November 06, 2022: Tech Wreck!

Last week, the Dow Jones Industrial fell 1.4%, S&P 500 was down 3.3%. Nasdaq fell 5.7%, its worst loss since the week ended Jan. 21. Numerous tech companies announced hiring freezes and/or reductions in force; Amazon has paused corporate hiring for ‘next few months’, Lyft will lay off 13% or 683 employees from its workforce, Stripe will lay off 14% or ~1k people from workforce, Chime will lay off 12% of its workforce, Opendoor laid off ~550 employees or 18% of its workforce. In Canada, Dapper Labs lays off 22% of its staff. Snowflake opens a Toronto HQ, engineering hub to expand investment in Canada. A Financial Times piece pointed out investors are questioning Big Tech’s capex plans as their businesses now raise serious questions about whether the returns from the latest spending binge will be as predictable as those of the past. Venture capital investments in China are falling sharply this year, making it one of the worst-performing countries globally. Gartner pointed out that worldwide spending on public cloud services will grow 20.7% in 2023, to US$591.8 billion. Stocks of Twilio, Atlassian, Roku, DraftKings had big moves down following earnings report. Robinhood reported a steep drop in users.Qualcomm is predicting a ‘double-digit’ drop in phone sales. Banks prepare to hold US$12.7 billion Twitter debt on books until early 2023. The Council on Foreign Investment in the U.S. (CFIUS) should take action to ban TikTok, Brendan Carr, one of five commissioners at the Federal Communications Commission, told Axios in an interview. Uber app may get worse as company experiments with push notification ads. Disney+ subscribers now have early access to Disney merchandise, including Marvel and Star Wars products. Fidelity Investments is gearing up to launch crypto trading for small investors, announcing on Thursday that it had opened up a waitlist for customers.

TouchBistro Raises US$110 million amid new appetite for restaurant tech.

TouchBistro, a restaurant point-of-sale system, announced on Tuesday it nabbed US$110 million in growth financing led by Francisco Partners, enabling the company to expand its product line and bolster acquisition efforts. The company has raised $320.2 million in total, per Crunchbase data. This latest round will enable the company to expand its product line and bolster acquisition efforts. TouchBistro allows restaurants to manage reservations, online orders, payments and food inventory. The company has expanded since the pandemic to help customers and restaurants deal with contactless payments, online menus and food delivery. Founded in 2010, Canada-based TouchBistro has expanded to over 100 countries and 16,000 restaurants. https://bit.ly/3UiF5rA

Voilà! closes $13.75 million Series A to help combat labour shortages across Canada, United States.

This funding was led by first-time investor Walter Ventures, with follow-on participation from Voila!’s seed round investors, Desjardin Capital and Investissement Québec. All of the $13.75 million was equity financing, bringing Voila!’s total funding to $16.75 million across two rounds. https://bit.ly/3t7gqKN

Audette raises $12.8 million to ‘level up’ decarbonization of buildings.

The built environment generates nearly 50 percent of annual global carbon emissions, and of those total emissions, building materials and construction are responsible for an additional 20 percent. In its goal to build a carbon reduction plan for “every existing building on the planet,” Audette wants to tackle the issue at a large scale and analyze cities’ worth of buildings. The Victoria-based company has raised $12.8 million in seed funding to ‘level up’ the decarbonization of buildings, with a plan to launch across 150 North American cities over the next two years, including 40 in Canada. Launched in 2020, Audette’s platform uses artificial intelligence to capture, monitor, and analyze building data to identify emissions-reduction opportunities. Its large-scale focus comes into play with the customers it targets. Audette aims to work with large property owners or managers, such as pension funds that may have real estate portfolios, or city managers with decarbonization plans. A number of Audette’s investor’s for this round align with its interests in cleantech and real estate. The round was Led by Buoyant Ventures, which is a United States-based venture firm that invests in climate tech. The rest of the investors represent a mix of cleantech focus with many from the United States, as Audette sees a sizable market opportunity there. The financing round received contributions from Energy Impact Partners, Turnham-Green Capital, Active Impact Investments, and Powerhouse Ventures. Other investors were: Osgoode Properties, which owns and manages over 5,000 apartment rentals throughout Canada; and heating, ventilation, and air conditioning company Johnson Controls. https://bit.ly/3fD0DAw

Satellite component testing startup Connektica raises $2.7 million.

Connektica occupies a specialized niche in the space industry, employing automated testing solutions for manufacturers and contractors. Initially, the startup focused on radio frequency (RF) testing for satellite integrators and component manufacturers, but has since expanded its range of quality assurance testing. Of the $2.7 million, a portion is non-dilutive funding from the National Research Council, while the remaining is equity from Boreal Ventures, Space.VC, and the RAO Family Irrevocable Trust. Connecktica did not disclose the lead investor as well as another French investor. https://bit.ly/3DFTY0s

BDC commits $400 million for second cleantech-focused fund.

