Headlines this week - Oct 30, 2022
A big tech-pocalypse in the financial markets. Meta in problems. The acceleration of robot adoption. TSMC vs. the end of Moore's Law. Elon Musk and Twitter. The autonomous car hype cools down
IN SUMMARY - TOP 15 THEMES THIS WEEK
1 - As digital technologies permeate everything we do, we may be becoming more vulnerable
After the recent Kakao debacle in Korea, this week we saw a WhatsApp outage, that disrupted our personal communications
WhatsApp Services Restored After Global Outage, Company Says - Some users said they were unable to use Meta’s popular messaging service for more than an hour (WSJ)
Our privacy risks are also growing. E.g. Square is selling data about users’ shopping habits
Square sells access to your inbox. No one seems to know if the law cares - When my work inbox got flooded with reminders of my most twee shopping habits, I found out the Block-owned service throws up obstacles to getting out of its marketing business. (Protocol)
Outages of satellite systems reveal how much we depend on GPS
We are dangerously reliant on GPS to tell the time - Recent outages in satellite systems have confirmed the importance of data from atomic clocks as an invisible utility (FT)
2 - A disastrous week for Big Tech companies
Disappointing results triggered a massive value erosion
Brutal week for Big Tech with nearly $800bn wiped off valuations - Investors spooked by weak earnings season and runaway costs at largest digital companies (FT)
Question marks emerging on Tech Giants visions and long-term investments
Meta’s woes spur brutal reassessment of Big Tech’s bets - Hammering of sector shares partly reflects worries over costs and benefits of AI and the metaverse projects (FT)
Social media is losing its privileged position as an advertising target
Adpocalypse Everywhere - Social media bets big on shorts as digital advertising is taken to the woodshed (FT)
Who killed the social media ad boom? - A decade of breakneck growth has ground to a halt and there are plenty of suspects beyond the slowing global economy (FT)
Even the cloud market growth could be under threat
Microsoft Casts a Very Big Cloud - Downbeat forecast from software giant is a bad sign for corporate tech spending resilience (WSJ)
As if they were telecom operators, Big Tech companies shift focus to efficiency programs
Amazon, Intel Pressed to Slash Costs After Years of Bulking Up - Tech giants face pressure to tighten belts after earnings rout. Meta is punished for pushing ahead with its spending plans (Bloomberg)
Amazon: big spender must cut costs - Online retailer has invested heavily, even though shoppers and companies have been reining back (FT)
Meta Investor Urges CEO Mark Zuckerberg to Slash Staff and Cut Costs - Altimeter Capital says drastic action is needed for the social-media company to ‘get its mojo back’ (WSJ)(AltimeterLetter)
Google’s Bottom Line Is Now Top of Mind - Core search business feels weight of advertising slowdown while hiring growth hasn’t abated (WSJ)
3 - Meta’s 3Q22 results: structural headwinds increase pressure on the stock
Shares fall to their lowest value since 2016, driven by disappointing results, including a concerning reduction of operating margins
Facebook Parent Meta Shares Fall to New Multiyear Lows - Company posts second consecutive quarter of declining revenue and warns of rising costs, accelerating losses at metaverse unit (WSJ)
Meta’s value plunges by $89bn amid falling sales and rising costs - Facebook parent’s earnings add to gloom surrounding Big Tech as advertisers pull back (FT)
Zuckerberg keeps committed to (huge) long-term investments. Some analysts claim he’s taking advantage of a governance problem in the company
Zuck warned you, and you wouldn’t listen - Would Mark Zuckerberg still be chief executive of Meta if he didn’t have voting control of the company? Probably, because things only really started to go off the rails this year. But his job would not be safe. Remember what the bond market thought of Liz Truss’s plans for the UK? The stock market takes a similar view of Zuckerberg’s plans for Meta — only much, much less enthusiastic. The shares are where they were seven years ago, have lost two-thirds of their value in a year, and lost a quarter of their value yesterday. (FT)
Meta: Zuckerberg’s ambitions become costly as profits erode - Pivot is uncertain, expensive and led by a boss who has few constraints on his actions (FT)
Maybe there is a silver lining: the case for applying antitrust regulation to Facebook is losing steam
Facebook Does a Faceplant - Memo to Lina Khan: After losing 70% of its market cap, Meta hardly looks like a monopoly (WSJ)
4 - Alphabet also suffered from a declining online advertising demand, after results below expectations
Alphabet’s Profit Drops 27 Percent From a Year Earlier - Google’s parent company reported earnings that were below analysts’ expectations, bringing in $13.9 billion in profit on $69.1 billion in sales. (NYTimes)
Alphabet leads Big Tech sell-off after reporting slowdown in ads growth - Google parent vows to sharpen focus after results fall short of Wall Street expectations (FT)
