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Tesla Says New Factories Will Need Time to Ramp Up, Posts Record Revenue Due to Record Deliveries

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By Reuters | Updated: 21 October 2021

Tesla said on Wednesday its upcoming factories and supply-chain headwinds would put pressure on its margins after it beat Wall Street expectations for third-quarter revenue on the back of record deliveries.

The world’s most valuable automaker has weathered the pandemic and the global supply-chain crisis better than rivals, posting record revenue for the fifth consecutive quarter in the July-to-September period, fueled by a production build-up at its Chinese factory.

But the company led by billionaire Elon Musk faces challenges growing earnings in coming quarters due to supply chain disruptions and the time required to ramp up production at new factories in Berlin and Texas.

“There’s quite an execution journey ahead of us,” Chief Financial Officer Zachary Kirkhorn said, referring to the new factories.

Price fluctuations of raw materials such as nickel and aluminium had created an “uncertain environment with respect to cost structure”, he added.

Even so, he said Tesla was “quite a bit ahead” of its plan to increase deliveries by 50 percent this year.

“Q4 production will depend heavily on availability of parts, but we are driving for continued growth,” he said.

Tesla shares, up about 23 percent this year, were down about 0.6 percent in extended trade late on Wednesday.

Musk himself was not present on the quarterly earnings call for the first time, a development that may have disappointed those investors keen to hear the celebrity CEO’s latest thoughts.

Third-quarter revenue rose to $13.76 billion (roughly Rs. 1,02,840 crores) from $8.77 billion (roughly Rs. 65,540 crores) a year earlier, slightly beating analyst expectations according to IBES data from Refinitiv.

Tesla’s automotive gross margin, excluding environmental credits, rose to 28.8 percent, from 25.8 percent the previous quarter.

Tesla’s overall average price fell as it sold more lower-priced Model 3 and Model Y cars, but it raised prices in the United States.

The company posted robust sales in China, where its low-cost Shanghai factory has surpassed the Tesla factory in Fremont, California, in terms of production.

Tesla also said it intended to use lithium iron phosphate (LFP) battery chemistry, which is cheaper than traditional batteries but offers lower range, in entry-level models sold outside China. Analysts said this would help keep costs down and address shortages.

It expected the first vehicles equipped with its own 4680, bigger battery cells to be delivered early next year, although it did not say which model would be fitted with them. Musk said in September last year that using its own cells would let Tesla offer a $25,000 (roughly Rs. 18.6 lakhs) car in three years.

In the third quarter, Tesla posted $279 million (roughly Rs. 2,085 crores) in revenue from sales of environmental credits, the lowest level in nearly two years. The company sells its excess environmental credits to other automakers that are trying to comply with regulations in California and elsewhere.

© Thomson Reuters 2021

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Social Networking

Meta Sued for $150 Billion by Rohingya Refugees Over Myanmar Violence

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By Reuters | Updated: 7 December 2021

Rohingya refugees from Myanmar are suing Meta, formerly known as Facebook, for $150 billion (roughly Rs. 11,31,300 crore) over allegations that the social media company did not take action against anti-Rohingya hate speech that contributed to violence.

A US class-action complaint, filed in California on Monday by law firms Edelson PC and Fields PLLC, argues that the company’s failures to police content and its platform’s design contributed to real-world violence faced by the Rohingya community.

In a coordinated action, British lawyers also submitted a letter of notice to Facebook’s London office.

Facebook did not immediately respond to a Reuters request for comment about the lawsuit. The company has said it was “too slow to prevent misinformation and hate” in Myanmar and has said it has since taken steps to crack down on platform abuses in the region, including banning the military from Facebook and Instagram after the February 1 coup.

Facebook has said it is protected from liability over content posted by users by a US Internet law known as Section 230, which holds that online platforms are not liable for content posted by third parties. The complaint says it seeks to apply Myanmar law to the claims if Section 230 is raised as a defense.

Although US courts can apply foreign law to cases where the alleged harms and activity by companies took place in other countries, two legal experts interviewed by Reuters said they did not know of a successful precedent for foreign law being invoked in lawsuits against social media companies where Section 230 protections could apply.