Citing the importance of reducing greenhouse gas (GHG) emissions, the Business Development Bank of Canada (BDC) is launching its second fund devoted to cleantech, with a $400 million commitment. Climate Tech Fund II, as it is called, will invest in Canadian climate tech firms that are at the scale-up or commercialization stages. The goal is to scale and deploy low-carbon technologies to help Canada meet its GHG emissions reduction targets. The fund announcement comes just ahead of the 2022 United Nations Climate Change Conference being held in early November in Egypt. It also arrives at a time when the UN has issued a report warning that the plans most countries submitted as signatories of the Paris Agreement to reduce GHG emissions are still not ambitious enough to limit global temperature rise to 1.5 degrees celsius by the end of the century. The second fund brings BDC’s overall cleantech fund investments to $1 billion. BDC Capital’s Cleantech Practice was created as a result of a $700 million commitment in the 2017 federal budget. The capital was set to be distributed over the following five years. The majority of the capital, $600 million, went towards direct investments through Fund I, while $100 million went to existing BDC financing programs, which support cleantech companies through BDC’s branch network using commercial debt, according to a spokesperson for the organization. BDC’s indirect investments have also included programs like Breakthrough Energy, which received $10 million from the practice. https://bit.ly/3Uv3Tgb

Shopify (SHOP-NYSE, SHOP-TSX) acquires Remix to bolster its headless commerce framework.

Shopify has announced that it acquired American web framework provider Remix to bolster its own headless commerce solution. Shopify president Harley Finkelstein revealed the deal on Twitter, saying that Shopify plans to bring Remix “under the hood” of Hydrogen, its framework tool for building storefronts. The initial version of Hydrogen was made available in November last year to allow merchants to build headless commerce storefronts with Shopify. Headless commerce allows companies to test and experiment with web applications with more agility and flexibility by separating the front-end and back-end of their e-commerce experiences. Remix is a full stack web framework for delivering web applications. Last year, it announced $3 million in funding led by OSS Capital. Shopify has been actively investing in its tech stack through investments and acquisitions in recent years, many of which have connections to its ecosystem. In July, Shopify completed its acquisition of Deliverr to expand its in-house fulfillment network, and recently invested in WATI, a Hong Kong SaaS startup that allows businesses to send personalized notifications to customers through WhatsApp. A number of Shopify’s partnerships tend to be strategic in nature, such as its $100 million partnership with marketing automation SaaS provider Klaviyo in August, and its investment in US-based AI recommendation startup Crossing Minds. https://bit.ly/3UtN70Y

Snowflake opens Toronto HQ, engineering hub to expand investment in Canada.

American cloud computing company Snowflake has opened its Canadian headquarters in Toronto, which also functions as one of its five global engineering hubs. Snowflake initially announced its plans to establish a physical presence in Canada in June, with the intention to hire hundreds of engineers. The company already employs about 100 people in Canada across various roles. https://bit.ly/3U6epdO

Dapper Labs lays off 22 percent of staff.

The company confirmed the layoffs to BetaKit, noting they were part of a broader refocus of strategy and reorganization of teams. The move makes Dapper Labs the second large Vancouver tech company this week to make staff cuts as the economy continues to have effects: Hootsuite also recently laid off five percent of its staff in its second round of layoffs since August. The 22 percent reduction represents approximately 134 people, according to Dapper Labs’ LinkedIn profile, which shows 613 employees at the company. Dapper Labs’ layoffs follow the pattern of many tech companies, Canada and elsewhere, that raised massive funding rounds in recent years, saw sizeable growth, scaled up quickly, and are now feeling the effects of the macroeconomic environment. In addition to the general economic headwinds, Dapper Labs is also dealing with a NFT market crash. As Quartz writes, the once booming NFT market has fallen across “nearly every trackable metric,” including in areas of art and gaming where Dapper Labs plays. As Quartz reports, trading volume for NFTs across all sectors has plunged about 90 percent since last year. https://bit.ly/3fzsamr

Big Tech’s capex arms race.

Investors have grown accustomed to periodic leaps in capital spending by the largest US tech companies. But changes in Big Tech’s business raise serious questions about whether the returns from the latest spending binge will be as predictable as those of the past. After jumping 32 per cent in 2020, the combined capital budgets of Alphabet, Amazon, Apple, Meta and Microsoft rose as much again in 2021, reaching US$140 billion. They climbed another 20 per cent in the first nine months of this year. Periodic spurts like this are nothing new. One reason has been the need to add capacity ahead of expected surges in growth. New data centres, offices to house extra workers, or (in the case of Amazon) warehouses and delivery vans all need to be put in place ahead of time. The surprisingly strong growth rates that the big tech companies have maintained in recent years — particularly through the pandemic — have largely justified their confidence. Going into an economic slowdown, this risk has increased — particularly since some corners of the digital economy are showing signs of reaching maturity. Big Tech’s latest earnings reports and forecasts pointed to an unexpectedly pronounced deceleration in ecommerce and digital advertising as consumer demand slows. Now that they represent such a large share of the overall economy, it is no longer so easy for the tech companies to shrug off the macro trends. https://on.ft.com/3Upggu0

Gartner: Spending on public cloud services will exceed US$591 billion in 2023.

