Big Tech, Elon Musk, Tesla, Japan, TikTok and Spotify

Big Tech hits the national spotlight, Elon Musk tweets about Tesla’s future, Japan weighs a TikTok ban and Spotify posts mixed results.
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Washington, D.C., USA: United States Capitol Building (By Orhan Cam)
Washington, D.C., USA: United States Capitol Building (By Orhan Cam)

Good morning! Today’s word count is 1,287 words, or an 8-minute read. Let’s get to it:

What To Expect From Tech’s Historic Antitrust Showdown With Congress

Chief executives from four major tech companies – Jeff Bezos (Amazon), Tim Cook (Apple), Sundar Pichai (Google) and Mark Zuckerberg (Facebook) – are set to appear before the House’s Antitrust Subcommittee to face questions about “how their business practices propelled them into the market-dominant giants they are today.”

  • Why these four? Amazon, Apple, Google and Facebook make up four of the top six most valuable public companies. They are widely regarded as “reshaping the consumer world.

  • What’s the big deal? Tech companies have testified before, but usually, they send their lead counsel, not CEOs. The threat to their businesses must be real if these firms are sending such high-value figures to make nice with lawmakers. The hearing will also be Bezos’ first appearance before Congress.

  • Who’s in charge? The House Judiciary Antitrust Subcommittee, a subsection of the broader unit that focuses on antitrust issues, is helmed by Democrat David Cicilline. Tech Crunch referred to him as a “prominent and serious critic of big tech companies.” Also worth pointing out are Val Demings, a potential running mate for Joe Biden, and Republican Jim Sensenbrenner.

  • What’s it about? It’s the sixth hearing within the subcommittee’s year-long antitrust investigation into digital markets and expects to touch on data privacy, innovation, the free press and competition.

  • Where to watch? You can stream the hearing at the link here (YOUTUBE), and you can find a summary of each company’s opening statement here (TECH CRUNCH).

Read More: (TECH CRUNCH)

Elon Musk Says Tesla Is Open to Licensing Autopilot, Supplying Powertrains and Batteries to Other Automakers

Tesla CEO Elon Musk has an idea on how his company might evolve. On Twitter Tuesday night, Musk said the automaker would be “open to licensing software and supplying powertrains & batteries” to other competitors. He added that would include Autopilot, the advanced driver assistance software Tesla offers for intelligent cruise control.

Why It Matters

For Tesla, the world’s biggest automaker by market capitalization, the idea of licensing stems from the company’s underlying goal, “to accelerate sustainable energy, not crush competitors,” as Musk expressed in his tweet. Back in 2014, Musk authored a blog post saying Tesla would offer its IP freely to “anyone who, in good faith, wants to use [its] technology.”

As Tech Crunch reported, that hasn’t diverted Tesla from taking legal action against competitors on occasion. But a platform licensing or supplier relationship would represent a significant evolution for the firm, one that has precedent in the automaker industry. It’s also possible a licensing arrangement would only bolster Tesla’s revenue streams and not impact sales. The company offers a variety of additional selling points beyond its powertrains and batteries.

Numbers to Consider

  • $279 Billion – Tesla’s market capitalization, the largest of automakers around the world, according to Yahoo Finance.

Read More: (TECH CRUNCH)

Japan’s Lawmakers Call for Restrictions on TikTok and Other Chinese Apps

The ground beneath TikTok is shrinking. Japan’s lawmakers are contemplating restrictions on TikTok and other Chinese-made apps operating in the country “due to concerns that their user data could end up in the hands of the Chinese government.”

Why It Matters

With the world’s third-largest economy, Japan is an immensely lucrative market for TikTok. It’s also one of the world’s biggest market for advertising. Losing access to Japan would be a massive blow for TikTok parent ByteDance. India’s already taken action against the app, and the U.S. is heavily considering it. If Japan follows suit, TikTok will find itself shut out from three of the world’s five largest economies. ByteDance has repeatedly stated that TikTok’s user data is “stored outside China, and the Chinese government would never gain access to it.” However, growing national security concerns around the world over the app’s data practices have prompted ByteDance to explore potential avenues to distance TikTok from its Chinese roots, including a sale to U.S. company.

