|Day's range||485.20 - 485.20|
Spotify (NYSE: SPOT) shares have soared following a string of podcasting deals. Bernstein analyst Todd Juenger downgraded Spotify's stock recently, believing the run-up in price isn't fully justified by its podcast investments. "We continue to believe it's unlikely Spotify will generate much earnings from podcasts," he wrote in a note.
Alphabet's (GOOGL) Google has agreed to partner with Deutsche Bank in a bid to expand its cloud customer base.
U.S. tech giants face a reckoning over how Hong Kong's security law will reshape their businesses, with their suspension of processing government requests for user data a stop-gap measure as they weigh options, people close to the industry say. While Hong Kong is not a significant market for firms such as Facebook, Google and Twitter, they have used it as a perch to reach deep-pocketed advertisers in mainland China, where many of their services are blocked. "These companies have to totally reassess the liability of having a presence in Hong Kong," Charles Mok, a legislator who represents the technology industry in Hong Kong, told Reuters.
(Bloomberg) -- Signal has become the most-downloaded app in Hong Kong after Beijing imposed a sweeping national security law on the city that stirred fears of curbs on civil liberties.The messaging app, endorsed by whistle-blower and privacy advocate Edward Snowden, provides end-to-end encryption to secure messages from being read by a third party as they travel between users. It has topped both Apple Inc.’s and Google’s mobile app stores, according to App Annie data.Hong Kong detailed on Monday unprecedented online policing powers under the new law, including warrants for “any action” necessary to remove content deemed in violation. But the nonprofit responsible for Signal said that it won’t cooperate with any requests for user data from Hong Kong courts -- joining tech giants like Microsoft Corp. in the wake of the law’s passage -- in part because it doesn’t collect any data to begin with.“We never started turning over user data to HK police. Also, we don’t have user data to turn over,” it wrote on Twitter.Signal’s privacy-first ethos includes the app’s deliberate ignorance of what its users are doing, which goes above and beyond the likes of Telegram, another secure messenger that’s been popular in Hong Kong amid protests against the Beijing government. Virtual private networks, designed to disguise a user’s digital footprints, also saw a big spike in downloads in May as plans for the national security law started to emerge from the Chinese capital.Read more: VPN Downloads Surge in Response to Hong Kong Security LawThe controversial law went into effect June 30 and has already had a chilling effect on free expression in Hong Kong. It forbids speech and actions that might be seen as encouraging secession from China, terrorism, subversion of state power or collusion with foreign forces. Private messaging platforms have become a refuge as a result, with Hong Kongers retreating to unmonitored forms of communication.(Updates with data from App Annie in second paragraph)For 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 Opinion) -- For most people, a vaccine against the coronavirus can’t come soon enough, as it will be the only tolerable way to achieve herd immunity. So it’s encouraging that more than 100 drug candidates in 12 countries are in development, and eight are already entering clinical trials. To accelerate the process, some people are heroically volunteering to expose themselves to infection. With luck, some of us can get our shots next year.And yet, there’s still a danger that humanity will fail in its quest to control Covid-19. The culprit wouldn’t necessarily be the medical complexity, fiendish as it is, of engineering a vaccine. It could also be the ensuing politics surrounding inoculation. The fights will be intense, irrational and sometimes nasty.The first problem is that even after we become confident that a particular vaccine is effective and safe, there won’t be enough for everyone. So we’ll have to decide: Who should get the shots first? Who won’t get any? These questions will come up between countries, and within them.Given the right leadership, the world would overcome these difficulties with dignity and wisdom. Forty years ago, for example, as the world shivered in a Cold War between the U.S. and the Soviet Union, humanity nonetheless managed to unite and eradicate smallpox.Today, however, the odds for health-care multilateralism are bad. A new Cold War is underway between the U.S. and China. And a “My Country First” nationalism is infecting ever more countries, including several of those working on vaccines. Rich nations will try to outbid poor ones in securing supplies of the vaccine. And someone like U.S. President Donald Trump may not necessarily “share” a scarce vaccine invented and made in America with other countries. German officials were outraged earlier this year after reports — never confirmed — that Trump tried to buy CureVac, a German company working on a vaccine, in order to get exclusive access.Ethical problems of triage will also haunt domestic politics. Most people will agree that health-care workers on the front lines should get first dibs on jabs. But, after that, nothing is clear. Should pregnant women get priority? What about the elderly? They’re in greatest danger of dying if infected, but they respond much less to vaccination than younger people do. So if herd immunity is the goal, inoculating the old may not make sense.On it goes, with increasingly charged decisions. What about “essential workers,” and who are they anyway? Migrant workers and prisoners live in cramped conditions. Should they jump the queue? Not least, in this time of Black Lives Matter, there’s the question of whether ethnicity should in some cases confer priority. In the U.S., Black and Latino people are suffering disproportionately from Covid-19. Should they get shots before Whites?If these dilemmas are political dynamite, they may end up looking trivial next to what’s sure to be the biggest showdown: the standoff between scientific rationality and conspiracy theories. Early in the pandemic, there were hopes that the balderdash of anti-vaxxers would become untenable and their movement would atrophy. Instead, it’s booming.Humans have always spun conspiracy theories, especially at times of calamity. The anxiety that comes with loss of control primes people to seek simple explanations with compelling story lines and an obvious culprit. Unsurprisingly, the Covid-19 epidemic has been accompanied all along by an “infodemic.”For example, a fake-news video called “Plandemic,” claiming that the new coronavirus was hype and that a vaccine would kill millions, was viewed more than 7 million times on YouTube before it was taken down. Demonstrators from Germany to the U.S. have been spreading bizarre fantasies that Bill Gates, one of the world’s great philanthropists, conspired with “Big Pharma” to engineer SARS-CoV-2 so he could establish a global health dictatorship. He’ll police this with microchips implanted under your skin. There’s no end to this bilge available on the internet.None of this is funny. Conspiracy theories have already led to anti-vaxxers refusing to get shots against measles, thus compromising the already-achieved herd immunity and causing new outbreaks of this deadly disease. The same could happen when a coronavirus vaccine becomes available. The threshold for herd immunity against Covid-19 is estimated at between 55% and 82% of a given population. But only about 50% of Americans say they’d get vaccinated.So the time for corona statecraft and education is now, before the vaccine arrives. Internationally, countries are likely to be most open to multilateral solutions before it’s clear which nation will first develop a vaccine. Domestically, the debate about who has priority has the best chance of staying scientific before people are clamoring for jabs. Above all, educating people to distinguish facts from fake news is effective only before they become exposed to, and infected by, conspiracy theories. We have to win the struggle against disinformation this year, or lose the fight against Covid-19 in 2021.