Headlines this week - Dec 4, 2022
Musk as a management superstar. The Tech Civil War that (finally) didn't happen. Regulators monitoring Twitter. Disney full of challenges. Amazon closing projects (at home and abroad). And more
IN SUMMARY - TOP 15 THEMES THIS WEEK
(1) Twitter is becoming the preferred tool for political protests (even in China)
Amid all the negative press about social media, there is also consensus that these apps play a critical role to help people complain against autocratic regimes (Bloomberg)
Current protests in China are a good example. Chinese activists are using Twitter (through VPNs) to tell the rest of the World what is happening (WSJ)
Some analysts see this as one more challenge for Elon Musk, as content moderation is now expected to get (even) more tricky (Bloomberg)
(2) Elon Musk remains at the center of (tech) attention. Twitter might be a revolution in management… at the expense of his other businesses?
Musk’s performance at Twitter is seen as an experiment in management, and everybody is watching… (FT)
This may be important for his personal brand. So much so that it looks very unlikely that he will allow the company to go bankrupt (as some people were expecting) (WSJ)
On the other hand, Tesla’s (and maybe SpaceX’s) investors are increasingly jealous, and accuse Musk of spending too much time managing Twitter (FT)(TheEconomist)
(3) Meanwhile, policymakers in the US and Europe are looking at him with suspicion
This week, Thierry Breton warned Musk about the need to follow the EU’s rules. And in the US, the Secretary of the Treasury threatened with a review of the Twitter acquisition (FT)(WSJ)(FT2)
(4) Amid all this noise, this week Musk explicitly attacked Apple, and then he backed out
Apple’s cuts of their advertising expense in Twitter triggered an angry reaction from Musk, a highly risky move, given Twitter’s dependence on iOS (Bloomberg)(FT)
Musk’s said Apple had threatened to pull Twitter from the App Store, under political pressures from the left wing, who (according to him) would like to increase censorship at the platform (NYTimes)
Immediately, this was seen as a potential start of a “Tech Civil War”, the technology-centric version of current “culture wars” in US politics, with many potential risks for the industry (PirateWires)(WSJ)
But then we learned (through Musk’s tweets) that he and Tim Cook had rapidly moved to neutralize the “misunderstanding” and reach a peace agreement (WSJ)(FT)
Meanwhile, Zuckerberg took advantage of the noise and the opportunity to criticize Apple’s “monopoly” on the App Store, implicitly asking regulators to act against it (WSJ)(Bloomberg)
(5) Worker revolts at Foxconn in China expose Apple’s supply chain risks. Investors are worried
With the current chaos around Covid policies in China, which is directly affecting Foxconn (a key Apple partner), potential disruptions to Apple’s supply chain pose a risk to Apple’s growth (FT)
The situation seems to be getting worse. Foxconn is even offering a bonus in cash to workers who stay at the factories (FT)(Bloomberg)
Current estimations point to a production loss of about 6m iPhone Pro units, a very significant impact on Apple’s most profitable product (Bloomberg)
Beyond these short-term effects, investors are worried about the long-term impact, as Apple seems “locked-in” to its Chinese manufacturing partners (and to sales in China) (WSJ)
The company has apparently started looking for ways to move some production from China to other Asian countries (like India and Vietnam) (WSJ)
(6) Amazon moves ahead with its cost reduction program, impacting business units (devices, Alexa) and countries (India)
Amazon is on the way to cut jobs. They’re prioritizing the hardware teams (Alexa, Kindle). But investors want more (FT)
Latest news about Amazon’s Robotics division show how the company could be thinking about reducing staff in (highly populated) distribution / logistics centers (WSJ)
The Entertainment unit could also be a target. Speculations grew this week, as it was learned that the area’s top executive was leaving the company (WSJ)
In parallel, Amazon is also looking to close some underperforming businesses in other countries. India (a very challenging market) looks like a good candidate for this (WSJ)
The company has already announced it’s shutting down their Indian meal delivery business, and a similar service focused on small enterprises (Bloomberg)
(7) TikTok is again in the spotlight. Political pressures have started on Google and Apple to drop them from their app stores
Two years after Trump’s push for ByteDance to spin-off TikTok US, there is a revival against TikTok in the US, as the next target of measures against Chinese tech firms (Bloomberg)
Some people are even asking Apple and Google to drop TikTok from the App Stores. Things like this make it increasingly clear that Apple and Google control a bottleneck for internet services… (WSJ)
Meanwhile, TikTok is answering with a campaign defending that their data-privacy initiatives are enough to address the concerns of US authorities (WSJ)(Bloomberg)
(8) The Disney affair: more revelations about the crisis. And a challenging job for the new CEO
A new strategic plan that the previous CEO built with McKinsey was rejected by his direct reports, and might have triggered the crisis. It included more centralized decision making. So this looks like a case of Corporate politics… (WSJ)
The new (old) CEO has committed to focus on “creativity and streaming profitability”. But cost reduction seems the key priority, and he’s asking for a “sense of urgency” (WSJ)(FT)
The context is challenging. The animation market is in transition, and Disney’s latest bet (“Strange World”) has not worked well in the box office (WSJ)
On top of that, Theme Parks are now also a cause of concern for investors (WSJ)
(9) A new Tech War could be starting around 6G network standards. Will the West be able to build an alternative to Huawei?
