|Bid||0.00 x 0|
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|Day's Range||175.70 - 176.28|
|52 Week Range||112.88 - 185.20|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
(Bloomberg Opinion) -- The latest unrest in Iran is about something far more serious than rising gasoline prices. The proof is that, over the weekend, the regime took most of the country offline.NetBlocks, a nongovernmental organization that monitors digital rights, says that by Saturday, Iran’s internet connectivity was 5% of what it was earlier in the week. The clampdown began on Friday, coinciding with demonstrations and protests throughout Iran, with intermittent outages in major cities such as Tehran and Shiraz. By Saturday, the group said, it had “proceeded to a disconnection of all mobile networks followed by a near-total national internet and telecommunication blackout.” And yet the images from inside the country have kept coming. In the past few days, the rest of the world has been able to see videos from inside the country showing mass demonstrations and at times violent crackdowns from security services. “I keep getting these videos,” says Masih Alinejad, an Iranian activist who began the anti-hijab protests and is now based in Brooklyn. Anticipating the regime’s actions, many Iranians have developed a kind of digital resilience. They take advantage of networks that remain online and at times connect to the internet through satellites or service providers in neighboring countries.In some cases, Iranians are also taking advantage of the country’s two-tiered approach to internet access. Despite the near national blackout, regime and university networks have remained online. “The government people have internet,” says Mariam Memarsadeghi, co-founder of Tavaana, a web platform that works to build civil society inside of Iran. “There are good reasons to think the friends and families of people who have government connections will use them to get the word out.”Abdullah Mohtadi, the secretary general of the Komala Party of Iranian Kurdistan, says Kurdish activists use Iraqi SIM cards to gain access to the Internet. The participation of the Kurds in the national protests this time also marks a change. Kurdish Iranians have protested the regime for decades, but their protests are often against the regime’s treatment of the Kurdish minority. This time, he says, Iranian Kurdish parties are coordinating their activism with the national movement.But Alp Toker, the director of NetBlocks, warns that there is no reliable way to circumvent the regime’s restrictions. Roaming SIM cards can be cut off, he points out, while satellite internet is expensive and slow. At the same time, some apparent connections may actually be operated by the government as a ruse — tricking users into thinking their communications are safe.The U.S. government, meanwhile, is doing what it can. It has helped fund organizations such as Memarsadaghi’s, for example. It has worked to help Iranians get access to equipment that would make it easier to get online through satellite connections instead of the on-the-ground internet service providers controlled by the regime. One U.S. official tells me that the State Department has asked some of the big social media companies to suspend the accounts of Iranian regime leaders and entities as long as Iranian citizens are kept offline. Alinejad herself has called on Twitter to shut down the personal accounts of Iran’s supreme leader, Ayatollah Ali Khamenei.But banning Khamenei’s account, and those of other regime figures, is the least that Facebook and Twitter should do. It’s in their interest to develop easy-to-use technologies to circumvent internet bans such as Iran’s; Iranians use Twitter, Instagram, Facebook and Telegram like anyone else.More important, the digital resilience of Iran’s freedom movement is a U.S. national security issue. It’s too soon to say whether these latest convulsions will topple a regime that has made war throughout the Middle East. But it’s clear that online activism was enough of a threat to Khamenei and his deputies that he tried to turn the internet off. The rest of the world should be grateful that so many Iranians have found ways to defy his orders.To contact the author of this story: Eli Lake at firstname.lastname@example.orgTo contact the editor responsible for this story: Michael Newman at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Eli Lake is a Bloomberg Opinion columnist covering national security and foreign policy. He was the senior national security correspondent for the Daily Beast and covered national security and intelligence for the Washington Times, the New York Sun and UPI.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- I’m not sure which is the bigger question: What is T-Mobile US Inc. without John Legere? Or, who is John Legere without T-Mobile?“I own no other clothing,” Legere joked during a conference call Monday morning, after the wireless carrier announced that its magenta-festooned CEO will be stepping down soon. Legere’s last day will be April 30, capping a remarkably successful seven-year run during which he took T-Mobile from a distant last place among the top U.S. carriers and turned it into the fastest-growing member of the industry. He will be replaced by Mike Sievert, who is currently president and chief operating officer.Make no mistake, the CEO transition will usher in a new T-Mobile. That’s not because the visions of the two men are so different — they aren’t, and Legere has been grooming Sievert, 50, for quite some time. But T-Mobile is no longer the industry upstart, and Legere’s departure suggests that he feels his work there is almost done. The last step is to complete the acquisition of Sprint Corp., which is being held up by a group of state attorneys general rightly concerned about the potential harm the transaction may cause consumers.Legere, 61, made clear that he isn’t retiring — nor is he turning his “Slow Cooker Sunday” Facebook Live series into a full-time gig. While he said the rumors of him joining WeWork aren’t true, he has fielded a “tremendous amount” of interest from companies seeking the expertise he’s demonstrated at turning around a troubled business and generating broad enthusiasm for a brand. “I’ve got 30 or 40 years and five or six good acts left in me,” Legere, the class clown of corporate events, said on Monday’s call. When Legere joined T-Mobile in 2012, the brand was in disrepair and customers were fleeing. It looked as if the wireless carrier might never be able to catch up to Verizon Communications Inc., AT&T Inc. or Sprint. But Legere transformed T-Mobile into a self-marketing powerhouse, with he and the rest of the management team shamelessly adopting new looks as walking billboards for the company. And it worked. More important, investments in the network and novel moves to simplify customer bills altered T-Mobile’s perception from one of a budget operator of last resort to a company that’s driving industry innovation. That’s earned it customer loyalty, as evidenced by having the lowest rate of churn — or customer defections — among its peers. T-Mobile’s stock has also left the others in the dust:Over the years, Legere’s style has not only included a closet’s worth of Superman-esque T-shirts adorned with a giant letter T, but also sports coats, sneakers, a leather jacket, a chef’s hat, a sports jersey and anything that could be made hot pink or fit the company’s logo. He has 6.5 million Twitter followers — almost as many as Kris Jenner, the matriarch of the Kardashian family — and is known to respond directly to them, even occasionally dropping into calls to the customer service line. It was all part of his effort to shake up an industry that was going the way of cable-TV, with subscribers irritated by steep, overly complex monthly bills. “We saw an opportunity to disrupt a stupid, broken, arrogant industry,” a typically off-the-cuff Legere said on Monday’s call. “And T-Mobile is far from done,” he added. Though that may be for better or worse. Should the Sprint deal survive or avert the trial that’s set to begin Dec. 9, T-Mobile will gain newfound pricing power. Legere and Sievert have promised that the combined company won’t exploit this, saying that the combination instead allows them to “supercharge” what’s known as T-Mobile’s Un-carrier strategy. But the logic doesn’t quite follow. There’s little reason to believe a merger that facilitates higher prices and better profit margins wouldn’t result in exactly that, and the goodwill Legere has built up with regulators and consumers isn’t insurance enough against this scenario. Fierce competition between T-Mobile and Sprint the last few years is what benefited consumers and forced the industry to do things like offer unlimited data plans. If Sprint gets swallowed, the marketplace will be narrowed to just Verizon, AT&T and T-Mobile.