Worldwide spending on public cloud services will grow 20.7% in 2023, to US$591.8 billion, according to a new Gartner Inc. forecast released today. Gartner expects organizations to spend US$490.3 billion on cloud services this year, a 18.8% increase from the US$412.6 billion invested during 2021. The fact that the market’s growth rate is projected to accelerate from 18.8% this year to 20.7% in 2023 reflects increasing enterprise demand across several cloud service categories. Gartner’s forecast organizes the cloud service market into six major segments. The segment expected to grow at the fastest rate in 2023 is the infrastructure-as-a-service category. According to Gartner’s estimate, IaaS spending will increase by at least 29.8% next year, to US$150.2 billion. “Cloud migration is not stopping,” Nag said. “IaaS will naturally continue to grow as businesses accelerate IT modernization initiatives to minimize risk and optimize costs. Moving operations to the cloud also reduces capital expenditures by extending cash outlays over a subscription term, a key benefit in an environment where cash may be critical to maintain operations.” The platform-as-a-service and software-as-a-service segments are expected to grow 23.2% and 16.8%, respectively. PaaS spending is on track to increase from $110.6 billion this year to $136.4 billion in 2023. During the same time frame, SaaS budgets will grow from a cumulative $146.3 billion to more than $195.2 billion. The cloud services market is on track to grow at a significantly faster pace in 2023 than overall information technology spending. Gartner expects that worldwide IT spending will climb 5.1% year-over-year in 2023, to US$4.6 trillion. https://bit.ly/3TadU17

China’s venture funding tumbles precipitously after crackdown.

Venture capital investments in China are falling sharply this year, making it one of the worst-performing countries globally after the Communist Party’s crackdown and an overall decline in tech valuations. The value of venture capital deals in the country tumbled 44% to US$62.1 billion through October, compared with the same period in 2021, according to research firm Preqin. China once rivaled the US for capital invested in startups, before Xi Jinping’s administration embarked on sweeping efforts to reform the practices of giants like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. In addition, venture firms have pulled back globally as investors sour on money-losing technology companies and publicly traded stocks tumble. Still, China is among the worst performers, with a venture investment drop that is worse than the global decline and the pullback in the US. https://bloom.bg/3t3yjdM

Twilio stock plunges toward 4 1/2-year low, kudos to BofA’s Funk for pre-results double downgrade.

Shares of Twilio Inc. plummeted 23.5% toward a 4 1/2-year low in premarket trading Friday, after the customer communications software company reported a large third-quarter net loss and provided a downbeat fourth-quarter outlook. The stock is on track to open at the lowest price seen during regular-session hours since May 2018, and to suffer the biggest one-day drop since it lost 26.3% on May 3, 2017. Kudos to BofA Securities analyst Michael Funk, who double downgraded Twilio, warning investors to sell a day before the results were released. Even before the post-results selloff, Twilio’s stock had tumbled 75.2% year to date through Thursday, while the S&P 500 had lost 22.0%. https://on.mktw.net/3sXSbPo

DraftKings loss narrows to US$450 million, stock falls after earnings.

Shares of DraftKings Inc. were falling more than 10% in premarket trading Friday, though the company beat with its revenue in the latest quarter and saw its losses narrow. The company posted a third-quarter net loss of US$450.5 million, or US$1.00 a share. DraftKings lost US$545.0 million in the year-earlier quarter. Revenue surged to US$502 million from US$213 million and easily exceeded the FactSet consensus, which was for US$439 million. “Throughout 2022, we’ve struck the right balance between delivering differentiated top-line growth and driving operating efficiencies,” Chief Executive Jason Robins said in a release. Executives now anticipate US$2.16 billion to US$2.19 billion in full-year revenue, whereas their prior outlook was for US$2.08 billion to US$2.18 billion in revenue. The FactSet consensus was for US$2.14 billion. DraftKings’ management also introduced a 2023 revenue forecast that calls for US$2.80 billion to US$3.00 billion in revenue, while analysts surveyed by FactSet were looking for US$2.83 billion. https://on.mktw.net/3TgiFGE

Roku drops ~19% as it braces for a bumpy fourth quarter.

