November 20, 2022: Taking A Bit Of A Breather

After the previous week’s gain, the Dow Jones was up very modestly last week, S&P fell 0.7%, and the Nasdaq was down 0.7%. Global venture funding plateaued in October, with valuations likely to blame. Masayoshi Son owes US$4.7 billion to SoftBank following tech rout. Ant’s consumer-lending unit to raise US$1.5 billion in scaled-down capital plan. BYD Co Ltd said on Tuesday it had scrapped plans to list its semiconductor unit in China, saying a move to increase investments in wafer production would significantly affect the unit’s asset structure. Shares of Alibaba inched about 1% higher in premarket action Thursday after the company topped adjusted earnings expectations for the latest quarter and said it was upsizing its buyback program. Taiwan Semi stock surges toward best day since 2008 after Buffett’s Berkshire reveals stake. Micron stock falls as chip maker cuts supply forecast, citing market conditions. Shares of Coinbase slipped 6% Thursday as the fallout from FTX’s collapse continues to hit the broader cryptocurrency market. Microsoft and Nvidia announced plans to work together to build a cloud-based supercomputer capable of training large-scale language models like OpenAI’s DALL-E 2, which translates text to images, and GPT-3, which can generate realistic-sounding news articles. Apple plans a 3D world and video service for its mixed-reality headset. Nike Inc. is opening an online store and trading platform for virtual sneakers as management pumps investment into the metaverse. Twitter may be in big trouble when it comes to generating advertising revenue: GroupM, part of WPP, the world’s biggest ad company — and Twitter’s biggest spender — is reportedly telling its clients that buying ads on the platform is “high-risk”. Epic says more than half of all announced next-gen games are made on Unreal Engine. Federal Bureau of Investigation Director Chris Wray told lawmakers during a hearing that the FBI has national security concerns about TikTok, the popular video app owned by Chinese internet giant ByteDance. Democratic senators urge FTC to investigate Twitter.

Martello (MTLO-TSXV) announces US$2 million private placement resulting in the creation of a control person.

The Company announced a non-brokered private placement of common shares in the capital of the Company (“Common Shares”) for aggregate gross proceeds of approximately US$2,000,000 (the “Private Placement”) as a result of which, Wesley Clover International Corporation (“Wesley Clover”), a corporation controlled by Terence Matthews, will become a Control Person of the Company (as such term is defined in the policies of the TSX Venture Exchange (the “TSXV”). Pursuant to the Private Placement, the Company intends to issue 54,000,000 Common Shares at a price of $0.05 per Common Share, representing a premium of 67% on the trading price of the Common Shares on the TSXV at closing on November 15, 2022.  The Private Placement is expected to close on or about January 24, 2023. https://tinyurl.com/4ce9mpz7

Attabotics secures $95 million from EDC, Ontario Teachers’ to scale its warehouse robots.

Over the past six and a half years, Calgary-based 3D robotics supply chain firm Attabotics has focused its efforts on turning what began as a blank sheet of paper into a commercialized warehouse automation system for retailers. With its tech finally ready and $95 million (US$71.7 million) in fresh “Series C-1” funding, Attabotics founder and CEO Scott Gravelle said the startup is prepared to start scaling. Attabotics’ all-equity, all-primary financing was led by new investor Export Development Canada (EDC), with support from Ontario Teachers’ Pension Plan Board through Teachers’ Venture Growth. The pension fund previously led the Calgary startup’s $66 million mid-2020 Series C round. This latest capital brings Attabotics’ total funding to around $220 million (US$165 million). Founded in 2015, Attabotics describes itself as “the world’s first 3D robotics supply chain system for modern commerce.” The startup claims its ant colony-inspired automated fulfillment solution can increase the flexibility and speed of warehouse processes while also reducing warehouse needs by up to 85 percent, enabling retailers to place robot-run fulfillment centres closer to urban areas and facilitate faster deliveries. http://bit.ly/3OkoWQo

Symend closes $54 million to pursue global expansion amid uncertain economic environment.

