• Facebook asks for a moat of regulations it already meets
    TechCrunch

    Facebook asks for a moat of regulations it already meets

    It's suspiciously convenient that Facebook already fulfills most of the regulatory requirements it's asking governments to lay on the rest of the tech industry. Facebook CEO Mark Zuckerberg is in Brussels lobbying the European Union's regulators as they form new laws to govern artificial intelligence, content moderation and more. The idea was to strengthen privacy and weaken exploitative data collection that tech giants like Facebook and Google depend on for their business models.

  • Amazon's Bezos pledges $10 billion to climate change fight
    Reuters

    Amazon's Bezos pledges $10 billion to climate change fight

    Amazon Chief Executive Officer Jeff Bezos will commit $10 billion to fund scientists, activists, nonprofits and other groups fighting to protect the environment and counter the effects of climate change, he said on Monday. Cutting emissions will be challenging for Amazon. Bezos, the world's richest man, is among a growing list of billionaires to dedicate substantial funds to battling the impact of global warming.

  • Colombia tells Facebook to boost security for users' data
    Reuters

    Colombia tells Facebook to boost security for users' data

    Colombia on Monday issued an ultimatum to Facebook, telling the Silicon Valley-based tech giant it must strengthen its security measures to better protect users' personal data in the Andean country. Facebook has until June 14 to implement useful and effective new security measures to prevent unauthorized or fraudulent use of personal data, the Superintendency of Industry and Commerce said in a statement. Security improvements will help protect the 31 million Colombians who have Facebook accounts, the SIC said.

  • Sky News

    'Hellish conditions' at Amazon warehouses 'seriously hurt hundreds'

    Hundreds of people have been seriously injured at Amazon's UK warehouses over the last three years, new figures suggest. In Manchester, a worker received head injuries after a number of boxes fell on them, and they were later diagnosed with an inter vertebral disc prolapse. The figures show that 240 reports of serious injury or near misses were sent to the Health and Safety Executive (HSE) in the 2019 financial year.

  • Crypto Giant Binance Launches Cloud Service in Revenue Shift
    Bloomberg

    Crypto Giant Binance Launches Cloud Service in Revenue Shift

    (Bloomberg) -- Binance Holdings Ltd., one of the world’s largest cryptocurrency-trading platforms, has made its first foray into business services by lending its technology and liquidity to those who want to start their own exchanges.The Malta-based crypto behemoth announced its cloud operation to help business clients and partners set up crypto exchanges using Binance’s tech infrastructure, ranging from matching engines to risk controls and data security systems, according to a company statement.Tech giants like Amazon.com Inc. and Alphabet Inc. have over the years evolved beyond their core consumer-facing services and become some of the world’s biggest cloud providers -- and Binance envisions the same type of success in crypto. Binance Cloud will overtake the company’s main exchange to become its biggest source of revenue in five years, co-founder and CEO “CZ” Zhao Changpeng estimates.“Theoretically speaking, we can let anyone in the world create their own exchanges, and the demand is huge,” the 43-year-old coder-turned-entrepreneur said in an interview. “Even during the crypto winter of 2018 and 2019, hundreds of new exchanges popped up every day.”The cloud division -- which started just three months ago and now has nearly 20 people -- complements Binance’s strategy of attracting fiat money. Like its peers, Binance makes money mostly via transaction fees on its trading platforms, which fluctuate wildly with crypto prices. The shift into enterprise-oriented businesses could also help the startup unlock a more steady revenue stream.Binance started off in 2017 as a crypto-to-crypto trading platform, and gained momentum quickly by handling only tokens like Bitcoin and Ether, which allowed it to avoid dealing with banks and government watchdogs. Now a major player, Zhao’s firm is working to shake off its reputation as a regulatory arbitrageur: It has set up regulatory-compliant fiat exchanges in jurisdictions like Singapore and Jersey as it seeks to appeal to a much larger user base that hasn’t bought digital money yet.Binance Applied for Singapore’s New Crypto License, CEO SaysAnd this isn’t Zhao’s first crack at the cloud business. Before Binance, he was the founder of a Shanghai-based startup called BijieTech specializing in outsourcing tech solutions for crypto exchange operators.Zhao said Binance would favor fiat exchanges as its cloud clients, especially those that target regions or communities where the company doesn’t yet have a strong foothold. Ideally they would also have “good compliance status, relationships, and even strong influence with regulators,” he said.Competition is still nascent in cloud services for crypto exchanges. Binance rival Huobi rolled out its cloud operation in 2018 and has signed up partners including Russia’s VEB Bank and Taiwan’s Chi Fu Group, according to its website.Binance will announce the first fiat exchange powered by its cloud service in the coming weeks, while it has confirmed four other clients in the lineup, Zhao said, without sharing specifics.Aside from tapping into Binance tech, Zhao said clients will also be able to access the order books of all the existing trading pairs on Binance.“Liquidity is a chicken-and-egg problem for small exchanges,” he said. “Without liquidity, they won’t have users.”To contact the reporter on this story: Zheping Huang in Hong Kong at zhuang245@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Joanna Ossinger, David ScanlanFor 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.

