As H1 2023 came to an end this Friday, S&P 500 index hit a 14-month high, Dow Jones and Nasdaq are back near 2023 highs. Apple is at a US$3 trillion market cap, for the first time. CNBC highlighted that tech stocks closed out best first half in 40 years. Even more stunning, it happened while the U.S. economy is still at risk of slipping into recession, reckoning with a banking crisis, and the Federal Reserve steadily increased its benchmark interest rate to the highest since 2007. While global economic concerns persist, highlighted by uncertainty surrounding the war in Russia and Ukraine and ongoing trade tensions with China, the NASDAQ could likely be in for some near term volatility, or see improved market breadth – we prefer the second option. That said, a sign of skepticism is the absence of a tech IPO market. There hasn’t been a notable venture capital-backed tech IPO in the U.S. since late 2021, and investors and bankers tell CNBC that the second half of the year is poised to remain quiet. M&A remains robust, with five notable transactions in the US just last week. Visa will acquire Brazilian fintech Pismo for US$1 billion. IBM will buy Apptio from Vista Equity Partners for US$4.6 billion. Databricks will acquire generative AI startup MosaicML for US$1.3 billion. Nvidia quietly acquired OmniML, an artificial intelligence startup that helps machine-learning models run on devices, rather than in the cloud. Defense technology company Anduril Industries has acquired Adranos, a startup that manufactures solid rocket motors for in-space and terrestrial applications. SpaceX is planning a sale of insider shares that would raise the company’s valuation to about US$150 billion, a rise from the company’s US$137 billion valuation reported in January. Fidelity Investments valued its stakes in Discord and Reddit slightly lower than it had previously. Shein, the Chinese online fashion retailer worth more than US$60 billion, has registered with regulators for an initial public offering in New York.
Canadian Technology Capital Markets & Company News
Sophic Client LuckBox (LUCK-TSXV, LUKEF-OTC) announces Private Placement of Units for gross proceeds of up to $2,400,000 and May 2023 Metrics.
The Company intends to complete a non-brokered private placement of up to 60,000,000 units of the Company, at a price of $0.04 per Unit, for gross proceeds of up to $2,400,00. Each Unit will consist of one common share and one Common Share purchase warrant of the Company. Each Warrant will be exercisable to acquire one Common Share for a period of 36 months following the closing date of the Offering at an exercise price of $0.08 per Common Share. During May 2023, the Company reported record player metrics, with average player stakes now exceeding $1,000 per active player for the first time in its history. Average Revenue Per User (“ARPU”) also grew significantly with an 87% uplift versus the Company’s April 2023 ARPU. As a result, May’s performance exceeded management expectations on key metrics, including Gross Gaming Revenue, which increased 8% compared to April. Global Betting Handle in May was up 6% month-over-month (in EUR base currency) to $4.9 million, with $18.9 million now staked across the platform in the five months year to date. Luckbox has continued with data driven traffic source optimization, CRM and product improvements which has allowed it to acquire Global Players at a low CPA (cost per acquisition) while maintaining a high player value. https://bit.ly/3XK9q5r
Sophic Client Jasper Commerce Inc. (JPIM-TSXV) announces Q3 (April) fiscal 2023 financial results: Significant cost reduction and improved profitability.
Jasper reported a net loss of $622,978 for Q3 2023. This shows marked progress compared to a loss of $1,160,010 in Q2 2023 and a substantial loss of $4,799,640 in Q3 2022. The decreased loss in Q3 2023 largely stemmed from a drop in operating expenses, from $1,523,499 in the previous quarter to $966,493. Management anticipates a return to sequential growth of recognized software revenue in Q4 (July) 2023, driven by Q3 bookings. The Company projects reductions in quarterly operating expenses, aiming for around $730,000 ($630,000 excluding non-cash items) in the coming quarters. Other Q3 highlights include: The completion of a $900,000 debenture financing, and the addition of four new customers, spanning both B2C and B2B companies. https://bit.ly/3CSXIMa
SolarBank (SUNN-CSEP) announces At-The-Market offering.