Following 20 months of “laser focus” on research and development, Calgary-based software startup Symend is ready to scale its behavioural engagement platform. Armed with over $54 million (nearly US$41 million) in growth capital led by return investor Inovia, Symend has shed staff and shifted its focus to scaling efficiently. The startup is now focused on both its existing customer base and international expansion, as well as moving into new verticals, amid an uncertain market that features both economic headwinds and tailwinds. During different venture capital market conditions, Symend raised $127 million in Series B funding, including an initial $73 million in May 2020 followed by a $54 million extension in February 2021. Both rounds were led by Inovia, which has been a big investor in Symend for some time, investing in the startup’s Series A, Series B, Series B extension, and this round. The all-equity, all-primary capital round also included return investors Impression Ventures, Mistral Venture Partners, BDC’s Growth Venture Co-Investment Fund, and BDC Capital’s Women in Technology Fund. Plaza Ventures and Export Development Canada also invested in Symend for the first time as part of the financing. The latest round brings the startup’s total funding to around $187 million. http://bit.ly/3XbP0RY

BoostSecurity emerges from stealth with $12 million to automate cybersecurity for DevOps.

Montréal startup BoostSecurity, which provides a cybersecurity platform for the software supply chain, has emerged from stealth with $12 million in seed funding. The all-equity round was led by Sorenson Capital, with additional support from Hoxton Ventures, Golden Ventures, Firebolt Ventures and Transform VC. Sorenson Capital will be joining BoostSecurity’s board. BoostSecurity’s aim is to help its users implement better security practices for their existing software supply chains. Co-founded by Zaid Al Hamami (CEO) and Rajiv Sinha (CRO), BoostSecurity wants to bring the automation that hyperscale companies have developed internally to all. According to the company, its platform directly addresses the weaknesses in the software chain in addition to the third-party components. The software supply chain has been a target for major attacks in recent years, including SolarWinds’ hack, which has been labeled as one of the biggest cybersecurity breaches of the 21st century. BoostSecurity’s aim is to help its users implement better security practices for their existing supply chains by injecting the right security technologies at the various layers in the technology stack. http://bit.ly/3GpYm6A

Cyclica receives $2.4 million grant from Bill & Melinda Gates Foundation.

Cyclica has received a $2.4 million (US$1.79 million) grant from the Bill & Melinda Gates Foundation to discover new contraceptive options. The Toronto-based biotech startup is developing new, non-hormonal contraceptives, and said the grant enables it to apply its artificial intelligence-enabled drug discovery platform to the problem. The goal is to create new non-hormonal contraceptives that can be used on a global scale, but with an eye towards developing countries. The grant comes as part of the latest round of financing from the Bill & Melinda Gates Foundation. Other Canadian organizations that recently received grants include InSilico Medicine Canada, Nutrition International, Global Canada Initiative, and Save the Children Canada. The startup’s business model also includes the creation Cyclica focuses on three therapeutic areas: cancer, diseases of the central nervous system, and auto-immune diseases. To date, the startup has secured around $30 million in venture and grant financing, with its most recent round in 2020 being a $23 million Series B led by Drive Capital in mid-2020. The Gates’ investment groups also include Breakthrough Energy, which backs sustainable energy solutions. http://bit.ly/3GpGkBp

Global venture funding plateaued in October, with valuations likely to blame.

After a particularly slow summer, the mood in venture capital seemed to change with the season come Labor Day. By the end of September, it felt that maybe the worst had already come in terms of this year’s falling venture funding numbers. Investment volume had stopped declining and was starting to make up ground. Investors said that anecdotally it felt like the market was really starting to gain momentum again — especially at the early stages. But October funding data showed that the venture capital market still has a long way to go. http://bit.ly/3TPV9R1

Masayoshi Son owes US$4.7 billion to SoftBank following tech rout.

Masayoshi Son personally owes SoftBank close to US$5 billion because of growing losses on the Japanese conglomerate’s technology bets, which have also rendered the value of his stake in the group’s second Vision Fund worthless. The billionaire’s ballooning personal liabilities, discovered through a Financial Times analysis of SoftBank’s recent filings, comes as the world’s biggest tech investor was hammered by plunging tech stocks and valuations in private companies over the past year. The widening losses in SoftBank’s various investment vehicles have also added billions of dollars to the tab that Son owes the group in relation to its technology bets. This is because SoftBank fronted him the money to invest in its technology-related funds, which he is under no obligation to repay for many years. The value of Son’s 17.25 per cent stake in SoftBank’s US$56 billion second Vision Fund was also wiped out entirely by the end of September, having been valued at US$682 million during the previous quarter. His stake in the investment vehicle climbed as high as US$2.8 bilion at the end of 2021, when heady valuations for start-ups enabled SoftBank to sell shares in public listings of portfolio companies such as WeWork and AutoStore. https://tinyurl.com/yckr9fvv

Ant’s consumer-lending unit to raise US$1.5 billion in scaled-down capital plan.