(1)Sievert is a fine choice as CEO. But the reality is that the company he’s inheriting is different from the one Legere joined, and the days of T-Mobile’s incredible rapid growth will fade into the past, and there will be a natural shift to take advantage of its enhanced market power. So when Sievert said on Monday’s call that after the Sprint deal closes, “customers are going to the be winners,” I wouldn’t count on it. (1) Regulators have mandated that T-Mobile unload some assets to Dish Network Corp., helping set up the satellite-TV provider as a new entrant to the wireless market. But Dish is years and multiple billions of dollars away from becoming a formidable rival that can fill the hole Sprint will leave behind. It’s a weak concession that Legere was more than happy to accept.To contact the author of this story: Tara Lachapelle at firstname.lastname@example.orgTo contact the editor responsible for this story: Beth Williams at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- The U.S. Justice Department No. 2 official explained the reasoning behind an investigation of large technology platforms, underscoring the department’s commitment to the probe at the highest levels.Deputy Attorney General Jeffrey Rosen said in a speech Monday at an American Bar Association antitrust forum in Washington that there are “serious and substantive issues” regarding competition by the largest online platforms. While he noted that top department officials are keeping close tabs on the inquiry, no conclusions have been reached yet about the sector, he said.“Even dynamic industries characterized by rapid technological progress can be monopolized to the detriment of consumers,” Rosen said.The Justice Department is investigating whether Alphabet Inc.’s Google and Facebook Inc. thwart competition laws as part of its broader inquiry into digital marketplaces. Attorney General Bill Barr, who has antitrust experience, authorized the probe and is closely watching it.Federal Trade Commission Chairman Joe Simons, who spoke after Rosen, said his agency is also conducting “multiple” probes of technology companies. Facebook has disclosed it’s also being investigated by the FTC.Rosen compared the technology giants to the film industry, which was the subject of multiple antitrust actions in the 20th century. He also referenced the U.S. case against Microsoft Corp. that began in the late 90s and ended in settlement.He cited an appeals court ruling that the software giant’s “operating system was a monopoly” because it was so broadly used that consumers and developers alike were reluctant to switch to competitors.Some antitrust scholars have said that Google, Facebook and other contemporary tech giants are dominant because they benefit from so-called network effects in which platforms become more valuable the more they are used. The companies say they face robust competition.Rosen also acknowledged there are other concerns about the companies that go beyond antitrust that may need to be addressed.“We do not view antitrust law as a panacea for every problem in the digital world,” Rosen said. “We are keeping in mind other tools in areas such as privacy, consumer protection, and public safety as part of a broader review of online platforms, to whatever extent warranted.”To contact the reporters on this story: Ben Brody in Washington, D.C. at firstname.lastname@example.org;David McLaughlin in Washington at email@example.comTo contact the editors responsible for this story: Sara Forden at firstname.lastname@example.org, Mark NiquetteFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- For much of the past decade, the digital media landscape has largely been defined by disruptive companies such as Facebook, YouTube and Netflix. In the case of Facebook and YouTube, those disruptors are now seen as problematic; both face accusations that their platforms have become venues for privacy invasion, misinformation, malicious foreign actors and domestic political extremism. As the federal government weighs regulating these companies this creates an opening for platforms that are well-policed with the potential to take market share from the incumbent bad actors. That suggests the introduction of Walt Disney Co.'s new Disney+ video-streaming service couldn’t have been better timed.Disruptive platforms grew to enormous size by doing pretty much whatever they could to attract both producers and consumers of content. Restrictions on what kinds of content could be published were barriers to growth while also raising thorny ethical questions about how platforms that claimed to be neutral could moderate content on their networks. Content moderation has a big drawback: It's expensive, whether that means building technology to monitor abuse or hiring humans to do the job. It's not too surprising that companies interested in holding down costs and maximizing profits might try to avoid those costs.And it's hard to untangle and design remedies for these problems because the platforms have gone global, with hundreds of millions if not billions of users. With competing and divergent interests among consumers, content producers, advertisers, politicians and shareholders, any change from the status quo is bound to run into opposition. The result is that change ends up being much slower than many might hope.That's where Disney+ comes in. Disney’s announcement on launch day that it had signed up 10 million subscribers indicates potential demand; it's possible that the platform could gain significant market share in the streaming wars much sooner than many anticipate. It gives young parents -- or anyone else not interested in the fire hose of trash on offer elsewhere -- a trusted platform to install on their kids' or their own smartphones and tablets. Every minute spent on Disney+ is a minute not spent on other digital media platforms, lessening the influence of the latter. As the clout of Disney+ grows at the expense of the competition, it could put pressure on the latter to clean up their collective acts and put in place more safeguards.The parallel to consider here is the evolution of the music industry. Until the launch of peer-to-peer music-file-sharing company Napster in 1999, the vast majority of consumers got their music through traditional channels -- mainly radio and CDs. Then Napster and other illicit services built off the BitTorrent platform made it easier for consumers to download MP3 files at a time when major corporations were reluctant to embrace the new technologies. But downloading MP3s often exposed consumers to other types of illegally-distributed content like video games and software. That made MP3s a sort of gateway drug to other dubious online activity and content.That era didn't last long. First, Apple introduced the iTunes store in 2003, which surged in popularity with the growth of first the iPod and later the iPhone. Then, music streaming services like Spotify followed, attracting tens of millions of users. Napster has since shut down, and though black market file-sharing services still exist, most consumers would find them too much of a nuisance to deal with when it's cheap and easy to buy or stream music legitimately.If we're lucky, Disney+ could mark the point when major tech corporations decide to take control of the media ecospheres they've created. There are now a plethora of streaming services with billions of dollars invested in them, giving consumers, particularly parents, choices without some of the downsides of the large, disruptive platforms. Content creators, major corporate partners and advertisers can focus their resources on platforms that have better reputations and aren't constantly in the news for moderation and data-privacy issues. Thriving in the future may require these disruptors to abandon the Wild West ways that powered their initial rise. And who would be bothered by that?To contact the author of this story: Conor Sen at email@example.comTo contact the editor responsible for this story: James Greiff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Conor Sen is a Bloomberg Opinion columnist. He is a portfolio manager for New River Investments in Atlanta and has been a contributor to the Atlantic and Business Insider.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
