NTSB has for years issued warnings about distracted driving and its deadly toll on the roadways. During the hearing, it called on Apple and other mobile phone manufacturers to develop protections to prevent misuse of electronic devices behind the wheel as a default setting.The agency also urged the NHTSA to conduct a fresh evaluation of Autopilot and take enforcement action if necessary if the agency finds defects.“We urge Tesla to continue to work on improving their Autopilot technology and for NHTSA to fulfill its oversight responsibility to ensure that corrective action is taken when necessary,” Sumwalt said.The death of 38-year-old Apple engineer Walter Huang in March 2018 in Silicon Valley prompted the NTSB to issue its strongest findings to date on safety risks posed by automated driving systems and driver distraction by mobile devices.“Limitations within the Autopilot system caused the SUV to veer towards the area with a concrete barrier that it ultimately struck, which the driver didn’t attempt to stop due to distraction,” the board found.NTSB recommended that both mobile device manufacturers such as Apple, Google and Samsung Electronics Co., as well as employers more broadly, do more to combat distracted driving.Mobile phone manufacturers should lock out features on the devices as a default setting, rather than as an optional feature that must be activated manually, the NTSB said. Employers should adopt policies banning non-emergency mobile phone use by employees when behind the wheel.The NTSB posted a document on Monday in its public record on the crash showing Apple didn’t have a policy on distracted driving.“I checked around with various groups and we do not have a policy related to phone use and driving,” wrote an Apple representative in an email response to the NTSB, which was posted to the safety board’s public investigative files on Monday.An Apple spokesman said the company expects its employees to follow the law. Tesla didn’t respond to a request for comment but has said it has updated Autopilot in part to issue more frequent warnings to inattentive drivers and that its research shows drivers are safer using the system than not. Tesla has also repeatedly stressed that drivers must pay attention while using Autopilot.The combination of growing mobile device use in semi-autonomous cars, in which drivers can take their eyes off the road for long periods, is a combustible mix, said NTSB Vice Chairman Bruce Landsberg.“What this crash illustrates is not only do we have the old kind of distraction” Lansberg said. Partly-automated driving systems present “yet another kind, which is the automation complacency of the system almost kind of always works, except when it doesn’t.”NTSB board member Jennifer Homendy criticized the NHTSA for issuing a recent statement saying it was trying to limit regulations to make cars more affordable.“What we should not do is lower the bar on safety,” Homendy said. “That shouldn’t even be considered for an agency that has the word safety in its name.”NHTSA said in a statement it was aware of the NTSB’s report and would review it. It also said distracted driving remains a concern and that drivers of every motor vehicle available currently on sale are required to remain in control at all times.It is also conducting more than a dozen of its own investigations into Tesla crashes linked to its semi-autonomous system known as Autopilot. Tesla is one of the leading developers of automated driving technology.Warnings to DriverHuang’s Tesla struck the concrete highway barrier at about 70 miles (113 kilometers) per hour. His hands weren’t detected on the steering wheel for about one-third of the drive and the car twice issued automated warnings to him.A protective barrier on the highway designed to reduce the crash impact wasn’t in place, the NTSB found.In addition, Tesla and government agencies haven’t bothered to respond to NTSB’s recommendations related to an earlier, similar crash.Smartphone manufacturers and software developers have taken some steps to address distracted driving. Apple’s iPhone, for example, has a feature to block text message and other notifications when driving that a user can activate in the phone’s settings.“The challenge is that they’re all passive systems. They require you as the owner of the phone to take that action, and many won’t or don’t because they don’t have to,” said Kelly Nantel, vice president of roadway safety at the National Safety Council.While the safety board stopped short of concluding that NHTSA’s lack of actions were part of the cause of the crash, it found that the regulator hadn’t done enough to set safety standards and called its approach to semi-automated vehicles “misguided.”Separately, the NTSB is prepared to cite the highway-safety regulator’s actions in another fatal Tesla crash as a contributing factor.In a March 2019 crash in Delray Beach, Florida, a Tesla drove into the side of a truck without braking, killing the driver. The conclusions of the investigation haven’t been published, but were read by Homendy during Tuesday’s meeting.(Updates with details from hearing, beginning in the fourth paragraph)To contact the reporters on this story: Ryan Beene in Washington at;Alan Levin in Washington at alevin24@bloomberg.netTo contact the editors responsible for this story: Jon Morgan at, Elizabeth Wasserman, John HarneyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Oracle Reveals Funding of Dark Money Group Fighting Big Tech

