Google+ to Shut Down

Google recently reported that it will “sunset” Google+, an unpopular social network it launched in 2011. Google released the announcement following a report by The Wall Street Journal about a security bug in the platform’s API that may have exposed the private data of half a million users to outside developers.

The bug surfaced in the redesign of Google+ in 2015. However, Google’s security engineers only discovered the flaw as part of a security audit in March 2018. The probe found that up to 438 external applications could have exploited the flaw.

The developers of the external applications thereby accessed the “static” profile information of private Google+ users, including users’ full name, email address, gender, profile picture, job status, location, and birth date. According to Google, as many as 500,000 Google+ accounts were affected by the flaw. However, Google could not discern which users were affected.

Google claimed that it immediately patched the bug upon discovery. Nonetheless, many have criticized Google’s initial decision to not report the bug. The Irish Data Protection Commission, a supervisory authority in the EU, announced that it will request additional information.

Google+ was launched as a would-be Facebook rival in 2011. However, it failed to achieve popularity, as 90 percent of Google+ users used the platform for less than five seconds. Regardless, Google’s decision to report the shut down of Google+ immediately following The Wall Street Journal’s report may reveal that the termination was at least partly motivated by a need to avoid additional regulatory scrutiny.

Profile data security scandals have recently rocked Silicon Valley. Facebook’s Cambridge Analytica scandal surfaced the month that Google discovered the security bug. People have primarily focused on Facebook’s scandal, which revealed that the data of more than 50 million users had been stolen. But, the difference between the security bug confronted by Google and Facebook can only boil down to scale.

Google+ to Shut Down

Netflix Acquires Its First Production Studio

Online streaming giant Netflix announced its acquisition of Albuquerque-based ABQ Studios on October 8—a deal that will bring over $1 billion in production and hundreds of jobs to the state of New Mexico over the next ten years. The deal was made possible in part due to New Mexico’s Local Economic Development Act (LEDA), which will provide up to $4.5 million from the city and $10 million in funding from the state. ABQ Studios adds eight sound stages, production offices, mill space, a back lot, and the entire canvas of Albuquerque to Netflix’s arsenal of recent infrastructure upgrades.

The acquisition is just as much about Albuquerque’s growth as it is Netflix’s—amidst growing competition amongst municipalities for tech darlings and their tax dollars, the city of Albuquerque seems to have understood and captured the changing landscape of modern media consumption. Albuquerque first put itself on the map as the backdrop for AMC’s hit show Breaking Bad, and the city continues to reap the benefits as a tourism hotspot over ten years after the show began. Creator Vince Gilligan viewed the city as “virgin territory for cinematography,” soon thereafter utilizing the rich landscape as part-and-parcel of the core storyline. With Netflix’s deep pockets and history of creative storytelling, there is little question as to whether the company will be able to do the same.

Furthermore, this expansion comes as no surprise. With Netflix’s vision of long-term growth centered around its long-form original content, the company has primed itself to take the next step in ramping up production to cater to the appetite of young cable-cutters around the world. Competitors such as Disney have come to understand the up-or-out ecosystem of online streaming—Disney recently announced its plans to pull its content from Netflix to start its own streaming service. However, the acquisition of ABQ Studios should signal to competitors that Netflix has no intention of bowing down, and instead is taking active steps in becoming its own content-creating behemoth.

Netflix Acquires Its First Production Studio

U.S. Takes Aim at WTO Appeals Court

With the high-profile international disputes of the past few months, such as the trade war with China and the impending signing of USMCA, one could be forgiven for forgetting about the WTO. The Trump administration’s war against the WTO continues, however, as the organization has been thrown into crisis by the failure of the U.S. to appoint enough judges to its Appellate Body. The vacant seats could lead to the shutdown of the WTO’s appeals court, presenting a foreign policy confrontation that comes on the heels of the U.S. withdrawal from the Paris Accord and the UN Human Rights Commission, among other American pullouts.