The consumer-finance arm of China’s Ant Group Co. is planning to raise the equivalent of US$1.5 billion in new capital, scaling back its fundraising ambitions after a large state-backed investor backed out of a previous plan. Chongqing Ant Consumer Finance Co., a company that the financial-technology giant set up in mid-2021 to house its personal-lending business, is planning to increase its registered capital to 18.5 billion yuan, equivalent to US$2.6 billion, from 8 billion yuan, according to regulatory filings from some of the companies taking part in the capital raise. Last December, the Ant unit had said it planned to raise more than US$3 billion to help it make loans, with a large chunk of that money coming from China Cinda Asset Management Co., a state-owned financial institution. Not long after, Cinda decided against participating in the capital raise, forcing Ant to go back to the drawing board. Yufu Capital, an investment firm owned by the Chongqing local government, also backed out of the plan. Ant, controlled by billionaire Jack Ma, owns 50% of its consumer-lending arm, and is pumping in the equivalent of US$739 million in the latest raise. The other investors taking part include a unit of Hong Kong-listed electronics-parts manufacturer Sunny Optical Technology (Group) Co., and Guangzhou Boguan Telecommunication Technology Co., a company controlled by Chinese internet-technology company NetEase, Inc. Two state-owned firms from Hangzhou and Chongqing are also buying shares of the Ant unit. https://tinyurl.com/256cpxnj

China’s BYD scraps IPO plan for semiconductor unit.  

BYD Co Ltd said on Tuesday it had scrapped plans to list its semiconductor unit in China, saying a move to increase investments in wafer production would significantly affect the unit’s asset structure. “BYD Semiconductor intends to seize the time window to make large-scale investment in wafer production capacity,” BYD said in a filing to the Shenzhen stock exchange, adding current wafer supplies were far from enough to meet demand amid rapid growth in electric vehicle manufacturing. Scrapping the planned initial public offering (IPO) will not have a material adverse impact on the company’s existing operations or the future development strategies of the group, the automaker added. According to the IPO prospectus, the chip unit aimed to raise 2 billion yuan (US$281 million) to fund projects and replenish capital on the Nasdaq-like ChiNext Board of the Shenzhen Stock Exchange. The IPO plan was first halted by the exchange in August 2021, as a firm advising on the IPO process faced a regulatory probe. https://tinyurl.com/5n6cchpw

U.K. government blocks Chinese takeover of chip manufacturer.

The U.K. has ordered a Chinese-owned company to undo its takeover of a British chip manufacturer due to national security concerns. The U.K. government has ordered Nexperia, a Dutch subsidiary of a Chinese firm called Wingtech Technology, to sell at least 86% of its stake in Newport Wafer Fab, the U.K.‘s largest chip manufacturer. In July 2021, Nexperia, which was already a minority shareholder in Newport, acquired an additional 86% of the U.K. firm to own 100%. The U.K. has been stepping up its scrutiny of China’s attempts to acquire overseas chip businesses, in a move that aligns with Washington’s initiatives. Earlier this year, the U.K. government blocked a China-backed company’s attempt to acquire a U.K. chip design software company citing national security risks. https://tinyurl.com/yc8krx6s

PTC to acquire ServiceMax to bolster field Service Management.

PTC, a software developer focused on the digital side of product lifecycle management, Thursday said it has acquired ServiceMax, a developer of cloud-native field service management software, in a cash deal worth about US$1.46 billion. PTC’s proposed acquisition of ServiceMax, which in 2019 was sold by its parent company General Electric to private equity firm SilverLake, is subject to regulatory approval, and is slated to close in early January 2023. ServiceMax is PTC’s second acquisition this the year, following its May purchase of Intland, developer of the Codebeamer application life-cycle management (ALM) cloud-ready software product suite. https://tinyurl.com/5aphy4ws

Alibaba stock heads higher after earnings as profit tops expectations.

Shares of Alibaba Group Holding Ltd. inched about 1% higher in premarket action Thursday after the company topped adjusted earnings expectations for the latest quarter and said it was upsizing its buyback program. The Chinese e-commerce company reported a September-quarter net loss of RMB22.5 billion (US$3.2 billion), or RMB7.77 per American depositary share, whereas Alibaba posted net income of RMB3.4 billion, or RMB1.97 per ADS, in the year-before quarter. Alibaba said that the change reflected a “decrease in market prices of our equity investments in publicly-traded companies” that was partially offset by a rise in adjusted earnings before interest, taxes, and amortization. After excluding stock-based compensation and certain other items, Alibaba earned RMB12.92 per ADS, up from RMB11.20 per ADS in the year-earlier period, while analysts tracked by FactSet were anticipating RMB11.98 per ADS. Revenue increased to RMB207.2 billion from RMB200.7 billion, while the FactSet consensus was for RMB208.4 billion. “The uncertainties of the global landscape have only reinforced our resolve to focus on building capacity that will yield sustainable, high-quality growth for our customers and our own business over the long term,” Chief Executive Daniel Zhang said in a release. He called the latest results “solid” in the face of “ongoing macro environment challenges.” Chief Financial Officer Toby Xu noted in the release that Alibaba was upsizing its stock-buyback program by US$15 billion and extending it to the end of fiscal 2025.  http://bit.ly/3X5Wc25