  • Apple Won’t Meet Quarterly Revenue Target Due to Coronavirus
    Bloomberg

    Apple Won’t Meet Quarterly Revenue Target Due to Coronavirus

    (Bloomberg) -- Apple Inc. doesn’t expect to meet its revenue guidance for the March quarter because of work slowdowns and lower smartphone demand, showing that the virus outbreak in China is taking a bigger-than-predicted toll on one of the world’s most valuable companies.The company said that the iPhone, which generates the bulk of Apple’s revenue, is temporarily constrained due to production ramping up more slowly than anticipated. “Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” the company said in a statement Monday. In addition, demand for iPhones has been reduced because stores in China have been closed or operating with reduced hours and few customers, the company said.Apple had forecast revenue of $63 billion to $67 billion for the fiscal second quarter ending in March. Analysts on average estimated $65.23 billion, according to data compiled by Bloomberg. The company said in January when it announced its guidance that it anticipated factories reopening beginning Feb. 10. That process however has been slow as factory workers and manufacturing partners look to contain the virus, which has resulted in about 1,800 reported deaths in China, from spreading further.U.S. stock futures slid after Apple amplified worries about the blow to corporate earnings and economic growth from the deadly coronavirus. Apple suppliers TDK Corp. and Murata Manufacturing Co. slid more than 3% in early Asian trade.“This is the double-edged sword of being in China,” said longtime Apple analyst and Loup Ventures co-founder Gene Munster. “They’re the only big company with China exposure, so they are working through the pain of what has largely been a success for the company over the past decade.” Apple is the only major U.S. technology giant to offer the majority of its products and services in China. Products from Facebook Inc., Alphabet Inc.’s Google, Amazon.com Inc. and Netflix Inc. are either limited or unavailable.Still, Apple isn’t the only big tech company impacted by the virus. Nintendo Co. is likely to struggle with production of its Switch gaming device due to coronavirus, while Facebook previously said that it will see production of its Oculus VR headsets drop due to the epidemic.Apple said that, outside of China, products and services sales have been “strong to date and in line with our expectations.”The Cupertino, California-based technology giant didn’t say what its new revenue outlook is for March but that situation is “evolving.” The company said it will share more information during its April earnings call. The disclosure marks the second time in two years that Apple has readjusted its earnings forecast due to China-related factors. For fiscal 2019, it cut holiday earnings projections on slower than expected iPhone sales in China, which it attributed in part to the trade war with the U.S.Apple had been planning to start producing a new low-cost iPhone in February, putting it up for sale as early as March, Bloomberg News has reported. It’s unclear how coronavirus has impacted those plans.Read more: ‘Nightmare’ for Global Tech: Virus Fallout Is Just Beginning (3)“This unexpected news confirms the worst fears of the Street that the virus outbreak has dramatically impacted iPhone supply from China/Foxconn with a demand ripple impact worldwide,” Dan Ives, an analyst at Wedbush Securities, said in a research note. He kept an outperform rating on the stock and remains bullish on the longer-term outlook.The company said that despite missing its guidance, all of its manufacturing sites for iPhones in the region have reopened. In addition to iPhone constraints, the company cited its inability to sell products at its retail and partner stores in China due to the virus. China represents Apple’s third-biggest market in terms of revenue and has 42 stores, which have been closed for much of February.“Stores that are open have been operating at reduced hours and with very low customer traffic,” Apple said in its statement. “We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can.” Apple said its contact centers and corporate offices in China have already reopened. It has opened a few stores in China, including in Beijing and Shanghai, but with limited operating hours.(Updates with Asian share action from the third paragraph)To contact the reporters on this story: Mark Gurman in Los Angeles at mgurman1@bloomberg.net;Sarah Frier in San Francisco at sfrier1@bloomberg.netTo contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Andrew Martin, Catherine LarkinFor 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.

  • Concerns over safety at Amazon warehouses as accident reports rise
    The Guardian

    Concerns over safety at Amazon warehouses as accident reports rise

    Concerns over safety at Amazon warehouses as accident reports rise. Figures obtained by GMB show safety at its UK warehouses could be worsening

  • Bloomberg

    Bezos Says He’ll Commit $10 Billion to Fight Climate Change

    (Bloomberg) -- Amazon.com Inc. founder Jeff Bezos announced he’s created the Bezos Earth Fund, his biggest-ever philanthropic investment to help counter the effects of climate change.Bezos is starting with $10 billion and will begin to issue grants in a few months. “It’s going to take collective action from big companies, small companies, nation states, global organizations and individuals,” he said Monday in a post on Instagram. “We can save Earth.”Bezos, the world’s richest person, is under pressure to balance Amazon’s need to deliver goods quickly with the environmental consequences of the rapid growth of online shopping. There is tension within Amazon on the issue, with some employees saying the company isn’t doing enough and there is a threat of punishment for those who are too outspoken on the matter.The company last year said it would reach 80% renewable energy use by 2024 and 100% by 2030, up from 40% today. The effort relies on a fleet of electric vehicles. The moves came after a worker group, Amazon Employees For Climate Justice, staged a protest and wrote a shareholder proposal based on their concerns.The employee group said Monday that it applauds Bezos’s philanthropy, but it doesn’t change criticism about the way Amazon operates -- not just with regards to shipping, but also the data center energy used for their cloud storage business, propping up the fossil fuels industry. “What this shows is that employees speaking out works,” the group said in an emailed statement. “We need more of that right now.”In theory, online shopping could benefit the environment if it resulted in fewer vehicle trips to stores and customers placed large orders infrequently. In reality, shoppers still browse in stores and order online when they’re ready to purchase. Amazon Prime, a subscription program that includes delivery discounts, allows people to make frequent small orders without penalty, resulting in a larger number of vehicle trips and more boxes than if orders were placed less frequently in batches.Bezos, 56, has a net worth of more than $130 billion, according to the Bloomberg Billionaire’s Index. His $10 billion investment, announced separately from the company’s efforts, marks his largest philanthropic investment to date. His other major personal investment is in space travel, which he has also at times called necessary because of the instability of the Earth’s climate. For years, Bezos didn’t pursue major philanthropic projects, leading to public pressure as his wealth rose.The chief executive has recently started offloading some of his Amazon stake. Between Jan. 31 and Feb 6, Bezos sold 2 million shares, worth $4.1 billion, as part of a pre-arranged trading plan. It’s not just for philanthropy; he recently agreed to buy a $165 million Beverly Hills mansion, and has started playing around in the art market, people familiar with the matter have said.(Adds employee group statement in the fifth paragraph.)To contact the reporters on this story: Sarah Frier in San Francisco at sfrier1@bloomberg.net;Spencer Soper in Seattle at ssoper@bloomberg.netTo contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Catherine Larkin, Michael B. MaroisFor 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: Zuckerberg in Europe, EU Industrial Data, YouTube Dumps App Store, More
    Zacks