The WTO is governed by the General Agreement on Trade and Tariffs, or GATT. GATT serves two main purposes. First, it serves to lower trade barriers through terms like the most-favored-nation (MFN) principle for GATT signatories. Second, and just as important, it introduces a path for dispute resolution. When member countries believe that another country has engaged in unfair practices, such as dumping or non-national security tariffs, they can enter a dispute mediation overseen by a rotating panel of judges. At any point, the parties may end the dispute and settle. If the initial ruling is unsatisfactory, the parties can then appeal. The United States has the power to block the appointment of any WTO judge—in 2016, President Obama blocked the appointment of a South Korean judge for the first time. Now, under President Trump, the seven-seat WTO Appellate Body has three vacancies. It may soon be unable to operate.

The WTO has been amended several times since its inception. Nonetheless, in recent years it has been criticized as ineffective, especially as countries like China flout WTO principles without reprimand. It has also been accused of being out of date. Fundamentally, these accusations speak to the physical goods orientation of the GATT in a world that is increasingly driven by property that is less physical and more intellectual. For example, when it comes to ecommerce, the WTO still has no dedicated rules.

The United States is actually the most active member of the WTO, participating in more disputes than any other country by a large margin. Yet the WTO is under siege from the country that previously was its biggest booster. Secretary of Commerce Wilbur Ross called the WTO “outdated.” President Trump even proposed leaving the WTO altogether in favor of bilateral agreements, which he has always supported over multilateral agreements. Conservatives have critiqued multilateral bodies like the UN for a long time, but such concerns typically center around loss of sovereignty, rather than crude mercantilism. With the Trump administration’s refusal to appoint new judges to the Appellate Body, the WTO’s future looks less certain than ever.

U.S. Takes Aim at WTO Appeals Court

Trump Hails Revised NAFTA Trade Deal

President Trump recently applauded revisions to the North American Free Trade Agreement, considered raising Chinese tariffs, and boasted that actions by his administration have been taking a toll on the Chinese economy.

Originally, NAFTA was meant to gradually reduce tariffs and other trade barriers between the United States, Mexico, and Canada in order to increase trade and production. It effectively acted as a laissez-faire policy between the countries that resulted in the creation of millions of jobs. Opposing groups feared it would undermine local governments and prioritize private interest because it could, and ultimately did, result in the deregulation of public services and displacement of local farmers.

NAFTA’s replacement, United States-Mexico-Canada Agreement (USMCA), makes adjustments to the trading relationships between the participating countries. Some changes included new rules for the automobile industry, expanded access to U.S. markets for Canada and Mexico, improved labor and environmental rights, and increased intellectual property protections. Some criticism to this agreement, however, is that car prices may increase; China may feel pressure to follow suit; and Mexico’s manufacturing growth could possibly stall.

President Trump commented on USMCA saying that, “it’s a much different deal.” Yet, while the deal is an alteration of its predecessor, many of its changes were inspired by a previous deal the President so passionately opposed, the Obama-era Trans-Pacific Partnership (TPP). The similarities are such that a senior Trump advisor, Robert Lighthizer, felt compelled to comment, where he implied that TPP was effectively a foundation for the USMCA.

The next step to finalize the USMCA deal is for Congress to approve it after all three countries sign it. Nevertheless, due to recent political changes in Mexico and the upcoming U.S. elections, there is no sure way to predict its conclusion.

There are only a few significant changes to this new deal along with some TPP inclusions, which points toward little actual work done to create a brand new deal. Although NAFTA needed revisions, will USMCA actually benefit the US? Or, is it simply a strategy used to fuel a trade war with China?

Trump Hails Revised Nafta Trade Deal

The Smartphone Dominating Africa

Apple and Samsung may seem like the big players in the smartphone market, but Chinese company Transsion dominates one of the largest markets in the world: Africa.  Transsion’s primary smartphone brand, Tecno, has become a staple throughout the continent, with its blue logo lining the streets of major cities like Nairobi.  Transsion brands Itel and Infinix have also found major success in the African market.