Taiwan Semi stock surges toward best day since 2008 after Buffett’s Berkshire reveals stake.

U.S.-listed shares of Taiwan Semiconductor Manufacturing Co. Ltd. were headed for their best single-day performance since 2008 after Warren Buffett’s Berkshire Hathaway revealed a new position in the Taiwanese chip manufacturer. Shares were up 12.9% in Tuesday morning trading and on track for their largest single-day percentage gain since Oct. 28, 2008, when they rose 21.1%. Berkshire’s position amounted to just over 60 million American depositary shares of TSMC as of the third quarter. Jordan Klein, a Mizuho desk-based analyst associated with Mizuho’s sales team and not its research arm, wrote Tuesday that the investment was Buffett’s first in semiconductors over the course of his career “so it does matter” and TSMC is “as high quality as it gets.” That said, he wrote that 2023 Wall Street estimates for TSMC “still look too high” in his view, while “China invasion risk is not zero.” Other chip stocks were rising as well Tuesday, with Intel Corp. shares up more than 3%, Advanced Micro Devices Inc. shares up more than 4%, and Nvidia Corp. shares up more than 2%, though Buffett didn’t reveal stakes in those names as of Berkshire’s third-quarter 13-F filing. http://bit.ly/3OfthEI

Micron stock falls as chip maker cuts supply forecast, citing market conditions.

Micron Technology Inc.’s stock fell 3% before opening bell Wednesday after the chip maker cut its 2023 supply forecast, citing market conditions. The company announced that it is reducing DRAM and NAND wafer starts by approximately 20% compared with the fiscal fourth quarter of 2022. In a statement, the company said the reductions will be made across all technology nodes where Micron has meaningful output. Micron is also working toward additional cuts in its capital expenditure, it said, and now expects calendar 2023 year-on-year bit supply growth to be negative for DRAM, and in the single-digit percentage range for NAND. “Micron is taking bold and aggressive steps to reduce bit supply growth to limit the size of our inventory,” said Chief Executive Sanjay Mehrotra, in the statement. “We will continue to monitor industry conditions and make further adjustments as needed.” Micron’s stock has fallen 32.3% in 2022, compared with the S&P 500 Index’s decline of 16.3% and the PHLX Semiconductor Index’s 28.8% decline.  http://bit.ly/3tCmlIc

Coinbase stock price falls as FTX chaos spreads further into crypto.

Shares of Coinbase slipped 6% Thursday as the fallout from FTX’s collapse continues to hit the broader cryptocurrency market. The decline comes despite the lack of direct risks from FTX. On Friday, Goldman Sachs said Coinbase was sufficiently insulated from the FTX crash and had a highly liquid balance sheet. But analysts still cut its price target to $41 from $49 and maintained its “sell” rating, per CoinDesk. And in a tweet last week, CEO Brian Armstrong said Coinbase doesn’t have any material exposure to FTX. But cash flow remains an issue. After slashing 18% of its workforce already this year, the crypto exchange moved toward another round of layoffs to reduce costs. And S&P Global Market Intelligence has estimated that Coinbase burned through US$278 million in cash last quarter, despite saving US$391 million in cash outlays by paying employees with stock. Coinbase stock has fallen roughly 80% year to date. Its market capitalization has cratered to US$11 billion after it enjoyed an IPO that valued the firm at US$85 billion in April 2021. http://bit.ly/3tIdtAJ

Bird may not have enough funds to continue shared micromobility business.