    Tech Daily: Zuckerberg in Europe, EU Industrial Data, YouTube Dumps App Store, More

    Top stories covered here include Zuckerberg in Europe, EU stand on industrial data, Google talks with publishers and YouTube dumping the App Store.

  • Facebook Needs Regulation to Win User Trust, Zuckerberg Says
    Bloomberg

    Facebook Needs Regulation to Win User Trust, Zuckerberg Says

    (Bloomberg) -- For years, Facebook Inc. lobbied governments against imposing tough regulations, warning in some cases that they could harm the company’s business model. Now, it’s pleading for new rules for the good of its business.In a white paper published Monday, Facebook detailed its push for internet regulation, calling on lawmakers to devise rules around harmful content, a different model for platforms’ legal liability and a “new type of regulator” to oversee enforcement.“If we don’t create standards that people feel are legitimate, they won’t trust institutions or technology,” Facebook’s Chief Executive Officer Mark Zuckerberg said in an op-ed in the Financial Times on Monday. That and the publication of the white paper coincided with a visit to Brussels, home of the European Union institutions that have crafted some of the toughest rules in recent years.Silicon Valley firms have suffered from what’s been dubbed as a “tech lash,” with users frustrated over how web platforms profit from their data. Facebook has borne the brunt of that disenchantment following a series of missteps including privacy breaches and accusations it didn’t do enough to stop election manipulation on its platform. Meanwhile, Facebook’s user growth is stagnating in the U.S. and Canada – its most important markets.“I believe good regulation may hurt Facebook’s business in the near term but it will be better for everyone, including us, over the long term,” Zuckerberg said in the op-ed, echoing comments he made over the weekend at the Munich Security Conference.Read more about Zuckerberg’s visit to Brussels here.In Brussels, Zuckerberg has Monday meetings with EU tech czar Margrethe Vestager and other senior officials as the bloc prepares new legislation in areas including artificial intelligence, gate-keeping tech platforms and liability for users’ posts, all of which could impact Facebook’s business.Zuckerberg has previously called for global regulation covering election integrity, harmful content, privacy and data portability.Political Ads, Harmful ContentIn the op-ed, Zuckerberg said Facebook was hoping for clarity around what constitutes a political ad - especially if paid for a group not directly affiliated with a political party, such as a non-governmental organization. Companies also need clearer lines around data ownership to enable users to move their information between services, he said.In addition, the company would look into opening up its content moderation systems for external audit to help governments design regulation in areas like hate speech, he said.Any new rules should hold internet companies accountable for having certain procedures in place and platforms should meet specific performance targets when it comes to handling content that violates their policies, Facebook said in Monday’s white paper. Rules should also define forms of speech that should be prohibited online, even if they’re not illegal, it said.When it comes to liability for what users post on its platform, Zuckerberg said in a media roundtable in Brussels on Monday that a different regulatory system should be created -- somewhere between newspaper publishers, who can be sued for what journalists write in their pages, and telecommunications companies, who aren’t liable for customer conversations. This legislation may require a new type of regulator that is proficient in data, operations and online content, the company said.European Industry Commissioner Thierry Breton said in a press briefing he had discussed platform regulation, market dominance and liability in a meeting with Zuckerberg this afternoon.Breton took note of Facebook’s use of AI systems to take down more harmful content, but said “if we see that it’s not what we need regarding our own standards, then we will have to regulate.” He also warned the EU could regulate the market dominance of platforms like Facebook’s.Brussels VisitsZuckerberg reiterated that companies shouldn’t be in charge of making decisions that balance competing social values, and said he hopes that new laws will draw cleaner lines to help companies navigate those decisions -- even as regulators in Europe are also investigating Facebook over its compliance with existing privacy and antitrust rules.“People need to feel that global technology platforms answer to someone,” Zuckerberg said in the op-ed, but also stressed that the plea “isn’t about passing off responsibility.” He said that Facebook is continuing to make progress on some of the issues on its own.The Facebook chief’s Brussels visit follows a recent trip by Alphabet Inc. Chief Executive Officer Sundar Pichai in January who came to discuss regulating artificial intelligence. The EU is expected to unveil planned rules for the technology this week, when it’s also likely to flag proposed liability rules for tech platforms coming later this year.It’s not a coincidence that the chief executives of tech firms like Facebook and Google are making the pitch for regulation in the EU capital. They have seen before that, when the EU sets sweeping laws on tech, like the General Data Protection Regulation, the impact can reverberate far beyond its borders.(Updates with Breton comments in 12th, 13th paragraphs)To contact the reporter on this story: Natalia Drozdiak in Brussels at ndrozdiak1@bloomberg.netTo contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Amy Thomson, Jennifer RyanFor 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.

  • Market News Report: February 17, 2020 – February 21, 2020
    FX Empire

    Market News Report: February 17, 2020 – February 21, 2020

    This week we will have another series of quite important economic data releases. Let’s take a look at the details.