Transsion’s rise to domination in just a decade is a result of its “glocalization” strategy.  Though the company is based out of China, Transsion largely ignored the Chinese market.  Instead, it focused on the developing African market, creating affordable cell phones that were designed specifically for African consumers.  The phones have a long battery life, which is important since Africa has the lowest electrification rate in the world, and can also receive FM radio signals.  Transsion’s phones also have multiple SIM card slots, which lets consumers switch between providers to save money or continue to receive service in areas with insufficient coverage.  Founder Zhu Zhaojiang says he does not target the wealthy consumers who are more likely to turn to brands like Apple.  Instead, Transsion caters a broader market and sells some smartphones for as little as $10.

Now, Transsion is aiming to repeat its dominance in Africa by focusing on India and otherparts of south Asia.  India is one of the fastest growing cellphone markets in the world.  Securing a strong foothold in the Indian smartphone market will be important for Transsion to continue its growth and become a major player like Huawei and Samsung.

The company plans on emulating its success in Africa and building a manufacturing plant in India to focus on the needs of Indian consumers and ensuring a low price point for consumers.  While focusing on creating specialized products for the local market clearly worked for Transsion in Africa, the Indian smartphone market is further developed and thus more competitive.  Yet if there is one strategy that would successfully disrupt the Indian smartphone market, it is likely Transsion’s glocalization strategy.

The Smartphone Dominating Africa

Bitmain Technologies–A New Age of Investment Amidst a Pending IPO

Bitmain Technologies (Bitmain), a Beijing-based corporation that specializes in cryptocurrency mining equipment, initiated an application to take its company public in late September of 2018 with the Hong Kong Stock Exchange.

Amidst the pending initial public offering (IPO) application, cryptocurrencies, such as Bitcoin, have significantly dropped in value this year. In early 2018, Bitmain’s sales followed suit due to a disproportionately high supply in relation to demand. However, the company is still on track to hit $10 million in annual revenue despite the observed fall in cryptocurrency value.

Since Bitmain’s technology is reliant upon the market for cryptocurrencies, there is great speculation over how well Bitmain will fair once its IPO is issued. Pending success as a publicly-traded company, Bitmain will likely serve as a model for emerging startups engaged in cryptocurrency-related business practices. However, Bitmain’s path to success is largely unpaved and unclear, which may cause risk-averse investors to keep Bitmain at arms-length. For instance, Tencent Holdings and Softbank Group, Uber’s largest shareholder, are reportedly not involved in funding Bitmain’s IPO.

Notwithstanding the close relationship between Bitmain and the cryptocurrency market, Bitmain appears to be relatively prudent in terms of its business dealings. By diversifying its products, Bitmain has made its company more appealing to investors by shielding itself from the seemingly volatile cryptocurrency market. Not only has it focused on creating mining equipment for a diverse group of cryptocurrencies, it also seeks to enter the artificial intelligence space. Investors are likely more willing to financially support a company that not only illustrates its knowledge about the risks associated with the cryptocurrency market but has concrete plans to protect itself from those same risks.

In addition, there has been a notable shift among large corporations to align their interests with the emerging cryptocurrency market. Companies like IBM, Intel, and Amazon, to name a few, are all integrating blockchain into their business dealings. Thus, while some may believe Bitmain’s pending IPO application seems ill-advised, if all goes as planned, it will be one of many publicly-traded corporations that find value in engaging with emerging technologies to remain relevant and attract a new age of technology-focused investors.

Bitmain Technologies – A New Age of Investment Amidst a Pending IPO

Silicon Valley Wary of Investing in Juul

Juul, a widely popular e-cigarette startup, is valued at about $16 billion. However, many Silicon Valley investors are wary of investing in the company due to its alleged practice of marketing to young people.