Just hours after Bird said it had overstated revenue for more than two years by recognizing unpaid customer rides, Bird dropped a growing concern warning. In a regulatory filing, the company said it might “need to scale back or discontinue certain or all of its operations in order to reduce costs or seek bankruptcy protection.” Bird closed out the third quarter with US$38.5 million in free cash flow. Without additional funding, the company said it would be unable to meet its obligations over the next year. Bird points to “factors beyond its control” like current market volatility that could impact if and how Bird receives further equity or debt financing. Since May, Bird has dismantled its retail business, laid off 23% of staff, received a warning from the New York Stock Exchange for trading too low and exited Germany, Sweden, Norway and “several dozen” markets in the U.S. Bird isn’t the only SPAC this year to issue a growing concern warning. Canoo and Arrival both also said they may not have enough funds to get their EVs to market, and Arrival also recently got a delisting warning from the Nasdaq. Bird’s stock tanked nearly 16% today and is currently trading at $0.36. http://bit.ly/3UMqyVz

Binance to relaunch bid to buy bankrupt Voyager Digital – Coindesk.

Crypto exchange Binance’s U.S. unit is relaunching its bid to buy bankrupt lending platform Voyager Digital, Coindesk reported on Thursday, citing a person familiar with the matter. The report comes days after crypto exchange FTX, which was set to acquire Voyager’s assets after signing a deal in September, filed for bankruptcy following a liquidity crunch. Voyager ended the deal with FTX this week and said it was in active discussions with several alternate bidders. The lender had filed for bankruptcy in July, months after the crash of major crypto tokens TerraUSD and Luna that sent shockwaves across the digital asset industry and led to the collapse of hedge fund Three Arrows Capital, to which Voyager was exposed. https://tinyurl.com/28d9d88p

Activist investor TCI calls on Alphabet to cut costs.

In a letter Tuesday, TCI’s Christopher Hohn urged Alphabet CEO Sundar Pichai to aggressively reduce expenses, including trimming headcount and cracking down on losses in its speculative Other Bets category. The investment firm said it had amassed a US$6 billion stake in Google’s parent company. The letter comes as Alphabet’s workforce has ballooned in the last few years to nearly 200,000 people, which Hohn called excessive. “Our conversations with former executives of Alphabet suggest that the business could be operated more effectively with significantly fewer employees,” he wrote. Unlike other tech companies, Google has yet to pursue a mass layoff. TCI is the latest activist investor to call for more discipline at Silicon Valley companies after Altimeter Capital sent a letter to Meta in late October urging the company to cut costs. Meta laid off more than 11,000 employees two weeks later. https://tinyurl.com/u4akbfcn

Microsoft, Nvidia to build cloud supercomputer for large AI models.

Microsoft and Nvidia announced plans to work together to build a cloud-based supercomputer capable of training large-scale language models like OpenAI’s DALL-E 2, which translates text to images, and GPT-3, which can generate realistic-sounding news articles. The agreement, which is similar to one that Oracle announced with Nvidia last month, will see Microsoft’s Azure cloud adopt tens of thousands of Nvidia’s graphics processing chips, as well as its networking chips and artificial intelligence software. It shows how Nvidia’s $7 billion acquisition of networking chip maker Mellanox in 2020 helped pave the way for more comprehensive deals with cloud providers. For Microsoft, which is already providing cloud services to OpenAI, the Nvidia deal further illustrates its goal of attracting more large-scale data science and AI projects to its Azure cloud. While Microsoft still trails Amazon Web Services in the cloud market, staking a claim in the emerging market for cloud-based AI services could help alter the balance of power down the road. https://tinyurl.com/j4s6x4p7

Apple plans a 3D world and video service for its mixed-reality headset.

Apple Inc.’s next major product—a mixed-reality headset that it hopes will vault the company into a new era of computing—isn’t set to arrive until next year. But job listings and personnel changes at the company give a preview of some of the device’s capabilities. Here’s what we already knew: The headset itself is likely to be priced between US$2,000 and US$3,000 because it’s a high-end product that will pack a Mac-level M2 chip, more than 10 cameras placed outside and inside the device, and the highest-resolution displays ever featured in a mass-market headset. We also know that the device will run a new operating system dubbed realityOS, which will include mixed-reality versions of core Apple apps like Messages, FaceTime and Maps. The first version of the operating system, codenamed Oak, is wrapping up internally and should be ready for the new hardware next year. Another key detail is the potential name, as it affirms the high-end nature of the headset. I reported in August that Apple is behind the trademark filings for “Reality Pro” and “Reality One,” suggesting that the company is deciding between those two brands for the device. The “Reality” moniker makes sense given the operating system name and existing Apple AR development tools like RealityKit. A few job listings indicate that Apple is ramping up its work to bolster the device with content. The company is searching for a software producer with experience in visual effects and game asset pipelines who can create digital content for augmented- and virtual-reality environments. The listings also imply that Apple is looking to build a video service for the headset featuring 3D content that can be played in virtual reality. This would follow the company’s 2020 acquisition of NextVR, which partnered with artists and professional sports leagues to transmit VR content to headsets. https://tinyurl.com/35n6yxuf

Apple finalizing mixed-reality headset software ahead of launch.

