Big Tech rolls on as investors shrug off regulatory pressure

Analysts say the big tech firms are also well-positioned to deal with tougher regulations. (File/AFP)
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Updated 15 August 2021

Big Tech rolls on as investors shrug off regulatory pressure

  • Shares in Apple, Facebook, Amazon and Google parent Alphabet have hovered near record highs in recent weeks
  • Big Tech critics in the United States and the EU want Apple and Google to loosen the grip of their online app marketplaces

WASHINGTON: Pressure is rising on Big Tech firms, signaling tougher regulation in Washington and elsewhere that could lead to the breakup of the largest platforms. But you’d hardly know by looking at their share prices.
Shares in Apple, Facebook, Amazon and Google parent Alphabet have hovered near record highs in recent weeks, lifted by pandemic-fueled surges in sales and profits that have helped the big firms extend their dominance of key economic sectors.
The Biden administration has given signs of more aggressive regulation with appointments of Big Tech critics at the Federal Trade Commission.
But that has failed to dent the momentum of the largest tech firms, despite tough talk and antitrust litigation in the United States and Europe, with US lawmakers eyeing moves to make antitrust enforcement easier.
Big Tech critics in the United States and the EU want Apple and Google to loosen the grip of their online app marketplaces; more competition in a digital advertising market dominated by Google and Facebook; and better access to Amazon’s e-commerce platform by third-party sellers.
One lawsuit tossed out by a judge but in the process of being refiled could force Facebook to spin off its Instagram and WhatsApp platforms, and some activists and lawmakers are pressing for breakups of the four tech giants.
All four have hit market valuations above $1 trillion, with Apple over $2 trillion. Alphabet shares are up some 80 percent from a year ago, with Facebook up nearly 40 percent and Apple almost 30 percent. Amazon shares are roughly on par with last year’s level after breaking records in July.
Microsoft, with a $2 trillion valuation, has largely escaped antitrust scrutiny, even as it has benefitted from the cloud computing trend.
The surging growth has stoked complaints that the strongest firms are extending their dominance and squeezing out rivals.
Yet analysts say any aggressive actions, in the legal or legislative arena, could take years to play out and face challenges.
“Breakup is going to be nearly impossible,” said analyst Daniel Newman at Futurum Research, citing the need for controversial legislative changes to antitrust laws.
Newman said a more likely outcome would be multibillion-dollar fines that the companies could easily absorb as they adjust their business models to adapt to problematic issues in a fast-moving environment.
“These companies have more resources and know-how than the regulators,” he said.
Dan Ives at Wedbush Securities said any antitrust action would likely require legislative change — unlikely with a divided Congress.
“Until investors start to see some consensus on where the regulatory and law changes go from an antitrust perspective, it’s a contained risk, and they see a green light to buy tech,” he said.
Other factors supporting Big Tech include a massive shift to cloud computing and online activities that allow the strongest players to benefit, and a crackdown in China on its large technology firms.
“The China regulatory crackdown has been so massive in scale and scope, it has driven investors from Chinese tech to US tech,” Ives said.
“Even though there is regulatory risk in the US, it pales in comparison to the crackdown we’re seeing from Beijing.”
Analysts say the big tech firms are also well-positioned to deal with tougher regulations.
Tracy Li of the investment firm Capital Group, in a recent blog post that the tech giants face major risks in regulation around privacy, content moderation and antitrust.
“Concerns related to privacy or content may actually strengthen, rather than weaken, the moats of the largest platforms,” Li said.
“These companies often boast well-established protocols and have more resources to tackle privacy and legal matters.”
Other analysts point to the swift movement by tech firms to adapt their business models in contrast to the slow efforts to regulate.
Facebook, for example, is adapting to changing conditions by moving into the “Metaverse” of virtual and augmented reality experiences, noted Ali Mogharabi at Morningstar.
Mogharabi said Facebook’s vast data collected from its 2.5 billion users gives it the ability to withstand a regulatory onslaught.
“Antitrust enforcement and further regulations pose a threat to Facebook’s intangible assets, data,” the analyst said in a July 29 note.
“However, increased restrictions on data access and usage would apply to all firms, not just Facebook.”
Independent analyst Eric Seufert said in a tweet that “regulatory changes will have a significant impact on Facebook’s business, but the sheer scale of Facebook and the growth trajectory of digital advertising ameliorate that. Facebook’s gold mine is far from depleted.”
Newman said the large tech firms have expanded during the pandemic by delivering innovative services, extending a trend that has seen the strong get stronger.
“These platforms have created better experiences for consumers, but it is extremely difficult for new entrants,” he said.
For investors, Newman added, “that means no one is creating revenue and profit growth faster.”