We believe one of the best tools for ordinary investors who are on the hunt for new ideas is 13F filings. Once every quarter hedge funds with at least $100 million in total positions in publicly traded US stocks/options are required to open the kimono and disclose the number of shares and the total value of […]
(Bloomberg Opinion) -- Do the poor suffer more from inflation than the rich? Recent reports to the contrary, the numbers are not complete enough to answer that question in a simple way. What’s clear is that diverging rates of price inflation are creating distinct winners and losers.Because the U.S. tech sector has advanced so much while many other parts of the economy have been relatively sluggish, the benefits from progress are now quite concentrated, though not in a way directly related to income. Rather, they accrue to people with a taste for a particular kind of novelty.Consider people who love to consume information, or, as I have labeled them, infovores. They can stay at home every night and read Wikipedia, scan Twitter, click on links, browse through Amazon reviews and search YouTube — all for free. Thirty years ago there was nothing comparable.Of course, most people don’t have those tastes. But for the minority who do, it is a new paradise of plenty. These infovores — a group that includes some academics, a lot of internet nerds and many journalists — have experienced radical deflation.Another set of major beneficiaries is people who enjoy writing for fun (as distinct from professional writers). They can write to their friends or groups of friends on WhatsApp and Facebook, all day long, also for free. You might also put “people who love to argue” in this same lucky category, though whether that translates into lasting enjoyment is a question that we could … argue about.Lovers of variety are another big winner. You can use eBay to find that obscure collectible, or browse Amazon’s vast inventory, or watch a lot of different TV programs, ranging from Spanish-language news to curling to cooking shows. In short, it is a wonderful time for those who love to browse and sample. Maybe you discover a favorite category or genre and form a deep aesthetic commitment, or maybe you just want to keep on surfing. Either way, the opportunities are unprecedented.As a side note, I belong to all of those groups: I am an infovore, I write for fun (and for other reasons) and love variety. So I have been a big winner from the last 20 years, in a disproportionate and unrepresentative way — quite apart from any changes to my income.So who might be worse off in this new American world?People who like to spend time with their friends across town are one set of losers. Traffic congestion is much worse, and so driving in Los Angeles or Washington has never been such a big burden. In-person socializing is therefore more costly. On the other hand, the chance that you have remained in touch with your very distant friends is higher, due to email and social media. Those who enjoy less frequent (but perhaps more intense?) visits are on the whole better off for that reason. It is easier than ever to go virtually anywhere in the world and have someone interesting to talk to.Another group of losers — facing super-high inflation rates — are the “cool” people who insist on living in America’s best and most advanced cities. Which might those be? New York, Los Angeles, San Francisco? You can debate that, but they have all grown much more expensive. Many smaller cities, such as Austin, Washington and Boston, are going the same route. Alternatively, if you have more of a taste for isolation or desolation, or a high tolerance for boredom, your pocketbook is not being squeezed so tightly.Medical care is another area that has created big losers and winners. If you suffer from a common malady that simply requires care and attention from the medical establishment, you may well be worse off. The price of medical care is much higher, insurance coverage is by no means guaranteed, and the system has been growing more bureaucratic and arguably more frustrating.If, on the other hand, you have some kind of “frontier” condition, requiring innovative technology or new pharmaceuticals, your chances have never been better.What is the common theme here? It is that those who love or need “the new” are often doing relatively well. Those who value the old standbys — the crosstown friend, the Manhattan brownstone, the uncomplicated visit to the local doctor to have a broken ankle set — are in a more dubious position.As a result, there is an incentive to cultivate a taste for novelty. It’s fun, to be sure, but maybe also a bit confusing and alienating. So when people feel that way, and express it in unexpected ways, perhaps we should not be altogether surprised.To contact the author of this story: Tyler Cowen at email@example.comTo contact the editor responsible for this story: Michael Newman at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tyler Cowen is a Bloomberg Opinion columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include "Big Business: A Love Letter to an American Anti-Hero."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Apple Podcast, Spotify or Pocket Cast.London’s office landlords keep being surprised that things aren’t a lot worse.Demand for office space in the U.K. capital is holding up even as political uncertainty persists in a nation gripped by its decision to leave the European Union. Businesses have continued to lease space despite the prospect of a general election that’s pitted the Brexit-backing Conservative party against a Labour opposition that’s committed to a radical policy program that involves higher taxes, nationalization and handing shares to workers.The disbelief that the surprisingly good times can continue was evident as London’s largest office landlords reported half-year earnings last week. London developer Great Portland Estates Plc kept its guidance for rents broadly flat for the year despite reporting results for the first half that showed it was leasing space at substantially higher rates than expected.“If the current multitude of uncertainties get resolved in a fashion that’s friendly to U.K. business, then we expect to outperform that guidance,” Chief Executive Officer Toby Courtauld said in an interview. “Because of the extent of the uncertainties, we felt it was probably imprudent to revise our forecasts.”To be sure, shares in London’s largest public landlords continue to trade at wide discounts to the value of their assets as fears persist that the U.K.’s eventual exit could yet trigger a slump. The Bank of England’s worst-case scenario envisaged commercial real estate price declines of as much as 48% in the event of a messy divorce.Political UncertaintyTechnology companies like Apple Inc. and Facebook Inc, that are less impacted by Brexit uncertainty have kept demand for office leasing high since the 2016 vote, committing to large new London offices. At the same time, the political nervousness gripping developers and their lenders has limited new supply.“There’s some big deals in the pipeline, so by the end of this year it could easily be the strongest year for occupational take-up for the last five years,” Chris Ireland, U.K. Chief Executive Officer at Jones Lang LaSalle, said in a Bloomberg Television interview on Monday. New construction starts on London office developments fell by almost half in the six months through September, according to a report published Monday by Deloitte. Work began on about 1.8 million square feet (167,225 square meters) of new space in the period, down from about 3.5 million square feet in the previous six months, the lowest level in five years.‘Notably Quiet’The total volume of space under construction is down 10% from the previous survey. Still, with about 3 million square feet of space currently being demolished to make way for new projects, there’s potential for a modest increase in activity in the near future, the Deloitte report said.