Apple’s mixed-reality headset has been rumored for years, and it could finally see the light of day sometime in 2023. A new report from Bloomberg points out that Apple is continuing to ramp up hiring for teams working on AR and VR technology, including new hires and recruiting a former Apple engineer who had departed the company last year… While Apple has drastically cut down on hiring amid broader economic uncertainty, the company is still on the lookout for people to join the teams working on the mixed-reality headset and other AR/VR technologies. Apple continues to make changes to the team working on the headset, which is Apple’s “Technology Development Group,” commonly referred to as TDG. Apple’s job listings also emphasize that the company wants to bring third-party apps to its mixed-reality headset. The company is looking for engineers to “work on the App Intents framework to help design and implement solutions” for things like Shortcuts, Search, Siri, and more. Perhaps most notably, one job listing for the Technology Development Group targets engineers to work on building “tools and frameworks to enable connected experiences in a 3D mixed-reality world,” a virtual environment that is similar to the metaverse. http://bit.ly/3V1flj

Amazon launches virtual care clinic for common ailments.

Amazon’s new Amazon Clinic provides virtual care to patients in 32 states. In conjunction with Amazon Pharmacy and One Medical, the clinic will offer a message-based service to those seeking treatment for more than 20 everyday medical issues, Amazon announced Tuesday. Those interested will need to visit the Amazon Clinic site, select their ailment and fill out an intake form, and Amazon will connect them with a US-licensed telehealth clinician. The service doesn’t take insurance, but is FSA- and HSA-eligible. Prices for a session with a doctor will be shown, and Amazon says it’s on par with the average copay for a doctor’s visit. Patients then receive a treatment plan and a follow-up with the clinician for up to 14 days, at no extra cost. Amazon hopes to expand to additional states within the next couple of months. https://tinyurl.com/4bd3jbed

Cruise has expanded its driverless robotaxi service to daytime hours.

Cruise is expanding its driverless ride-hailing service in San Francisco to daytime hours, Cruise CEO Kyle Vogt tweeted Wednesday. The robotaxi service is now available to employees 24 hours a day. Eventually, these expanded operating hours will be available to the public. The bolstered hours are the latest expansion of the GM subsidiary’s driverless operations in San Francisco. Cruise opened its driverless robotaxi service, in which there is not a human safety operator, to the public in early 2022. public customers can hail (and are charged for) driverless rides between 10 p.m. and 5 a.m. About 70 Cruise AVs are operating in the service. Cruise has about 300 AVs across its operations in San Francisco, Austin and Phoenix. Fares include a base fee of US$5 and a US$0.90 per mile and US$0.40 per-minute rate. A 1.5% city tax is also included in the price. An estimated fare is calculated using the estimated time and distance of the fastest, most optimal route. Cruise shares that estimate fare with customers and will charge that amount if the time or distance of the actual ride takes longer. Cruise doesn’t have surge pricing. http://bit.ly/3GnCloX

Buying ads on Twitter is ‘high-risk’ according to the world’s biggest ad agency.

Twitter may be in big trouble when it comes to generating advertising revenue: GroupM, part of WPP, the world’s biggest ad company — and Twitter’s biggest spender — is reportedly telling its clients that buying ads on the platform is “high-risk,” according to Platformer and Digiday. That makes it the third advertising juggernaut telling massive corporations that they might want to take their money elsewhere, after IPG and Omnicom Media Group both recommended pausing advertisements on the platform. GroupM works with companies like Google, L’Oréal, Bayer, Nestle, Unilever, Coke, and Mars. If you’ve ever seen that graphic about how a few brands make pretty much everything you buy at the grocery store, you’ll notice a lot of Venn diagram overlap with GroupM’s list of clients. GroupM is reportedly concerned about several specific things following Elon Musk’s takeover of Twitter. http://bit.ly/3tHy2NH

Epic says more than half of all announced next-gen games are made on Unreal Engine.

Over half of all announced games for next-gen game consoles are being developed using Epic Games’ Unreal Engine suite of developer tools, Epic VP of engineering Nick Penwarden said in an interview with The Verge. While that’s a small improvement from the previous 48 percent figure CEO Tim Sweeney shared in April at the launch of Unreal Engine 5, both numbers demonstrate the growing popularity of Unreal Engine for developing PS5 and Xbox Series X / S games. And it’s perhaps not too surprising that the number is trending up given that both the PS5 and Xbox Series X / S are now two years old and much easier to buy. http://bit.ly/3tECw7Q

EU Parliament passes vote to recognise and fund esports, video games in Europe.