The Company has entered into an equity distribution agreement (the “Distribution Agreement”) with Research Capital Corporation (the “Agent”) to establish an at-the-market equity program (the “ATM Program”). The Company may issue up to $15,000,000 of common shares of the Company (the “Offered Shares”) from treasury under the ATM Program. The Offered Shares will be issued by the Company to the public from time to time, through the Agent, at the Company’s discretion. The Offered Shares sold under the ATM Program, if any, will be sold at the prevailing market price at the time of sale. Since the Offered Shares will be distributed at trading prices prevailing at the time of the sale, prices may vary between purchasers and during the period of distribution. The Company intends to use the net proceeds from any sales of Offered Shares under the ATM Program, if any, to advance the Company’s business objectives and for general corporate purposes, including, without limitation, funding ongoing operations or working capital requirements, repaying indebtedness outstanding from time to time, discretionary capital programs and potential future acquisitions. https://tinyurl.com/52v7avu5
TIMIA Capital and Arena Investors aim to fill SVB lending gap with new US$100-million venture.
Vancouver-based alternative lender Montfort Capital (MONT-TSXV) and its subsidiary, TIMIA Capital, have teamed up with American institutional asset manager Arena Investors to help “fill a void” in the technology lending space left by the collapse of Silicon Valley Bank (SVB). Montfort and Arena have agreed to establish a joint tech lending venture with “initial capacity” to deploy up to US$100 million to tech entrepreneurs across North America. Arena will provide up to US$95 million of this amount, while Monfort has committed US$5 million. TIMIA, which provides flexible private credit products like venture debt to North American tech companies, will service the joint venture and earn fees for doing so. TIMIA claims to have seen an increase in demand for its products since SVB shut down and the VC market cooled. https://tinyurl.com/3tbman67
Shipping container marketplace Boxhub raises $12.4 million for global expansion.
Toronto-based startup Boxhub, which offers an online marketplace for shipping containers, has raised a $12.4-million Series A round. Early-stage venture fund AlleyCorp led the round with participation from Solasta Ventures, Interplay VC, FJ Labs, and Hum Capital. Boxhub previously raised a $2.7-million seed round last year, which was led by Niklas Östberg, the founder and CEO of German food-delivery company Delivery Hero. https://bit.ly/46vWT9I
Thomson Reuters (TRI-TSX, TRI-NYSE) buys Casetext, an AI legal tech startup, for US$650 million in cash.
Thomson Reuters has entered into a definitive agreement to acquire Casetext, a Y Combinator-backed legal tech startup. The deal, valued at US$650 million in cash, is expected to close in the second half of 2023, subject to regulatory approvals and customary closing conditions. According to a press release, Casetext — which has 104 employees — has a customer base exceeding 10,000 laws firms and corporate legal departments. Leading up to the acquisition, the company raised over US$64 million from Union Square Ventures and others. For Thomson Reuters, the acquisition is a part of a long-term strategy to embed generative AI into its major business verticals — legal, tax, accounting and news. The company recently announced that it plans to spend some US$100 million a year on AI and incorporate generative AI into its products in the second half of this year, and to set aside US$10 billion for mergers and acquisitions — many AI-focused — from now until 2025. https://bit.ly/46vSJyh
Netflix drops its cheapest ad-free plan in Canada.
Netflix has stopped offering its cheapest ad-free tier in Canada, as reported earlier by TechCrunch. In a statement to The Verge, Netflix spokesperson Kumiko Hidaka confirmed Netflix will no longer offer the $9.99 per month basic plan to new members but says existing subscribers aren’t affected. The removal of Netflix’s basic plan means users in Canada now only have three plans to choose from: the $5.99 / month standard with ads plan, the $16.49 / month standard ad-free plan, and the $20.99 / month premium ad-free tier. https://bit.ly/43b4OpM
Microsoft says Bing will keep serving News links in Canada after Google backs out.
Microsoft’s Bing search engine will continue to link to local news articles for users in Canada, complying with a new law requiring search engines to pay royalties to publishers every time people click their links in search results, the company told The Information. The decision comes after Google announced it would stop serving news articles from local outlets to Canadian users in response to the new law. Google said on Thursday that the so-called “link tax” is “unworkable,” adding that Canadians clicked on links to local news sites more than 3.6 billion times through its search engine last year. The law doesn’t specify an exact dollar amount that tech companies must pay news publishers in royalties, but instead sets up a system where news publishers can negotiate royalty prices with the tech companies. Microsoft’s decision to keep serving local news links on Bing to Canadian users, which has not been previously reported, was based on its belief in a strong news industry, a company spokesperson said. But it also gives Bing an opportunity to try to swipe some Canadian users away from Google, its top search rival. Bing has been exploring ways to chip away at Google’s market share, even if it proves costly, The Information has reported. https://tinyurl.com/uu2xh3zp
Global Markets: IPOs, Venture Capital, M&A
Tech stocks close out best first half in 40 years, powered by Apple rally and Nvidia boom.