Anupam Chander, a professor at Georgetown University Law Center, said that invoking Myanmar law wasn’t “inappropriate.” But he predicted that “it’s unlikely to be successful,” saying that “it would be odd for Congress to have foreclosed actions under US law but permitted them to proceed under foreign law.”

More than 730,000 Rohingya Muslims fled Myanmar’s Rakhine state in August 2017 after a military crackdown that refugees said included mass killings and rape. Rights groups documented killings of civilians and burning of villages.

Myanmar authorities say they were battling an insurgency and deny carrying out systematic atrocities.

A Myanmar junta spokesman did not answer phone calls from Reuters seeking comment on the legal action against Facebook.

In 2018, UN human rights investigators said the use of Facebook had played a key role in spreading hate speech that fuelled the violence. A Reuters investigation that year, cited in the US complaint, found more than 1,000 examples of posts, comments and images attacking the Rohingya and other Muslims on Facebook.

The International Criminal Court has opened a case into the accusations of crimes in the region. In September, a US federal judge ordered Facebook to release records of accounts connected to anti-Rohingya violence in Myanmar that the social media giant had shut down.

The new class-action lawsuit references claims by Facebook whistleblower Frances Haugen, who leaked a cache of internal documents this year, that the company does not police abusive content in countries where such speech is likely to cause the most harm.

The complaint also cites recent media reports, including a Reuters report last month, that Myanmar’s military was using fake social media accounts to engage in what is widely referred to in the military as “information combat.”

Mohammed Taher, a refugee living in the sprawling Bangladesh camps that are home to more than a million Rohingya, said Facebook had been widely used to spread anti-Rohingya propaganda. “We welcome the move,” he said by phone.

© Thomson Reuters 2021

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Cryptocurrency

Cryptocurrency in India: Proposed Bill Banning Crypto Payments Could Mean Jail for Violations, Document Shows

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By Reuters | Updated: 7 December 2021

Proposed legislation that would ban the use of cryptocurrencies as a method of payment in India also seeks to make those who infringe the law subject to arrest without a warrant and being held without bail, according to a source and a summary of the bill seen by Reuters.

Prime Minister Narendra Modi’s government has previously flagged that it plans to ban most cryptocurrencies – a move which follows measures by China this September that intensified its crackdown on cryptocurrencies.

According the summary of the bill, the Indian government is planning a “general prohibition on all activities by any individual on mining, generating, holding, selling, (or) dealing” in digital currencies as a “medium of exchange, store of value and a unit of account”.

Flouting any of these rules would also be “cognisable” which means an arrest without a warrant is possible, and “non bailable,” it said.

The source, who has direct knowledge of the matter, was not authorised to speak to media and declined to be identified. The finance ministry did not respond to an email seeking comment.

Although the government has previously said it aims to to promote blockchain technology, the proposed law will also deal a blow to its use as well as to the non-fungible token market in India, lawyers said.

“If no payments are allowed at all and an exception is not made for transaction fee then it will also effectively stop blockchain development and NFT,” said Anirudh Rastogi, founder of law firm Ikigai Law.

The government’s plans to crack down heavily on cryptocurrency trading sparked a frenzy in the market and several investors exited with significant losses.

Lured by a barrage of advertisements and rising prices for cryptocurrencies, the number of investors in crypto assets has surged in India.

While no official data is available, industry estimates suggest there are some 15 million to 20 million crypto investors in the country, with total crypto holdings of roughly Rs. 45,000 crore.

The government now plans to also come down heavily on advertisements that seek to woo new investors, according to the draft summary of the bill and the source.

Self-custodial wallets that allow people to store digital currencies outside exchanges are also likely to be banned, the source added.

The tough new regulations stem from the central bank’s grave concerns about digital currencies and aim to put in safeguards to ring-fence the traditional financial sector from cryptocurrencies, the draft summary of the bill said.

The Securities and Exchange Board of India (SEBI) will be the regulator for crypto assets, the draft summary also said.