“The City is notably quiet with only one new-build office and three refurbishments commencing construction,” Mike Cracknell, a director at Deloitte Real Estate said by email. In the West End district where vacancy rates are just 2.9%, only 150,000 square feet of new space that will be ready before the end of next year is still available to lease, according to a Great Portland Estates presentation.The unexpected resilience of the market has rewarded developers that carried on with projects in the aftermath of the referendum and is increasing competition for buildings that can be redeveloped.“We were probably more optimistic than others and the market has continued to be stronger than our base case,” British Land Chief Financial Officer Simon Carter said in a telephone interview. “We haven’t seen occupiers slow down decisions because of the Brexit process or the election.”(Updates with JLL U.K. CEO comment in seventh paragraph.)\--With assistance from Anna Edwards.To contact the reporter on this story: Jack Sidders in London at email@example.comTo contact the editors responsible for this story: Shelley Robinson at firstname.lastname@example.org, Patrick HenryFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Masayoshi Son, after backing startups around the world, is engineering a complex deal on his home turf to create a national champion that can more effectively compete with global rivals like Google and Amazon.com Inc.Son’s SoftBank Group Corp. plans to combine its Yahoo Japan internet business with Line Corp. in a deal that values the country’s leading messaging service at $11.5 billion. SoftBank and South Korea’s Naver Corp. will take Line private and then fold Line and Yahoo Japan into a new joint venture. The deal requires shareholder approvals and is scheduled to close by October 2020.The two companies said the combination is driven by a sense of crisis that global giants are increasing their grip on the technology industry and countries like Japan risk falling behind. Together, Line and Yahoo Japan, which now operates as Z Holdings Corp., will be able to share engineering resources, access broader sets of data and invest more in areas like artificial intelligence, the chief executive officers said in a Tokyo press conference.“The internet industry often operates on the winner-takes-all principle and the strong only get stronger,” said Line co-CEO Takeshi Idezawa. “Even combined, our market capital, business scale and R&D expenditures are dwarfed by the global tech giants.”At the event, the CEOs gave unusual emphasis to their corporate vulnerabilities and the incumbent risks for Japanese consumers, perhaps in an attempt to preempt government scrutiny of a deal that will combine two of the country’s largest internet companies. The chiefs said they need to join forces to mount a serious challenge to much larger rivals from the U.S. and China.“We want to become an AI tech company that leads the world from Japan,” said Kentaro Kawabe, CEO of Z Holdings. Kawabe wore a bright green tie, Line’s trademark hue, while Idezawa donned one in Yahoo Japan red.Under the proposed transaction, Z Holdings and Naver will buy out Line’s public shareholders in a tender offer at a projected 5,200 yen per share, a 13% premium to Line’s share price before news of the talks. Each company plans to spend 170 billion yen ($1.56 billion) on the bid. Naver already owns 73% of Line, while SoftBank Corp., the domestic telecom arm of Son’s business empire, holds a roughly 44% stake in Z Holdings.The companies have been in talks about a possible alliance since June and settled on the idea of a merger in August, according to the statement. After taking Line private, SoftBank and Naver will undertake a reorganization that will eventually result in a 50-50 ownership of the new company. The combined entity will hold stock in Z Holdings, which will remain public with Yahoo Japan and Line as wholly-owned subsidiaries.SoftBank and Line have increasingly competed in fields such as digital payments, and an alliance may allow them to save money on expenses like subsidies. Both companies have also been investing in artificial intelligence to improve their services. While the announcement didn’t say how the mobile payment rivalry will be resolved, it said the resulting company aims to spend 100 billion yen annually on development of AI-powered products.“Big data is key for the future of both companies,” said Koji Hirai, the head of M&A advisory firm Kachitas Corp. “The merger will enable them to create a massive repository of client data.”Idezawa and Kawabe said there are potential synergies in a number of services areas spanning media content, fintech, advertising, communications and commerce, but didn’t give further details. The combined company will also have about 20,000 employees, a major benefit in an industry where competition for talent intensifies year after year, they said.Steps to the planned merger:Step 1 - Final signing of the deal planned for DecemberStep 2 - Naver and SoftBank to buy out Line’s public shareholders and create a new 50-50 joint ventureStep 3 - SoftBank moves its stake in Z Holdings to the JV, while Z Holdings issues 2.8 billion new shares to the JVStep 4 - Line and Yahoo Japan become fully owned subsidiaries of Z Holdings, which will be owned by the JV. The companies plan to complete the deal by October 2020Silicon Valley giants like Google, Amazon and Facebook Inc. and Chinese startups have taken the lead in both pushing AI development and turning the research into commercial products. That has left most other companies scrambling to attract scarce talent and collect the data necessary to conduct research in fields like deep learning.Line and Yahoo Japan are betting they can leverage local knowledge to stay in the race in their home country and markets where their services are popular, including South Korea, Taiwan, Thailand and Indonesia. Line and Z Holdings shares rose on the deal.Yahoo Japan was once the country’s leading search engine, web portal and major e-commerce player, but has lost ground as users migrated from PCs to smartphones. The company’s online shopping offering has been squeezed by Amazon and Rakuten Inc., while smartphone-native newcomer Mercari Inc. lured customers from its auction service. Yahoo Japan counts some 48 million daily active users across its portfolio of more than 100 mobile phone apps.Line’s origins date back to the turn of the century, when Naver dispatched Shin Jung-ho to Japan to promote its search engine technology. Shin led the company through its first decade in relative obscurity, distributing online games and dabbling in social networking services. In 2010, Line acquired Livedoor Inc., a once high-flying Japanese web portal that had fallen on hard times after its founder was thrown in jail for accounting fraud. It launched Japan’s dominant messaging service in 2011 and went public in 2016.Shin, who shares the CEO title with Takeshi Idezawa at Line, will become the newly created entity’s chief product officer. The post will give him control over the 100 billion yen AI budget and oversight of service development for both Line and Yahoo Japan.Line has 82 million monthly active users in Japan and is also the dominant messenger in Taiwan and Thailand, where it has 21 million and 45 million customers respectively. The company has been expanding into financial services by partnering with Nomura Holdings Inc. and Mizuho Financial Group Inc. It has also been developing a lineup of AI-powered hardware products, including speakers and earphones. Outlays on the new businesses have led to losses in four out of five past quarters.In the Tokyo press conference, the CEOs repeatedly spoke about getting outgunned by GAFA, or Google, Amazon, Facebook and Apple Inc. They said they wouldn’t want see Japan lose out on world-leading services like search and e-commerce, but they want to create a local alternative that can address domestic needs and tastes.“GAFA’s biggest threat is the kind of loyalty they command from their users,” said Kawabe. “We want to give users a domestic AI option. By focusing on Japan’s unique challenges, we can offer services others cannot.”(Updates with the deal strategy from first paragraph.)To contact the reporters on this story: Pavel Alpeyev in Tokyo at email@example.com;Takahiko Hyuga in Tokyo at firstname.lastname@example.orgTo contact the editor responsible for this story: Peter Elstrom at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
“Friends” might be getting a reboot on HBO Max while Netflix secures a one-time licensing deal with Paramount for the fourth installment of “Beverly Hills Cop." Why reboots are all the rage as platforms look to beat out streaming competitors.