The last time technology stocks had a better first half, Apple was touting its Lisa desktop computer, IBM was the most-valuable tech company in the U.S. and Mark Zuckerberg hadn’t been born. On Friday, the Nasdaq wrapped up the first six months of the year with a 1.5% rally, bringing its gains so far for 2023 to 32%. That’s the sharpest first-half jump in the tech-heavy index since 1983, when the Nasdaq rose 37%. Even more stunning, it’s happening this year while the U.S. economy is still at risk of slipping into recession and reckoning with a banking crisis, highlighted by the collapse in March of Silicon Valley Bank, the financial nucleus for much of the venture and startup world. The Federal Reserve also steadily increased its benchmark interest rate to the highest since 2007. But momentum is always a driver when it comes to tech, and investors are notoriously fearful of missing out, even if they simultaneously worry about frothy valuations. Coming off a miserable 2022, in which the Nasdaq lost one-third of its value, the big story was cost-cutting and efficiency. Mass layoffs at Alphabet, Meta and Amazon as well as at numerous smaller companies paved the way for a rebound in earnings and a more realistic outlook for growth. Nvidia shares soared 190% in the first half, lifting the 30-year-old company’s market cap past US$1 trillion. Apple hasn’t seen gains quite so dramatic, but the stock is still up 50% this year, trading at a record and pushing the iPhone maker to a US$3 trillion market cap. Apple still counts on the iPhone for the bulk of its revenue, but its latest jump into virtual reality with the announcement this month of the Vision Pro headset has helped reinvigorate investor enthusiasm. It was Apple’s first major product release since 2014, and will be available starting at US$3,499 beginning early next year. Global economic concerns persist, highlighted by uncertainty surrounding the war in Russia and Ukraine and ongoing trade tensions with China. Short-term interest rates are now above 5%, meaning investors can get risk-free returns in the mid-single digits from certificates of deposit and high-yield savings accounts. Another sign of skepticism is the absence of a tech IPO market, as emerging companies continue to sit on the sidelines despite brewing enthusiasm across the industry. There hasn’t been a notable venture capital-backed tech IPO in the U.S. since late 2021, and investors and bankers tell CNBC that the second half of the year is poised to remain quiet, as companies wait for better predictability in their numbers. https://tinyurl.com/y7xha9zn
SpaceX tender lifts value to US$150 billion, report says.
SpaceX is planning a sale of insider shares for more than US$80 each that would raise the company’s valuation to about US$150 billion, according to Bloomberg. That price would represent a rise from the rocket company’s US$137 billion valuation reported in January, when the rocket and satellite company raised US$750 million from investors. The company led by Elon Musk has raised more than US$9 billion since its founding to support the capital intensive business of developing and testing rockets. It regularly arranges for employees to sell some of their private shares to investors. SpaceX has about US$5 billion in cash on its balance sheet, according to Bloomberg. https://tinyurl.com/mu4a6ts2
Fidelity marks down stakes in Discord, Reddit.
Fidelity Investments valued its stakes in Discord and Reddit slightly lower than it had previously, according to new public disclosures reported by TechCrunch. The asset manager marked down the value of its Discord holdings by 13% at the end of May, compared to the previous month. At the same time, it marked down its Reddit stake by about 7%. Those declines come after larger markdowns last year amid a steeper slump in public tech stocks. Twitter, on the other hand, got better news. Fidelity marked up its stake by about 5% in May compared to April. https://tinyurl.com/bdh9jbjh
China’s Shein files for U.S. IPO.
Shein, the Chinese online fashion retailer worth more than US$60 billion that is under scrutiny from U.S. lawmakers over its labor practices, has registered with regulators for an initial public offering in New York, people familiar with the matter said. The stock market debut could make Shein the most valuable Chinese company to go public in the United States since ride-hailing giant Didi Global listed in New York in 2021 at a US$68 billion valuation. Didi was delisted from New York a year later amid Beijing’s crackdown on Chinese technology giants over antitrust and data security rules. Shein has confidentially submitted its IPO registration with the U.S. Securities and Exchange Commission (SEC), the sources said. The stock market debut could come before the end of 2023, the sources added. Shein was valued in excess of US$60 billion in a US$2 billion private fundraising round in March. General Atlantic, Mubadala, Tiger Global and Sequoia Capital China are among its investors. https://bit.ly/3r57VCp
Lordstown motors files for bankruptcy.