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andreas Kluth is a columnist for Bloomberg Opinion. He was previously editor in chief of Handelsblatt Global and a writer for the Economist. He's the author of "Hannibal and Me." For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Digital advertising platforms run by Google, Amazon.com Inc. and other tech companies will funnel at least $25 million to websites spreading misinformation about Covid-19 this year, according to a study released Wednesday.Google’s platforms will provide $19 million, or $3 out of every $4 that the misinformation sites get in ad revenue. OpenX, a smaller digital ad distributor, handles about 10% of the money, while Amazon’s technology delivers roughly $1.7 million, or 7%, of the digital marketing spending these sites will receive, according to a research group called the Global Disinformation Index.GDI made the estimates in a study that analyzed ads running between January and June on 480 English language websites identified as publishers of virus misinformation. Some of the ads were for brands including cosmetics giant L’Oreal SA, furniture website Wayfair Inc. and imaging technology company Canon Inc. The data exclude social-media and online-video services, so the true total is likely much higher.Governments and health officials are still learning more about the virus, and this has allowed misinformation to flourish online. Silicon Valley giants have pledged to crack down, and Alphabet Inc.’s Google has removed ads from sites that violate its policies. However, GDI thinks these platforms need to do more to limit the spread of misinformation.“The difference between what the companies say publicly about their dedication to not monetizing hate speech and harmful content, especially around the pandemic, is not matching up with what our data is telling us that’s actually happening,” said Danny Rogers, co-founder of the Global Disinformation Index.In an ad delivered on May 19 by Amazon, a L’Oreal product was promoted on Americanthinker.com next to an article titled “Is Big Pharma Suppressing Hydroxychloroquine?” Earlier this month, Google served up a Bloomberg News ad on the website Bigleaguepolitics.com, according to the GDI report. The Global Disinformation Index is a U.K.-based research group that provides disinformation risk ratings on media sites all over the world. GDI said it presented Google, Amazon and OpenX with the latest findings from its report and none of the tech companies provided a formal response. The group updates its research weekly and often tells tech companies when their platforms place ads on misinformation sites.The research group releases this information, in part, as a way to alert advertisers when their marketing spots show up on this kind of website. These brands can help by pulling ads from tech platforms when they see issues like this, Rogers said.For 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) -- Traveloka, Southeast Asia’s biggest online travel startup, is close to raising fresh funds at a private-market valuation of about $2.75 billion -- roughly 17% less than its most recent fundraising, according to people familiar with the matter.The Jakarta-based firm is in advanced negotiations with new strategic investors such as Siam Commercial Bank Pcl and Richard Li’s FWD Group Ltd., as well as existing backers GIC Pte. and East Ventures to secure about $250 million, the people said, asking not to be named because the discussions are private. The primary fundraising will be at a $2.75 billion valuation, while a secondary sale will be at $2.4 billion, one of the people said. Traveloka counts online travel site Expedia Group Inc. and JD.com Inc. among its existing backers.Terms of the fundraising could still change, they said. A Traveloka representative declined to comment.Traveloka, which has had its business hammered by the coronavirus fallout, is one of the first unicorns in Southeast Asia to experience a down-round -- raising funds at a lower valuation than the previous funding round. It reflects the sharp drop in business after lockdown orders halted flights and travel. Since the outbreak, the company has cut an unspecified number of positions, including about 80 jobs in Singapore in April.The travel industry is witnessing a sharp decline in business since the spread of the coronavirus. Expedia saw its total gross booking fall 39% in the first quarter, while its share price has dropped 21% this year. Vacation-rental startup Airbnb Inc. cut 25% of its workforce and raised an additional $2 billion in debt to help weather the downturn.Despite the slump, some Traveloka investors are betting on the travel industry’s eventual recovery, led by a rebound in tourism within countries, and a series of cost-cutting measures at the company, one of the people said. In Vietnam -- a model case in containing the pandemic with fewer than 400 cases and no deaths -- domestic travel has restarted.With a population of 570 million and growing middle class, Southeast Asia’s six largest economies are expected to see their online travel market more than double from $34 billion in 2019 to $78 billion in 2025, according to the most recent report by Google, Temasek and Bain released in October.Read more: Southeast Asia’s No. 1 Travel App Jumps on Fintech BandwagonSince its inception in 2012, Traveloka’s valuation climbed to $3.3 billion, according to the people. It has expanded across Southeast Asia, making it easier for consumers to book flights and hotels across countries. Like other startups in the region, Traveloka followed a popular playbook of providing multiple products and extending into financial services to complement its travel, accommodation and lifestyle offerings.Traveloka Chief Executive Officer Ferry Unardi said in an interview at the New Economy Forum in Beijing in November that the company is considering an initial public offering in Indonesia and in the U.S. in two to three years.Traveloka Looking to Grow Into Lifestyle, Financial Services: CEO (Video)(Adds forecast of Southeast Asia’s digital market in the seventh paragraph.)For 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.