    Oracle Reveals Funding of Dark Money Group Fighting Big Tech

    (Bloomberg) -- When the Internet Accountability Project popped up late last year and joined the growing crusade against Big Tech, the nonprofit group refused to say who was financing it.Turns out, at least one of its benefactors is Oracle Corp.Oracle donated between $25,000 and $99,999 last year to the internet project, according to a new political-giving report Oracle posted on its website. The group calls itself a conservative nonprofit advocating for tougher privacy rules and stronger antitrust enforcement against the internet giants.The IAP financing is just one part of an aggressive, and sometimes secretive, battle Oracle has been waging against its biggest rivals, including Inc. and Alphabet Inc.’s Google.Oracle spent years fighting to unseat Amazon as the front-runner for a lucrative Pentagon cloud contract, which was awarded to Microsoft Corp. in October.The Redwood City, California, company has also been locked in a decade-long legal dispute with Google, claiming the search-engine giant violated Oracle copyrights by including some Java programming code in the Android phone. Oracle acquired Java’s developer, Sun Microsystems Inc., in 2010.Earlier this month, IAP filed an amicus brief supporting Oracle’s position in the case. IAP said it wants to “ensure that Google respects the copyrights of Oracle and other innovators.” The U.S. Supreme Court on March 24 will hear oral arguments in the Google v. Oracle America case.The Trump administration on Feb. 19 also urged the Supreme Court to reject Google’s appeal in the case. Its brief appeared the same day that Larry Ellison, Oracle’s co-founder and chairman, hosted a high-dollar fundraiser at his Rancho Mirage estate for President Donald Trump. The event prompted about 300 Oracle employees to stage a protest the next day. The U.S. had previously supported Oracle as the case wound its way through the courts.Oracle’s donations disclosure reveals that it contributed to at least four other groups that filed supportive briefs in the Supreme Court case. Google has also donated money to at least 10 groups that have filed briefs on its behalf in the high court case.Oracle and Amazon didn’t immediately respond to requests for comment about the Oracle disclosure. Google declined to comment.IAP President Mike Davis said in a statement the group doesn’t disclose its financial backers but specified that Oracle didn’t fund its Supreme Court brief.The internet project was launched in September by Davis, a former aide to Republican Senator Chuck Grassley of Iowa, and Rachel Bovard, a former aide to Republican Senator Rand Paul of Kentucky. The group aims to “lend a conservative voice to the calls for federal and state governments to rein in Big Tech before it is too late,” according to its website.The IAP is a Section 501(c)(4), known as a “social-welfare” organization. That designation means it isn’t required to disclose donors as long as it doesn’t spend more than half of its money on campaign advertisements or activities to sway an election.Among other policies, IAP supports curtailing Section 230 of the 1996 Communications Decency Act, which shields tech companies from liability for content that users post on their platforms. The clause saves tech companies from having to review content before it’s published online, and then shields them from lawsuits if that content turns out to be problematic.Earlier: Barr Takes Aim at Legal Shield Enjoyed by Google, FacebookIn interviews and on social media, IAP has supported Republican Senator Josh Hawley of Missouri, who has proposed that tech companies lose the legal immunity unless they can prove to the Federal Trade Commission that they treat their content in a politically neutral manner.Since September, IAP has tweeted at least 11 times about Hawley’s legislative efforts against Google and other tech companies. Other IAP tweets highlight instances in which Google-funded groups fought on the internet giant’s behalf.“Holy smokes you guys, DC is awash in @Google money,” Bovard tweeted in September.Davis, the group’s president, wrote last week on that Google’s battle with Oracle is “the poster child for what we at IAP call ‘the Great 21st Century Internet Heist.’” He said the company “is anathema to conservatives and everything we stand for,” without disclosing that his group is funded by Oracle.Earlier: It’s the Kochs vs. the Mercers in the Right’s Big Tech BrawlOracle claims Google owes it at least $8.8 billion for using the Java code without a license. Google argues it was fair to use parts of the programming language to help Android communicate more easily with other software.The case has split Silicon Valley by pitting software makers who favor stronger copyright protections against companies that rely on others’ code to produce new innovations.Other CampaignsIAP is far from the only anti-tech group Oracle has funded. It also gave between $25,000 and $99,999 to the Free and Fair Markets Initiative, according to the disclosure.Free and Fair Markets claims it is a grassroots coalition of businesses and advocacy groups fighting for a better economy. In practice, it has focused more on publicizing negative reports about Amazon. The Wall Street Journal reported that Oracle, Walmart Inc. and the Simon Property Group had financed the group.For the last two years, Oracle has also waged a multi-front battle against Amazon over the Pentagon’s Joint Enterprise Defense Infrastructure, or JEDI, cloud contract. The deal, which could be worth $10 billion over a decade, is designed to transition much of the Pentagon’s data into one commercially operated cloud system.For more: Oracle’s Catz Is Said to Talk Amazon Contract Row With TrumpAmazon was seen as the leading contender because it had already won a major cloud contract with the U.S. Central Intelligence Agency and had obtained high levels of security clearance. The move to Amazon’s cloud would have threatened Oracle’s legacy database business with the Defense Department.Oracle led a coalition of other tech companies, including Microsoft Corp. and International Business Machines Corp., to oppose the Pentagon’s decision to award the contract to a sole bidder. In addition to lobbying Congress and the Trump administration, Oracle also filed -- and lost -- challenges through the Government Accountability Office and the U.S. Court of Federal Claims.Oracle is currently appealing a July ruling that it lacked standing to challenge the contract.(Updates with comment from IAP in paragraph 11)\--With assistance from Greg Stohr.To contact the reporters on this story: Naomi Nix in Washington at;Joe Light in Washington at jlight8@bloomberg.netTo contact the editors responsible for this story: Sara Forden at, Paula DwyerFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Tech Daily: Regulatory & More

    Tech Daily: Regulatory & More

    The planned digital tax, a new bill that could impact encryption, developments on U.S. Google's antitrust case and Amazon's challenge of the JEDI contract and other news is covered in this article.