Trump announces plans to launch new social network ‘TRUTH Social’

Updated 21 October 2021

Trump announces plans to launch new social network ‘TRUTH Social’

WASHINGTON: Former US president Donald Trump announced plans Wednesday to launch his own social networking platform called “TRUTH Social,” which is expected to begin its beta launch for “invited guests” next month.
The long-awaited platform will be owned by Trump Media & Technology Group (TMTG), which also intends to launch a subscription video on-demand service that will feature “non-woke” entertainment programming, the group said in a statement.
“I created TRUTH Social and TMTG to stand up to the tyranny of Big Tech,” Trump, who was banned from Twitter and Facebook in the wake of the Capitol insurrection carried out by his supporters on January 6 this year, was quoted as saying in the statement.
“We live in a world where the Taliban has a huge presence on Twitter, yet your favorite American President has been silenced. This is unacceptable,” he continued.
The Trump Media & Technology Group will merge with blank check company Digital Acquisition Corp. to make TMTG a publicly-listed company, the statement said.
“The transaction values Trump Media & Technology Group at an initial enterprise value of $875 Million, with a potential additional earnout of $825 Million in additional shares (at the valuation they are granted) for a cumulative valuation of up to $1.7 Billion depending on the performance of the stock price post-business combination,” it stated.
Ever since he was banned from the world’s dominant social networks as punishment for stirring up the mob that ransacked Congress on January 6, Trump has been looking for ways to reclaim his Internet platform.
In May he launched a blog called “From the Desk of Donald J. Trump,” which was touted as a a major new outlet.
But Trump, who was also banned from Instagram, YouTube and Snapchat in the wake of the Capitol mayhem, canceled the blog just a month later.
Former Trump aide Jason Miller launched a social network called Gettr earlier this year, but the former president has not yet joined it.
 


UAE ranked 11th on major global brand strength index, beating US, UK

Updated 21 October 2021

UAE ranked 11th on major global brand strength index, beating US, UK

  • The top five positions are taken by Switzerland, Canada, the Netherlands, Singapore, and Germany, followed by Australia, Denmark, Norway, Sweden, and New Zealand

LONDON: The UAE climbed three spots from last year’s global Brand Strength Index, beating both the UK and the US, to be ranked 11th among the world’s strongest nation brands. 

Brand Finance gave the UAE a score of 79.1 out of 100, marking “the latest confirmation of the excellence of the Emirati model in strategic planning and development,” according to Minister of Cabinet Affairs Mohammed Al-Gergawi.

He told The National: “It confirms the nation’s success in establishing modern, open, transparent and interactive media communication with the public around the world, through which it has been able to present its many inspiring success stories.”

Similar metrics demonstrated a rise in UAE’s economic ranking and financial value.

“The rise in the economic value of the UAE’s national brand from 18th to 17th position this year is a clear indication of the country’s global reputation and competitiveness in various fields,” added Al-Gergawi.

The top five positions are taken by Switzerland, Canada, the Netherlands, Singapore, and Germany, followed by Australia, Denmark, Norway, Sweden, and New Zealand.

“There is no doubt that achieving 11 percent brand value growth, from $672 billion to $749 billion, is a major achievement in the 50th year of the UAE and underlines how quickly our nation has established its name and global identity as a developed and pioneering country. It is an exceptional success story that will be told to all generations,” Al-Gergawi added. 