One of the best tools for ordinary investors who are on the hunt for new ideas is 13F filings. Hedge funds hire some of the smartest Ivy League graduates as their analysts, have access to industry insiders whom they "consult" with, unconventional data sources that cost tens of thousands of dollars, years of experience and […]
(Bloomberg Opinion) -- Some people are fuming at Facebook for allowing unfiltered political ads, while others are fuming at Twitter for banning them. There’s lots of confusion and speculation, but what we know is that these social media companies have fundamentally changed how people exchange information. What we need to figure out is whether they also change how people spread disinformation — and if so, how to fix it. It's a question researchers are actively investigating.After “fake news” became the catchphrase of the 2016 election, experts in psychology, political science, computer science and networks stepped up research on disinformation, learning in more detail how it travels through social media and why some things stick in people’s heads.There’s a good reason not to ban political ads on social media: People in democratic societies should be able to see and hear from candidates directly, not just through interview and debate formats. Social media ads are relatively cheap, so less well-funded candidates can still make themselves heard. The fear is that politicians might lie, mislead and manipulate on social media in ways that were impossible in the days of television and newsprint.Some see a particular threat in the way Facebook allows advertisers to precisely target ads based on personal data. “Facebook profits partly by amplifying lies and selling dangerous targeting tools that allow political operatives to engage in a new level of information warfare,” writes former Facebook insider Yaël Eisenstat in the Washington Post.How dangerous is this information warfare? Experiments show that people can be misled easily and that wrong ideas tend to stick. USC psychologist Norbert Schwarz says people tend to believe messages for many reasons that have nothing to do with credibility. People are more likely to believe messages when they’re presented simply, in an easy-to-read font or spoken without an accent, and repeated often. People are also more easily influenced by messages they think their friends also believe.Stephan Lewandowsky, a psychologist at the University of Bristol, says the extremely fine-grained targeting abilities of social media might interfere with a free marketplace of ideas. Rather than making claims in ads that anyone is free to see, politicians might tailor messages to individual social media users. The propaganda might never even be seen by fact-checkers or opponents who might challenge it. “My main concern is that we’re replacing public debate with manipulation,” he says.There is still hope for democracy, however. There’s little evidence that targeted ads have the power to to change minds or votes, says Harvard law professor Yochai Benkler, co-author of the book “Network Propaganda.” Belief in targeted ads in general is more faith-based than evidence-based, he says. Advertisers assume the targeting causes people to buy things — though this is far from proven.In 2018, there was outrage when it came out that the company Cambridge Analytica claimed it could use the seemingly superficial tastes of consumers to delve deep into their psyches, gain personality information that even their friends didn’t know, and, in theory, use it to manipulate their voting behavior. But in researching a 2018 column on the phenomenon, I learned that the evidence is thin to nonexistent that Cambridge Analytica was able to glean meaningful information or manipulate voting behavior.Dr. Benkler says if he had access to enough Facebook data, he and other researchers could find out who saw which ads, and infer from other information if and how people voted. But it probably isn’t in Facebook’s interest to give out that kind of information. It might reveal that Facebook ads are suppressing voting, or that the ads don’t matter. Either way, it could look bad for the company.Dr. Benkler points to a recent paper in the journal Marketing Science, which shows it’s not clear whether an ad causes people to buy a particular product, or whether the people who are targeted are already more likely to buy. Other research papers report on the limited power of fake news on Facebook and Twitter. For example, one study that looked at Twitter activity during the 2016 election concluded that 80% of fake news was shared by just 0.1% of users, making it a fringe activity.People tend to focus on new threats, Benkler says, when there are known masters of manipulation out there. The ads, fake news, and other so-called content on social media have been getting a lot of attention, but their impact still pales in comparison to that of old-fashioned platforms like cable news and radio. In research reported in his book, he and his co-authors trace stories using of certain words or phrases — like the child sex ring rumor or the conspiracy theories surrounding the Seth Rich murder — from their origins on small-scale blogs and fringe publications to Fox News and conservative talk radio, where they blew up.It’s true that there’s still a lot we don’t know about social media. But instead of giving Facebook more power — by encouraging it to police ads for misleading content — we should make rules to force the company to reveal its targeting practices.If someone sees a Trump ad because she went to church and stopped at the liquor store on the way home, she has the right to know it, says Benkler. And the more information Facebook and others provide, the better scientists can understand how much social media is shaping the free marketplace of ideas, and whether we should be focused on other, more substantial threats to democracy.To contact the author of this story: Faye Flam at firstname.lastname@example.orgTo contact the editor responsible for this story: Sarah Green Carmichael at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Faye Flam is a Bloomberg Opinion columnist. She has written for the Economist, the New York Times, the Washington Post, Psychology Today, Science and other publications. She has a degree in geophysics from the California Institute of Technology.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Twitter Inc. is making some exceptions to its recent ban on all political advertising, announcing Friday that it will allow “cause-based” ads for some economic, environmental or social issues.There will still be certain restrictions for those promotions, also known as issue ads. Groups that promote content about a cause -- climate change, for example -- can’t link to a specific candidate’s landing page, promote the ad on behalf of a candidate or mention a particular piece of legislation. Such ads also won’t be able to target people using specific identifiers, like email addresses or zip codes.Candidates, elected officials and political parties will be banned from buying any ads at all, including ones about issues or causes.The point, Twitter said, is to allow advertisers to encourage discussion around certain subjects, but not directly influence elections.“While advertising should not be used to drive political, legislative or regulatory outcomes,” Twitter General Counsel Vijaya Gadde said on a conference call with reporters, the company believes “that there is certain cause-based advertising that can facilitate public conversations about important topics.”Twitter’s policy comes amid a presidential campaign in full swing less than a year before the election and runs counter to rules Facebook Inc. has established for its social network. Facebook does allow political advertising but doesn’t fact-check those ads the way it does with non-political ads. That policy has generated intense pushback from some candidates, including Senators Elizabeth Warren and Bernie Sanders.Twitter won’t fact-check cause-based ads either. “One of the benefits of Twitter being a primarily public platform is that you can absolutely be called [out] and held accountable for what you say,” explained Del Harvey, Twitter’s vice president of trust and safety. Advertisers will still need to follow the company’s existing ad guidelines, which prohibit things like hateful or sexual content.Twitter unveiled its new political ad rules to better prepare advertisers and the media before it plans to ban all political ads on Nov. 22. Still, the policy is complicated and bound to draw criticism. It could be challenging, for example, to determine when an advertiser crosses the line from promoting a topic for the sake of discussion, to pushing for some kind of political or regulatory outcome. “We tried to make this policy as clear and straightforward as possible, but there are going to be some areas that are going to be more subjective,” Harvey said.