EU Probes Apple’s Planned Acquisition of Shazam

Antitrust authorities are concerned a deal to buy the popular song-recognition app could reduce choice for users of music-streaming services

European Union antitrust authorities on Monday opened a full-blown probe into Apple Inc.’s proposed acquisition of song-recognition app Shazam Entertainment Ltd. on concerns it would reduce choice for users of music-streaming services.

The deal would give Apple ownership of a popular app that helps users identify songs, before directing them to Apple Music or Spotify to listen to and potentially buy or stream the music. It also would give Apple access to extensive information on consumers’ musical interests. Financial terms of the deal, announced in December, weren’t disclosed.

The European Commission, the bloc’s antitrust authority, said it was concerned Apple would gain access to data that would allow the iPhone maker to directly target its rivals’ customers and encourage them to switch to its music-subscription service, Apple Music. EU investigators said they would also probe whether competitors could be harmed if Apple were to discontinue referrals to their services from the Shazam app.

“Our investigation aims to ensure that music fans will continue to enjoy attractive music streaming offers and won’t face less choice as a result of this proposed merger,” EU antitrust chief Margrethe Vestager said on Monday.

The EU could block the deal or extract concessions from the companies in exchange for clearance.


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Apple didn’t comment. London-based Shazam said, “We respect the European Commission’s process and look forward to having the acquisition closed,” adding “we can’t imagine a better home for Shazam.”

Control of data and large sets of personal information is playing an increasingly important role in the EU’s antitrust and merger reviews. The bloc’s regulators are scrutinizing whether companies holding large amounts of data can use it to cut costs or gain customers in a way that thwarts new competitors.

The EU is also considering changing its merger review rules to include a wider swath of technology deals not typically within its purview, such as the acquisition of a company that generates relatively little revenue but holds commercially valuable data.

Referrals from Shazam could help Apple raise the number of subscribers to its streaming-music service to better compete with competitors. They include Spotify AB, which went public on the New York Stock Exchange in early April and Tencent Music Entertainment Group, China’s largest music-streaming company, which is preparing what would be one of the biggest technology IPOs ever, say people familiar with the matter.

Apple initially registered the Shazam deal with regulators in Austria, but authorities there, along with those in France, Italy, Sweden and several other EU countries, asked Brussels to review the deal instead. The national authorities were concerned the deal could harm competition across the European market as well as within their borders.

The European Commission said in February it would take over the review of the merger from Austria. Then on Monday, the EU said it would undertake a full-blown review given lingering concerns. Such a process allows companies several more months to suggest steps, such as selling assets, to win over regulators.

The EU has jurisdiction over a merger if the companies have combined annual world-wide revenue of €5 billion ($6.1 billion) and each has €250 million in revenue within the EU as a whole. Apple’s acquisition of Shazam doesn’t meet those revenue thresholds; the app in 2016 posted revenue of about £40 million ($56.2 million). But national regulators or companies are allowed to ask the commission to make an exception

The EU said it was giving itself until Sept. 4 to decide on the deal, though the deadline could still be extended.

 


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Author: Natalia Drozdiak 
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Google Parent Posts Surge in Profit, but Expenses Also Jump

Alphabet’s earnings got multi billion-dollar boost from stakes in startups including Uber

Google parent Alphabet Inc. posted surging profits as advertisers kept swarming to the search giant amid a global debate about internet privacy that threatens to affect its main revenue generator.

Alphabet’s earnings also got a multibillion-dollar boost from the company’s stakes in startups including Uber Technologies Inc. but were tempered by the costliest spending spree in its 14-year history as a public company.

Net profit jumped 73% to $9.4 billion in the first quarter, up from $5.4 billion in the same period last year, a performance that highlights the firm’s huge lead in the global market for online ads. The earnings growth was Alphabet’s strongest since the fourth quarter of 2009.

Advertising revenue, which accounts for nearly all of the company’s top line, soared 24% to $26.6 billion. Revenue from “Other Bets,” a segment which includes Waymo self-driving cars, totaled $150 million, an increase of 14% from the same period last year.

The results landed while regulators in Washington are considering getting tougher on internet privacy. While most of the attention on the issue has focused on Facebook Inc., many observers believe Google’s dominant role online means the firm will also be subject to tougher scrutiny. The European Union is also moving forward with a sweeping set of rules called the General Data Protection Regulation, which goes into effect May 25. The new law could affect the revenue of Alphabet, which has already announced some changes to the way it collects consent from visitors of sites displaying its ads.


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Companies found in violation of the sweeping regulation will face fines of up to 4% of their annual global revenue.