Numbers to Consider

  • $5.75 Trillion – Japan’s GDP, which ranks third in the world.
  • $50 Billion – TikTok’s estimated valuation as ByteDance weighs a potential sale, according to Reuters.

Read More: (THE INFORMATION)

A Quick Look

Spotify Loss Deepens Despite Subscriber, Podcast Growth

  1. The average revenue per user for the subscription business dropped 9 percent to €4.41 ($5.17). The decline came due to new subscribers joining using discounted plans, student rates and lower pricing power in new international markets.
  2. In total, Spotify posted a loss of €356 million versus €76 million in the year-earlier quarter. The company’s subscription revenue climbed 17 percent to €1.76 billion, while ad-supported revenue slid 21 percent to €131 million. Ads are a relatively small part of Spotify’s business (less than 10 percent of overall revenue) but have grown over the past year as it expands its podcast business. Total revenue rose 13 percent to €1.89 billion.
  3. Spotify said 21 percent of its monthly active users now listen to podcasts, increasing from 19 percent in the previous quarter. The overall consumption of podcasts more than doubled. At the end of Q2, Spotify had 299 million monthly active users and 138 million paying subscribers. The Stockholm-based streaming platform said customers’ overall time spent listening to the service recovered to pre-pandemic levels.

Read More: (WALL STREET JOURNAL)

Worth Your Time

Dinner and a Movie: It’s an age-old question — should I see a movie in theatres or wait for it to come to home video? Well now, consumers won’t have to wait very long if they choose the latter. A new agreement between AMC, the world’s biggest theatre chain, and Universal Pictures is upending the way Hollywood has done business for decades. Under the deal, the “theatrical window” will shrink from 75 days to 17. (WALL STREET JOURNAL)

Test of Time: Any professional sports league needs rigorous Covid-19 testing even to attempt to operate during the pandemic, and for BioReference Laboratories, a public health crisis has grown into a tremendous business opportunity. The NFL, NBA and MLS all enlisted BioReference’s services, which is owned by Opko Health, and the company has seen its shares skyrocket nearly 300 percent since the start of the year. (AXIOS)

Safe and Sound: “They have pre-existing conditions, newborn children and at-risk family members. They’re not ready to return to a job that’s incompatible with social distancing. They’re the NFL players choosing not to play football during a pandemic.” As of Tuesday, 27 players have notified the league and union of their intention to opt-out of the upcoming season. (WALL STREET JOURNAL)

Tidbits

After Covid-19 forced Purdue University to shut down its MBA program, more business closures are expected.

Chip Maker AMD posted improved earnings amid growing processor demand, setting the stage for a showdown between the firm and its chief rival, Intel.

In the years leading up to Wirecard’s collapse, the company’s inflated balance sheet allowed them to raise $3.7 billion in debt. Half of that money came as a result of SoftBank lending its name and reputation to the digital-payments company.

Boeing is planning deeper job and production cuts as the pandemic continues to ravage its business and forces it to rely on its defense industry contracts.

GE is also suffering from a steep decline in its jet-engine business, although executives predict the things will improve in the second half of the year.

A Couple Cents Content

In a unique crossover between the sports and finance worlds, Oakland A’s executive Billy Beane has joined forces with Redbird Capital to form a SPAC. (TIKTOK)

Rush Street Interactive announced a $1.8 billion SPAC merger Monday, check out Justin Oh’s overview (TIKTOK), and a more in-depth breakdown. (POST)

Curious how people view returning to live events? Check out Part Two of my conversation with industry expert Alex Evans. (POST)

  • Watching the livestream of the hearings right now… found the FB/Instagram tidbit very interesting. Instagram was certainly a big platform in 2012 when it was purchased by Facebook, but it’s really surprising to hear that such an acquisition shouldn’t have been allowed by FTC antitrust regulations considering there’s billion-dollar mergers all the time, and Facebook capitalized by reaching a much younger demographic on the Instagram platform. But these Google questions definitely sound like the most severe allegations so far…

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