“When we find ourselves in those types of situations, we’ll be sure to be transparent about how and why a decision was made,” Gadde said. “But I want to be open that we’re also prepared that we’re going to make some mistakes.”Harvey said Twitter doesn’t expect this political ad ban will impact business in the short term, saying the company is “not anticipating any change to Q4 guidance.” Chief Financial Officer Ned Segal said last month that Twitter made just $3 million in political advertising revenue around the 2018 U.S. midterm elections.To contact the reporter on this story: Kurt Wagner in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Jillian Ward at email@example.com, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Sometimes, the big guys get the press for a reason. The six largest publicly traded companies have a combined market cap of more than $5 trillion – roughly equivalent to the gross domestic product of the Japan, the world’s third-largest economy. In some respects, the stock market is little more than a performance reflection of its very largest members.A look at TipRanks’ Stock Screener quickly reveals the stocks we are talking about, and the names are no surprise. Apple and Microsoft are at the top, valued at over $1 trillion each. We’ll be looking at several of their peers –the news-makers in the tech industry that draw investors in. They’ve reached this peak for similar reasons: positive disruption of established markets, proven success generating revenues, enormous returns for investors. And even at their scale, Wall Street still sees room for them to grow. Let’s dive in.Amazon (AMZN)In the recent Q3 report, Amazon reported sharp earnings losses despite a modest gain in revenues. Total sales rose 24% to $70 billion, against a forecast of $68.8 billion, while EPS missed the estimates, coming in at $4.23 versus the $4.62 predicted. The EPS miss comes after Amazon has spent $1.6 billion over the past two quarters on expansions of the one-day delivery program. In a move that is sure to make investors a bit nervous, the company also announced that capital expenditures will increase in Q4, to $1.5 billion, due to warehouse and product line expansions.It’s a testament to Amazon’s underlying strength that management could post a loss due to high spending – and then announce plans for even higher spending. This is a company with a firm business model and plenty of revenue to cover the expansion plans. But more important, from an investor’s perspective, the capital expenditures are money well spent. Expanding and improving one-day delivery, expanding warehouses, and improving product lines will all positively impact the bottom line once they are fully implemented.So, even though AMZN shares have underperformed the markets in 2019, gaining 18% against the broader S&P’s 23% increase, the stock still shows the potential that has made Jeff Bezos the richest man alive.Setting out the bullish case clearly is Deutsche Bank’s Lloyd Walmsley, who writes, “We would be buyers of Amazon shares post disappointing 4Q guidance, which reflects the typical seasonal step-down in growth… While operating income guidance was meaningfully below consensus, and buyside expectations, we think the clear benefits of 1-day Prime visible in 3Q results give investors comfort the investment is worth it, particularly given the view that Amazon will eventually ring out efficiencies in its delivery and the AWS and advertising profit juggernauts continue along at healthy growth rates…” Walmsley’s $2,150 price target implies a healthy upside of 21% for AMZN. (To watch Walmsley's track record, click here)Doug Anmuth, 5-star analyst from JPMorgan, is also upbeat about Amazon’s future. Giving the stock a $2,200 price target, he says, “We believe Amazon’s flexibility in pushing first-party vs. third-party inventory and its Prime offering both serve as major advantages in its retail business, and its multi-year head start in the cloud has led to a ~60% US market share. Amazon is also starting to show more profit, with its high-growing AWS and Advertising revenue streams also its most profitable.” His price target indicates confidence in a 24% upside potential for Amazon.All in all, the e-commerce king is without question a Wall Street favorite, considering TipRanks analytics indicate AMZN as a Strong Buy. Out of 35 analysts polled in the last 3 months, all 35 are bullish on the stock. With a return potential of nearly 25%, the stock's consensus target price stands at $2,182.36. (See Amazon's price targets and analyst ratings on TipRanks).Alibaba (BABA)Shifting our gaze to China, we find Amazon’s major international competitor. Alibaba is China’s largest retail website, and while China’s government policy of restricting international internet access means that Western observers are less familiar with it, it’s important not to lose sight of some basic facts.BABA’s growth has been impressive. The stock’s 36% year-to-date gains are double those of Amazon, and BABA has gained 107% in the last three years. BABA reported fiscal Q2 2020 earnings earlier this month, and the $1.83 EPS clobbered the forecast of $1.55. Revenues, at $16.7 billion, showed a 40% gain from the year-ago quarter. The company’s Core Commerce segment was up 40% for the period; its smallest segment, Cloud Computing, gained a hefty 64%. Overall, BABA’s growth makes it a viable competitor for Amazon – but it’s important to remember that Amazon has overhead costs that Alibaba lacks.On a further positive point for Alibaba, the company hit record numbers on the November 11 Singles Day sales, the biggest annual online shopping event in China. The first minute and eight seconds of the shopping day saw Alibaba pull in $1 billion, and the company hit $12 billion by the end of the first hour. Total sales for the day, $38 billion, were, for the third year in a row, a new record.UBS analyst Jerry Liu sees a happy future for Alibaba, which he describes in his recent report on the stock: “We believe the company can maintain high-30% revenue growth due to strong user engagement… with new drivers (live streaming, second hand goods, feed ads) potentially accelerating China Commerce revenue growth next year. We also believe… investors have gotten too negative on Alibaba relative to competitors.” Liu recommends buying BABA stock now, and his $210 price target implies a 14% upside. (To watch Liu's track record, click here)Writing from Deutsche Bank, analyst Eileen Deng describes the path forward for Alibaba: “Alibaba's Sep Q results featured a nice beat on revenue... We sensed a great effort moving towards a disciplined investment strategy... There will be more focus on user retention, cross-selling, and then reinvestment out of discretionary profit. By realizing stronger synergies, we become more confident for an EBITDA profit growth in the next few quarters.” Deng set a $223 price target, suggesting that BABA has room for 19% growth.Like Amazon, Wall Street’s analysts are unanimous on BABA. The Strong Buy consensus rating is based on 17 "buys" set in recent weeks, while the $229 average price target indicates a 24% upside from the current trading price of $185. (Find out how the Street’s average price target for Alibaba breaks down)Facebook (FB)Facebook’s reputational problems in the area of consumer data protection and privacy are well known, and founder Mark Zuckerberg’s attempts over the past two years to address the issue brought him several rounds of merciless mockery – ironically, on the very social media networks he had pioneered. Earlier this year, Facebook suffered an earnings hit when the company had to set aside $5 billion in cash to cover a record-setting FCC fine related to the problems with data privacy.But with a market cap of $555 billion, annual revenues exceeding $55 billion, and net income of $22 billion, Facebook had the resources to pay that fine, swallow the immediate loss, and move forward. Despite the mockery heaped on Zuckerberg, the company has made visible efforts to improve data security – although the company still faces difficulties relating to perceptions of political censorship. Zuckerberg has said that FB will simply allow anyone to post any political idea – but in today’s highly charged socio-political environment, it’s probably not possible for him to please everyone.Facebook’s shares have reacted well to the company’s efforts at reputation management and damage control. The tech giant suffered first and worst in the 2H18 downturn, losing 42% of its value before bottoming out in December. Since then, the stock has shown a solid recovery, climbing 55% from its lowest point. While it’s not back at peak values yet, and has shown high volatility since May, FB is up 44% year-to-date.A solid Q3 report underscored the company’s gains. Daily active users, a key metric, climbed to 1.62 billion – and yes, that’s billion; Facebook reaches 22% of the world’s population every day through its family of apps. Revenues and EPS, at $17.65 billion and $2.12 respectively, both beat the forecasts.Youssef Squali, 5-star analyst with SunTrust Robinson, lays it out in his recent report on FB shares: “We remain bullish on FB after another solid quarter, beating on all financial/ user metrics amidst intense regulatory/media scrutiny… We believe Facebook has become the foundation of the social web… Facebook is still in its early growth phase, in our view, and given its enormous reach and time spent statistics, coupled with relevance, targeting, and social context, we believe the company will capture a disproportionately high percentage of brand ad dollars over the next 2-3 years.” Squali’s price target of $250 implies an upside of 31%. (To watch Squali's track record, click here)Facebook’s Strong Buy consensus rating is not unanimous, but it is based on 27 "buy" ratings set in recent weeks. The 3 "holds" and 1 "sell" are reminders of the company’s recent problems, but don’t detract from optimistic the outlook. Shares are priced at $195, and the average price target of $235 is well above the July 2018 peak of $235. Overall, FB has a 21% upside potential. (Discover how the overall stock-price forcecast for Facebook breaks down here)
While the crypto market continues to stall, some analysts are betting on institutions to carry the next bull cycle, opposed to casual traders who snowballed the BTC price in 2017. Indeed, the Wild West days of crypto, accompanied by thousands of cash-grabbing, fraudulent ICOs seem to be coming to a close — compliance is the […]
In this week's cryptocurrency news, Facebook's Libra and China's newfound blockchain and crypto acceptance push other nations to react or potentially be left behind.