  • Google-Fitbit Probe Isn’t for Data Watchdogs, Vestager Says

    Google-Fitbit Probe Isn’t for Data Watchdogs, Vestager Says

    (Bloomberg) -- The European Union’s review of Google’s plan to buy Fitbit Inc. won’t involve privacy regulators, the bloc’s antitrust chief insisted, days after data watchdogs warned about how tech giants could use M&A to access citizens’ private information.A panel of EU data regulators raised the alarm last week, saying that the $2.1 billion takeover of fitness tracker Fitbit could “entail a high risk to privacy and data protection” in an unusual statement.But the group, known as the European Data Protection Board, can’t have a formal role weighing the merger, Competition Commissioner Margrethe Vestager said in an interview with Bloomberg.“We cannot invite other bodies to participate,” she said. “We are very much aware that in cases there can be a privacy issue. We are just very careful not to see a competition issue where there is a privacy issue because, if that is the case, it’s not for us.”Google’s plan to buy Fitbit is running into a wall of antitrust and privacy worries in the U.S., Europe and Australia, where competition officials are increasingly wary of how internet giants can exert control over data to cement their dominance. The deal adds wearable devices to the internet giant’s hardware business. It also advances the ambitions of Google parent Alphabet Inc. to expand in the health-care sector by adding data from Fitbit’s more than 28 million users.The data regulators said last week that companies should take action to mitigate any risks before seeking formal approval from the European Commission, the bloc’s merger authority. They also said they were “ready to contribute” to a merger review.The EU hasn’t started any formal examination of the deal and must wait for Google to file for approval. The commission is responsible for checking whether a transaction that falls under its remit harms competition in the bloc.Vestager said she would “always welcome people contributing to the case” but cooperation with privacy regulators “would not discuss specific cases because then we would invite people in who may not be privy to” confidential details of a review.EU antitrust regulators may eventually have to deal with how “privacy issues can be used in an anti-competitive manner,” she said. “We will have to stay vigilant to see if that is actually the case.”Google referred to a statement it made last week, saying it plans “to work constructively with regulators to answer their questions” about the deal and won’t sell personal information to anyone.“Fitbit health and wellness data will not be used for Google ads. And we will give Fitbit users the choice to review, move, or delete their data,” the company said.Extensive ScrutinyGoogle’s businesses have received extensive scrutiny already in Europe, with three EU antitrust probes resulting in more than $9 billion in fines.Vestager said the penalties, of between 4-6% of Google’s revenue “could have been higher,” up to a limit of 10%. Officials found it more urgent to look at companies’ actions to repair damage caused by anti-competitive behavior, she said.Smaller shopping search firms that say they have been hurt by Google’s action in the product search market have criticized Google’s changes as inadequate and have called on Vestager to declare the company as non-compliant with the EU’s order -- which could involve new fines.The EU commissioner is keenly aware of the “very tricky” issue, saying the changes have made Google’s rivals more visible and more merchants have been getting traffic. “But you do not see that rivals themselves are getting traffic.”“It’s difficult to say what is cause and effect here,” she said, pointing to that and Google’s recent changes to Android apps as cases to “see and learn from,” warning that companies that breach antitrust rules must know that fines will be accompanied by orders to change behavior.“If we find illegal behavior, it’s not just stop what you’re doing. It is definitively also, you will have a responsibility to do positive actions to make competition come back,” she said.(Updates with detail on procedure in 7th paragraph.)To contact the reporters on this story: Aoife White in Brussels at;Hamza Ali in Brussels at hali69@bloomberg.netTo contact the editors responsible for this story: Anthony Aarons at, Peter Chapman, Molly SchuetzFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Inside the Seething Boardroom Drama That Poisoned HQ Trivia