  • Bloomberg

    Musk’s SpaceX Launches Fifth Batch of Starlink Satellites

    (Bloomberg) -- Elon Musk’s SpaceX launched its fifth batch of 60 Starlink satellites Monday morning, another step toward Musk’s vision of creating a space-based network to provide broadband service around the world.A SpaceX Falcon 9 rocket rumbled aloft from Cape Canaveral Air Station in Florida at roughly 10:05 a.m. local time and the satellites successfully deployed. The rocket’s first stage appeared to narrowly miss landing on an uncrewed drone-ship in the Atlantic ocean.Gywnne Shotwell, SpaceX’s president and chief operating officer, said earlier this month that SpaceX will likely spin out Starlink and sell shares to the public.SpaceX is one of a handful of players that wants to build out a space-based internet system that can serve people who struggle to access the web today via fiber optic and cellular connections. Starlink would beam down relatively high-speed data from its network of satellites orbiting the Earth. It’s targeting service in the northern U.S. and Canada this year.Such a service would effectively make SpaceX a telecommunications company that also has a rocket launch business.SpaceX has been launching roughly 60 satellites at a time into orbit, and with a few more should have global coverage. The service will be “less than what you are paying now for about five to 10 times the speed you are getting,” Shotwell said earlier this month at a private investor event hosted by JPMorgan Chase & Co. in Miami.SpaceX has come to dominate the commercial rocket industry, with customers that include NASA, the U.S. military and commercial satellite operators.Starlink and its ability to provide high-speed internet across the globe has helped private investors in SpaceX justify a roughly $33 billion valuation. Musk has long maintained that SpaceX itself is unlikely to go public until it is regularly ferrying people to Mars.(Adds Spacex tweet confirming satellites deployed)To contact the reporter on this story: Dana Hull in San Francisco at dhull12@bloomberg.netTo contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Virginia Van Natta, Kevin MillerFor 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.

  • GBP/USD Price Forecast – British Pound Continues To Struggle With 50 Day EMA
    FX Empire

    GBP/USD Price Forecast – British Pound Continues To Struggle With 50 Day EMA

    The British pound initially tried to rally during the trading session on Monday but pulled back from the 50 day EMA. The market continues to go back and forth just above the 1.30 level, and at this point it looks as if the market is trying to build up enough momentum to make its next move.

  • EU industry chief tells Facebook to adapt to EU, not other way round
    Reuters

    EU industry chief tells Facebook to adapt to EU, not other way round

    EU industry commissioner Thierry Breton said on Monday it was for Facebook to adapt to Europe's standards, not the other way round, as he criticized the U.S. social media giant's proposed internet rules as insufficient. The blunt comments came after a short meeting with Facebook CEO Mark Zuckerberg and two days before Breton is due to present the first of a raft of rules to rein in U.S. tech giants and state-aided Chinese companies. "It's not for us to adapt to this company, it's for this company to adapt to us," Breton, a former CEO at French telecoms provider Orange and French technology company Atos, told reporters after the meeting.

  • Amazon.com, Inc. (NASDAQ:AMZN) Is Employing Capital Very Effectively
    Simply Wall St.

    Amazon.com, Inc. (NASDAQ:AMZN) Is Employing Capital Very Effectively

    Today we are going to look at Amazon.com, Inc. (NASDAQ:AMZN) to see whether it might be an attractive investment...

  • GBP/USD Daily Forecast – Recovery Rally Blocked at 1.3050 Resistance
    FX Empire

    GBP/USD Daily Forecast – Recovery Rally Blocked at 1.3050 Resistance

    The British pound posted gains every day last week but the upward momentum appears to have stalled at resistance from a horizontal level and the 50-day moving average.

