Both Facebook ( FB ) and Google ( GOOGL ) continue to innovate and grow, but regulatory hurdles are weighing on the shares.
Privacy Regulators Target Facebook
Facebook lost some steam last week, as members of the European Consumer Organization and the Federal Trade Commission (FTC) announced that they would investigate the changes in its tracking policy. Facebook recently announced that it would track user activity on non-Facebook sites and apps in order to serve ads better.
The controversy seems to have arisen out of a possible breach of a 2012 agreement it made with the FTC wherein it agreed to allow users to opt out of such tracking. Facebook's defense was emphatic: it says that the "level of control over advertising on Facebook exceeds industry standards," that people can still "opt out of ads based on websites they visit and apps they use" and further, that it offers ad preferences that allow "people to add and remove interest categories to improve the ads they see on Facebook."
European Regulators Could Target Android Next
Media reports indicate that as soon as the issues with respect to Google's web search practices are resolved, the European Commission will formally start a new probe on whether it is abusing power arising out of Android, its dominant mobile operating system to push other Google services including maps. The commission is apparently doing the groundwork right now, sending detailed questionnaires to companies about the nature and contents of their agreements with Google.
The emails, faxes, letters, notes from phone calls and meetings, and presentations that companies are required to furnish date as far back as 2007. It's hard to say how far the probing has already progressed, but the increased frequency of requests could mean that they already have a preliminary case.
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John Stanton Joins Microsoft Board : Stanton has notable experience in the mobile industry, having led three of the top four wireless carriers in the U.S. and operated wireless networks across Europe, Africa, Central and South America, and New Zealand among other roles. Most recently, he has been chairman of trilogy Equity Partners, which is a private equity fund investing in wireless startups. Stanton's industry experience and business acumen will be important for Microsoft ( MSFT ) in the transformational stage it currently finds itself in. Microsoft's board now has 11 members.
German Copyright Law Penalizes Search Engines : Yahoo ( YHOO ) has taken a year-old copyright law to The German Federal Constitutional Court. Yahoo alleges that the law, which grants exclusive rights to publishers to determine the commercial use of their content, is vague, leads to unreasonable legal complexity and hits German citizens' constitutional right to freedom of information, including the structures that guarantee people can obtain information.
Yahoo being both a publisher and a search engine is in the peculiar position that its content is protected while its search business sees increased litigation. Moreover, the law does not have any specifications for social networks like Facebook, meaning that these companies will be dragged to court on a case-by-case basis.
China Anti-trust Probe Sees Microsoft Up Next : Chinese government officials visited Microsoft offices inBeijing, Shanghai, Guangzhou and Chengdu in what is likely to be the preliminary stage of an anti-trust probe. The government doesn't like Microsoft's dominance in operating systems, which isn't all that surprising given recent reports about a possible fine on Qualcomm for dominating another market. Just last month, a microblog on the People's Daily said that Apple, Microsoft, Google and Facebook were involved in a U.S. program to monitor China.
Microsoft Sues Samsung : Microsoft has sued Samsung for refusing to pay royalties on Android devices following the closure of its Nokia acquisition. Samsung claims that the Nokia acquisition is a breach of the cross-licensing agreement that Microsoft signed with Samsung and hence it was no longer required to pay royalties on devices.
Samsung is appealing to Korean competition authorities to relieve it from paying the royalties. It would also like to sue Microsoft for its Lumia devices. Microsoft says that the Nokia deal doesn't change anything with respect to its agreement with Samsung and is therefore seeking a jury trial. It has also put on record the fact that Samsung made a late payment last year and refused to pay related interest.
Apple Launches Retina MacBook Pro : Last week, Apple ( AAPL ) launched 13-inch and 15-inch retina display MacBook Pros with faster versions of Intel's Haswell processors and tons of RAM. They are also eligible for more affordable configurations and a free upgrade to OS X Yosemite this fall. A 12-inch version will probably ship in time for the back-to-school season. The next refresh is likely to contain Intel's Broadwell.