The European Parliament has passed a resolution recognising the value of the esports and video game industries, recommending a long-term strategy to support and fund the sectors. The European Parliament resolution recognises the value that esports, and the video game industry more broadly, offers economically and culturally in Europe. It endorses the development of a long-term European video game strategy that takes into account esports and builds on existing national strategies. The resolution itself is not binding, but a representative for the European Commission — the EU’s executive body — expressed their intention to take action during the parliamentary session. EU legislators will now decide what, and how, to implement the Parliament’s resolution, which will then form the EU’s strategy on esports and gaming going forward. While free to decide how it’s implemented, legislators tend to follow the proposals put forward by Parliament. The successful passage of the resolution is a major win for the European esports and gaming industries — both in terms of legitimacy, and financially. Companies will likely have access to EU funding and support once a strategy is devised. https://tinyurl.com/bdfwtmkj

Warcraft and Overwatch to end in China after NetEase and Blizzard fail to renew contract.

Chinese online gaming company NetEase and developer Blizzard took a major hit after they failed to renew their 14-year contract. Blizzard is the developer of popular video games Warcraft and Overwatch. The loss could also impact Microsoft, which is trying to buy the owner of Blizzard, Activision Blizzard. The Chinese gaming market remains one of the most important in the world, despite a government crackdown that has sharply curtailed the amount of time that children can play games, resulting in a decline for online gaming revenues. Bloomberg said that the two sides couldn’t agree on financial terms as well as ownership of the intellectual property and control of the data of the players in China. https://tinyurl.com/3zchh3hw

FBI Director says TikTok poses national security concerns.

Federal Bureau of Investigation Director Chris Wray told lawmakers during a hearing that the FBI has national security concerns about TikTok, the popular video app owned by Chinese internet giant ByteDance. “Under Chinese law, Chinese companies are required to essentially—and I’m going to shorthand here—basically do whatever the Chinese government wants them to, in terms of sharing information or serving as a tool of the Chinese government. So that’s plenty of reason by itself to be extremely concerned,” Wray said in response to questions about TikTok’s threat during Tuesday’s hearing, which covered a wide range of topics including terrorism, border control and cybersecurity. Wray said the FBI’s concerns include the possibility that the Chinese government could use TikTok to control data collection on millions of users or control the recommendation algorithm which could be used for influence operations. The FBI director’s comments come as the video app faces intense scrutiny by the U.S. government. TikTok, which has long been going through a national security review by the Committee on Foreign Investment in the United States, said in July that it was routing all U.S. user traffic to servers run by Oracle. https://tinyurl.com/4yvta54m

Democratic senators urge FTC to investigate Twitter.

A group of seven Democratic senators, including Dianne Feinstein of California and Richard Blumenthal of Connecticut, on Thursday called for the Federal Trade Commission to conduct “vigorous oversight and enforcement” of Twitter Inc.’s consent decree and to investigate potential violations of consumer protection laws. “We are concerned that the actions taken by (Tesla Inc. Chief Executive Elon) Musk and others in Twitter management could already represent a violation of the FTC’s consent decree,” they wrote in a letter to FTC Chair Lina Khan. The FTC and Twitter were not immediately available for comment. https://tinyurl.com/36htcu5s

OnlyFans to offer shopping features as it competes for influencers.

Content creators on OnlyFans will be able to sell merchandise directly to their viewers, as the platform becomes the latest social network to jump into ecommerce amid fierce competition for influencers. The company, which allows a range of creators to sell content directly to fans, announced a partnership with ecommerce platform Spring, enabling users to link their pages to an online store to sell personalised merchandise. Tech groups including Facebook parent company Meta, YouTube and TikTok have expanded into the so-called social commerce market over the past few years, where consumers purchase products on social networks, as a way to drive additional revenues and enable influencers to monetise their following. OnlyFans counts 220 million overall users, with more than 3mn of them creating content in 2022. In September, the British company reported revenues for 2021 of US$932 million, with pre-tax profits of US$433 million. OnlyFans has announced other tools for creators to manage their business, including a statistics page, which offers creators a detailed breakdown of their viewers and engagement statistics. https://tinyurl.com/43xpbjbx

Nike to open .Swoosh, a virtual sneaker store and trading platform.