As advertisers pull back on spending and supply chain disruptions persist, investors have braced themselves for an unpleasant quarter for Roku. And investors are probably right to be worried. Roku released its fiscal third-quarter earnings results on Wednesday, revealing that it is still experiencing slow growth in revenue in a continuously challenging environment. The company also warned investors of a weak fourth quarter, telling shareholders it expects total net revenue of about US$800 million, or a 7.5% decline year over year. Roku shares dropped nearly 19% in after-hours trading once investors saw the fourth-quarter guidance. Meanwhile, the company also reported a net addition of 2.3 million incremental active accounts in Q3, bringing the total to 65.4 million, up from 61.3 million active accounts in the second quarter. Roku also had total streaming hours of 21.9 billion, up 1.1 billion from last quarter. https://tcrn.ch/3zOHimS

Airbnb forecasts slowing growth after record sales.

Airbnb said late Tuesday that revenue in the third quarter rose 29% from the year-ago quarter, to US$2.9 billion, as demand for booking on the platform remained strong and new hosts increasingly turned to Airbnb to supplement their income amidst the economic downturn. The home rental company also posted its highest net income in a single quarter, totaling US$1.2 billion, up 46% from the same period last year. “Despite a lot of consumers pulling back on spending, the one area that I haven’t seen them pull back on as much is travel,” said CEO Brian Chesky on the call. Even with macroeconomic headwinds, total nights booked increased 25% year over year, and the company also saw a significant rise in cross border bookings. The San Francisco company forecast sales growth slowing to between 17% and 23% in the current quarter compared to the final quarter of 2021, when it benefited from strong travel demand during the window between the outbreak of the Delta and Omicron coronavirus variants. The stock fell 6% in after hours trading. Airbnb also reported positive free cash flow of US$966 million, an increase of more than 80% compared to the amount of cash it generated in Q3 last year. https://bit.ly/3NJGN3e

Uber’s ride-hailing business almost back at pre-Covid levels.

Uber reported a rebound in its ride-hailing service in the third quarter, a sign that the business was nearly back to pre-Covid levels. Uber’s food delivery business also posted double-digit percentage growth in revenue. Uber cheered Wall Street with a forecast that gross bookings—a measure of the volume of both delivery orders and rides—would grow between 23% and 27% year on year in the fourth quarter, before the impact of foreign exchange movements. That helped buoy Uber’s stock, which rose 12% to US$29.85. Uber reported 72% growth in revenue year on year, although that growth was increased artificially by a couple of factors, including the acquisition of a freight company and a change to Uber’s UK ride-hailing business. Since earlier this year, Uber has been including in its UK revenue the total amount of customer fares, rather than the net amount it keeps after paying drivers as it does everywhere else. That change increased the ride-hailing business revenue by US$1.1 billion in the third quarter. Excluding that amount, revenue would have been US$2.7 billion, compared to US$2.895 billion the ride-hailing business reported in the third quarter of 2019. Still, even without that included, the mobility revenue is 23% higher than a year ago. Delivery revenue rose 24%, meanwhile. Uber also reported that earnings rose to US$516 million compared with US$8 million a year earlier, excluding stock compensation and other expenses. Another measure of profit, free cash flow, fell 32% to US$358 million. https://bit.ly/3hdu3Wm

Stripe cuts 14% of staff, was ‘Much Too Optimistic’ about e-commerce boom.

Payments giant Stripe is cutting 14% of its staff, or more than 1,000 jobs, with co-founders John and Patrick Collison saying the company had made a mistake by over-hiring with the expectation that the pandemic fueled e-commerce boom would continue. Stripe, which had a post-money valuation of US$95 billion after its most recent private fundraising announced last March, is one of a number of e-commerce firms that are grappling with a slowdown in online shopping growth. A significant portion of Stripe’s revenue is based on volumes of online payments. The cuts unwind recent hiring, and return headcount to 7,000, which is what the employee count was in February, according to a company blog post. “We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown,” the founders wrote. “We grew operating costs too quickly.” Shopify, the e-commerce software giant, laid off about 10% of its workers in July. At the time, CEO Tobias Lütke said the company had incorrectly bet that growth in the share of shopping done online during the pandemic would become the new normal. https://bit.ly/3zL5ruC

Apple slashes budgets and implements broad hiring freeze, report claims.

While Apple has acknowledged that it has slowed hiring amid concerns about an economic downturn, a new report from Insider has more details about the company’s internal plans. The report claims that Apple has “paused almost all hiring,” and this freeze could remain in effect through late 2023. Tim Cook has said that Apple has slowed its hiring rates amid broader concerns about the economy, but that it would still be hiring on a “deliberate basis.” Bloomberg previously reported that Apple laid off a number of recruitment contractors. Today’s report says that Apple is actually planning more of a slowdown than it has acknowledged publicly. Citing “three sources with close knowledge of conversations” says that Apple has informed staff across multiple divisions that it “won’t be onboarding new hires for a number of months.” This hiring freeze could run through the end of Apple’s fiscal year, which comes to a close in September 2023. https://bit.ly/3FMPF6f

Amazon has frozen headcount at its growing advertising business, after it posted a glum fourth-quarter outlook amid slowing sales.