  • Huawei Scare Pushes Carriers to Tackle Dominance of 5G Suppliers
    Bloomberg

    Huawei Scare Pushes Carriers to Tackle Dominance of 5G Suppliers

    (Bloomberg) -- With the U.S. campaign against Huawei Technologies Co. threatening to disrupt the rollout of 5G wireless networks, phone carriers are joining forces to develop technology that can reduce their reliance on a handful of powerful equipment suppliers.The Chinese company dominates the European market for telecommunications gear, ahead of Ericsson AB of Sweden and Finland’s Nokia Oyj. Governments are weighing whether to follow the U.K. and limit Huawei’s share of 5G networks over concerns -- denied by the company -- that it represents a security risk.If they do, it could knock the progress of 5G off course: The big three have designed a lot of their wireless gear so it can’t easily be integrated in the same network, much like an electric toothbrush only works with its own brush heads. So building 5G with Nokia or Ericsson kit on top of Huawei 4G infrastructure is fraught with complexity and costs.Companies including Deutsche Telekom AG and Vodafone Group Plc have decided to combine separate projects to develop a more standardized, flexible network architecture that would make it easier for carriers to use products from multiple vendors, according to people familiar with the matter.Under the plans, the O-RAN industry alliance, backed by Deutsche Telekom and AT&T Inc. among others, will align its work with the Telecom Infra Project, which was started by Facebook Inc. and is supported by several phone companies, said the people, who asked not to be named as the plans aren’t yet public.The industry is pursuing the efforts with greater urgency partly because they’re alarmed by the prospect of restrictions on Huawei in more markets such as Germany, one of the people said. The U.K.’s decision to limit Huawei’s share of broadband infrastructure already led BT Group Plc to predict a 500 million-pound ($650 million) hit to its finances.The carriers were planning to announce the O-RAN/TIP initiative at the wireless industry’s biggest annual showcase in Barcelona next week, before it was canceled due to the coronavirus outbreak, the people said. An announcement could instead come as early as this week.O-RAN’s goal from the start has been to “invite in more players with new ideas to help make the network stronger and more secure,” said Deutsche Telekom spokeswoman Pia Habel. She declined further comment.A spokeswoman for TIP declined to comment. A representative for O-RAN could not immediately be reached for comment.Negotiating PowerEnsuring that antennas, switches and other gear from competing suppliers can communicate seamlessly may also make it harder for any vendor -- Ericsson and Nokia included -- to clinch contracts just because the customer already uses its equipment. That could strengthen the negotiating position of carriers in contracts for 5G networks that are set to cost the industry hundreds of billions of dollars.AT&T has said it wants to replace the proprietary software that Nokia, Ericsson and Huawei use to run their wireless network gear with an open software.Vodafone has begun issuing small contracts for OpenRAN, an initiative backed by TIP to standardize radio access network hardware and software. CEO Nick Read said in October that Vodafone was “ready to fast track it into Europe as we seek to actively expand our vendor ecosystem.”O-RAN began in 2018 as a lobbying and research effort to make the radio access network -- the largest part of a wireless system -- more transparent and inter-operable. TIP is a broader project involving hundreds of companies working across all elements of networks.O-RAN and TIP may already be changing the economics of the industry and giving newer players more room. It’s now possible to design a “virtual” wireless network, which uses standardized, open-source software in conjunction with hardware from different vendors.Rakuten Inc. is using such technology to roll out a virtual network in Japan. U.S. satellite broadcaster Dish Network Corp., a member of the O-RAN alliance, aims to build a 5G network along similar lines.Ericsson and Nokia, reluctant to pick a fight with their biggest customers, have publicly welcomed O-RAN and TIP. Ericsson has joined O-RAN, while Nokia supports TIP and has been helping Rakuten build the Japanese network.Nokia Chief Executive Officer Rajeev Suri said in April last year it’s “better to be involved than not,” although he didn’t expect the model to be replicated in other parts of the world.\--With assistance from Thomas Seal, Angelina Rascouet, Niclas Rolander and Scott Moritz.To contact the reporters on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net;Rodrigo Orihuela in Madrid at rorihuela@bloomberg.net;Natalia Drozdiak in Brussels at ndrozdiak1@bloomberg.netTo contact the editors responsible for this story: Thomas Pfeiffer at tpfeiffer3@bloomberg.net, Jennifer RyanFor 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.