Huawei is fully committed to 6G, and is asking for “building it together”. But there are concerns in the West that they will want to impose a de-facto standard (FT)
(10) Traditional telecom operators are pinning their hopes on the enterprise segment. Meanwhile, satellite-based connectivity starts to capture the low-end market
Verizon has announced a partnership with Wipro to develop “on demand network services”, (network capabilities sold with the cloud model), targeting the enterprise market (RCRWireless)
Meanwhile, governments interested in covering connectivity gaps (e.g. UK rural areas) are increasingly relying on satellite technologies, with Elon Musk’s Starlink as the leading option (FT)
Starlink is moving ahead with plans to deploy thousands of new satellites, even if regulators are imposing limitations (7,500 new satellites authorized, vs. 30,000 initially projected) (WSJ)
(11) Chip companies are in transition to a “new semiconductor world order”, after the US ban on China
Under pressure from the US government, companies like Apple are asking TSMC (who builds the chips that Apple designs) to manufacture in the US. And TSMC is accepting (Bloomberg)
This could soon be the case with Amazon, too. They just announced a new “high-performance” chip designed by themselves (to be made by TSMC) (Bloomberg)
Chip vendors that were building in China are now on the way to shift production to other countries. E.g. Ferrotec, a Japanese chip supplier (FT)
European chip toolmakers are worried about their exports to China. The largest ones (like ASMI) are in the Netherlands, so the Dutch government is negotiating with the Americans (FT)
(12) Governments are also adapting to the new reality: Taiwan is worried. China tries to reduce the pressure. And US Senators want more…
Taiwan is seeing how “tech protectionism” (from the country’s main allies, that look for a hedge against potential geo-political risks) could hurt its economy (Bloomberg)
Meanwhile, China wants to neutralize the pressure by adopting the (open) Risc-V chip architecture, and is asking local tech giants Alibaba and Tencent to cooperate in the effort (FT)
In the US, Senators push for more restrictions, including a ban on commercial relationships between the US government and companies using suppliers that sell chips to Chinese rivals (Reuters)
(13) The Second Cold War could also make the “Green Transition” more difficult. At least for the West
China controls the supply of solar panels, and lots of critical materials. This may become a barrier for the US to move ahead with its “Green Transition” plans (WSJ)
US government’s push for “clean energy” solutions using local supplies is also causing tensions with European allies, which feel excluded and complain of “fragmentation” (FT)(FT2)
(14) Meta remains under regulatory pressure: they’ve just been fined $275m in Europe, over privacy concerns
This is perceived as one more sign of how EU regulators are getting more aggressive against Big Tech companies. And the pressure comes at a really bad time (WSJ)
In the case of Meta, this completes a total of almost €1bn in fines from European regulators over data protection, only this year (NYTimes)(FT)
(15) Investing in the future: what is happening in long-term innovation
Mariana Mazzucato from UCL has published a new opinion piece asking for a more active role of governments in countries’ long-term innovation (not everyone agrees…) (FT)
Efforts to train AI algorithms to align with human values, through traditional “steepest descent” methods, have not worked as expected. This is a challenging problem (AstralCodexTen)
Meta’s Cicero, an AI system that negotiates in a human-like way (including bluffing and withholding information), shows some of the emerging AI ethical challenges (FT)
Business schools seem to be interested in Virtual Reality (AKA Metaverse) as a tool for educating people, e.g. by “immersing” students in business situations (FT)
Sony has launched a new set of wearables that monitor the user’s moves and help connect them with avatars and virtual worlds in the Metaverse (Bloomberg)
Spatial Labs, a startup, is installing chips in clothes and using blockchain to track the history of these clothes, as a way to increase their value (BusinessWeek)
Investors’ remain concerned about the threat that Chinese electric cars represent for European car brands, like VW, which (still) have China as a key market (WSJ)
Tesla’s competitors are trying to get an advantage against Elon Musk’s company through deals to get exclusive access to lithium supplies for batteries (Bloomberg)
Charging stations are still a barrier for electric vehicle adoption. Even in the US, supposed to be one of the most advanced markets, the charging network is perceived as “a mess” (WSJ)
A good way to reduce dependence on charging: solar cars. Still in a very initial stage, but with prototypes now entering production. E.g. from Lightyear, a Dutch startup (Bloomberg)
Incentivized by a local BMW factory, leading Chinese battery vendors are deploying production facilities in a quite Hungarian town (FT)
Investors’ skepticism about self-driving cars keeps growing. Only a really significant breakthrough could change the trend. And maybe that’s years away (WSJ)
NASA’s Artemis program to go back to the Moon is attracting innovative companies, including this startup (ICON) that is adapting 3D Printing to build facilities on the Moon (Payload)
NASA is also working with Amazon to deploy Alexa in spacecrafts. Anyone remembers HAL9000? (Bloomberg)
Other countries are trying to follow NASA’s example, and become “space powers”. This week we heard about examples in South Korea and Japan (Payload)(Payload2)
Starlink, SpaceX’s satellite network is way ahead of competitors. These could also catch up if they’re allowed to merge and get the right scale, but they need regulatory approvals (WSJ)
Bionaut Labs, a startup founded by a team of ex-Apple employees (involved in iOS’s face recognition features), is working to build tiny robots to deliver drugs into the brain (FT)