Wednesday, January 29, 2020
Retailers, hoteliers may soon run cloud kitchens
Lyft lays off 90 employees on journey to profitability
Fantastical, a popular calendar app for iOS and macOS, switches to a subscription model to unlock new premium features like Calendar Sets and weather forecasts (Zac Hall/9to5Mac)
Fantastical, a popular calendar app for iOS and macOS, switches to a subscription model to unlock new premium features like Calendar Sets and weather forecasts — Admit it, you've lost track of how many years it's been since you paid for Fantastical. The answer could be as long ago as 2013 …
Microsoft's Q2 gaming revenue was down 21% YoY to $3.4B, with hardware revenue down 43% YoY and Xbox content and services revenue down 11% YoY to $2.4B (Taylor Soper/GeekWire)
Microsoft's Q2 gaming revenue was down 21% YoY to $3.4B, with hardware revenue down 43% YoY and Xbox content and services revenue down 11% YoY to $2.4B — Microsoft's Xbox business took a hit in the most recent quarter as the company prepares to debut its new Xbox Series X console this holiday season.
All eyes are on the next liquidity event when it comes to space startups
At the FAA’s 23rd Annual Commercial Commercial Space Transportation Conference in Washington, DC on Wednesday, a panel dedicated to the topic of trends in VC around space startups touched on public vs. private funding, the right kinds of space companies that should even be considering venture funding, and, perhaps most notably, the big L: Liquidity.
Moderator Tess Hatch, Vice President at Bessemer Venture Partners, addressed the topic in response to an audience question that noted while we’ve heard a lot about how much money will flow into space-related startups from the VC community, we haven’t actually et seen much in the way of liquidity events that prove out the validity of these investments.
“In 2008, a company called Skybox was created and a handful of years later Google acquired the company for $500 million,” Hatch said. “Every venture capitalist’s ears perked up and they thought ‘Hey, that’s pretty good ROI in a short amount of time – maybe the space thing is an investable area’ and then a ton of venture capital investments flooded into space startups, and all of these venture capitalists made one, or maybe two investments in the area. Since then, there have not been many — if any – liquidity events: Perhaps Virgin Galactic going public via the SPAC (special uprose vehicle) on the New York Stock Exchange late last year would be the second. So we’re still waiting; we’re still waiting for those exits, we are still waiting for companies to pave the path for the 400+ startups in the ecosystem to return our investment.”
Hatch added that she’s looking at a number of companies who have the potential to break this somewhat prolonged exit drought in 2020, including five who are either quite mature in terms of their development, naming SpaceX, Rocket Lab, Planet and Spire as all likely candidates to have some kind of liquidity event in 2020, with the mostly likely being an IPO.
Space as an industry was described to me recently as a ‘maturing’ startup market by Space Angels CEO Chad Anderson, by virtue of the distribution of activity in terms of the overall investment rounds in the sector. There is indeed a lot of activity with early stage companies and seed rounds, but the fact remains that there hasn’t been much in the way of exits, and it’s also worth pointing out that corporate VCs haven’t been as acquisitive in space as some of their consumer and enterprise technology counterparts.
The panel touched on a lot more apart from liquidity, which actually only came up towards the end of the discussion, which included panelists Astranis CEO and co-founder John Gedmark; Capella Space CEO and founder Payam Banazadeh and Rocket Lab VP of Global Commercial Launch Services Shane Fleming. Both Gedmark and Banazadeh addressed aspects of the risks and benefits of seeking VC as a space technology company.
“Not every space business is a venture-backable business,” said Banazadeh earlier in the conversation. “But there are a lot of space businesses that are specifically going after raising venture money, and that’s dangerous for everyone – because at the end of the day venture is looking at high risk, high return. The ‘high return’ comes from being able to get substantial amount of revenue in a market that’s big
enough for those revenues to be coming from. But if your idea is to go build, maybe, some very specific part in a satellite, then you have to make the case of why you’ll be able to make those returns for the investors, and in a lot of cases, that’s just not possible.”
Banazadeh also concedes that doing any kind of space technology development is expensive, and the money has to come from somewhere. Gedmark talked about one popular source, government funding and grants, and why that often isn’t as obviously a positive thing for startups as it might seem.
“Small government grants can be great, and obviously a fantastic source of non dilutive capital,” Gedmark said. “But there is a little bit of a trick there, or something to be aware of: I think people are often surprised how much time is spent in the early days of a startup refining the exact idea and the product, and if you’re not certain that you have the that product market fit […] then, the government grant can be extremely dangerous, because they will fund you to do something that is sort of similar to what to what you’re doing, but it really prevents you changing your approach later; you’re going to end up spending time executing on the specific project of the program manager on the government side and you’re executing on what they want.”