    Inside the Seething Boardroom Drama That Poisoned HQ Trivia

    (Bloomberg) -- Before HQ Trivia ran out of money earlier this month and abruptly shut down, the once-promising startup appeared to be on the brink of a dramatic victory. It had an acquisition offer from a media company called Whistle. The deal would have given HQ the cash it desperately needed to keep the lights on. Whistle was still doing its due diligence, but it already knew that HQ Trivia had been declining in popularity in recent months. It was familiar with the company’s history of managerial infighting, and it was aware of the shocking death of its 34-year-old co-founder from a drug overdose.Then, earlier this month, Whistle pulled out unexpectedly. HQ’s board members were blindsided, according to two people close to the company who asked not to be identified discussing private conversations. The company’s chief executive officer, Rus Yusupov, sent an email to its 25 employees on Valentine’s Day, telling them they were losing their jobs.That day, users got a bitter push notification on their phones. “HQ is live,” it read. “Just kidding. We’re off-air indefinitely.”The story of how one of the most promising companies in entertainment got to this point is a singular example of a clever idea derailed by what former employees describe as mismanagement and seething boardroom drama. In 2018, the New Statesman declared that “HQ Trivia—not Netflix—is the real future of television.” This year, by the time it was talking to digital video maker Whistle about a deal, HQ parent Intermedia Labs was on the verge of not being able to pay out promised prize money, people familiar with the company said.In nearly a dozen interviews with former employees, industry experts and others close to the startup, a portrait emerged of a company whose problems ran deeper than has been previously reported. In Silicon Valley, it’s not uncommon for good ideas to be stymied by managerial dysfunction. But HQ displayed a degree of personal animosity between staff and management—and among managers themselves—that’s rare even by tech startup standards. Yusupov, his board members and key employees all declined requests for comment. Most people who agreed to speak requested anonymity in order to protect their relationships, and prospects of getting another job in the industry.Now, the company is fighting for a second chance. On February 18, four days after declaring HQ was over and out of money, Yusupov tweeted that a new buyer had emerged. People familiar with the situation also say that a deal is close, though not finalized, and could become official as soon as early this week. Still, some who worked at the startup remain skeptical that HQ will ever make a comeback.Its most famous former employee, quiz show host Scott Rogowsky, tweeted a post-mortem for the company the day after it shut down. “HQ didn’t die of natural causes,” he wrote. “It was poisoned with a lethal cocktail of incompetence, arrogance, short-sightedness & sociopathic delusion.”On paper, the guys who founded HQ Trivia made a pretty good team. Yusupov and Colin Kroll had previously created Vine, the short looping video company. It became a force on the internet, minting now-famous influencers like viral provocateurs Jake and Logan Paul and musician Shawn Mendes. Vine was acquired by Twitter in 2015 for $30 million.But that integration into Twitter proved to be the first major setback for the promising duo. Kroll and Yusupov were both fired from the company at different times, Recode later reported. And, according to allegations that eventually surfaced in the media, Kroll made some of his female colleagues there uneasy with “creepy” behavior. In a statement to Axios, Kroll would later apologize for “things I said and did that made some feel unappreciated or uncomfortable,” and deny sexually harassing anyone. An investigation conducted by HQ’s board would also find his behavior fell short of harassment. The Twitter tie-up came to an end in October 2016, when the company shut down the service.By that point, though, Kroll and Yusupov had earned a reputation as online video whiz kids, and they found support for their next project, a live video app called Hype. Lightspeed Venture Partners invested $8 million to get the company off the ground, Recode reported. Lightspeed partner Jeremy Liew praised the company in a Medium post partly titled “Founders Matter,” which lauded pioneering social media entrepreneurs. “When these founders move on, they tend to see success again in their next venture,” he wrote. Hype didn’t find an audience. Neither did the company’s other ideas for a DIY game show or a celebrity baby photo-matching game. But before long, Yusupov and Kroll struck internet oil. HQ Trivia launched in August 2017 with a glitchy app, but almost immediately, it was a sensation. The game, an interactive mobile trivia show, was fun to play—and people of all ages found it addictive. When the live broadcast of the show would come on each day thousands of people stopped what they were doing to look at their phones and try to answer the game’s 12 questions correctly for cash prizes. Within months hundreds of thousands of players would tune in for the company’s daily show. But by mid-December of 2017, just months after its launch, trouble was already brewing for the company. HQ was struggling to raise money thanks to a reputation for “womanizing” that Kroll had left behind at Twitter, Liew said in a statement at the time to media outlets including Businessweek. Concerned by investors’ reticence, Liew, who was on the HQ board, launched an investigation into the allegations. He concluded that Kroll hadn’t been popular at Twitter, but that he didn’t harass anyone.As questions percolated about HQ’s management, its trivia app’s growth continued unabated. In February, the company scored a Super Bowl commercial, cementing its position as a staple of popular culture. The month after, the company raised $15 million in a funding round led VC firm Founders Fund. In a statement accompanying the funding announcement, Kroll said he was “let go” by Twitter from his role at Vine for “poor management,” and apologized for past behavior. HQ’s valuation climbed to $100 million.The high point for HQ Trivia came in March 2018, when almost 2.4 million people tuned in to try and win a $250,000 prize sponsored by Warner Bros. to promote its upcoming movie, “Ready Player One.” Dwayne “The Rock” Johnson made an appearance the next month, reaching a slightly smaller audience, and the game continued to book major sponsors like Nike Inc., Alphabet Inc.’s Google and JPMorgan Chase & Co.Despite the star power, in 2018 HQ Trivia was starting to slip in the App Store rankings. It went from consistently landing in the top five slots in the “games” category in the U.S. App Store at the beginning of the year, to 188th place on July 1, according to App Annie.The key problem was that HQ wasn’t innovating, according to conversations with former employees. As people got bored with the main game, the company had little else to offer them. The stagnation wasn’t necessarily for a lack of ideas. Starting in 2018, the company discussed lots of additional shows including a “Judge Judy”-like program, and one based on “Family Feud,” people familiar with the company said. A dating show idea got far enough along that the company even made a pilot, they said, but it never launched.Yusupov was more interested in building out HQ’s flagship product than launching new ones, former employees said. Several people also said that Yusupov, a talented designer and creative thinker, could be erratic—alternating between bursts of frenetic activity and long periods of inaction. One employee recalled how once, hours before a game was supposed to drop, Yusupov asked to cut the number of winners from 5,000 to 500. Another former staffer remembered Yusupov personally overseeing the details for a game, even as larger issues like cash burn loomed at the company.A representative for Yusupov declined requests for comment. In a conversation with the Wall Street Journal in 2019, he said, “I’ve always welcomed and appreciated candid feedback. I’m evolving as a leader and will continue to do so.”That spring, Kroll contemplated leaving HQ altogether. His relationship with Yusupov had been rocky since the allegations and