Big Tech is bunkering down for a harsh winter ahead. The entire sector is getting hammered by layoffs and hiring freezes, and even tech giant Amazon is feeling the chill. Amazon has frozen headcount at its growing advertising business, Bloomberg reported on Tuesday, citing a person familiar with the matter. The company will continue to fill vacancies, but there will be no new positions created, the media outlet reported. This is just days after Amazon — the world’s largest online retailer — posted mixed third-quarter earnings and projected the company’s slowest fourth-quarter growth ever. https://bit.ly/3G4dpmz

Qualcomm is predicting a ‘double-digit’ drop in phone sales.

Qualcomm, one of the primary providers of chips and modems in phones, is predicting that phone sales will be down much more than expected in 2022 due to the uncertain economic environment, according to the company’s latest earnings release published Wednesday. “Given the uncertainty caused by the macroeconomic environment, we are updating our guidance for calendar year 2022 3G/4G/5G handset volumes from a year-over-year mid-single-digit percentage decline, to a low double-digit percentage decline,” Qualcomm wrote. The company also says that “rapid deterioration in demand” and “easing of supply constraints” in the semiconductor industry have led to increased inventory and that Qualcomm’s largest customers are having to draw down their inventory. Two of those “largest customers” likely include Samsung and Apple, which use Qualcomm chips in their smartphones, and both have reportedly struggled with not selling enough phones. https://bit.ly/3fw6BmR

Banks prepare to hold US$12.7 billion Twitter debt on books until early 2023.

Barring an unexpected rally in credit markets this year, the group of lenders, led by Morgan Stanley, Bank of America and Barclays, have conceded they will be stuck holding the debt on their books for months or even longer and will probably end up incurring huge losses on the financing package. The banks have in recent weeks held short discussions with several large credit investors as they attempt to gauge the demand for the debt and the discounts they will ultimately need to offer to offload it. The conversations have been informal and some investors said they were given the impression the deal would not come to market quickly. The seven lenders are wagering it will be easier to appeal to creditors after Musk presents a clear strategy for Twitter, including the size of cost cuts and estimates for the company’s financial performance in 2023 and 2024. The US$12.7 billion in debt has been split between a US$6.7 billion term loan, along with US$3 billion each of secured bonds and unsecured debt, obligations that are ultimately expected to be financed as fixed-rate bonds. A sharp sell-off in credit markets has saddled banks with more than US$35 billion of debt from takeovers that they have been unable to sell to investors. The group of banks, which also includes MUFG, BNP Paribas, Mizuho and Société Générale, did not attempt to sell the debt to institutional investors before the deal closed, as is customary, given legal wrangling between Musk and Twitter. They are now contending with one of the largest “hung” financings ever. https://on.ft.com/3t3yA0i

Justice Department is prepping probe of Adobe’s US$20 billion acquisition of Figma.

The Justice Department is preparing an investigation of Adobe Inc.’s US$20 billion acquisition of Figma, a collaborative web application for interface design, according to a report Thursday in Politico, citing people familiar with the matter and access to a document. Justice officials have issued civil investigative demands requesting information on the deal, Politico reported. Adobe shares are down 4% in early-afternoon trading Thursday. Adobe was not immediately available for comment. https://on.mktw.net/3hfpivp

Blackstone to take control of Emerson’s climate tech in US$14 billion deal.

Emerson Electric Co will sell a majority stake in its climate technologies unit to Blackstone Inc in a deal that values the business at US$14 billion, as the U.S. industrial firm pivots to supplying to a booming automation market. The company will receive an upfront payment of about US$9.5 billion, it said on Monday, which it will use to scoop up more firms, especially in the automation segment. Businesses are accelerating their efforts to automate their operations amid a shortage of factory workers, and Emerson has doubled down on its software strategy to capture that shift. The company sold its division that makes waste disposal equipment and hot water dispensers to Whirlpool Corp and merged its software units with smaller rival Aspen Technology. Emerson, which will retain about 45% stake in the climate tech unit, said Blackstone and co-investors Abu Dhabi Investment Authority and Singapore state fund GIC would contribute US$4.4 billion in equity toward the deal, which would be supplemented by US$5.5 billion of debt financing. The debt will be equivalent to about four times the new company’s annual cash flow. “(Emerson) is significantly re-orienting its portfolio to result in a more focused and potentially higher growth enterprise,” Citi Research analysts said. The deal, expected to close in the first half of 2023, is the latest in a flurry of private equity transactions this year as a selloff in equities on recession worries hammered valuations. https://reut.rs/3Ur8a41

Lockheed Martin increases its bet on satellite manufacturer Terran Orbital with US$100 million investment.