FDA Commissioner Scott Gottlieb has deemed youth e-cigarette use an “epidemic,” and in September announced an initiative against retailers for allegedly selling e-cigarettes to minors. Data shows a 75 percent increase in e-cigarette use among high school students this year compared with 2017. On October 2nd, the FDA conducted a surprise inspection of the Juul Labs headquarters, seizing over a thousand documents it said were related to the company’s sales and marketing practices.

Juul has faced public criticism from Silicon Valley executives, including David Burke, chief executive of Makena Capital Management; Om Malik, partner with True Ventures; and Bradley Tusk, head of Tusk Ventures. However, many investors have willingly contracted with other nicotine start-ups, such as Lucy Nicotine and Ro, which specialize in “hip” nicotine gum. Further, venture capitalist firms are generally more willing to invest in cannabis companies as well.

In some ways, the skepticism with which investors approach Juul reflects the ethical and moral boundaries venture capitalist firms must draw in this day and age. Indeed, firms are likely aware that they are losing big on potential profits that could be earned by investing in Juul, as Juul’s sales now amount to more than half of all e-cigarette sales. But, with the widespread outrage surrounding the product in recent months, those who did invest in Juul have faced significant criticism.

Venture capitalist firms have seemingly deemed it a safer bet to invest in nicotine gum, and even cannabis products. Nicotine gum is typically associated with efforts to quit smoking, as opposed to Juul, which has the aura of a sleek, hip drug. Similarly, cannabis has entered the wellness industry, and many cannabis companies market their products with an emphasis on its health benefits. It is likely easier for investors to square their moral obligations with “drug” companies whose products are marketed to promote health and wellness, as opposed to those with a stigma of taking advantage of youth addiction. Juul is apparently aware of this, as the company has begun to tailor its marketingpractices to try to curb youth engagement and instead focus on the benefits of Juul for smokers looking to quit.

Silicon Valley Wary of Investing in Juul

CVS Health and Aetna Merger Approved by DOJ

On Wednesday, October 10, following the conclusion of an anti-trust review, the Department of Justice gave CVS Health a conditional go ahead to acquire health insurance giant Aetna in a $69 billion deal. CVS’s acquisition of Aetna marks the largest ever American health insurance deal. While the Justice Department said that the initial merger plan could have proven harmful to competition, the acquisition could go forward safely so long as Aetna sold of part of its private Medicare prescription business.

The CVS-Aetna merger is the latest example of large-scale consolidation occurring in the health care industry. Just last month the Justice Department agreed to Cigna’s takeover of CVS competitor Express Scripts. Likewise, major health insurers Anthem and UnitedHealth Group have either implemented or made plans to establish their own in-house pharmacies. As a result, these massive healthcare conglomerates plan to integrate a wide array of services, extending far beyond insurance and running pharmacies.

This development has concerned a number of professional groups and consumer advocacy organizations. Many of the critics of the latest CVS-Aetna deal reference the negative consequences of similar recent mergers. These organizations claim that such massive acquisitions have left consumers with higher medical bills and reduced choices. One such group is the Consumers Union, a consumer advocacy organization. The Consumers Union has stated that mergers like CVS and Aetna’s will lead to fewer major players dominating the consumer health industry, pushing out smaller players. Further, the Consumers Union predicts this will create reduced competition and accordingly higher prices.

The American Medical Association has also come out against the merger. According to AMA president, Barbara McAneny, the AMA has been relentless in attempts to prevent the merger. McAneny claims that the AMA has already presented empirical evidence to regulators demonstrating that the merger would prove harmful to patients. Chief among the AMA’s concerns are potential increases in costs for out of pocket medical expenses and rises in insurance premiums.

CVS and Aetna leaders have suggested otherwise. They claim that the merger will allow for more comprehensive and effective treatment, as well as reduced prices. CVS CEO Larry Merlohas suggested that the deal could result in the prevention of future health problems before they occur due to the highly integrated format CVS and Aetna would offer. Further, Aetna CEO Mark Bertoloni has emphasized that the merger could help customers stay on their medication and perhaps even assist patients that have difficulty showing up for medical appointments. Both companies have emphasized a focus on improving local and community health.