Brand Finance, a brand valuation company, measures the relative strength of national brands through a balanced scorecard of metrics evaluating brand investment, equity, and performance. 

Andrew Campbell, managing director at Brand Finance Middle East, said that the UAE is “challenging the Western status quo in ranking.” 

He added: “As the UAE celebrates its Golden Jubilee year, it continues to fly the flag high, promoting the nation’s achievements across the world through ground-breaking initiatives like the Emirates Mars Mission and serving as the gateway to the region by hosting the world for 182 days at Expo 2020 Dubai.”

Not only did the UAE score high on brand strength, but the country also stood out for its COVID-19 response, getting top marks on the influence and business and trade pillars, while also scoring strongly on the education and science pillars. 

While Switzerland continued to dominate the market as the world’s strongest nation brand, other countries took a fall. 

The UK, US, Japan, and France have all fallen out of the top 10 strongest nation brands following perceptions on how they handled the COVID-19 pandemic. 

The UK fell dramatically from 2nd to 14th position with a score of 77.4, while the US dropped from 4th to 17th with a score of 75.1. 

Despite their brand strength taking a hit, however, these nations all still feature in an unchanged top 10 when ranked by nation brand value.

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Facebook paying fine to settle US suit on discrimination

Critics of the practice contend that the foreign nationals will work for lower wages than US citizens. (File/AFP)
Updated 20 October 2021

Facebook paying fine to settle US suit on discrimination

  • Facebook is paying a hefty fine to resolve allegations that it discriminated against US workers in favor of foreigners with special visas to fill high-paying jobs
  • Facebook sponsored the visa holders for “green cards” authorizing them to work permanently.

WASHINGTON: Facebook is paying a $4.75 million fine and up to $9.5 million to eligible victims to resolve the Justice Department’s allegations that it discriminated against US workers in favor of foreigners with special visas to fill high-paying jobs.
Facebook also agreed in the settlement announced Tuesday to train its employees in anti-discrimination rules and to conduct more widespread advertising and recruitment for job opportunities in its permanent labor certification program, which allows an employer to hire a foreign worker to work permanently.
The department’s civil rights division said the social network giant “routinely refused” to recruit, consider or hire US workers, a group that includes US citizens and nationals, people granted asylum, refugees and lawful permanent residents, for positions it had reserved for temporary visa holders.
Facebook sponsored the visa holders for “green cards” authorizing them to work permanently. The so-called H-1B visas are a staple of Silicon Valley, widely used by software programmers and other employees of major US technology companies.
Critics of the practice contend that the foreign nationals will work for lower wages than US citizens. The tech companies maintain that’s not the case, that they turn to foreign nationals because they have trouble finding qualified programmers and other engineers who are US citizens.
“In principle, Facebook is doing a good thing by applying for green cards for its workers, but it has also learned how to game the system to avoid hiring US tech workers,” said Daniel Costa, director of immigration law and policy research at the liberal-leaning Economic Policy Institute. “Facebook started lobbying to change the system more to its liking starting back in 2013 when the comprehensive immigration bill that passed the Senate was being negotiated.”
The settlement terms announced Tuesday are the largest civil penalty and back-pay award ever recovered by the civil rights division in the 35-year history of enforcing anti-discrimination rules under the Immigration and Nationality Act, officials said. The back pay would be awarded to people deemed to have been unfairly denied employment.
The government said Facebook intentionally created a hiring system in which it denied qualified US workers a fair opportunity to learn about and apply for jobs that it instead sought to channel to temporary visa holders.
“Facebook is not above the law and must comply with our nation’s federal civil rights laws, which prohibit discriminatory recruitment and hiring practices,” Assistant Attorney General Kristen Clarke told reporters in a telephone conference. “Companies cannot set aside certain positions for temporary visa holders because of their citizenship or immigration status.”
Facebook also agreed in a separate settlement with the Labor Department to expand its recruitment for US workers and to be subject to ongoing audits to ensure compliance.
The company based in Menlo Park, California, said it believes it met the government’s standards in its practices. It said it agreed to the settlements to end the litigation and move ahead with its permanent labor certification program — which it called an important part of its “overall immigration program.”
“These resolutions will enable us to continue our focus on hiring the best builders from both the US and around the world, and supporting our internal community of highly skilled visa holders who are seeking permanent residence,” Facebook said in a statement.
Facebook says it ended the April-June quarter this year with over 63,400 full-time employees globally and has 3,000 current job openings.
The lawsuit was filed against Facebook last December by the Justice Department under the Trump administration. The alleged violations are said to have occurred from at least Jan. 1, 2018 to at least Sept. 18, 2019.
A $4.75 million fine and $9.5 million in back pay are a trifle for a company valued at $1 trillion with revenue of nearly $86 billion last year. But the announcement comes at a time of intense public discomfort and scrutiny for Facebook.
Public allegations and testimony to Congress from a former Facebook data scientist that the company disregarded internal research showing harm to children have raised a public outcry and calls for stricter government oversight of the company. The former employee, Frances Haugen, accused Facebook of prioritizing profit over safety and being dishonest in its public fight against hate and misinformation.
The company is also awaiting a federal judge’s ruling in an epic antitrust suit filed against it by the Federal Trade Commission. Calls from critics and lawmakers of both parties to break up the behemoth company are intensifying.