subsequent fundraising struggles. "I have a lot of ideas left," he said in a text message to a friend reviewed by Bloomberg. "And I don't want to make them w/Rus."At the office, Yusupov and Kroll continued to sit next to each other. But their mutual dislike had become so intense that one person familiar with the dynamic recalled that instead of speaking, they would sometimes Slack employees messages for each other.In August 2018, some members of HQ’s four-person board of directors felt the company needed a change in leadership, Recode reported. Liew and Kroll wanted Kroll to replace Yusupov as CEO. “We’re trying to diversify a bit, and that’s where my skill-set comes in handy,” Kroll would later tell tech site Digiday. Yusupov, however, didn’t want to give up his job, according to people with knowledge of the dynamic at the time.Displacing a CEO, even with another co-founder, is a seismic event for a startup. “Removing the founder more often than not is like ripping out the heart of the company,” Carol Liao, assistant professor of law at the University of British Columbia, wrote in an email. To add to that, investors doing the ousting are also risking becoming known as unfriendly to founders. "If that becomes your reputation, you're in trouble," said Brandy Aven, associate professor of organizational theory, strategy, and entrepreneurship at Carnegie Mellon University.HQ’s board consisted of Liew, Kroll, Yusupov and Founders Fund’s Cyan Banister, who had joined earlier that year in the $15 million funding round. In the standoff between Kroll and Yusupov, Banister didn’t want to pick a side. (Founders Fund boasts on its website that it “has never removed a single founder.”) So she left the board to avoid the decision. That left Yusupov outnumbered 2-to-1. He was demoted. Before Kroll’s ascension to the CEO spot was announced, though, an employee filed a complaint about him to human resources, Recode first reported. The complaint, which accused Kroll of “inappropriate and unprofessional” management, was elevated to the board and leaked to the press. In an indication of the brewing mistrust at the company, Kroll suspected the leak could have come from Yusupov’s camp, according to text messages reviewed by Bloomberg.The complaint did not derail Kroll’s appointment, but the transfer of power solidified the long-gestating enmity between the founders. Yusupov felt betrayed that Kroll and Liew took away his job, people familiar with the situation said. Kroll thought Yusupov had tried to sabotage him in the press. He confided in a friend that he was considering firing his co-founder, and texted, "Feel like I should stop talking to Rus.”Then, just months after Kroll took over, HQ suffered its most shocking setback. In mid-December 2018, the company threw its annual holiday party. Kroll left the event and ordered drugs through an on-demand delivery service in New York City called Mike’s Candyshop, according to reports at the time. After taking the drugs with a girlfriend in his apartment late that night, the next day police found Kroll dead in his bed. The autopsy found heroin, cocaine and fentanyl in his body. Six men were arrested for running the drug service that provided the lethal substances, news reports said.Kroll’s death stunned HQ’s staff—and thrust Yusupov back into the unofficial role of CEO. That unsettled some employees. A few said they feared the company would slip into a state of inaction they believed had characterized Yusupov’s tenure as CEO. So several staffers—including the face of the company, quiz show host Rogowsky—started circulating the idea of drafting a letter demanding that the board replace Yusupov, according to multiple people familiar with the matter. A sizable number of HQ’s employees added their names.Liew was made aware of the letter before he ever received it. A hasty, all-staff meeting was called in February 2019, with Liew and other board members in attendance. At the meeting, the assembled staff was told that the board had hired a search firm to help HQ Trivia find a new leader. In the meantime HQ’s top engineering exec, Ben Sheats, and the company’s head of production, Nick Gallo, would share the CEO role with Yusupov, according to several former employees who were at the meeting. Liew also said that once Yusupov’s replacement was found, he would step down as board member, yielding his seat to his Lightspeed colleague, Merci Grace.But the new CEO never came. HQ spoke to a number of candidates in 2019, and got close on a few, but ultimately failed to hire anyone, according to people familiar with the discussions. Shortly after the February all-hands meeting, Rogowsky, by far HQ’s most visible employee, left for another job.By late summer of last year, it was clear that HQ needed an influx of capital, or new ownership, in order to survive. The number of downloads were down, and the company laid off about 20% of its staff in July, TechCrunch reported. The board hired Watertower Group, a boutique investment and advisory firm, and set out to explore their options, according to two people familiar with the arrangement. Watertower Group did not respond to requests for comment.In November, the company began talks with Whistle, formerly known as Whistle Sports, about an acquisition. Whistle makes digital shows for platforms like YouTube, IGTV, Snapchat Discover and the video section inside Facebook Inc., called Watch. HQ Trivia’s late  attempts at new games, including HQ Tunes for music trivia launched in December 2019, had failed to take off. But it wasn’t hard to see how the company's offerings might fit into Whistle’s broader content strategy.HQ’s board expected the deal to close in mid-February, then Whistle pulled the plug, according to people familiar with the startup’s thinking. The botched acquisition meant HQ no longer had the money to sustain operations, Yusupov tweeted. The one-time media darling suddenly, abruptly shuttered.In a statement, a spokeswoman for Whistle confirmed that the company had had conversations with HQ as part of its broader growth strategy. “We will continue to look for the right growth opportunities,” she wrote. HQ’s demise was not exactly surprising. Since the start of this year, HQ Trivia had not cracked the top 1,000 in the rankings of top games in the U.S. App Store, according to App Annie. Still, its closure marked one of the most dramatic tumbles from grace in recent tech history. “With HQ we showed the world the future of TV,” Yusupov tweeted. “Thanks to everyone who helped build this and thanks for playing.”While the game is over for the foreseeable future, the world has likely not heard the last of HQ. The company will be the focus of a new podcast from sports and entertainment outlet, the Ringer. And a group of former employees is currently shopping a documentary-style video series to a number of well-known streaming services, according to people familiar with the discussions. The group includes former host Rogowsky—but not Yusupov—the people said.Meanwhile, HQ is still seeking a reprieve. After the Whistle deal fell through, Yusupov and HQ’s board spent the weekend calling around in search of another buyer, according people familiar with the situation. Now, the people said, a deal is being negotiated and is expected to close in the coming days, but is still not official.The hope is that this new buyer will pay enough for HQ to at least deliver severance for employees and prize money for players, people familiar with the matter said, if not fund a return to glory for the app.Several people with knowledge of the discussions declined to comment on who the new buyer was, citing a fear of upending the deal. But that didn’t stop Yusupov from sharing last week that something is in the works. “We have found a new home for HQ, with a company that wants to keep it running,” he tweeted Tuesday. “Not a done deal yet, but I’m optimistic.”(Updates with context in the 31st paragraph. An earlier version of this story corrected the month of the app's first launch.)\--With assistance from Sarah McBride.To contact the author of this story: Kurt Wagner in San Francisco at kwagner71@bloomberg.netTo contact the editor responsible for this story: Anne VanderMey at, Mark MilianAndrew PollackFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Huawei’s New MatePad Looks a Lot Like Apple’s iPad Pro