Aerospace giant Lockheed Martin is deepening its investment in satellite manufacturer Terran Orbital with a US$100 million investment and a cooperation agreement for the development and sale of smallsats through 2035. Terran also announced that it will now build its massive, US$300 million space vehicle manufacturing facility in Irvine, California, not Florida as originally planned. https://tcrn.ch/3UpgJwg

Alibaba and other US-listed Chinese stocks jump following speculation Beijing is exploring an exit from its zero-COVID policy.

Alibaba and stocks of Chinese companies that trade in the US climbed Tuesday following an unconfirmed social report the Chinese government may be moving toward shedding its strategy of managing COVID-19 infections. Chinese equities also soared after a social media post that was unverified said the ruling Communist Party was considering establishing a “reopening committee” to examine how to exit its policy that calls for mass lockdowns in areas where coronavirus outbreaks are detected. In the US, shares of Alibaba rose as much as 7.7% to US$64.45 then pared the advance to 5.3% on the New York Stock Exchange and competitor JD.com gained 4% on the Nasdaq. Electric vehicle maker Nio picked up 2% on the NYSE. Also moving higher in the US, search engine heavyweight Baidu rose 5.1%. But EV company XPeng and e-commerce tech platform Pinduoduo each turned lower, losing 0.4% and 1.6%, respectively. https://bit.ly/3DLrum6

Samsung reportedly expects Apple to introduce a foldable tablet in 2024.

While companies like Samsung have been increasingly investing in foldable devices, Apple is yet to announce any products in this category. There’s no sign that the Cupertino-based company will announce a foldable phone in the short term, but Samsung reportedly expects Apple to introduce a foldable tablet by 2024. The news comes from The Elec (via BGR), which reportedly heard from sources that Samsung’s mobile division had a meeting with suppliers last month to discuss the smartphone market. Among the discussions, representatives from the South Korean company allegedly said that they expect Apple to announce its first foldable device in two years. Interestingly, at least according to Samsung, Apple’s first foldable device won’t be a phone. Instead, the company believes that Apple will enter this segment with a foldable tablet or laptop. CCS Insight corroborates these rumors. In a report shared last month, the research company claimed that launching a foldable iPhone would be super risky at this point, and that it would make more sense for Apple to experiment with this technology in a new iPad. It’s unclear how much this product would cost, but analysts believe that a foldable Apple device might hit stores with a price tag of US$2,500. https://bit.ly/3UvgWhl

China aims to ship 25 million virtual reality devices by 2026.

China released its first action plan dedicated to virtual reality on Tuesday, with an aim its industry ship more than 25 million devices with a value exceeding 350 billion yuan (US$48.20 billion) by 2026. It was published by five ministries in Beijing, led by the Ministry of Industry and Information Technology, and categorised virtual reality as a key industry for the digital economy under the country’s 14th five-year plan. This first action plan reflects Beijing’s ambition to lead the world in virtual technology and sets detailed goals. It did not specify whether the 25 million devices target referred to annual or accumulative shipments between now and 2026. In the first half of this year, China shipped just over half a million virtual reality and augmented reality devices, research firm IDC said. The plan also includes a target to increase the total value of the industry to more than 350 billion yuan, which the ministries say includes hardware and software sales. It added that China will need to nurture 100 core companies and form 10 public service platforms for the industry by 2026. https://reut.rs/3E2MVA8

FCC commissioner says government should ban TikTok.

The Council on Foreign Investment in the U.S. (CFIUS) should take action to ban TikTok, Brendan Carr, one of five commissioners at the Federal Communications Commission, told Axios in an interview. The FCC has no authority to regulate TikTok directly, but Congress previously acted after Carr voiced concerns about Chinese telecom companies, including Huawei. The New York Times reported in September that a deal was taking shape but not yet in its final form and that Department of Justice official Lisa Monaco was concerned the deal did not provide sufficient insulation from Beijing. A Republican-controlled Congress could try to scrap any deal viewed as too easy on China. Carr highlighted concerns about U.S. data flowing back to China and the risk of a state actor using TikTok to covertly influence political processes in the United States. There simply isn’t “a world in which you could come up with sufficient protection on the data that you could have sufficient confidence that it’s not finding its way back into the hands of the [Chinese Communist Party],” Carr said. Carr sent letters to Apple and Google in June asking the companies to remove the apps from their stores due to concerns about data flowing back to China. https://bit.ly/3hi2JWI

Amazon takes aim at Spotify with music pricing overhaul.