Asked about the impact of the European regulations on a call with analysts Monday, Chief Executive Sundar Pichai said Google has spent more than a year preparing to be compliant. Because Google derives most of its revenue from search ads, which rely less on personal targeting, much of its business won’t be affected by the changes, he said.

Alphabet’s first-quarter earnings received a boost from a change in accounting rules that caused the company to begin reporting the current fair value of nonmarketable securities, including its valuable stake in ride-hailing giant Uber.

Alphabet attributed about $3 billion of its net profit increase to the value of those securities, though the company didn’t break out individual holdings or disclose what portion of that increase was made up by Uber.

The fair value of Uber shares is something of a mystery. Last December, Uber backers and employees sold shares to a group of investors led by SoftBank Group Corp. at a $48 billion valuation—a roughly 30% discount to the last time it sold new shares to investors, at a $68 billion valuation.

Alphabet’s earnings boost helped offset the rising costs it pays partners such as Apple Inc. to direct more smartphone users to Google’s search engine. Those costs have raised concerns that the company has to give up chunks of its revenue to maintain its level of growth.

Brian Wieser, an analyst at Pivotal Research, said the advertising business not based on Google’s home page search activity—which comes from partners—“is growing faster, which helps their top line, but is lower margin.”

Traffic costs rose to $6.3 billion, up 35% from a year earlier and have made up one-fifth of the company’s revenue for five consecutive quarters.

The company also drastically increased its spending in other areas. Alphabet spent $7.3 billion on capital expenditures in the first quarter of the year, more than triple the amount it spent a year earlier. That included its $2.4 billion purchase of a building in New York’s Chelsea Market as well as investments in data centers and undersea cables.

The spending caps several quarters of rising costs at Alphabet, which is investing in the infrastructure the company says is critical to maintaining its lead in future technologies such as machine learning, a branch of computer science dedicated to helping computers find patterns in data.

Alphabet Chief Financial Officer Ruth Porat suggested the spending could continue, saying “it reflects the demand we are seeing” and not one-off expenses.

Alphabet’s shares were little changed in after-hours trading.

Google has maintained its lead in the global market for online ads despite its massive size and growing competition from fast-expanding challengers. Google is expected to control 31% of the global ad market this year, down slightly from 31.7%, according to estimates from eMarketer.

Google’s ad business accounts for the vast majority of revenue but the company is increasingly looking to emerging areas, such as Waymo and high-tech health-care division Calico, for continued growth.

Alphabet generally doesn’t disclose results from those units individually, but it did give investors a rare glimpse at the financials of Nest Labs, the pioneer in internet-connected home devices such as thermostats and home security cameras that the company acquired for $3.2 billion in 2014.

In all four quarters of 2017 combined, Nest generated $726 million in revenue, or about 60% of the total sales of the “Other Bets” segment over that period, according to Alphabet’s data. Nest was moved from “Other Bets” to the Google unit last year, a move seen a retrenchment of Alphabet’s strategy to let more units grow as independent businesses.

Nest has been slow to release new products and has been upstaged by talking speakers with embedded virtual assistants—mainly the Amazon Echo and Google Home—which have become the hubs for connected homes.

Alphabet doesn’t share results for a much bigger driver of revenue, YouTube. Some investors and others have renewed calls for more transparency from YouTube, which analysts estimate will generate from $11 billion to $20 billion this year, representing between 10% and 18% of Alphabet’s overall revenue.

The company said the product was part of a broader suite of ad-supported businesses.

 


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Author: Douglas MacMillan
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Cryptocurrency – The Pied piper of Wall Street

Cryptocurrency is on a pilfering spree, where the current course is making all the executives move away from the lucrative Wall Street to the more lucrative cryptocurrency field. In a recent report, Richard Kim, the former Executive in Goldman Sachs has left Wall Street to join Galaxy digital as the CEO.

This trend can be attributed to Bitcoin’s rise to nearly $20000 in late 2017. It created such a flutter in the market that the firms handling cryptocurrency funds jumped from 165 to 245.

New Yorker quoted Mike Novogratz, an ex-Wall Street banker who said that his firm hired the best Blockchain expert from Goldman. Justin Short who had worked for Bank of America Corp by working on its electronic trading algorithm in a statement said:
“It’s a Cambrian explosion of ideas. But that means you have to put in your work to figure out which one is even likely to work,”

Cryptocurrencies are the craze as they eliminate middlemen such as banks which charge fees and venture capital firms while giving the user faster access to money. Former HSBC trader, Hugh Madden compared the ICO token ship to having a football club membership. which he likens to having to aims at drawing a wider fan range by playing more matches and building relationship with other clubs.
He added:
“There is no limit to participants…but there is a limit to memberships that allow members to exert influence on the future direction of the club.”