Lordstown Motors filed for Chapter 11 bankruptcy and simultaneously sued Foxconn over the Chinese manufacturer’s failure to complete an investment agreement made late last year. Lordstown, one of about a dozen electric vehicle startups to go public in the past three years, will look for a buyer of its assets. The bankruptcy filing caps a series of struggles that has enmeshed Lordstown. It has been developing an electric pickup truck, the Endurance, and originally partnered with General Motors for manufacturing. But in mid-2021, the CEO and CFO quit after a board of directors report that the company had given out inaccurate information about truck pre-orders, prompting an SEC investigation. GM later sold its stake in the company. Lordstown went on to partner with Foxconn but the two companies ended up falling out. The startup said in a bankruptcy court filing on Tuesday that it had US$136 million in cash but was burning about US$5 million a month. It plans to try to sell its assets, saying its development work on the Endurance “can serve as a springboard” for a company into the “broader North American electric vehicle full size truck market.” Meanwhile, the status of other EV startups is mixed. Also on Tuesday, Faraday Futures said it had raised US$105 million in new funding. And on Monday, another startup, Lucid Motors, struck a deal with Aston Martin. Nikola, on the other hand, said earlier this month that it was taken steps to reduce its spending. https://tinyurl.com/34x62rkh
Apollo Global leads debt investment in chipmaker Wolfspeed, media report.
A group of investors led by Apollo Global Management is making a debt investment between US$1 billion to US$2 billion in chipmaker Wolfspeed to support its expansion in the U.S., media outlets reported last Sunday. The financing would make US$1.25 billion of cash available immediately to Wolfspeed, while another US$750 million could be drawn later, Bloomberg News reported. The report added it was structured as seven-year secured notes carrying a coupon of 9.875% and can be paid back after three years. In September last year, Wolfspeed said it will build a multi-billion dollar factory in Chatham County, North Carolina, to make the raw materials used for chips that power things like electric vehicles as demand surges. https://tinyurl.com/3c68sdur
Visa acquires Brazilian fintech startup Pismo in US$1 billion blockbuster deal.
Credit card giant Visa is acquiring Brazilian payments infrastructure startup Pismo for US$1 billion in cash in what is likely one of the largest fintech M&A deals taking place this year so far. The startup processes almost 50 billion API calls and US$40 billion in transaction volumes annually, and powers almost 80 million accounts and over 40 million issued cards. Pismo’s cloud-native issuer processing and core banking platform is aimed at giving banks, fintechs and other financial institutions “flexibility and agility,” the company shared when it raised US$108 million in Series B funding in October of 2021. SoftBank, e-commerce giant Amazon and Silicon Valley–based venture firm Accel co-led the startup’s Series B raise. Falabella Ventures, PruVen and existing backers Redpoint Ventures and Headline also participated in the financing, which brought Pismo’s total funding raised to US$108 million. The company did not share its valuation, but Accel partner Ethan Choi told TechCrunch that the sales price was “a very strategic multiple.” It’s not the first infrastructure play on Visa’s part. In March 2022, it closed on its US$2.15 billion acquisition of Tink, a leading fintech startup in Europe focused on open banking application programming interfaces. https://bit.ly/3qZ3MQk
IBM to buy Apptio from Vista for US$4.6 billion.
IBM is to buy enterprise software firm Apptio from Vista Equity Partners for US$4.6 billion, more than double what Vista paid to buy the firm in early 2019. The deal would help IBM further its push into cloud computing related services, a key priority for CEO Arvind Krishna. Apptio sells software that companies use to keep track of costs when buying from multiple cloud providers. Its clients include Allstate and Bank of America. Vista acquired Apptio for US$1.9 billion. https://tinyurl.com/y7uwkny3
Databricks to buy generative AI startup MosaicML for US$1.3 billion.
Databricks is acquiring the generative AI startup MosaicML for US$1.3 billion, the two companies announced on Monday. The deal comes as Databricks, the ten-year-old data and AI company worth US$38 billion, strives to grow its portfolio of AI software and services to meet the rising demand for generative AI tools similar to OpenAI’s ChatGPT. Acquiring MosaicML could help Databricks win customers who want generative AI software but are wary of incorporating their data with OpenAI’s proprietary models. Unlike ChatGPT, which is trained on data from the public internet, MosaicML helps companies build their own in-house AI tools by training copies of open source models using their own proprietary data. That results in AI tools that are better suited to internal uses like retrieving proprietary information or automatically writing company code. Databricks, which helps companies store and manage internal data, could look to link those features to its existing portfolio. The deal is expected to close in July. https://tinyurl.com/32jb45hm
Nvidia acquired AI startup that shrinks machine-learning models.