Facebook's Internet.org Enters Zambia : Facebook has launched an Internet.org app for Airtel subscribers in Zambia that will allow them basic free Internet connectivity along with 13 "free" services including Facebook, Google search, Wikipedia, a local news and job searching app and AccuWeather. The apparently philanthropic activity has the potential to generate additional advertising revenue for Facebook (Internet penetration in Zambia is estimated to be around 15%).
However, it will very likely attract anti-competitive lawsuits because of the preferential treatment to the free services that will make users prefer them to other paid apps. Facebook has a strong ally in Google (to battle these people) and since cases of this nature tend to stretch out to multiple hearings and appeals, Facebook will probably make deep inroads before there is any real action against it.
Car Navigation App from Yahoo : With both Apple and Google targeting the dashboard in automobiles with their respective operating systems, Yahoo Japan has made a counter-move with a new navigation app for cars. The company is the leading search portal in Japan, but bound by an agreement with Yahoo Inc to limit its activities within the country. This is one of several attempts to diversify its income in ways other than geographic expansion.
Xbox One for China : The Xbox console that China'sBesTV New Media Co Ltd is manufacturing is expected to launch in China on Sep 3. The Shanghai Media Group VP has said that the launch has already been approved by the government. Surprisingly, the devices will sell in China for around $600 (without Kinect) and $700 with it, which is $200 more than the sale prices in the U.S.
Sony is following a similar strategy, pairing with Shanghai Oriental Pearl Group to bring PS4 to China. The Chinese gaming market is huge, but piracy and a preference for PC and mobile games could initially be a deterrent to console sales.
Apple Furnishes $30 Million for Concept.io : Media reports are saying that Apple will be buying Concept.io and shutting down its content streaming app Swell. The app delivers an audio news feed based on stories that it picks up from NPR, TED Talks and the Harvard Business Review . The feed is automatically adjusted according to a user's preference depending on the stories he/she consumes.
Oracle Buys TOA Technologies : The idea behind the acquisition is to beef up its cloud ERP services and also gain insight into a chunk of competitor Salesforce.com's customer base. TOA offers a cloud service to manage field staff that is relied on (at least partly) by Salesforce's service cloud. The terms of the deal weren't disclosed but Oracle could end up spending well over a $100 million.
Analyst Says Cisco Overvalued : A Pacific Crest analyst lowered expectations about Cisco ( CSCO ) as it prepares to stay relevant in a market that is rapidly taking to the cloud. The analyst has reservations about Cisco's ability to succeed in this highly competitive market if it does not supplement its internal efforts with acquisitions, both big and small. Cisco's structure and cash hoard may not be enough to prevent the inevitable hit to margins as it sees its core market (routers, switches and wireless) slip away.
Strong Growth Seen in Health & Fitness Chips : According to a recently-published report, IHS Technology estimates that shipment of chips consumed in health and fitness devices will jump 11% to 61.2 million units this year. Shipments are expected to reach 95.8 million units in 2018.
IHS analyst Lee Ratliff has said that the most-used connectivity technology used in the devices was called Bluetooth Smart, but a competing technology called ANT+ has been developed by a Garmin subsidiary. Nordic Semiconductor and Texas Instruments ( TXN ) has offerings in both categories, while CSR and others focus on Bluetooth Smart alone.
MacBook Prices Get a Price Cut : Following the launch of the new MacBook with retina display, non-retina MacBooks prices were cut by a $100 each.
Android Usage Surpasses iOS : Recent data from Net Applications indicates that Android usage went from 43.7% to 44.6% in July, surpassing iOS (down from 45.6% to 44.2%) for the first time. Considering the large and growing user base, Android should be able to maintain and grow its usage rate. Larger-screen devices from Apple to launch later this year will help iOS however.
Some Earnings Reports : LinkedIn , Yelp , Twitter , Akamai and Sohu are some technology companies that reported last week.
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