Amazon on Tuesday announced sweeping changes to its Amazon Music catalog and podcast offerings in a move to lure customers away from audio giants like Spotify and Apple Music. Prime subscribers can now access Amazon Music’s full catalog of 100 million songs and podcasts, without advertisements, as part of their membership. Ad-free access to the expanded catalog was previously only available to Amazon Music subscribers. Now, all Prime subscribers will be able to listen to artists, albums and playlists from the catalog without ads on shuffle mode without paying for an additional subscription. The new offering is similar to Spotify’s free tier, but without the unskippable ads. The announcement comes just a week after competitor Apple Music raised subscription prices, and Spotify said it was likely to do the same in 2023. https://bit.ly/3NEDxG0

Twitter is planning to start charging US$20 per month for verification.

Now that he owns Twitter, Elon Musk has given employees their first ultimatum: Meet his deadline to introduce paid verification on Twitter or pack up and leave. The directive is to change Twitter Blue, the company’s optional, US$4.99 a month subscription that unlocks additional features, into a more expensive subscription that also verifies users, according to people familiar with the matter and internal correspondence seen by The Verge. Twitter is currently planning to charge US$19.99 for the new Twitter Blue subscription. Under the current plan, verified users would have 90 days to subscribe or lose their blue checkmark. Employees working on the project were told on Sunday that they need to meet a deadline of November 7th to launch the feature or they will be fired. Musk has been clear in the months leading up to his acquisition that he wanted to revamp how Twitter verifies accounts and handles bots. On Sunday, he tweeted: “The whole verification process is being revamped right now.” https://bit.ly/3DD32TG

Musk team working to reboot Vine this year.

Elon Musk has instructed Twitter engineers to work on a Vine reboot that could be ready by year end, multiple sources tell Axios. Twitter shuttered the looping-video app in 2016 after acquiring it four years earlier, leaving loyal Vine fans dismayed. Twitter engineers already have been assigned to look at Vine’s old code base, which hasn’t been changed or updated since the shutdown. https://bit.ly/3DD31iA

Sony has sold over 25 million PS5s.

In its latest earnings drop, Sony said it sold 3.3 million PlayStation 5s this quarter, matching exactly what it did last year and bringing total units sold since launch to 25 million. Its numbers this quarter are far short of what it needs to hit the 18 million PS5 sales target for fiscal year 2022, though. Sales halfway through the fiscal year (ending March 31st) are now at 5.7 million, which is also nearly the same as 2021 at this point (5.6 million). Sony sold 11.5 million consoles last year, so it’s a good bet that 2022 sales will be about the same . However, a lot depends on holiday sales and whether it can keep production up with demand. That’s a problem that has plagued the PS5 since it arrived, due to the pandemic and other issues. In May, Sony said that it will finally be able to ramp up production to meet PS5 demand as supply chain issues ease. While it hasn’t given any numbers in that regard, anecdotally it appears that the console has been easier to find in recent months. https://engt.co/3FNxZav

Uber app may get worse as company experiments with push notification ads.

Even though we’ve learned to live with advertisements everywhere at this point, I’m quite sure that most of us don’t like them. This time, it seems that Uber wants to make its app worse as the company has been experimenting with push notification ads. TechCrunch notes that the advertisements come after Uber introduced an advertising division last month. The company confirmed that it was working on a new “in-app ad experience,” but sending push notifications to users while they’re not interacting with Uber is clearly not an in-app experience. Of course, users can also turn off all notifications from the Uber app, but this also turns off useful notifications like alerts for when the driver is arriving. https://bit.ly/3E4fa1s

EU could force third-party app stores on Apple after USB-C iPhone mandate.

After the EU passed the Digital Markets Act this past summer, the new legislation has officially gone into effect at the start of November. While we’ve previously heard of the potential consequences, an EU official has reiterated that we could see Apple forced to open up iPhone to third-party app stores and more. The new comments from veteran EU official Gerard de Graaf (via Wired) come just after the European Parliament’s Council of Ministers ratified the vote that will mandate iPhone moves to USB-C before long. While the writing has been on the wall that the Digital Markets Act (DMA) could force Apple to open up iPhone, iPad, and iPod touch to third-party app stores, de Graaf confirmed the intention again. https://bit.ly/3Ut26rP

FTC sues Chegg for exposing sensitive student data.

The Federal Trade Commission filed a complaint on Monday against education technology provider Chegg, which has experienced four data breaches since 2017 (via The New York Times). Now the FTC says that across all the breaches, Chegg’s insufficient cybersecurity practices resulted in exposing data for approximately 40 million users. Chegg has agreed to honor a proposed order from the FTC to improve its data security, which will see the company implement multifactor authentication, provide security training to employees, encrypt user data, and allow customers to access and delete their data from the platform. https://bit.ly/3WBoK2Y

U.S. banks processed roughly US$1.2 billion in ransomware payments in 2021, according to federal report.