NVIDIA (NASDAQ: NVDA) announced on Tuesday that just weeks after its release, the A100 Tensor Core graphics processing unit (GPU) has been adopted by Google Cloud, a division of Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG). The Accelerator-Optimized VM (A2) family, available on Google Compute Engine, is designed specifically to handle some of the most demanding applications out there, including artificial intelligence (AI) workloads and high performance computing (HPC). This makes Google the first cloud service provider to offer the new NVIDIA GPUs.
(Bloomberg) -- The coronavirus pandemic is exacerbating wealth and racial inequalities around the world. Nowhere is that more apparent than in San Francisco.While many low-income employees in the service sector have been laid off or risk getting sick if they do go to work, the city’s high-paid tech workers have been mostly shielded. The engineers and product managers who helped push up the cost of living in the area over the last 15 years aren’t nearly as affected by the pandemic, with companies like Alphabet Inc. and Facebook Inc. giving them cash bonuses to upgrade their home offices and organizing virtual yoga sessions to help them stay fit.Most tech employees aren’t worried about getting fired and the mostly-digital nature of software work means they can safely do their jobs from home. Many have even left the Bay Area completely.To help staff cope while working remotely, companies are rolling out perks. Salesforce.com Inc. recently sponsored a virtual talent show and is running a week-long “adventurers club” to entertain workers’ kids while they’re stuck at home, in addition to providing benefits such as six additional weeks of parental leave. Microsoft Corp. is also offering parents extra leave time amid school and camp closings.At the same time, service industry workers like Joe Grandov, who has a part-time security job at San Francisco International Airport, are struggling.Grandov, 65, says his hours have been cut by up to 20 a week since the pandemic began because he hasn’t been able to pick up overtime shifts. He also used to earn extra money driving for Lyft Inc. but said he had to stop because he was making as little as $35 a week, hardly enough to justify the health risks the gig posed. Business travel has come to a halt, which is hurting jobs like his that depend on a lively tech sector.“It’s not been easy,” said Grandov, who is a member of the airport’s local union. “We’ve been selling things we don’t need because we need the money more.”This divide between the tech and service industry is compounding the income disparities that have plagued the Bay Area for years. Since January, earnings among low-income workers in San Francisco County have fallen 52.1%, among the highest in the state, according to data from Opportunity Insights, a Harvard University research lab.“The service sector already had stagnating wages, then you introduce a pandemic, and it becomes not just an income gap but a stark divide between those who will survive versus those who can’t,” said Russell Hancock, chief executive officer of Joint Venture Silicon Valley, a nonprofit that analyzes the region’s economy.The changes cut across racial lines too, deepening inequalities between White and non-White workers in the area. More than 30% of the Bay Area is Black or Latino, according to the Bay Area Equity Atlas. Fewer than 10% of Facebook and Google staff are Black or Latino, according to the companies’ latest diversity reports.The inequalities extend to the virus impact: In San Francisco, Hispanic and Latino people make up 50% of cases and about 15% of the population. In Santa Clara County, Latinos are 47% of cases and 26% of the population.Some of the companies boosting perks for their own employees are also acting to address economic and racial inequities. Salesforce is adding diversity recruiters and spending $200 million on organizations that are working to advance racial equality, and pledged to “advocate at federal, state, and local levels for policies to address the equity gap, exacerbated by Covid-19.”The effects of low-income job losses are already weighing on workers, according to Richard Garbarino, mayor of South San Francisco. While the city of about 68,000 hasn’t had major food insecurity issues in the past, it recently partnered with a food bank to distribute 750 meal boxes a week. The pandemic has hit low income families the hardest because they often rely on multiple part-time jobs, Garbarino said.Over 55% of leisure and hospitality jobs were cut between May 2019 and May 2020 in San Francisco and San Mateo Counties, the most of any industry in the area, according to data from California’s Employment Development Department. Over the same period, professional and business services, which includes computer engineering and management, saw a 2% drop.San Francisco’s economy may face even more challenges the longer tech employees stay home. Google and Facebook have told their staff to prepare to work remotely until 2021. Twitter Inc. says anyone who wants to can work from home forever.“Restaurant and service workers are currently paid really well because they’re supported by big companies. When they take their work away, or those jobs away, that ripples through the rest of the economy,” said Jay Cheng, public policy director at the San Francisco Chamber of Commerce. If that happens, “San Francisco is no longer going to be able to be the golden child of the United States economy.”