  • Masayoshi Son’s Other Big Real Estate Bet Has Some Real Problems
    Bloomberg

    Masayoshi Son’s Other Big Real Estate Bet Has Some Real Problems

    (Bloomberg) -- Last March, months before the meltdown at WeWork, Masayoshi Son worked through the prospects for another one of his favorite portfolio companies -- a startup from India called Oyo. In a spacious conference hall at his Tokyo headquarters, the Japanese billionaire huddled with lieutenants from the startup and his own SoftBank Group Corp. to brainstorm strategy. He figured Oyo had the potential to disrupt both the staid hotel business and short-term apartment rentals in Japan, according to people in the room.One bullet point scribbled on a floor-to-ceiling whiteboard, in particular, caught Son’s eye: a target of one million rooms within a year. In a burst of enthusiasm, he had everyone sign off on the goals right on the whiteboard, scrawling signatures under the words “BINDING” in all caps, according to a copy seen by Bloomberg News and the people present.Today, the Oyo unit handling apartments has about 7,500 rooms, less than 1% of the whiteboard target. Son’s aspirations turned out to be an example of dramatic overreach, part of a year in which the Japanese investor’s reputation was battered by troubles at WeWork and Uber Technologies Inc.The shortfall, which hasn’t been reported before, signals more trouble ahead for SoftBank and one of its most highly touted investments. Perhaps more concerning, the episode reveals a fundamental flaw in SoftBank’s investment strategy: Pumping billions into startups and pushing them toward outsized growth often undermines promising businesses. With its chaotic rush to expand in Japan, Oyo infuriated potential partners, alienated workers and jeopardized its reputation with local customers, according to interviews with more than two dozen of them. One incensed local customer went so far as to set up an Oyo Life Victims Association account on Twitter. Similar frustrations have been voiced by customers and hotels in India and other overseas markets.The troubles are so pronounced Son faced questions about Oyo during his earnings briefing in Tokyo last week. He conceded there have been “some conflicts with hotel owners,” but said that is normal in such businesses and overall the performance is good. “Oyo is a wonderful company,” he said.SoftBank declined to comment on the startup’s internal issues and practices beyond Son’s comments, but said it believes the company can have a sustainable expansion in Japan with good corporate governance.Oyo, founded by 26-year-old Ritesh Agarwal, has drawn particular attention in SoftBank’s portfolio of startups because of its similarities to WeWork. Both are trying to change traditional real estate businesses with technology. Both have charismatic young founders. Now, skeptics say Oyo could also fall short, further undermining Son’s grand ideas about technology investing.“Oyo is a WeWork in the making,” says Santosh Rao, head of research at New York-based Manhattan Venture Partners. “They need to slow down and pull back.”Oyo says patience is in order. In an interview, Agarwal argues his company is bringing new concepts to a business in need of fresh thinking, especially in markets like Japan. He acknowledges “teething issues” that are to be expected for a fast-growing, innovative startup and defended the use of ambitious goals.“Leaders at Oyo aspire for ambitious targets which act as directional north stars for building for scale,” he said. “From our shareholders perspective, they have said – you have a good business plan, you have continued operating as per your business plan, please keep delivering against that.”SoftBank is the largest outside shareholder at the company, whose backers also include Sequoia India and Airbnb Inc.The last thing Son needs now is another big mistake. He wants to raise capital for a successor to his $100 billion Vision Fund, but potential backers have been spooked by WeWork and Uber, as he conceded last week. At the same time, activist Paul Singer has taken a stake in SoftBank, advocating for changes to boost its share price including a buyback and more transparency.“Son needs to focus on rebuilding his reputation,” says Atul Goyal, senior analyst at Jefferies Group. “If Oyo blows up, that won’t be easy.”Agarwal got the idea for Oyo after roaming around India on a shoestring budget, witnessing first-hand the opportunity to bring order to the anarchic industry. At 19, he set up a reservation website and began working with small hoteliers on service, design and standardized accouterments like bedding and toiletries to draw more travelers. Oyo took 25% of sales.In India, the concept took off. The reassurance of basic quality fostered trust with customers and brought in extra revenue. Enamored of the idea and Agarwal, Son invested in 2015, two years after founding.But as SoftBank started the original $100 billion Vision Fund in 2017 and Son invested in the world’s biggest startups, he began to stoke Agarwal’s dreams with money and ambition, according to people directly involved. Son poured about $1.5 billion into the company and encouraged the young founder to try to become the world’s largest hotel operator by room count. That would mean surpassing Marriott International Inc., founded in 1927.The business model that worked so well in India wasn’t an obvious fit for markets like the U.S. and Europe, which already had well-established hotel chains and largely predictable quality. Yet Agarwal slogged ahead overseas, even buying a few properties outright, including the Hooters Casino Hotel in Las Vegas.Japan was supposed to be like a second home. Son is a local hero and SoftBank’s brand is ubiquitous: It operates one of the largest wireless carriers, runs the leading web portal and owns the Fukuoka SoftBank Hawks, which have won five of the last six baseball championships. SoftBank set up joint ventures through two subsidiaries to promote Oyo’s local business.That support fueled Oyo’s confidence as it entered Japan in early 2019. Agarwal decided to push into both its traditional hotels business and a newer operation called Oyo Life, which offers furnished apartments without the typical hassles of security deposits or guarantors. With Son’s enthusiastic backing at the March meeting, Agarwal and his team set the audacious goal of becoming the biggest operator in both businesses -- in one year.“Many entrepreneurs want to do a land grab, and it’s often the right thing to do, but you have to balance between your desire and ability to do it,” says Ben Narasin, venture partner at New Enterprise Associates Inc., which isn’t involved with Oyo.There were missteps at Oyo from the start. The Japan hotel team, led by a transplant from India named Prasun Choudhary, figured they could get to as many as 75,000 rooms in the first year, which would put them ahead of the Apa Hotels chain in the No. 1 spot. But they took as their starting point an inflated addressable market of 1.6 million rooms based on numbers from the local tourism authority: They included campgrounds, bed-and-breakfasts and pay-by-the-hour love hotels, which weren’t part of Oyo’s business plan, according to people involved at the time.Oyo Life, the apartment rentals business led by another Indian lieutenant called Kavikrut (who like many Indians goes by one name), set the goal of 1 million rooms in part because it was a stunning, round number that would exceed the capacity of the Japan market leader, the people said. That was the target that caught Son’s attention in March.To reach their goals, the two lieutenants began hiring furiously. Human resources staff conducted as many as 15 interviews a day, making offers to many the same day, people involved said. At job hunting events, prospects would get recruited on the spot, sometimes signing hand-written offer letters. Oyo Hotels surged to more than 580 people, while Oyo Life added 300, the company said.“Oyo believes that building a highly-motivated local team and strong management leadership is an important strategy for launching and succeeding in a new market,” Choudhary said in an interview. “This team is what has made it possible for us to partner with over 190 hotels.”But Oyo’s technology wasn’t ready. In the first three months after launch, the hotel operation double booked rooms because it had failed to integrate with local travel agencies, according to Oyo and former employees. Staff in India entered reservations made in Japanese manually, introducing errors. Some hotel owners found their rates reduced to just pennies by inscrutable algorithms. When they complained, the fix would take days because pricing was controlled in India, according to former employees.At the same time, Oyo Life workers struggled to keep track of keys they received from landlords because of software created in India. One tenant interviewed by Bloomberg spent the night in his car outside of his new apartment because he was given a wrong code for a lock box containing the keys. Even though it was during working hours, no one was manning the help lines at the company, he said. Two other customers interviewed by Bloomberg also had trouble getting into their apartments.