The digital safety storm
And also: The disruption of global supply chains. The growing concerns on Big Tech (but investors remain cool). Electric cars and batteries as innovation hotspots. Governments vs. crypto
Digital safety, on top of governments’ agendas
Difficult week for Facebook, culminating a month when the WSJ published a series of articles about internal contradictions, including about internal research that would show that Instagram has a negative psychological impact on teenagers. The company has denied this, but last Thursday their global Head of Safety was under heavy fire at the US Congress, where Senators asked them to publicly release all the research about how their products affect users, They have also decided to halt their “Instagram Kids” project, a new version of the app that would target 10-to-12-year-olds
The week
1. Consumers and businesses, after COVID
What is happening
We’re on the way to a new physical-digital balance. This week we had signs that traditional consumer activity is back:
Signs of (post-pandemic) recovery, in Europe and the US (FT)(WSJ)
Traditional entertainment is back: Softbank bets on live music (FT). Content producers bet on theaters (FT)
Travel rules being eased. Airlines celebrating (Bloomberg)
Peloton in crisis, as the “e-fitness” model loses steam (WSJ)
There is a push against remote work and education… (FT)(FT2)
… but companies keep announcing permanent remote work schemes (FT)
Emerging risks:
Global supply chains under huge stress. Concerns increase among business leaders (FT).Apple impacted, with iPhone13 delivery times lengthening (Nikkei)
Inflation risk: Authorities remain optimistic (Bloomberg), but some critical prices are raising (e.g.: e-commerce logistics) (WSJ)
More cybersecurity incidents:: new hacker attacks on crypto exchanges (FT) and even on hospitals (WSJ)
What it means
News this week show that uncertainty continues to dominate the scene when we consider the short-term future of the economy. We still don’t know if we’re on the way out of the pandemic, and even if we were, we don’t really know how much of the new “digital order” will be here to stay. But it will probably be a lot, even if physical options will still exist for most activities (but often at a premium)
One of the most negative implications of the pandemic has been the huge disruption of global supply chains. This is far from having been solved and will probably have an impact in the short term (e.g.: through inflation) but also in the long term, with many countries looking to develop local (but more inefficient) supply chains for strategic activities
2. Platforms and digital enablers
What is happening
Facebook under pressure. Uncertainty grows among investors (Bloomberg)(NYTimes), and journalists speculate on internal power shifts (WSJ)
Amazon launches several new devices (WSJ), including a home-patrolling robot that most people see as a (very) intrusive tool (Vice)(FT). There is no agreement on why Amazon does this (FT)(WSJ). There have also been recommendations for Amazon to “invent with care” (NYTimes)
Apple’s (strong) position as a game aggregator is also under threat (WSJ). Netflix is preparing to launch its own gaming platform, and is even acquiring game development studios (Bloomberg)(Bloomberg2)
Google looks for ways to defend against Amazon in advertising (WSJ). They’re also abandoning their plans to offer bank accounts linked to Google Pay (WSJ)
Despite all this, market remains mostly optimistic on Big Tech (FT)
Fast food deliveries remain a hot space (FT). But some analysts dislike their potential impact on our lives (FT)
Semiconductors: Shortages continue for the car industry (WSJ). To make things even worse, the price of silicon is out of control (Bloomberg). ASML, the (Europe-based) global leader in chip production machines, had an investor day and raised its long term guidance (Bloomberg)
What it means
Lots of noise around Big Tech firms, with claims about the start of their fall. As often in the past, these look closer to the wishes of some people than to reality. We have had a market correction to some valuations, yes. But they will probably recover soon
The Facebook affair is one of the drivers of these negative opinions. The company issuffering a lot of political and media pressure, but investors have been relatively cool for now, and a FT op ed this week even claimed that the shares were cheap
Google and Facebook are increasingly on collision course with Amazon, which is growing in advertising, with a more “politically friendly” business model
Silicon is getting very expensive, and this is on the way to create one more disruption on the semiconductor markets, at the worst possible time
3. Financing digital innovation
What is happening
Chinese tech stocks remain under pressure, with investors concerned about regulation (FT)(Bloomberg), but also about the systemic impact of the current power crunch in the country (Bloomberg). Most people see global risks coming out from this (WSJ)
Hong Kong impacted (FT). India emerging as potential alternative (Bloomberg)
The car revolution: Ford accelerates and reveals plans to build 4 new electric car factories (NYTimes). Meanwhile, Foxconn confirms its US ambitions, buying Lordstown’s factory in Ohio (Bloomberg). Ferrari is working with ex-Apple Jony Ive to design its own electric car. (FT) GM is working on a “cloud-centric” approach to cars starting in 2023 (Bloomberg)
Batteries: Volkswagen and Ford are betting on solid-state batteries (WSJ). An Australian startuppresents a new battery technology based on nanotubes (Bloomberg)
Quantum Computing: IonQ, a leading startup in the field has its IPO (through a SPAC merger) (FT)(InvestorPresentation)
What it means
The (huge and rather unpredictable) energy crisis in China is making global investors even more hesitant to get exposure to Chinese tech companies. The trend could increase technology fragmentation, so it doesn’t look good for global progress
With Biden’s administration fully focused on “green economy” objectives, the shift to electric cars in the US is accelerating. Both Ford and Foxconn have made announcements consistent with this. As expected in the current political climate, they’re betting on a fully local US supply chain
Batteries, as a key “problem to be solved” to make electric cars feasible at a massive scale, are a hot space for startups. If one gets the right technology to extend life, reduce cost and increase safety, there could be huge value creation
4. Building new rules for the (digital) game
What is happening
Customer protection: privacy & safety:
Facebook under fire about how its platforms affect young users. This week they answered questions at the US Senate (WSJ), suspended the plan to launch Instagram Kids (NYTimes), and publicly discussed accusations on ignoring concerning results from internal research (Bloomberg)
Meanwhile, Google defends YouTube’s effects on young viewers , and increases efforts against “toxic content” (WSJ), including the search engine results (Bloomberg)
China continues its crusade against cryptocurrencies (Bloomberg). The US also wants to regulate, but with a softer approach (Bloomberg)(WSJ)(WSJ2)
Antitrust:
Google fighting against a EU’s decision on Android (WSJ). They also face potential actions in Australia over ad fees (FT)
Tech geo-strategy:
Huawei is still a priority for China (FT), with intellectual property as a strategic objective (Nikkei)
Chinese AI champion SenseTime is preparing its IPO, and simultaneously facing. pressures due to a US ban (on a particularly sensitive technology) (FT)(Bloomberg)
What it means
Online safety is the hottest topic in technology these days, and Facebook is in the eye of the storm. As discussed in previous weeks, the company’s current business model looks like a weakness, and they’re working to solve that (e.g.: through payments). In the meantime, there is a lot of PR work under way in Menlo Park
Google is trying to learn from its neighbor, and is also very active on ”safety PR” and management of misinformation I would be surprised if they were not also exploring alternative business models, but this is not easy to change anytime soon