    Huawei’s New MatePad Looks a Lot Like Apple’s iPad Pro

    (Bloomberg) -- Huawei Technologies Co. reaffirmed its bet that expensive folding smartphones will excite consumers into upgrades, and that Apple Inc.’s iPad Pro is a design worth imitating for a new line of tablet computers. The Chinese company on Monday announced a second-generation version of its Mate X folding phone, which up to now has been sold mostly in its home country. This time Huawei’s bringing it to Europe, and said the product’s more durable than the first version and has a faster processor and 3D graphics.When folded, the Mate Xs has a 6.6-inch display, which is just slightly larger than Apple Inc.’s iPhone 11 Pro Max. But when opened out, Huawei’s device becomes an 8-inch tablet computer. It has three rear-facing Leica Camera AG-branded lenses, which double as selfie cameras when flipping the phone around in its folded form.It’ll cost 2,499 euros ($2,704) when it goes on sale worldwide in March.The market for smartphones is slowing, and manufacturers are trying to find new ways to convince consumers they should upgrade their devices. Bendable products are an increasingly popular strategy being tried out by some of the world’s biggest device makers.Samsung has been selling a foldable smartphone for as many months as Huawei, and at the Consumer Electronics Show in Las Vegas in January, Lenovo Group Ltd. showed off an updated prototype of a folding ThinkPad computer. The Motorola Razr brand is also due to make a comeback later this year, and it too will bend.Huawei also showed off a new line of tablet computers for Europe -- the MatePad Pro 5G -- aimed at the same buyers of products like Apple’s iPad Pro. It’s not without its physical similarities, either.The MatePad Pro has a 10.8-inch display compared to the iPad’s 11 inches; it includes a stylus that, like the Apple Pencil, connects magnetically to the outer edge of the tablet for recharging, and is dubbed the Huawei M-Pencil. The bezel around the screen is slimmer than that of Apple’s, but uses the same rounded screen corners that differentiate the iPad Pro from its cheaper brethren. At a briefing with reporters ahead of the launch on Monday, Huawei championed the MatePad Pro’s use of split-screen multitasking to run apps side-by-side and its optional magnetic keyboard case.It does have innovations of its own, however. The tablet can mirror the display of certain Huawei smartphones if they’re nearby, letting you control the phone virtually -- a bit like using a remote desktop app to use a PC from another computer. The tablet also has fifth-generation 5G wireless -- something no iPhone or iPad offers yet -- and it can be used to wirelessly charge other products, such as phones, headphones or computer mice.Prices will start at 549 euros for a Wi-Fi-only version from April.However, due to the U.S. government blacklisting Huawei -- which it accuses of aiding Beijing in espionage -- last year, the company’s new Mate Xs and MatePad run on versions of Android that’s free and open-source, meaning they don’t have apps such as Google Maps, YouTube or the Google Play Store. Samsung’s Android-powered tablets do not suffer such restrictions.Huawei’s been battling global scrutiny over its telecom equipment, but often overlooked is the company’s rapid growth as a smartphone manufacturer. In 2018, it surpassed Apple to become the world’s second-largest maker of smartphones, according to data from market research firm IDC. (Updates with MatePad Pro pricing)To contact the author of this story: Nate Lanxon in London at nlanxon@bloomberg.netTo contact the editor responsible for this story: Giles Turner at gturner35@bloomberg.netFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Stock-Market Bubble Fears Are Greatly Overblown