“Oyo operated like they were driving a Ferrari, instead of a hatchback,” said Taito Ito, executive officer at Japan Accommodation and Lodging Foundation, a hotel industry group handling about a dozen complaints against the company from its members. “It’s difficult to see this business going anywhere in Japan.”There were some satisfied customers, including one Oyo Life user who raved about the convenience of getting an apartment via an app and raking in points by paying rent with a credit card.Despite the rocky start, Agarwal landed a starring role in July at SoftBank World, an annual event Son hosts in Tokyo. On stage in front of hundreds of the Japanese company’s suppliers and customers, Agarwal explained how Oyo is using data to beat the competition. Its algorithms can evaluate properties in under five days, compared with months for traditional hotels, he said. Artificial intelligence helps Oyo predict what kind of interior design can boost demand -- like pictures of Marilyn Monroe -- and adjust prices more than 43,000 times a minute.Beaming on stage, Son said it was only a matter of time before Oyo, the third-biggest hotel chain by room count, would surpass the established giants.“In three months, he will become the world’s biggest hotel king,” Son said at the time. “This would be a first in human history.”Unbeknownst to the crowd, Agarwal and Son were in talks about an unprecedented deal at the time. To increase his stake in Oyo, the young founder would borrow $2 billion to buy out some of his earlier investors. To reassure banks including Mizuho Financial Group Inc. to lend the money, Son personally guaranteed those loans, a highly unusual arrangement. The deal would double Oyo’s valuation to $10 billion.Just weeks later, in early August, it became clear Oyo’s hotel business in Japan was falling far short of its targets. Agarwal told Choudhary to start firing under-performing staff, according to a message reviewed by Bloomberg News. But top management didn’t realize at first that labor laws in Japan prohibit such layoffs, according to former HR staff.Oyo had begun hiring before it set up all its operations, so many employees joined under temporary contracts through an outside recruiter with a plan of making them full-time after six months. When that time came, Oyo tried to cut salaries for a number of them as much as 50%, according to former employees and copies of documents seen by Bloomberg News.Alarmed by worker complaints, SoftBank sent its own compliance staff into Oyo for a week-long internal audit, the people said. In the end, Agarwal’s management withdrew the low-ball offers and said the revisions were an administrative mistake. Oyo says it wasn’t downsizing and was only making a fair assessment of staff. Choudhary acknowledges that, at first, Oyo thought it could manage performance in Japan like it has in the rest of the world.Several former Oyo Life employees, who declined to be named because they signed confidentiality agreements, described a chaotic, disorganized work environment. The company poached executives from top-tier consulting and technology firms who excelled at inspirational talk, but had little understanding of real estate and even less patience for the industry’s slow-moving ways, the people said. One of them said the real estate industry just doesn’t run on startup time.The push for growth hurt Oyo’s relationship with suppliers too. In one instance, the company placed a 100 million yen ($910,000) furniture order with Japanese maker Takumi Otsuka, clinching the deal with a handshake. A month later, Oyo canceled even though the manufacturer had already set up a dedicated line and began production, according to staff from Oyo.Oyo denied the cancellation of any confirmed orders, but acknowledged there were lapses in communication in its early dealings with Takumi Otsuka. Oyo says the two companies now share a healthy business relationship and the furniture maker remains one of its valuable suppliers. Takumi Otsuka declined to comment.In October, with Oyo Hotels short of its original targets, the company mobilized support staff to do sales. It launched Project Yukichi, named after a famed educator whose face is on the 10,000 yen bill, with the goal of that many new rooms a month. The workers, already struggling to keep up with complaints from hotel owners, were told they are also responsible for producing 30 new sales leads a month, according to former employees and company presentations. The “OYOpreneurs,” as they were called, got a three-day training session from Bain & Co. to get them up to speed, the people said.With so much energy focused on sales, customer service suffered. One Oyo Life tenant told Bloomberg News he moved into his room to find bed sheets and covers, but no bed or mattress to put them on. After facing a prospect of sleeping on the floor for a week, he hauled over a futon from his parent’s house.Yutaro Kondo, a 25-year-old entrepreneur, paid 86,000 yen for a 21-square-meter studio about an hour by train from central Tokyo. While a premium to similar listings, the contract covered internet access, all utilities and the last month free of rent. But he didn’t have heat for weeks so he moved out in December. Shortly after, he got a bill for the month that was supposed to be free.“The simplicity they offered is attractive to a lot of young people,” Kondo said. “I feel pretty disappointed they didn’t deliver on that promise.”Hotel owners are unhappy too, especially with disputes over money. Oyo aimed to increase business for its partners by dropping rates at first and then increasing the price as occupancy went up. To help ease the pain, it guaranteed owners a minimum level of revenue provided they met certain criteria. Instead, a number of hotels found the payments fell short and the company unwilling to make up the difference.Oyo acknowledged such disputes and said that in some cases hotels failed to fulfill their contractual obligations. Still, it said it decided to pay in full to mend relations. One SoftBank executive said there were troubles between Oyo and about 40 hotels out of about 200, emphasizing many hotel owners are satisfied.“Employees are exhausted from dealing with Oyo,” said Shingo Ozaki, who manages Hamakan Hotel on the southwestern island of Kyushu, which is considering ending its relationship with the startup.Oyo said it is continuously working to improve software and it launched a call center that in the past month handled 1,700 tickets from partners and guests.Late last year, after the debacle at WeWork, Son overhauled his approach to startups. At a gathering of portfolio companies in California, he cautioned founders that they need to have a strategy for profitability and that growth couldn’t be the sole target. Agarwal was in attendance.But any changes may be too late for Oyo in Japan. In December, news leaked out that SoftBank’s Yahoo Japan sold its stake in Oyo Life, liquidating the partnership without any explanation. In Japan, the hotel room count has stalled at little over 5,000, with just over 300 new rooms added in December.Oyo disclosed this week that revenue increased more than four-fold to $951 million for the fiscal year ending in March 2019, while losses surged six-fold to $335 million.“Entrepreneurship is a game where you have to learn to crawl, then walk and only then to jog and run,” said Narasin of NEA. “Skipping steps can be dangerous.”At least some hotels are giving up, tired of the troubles they’ve had with Oyo. Shoji Sato, president of the company that runs an Oyo affiliate called Sawara Kita Hotel, said the company didn’t pay revenue guaranteed for January after reducing room prices to draw more customers. He said Oyo workers often ignore his inquiries or are slow to respond too. Oyo said there is no delay in payment because the January cycle closes in mid-February.“I believed in Oyo after the salesman showed me a brochure with details about SoftBank. SoftBank is led by Masayoshi Son, who is very famous and popular in Japan,” says Sato. “Now we want to end the relationship. I am angry, of course, of course.”(Updates with financial results in fourth from last paragraph)\--With assistance from Saritha Rai and Kurumi Mori.To contact the reporters on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net;Takahiko Hyuga in Tokyo at thyuga@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Peter ElstromFor 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.