5 - Amazon’s results were not so bad, but the stock plunged after a conservative forecast for the holiday season
Amazon Shares Plunge on Forecast for Sluggish Holiday Sales - Shares tumble after disappointing forecast by e-commerce giant. Expenses rise faster than revenue for fifth straight quarter (Bloomberg)
Amazon shares fall 10% after weak holiday sales forecast - ‘This is uncharted waters for a lot of consumers,’ says chief financial officer Brian Olsavsky (FT)
6 - Microsoft’s shares also fell, due to weaker enterprise demand and question marks on the cloud
A weak PC demand and an unfavorable dollar exchange rate are slowing down Microsoft’s revenue growth
Microsoft Reports Slowest Revenue Growth in Five Years - The technology giant faced a strong U.S. dollar and weakening demand for personal computers in its latest financial results. (NYTimes)
Microsoft Earnings Fall, Stock Slides as PC Demand and Strong Dollar Hurt Sales - Software giant predicts further slowdown as cloud growth slows and Windows sales slip (WSJ)
Even the cloud couldn’t save the day, with demand also affected by the economic context
Microsoft Plunges on Forecast for Lackluster Azure Growth - First-quarter revenue growth is the slowest in five years. Slump in PC sales, sluggish economy also weighs on outlook (Bloomberg)
Microsoft warns of cloud computing slowdown - Company sounds cautious note as its customers ‘optimise’ spending to save money (FT)
Cloud costs are also under stress, under the current energy crisis
Microsoft’s Profits Hurt by European Energy Crisis, CFO Says - Rising energy prices in Europe are eroding profitability at Microsoft Corp., which is paying more to deliver cloud-computing services to customers in the region, the software giant’s chief financial officer said. (Bloomberg)
7 - Apple was the only Big Tech that escaped the tsunami
Apple’s share price actually increased, after quarterly sales beat estimates, helped by booming Mac sales
Apple’s High Note Clears a Low Tech Bar - iPhone maker’s decent results and outlook contrast with negative surprises by big tech peers (WSJ)
The iPhone is the only smartphone brand that is growing
The iPhone Is Lone Bright Spot in Gloomy Quarter for Smartphones - Apple Inc. was alone among the world’s top five smartphone vendors to register growth in the third quarter this year as the mobile market suffered a double-digit decline. (Bloomberg)
But there were also signs of headwinds: iPhone growth is decelerating, affected by exchange rates and supply chain issues. Service revenue momentum is also not so good, and the Mac boom is probably not sustainable
Apple says it is facing ‘significant’ headwinds from strong US dollar - Company also flags supply constraints for latest iPhone models (FT)
Apple Dodges Tech Rout, Even While Warning of Holiday Slowdown - Stock rally is the company’s biggest since July 2020. Sales beat estimates, but iPhone and services were soft spots (Bloomberg)
8 - Technology might enable a new wave of conglomerates. Look at the Reliance empire in India
How Ambani Will Use Finance to Tighten DNA Loop - Consumers' digital footprints could help the Indian billionaire's financial services ambition and unlock shareholder value. (Bloomberg)
9 - The economic crisis is accelerating AI-driven automation
There is a global surge in industrial robot adoption, to fill emerging workforce gaps
Forget the humanoids — it’s industrial robots that will transform the world - Societies need all the imagination of science fiction writers to use proven functional skills rather than replicate our own (FT)
And the evolution of robot technology is opening new spaces
The Quest for a Robot With a Sense of Touch - Robots that can touch are the next step in robotics technology. It will allow them to perform all sorts of tasks that are now impossible (WSJ)
AI systems automating creativity is seen as the next step. Examples keep appearing…
‘Deepfakes’ of Celebrities Have Begun Appearing in Ads, With or Without Their Permission - Digital simulations of Elon Musk, Tom Cruise, Leo DiCaprio and others have shown up in ads, as the image-melding technology grows more popular and presents the marketing industry with new legal and ethical questions (WSJ)
… but there is also a debate on how close these systems are to do actual creative work
No, Artists and Designers Aren’t About to Lose Their Jobs to AI - As companies such as Facebook, Google, and OpenAI claim to offer groundbreaking advances in artificial intelligence, don’t forget to ask if it works. (BusinessWeek)
10 - The semiconductor industry is in a battle against the end of Moore’s Law
Industry leader TSMC depends on ever-smaller chips to sustain its advantage, so this could be an existential risk for them
TSMC battles to stay ahead as world demands ever-smaller chips - Taiwan chipmaker ‘could stumble’ as industry is forced to develop new transistor technology (FT)
There might be help under way from some startups
Chip start-up pushes into Taiwan in quest for ever-smaller chips - NanoWired hopes its technology will be embraced by the world’s largest chipmaker TSMC (FT)