Chip giant Nvidia quietly acquired OmniML, an artificial intelligence startup that helps machine-learning models run on devices, rather than in the cloud, The Information reported on Friday. The deal could be a sign that Nvidia wants to improve the AI chips it makes for cars, industrial robots and drones. Nvidia already has a stronghold on the market for graphics processing units, or GPUs, which are specialized AI chips found in data center servers. https://tinyurl.com/bddx7xnx
Anduril’s teeing up to take larger defense market share with latest acquisition.
Defense technology company Anduril Industries has acquired Adranos, a startup that manufactures solid rocket motors for in-space and terrestrial applications. The two companies did not disclose the terms of the deal. Indiana-based Adranos’ solid rocket motor propulsion systems are designed for tactical missiles, hypersonics and space launch vehicles. Adranos has also developed a solid rocket fuel called Alitec, which has been tested in partnership with the U.S. Army. In a statement, Anduril said it would further develop Adranos’ solid rocket motors production facility in Mississippi to increase output to “thousands” of motors per year. Adranos has raised over US$21 million since its founding in 2015. For much of the company’s existence, it was the singular example of a startup going after the missile motor business — a business that is currently dominated by major defense primes Northrop Grumman and Aerojet Rocketdyne, the two sole solid rocket motor suppliers to the Pentagon. But this lack of competition has struck a note of concern amongst Defense officials, particularly as the backlog for solid rocket motors has grown. A 2022 report from the U.S. Department of Defense found that the defense sector shrunk from 51 to five prime contractors since the 1990s. It’s a situation that could lead to less innovation, higher prices and more vulnerable supply chains, the report found. (L3Harris, one such prime contractor, is currently in the process of buying Aerojet for US$4.7 billion, in a move that would further consolidate the industry.) https://bit.ly/3CVmICo
U.S. considers new curbs on AI chip exports to China.
The Biden administration is considering new restrictions on exports of artificial-intelligence chips to China, as concerns rise over the power of the technology in the hands of U.S. rivals, according to people familiar with the situation. The Commerce Department could move as soon as early next month to stop the shipments of chips made by Nvidia and other chip makers to customers in China and other countries of concern without first obtaining a license, the people said. The action would be part of final rules codifying and expanding the export control measures announced in October, some of the people said. The move could further crimp China’s ability to build its AI capabilities after restrictions last year that cut off the most advanced AI chips made by Nvidia and Advanced Micro Devices. Nvidia responded to that move by making a version of its AI chips for the Chinese market called the A800 that fell below performance thresholds outlined by the Commerce Department. That chip replaced the A100, which is widely used in data centers to do AI computations. https://tinyurl.com/ykak8smb
Unity shares rise 15% after company announces A.I. marketplace.
Unity rose over 15% to US$42.38 per share on Tuesday after the gaming tool maker announced a marketplace for artificial intelligence software that positions it as a platform in the hottest part of the technology industry. Unity’s customers, which use its game engine software to produce games for phones, consoles and virtual reality headsets, will be able to choose from software that can do things such as generate game dialogue or textures and graphics using AI from independent companies such as Inworld AI or Polyhive. AI companies will be able to distribute their software to game makers and charge for it through Unity’s Asset Store. The surge in Unity’s price comes as company officials have talked about the potential they see in AI in recent weeks. https://bit.ly/431t9yh
Zoox begins testing robotaxis on public roads in Las Vegas.
Amazon subsidiary Zoox has begun testing its purpose-built, electric, autonomous robotaxis on public streets in Las Vegas, the company announced Tuesday. Zoox says this marks the first time that an autonomous vehicle built without pedals or a steering wheel has operated on public roads in Nevada. Zoox is starting small with a one-mile loop around the neighborhood where its Las Vegas facilities are located in the southwest region of the city, with plans to expand in the coming months. The initial route will test Zoox’s robotaxi on several unprotected turns and multi-way stops, as well as its ability to navigate roads with cyclists, pedestrians and other cars. The Vegas launch follows Zoox’s deployment on public roads in Foster City, California, in February https://bit.ly/3PCFdmD
Meta launches VR subscription service.