  • EU Fights For ‘Purpose’ in Grand Plan for Tech, AI Rules
    Bloomberg

    EU Fights For ‘Purpose’ in Grand Plan for Tech, AI Rules

    (Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world threatened by trade wars. Sign up here. China might have data and the U.S. might have money, but Europe has purpose.That’s the message European Union tech czar Margrethe Vestager aims to convey on Wednesday when she unveils plans to help the bloc compete with the U.S. and China’s technological might on its own terms, conforming with fundamental EU rights including strict privacy and non-discrimination rules.On the EU’s menu: new rules for AI, possible legislation for gate-keeping platforms, plans to make data centers carbon-neutral, as well as incentives for businesses to share information with the aim of forming data pools that bolster innovation.Vestager, the European Commission’s executive vice president for digital affairs, is trying to reassure anxious Europeans that she can handle concerns Europe is becoming irrelevant while Asian and American companies dominate high-tech markets.The strategy “will produce and deploy much more artificial intelligence” in Europe, but “it will not be the same” as in the U.S. and China, Vestager said in a press briefing to journalists ahead of the announcement. Based on what she knows about their practices, Chinese AI might not meet European standards, she said.Artificial intelligence has started to penetrate every part of society, from shopping suggestions and voice assistants to decisions around hiring, insurance and law enforcement, provoking concerns about privacy, accuracy, safety and fairness. The EU wants to ensure technology deployed in Europe is transparent and has human oversight, particularly for high-risk cases.In situations where the use of AI could pose risks to people’s safety or their legal or employment status, such as those involving self-driving cars or biometric identification, the EU’s requirements could include implementing conformity checks by public authorities, Vestager said.Facial Recognition RulesAccording to a recent draft of the EU document, companies could have to retrain their systems with European data sets if they can’t guarantee the facial recognition or other risky technology was developed in accordance with European values.Facial recognition has sparked an intense debate in the U.S. and Europe as police departments have started testing the technology. In the U.S., reports that police were using technology from Clearview AI -- a startup that’s scraped billions of photos from social media accounts with the aim of helping law enforcement find suspects without criminal records -- caused a backlash from privacy groups and lawmakers.The same groups are urging legislation to prevent abuses of a technology they say is often inaccurate and could restrict people’s freedom to assemble. Meanwhile, law enforcement officials warn against banning a tool that can make societies safer.With the EU’s AI white paper, Vestager said she wanted to start a debate to determine which circumstances it would be justified to deploy remote facial-recognition technology, warning that without such a debate agencies and companies would steam ahead.“Then it will just be everywhere,” Vestager said. She added that one solution for the EU could be to draw up a European-wide legal framework to govern use of the technology.Valley ViewsFollowing Wednesday’s announcement, the EU will begin a 12-week consultation, inviting the public to submit comments to their AI plans before the commission formally proposes legislation as soon as the end of the year.The EU’s plans have already drawn top executives from Silicon Valley to Brussels, including Alphabet Inc.’s Sundar Pichai, to voice their views on how AI should be regulated.Vestager and other EU officials are due to meet Facebook Inc. Chief Executive Officer Mark Zuckerberg on Monday, who is capping off a trip to Europe with a visit to Brussels to discuss new regulations for the internet.Tech firms have seen before that when the EU sets sweeping laws on tech, like the General Data Protection Regulation, the impact can sprawl far beyond its borders. The EU’s GDPR has spurred similar legislation in Brazil and forced businesses selling into Europe to revise how they collect, store and process information.”EU regulation in this area is likely to have an effect similar to GDPR. People outside Europe are watching the commission,” said Mark Coeckelbergh, a professor of philosophy of media and technology at the University of Vienna. “This is a chance for the EU to set an example of regulation that supports ethical development of AI.”Other parts of the EU’s digital strategy will also serve to rein in U.S. and Chinese companies, potentially to the benefit of European business.Antitrust RulesVestager is also promising a review of antitrust rules, including potential legislation for “gate-keeping platforms,” that would give the EU the ability to crackdown on big tech. While she has fined Google, investigated Amazon.com Inc. and ordered Apple Inc. to pay a massive back-tax bill, the EU has also been criticized for failing to make real changes to how mostly U.S. tech companies have gained power in digital markets.Meanwhile, China’s rapid success in moving into new business areas, taking a global lead on technology and manufacturing where Europe and the U.S. were once ascendant, has also alarmed both Washington and Brussels. German firms have pushed for more barriers to Chinese takeovers and for looser antitrust rules that hinder consolidation between rivals, measures Vestager said she would examine.While EU officials have come to terms with the fact the next Facebook or Google probably won’t come from Europe, they are optimistic about local innovation in robotics, machinery, payments and other business-to-business companies.Plans to encourage data sharing among businesses and with governments -- also to be announced Wednesday --could further boost these firms’ leadership positions. That scheme is also designed to advance the bloc’s AI ambitions by pooling large sets of high-quality industrial data.“We are what we eat and that also goes for artificial intelligence,” Vestager said. “If you eat crappy stuff, well you’re not likely to be a fit for purpose algorithm either.”(Updates with Zuckerberg’s trip to Brussels in 15th paragraph.)To contact the reporters on this story: Natalia Drozdiak in Brussels at ndrozdiak1@bloomberg.net;Aoife White in Brussels at awhite62@bloomberg.netTo contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Amy ThomsonFor 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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