Tech Chiefs Grilled by Congress; TikTok Opening Algorithm; Starbucks Mobile Up, But Overall Down; Tesla may License AutopilotPosted: July 29, 2020
The four big tech CEOs have been getting grilled by Congress today. As has been the case for some time now, Democrats and Republicans in the House differ widely in their questioning and in the direction the hearing is taking. CEO’s of Facebook, Google (Alphabet), Apple, and Amazon have been testifying after making opening statements…mainly defending their positions and urging continued hands off of their businesses by the government. Axios.com reports that Democrats have been probing about competitive abuses, while the GOP members seem more concerned (as is Trump) with alleged anti-conservative bias.
Rep. David Cicilline, the House Judiciary antitrust subcommittee chair overseeing the hearing, accused Google CEO Sundar Pichai of stealing content from smaller companies to build out its search results. Facebook CEO Mark Zuckerberg faced a grilling from Rep. Jerry Nadler, chairman of the full Judiciary Committee, who sought to pin him down on the company’s 2012 acquisition of Instagram. Nadler said previously unseen emails reveal that Zuckerberg “saw Instagram as a threat that could potentially siphon business away from Facebook.”
In a ‘Well, duh’ moment, Amazon CEO Jeff Bezos acknowledged that, despite past denials and company policy against it, he can’t rule out the possibility that employees have tapped third-party sales data to develop in-house products. A 2015 internal Apple email, meanwhile, appeared to show the company putting Chinese tech giant Baidu on a fast track for app review, contra claims the company treats all app developers equally. CEO Tim Cook insisted as much under questioning Wednesday.
Republicans brought a different focus. Ranking antitrust panel member Jim Sensenbrenner praised tech companies for their size and power, narrowing his criticism to the bias allegations. Rep. Jim Jordan, top Republican on the full Judiciary panel, greatly amplified that line of attack, stating flatly, “Big tech is out to get conservatives.”
TikTok has been getting slammed for connection to the Chinese government, so now the CEO, Kevin Mayer, say they will give outsiders access to the algorithms they use to sort and share user video…letting the outsiders “observe our moderation policies in real-time,” as he put it. TikTok hopes to counter the spate of bans of their product from company and government phones that has been growing lately. The Trump administration has even suggested an outright ban in the US might be coming. TikTok argues that without access to its platform, US ‘advertisers would again be left with few choices.’ I will pause here while folks in the ad and media business stop laughing and compose themselves. …..TikTok goes on to argue they are willing to take all necessary steps to ensure long-term availability and success of the platform.
The pandemic is hurting a lot of businesses, but also altering how they work. Starbucks has announced that in their 3rd quarter, mobile orders hit 22% of transactions, and delivery orders tripled from the prior quarter. Geekwire.com says Starbucks reported same-store sales plunged 40%, however. The coffee giant lot $3.1 billion in the quarter, due to reduced foot traffic, temporary store closures, and cutbacks in hours. The are moving more quickly to roll out their new store concept called Pickup. Coffeeholics would order ahead with the app, then just swing by and pick up their order. More of the conventional stores have begun doing curbside pickup also.
In a move to appear magnanimous, Elon Musk has Tweeted that Tesla is open licensing its Autopilot, and supplying powertrains and batteries to competitors. Techcrunch.com notes that German car makers are closing the gap between themselves and Tesla in the EV marketplace. It is worth noting that early investors in Tesla included Mercedes-Benz and Toyota, in part to access the EV maker’s battery tech, so Musk may have a bit of a hard sell on that part. Musk claims the interest in licensing flows form its major goal “to accelerate sustainable energy, not crush competitors.” Considering that several competitors are about to bow 15-30 EV models in the next couple years, I don’t think they are going to be crushed much by Tesla. VW is already licensing its tech, and cut a deal with Ford that could net it up to $20 billion.