For TSMC, the problem comes on top of the current geo-strategic pressures
TSMC: the Taiwanese chipmaker caught up in the tech cold war - Washington wants the company that dominates semiconductors to move more production to the US but Taipei is resisting (FT)
11 - Elon Musk has finally acquired Twitter. So he now has a role in content moderation, and people are worried about this
The deal finally happened, and now the question is what will happen next
Elon Musk closes $44bn deal to buy Twitter - World’s richest man dismisses top executives as he exerts control over influential social network (FT)
What will Elon Musk do with Twitter? - The billionaire has grand plans for faster innovation, leaner operation and new revenue streams (FT)
The first thing Musk has done is to fire the previous executive team
Musk Fires Top Twitter Executives After Closing $44 Billion Deal - Elon Musk completed his $44 billion acquisition of Twitter Inc., according to people familiar with the matter, putting the world’s richest man in charge of the struggling social network after six months of public and legal wrangling over the deal (Bloomberg)
He’s also taking the company private, to maximize control
Twitter/Musk: public showman looks to private market for turnround - There will be no more quarterly earnings calls but expect tycoon to keep us apprised of his progress (FT)
Goodbye Twitter—for Now - Elon Musk has seen the light on advertising, and will likely need to return Twitter to the public market at some point (WSJ)
Musk’s role in content moderation could lead to potential conflicts of (political) interest for him
“Alex Stamos, a former Facebook chief security officer who now leads the Stanford Internet Observatory, said the pitfalls and complexities of online content moderation will quickly become apparent to Musk, whose other business ventures, such as Tesla and SpaceX, could require interaction with foreign governments seeking to gain influence over Twitter’s reach” (WashingtonPost)
An example of Musk’s global political role: Starlink’s position in Ukraine
Elon Musk’s Starlink Is at the Forefront of a Corporatized Space War in Ukraine - Earth’s orbit is now the domain of companies, not just countries, and that’s changing the nature of warfare. (Bloomberg)
12 - The IPO for Intel’s MobileEye went well: a good sign for the (nascent) autonomous car industry?
Mobileye Shares Close Higher in Stock-Market Debut - Intel’s self-driving car business soared following an IPO, ending the trading day valued at roughly $23 billion (WSJ)
Shares in Intel’s self-driving unit Mobileye jump in trading debut - Autonomous driving company valued at $23bn in widely anticipated listing (FT)
13 - Analysts don’t think so. They are now skeptical on autonomous cars’ short-term perspectives
There is no consensus on how to make them work (technically or as a business)
The driverless car revolution is stuck in the slow lane - There is still no consensus on how autonomous vehicles should work (FT)
Some initiatives are being closed, claiming the problem is too difficult
Ford-VW driverless car venture folds in face of tech challenges - Argo AI, once valued at $7bn, struggled to meet goal described as ‘harder than putting man on moon’ (FT)
14 - The hype around the Metaverse might also be starting to vanish
Snap’s CEO is quite against Zuckerberg’s vision
Snap’s Evan Spiegel Slams the Metaverse, Touts Own AR Vision - Billionaire Snap Inc. founder Evan Spiegel rubbished the idea that future computing will migrate into a virtual world dubbed the metaverse, arguing most people prefer a lighter touch known as augmented reality. (Bloomberg)
First movers in the field, like Microsoft, have not made much progress
Microsoft’s Struggles Enter the Metaverse - Problems plagued development of its HoloLens augmented reality headset; ‘we had the opportunity to own this market’ (WSJ)
An analysis at Bloomberg sees a lot of uncertainties on actual demand or on what needs to be built
What Is the Metaverse, and Will It Be Worth the Wait? - Imagine a three-dimensional online world where you teleport from your London office to a meeting room in Singapore, shop at a digital replica of your favorite clothing store then join a friend for a round of virtual golf. To some, this aspirational version of the internet known as the metaverse is the future of human interaction. Facebook founder Mark Zuckerberg changed the company’s name to Meta Platforms Inc. and is pouring billions of dollars a year into efforts to dominate this “next frontier.” But it’s unclear what a unified virtual universe would look like, or whether people really want it. (Bloomberg)
15 - This could be a good time for biotech initiatives
Investors are attracted by cheap valuations of promising startups
Investors hunt for biotech bargains as market shows signs of a thaw - Valuations soared in the pandemic and then crashed, but more promising start-ups are managing to raise funds (FT)
There are exciting (albeit futuristic) visions behind some of the efforts
How scientists want to make you young again - Research labs are pursuing technology to “reprogram” aging bodies back to youth (MITTechReview)