(Adds details on Salesforce policies in fourth and 12th paragraphs.)For 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) -- Augmented reality startup Magic Leap Inc. has hired Peggy Johnson, a Microsoft Corp. executive, to take over as chief executive officer starting next month, as the company continues to reshape itself as a provider of business services.Magic Leap had been one of the buzziest startups in recent years. It raised more than $2 billion from high-profile investors including Alphabet Inc., largely on the promise that it would turn augmented reality into a viable consumer technology. Rony Abovitz, the company founder and CEO, became the de facto evangelist for augmented reality, with bold and colorful pronouncements of its potential.But the Florida-based company struggled to execute, and sales of its flagship product, the Magic Leap One headset, never took off after extensive delays. The company said late last year it would focus more on business applications, and cut more than half of its workforce in April. Selling to companies is a far different prospect than building a consumer product, and one Abovitz rarely showed as much enthusiasm for. He announced in May he would step down once the company found a replacement.Johnson, who spent more than two decades at Qualcomm Inc., brings extensive experience negotiating partnerships with other large businesses. She joined Microsoft in 2014 as one of CEO Satya Nadella’s first major hires, at a time when the software maker’s dealings with other companies were often contentious. As head of business development, Johnson worked to repair Microsoft’s relationships with partners like Salesforce.com Inc. and Samsung Electronics Co., becoming the face of a new, friendlier company. In 2016 she started Microsoft’s venture capital arm M12.“I look forward to strategically building enduring relationships that connect Magic Leap’s game-changing technology and pipeline to the wide-ranging digital needs of enterprises of all sizes and industries,” Johnson said Tuesday in a statement.Microsoft also makes one of the main rivals to Magic Leap, the Hololens, which it has always positioned primarily as a business tool. A Microsoft spokesperson said the company is satisfied that any confidentiality issues arising from Johnson moving to a direct competitor have been addressed.Microsoft will conduct an internal and external search to find Johnson’s replacement and her duties will be assumed in the short term by Chief Financial Officer Amy Hood, who already oversees mergers and acquisitions, according to a spokesperson.(Updates with background on Johnson in the fourth paragraph.)For 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 Opinion) -- Robin King, this week's guest on Masters in Business, didn't expect to be involved with the Naval Special Warfare program. When her photographer husband followed his older brother into the Navy Seals program, King, decided to put her business degree to good use. (Her past employers were Walt Disney and McDonnell Douglas, later bought by Boeing).She began working in the finance department of a nonprofit serving the special warfare community. Then a $100,000 donation came in with a small catch: It had to go to an IRS- recognized, tax-deductible organization. Thus, the Navy SEAL Foundation was born.King began in the finance department, eventually becoming chief financial officer and then chief executive officer. The organization provides critical support and assistance to the Naval Special Warfare community and its families.King discusses the balance that all special forces spouses seem to adapt to: being both independent when your spouse goes off to battle, yet part of a larger community supporting families through trauma and tragedy. She discusses why she (and other special forces wives and husbands) don’t stress out while their spouses are in harm’s ways: Their equipment, training, planning and leadership are so good it imbues them all with a reassuring sense of confidence in their team and their own abilities. It is not just that they like their chances, it is that they have done everything possible to tilt the odds in their own favor.Her favorite books are here; a transcript of our conversation is here.You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Overcast, Google, Bloomberg and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.Next week, we speak with Martin Franklin of Mariposa Capital. Franklin has founded and run numerous companies, including Element Solutions Inc. and Jarden Corp., since acquired by Newell Brands. He has also created more than a dozen special purpose acquisition companies, co-investing with money managers such as Bill Ackman of Pershing Square Capital.This column does not necessarily reflect the opinion of the editorial board or 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 bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Augmented Reality market booms with its increasing use cases. Companies like Microsoft (MSFT), Amazon and Facebook among others are putting strong efforts to bolster presence.
Amazon's (AMZN) Twitch sees an increase in viewer base in second-quarter 2020 on account of lockdowns due to the COVID-19 outbreak.
Here we present five technology stocks poised to benefit from the growing adoption of digital payment solution especially amid coronavirus outbreak such as FB, AMZN & others.