VC funds, on the other hand, come with the built-in expectation that you’re going to refine and potentially even change direction altogether, Gedmark says. Depending on the terms of the public funding you’re seeking, that flexibility may not be part of the arrangement, which ultimately could be more important than a bit of equity dilution.
Mark Zuckerberg says his goal for Facebook this decade "isn't to be liked but to be understood" and that people need to know where Facebook stands to be trusted (Kaya Yurieff/CNN)
Mark Zuckerberg says his goal for Facebook this decade “isn't to be liked but to be understood” and that people need to know where Facebook stands to be trusted — New York (CNN Business)Mark Zuckerberg sent a message to the public on Wednesday: Facebook is fine doing things that are unpopular …
Microsoft earnings show an uptick for Azure and Surface, slow going for Xbox
Enlarge / Xbox Series X, due in late 2020. It's tall. And it has a modified controller compared to the Xbox One pad. (credit: Xbox)
Today, Microsoft CEO Satya Nadella spoke with investors on the company's quarterly earnings call to share some numbers about Microsoft's performance in the second quarter of the 2020 fiscal year, which ended on December 31, 2019. In general, Microsoft beat analyst projections with a strong quarter thanks primarily to impressive performance by Azure and Office.
Key numbers include $36.9 billion in revenue with a net income of $11.6 billion, an improvement over analyst predictions of $35.7 billion for the first of those figures.
The cloud and productivity divisions each delivered around $11.8 billion in revenue. That makes for a 29 percent gain for cloud and 17 percent for productivity, which includes both Office and LinkedIn. More specifically, Azure revenue increased by 64 percent. Office saw 16 percent revenue growth for the commercial segment and 19 percent for the personal.
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DOJ sues US telecom providers for connecting Indian robocall scammers
Enlarge (credit: Luis Alvarez / Getty Images)
The US Department of Justice has filed lawsuits (PDF and PDF) against two small telecommunications providers that have allegedly connected hundreds of millions of fraudulent robocalls from Indian call centers to US residents. The feds want a New York federal judge to cut off the companies' access from the US telephone network. The government says a judge has already issued a restraining order against one of the defendants.
Fraudulent robocalls are a serious problem in the United States—and the Justice Department says two US companies contributed significantly to the problem. Over a 23-day period in May and June of last year, for example, defendant TollFreeDeals connected 720 million calls to US numbers. According to the Justice Department, 425 million of the calls lasted for one second or less—suggesting that many were unwanted.
The feds say that during those two months, TollFreeDeals connected 182 million calls from a single India-based call center. Of these calls, more than 90 percent appeared to come from one of 1,000 source numbers. And of those numbers, more than 80 percent have been associated with fraudulent robocalls.
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Tesla temporarily closes Shanghai factory over coronavirus concerns
Tesla was ordered by the Chinese government to shut down its Shanghai factory over concerns about the coronavirus, a closure that will delay Model 3 production and ultimately put slight downward pressure on profits in the first quarter, the automaker’s finance chief Zach Kirkhorn said during an earnings call Wednesday.
Prior to the call, Tesla reported Wednesday $105 million in net income, or 56 cents a diluted share, compared with $140 million, or 78 cents a share, in the same year-ago period. Tesla earned $386 million, or $2.14 a share, in the fourth quarter when adjusted for one-time items. Tesla generated revenue of $7.38 billion in fourth quarter, just 1% higher than the $7.2 billion generated in the same period in 2018.
Model 3 production will be delayed by a week and a half, Kirkhorn said. Novel coronavirus, a new form of the family of viruses known as coronavirus first cropped up in Wuhan in late December 2019. Since then, thousands of people have contracted the virus, causing the government to take measures such as shutting down transit and factories throughout the country.
“We are in the early stages of understanding if, and to what extent, we may be temporarily impacted by the coronavirus,” Kirkhorn said. “At this point we’re expecting a one, to one and a half week-delay in the ramp of the Shanghai build Model 3 due to a government required factory shutdown. This may slightly impact profitability for the quarter, but is limited as the profit contribution from Model 3 Shanghai remains in the early stages.”
Tesla is also closely monitoring if the coronavirus will cause interruptions in the supply chain for cars built in Fremont. “So far we’re not aware of anything material, but it’s important to caveat, this is an unfolding story,” Kirkhorn added.