Meta Platforms has launched a virtual reality subscription service in an effort to bolster its VR business after it slashed the cost of its Quest 2 headsets and announced its next headset, Quest 3, is coming later this year. In a blog post Monday, the company said the service, Meta Quest+, would cost US$7.99 per month or US$59.99 annually. Subscribers will get two new games per month. It’s unclear how many titles will be available on the service. Meta has been losing billions of dollars per year building virtual and augmented reality hardware devices, and the subscription service is notable as an effort to generate revenue from these products. The announcement also follows the highly anticipated debut of Apple’s Vision Pro headset, which will be launched for sale early next year. https://tinyurl.com/4r5df8r4
Google kills augmented reality glasses project.
Google has stopped work on a project to develop a pair of augmented reality glasses as it shifts its focus to developing software that runs on virtual reality devices made by other companies like Samsung, according to Business Insider. Google had been developing the device for several years as part of an initiative called Project Iris. The project’s abandonment comes just a few months after Clay Bavor, a senior executive who oversaw Google’s work on virtual and augmented reality, left the company to launch a startup with former Salesforce co-CEO Bret Taylor. Moving forward, Google plans to license an operating system called Android XR to headset manufacturers, in addition to a separate platform meant for smart glasses. https://tinyurl.com/ywc3ftfp
No more shots: Pill versions of Ozempic-like drugs are coming.
Drugs such as Ozempic that have surged in popularity for weight loss must be injected. Yet many people despise needles, prompting drugmakers to explore formulations that could be swallowed. The chemistry isn’t simple. But if researchers can pull it off, the tablets could appeal to the sizable number of people who fear needles, while also costing hundreds of dollars less than their injected cousins. The hunt for tablet versions of the injectable weight-loss medicines is among the hottest areas of drug research, attracting industry heavyweights like Eli Lilly, Novo Nordisk and Pfizer and fueled by a potential multibillion-dollar market. Farthest along is a tablet form of semaglutide—a main ingredient in the injections—developed by Novo Nordisk. Later this year, Novo Nordisk plans to ask U.S. and European drug regulators to approve the tablet. Novo already sells a tablet form of semaglutide, Rybelsus, to treat Type 2 diabetes, though some people use it off-label for weight loss. Novo Nordisk’s Ozempic and Wegovy therapies and Lilly’s Mounjaro have emerged as viral sensations—touted by celebrities and discussed on Facebook and TikTok—because of their potential to help people lose significant weight. https://tinyurl.com/y7fsuvj6
Media, Streaming, Gaming & Sports Betting
Google’s YouTube is testing an online-games offering.
YouTube is internally testing a product for playing online games, according to an email sent to employees at parent company Google, signaling ambitions to move beyond video hosting into games that can easily be played and shared between users. Google recently invited employees to begin testing a new YouTube product called Playables, which gives users access to games on mobile devices or desktop computers, according to the email, which was viewed by The Wall Street Journal. YouTube, which counts billions of monthly users, is already a popular destination for gamers and competes with Amazon’s Twitch for viewers of livestreamed footage. By hosting a selection of online games, the product would give YouTube a larger footprint in the sector as Chief Executive Neal Mohan seeks new areas of growth following a slowdown in advertising spending. Google has had mixed success distributing games in the past, and the product would be entering a cooling market for online gaming. The company often asks employees to test new services internally before releasing them to the public. Additional details about its plans for the product weren’t available. https://archive.fo/yf6uN
Microsoft wants to offer games that work on every device.
Microsoft CEO Satya Nadella said that he “would like to get rid of exclusive consoles,” implying he would prefer to offer games that work on every device. His comments, made while he was testifying on Wednesday in the FTC’s court case aimed at blocking Microsoft’s purchase of Activision, are part of the software giant’s argument that it doesn’t intend to restrict access to Activision games. Nadella said that it would make “no economic and strategic sense” for Microsoft to make Activision Blizzard’s most popular games, including Call of Duty, exclusive to Microsoft’s Xbox console. “We want to become a first class publisher,” Nadella said. “It’s what we’ve done with Office, and that’s what I want to do with gaming.” Nadella said that given Microsoft’s roots in software, “I always think of software first, so I want to be able to work on all platforms.” But under questioning from an FTC lawyer, Nadella acknowledged that Phil Spencer, CEO of Microsoft Gaming, would make calls on content exclusivity if the deal goes through. https://tinyurl.com/4khmws2h
Adtech, Privacy & Regulatory
FTC set to file major Amazon Antitrust suit over marketplace practices.