However, all is not good as news about the attack of hackers hacking ICO’s and making off with cash is on the rise. Recently Hackers stole $7million from the ICO, CoinDash. This has amounted totally to nearly $40 million as ICOs have been supported by operational frameworks which lack business models but have standard operational frameworks.
Goldman Sachs is working hard to turn this attrition rate around, it has adopted various crypto futures offered by Cboe with Jeff Curie telling reporters in a statement that he does not understand the hostility towards cryptocurrency.


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Author: Abhishek Anil
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Oil, stocks slide on Trump’s new trade salvo

NEW YORK

Crude oil and global equity markets tumbled on Friday after U.S. President Donald Trump upped the ante in a trade dispute with China, reviving investor jitters about the impact a tariff war could have on the world economy.

MSCI’s gauge of worldwide equity markets fell more than 1 percent and stocks on Wall Street skidded more than 2 percent after Trump threatened late on Thursday to add another $100 billion of tariffs on Chinese goods.

China warned it was fully prepared to respond with a “fierce counter strike” of fresh trade measures if the United States follows through on Trump’s latest threat.

The U.S. equity rout picked up during a speech by Federal Reserve Chairman Jerome Powell in Chicago on the U.S. economy. Powell said it was too early to tell if the threatened tariffs would materialise or the effect they might have.

“What Powell is signalling to market participants is that the Fed is not swayed or rattled by equity market volatility at this point. That’s the reason for the additional selling pressure,” said Chad Morganlander, a portfolio manager at Washington Crossing Advisors in Florham Park, New Jersey.

“The Fed has the intestinal fortitude to wait until it creeps into credit conditions and causes financial stress,” he said.

The pan-European FTSEurofirst 300 index, which closed before Powell’s speech, fell 0.4 percent but ended the week 1.15 percent higher.

The STOXX Europe index of companies in 17 European countries fell 0.35 percent, with the trade-exposed auto sector the leading sectorial loser, down 1.7 percent.

Earlier in Asia, Japan’s Nikkei nudged down slightly to regain a measure of calm after an initial knee-jerk reaction to Trump’s latest tariff proposal.

Defensive stocks such as utilities or telecoms were among a handful of European sectors to end the day in higher.

MSCI’s all-country index of stock performance in 47 countries fell 1.2 percent, led lower by Apple, Microsoft, Amazon.com and JPMorgan – the same as on the benchmark S&P 500 index.

On Wall Street, the Dow Jones Industrial Average closed down 572.46 points, or 2.34 percent, to 23,932.76. The S&P 500 lost 58.37 points, or 2.19 percent, to 2,604.47 and the Nasdaq Composite dropped 161.44 points, or 2.28 percent, to 6,915.11.

The market’s decline is due more to its current vulnerable state than the prospect of a trade war, said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.

“It’s got higher values; financial liquidity is contracting. You came into the year with a little too much optimism. You got rising rates going on, you got rising inflation fears,” he said.

Powell said the U.S. central bank will likely need to keep raising interest rates to keep inflation under control.

A weak U.S. unemployment report, which nonetheless highlighted underlying labour market strength, helped push U.S. Treasury prices higher as the economy created the fewest jobs in six months in March.

Oil prices tumbled, with U.S. crude falling more than 2 percent.
Brent crude futures fell $1.22 to settle at $67.11 a barrel, while U.S. West Texas Intermediate (WTI) crude futures settled down $1.48 at $62.06.

U.S. Treasury and euro zone government bond yields dipped as the trade spat raised the prospect of a full-blown trade war between the world’s two largest economies.

The yield on 10-year German government debt, the euro zone benchmark, dipped 2.7 basis points in late trading to 0.494 percent, erasing much of Thursday’s rise.

Benchmark 10-year notes last rose 15/32 in price to push yields down to 2.7753 percent.
Mike Terwilliger, portfolio manager of Resource Liquid Alternatives for the Resource Credit Income Fund, said nearly every news event seems to register on the market’s Richter scale, though investors have been dealing with some relatively weighty challenges this year.

“The recent decline in Treasuries is largely ‘Tweet related’ versus some fundamental shift in the view of inflation or economic growth,” he said.

The dollar index fell 0.37 percent, with the euro up 0.36 percent to $1.2282. The Japanese yen firmed 0.45 percent at 106.90 per dollar.

U.S. gold futures for June delivery settled up 0.6 percent at $1,336.10 an ounce.


 

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Author Herbert Lash

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