    Stock-Market Bubble Fears Are Greatly Overblown

    (Bloomberg Opinion) -- Anyone paying attention to finance, markets and the economy doesn't have to look very hard to find complaints that we are on the cusp of a bubble of one type or another.Perhaps the area most often targeted by the bubble believers is tech. I was curious about just how widespread this belief is: “Tech bubble” has doubled on Google Trends this year alone; Google News generates more than 3.6 million hits for the phrase.(1)Defining a bubble isn't too hard and one will do as good as another. “A market phenomenon characterized by surges in asset prices to levels significantly above the fundamental value of that asset. Bubbles are often hard to detect in real time because there is disagreement over the fundamental value of the asset,” Nasdaq says.  So let's turn to the pro-bubble argument: It has been a decade since the financial crisis and two decades since the dot-com implosion. That's enough time for people to have forgotten the trauma of that disaster. Since the Great Recession ended, there has been too much capital sloshing around, leading to excessive tech valuations. And not just in public equities, but in private markets, too. Unicorns and other SoftBank Vision Fund debacles have imploded, an early warning sign for publicly traded companies, the argument goes.Central banks have made the bubble worse, providing cheap capital that has artificially inflated profits. The bubble advocates also urge us not to overlook the impact of these low borrowing costs on the surge in share buybacks; reducing the total amount of a public company’s shares outstanding has the effect of making earnings per share look better.Then there are the anecdotes: Tesla’s stock has more than doubled in the past three months, and the company now has a market value of more than $165 billion -- higher than Volkswagen, General Motors and Ford combined. This is to say nothing of the companies valued at more than $1 trillion, such as Apple, Microsoft, Amazon and Google parent Alphabet. But let's also be generous and acknowledge that some things do look overvalued, whether it's Bitcoin (maybe), WeWork (obviously) or Tesla (I'm not getting in the middle of that one).But here's the thing: None of that is proof of a stock-market bubble. Let's look at some themes and issues to demonstrate why this is so:Business models: In the 1990s, the internet captivated the collective imagination of investors, too many of whom indiscriminately threw cash at anything with dot-com attached to it. The 2000 collapse taught investors that it took more than a high-concept idea to make a stock worth buying: growth and future cash flow matter a lot, too. The collapse of WeWork’s initial public offering last year brought this home once again. Investors realized that renting out office space short term while locking the company into long-term, expensive real-estate leases was a terrible business model. Public investors grasped this flaw -- something private investors seemingly failed to understand -- and the market worked the way it's supposed to. Revenue and earnings: Unlike the dot-coms of the '90, today's tech businesses are gigantic cash machines. Apple posted fourth-quarter revenue of $91.8 billion and net income of $22.2 billion. Without much fanfare, Microsoft's revenue grew 14% in the latest quarter, to $36.9 billion, while net income surged 38% to $11.6 billion. Alphabet, Amazon, Facebook all continue to mint revenues and profits. These companies also have accumulated hundreds of billions of dollars in cash. This is not the profitless tech boom of the 1990s.Sentiment: Maybe there is some excessive optimism. But that isn't the same as the full-blown delusion that bubbles produce. Talk of bubbles is offset by chatter about recession: Remember that less a year ago investors were anticipating a downturn and in the fourth quarter of 2018 major market indexes fell 20%, meeting the normal definition of a bear market, however brief. Meanwhile, the American Association of Individual Investors Bullish Readings index is 40.6, which is just a hair above the average reading of 39.5 for the past 25 years.Performance: Broad market performance is robust, but not crazy. Last’s year's 31% gain in the S&P 500 is misleading: most of that simply reflected the rebound from the 2018 fourth-quarter tumble cited above.So let's take a step back and consider the S&P 500 since 2015: It has had annual gains of 11.8%, for a total cumulative five-year return of 75%. Before fintwits howl “Now do the Nasdaq,” here it is: 17.6% annually and cumulative total returns of 125%. Fine, good, but not bubble material.Now compare those figures with the five years before the market peaked in March 2000: The Nasdaq generated annual returns of 60% and a five-year total return of 946% during that period, while the S&P 500 gained 25% annually and 211% for the five years. This is obvious, right?Sure, there are pockets of excessive optimism and foolishness in markets. There always are. But there also are lots of companies that are not participating in this bull-market rally. Those who were around in the 1990s know what a real bubble looks like: This isn't it.(1) Some recent examples:Barron’s:"Tesla’s Manic Rally Isn’t the Only Sign of a Market Bubble. What You Need to Know"CCN:"An Epic Stock Market Crash Is Looming, Analysts Warn"Yahoo:"The stock market is on steroids and it could end up like the dot com bubble"Barron’s (again): "Is the Fed Building Another Stock Bubble?"Bloomberg: “Mom and Pop Are On Epic Stock Buying Spree Fueled by Free Trades”To contact the author of this story: Barry Ritholtz at britholtz3@bloomberg.netTo contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”For more articles like this, please visit us at now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Alphabet A Stock Falls 4%