Nike Inc. is opening an online store and trading platform for virtual sneakers as management pumps investment into the metaverse. The world’s largest sportswear company will release its own goods on the .Swoosh platform, and users will be able to collect and show off their items on it. The digital products will include various types of tie-ins and some may unlock access to physical items, make them available in video games or provide entry to real-life events. Registration opens Nov. 18. http://bit.ly/3X8UA7P

Square adds business credit card.

Square is launching a business credit card in partnership with American Express, putting it head to head with small-business fintechs as well as other payments giants that have been beefing up financial products for their customers. It’s the first time Square, a division of payments company Block, has offered credit cards to businesses that use its point-of-sale hardware and software. Square started offering loans in 2014, and its other offerings include a debit card and checking and savings accounts. Square also established its own industrial bank, Square Financial Services, in March 2021 to further expand its Square Capital lending. The Amex card will be issued by Celtic Bank. The lines between card startups and payments players have been blurring as both sides look to claim territory in how small businesses manage their money. Fintechs like Ramp, which was last valued at $8.1 billion in March 2022, have expanded from corporate cards to other financial automation and expense management tools. Other fintechs like Brex are more focused on larger startups and enterprise clients, and payments processor Stripe launched an invite-only corporate card for its clients in 2019. Beyond cards, lending has become a hot corner of e-commerce. Marketplaces like Shopify and payment processors like PayPal and Stripe offer merchants loans based on their sales history and other data to help them grow their businesses—which in turn can help these platforms boost their transaction volumes. https://tinyurl.com/2s3rwkc9

Genesis halting withdrawals in crypto lending arm.

Crypto lender Genesis is suspending withdrawals and new loans within its lending unit following the bankruptcy of of crypto exchange FTX, the company announced on Wednesday. “FTX has created unprecedented market turmoil, resulting in abnormal withdrawal requests which have exceeded our current liquidity,” Genesis tweeted on Wednesday. “We have hired the best advisors in the industry to explore all possible options.” The lending company received a US$140 million equity infusion from its parent company, crypto investment firm Digital Currency Group, last week, The Block reported. It also announced last week that it had roughly $175 million locked in an FTX trading account. “We have no loans outstanding to Alameda Research. We have no ongoing lending relationship with Alameda,” a Genesis spokesperson said. They added that Genesis’ “spot and derivatives trading and custody businesses remain fully operational.” Following Genesis’ announcement, Gemini announced that customer withdrawals in its Earn program, which offers Gemini customers interest on crypto deposits through a partnership with Gemini, will be delayed due to Genesis halting withdrawals. https://tinyurl.com/3ene433r

Global banks, NY fed to launch pilot amid FTX crash.

Some of the biggest players in the financial industry are launching a digital dollar pilot program while the crypto sector reels from FTX’s collapse. About a dozen global giants, including Citigroup, HSBC, Mastercard and Wells Fargo, announced plans on Tuesday to test use of a digital token for 12 weeks in conjunction with the Federal Reserve Bank of New York, with the intention of examining how effective a digital currency is in speeding up payments. Other firms also listed by the New York Fed include BNY Mellon, PNC Bank, Truist Financial, US Bancorp and TD Bank. All of the firms will participate in the project and use simulated data in a test environment. Banks will issue tokens which will be processed through a simulated central bank. The project will initially focus on simulating digital dollars issued by institutions, but it could expand to include to multicurrency operations and stablecoins. The test run follows the latest blow to the crypto sector, which was rocked last week by FTX’s liquidity crisis and bankruptcy filing. And earlier this year, cryptos crashed after TerraUSD lost its peg to the US dollar, causing other stablecoins to “break the buck,” including Tether, the world’s largest stablecoin. http://bit.ly/3UQbLcr

Apple set to move some Apple Silicon production to the US.

Apple is set to move a key aspect of iPhone production to the United States, according to a new report from Bloomberg. Apple will reportedly begin sourcing at least some of its Apple Silicon processors from an upcoming TSMC factory currently being built in Arizona. Tim Cook revealed these plans during a meeting with Apple engineers and retail employees in Germany, which occurred during his recent trek across Europe. The Apple CEO explained that it will start buying chips from the plant in Arizona sometime around 2024. Some production could also happen in Europe as more factories take shape there. While Cook didn’t get any more specific, he is likely referring to a factory being built by Taiwan Semiconductor Manufacturing Company in Arizona. TSMC is the exclusive supplier of the Apple Silicon processors Apple uses in all of its products, including the flagship A-series processors as well as the M-series chips used in the Mac. http://bit.ly/3tETeUu