(Bloomberg Opinion) -- For months, President Donald Trump’s Justice Department has hinted that it intends to crack down on Silicon Valley. It recently took a big step closer as senior antitrust officials met with their state counterparts to plot out a case against Alphabet Inc.’s Google. Quite what they plan to argue isn’t yet clear. But as the final months of Trump’s first term wind down, and an election draws near, some exceptional skepticism is in order.One reason for caution is that Attorney General William Barr has not exactly been a disinterested enforcer of competition law. Quite the opposite: In recent testimony, a senior Justice Department whistle-blower described how Barr pressured antitrust prosecutors to harass automakers (and others) for transparently political reasons. Now, according to news reports, Barr has taken an unusual interest in the Google case. Why? In a recent interview with Fox News, he intimated that he hopes to use antitrust law to punish tech companies for censoring conservative viewpoints, a frequent preoccupation of Trump’s. Never mind that this accusation is false, and that tech companies would be entirely within their rights to so discriminate if they chose. The whole thing has nothing to do with antitrust.Perhaps Barr was musing idly, and perhaps the department has more legitimate objections in mind. But even under more traditional theories of competition law, Google makes an odd target.Feasibly, a case might be made against its dominance of the online advertising market, for instance. Combined with Facebook, Google took in about 60% of digital ad spending last year. Yet there’s no law against building a good product. And with pressure rising from Amazon and other contenders, online ad rates have fallen by more than 40% over the past decade. That doesn’t look like a market lacking in competition.Nor could anyone credibly argue that Google has harmed consumers, the standard traditionally applied in antitrust analysis. To the contrary, it gives them (among other things) access to limitless email, a smartphone operating system, innovative mapping software and a search engine that ranks among the greatest inventions of the last century — all for free. Its targeted advertising has been a boon to businesses big and small. That’s to say nothing of its work on driverless cars, quantum computing or esoteric life-extension technologies.Even an otherwise blameless company shouldn’t get a pass for anticompetitive behavior, of course. And some allege that Google has unfairly privileged its own products, pursued harmful mergers and engaged in other dubious conduct. If the Justice Department imposed targeted remedies for such violations after a transparent investigation, it would be entirely appropriate.Yet the Trump administration has suggested nothing of the sort publicly. If its track record is any guide, this case is more likely to amount to a political attack with a belabored legal rationale attached. Even if its motives are pure, the administration should be wary: Government intervention in a market where no obvious harm has been caused to consumers — and in pursuit of vague or unrelated objectives — is a recipe for disaster.The fact is, for all the criticism leveled at tech companies, they employ hundreds of thousands of people, create immensely useful products, propel what growth the American economy still enjoys and are among the most trusted brands going. They need to follow the rules like everyone else. But abusing antitrust law to clobber them for electoral gain won’t end well for anyone.Editorials are written by the Bloomberg Opinion editorial board.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Alphabet’s Google and Deutsche Bank have announced to form a strategic partnership to provide the German lender access to cloud services and create innovation in technology-based financial products for clients.
(Bloomberg) -- Google, Facebook Inc., Microsoft Corp. and Twitter Inc. won’t process user data requests from the Hong Kong government amid concerns that a new security law could criminalize protests.Last Wednesday, when the law took effect, Google paused production on any new information requests from Hong Kong authorities, said a spokesperson for the Alphabet Inc. unit. “We’ll continue to review the details of the new law,” the spokesperson added.It’s unclear what types of actions will violate the new law, but police arrested a man last week for brandishing a Hong Kong independence flag. Protesters have rallied against the law, and the government has threatened fines and imprisonment for service providers that fail to remove messages. In response, the U.S. has revoked some trade benefits with Hong Kong related to sensitive technology. American officials have expressed fears that the new law signals Beijing’s intention to take full control of Hong Kong, which has operated with more autonomy and freedom than cities on the mainland.Zoom Video Communications Inc. and Microsoft joined their internet peers in hitting pause on data requests while they examined the new law, spokespersons for both companies said in separate statements. Microsoft said it “typically received only a relatively small number of requests from Hong Kong authorities, but we are pausing our responses to these requests as we conduct our review.”In 2019, the Hong Kong government requested data from Google users 105 times, according to the company’s reported figures.Facebook typically works with law enforcement to follow local laws where the company operates, but said it has paused sharing user data with Hong Kong authorities while it conducts a “human-rights” assessment. The pause applies to all Facebook properties, including its core social network, Instagram and WhatsApp.“Freedom of expression is a fundamental human right and support the right of people to express themselves without fear for their safety or other repercussions,” a Facebook spokesperson said in a statement. “We have a global process for government requests and in reviewing each individual request, we consider Facebook’s policies, local laws and international human-rights standards.”Twitter operates in much the same way and paused data requests immediately following the law’s implementation last week, a Twitter spokesperson said, adding that the company has “grave concerns regarding both the developing process and the full intention of this law.”Facebook and Twitter don’t operate in China but do in Hong Kong, where they have offices. Google has a significant presence in Hong Kong, which includes sales staff that works with Chinese companies running digital advertising outside of China.(Updates with Zoom joining the action from the fourth paragraph.)For 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.
The video-sharing app said it would cease operating in Hong Kong amid increasing furore over the region’s new national security law.