The U.S. Federal Trade Commission is getting close to filing a far-reaching antitrust lawsuit against Amazon, focused on how the company treats online merchants who sell through its marketplace, Bloomberg reported on Thursday. The long-anticipated suit could come within weeks and would follow a yearslong investigation that began under different FTC management during the Trump administration. The FTC has gathered evidence that Amazon’s online marketplace favors merchants who pay for Amazon’s seller services like storage and shipping, as well as advertising that gives products a boost in search results, according to Bloomberg. These services have become a big source of income for Amazon in recent years. Amazon reported about US$118 billion in revenue from seller services and US$38 billion in advertising revenue last year. FTC Chair Lina Khan, who authored an influential law journal article on Amazon’s alleged anti-competitive practices in 2017, has previously signaled publicly that she could seek to break up Amazon. Amazon shares fell 1.1% on Thursday morning. The report comes about one week after the FTC sued Amazon for allegedly tricking people into signing up for Prime. The agency is also investigating Amazon’s pending acquisition of iRobot. https://tinyurl.com/erecrax5
Apple supplier TSMC hit by data breach, ransomware group demanding US$70 million payment.
Apple’s chipmaker partner TSMC has confirmed that it was impacted by a data breach on one of its third-party suppliers. As reported by TechCrunch, the ransomware group LockBit claimed responsibility for the breach and is demanding a ransom payment of US$70 million not to leak the stolen data. In a statement, a TSMC spokesperson confirmed the “cybersecurity incident” occurred at one of the company’s IT hardware suppliers, Kinmax Technology. TSMC says that the breach affects “information pertinent to server initial setup and configuration.” While Apple is a major customer of TSMC, with the chipmaker manufacturing all of its Apple Silicon processors, this breach did not affect “customer information.” https://tinyurl.com/mr42d98s
Amazon will now pay your coffee shop to deliver packages.
Amazon has started recruiting small businesses across the US to deliver packages and build out its network. Axios reports Amazon is interested in connecting with a range of small businesses, including small grocery stores, coffee shops, florists, clothing stores, and more. This means your local barista could finish a pour-over and then jump in a car to take an Amazon package to your neighbor. Last year, Vox reported that Amazon was secretly recruiting mom-and-pop shops in Alabama, Mississippi, and Nebraska to join a pilot delivery program. At the time, businesses like florists and restaurants were asked to handle Amazon’s delivery loads within a 10-mile radius for a per-package rate. Participating businesses will need to be available for deliveries seven days a week and need to have a physical location Amazon can drop packages off to daily. https://tinyurl.com/4h33bc3y
Amazon expands Staples returns partnership to 1,000 stores.
Staples announced Thursday that it plans to start accepting Amazon returns for free at all of its 1,000 U.S. stores by the end of July. The partnership is part of Amazon’s push to reduce its reliance on UPS for dealing with returns, which have become an expensive headache for the e-commerce giant. While many Amazon customers have traditionally made returns for free through UPS, Amazon has started adding fees for many UPS returns services, including home pickups and some drop-offs at UPS Stores—part of an effort to get customers to use returns channels that are cheaper for Amazon. The new Staples partnership adds to other locations where Amazon customers can drop off most returns for free, including more than 500 Whole Foods stores and more than 1,100 Kohl’s stores. Nearly half of Staples stores already accept Amazon returns, according to the company. https://tinyurl.com/2s3mm5rk
TikTok plans revamp of U.S. store to feature its own products.
TikTok is planning to launch an e-commerce store in the U.S. that will include its own inventory, Semafor reported on Wednesday. The new store will reportedly launch as soon as next month, allowing users to buy TikTok products as well as those offered through TikTok Shop by outside sellers. TikTok plans to handle logistics and customer service for items sold through the new online store, according to Semafor. Under the leadership of Amazon and Alibaba veteran Wei Huang, TikTok has been signing partnerships with outside logistics firms in the U.S. that lease and operate warehouses, and is currently testing offering fulfillment services to sellers, The Information reported last week. Through its e-commerce push in the U.S. and U.K., TikTok parent ByteDance is seeking to replicate the e-commerce success it’s had in Asia. Consumers in China spent about US$208 billion in 2022 buying items on Douyin, the Chinese version of TikTok, The Information previously reported. But TikTok Shop has been off to a slow start with U.S. sellers, The Information previously reported. https://tinyurl.com/3vy6dyey
Fintech, Blockchain & Cryptocurrency
Goldman Sachs wants to bail on Apple Card partnership after US$1 billion loss, in talks with Amex.