Britain fines Facebook $70 mln for breaching order in Giphy deal

Facebook had refused to report all the required information, despite multiple warnings, the CAM said. (File/Twitter)
Updated 20 October 2021

Britain fines Facebook $70 mln for breaching order in Giphy deal

LONDON: Britain’s competition regulator has fined Facebook 50.5 million pounds ($69.6 million) for breaching an order imposed during its investigation into the US social media giant’s purchase of GIF platform Giphy, the agency said on Wednesday.
The Competition and Markets Authority (CMA) said Facebook had deliberately failed to comply with its order, and the penalty served as a warning that no company was above the law.
Facebook said it strongly disagreed.
The CMA said Facebook had failed to provide full updates about its compliance with requirements to continue to compete with Giphy and not integrate its operations with Giphy’s while its investigation was ongoing.
Facebook had refused to report all the required information, despite multiple warnings, the CAM said, and it therefore considered the failure to comply deliberate.
“We warned Facebook that its refusal to provide us with important information was a breach of the order but, even after losing its appeal in two separate courts, Facebook continued to disregard its legal obligations,” said Joel Bamford, senior director of mergers at the CMA.
“This should serve as a warning to any company that thinks it is above the law.”
Facebook said: “We strongly disagree with the CMA’s unfair decision to punish Facebook for a best effort compliance approach, which the CMA itself ultimately approved.
“We will review the CMA’s decision and consider our options.”


Algeria journalist freed after 6 months’ jail for ‘false news’

Updated 20 October 2021

Algeria journalist freed after 6 months’ jail for ‘false news’

  • ‘Our reporter Rabah Kareche is free again after six months behind bars in Tamanrasset prison’
  • Algeria ranks a lowly 146th out of 180 countries on the Reporters Without Borders Press Freedom Index

ALGIERS: Algerian journalist Rabah Kareche left prison on Tuesday after completing a six-month sentence for “spreading false news,” his newspaper Liberte said.
“Our reporter Rabah Kareche is free again after six months behind bars in Tamanrasset prison” in the country’s desert south, it reported on its website.
An appeals court had sentenced Kareche on October 11 to six months in prison plus six months suspended, a two-month reduction from his original sentence.
His release came as he had already served much of sentence during his trial and appeal.
Kareche was arrested in April after reporting the Tuareg, a Berber minority who have long complained of economic and social marginalization, had protested over “expropriation” of their historical lands.
He was sentenced on August 12 to eight months behind bars plus four months suspended for “spreading false information liable to damage public order.”
He was also accused of posting reports that could trigger “segregation and hatred within society.”
“I’m the victim of a grave injustice,” Liberte quoted him saying as he left prison.
“I did nothing more than my job as a journalist with professionalism.”
Algeria ranks a lowly 146th out of 180 countries on the Reporters Without Borders Press Freedom Index.