(Bloomberg Opinion) -- Jeremy Corbyn’s Labour Party is behind in the polls for the U.K. election so it’s unsurprising that he’s chucking out more giveaways to voters. The policy to nationalize BT Group Plc’s fixed-telecoms networks business and provide free fiber broadband to every British household is a humdinger nonetheless.Of course, the chances of this becoming reality are slim given that Corbyn’s best hope of becoming prime minister is a coalition with more moderate political parties. Yet the idea has stimulated even more debate than Labour’s previous plans to re-nationalize the railways and the energy utilities, so it’s at least worth thinking about. Taking it at face value, the policy would be a huge mistake that would achieve the opposite of its stated aim of accelerating Britain’s sluggish rollout of fiber broadband.First, there’s the cost. A Labour government would add 15 billion pounds ($19 billion) to an existing 5 billion pound broadband spending pot, according to Shadow Chancellor John McDonnell. Even assuming that would cover the required capital expenditure — a big assumption — it would cost at least the same again to nationalize Openreach, BT’s networks division.McDonnell says the state would pay for the acquisition by giving BT’s shareholders government bonds as compensation. Yet why would investors, especially those outside the U.K. protected by treaties against asset expropriation, exchange an 8.1% annual dividend yield from their BT stock for the less than 1% returns from U.K. gilts? The network spending itself would be funded by an increased tax on the likes of Facebook Inc., Alphabet Inc. and Amazon.com Inc. But the G-20 will probably adopt new international tax standards next year to try to curb Big Tech’s avoidance tactics. So a Labour government might not even be able to whomp up these levies without breaching the new guidelines.Then there’s the speed of rolling out the networks. While the U.K. is well behind the pace on high-speed broadband rollout (it’s 10th in the European Union’s 2019 connectivity rankings), a tortured nationalization process isn’t the answer. BT would have no incentive to keep investing during that period.The same’s true for private competitors such as John Malone’s Virgin Media, Vodafone Group Plc and Comcast Corp.’s Sky. Increased competition has at least accelerated the pace of the rollout: The proportion of homes with fiber access has doubled in two years.Infrastructure investors have also been attracted by the returns promised by fiber, prompting a flurry of investment from KKR & Co., Macquarie’s infrastructure fund and Goldman Sachs Group Inc. McDonnell’s comments have certainly caused some consternation. TalkTalk Telecom Group Plc. said it had paused talks to sell a fiber project, for which Goldman-backed CityFibre Ltd. was the lead bidder. Should Labour ever get the chance to offer free broadband to everyone through a state-owned provider, tens of thousands of private sector jobs would be jeopardized. How would other companies be able to compete?And full-fiber broadband might not even really be necessary. The adoption of next-generation 5G mobile networks promises the ability to transmit far more data at far greater speeds. That would make fiber to every home redundant in parts of the country.There are better and more thoughtful ways to get fiber installed sooner: Making it easier to get permits to build the network; permanently reducing business tax rates for new fiber; and making it obligatory for customers to accept fiber upgrades. If McDonnell is willing to hand over 15 billion pounds to BT shareholders to snap up Openreach, why not use the funds to subsidize the rollout directly?To contact the author of this story: Alex Webb at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Sign up to our Brexit Bulletin, follow us @Brexit and subscribe to our podcast.Britain’s Labour party pledged to offer all consumers free fiber broadband within a decade by nationalizing phone carrier BT Group Plc’s Openreach unit at a cost of 20 billion pounds ($26 billion).BT shareholders would get newly-issued government bonds in return for their shares, Labour’s shadow chancellor, John McDonnell, said in a speech in Lancaster, England on Friday. Shares of BT fell as much as 3.7%.It’s the biggest new pledge of the election campaign from Labour, which already has plans to nationalize the postal service, the railways and water and energy utilities. The broadband effort would be financed in part with taxes on multinational companies such as Amazon.com Inc., Facebook Inc. and Alphabet Inc.’s Google. While the proposals may win over some voters, Labour may not be in a position to implement them. It has an average of 29% support in recent polls, trailing the Conservatives at 40%.“A Labour government will make broadband free for everybody,” party leader Jeremy Corbyn said at the campaign event at Lancaster University. “This is core infrastructure for the 21st century. It’s too important to be left to the corporations.”McDonnell said the new broadband pledge would be funded by asking “tech giants like Google and Facebook to pay a bit more” in proportion to their activities in the U.K. “So if a multinational has 10% of its sales, workforce, and operations in the U.K., they’re asked to pay tax on 10% of their global profits,” McDonnell said.While Labour puts the cost of the plan at about 20 billion pounds, BT’s Chief Executive Officer Philip Jansen said the proposal would cost almost five times that amount.BT shares were down 1.6% as of 12:29 p.m. in London, suggesting shareholders aren’t too worried about the nationalization risk. That gives the company a market value of about 19 billion pounds.“These are very very ambitious ideas,” Jansen said Friday in an interview on BBC Radio 4. “The Conservative Party have their own ambitious ideas for full fiber for everybody by 2025.”“How we do it is not straightforward, it needs funding,” Jansen said, putting the cost of such a roll-out over eight years at “not short of 100 billion pounds.”Lower Value?BT has been working to speed up its own full-fiber build and Jansen said the company’s shares have fallen on the recognition that “we’re going to be investing very very heavily.” Shareholders “are nursing massive losses on their investment” in BT if they’d bought it a few years ago, he said.Investors could get burned, as Openreach’s business would likely be undervalued in an expropriation, New Street analyst James Ratzer said in an email, adding that nationalization “rarely works well for shareholders.” Analysts at Jefferies put Openreach’s value at 13.5 billion pounds, flagging annual costs for operations and to service its high pension deficit.Labour’s McDonnell said the party has taken advice from lawyers to ensure its broadband plan fits within European Union state aid rules in case the U.K. is still in the bloc when the plans are carried out.Britain LaggingCorbyn’s plan is meant to solve a connectivity gap: Britain lags far behind other European nations when it comes to full-fiber coverage, which allows for gigabit-per-second download speeds. About 8% of the country is connected -- just under 2.5 million properties, according to a September report by communications regulator Ofcom. That compares with 63% for Spain and 86% for Portugal.As policymakers and regulators have been creating conditions to spur more competition with BT, rivals including Liberty Global Plc’s Virgin Media and Goldman Sachs Group Inc.-backed CityFibre have been jumping in to commit billions of pounds to infrastructure plans.“Those plans risk being shelved overnight,” Matthew Howett, an analyst at Assembly, said in an email. “This is a spectacularly bad take by the Labour Party.”The Labour announcement caused TalkTalk Telecom Group Plc to pause talks to sell a fiber project as the industry seeks clarity.Analysts are skeptical the government could roll out fiber more effectively than private industry and Howett pointed to delays and budget overruns from a state-led effort in Australia.It’s not the first time radical ideas have been proposed for BT’s Openreach unit, a national network of copper wire and fiber-optic cable that communication providers including BT, Comcast Corp.’s Sky and Vodafone Group Plc tap into to provide home internet to customers.BT was forced to legally separate the division from the rest of the company in recent years over concerns about competition, and that it wasn’t investing fast enough to roll out fiber, and some investors have suggested the company should fully spin it out into an independent, listed business to unlock value.‘Fantasy’ PlanNicky Morgan, the Conservative cabinet minister with responsibility for digital services, dismissed Corbyn’s plan in a statement as a “fantasy” that “would cost hardworking taxpayers tens of billions” of pounds.The Conservative Party’s own proposal for full-fiber broadband across the U.K. by 2025 -- eight years ahead of a previous government goal -- has raised eyebrows across the telecom industry, as some executives and analysts expressed skepticism about whether it’s doable, whether there’s consumer demand for the ultrafast internet service and how companies would make money.