    Alphabet A Stock Falls 4% - Alphabet A (NASDAQ:GOOGL) Stock fell by 4.31% to trade at $1,418.64 by 09:31 (14:31 GMT) on Monday on the NASDAQ exchange.

  • Mnuchin Says Congress Key Hurdle to Europe’s Digital Tax Demands

    Mnuchin Says Congress Key Hurdle to Europe’s Digital Tax Demands

    (Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world threatened by trade wars. Sign up here. European finance chiefs arrived at a meeting of their global peers in Riyadh demanding the urgent creation of a new global tax system for the 21st century that would capture the profits of tech multinationals. U.S. Treasury Secretary Steven Mnuchin responded: it’s not that simple.New rules for taxing companies like Alphabet Inc.’s Google and Facebook Inc. have stirred intense debate at this weekend’s Group of 20 meeting of finance chiefs. Finding a solution this year is key to maintaining a tariff truce the U.S. and Europe struck after France agreed to delay the collection of a national levy.While finance ministers from France and Germany were among those expressing confidence on Saturday that a compromise could be found in time, Mnuchin warned that he is somewhat hamstrung. “Let me emphasize: in the U.S., depending upon what the solutions are, these may require congressional approval,” he said during a discussion, sitting alongside France’s Bruno Le Maire.The pair have held tense discussions since France introduced a 3% levy last year on the digital revenue of companies that make their sales primarily online. The move was supposed to give impetus to international talks to redefine tax rules, and the government has pledged to abolish its national tax if there is agreement on such rules.The U.S. has argued the French measure discriminates against American companies, and threatened tariffs as high as 100% on $2.4 billion of French goods. Donald Trump’s government agreed to hold fire on import duties and France pushed back collecting the digital tax until the end of 2020.“One of the things we’re balancing is sticking with the fundamental issue of taxing based upon where companies are -- the more we change that to broaden this, the more we run into other issues,” Mnuchin said. He indicated Congress as a hurdle before any major changes on taxes can be agreed upon, but added “there’s a tremendous desire to get this done.”Spain, Italy and Austria also want to impose a digital service tax. Turkey, a G-20 member, introduced a 7.5% levy in December, targeting companies from Google and Facebook to Netflix Inc.“It is our collective responsibility to reach a global agreement on this issue by the end of this year,” the finance ministers of the euro area’s four largest economy said in an editorial published in European newspapers. “We now have a unique opportunity to recast the global tax system to make it fairer and more effective.”Sticking PointThe key sticking point is a U.S. proposal to make the new digital tax rules a safe-harbor regime. Doing that, the U.S. has said, would address concerns of taxpayers about mandatory departure from longstanding rules. France and others have contested that could render the rules effectively optional, which would make agreement impossible.In Riyadh, Mnuchin countered this interpretation.“What a safe harbor is -- and there’s lots of safe harbors that exist -- you pay the safe harbor as opposed to paying something else, and you get tax certainty,” he said. “People may pay a little bit more in a safe harbor knowing they have tax certainty.”Le Maire said he welcomed Mnuchin’s clarification.“We are in the process of technically assessing what it really means and what might be the consequences of such a solution,” he said. “It is fair and useful to give all the attention to this U.S. proposal.”To get agreement, Le Maire also said France would be open to a “phased” or “step-by-step” approach.German Finance Minister Olaf Scholz said there’s more than a 50% chance that a deal is struck before the end of the year.“Everyone has understood that it would be bad to push the debate into the next year or the year after that,” he told reporters. “We need something that helps protect us against the race to the bottom on taxes.”The framework -- developed under the leadership of the Organization for Economic Co-operation and Development -- will also include a deal on a global minimum tax, which the group is close to agreeing on, according to Mnuchin.Most countries want any OECD deal to be accepted as a package: the digital service tax along with a global minimum tax. The OECD has said both reforms together could boost government tax revenues by around $100 billion.To contact the reporters on this story: Saleha Mohsin in Washington at;William Horobin in Paris at whorobin@bloomberg.netTo contact the editors responsible for this story: Alex Wayne at, Jana Randow, Paul AbelskyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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