The first deliveries of Tesla Model 3 sedans produced at the Shanghai plant began in early January, one year after the U.S. automaker began construction on its first factory outside the United States.
The deliveries to customers was a milestone for Tesla and a critical step for the company in its aim to carve out market share in the world’s biggest auto market, as well as lessen the financial pain caused by tariffs.
Facebook will pay $550 million to settle class action lawsuit over privacy violations
Facebook will pay over half a billion dollars to settle a class action lawsuit that alleged systematic violation of an Illinois consumer privacy law. The settlement amount is large indeed, but a small fraction of the $35 billion maximum the company could have faced.
Class members — basically Illinois Facebook users from mid-2011 to mid-2015 — may expect as much as $200 each, but that depends on several factors. If you’re one of them you should receive some notification once the settlement is approved by the court and the formalities are worked out.
The proposed settlement would require Facebook to obtain consent in the future from Illinois users for such purposes as face analysis for automatic tagging.
This is the second major settlement from Facebook in six months; an seemingly enormous $5 billion settlement of FTC violations was announced over the summer, but it’s actually a bit of a joke.
The Illinois suit was filed in 2015, alleging that Facebook collected facial recognition data on images of users in the state without disclosure, in contravention of the state’s 2008 Biometric Information Privacy Act (BIPA). Similar suits were filed against Shutterfly, Snapchat, and Google.
Facebook pushed back in 2016, saying that facial recognition processing didn’t count as biometric data, and that anyway Illinois law didn’t apply to it, a California company. The judge rejected these arguments with flair, saying the definition of biometric was “cramped” and the assertion of Facebook’s immunity would be “a complete negation” of Illinois law in this context.
Facebook was also suspected at the time of heavy lobbying efforts towards defanging BIPA. One state senator proposed an amendment after the lawsuit was filed that would exclude digital images from BIPA coverage, which would of course have completely destroyed the case. It’s hard to imagine such a ridiculous proposal was the suggestion of anyone but the industry, which tends to regard the strong protections of the law in Illinois as quite superfluous.
As I noted in 2018, the Illinois Chamber of Commerce proposed the amendment, and a tech council there was chaired by Facebook’s own Manager of State Policy at the time. Facebook told me then that it had not taken any position on the amendment or spoken to any legislators about it.
2019 took the case to the 9th U.S. Circuit Court of Appeals, where Facebook was again rebuffed; the court concluded that “the development of face template using facial-recognition technology without consent (as alleged here) invades an individual’s private affairs and concrete interests. Similar conduct is actionable at common law.”
Facebook’s request for a rehearing en banc, which is to say with the full complement of judges there present, was unanimously denied two months later.
At last, after some 5 years of this, Facebook decided to settle, a representative told TechCrunch, “as it was in the best interest of our community and our shareholders to move past this matter.” Obviously it admits to no wrongdoing.
The $550 million amount negotiated is “the largest all-cash privacy class action settlement to date,” according to law firm Edelson PC, one of three that represented the plaintiffs in the suit.
“Biometrics is one of the two primary battlegrounds, along with geolocation, that will define our privacy rights for the next generation,” said Edelson PC founder and CEO Jay Edelson in a press release. “We are proud of the strong team we had in place that had the resolve to fight this critically important case over the last five years. We hope and expect that other companies will follow Facebook’s lead and pay significant attention to the importance of our biometric information.”
Sources: EU is preparing rules on data interoperability and cross-border use to create a single market in data aimed at challenging the dominance of big tech (Foo Yun Chee/Reuters)
Sources: EU is preparing rules on data interoperability and cross-border use to create a single market in data aimed at challenging the dominance of big tech — BRUSSELS (Reuters) - The European Union wants to create a single market in data aimed at challenging the dominance of tech giants such as Facebook …
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California court orders Apple to pay $838M and Broadcom to pay $270M for infringing California Institute of Technology patents on Wi-Fi transmissions (Bloomberg)
California court orders Apple to pay $838M and Broadcom to pay $270M for infringing California Institute of Technology patents on Wi-Fi transmissions — Apple Inc. and Broadcom Inc. must pay $1.1 billion in damages for infringing California Institute of Technology patents on Wi-Fi transmissions, a jury in California ordered.
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Arizona's Maricopa County is set to have the second largest concentration of US data centers by 2028, as the state races to increase electricity production (Pranshu Verma/Washington Post)
Pranshu Verma / Washington Post : Arizona's Maricopa County is set to have the second largest concentration of US data centers by 202...
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Jake Offenhartz / Gothamist : Since October, the NYPD has deployed a quadruped robot called Spot to a handful of crime scenes and hostage...
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