‘A Disaster’TechUK, the industry’s main trade body, called Labour’s plan “a disaster” for the telecom sector. “Renationalization would immediately halt the investment being driven not just by BT but the growing number of new and innovative companies that compete with BT,” said Chief Executive Officer Julian David.The announcement will provide more fodder for the arguments by Prime Minister Boris Johnson’s Conservatives that a Labour government risks plunging the country into an economic crisis. Chancellor of the Exchequer Sajid Javid over the weekend released analysis estimating Labour would raise spending by 1.2 trillion pounds over five years. McDonnell at the time called it “fake news.”McDonnell said Parliament would set the value of Openreach when it’s taken into public ownership and that shareholders would be compensated with government bonds.Under Labour’s plan, the roll-out would begin in areas with the worst broadband access, including rural communities, followed by towns and then by areas that are currently well-served by fast broadband.According to elections expert John Curtice, Corbyn’s chances of forming a majority government are “as close to zero” as it’s possible to get. The election is still hard to predict, and it is possible that Labour could yet win power, either on its own or with the support of smaller parties.(Updates with Corbyn remarks in fourth paragraph, McDonnell in fifth.)\--With assistance from Jennifer Ryan and Kit Rees.To contact the reporters on this story: Alex Morales in London at firstname.lastname@example.org;Thomas Seal in London at email@example.comTo contact the editors responsible for this story: Rebecca Penty at firstname.lastname@example.org, ;Tim Ross at email@example.com, Frank ConnellyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- A strategy blurring the lines between benchmark-hugging and stock picking is attracting choosy investors.Those who appreciate the lower costs and simplicity of passive investing can make their own edits to a benchmark with an approach called direct indexing. Rather than owning an exchange-traded fund or mutual fund that tracks a gauge like the S&P 500, the strategy allows you to buy shares of the companies in an index, while tailoring the portfolio to your needs.This style of investing is getting increased attention, especially as values-based money management becomes more mainstream. Assets in direct indexing strategies may total as much as $300 billion, though an exact figure is difficult to calculate, according to estimates from Bloomberg Intelligence analyst Eric Balchunas. Eaton Vance Corp.’s Parametric Portfolio Associates, Optimal Asset Management and Ethic Inc. all offer direct index strategies. But critics say flexible indexing undermines the whole premise of passive investing.“It sounds like a blessing on paper but it could be a curse in reality,” Balchunas said.These strategies are revamping separately managed accounts, products that can be used to create bespoke portfolios, traditionally for institutional investors or high-net-worth clients. And developments such as zero-commission trading and brokerage Charles Schwab Corp.’s offer to transact fractional shares have made it cheaper and easier to run tailored pools than ever before, paving the way for direct indexing to reach more customers.The accounts can be used in various ways: an Apple Inc. staffer who already owns company stock via benefits could reduce further exposure in their portfolios, for example. An ethically minded investor who wants to steer clear of a company that’s not doing enough to combat climate change could use direct indexing to avoid that firm but still track the rest of the market.There are also some tax advantages to this approach as the provider can regularly adjust an account’s holdings to lock-in tax losses. Known as tax-loss harvesting, ETF users can do something similar to minimize their gains, but direct indexers can do this at an individual stock level.“There are use cases,” said Nate Geraci, president of The ETF Store, an investment adviser that uses ETFs to construct portfolios. Still, “I don’t believe it’s an ETF killer.”Buyer BewareThe freedom to tweak your portfolio comes with risks. The more you stray from the index, the greater the difference in your returns versus that benchmark. That could be an advantage -- if you excluded Facebook Inc. when it lost 26% last year, for example -- but it could also be a serious drag on your performance. Facebook is up 47% in 2019.Customers also pay a larger upfront management fee for the personalization. Direct-index strategies typically charge about 0.15-0.35%, according to data from Bloomberg Intelligence. That’s less than an active mutual fund, but still at least five times more than some of the most popular, cheap equity ETFs.Direct indexers may need to grapple with the fact that they could end up paying more to own, edit and potentially underperform an index than they would if they owned an ETF based on the same benchmark.“You accept a certain amount of deviation,” Brian Langstraat, the chief executive officer of Parametric, said on an episode of Bloomberg’s “Trillions” podcast. “You have to be willing to accept a difference in order to avail yourself of the customization.”To contact the reporter on this story: Annie Massa in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Sam Mamudi at email@example.com, Rachel EvansFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Venture capitalist Ben Horowitz says CEOs at large tech companies don’t deserve to be villified.
(Bloomberg Opinion) -- “Technological sovereignty” is one of the European Union’s buzzwords of the moment, conjuring up an image of a safe and secure space for zettabytes of home-grown data, free from interference or capture by the U.S. and China.Both France’s Emmanuel Macron and Germany’s Angela Merkel have used the phrase to kick-start all sorts of initiatives, from artificial intelligence programs to state-backed cloud computing. The new European Commission president Ursula Von der Leyen has etched the concept into her political guidelines.It’s a noble goal, if only because it acknowledges Europe is anything but technologically sovereign right now. The internet behemoths are in America and China — Alphabet Inc., Facebook Inc., Amazon.com Inc., Alibaba Group Holding Ltd — and an estimated 92% of the Western world’s data is stored in the U.S., according to the CEPS think tank. China accounts for more than one-third of global patent applications for 5G mobile technology. Amazon boasts that 80% of blue-chip German companies on the DAX exchange use its cloud services business AWS. The trigger to do something about it is the race for supremacy between Beijing and Washington, which is spilling over into the tech sector and undercutting the EU’s ability to protect its turf. President Donald Trump’s ban on Huawei Technologies Co. and his attempts to bully allies into doing the same was a wake-up call, however valid his security concerns. The U.S. “Cloud Act,” which forces American businesses to hand over data if ordered regardless of where it’s stored, was another. Both China and the U.S. see the EU as an easy mark in the global tech tussle. And they’re right. Europe’s problem is that recapturing sovereignty is neither easy nor cheap. Take cloud computing, one area where France and Germany are eyeing the building of “sovereign” domestic infrastructure for use by national and European companies. This is a $220 billion global market dominated by U.S. suppliers with market values of close to $1 trillion, which invests tens of billions of dollars every year on infrastructure. Their power isn’t just technological: When Microsoft Corp. spends $7.5 billion on an acquisition such as GitHub, a forum for open-source coding, it’s bringing valuable developers into its own orbit. Likewise, Amazon’s AWS has the scale, cheap pricing and perks that lock in customers.France and Germany won’t win a head-on battle in this field. Paris is still smarting from a failed attempt years ago at building a sovereign cloud for the princely sum of 150 million euros ($165 million). Germany has Gaia-X, which looks like a common space for the sharing of data by the leading lights of the DAX , from SAP SE to Siemens AG. It’s hard to see how such initiatives will lead to true digital sovereignty, though; not just because of a lack of serious investment, but because it’s hard to avoid using U.S. cloud tech.Still, it wouldn’t be a bad thing if this trend led to France and Germany collaborating more — laying the groundwork for more ambitious spending — and to Brussels doing what it does best: setting the rules of engagement for tech companies everywhere. Digital commissioner Margrethe Vestager is already demanding tougher enforcement of data protection laws and taking a consistently muscular approach to antitrust violations by the Silicon Valley and Seattle giants. It’s not sovereignty, but it’s a start.To contact the author of this story: Lionel Laurent at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.