(Bloomberg) -- Wirecard AG’s collapse displayed a growing blind spot for the guardians of the world’s financial system: how do you regulate a firm that acts like bank, but isn’t really a bank?For years, Germany’s supposed fintech star escaped strict scrutiny because financial watchdog BaFin was focused on its banking unit rather than Wirecard as a whole. With the scandal undermining Germany’s reputation as a place to do business, the government is overhauling who regulates who, but it could also spark a regulatory rethink with consequences for the broader fintech industry.As banks retrenched after the 2008 financial crisis and spent billions on settling the resulting litigation, rather than new technology, other companies stepped in. Wirecard and competitors like Adyen NV process payments far quicker than traditional banks while also offering clients services to manage their risk and learn more about their own customers. Technology giants like Amazon.com Inc. and Google parent Alphabet Inc. are also increasingly offering financial services.Swathes of the fintech sector are currently unsupervised, particularly in the area of cryptocurrencies. Around 31% of fintech firms in Europe are not subject to any regulation, according to the European Banking Authority.“We need regulation that addresses banks and non-banks on a level playing field,” says Benoit Coeure, head of innovation at the Bank for International Settlements, better known as the central bank for central banks. Fintech companies play an important role in wider financial markets and not just in payments, he said in an interview with Bloomberg TV’s Nejra Cehic on Friday.At issue is whether fintechs and other digital payments firms should be subject to the same type of strict regulation as the banks and financial companies they are trying to disrupt. There are already some regulatory overlaps in many cases but some experts say more gaps need to be covered to ensure the digital companies are supervised as financial firms.In Europe, a company crosses the line into finance and all the regulatory scrutiny that entails when more than 50% of its business is associated with financial activities like lending and taking deposits, according to the EBA. Banks have faced tougher reporting and compliance obligations since the financial crisis.Wirecard wasn’t classified as a finance company in previous assessments by BaFin and other institutions. While its German bank and its U.K. unit were supervised by local regulators, oversight of the group company was essentially limited to whether it met the disclosure obligations of a German listed company, watched over by BaFin.BaFin President Felix Hufeld has described the collapse of Wirecard as a “massive fraud.” But for some, the debate about changing or increasing regulation is a distraction from the failure by authorities like BaFin to enforce existing rules.A Wirecard spokeswoman declined to comment on Hufeld’s characterization.“The real issue is that BaFin didn’t use the powers they had already,” said Sven Giegold, a member of the European Parliament for the Green party. “This is negligence by the supervisor, so this doesn’t need a new approach to financial regulation of fintechs.”While classifying Wirecard as a financial company would have given BaFin more access, the regulator was already able to pursue red flags at Wirecard. BaFin received documents alleging irregularities at the company in January 2019 and asked Germany’s accounting watchdog to look into it. Yet that group failed to deliver a report before Wirecard itself disclosed the 1.9 billion euros of missing cash in June this year. BaFin has also been faulted for moving too slowly.Hufeld has acknowledged that BaFin is among institutions that fell short in the supervision of Wirecard and has pledged to review any failings. Germany’s Justice Ministry canceled its contract with the accounting enforcement watchdog, known as FREP, while the Finance Ministry has said investigative powers should be handed to BaFin.To get a license to process payments, companies like Wirecard need to provide documentation on governance to national regulators and are required to keep their customer funds separate from their own revenues. Management also need to be screened by regulators and the banking arms need to maintain a certain level of financial strength.“The regulatory framework that’s there is fit for purpose,” said John Ahern, a partner at law firm Covington & Burling, who advises clients on financial regulation. “The question is whether the supervision of regulated entities is sufficiently effective.”Hufeld said he has been pressing the issue of oversight over technology companies for two years, but that ultimately it’s a political decision. Germany took over the rotating presidency of the European Union this month, meaning it could press for changes, although it may be more focused on the response to the coronavirus pandemic.Wirecard exposed a failure in oversight both by accountants and regulators, but Europe’s regulatory structure also contains gaps which will be more in focus as electronic payments grow, says Huw van Steenis, senior adviser to the CEO at UBS Group AG.“Europe has been so keen to drive open the payments market to break the banks’ monopoly that the regulatory change has meant that payments firms fall between the cracks,” he said in a Bloomberg TV interview. “Addressing this payments regulatory gap is going to be ever more important in the post-pandemic economy.”For 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) -- Facebook Inc., Google and Twitter Inc. -- all of which are blocked in the mainland -- are now headed toward a showdown with China that could end up making Hong Kong feel more like Beijing.Hours after Hong Kong announced sweeping new powers to police the internet on Monday night, those companies plus the likes of Microsoft Corp. and Zoom Video Communications Inc. all suspended requests for data from the Hong Kong government. ByteDance Ltd.’s TikTok, which has Chinese owners, announced it would pull its viral video app from the territory’s mobile stores in the coming days even as President Donald Trump threatened to ban it in the U.S.Their dilemma is stark: Bend to the law and infuriate Western nations increasingly at odds with China over political freedoms, or simply refuse and depart like Google did in China a decade ago over some of the very same issues. Much like that seismic event shook the mainland in 2010, Big Tech’s reaction now could have a much wider impact on Hong Kong’s future as a financial hub -- potentially sparking an exodus of professionals and businesses.“Google is pretty important to people here, and if that’s cut off then it’s really extremely serious,” said Richard Harris, a former director at Citi Private Bank who now runs Port Shelter Investment Management in Hong Kong. “In Hong Kong we don’t know where the boundaries are, and that’s threatening to a lot of business people.”Over the past week, Hong Kong authorities have begun explaining how they’ll enforce a law that officials in Beijing called a “sword of Damocles” hanging over China’s most strident critics. The legislation, which sparked the threat of sanctions from the Trump administration and outrage elsewhere, has had a chilling effect on pro-democracy protesters who demonstrated for months last year while also raising fresh questions for businesses.On Monday night, the Hong Kong government announced sweeping new police powers, including warrant-less searches, property seizures and online surveillance. If a publisher fails to immediately comply with a request to remove content deemed in breach of the law, police can seek a warrant to “take any action” to remove it while also demanding “the identification record or decryption assistance.”