Apple has developed a deep relationship with Goldman Sachs through Apple Card, but apparently, it’s an unhappy marriage. According to the Wall Street Journal, Goldman Sachs is in talks with American Express about transferring its Apple partnership. This comes after Goldman revealed in January that it had lost over US$1 billion on the Apple Card deal so far. The report explains that Goldman is “in talks to offload those businesses and its credit-card partnership to Amex.” Goldman has already significantly scaled back its efforts to break into the consumer finance industry. A deal with Amex isn’t imminent or assured, people familiar with the conversations said, and it could take a while to transfer the partnership in any case. Apple would have to agree to a transfer. The tech company is aware of the talks, which have been ongoing for months, the people said. For those who have been following along, this news isn’t that surprising, but it certainly doesn’t align with recent comments from Goldman Sachs. In October of last year, Goldman Sachs CEO David Solomon said that the company had reached a deal with Apple to extend the partnership through 2029. https://tinyurl.com/4b7e27xy
Fidelity joins Spot-Bitcoin ETF race with fresh SEC filing.
Fidelity Investments is the latest financial services heavyweight to throw its name into the race to offer the first US exchange-traded fund investing directly in Bitcoin. The Boston-based asset manager, which has about US$11 trillion in assets under administration and has tens of millions of customers, re-filed for the Wise Origin Bitcoin Trust, according to a document submitted Thursday with the US Securities and Exchange Commission. Similar to previous US spot Bitcoin ETF filings in the past few weeks, the updated application says that Fidelity expects to enter into a surveillance-sharing agreement with a US cryptocurrency exchange. https://bit.ly/3r3WFpL
Coinbase says SEC has no power to regulate crypto.
Coinbase argued that it is not an unregistered securities exchange and that the Securities and Exchange Commission does not have the power to regulate crypto in a response filed late on Wednesday to the regulator’s lawsuit. Lawyers for the crypto exchange wrote that Coinbase “is not, and has never been, a securities exchange, or a broker, or a clearing agency under the federal securities laws.” They also argued that the tokens listed on the exchange and the company’s staking services are not securities, as the SEC has alleged. The SEC sued Coinbase earlier this month. The regulator also sued Binance, the largest global exchange by trading volume, earlier this month, alleging that it is an unregistered securities exchange and that it violated other securities laws. A victory by the SEC could make it all but impossible for most crypto exchanges to operate in the U.S. https://tinyurl.com/27s6hsk2
Aston Martin taps Lucid to help develop electric vehicles.
Lucid Group, the U.S. automaker that produces the luxury all-electric Air sedan, will supply Aston Martin with powertrain components for future electric vehicle models, the companies said Monday. The iconic British luxury automaker aims to launch an EV in 2025. The agreement marks a first for Lucid — a chance to act as supplier and diversify its revenue streams. Lucid has been struggling to meet delivery expectations and drum up enough demand for its luxury EVs, and has consistently missed the beat on revenue. In March, Lucid cut its workforce by 18%. Under the terms of the agreement, Aston Martin will make phased cash payments to Lucid and give the startup a 3.7% stake, or about 28,352,273 ordinary shares. The value of shares and cash payments should reach about US$232 million. Lucid will give Aston Martin technical support as the latter integrates Lucid’s electric powertrain technologies, including its twin motor drive unit, battery technology and onboard charging unit called the Wunderbox. https://bit.ly/3puZDDi
VW subsidiary Electrify America to add Tesla connectors to EV charging network.
Electrify America has become the latest company to align itself with Tesla’s EV charging standard. The company, which was created as part of a settlement of the Volkswagen diesel emission scandal, said Thursday it will add Tesla’s North American Charging Standard (NACS) connector to Electrify America and Electrify Canada’s fast charging networks by 2025. Electrify America said it will also continue to provide the Combined Charging System (CCS-1) connector throughout its network. In the past month, major U.S. automakers Ford and GM as well as upstart Rivian and European manufacturer Volvo have made commitments to start providing NACS adapters to EV owners. Ford, GM and Volvo have said future vehicles would be equipped with the NACS charging port as well. Meanwhile, Electrify America’s parent company VW Group is still considering its options. The German automaker said in a statement that it is “currently evaluating the implementation of the Tesla North American Charging Standard (NACS) for its North American customers.” https://bit.ly/44omkI5
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