CVS Health and Aetna Merger Approved by DOJ

Implications of Potential AT&T Acquisition of Time Warner

This summer, telecommunications juggernaut AT&T announced the close of an $85.4 billion acquisition of Time Warner. A federal judge approved the merger, spurning government attempts to prevent the transaction on the grounds that such a deal would constrain consumer choices and lead to greater prices for television and internet services. The merger solidifies AT&T as a powerhouse in the telecommunications and media industries, granting the company an expanded media and entertainment portfolio.

This increasingly forms the future landscape for media, whereupon media executives oft claim “content creation and distribution must be married” in order to compete against large technology companies such as Amazon and Netflix. These are but two entities that pour billions into producing their own original shows that users can easily stream, placing constricting pressure on traditional media providers. As a counter against this, the AT&T and Time Warner merger grants AT&T new revenue streams to tap into, as AT&T can now combine its subscriber data to Time Warner’s networks and sell targeted advertising at a higher price.

In the wake of the merger announcement, a series of other mergers have been prompted in the media industry. Other goliaths in the industry closely followed the case. Comcast, for one, held off on bidding against Walt Disney Company for 21st Century Fox’s assets, until after the trial decision was handed down. Afterwards, they slammed down an all-cash offer worth $65 billion. This illustrates the heightened burden felt by traditional providers, in needing to expand, in order to survive against Silicon Valley technology companies.

This story is far from over, however. Though the Justice Department did not seek an injunction to prevent the transaction, they have appealed the decision handed down by the federal court judge. The government maintains that the federal judge who presided over the case failed to account for “mainstream economics,” ignoring considerations about how companies negotiate and seek to maximize profits. Until the case is resolved, AT&T has reported it will manage Time Warner’s networks as a separate business subsidiary. The initial defeat of the government’s antitrust claim leaves questions as to how effectively the Justice Department may prevent large corporate consolidation in the future and whether this will prompt more big business acquisitions.

Implications of Potential AT&T Acquisition of Time Warner

The Inevitability of Automated Vehicles Brings Hope, Uncertainty, and Many Questions

With the recent boost in technological advances, it is no surprise automated vehicles (AVs) are slowly but surely making their way to the forefront. The National Highway Traffic Safety Administration(NHSA) is reconsidering the necessity and appropriateness of some 75 current safety standards amidst the call for exemptions of requirements purportedly only relevant when humans are driving, such as steering wheels and mirrors.

AVs will certainly impact the approximate 15.5 million U.S. workers currently using cars or involved in the production of cars for occupational purposes. For certain types of industries, including truck drivers and taxi cabs, AVs may ultimately eliminate jobs and diminish income capacity. Still, some analysts predict that in the near future AVs will create the innovation needed to shift the workforce and workforce demands in a positive light, so that substantial changes in these industries result in new types of output activity. By creating new needs and new skillsets, the introduction of these vehicles might create unique opportunities for human drivers to work alongside them.

But the mark of AVs also ventures into uncharted legal territory, as important differences in humans and machines could change how we think about accountability in the law. Where humans use judgement to make decisions that effectively break laws, such as swerving into the next lane to avoid a car door opening, automated vehicle technology may not have such luxury. And if given such capacity to disobey the law in emergencies, who will be held liable when accidents occur at the hands of the machine? While our laws are rooted in morality, reasonableness, and prohibitions, such principles do not squarely apply where a machine does not have equivalent capability. Therefore, both foreseeable and unforeseen consequences of integrating automated technology will consistently affect our societal, legal, economic, and political landscapes.

Whether we are prepared or not, automated vehicles are coming and bringing both the potential for great benefits and unintended effects that will change our understanding of the world around us. What does all of this mean for human drivers? We have yet to know. It does, however, present an opportunity to get ahead of all the issues sure to surface from the use of the technology.

The Inevitability of Automated Vehicles Brings Hope, Uncertainty, and Many Questions