“We are absolutely headed for a showdown, and there are no indications that the Hong Kong government is particularly prepared if Facebook or another company refuses a removal request,” said James Griffiths, a journalist and author of “The Great Firewall: How to Build and Control an Alternative Version of the Internet.” “These companies appear to have realized that there is no compromise they could make that would truly satisfy Beijing or make them seem trustworthy. This could make them more willing to stand up against Chinese censorship in Hong Kong.”American internet giants have made overtures toward Beijing in recent years as the market exploded, but few have so far actually acceded to China’s censorship framework.Of the rare examples, Microsoft’s LinkedIn censors content to allow it to operate a Chinese version, while Apple Inc. complies with local regulations in policing its app store and other services. Reports that Google entertained the notion of returning -- via potentially a censored version of search called Project Dragonfly -- enraged lawmakers and its own employees torpedoed the idea.Worldwide CensorshipTwitter and Facebook have never been consistently available in China, but Mark Zuckerberg also flirted with Beijing before abandoning the notion as regulatory scrutiny and a user backlash grew at home. In both instances, external factors helped scupper the feasibility of operating in the world’s No. 2 economy.“I worked hard to make this happen. But we could never come to agreement on what it would take for us to operate there, and they never let us in,” he said last year in a speech at Georgetown University. “And now we have more freedom to speak out and stand up for the values we believe in and fight for free expression around the world.”Still, the internet heavyweights are already censoring content across the world for both authoritarian regimes and western democracies, according to Ben Bland, a research fellow at the Lowy Institute in Australia. After a mass shooting last March in Christchurch, New Zealand, top social media companies joined with more than 40 countries in a concerted call to end the spread of extremist messaging online.Germany has banned online Nazi and right-wing extremist content, and most countries have blocks in place against online pornography and criminal activity. In Thailand, strict lese majeste laws lead to censorship of content deemed offensive to the royal family, while Communist-run Vietnam expunges anything deemed “anti-state.”Reputational DamageBig tech companies must gauge the importance of the markets in China and Hong Kong with possible reputational damage in other places they operate, according to Stuart Hargreaves, a law professor at Chinese University of Hong Kong who researches surveillance and privacy issues.“I do not expect to see the Great Firewall extended from mainland China to Hong Kong, at least in the medium term,” he said. “It is not necessary for Beijing’s goal of tamping down certain sentiments and would be the obvious end of Hong Kong as a global city and its particular role as an Asian finance hub.”The exit of TikTok, the viral video app that has insisted it operates independently of Beijing, could actually benefit the Communist Party by removing a forum pro-democracy protesters have used to post videos calling for an independent Hong Kong. Last year, demonstrators used the Reddit-like forum LIHKG as well as Telegram to organize leaderless protests.TikTok on Tuesday played up its U.S. ties while pushing back against comments by U.S. Secretary of State Michael Pompeo, who said the government is considering a ban of the short video app. Trump later said the move may be one possible way to retaliate against China over its handling of the coronavirus.“We have never provided user data to the Chinese government, nor would we do so if asked,” a TikTok spokesperson said, adding that it’s led by an American CEO.Platforms like Telegram that provide end-to-end encryption could become increasingly popular, said Joyce Nip, senior lecturer in Chinese Media Studies at the University of Sydney. Telegram said it has never shared data with Hong Kong authorities, adding that it doesn’t have servers in the territory and doesn’t store data there. Signal has become the most-downloaded messaging app in the city, topping the communications category in Apple’s and Google’s mobile app stores.‘Knife Edge’Hong Kong’s leader, Carrie Lam, didn’t answer a question Tuesday on her response to tech companies that stopped processing data requests from her government. Still, she played down any long-term impact on the city’s position as a financial hub around the same time that Pompeo released a statement blasting the Communist Party’s “Orwellian censorship” in Hong Kong.There “has been an increasing appreciation of the positive effect of this national security legislation, particularly in restoring stability in Hong Kong as reflected by some of the market sentiments in recent days,” Lam said a day after local stocks entered a bull market. “Surely this is not doom and gloom for Hong Kong.”The regulations stemmed from a new national security committee created by the law that includes Lam and Luo Huining, Beijing’s top official in the city. While China’s leaders know Hong Kong needs a free flow of information to function as a world-class financial center, “much seems to rest in the hands of the few newly empowered bureaucrats who will police the new laws,” according to Steve Vickers, chief executive officer of Steve Vickers and Associates, a political and corporate risk consultancy.“Foreign firms are on something of a knife edge here, caught between their natural affinity with freedom of information and their commercial desire to operate in the huge Chinese market,” said Vickers, a former head of the Royal Hong Kong Police Criminal Intelligence Bureau. “It is now more a matter of what is actually done, as opposed to what is being said -- by either China or the foreign IT companies -- that will be the key.”(Updates with Signal’s rise in the 19th paragraph)For 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.
Deutsche Bank <DBKGn.DE> said on Tuesday it has agreed a strategic, multi-year partnership with Google <GOOGL.O> to give the German lender access to cloud services and drive innovation in technology-based financial products for clients. Earlier this year, Deutsche invited bids from Google, Microsoft <MSFT.O>, and Amazon <AMZN.O> to overhaul the bank's outdated and fragmented technology networks. The deal is part of a 13 billion euro ($14.70 billion)technology investment Deutsche has planned up to 2022 as it restructures to recover from years of losses.