U.S. banks and financial institutions processed roughly US$1.2 billion in likely ransomware payments in 2021, a new record and almost triple the amount of the previous year, according to a federal financial crimes watchdog. The total represents payments bank clients have made to possible cybercriminals. U.S. banks report the suspicious transactions to federal authorities under the Bank Secrecy Act. Over half the ransomware attacks are attributed to suspected Russian cyber hackers, according to a new report released Tuesday from the Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, which analyzed the data. The report reflects a sweeping government effort to identify and report ransomware attacks following the hacking of U.S.-based Colonial Pipeline’s IT network in May 2021. Company CEO Joseph Blount Jr. paid Russian-based cybercriminals US$5 million. The Department of Justice later recovered approximately half of the ransom. https://cnb.cx/3WA7Gus

Disney+ subscribers now have early access to Disney merchandise, including Marvel and Star Wars products.

Disney may have just taken a big step towards offering an Amazon Prime-like service. The company announced on Tuesday that Disney+ subscribers in the US now have early access to Disney merchandise available on its online store shopDisney, as part of a limited-time test. US Disney+ subscribers can shop at the store’s website by going directly to it or through a link at the details pages of select movies, TV shows, and shorts on the streaming service (there will be a “shop” tab, as seen below). https://bit.ly/3NRrDsR

Robinhood reports steep drop in users.

Robinhood generated US$361 million in third-quarter revenue, roughly flat versus last year, with a jump in revenue from interest on customer cash offsetting a drop in trading revenue. Overall trading-based revenue dropped 22% from the same period a year earlier, with the biggest declines coming from stock and options trading. Crypto trading revenue was flat versus last year. The trading app also lost active users. Monthly active users for September totaled 12.2 million, a 35% drop from the same month last year. Meanwhile Robinhood’s cost-cutting measures, which included laying off 23% of staff in August after cutting 9% of employees in April, are yielding slightly more savings than initially predicted. The company said it expects full year 2022 operating expenses to decline 31% to 32%, versus the guidance of a 25% to 29% decline it gave when it first announced the August layoffs. https://bit.ly/3sXbBUB

Fidelity launches waitlist for retail crypto trading platform.

Fidelity Investments is gearing up to launch crypto trading for small investors, announcing on Thursday that it had opened up a waitlist for customers. The investing giant’s move, announced the same day crypto exchange Coinbase is due to report third-quarter results, highlights mounting competition for crypto exchanges and brokerages at a time when their trading-based revenue has already been slumping. To be sure, Fidelity users owill be able to trade only two tokens—bitcoin and ethereum—when the crypto platform launches. The firm said trades will be commission free, but Fidelity will take a small portion of each trade by factoring a spread of 1% on each transaction. Fidelity has been notably active in crypto compared to some other big traditional financial firms. It first ventured into crypto in 2014, when it began mining bitcoin. In 2018, the firm launched a trading platform and custodian for digital assets. Just this year, the firm announced it would offer bitcoin exposure through 401(k) plans and has said it plans to hire more than 100 new employees to work on digital assets. Fidelity, Citadel Securities and Charles Schwab have all also backed a new crypto exchange, EDX Markets, that was announced in September. The exchange plans to launch in early 2023. https://bit.ly/3t6cqdu

Meta is testing a way to mint and sell NFTs on Instagram.

Meta has announced that it’s testing minting and selling NFTs on Instagram, like you can with many traditional NFT marketplaces, with a “small group of creators in the US” getting access to the feature first. The company’s also expanding Instagram’s NFT showcase feature, which it recently made available to users in over 100 countries. The announcement comes among news of several new ways for creators to make money on its platforms. Meta says its digital collectibles toolkit will let people create NFTs on the Polygon blockchain (as always, no relation to Polygon the video game news outlet) and then sell them either on Instagram or off the platform. When it comes to displaying NFTs that you’ve purchased elsewhere, the company says you can now show off ones from the Solana blockchain, in addition to the Ethereum, Polygon, and Flow blockchains that the feature already supported. It’s also adding some metadata from OpenSea to the display, similar to what Twitter does for its NFT profile picture feature. https://bit.ly/3fCJreu

iPhone maker Foxconn and Saudi Arabia are going into the EV business.

Saudi Arabia’s sovereign wealth fund has formed a joint venture with Foxconn to build and sell EVs, the latest move by the nation to meet its Vision 2030 goal of reducing its dependence on oil and diversifying its economy. The new company, called Ceer, will design, manufacture and sell a portfolio of EVs using BMW’s component technology, according to Thursday’s announcement. Foxconn, the Taiwanese manufacturing giant that makes Apple’s iPhones, is developing the electrical architecture of the vehicles, which Saudi Arabia says will lead to a “portfolio of products” in the areas of infotainment, connectivity and autonomous driving technologies. The first EVs from the Ceer brand are expected come to market in 2025. The Saudi Public Investment Fund, or PIF, said Ceer is the nation’s first EV brand and will attract more than US$150 million in foreign direct investment, and create up to 30,000 direct and indirect jobs. https://tcrn.ch/3fD1T6I