(Bloomberg) -- Alphabet Inc.’s Google and Deutsche Bank AG have agreed to form a long-term partnership that will see the U.S. technology company provide cloud computing capabilities to Germany’s largest lender.“The partnership with Google Cloud will be an important driver of our strategic transformation,” Deutsche Bank Chief Executive Officer Christian Sewing said in a joint statement Tuesday, confirming an earlier Bloomberg News report. “It is as much a revenue story as it is about costs.”The contract is set to last at least 10 years and Deutsche Bank expects to make a cumulative return on investment of 1 billion euros ($1.1 billion) through the alliance, according to people with knowledge of the matter, who asked not to be identified disclosing private information. The companies also plan to make joint investments in technology and share the resulting revenue, which could lead to engineers from both firms developing products together, they said.Sewing a year ago unveiled a strategy centered around deep cost cuts, including spending on information technology. He also hired Bernd Leukert, a former executive at German software giant SAP SE, to accelerate the bank’s efforts to digitize its operations.The companies declined to comment on how much Deutsche Bank will pay for Google’s services, and the bank didn’t indicate what cost savings it expects to generate from the arrangement.European banks in recent years have started pouring billions of euros in attempts to modernize their IT, frequently opting to put more of their data onto the cloud. That has lured the big U.S. providers including Google, Microsoft Corp. and Amazon.com Inc., according to a Bloomberg survey conducted earlier this year.Win for GoogleThe deal is a notable win for Google as it tries to show that its cloud business can service the financial sector. To date, Google’s only major bank customer was HSBC Holdings Plc. But Thomas Kurian, the head of Google’s cloud division, has made the financial industry one of his key customer targets since joining in late 2018.“We’re excited about our strategic partnership and the opportunity for Google Cloud to be helpful to Deutsche Bank and its clients as they grow their business and shape the future of the financial services industry,” Alphabet CEO Sundar Pichai said in the press release.The companies have signed a non-binding letter of intent and plan to finalize the contract in the coming months, they said in the release.Google’s latest cloud pitch involves including other parts of the search giant’s empire, such as its advertising business and stable of engineers. A recent cloud deal in travel, for instance, had Google co-developing products in the sector. That’s now happening in finance, another sector that Google has tentatively worked with for years.The increasing reliance on U.S. firms has stoked concerns in Europe’s technology industry, and banking executives have called on companies in the region to develop alternatives. Sewing in 2018 called “the likes of Google” the biggest threat to traditional banks.(Adds CEO comments in second and eighth paragraph)For 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) -- ByteDance Ltd.’s TikTok will pull its viral video app from Hong Kong’s mobile stores in coming days, becoming the first internet service to withdraw after Beijing enacted sweeping powers to crack down on national security threats.That announcement came after internet giants from Facebook Inc. to Google and Twitter Inc. voiced opposition to national security legislation that grants the Hong Kong government sweeping powers to police the online and public spheres. TikTok, which has insisted it operates independently of Beijing despite its Chinese ownership, may be able to argue the withdrawal is a move to escape requests to censor content or share user data.But its retreat could also benefit the Communist Party by removing a forum pro-democracy protesters have used to post videos calling for an independent Hong Kong. The Chinese-owned company didn’t explain its decision but said its Hong Kong exit could occur within days.“In light of recent events, we’ve decided to stop operations of the TikTok app in Hong Kong,” a spokesperson for the service said.ByteDance, the world’s most valuable startup, operates some of the world’s most popular social media platforms. TikTok in just a few years became the destination of choice for lip-syncing, dancing youngsters from the U.S. to India. Its Chinese-only twin Douyin and other services such as Toutiao have grown into major venues for more than 1.5 billion people in its home country and beyond.But that virality is provoking scrutiny around the globe about both its control of valuable personal data -- particularly of youths -- and censorship policies deemed pro-Beijing. On Monday, U.S. Secretary of State Michael Pompeo told Fox News “we’re certainly looking” at a ban on Chinese social media apps including TikTok. It’s also the largest and most prominent of 59 Chinese services India has banned, reflecting growing tensions between the neighboring countries after a deadly border skirmish in the Himalayas.Sensor Tower data showed that as of September 2019, TikTok had about 1.8 million downloads in Hong Kong, a city of 7.4 million people. It’s unclear if ByteDance plans a substitute for TikTok -- Douyin, its closest cousin, is available only in China.On Tuesday, Hong Kong Chief Executive Carrie Lam sidestepped a question about how her administration will respond to decisions by Google, Facebook and Twitter to suspend processing user data requests, over concerns about suppression of free speech. Pompeo blasted the Communist Party’s “Orwellian censorship” in a statement.While TikTok’s withdrawal may be viewed as support for the pro-free speech camp, the Chinese-owned service -- which likes to portray itself as mainly a fun venue for self-made music videos -- has come under fire repeatedly for censorship.TikTok has faced persistent allegations its decisions on content align with Beijing’s priorities. It has targeted videos related to pro-democracy protests in Hong Kong, the mistreatment of Muslims in China’s Xinjiang region,and standoffs at the India-China border. Last year, a ByteDance spokesman told Bloomberg TikTok didn’t remove videos from the Hong Kong protests for political reasons, saying they may have instead been taken down for violating guidelines around violent, graphic, shocking or sensational content.TikTok in June took a major step toward burnishing the service by hiring Kevin Mayer, the architect of Walt Disney Co.’s direct-to-consumer video strategy. Mayer, who runs TikTok globally, may help smooth relations with U.S. lawmakers and interest groups while attracting talent and new content to speed its international expansion.(Updates with details on TikTok’s business from the second paragraph)For 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.