© Thomson Reuters 2021

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Apps

Instagram Tightens Protection for Teen Users as US Senate Hearing Looms

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By Agence France-Presse | Updated: 7 December 2021

Instagram on Tuesday tightened protections for teens on the eve of a Senate hearing about whether it is “toxic” for young users.

“Every day I see the positive impact that Instagram has for young people everywhere,” chief executive Adam Mosseri said in a post.

“I want to make sure that it stays that way, which means above all keeping them safe on Instagram.”

Instagram’s parent company Meta, which also oversees Facebook, is battling a serious reputational crisis after a whistleblower leaked reams of internal documents showing executives knew of their sites’ risks for teens’ well-being, prompting a renewed US push for regulation.

Mosseri is to testify Wednesday at a Senate committee hearing titled “Protecting Kids Online: Instagram and Reforms for Young Users.”

“After bombshell reports about Instagram’s toxic impacts, we want to hear straight from the company’s leadership why it uses powerful algorithms that push poisonous content to children driving them down rabbit holes to dark places, and what it will do to make its platform safer,” said Senator Richard Blumenthal, a Democrat.

Instagram will be stricter about what it recommends to teen users, and will stop people from mentioning teens who don’t follow them on the platform, according to Mosseri.

Instagram will also start “nudging” teens toward new topics if there is one they have been dwelling on for a while, and suggest they take a break if they have been spending a lot of time on the platform, Mosseri said.

“If someone has been scrolling for a certain amount of time, we’ll ask them to take a break from Instagram,” Mosseri said.

The break suggestion feature launched in Australia, Britain, Canada, and the United States, and will expand to other countries by early next year, according to Instagram.

The platform also introduced an educational hub for parents, to “help them get more involved with their teen’s experiences” and tools for them to set limits on how much time their children spend in the app, Mosseri said.

“Meta is attempting to shift attention from their mistakes by rolling out parental guides, use timers, and content control features that consumers should have had all along,” Republican Senator Marsha Blackburn said in a statement.

“My colleagues and I see right through what they are doing.”

Meta has vehemently pushed back at accusations that its platforms are “toxic” for teens or that it puts profit over user safety.

Facing pressure, the company had previously announced that it would suspend but not abandon the development of a version of Instagram meant for users younger than 13.

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Internet

Microsoft’s $16-Billion Nuance Deal Faces Deeper Probe by EU Antitrust Regulator

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By Reuters | Updated: 7 December 2021

EU’s antitrust regulator is taking a deeper look into Microsoft’s $16-billion (roughly Rs. 1,20,525 crore) deal for transcription technology company Nuance Communications, asking customers and competitors to draw up a list of concerns, according to a questionnaire from last month.

The previously unreported outreach is the most extensive by an antitrust authority since the companies announced the acquisition in April, according to a person familiar with the matter.

Microsoft declined to comment, and Nuance did not respond to a request for comment.

After minimal review, the US Department of Justice in June and the Australian Competition Commission in October said they would not contest the deal. The companies filed for approval from the European Commission’s competition bureau last month, and the regulator has until December 21 to clear the deal or open a bigger investigation.

The companies had expected to close the deal by the end of this year, but said last month the timeline could slip to early next year.

The questionnaire asks whether Microsoft and Nuance are competitors and whether a tie-up could affect clients and rivals, including whether Microsoft could favour Nuance over competing services.

Nuance primarily sells transcription technology that is popular among doctors and call centres that want to automate note-talking. Analysts view the deal as bolstering Microsoft’s presence in the healthcare market, and bringing it new voice and medical data to train artificial intelligence offerings in health, speech and biometric security.

Like other big tech companies, Microsoft for years has grown its business through acquisitions, such as in advertising and video gaming. But in the last decade, Microsoft has avoided the target that recently has dogged its competitors Alphabet’s Google, Facebook, Apple, and Amazon, all of which are facing antitrust lawsuits and investigations on numerous issues.

Steven Weber, a University of California Berkeley professor studying the intersection of technology and health care, said possible concerns about the pending deal could include Microsoft forcing its Office suite on Nuance customers by bundling them together.

Nuance has said it serves 77 percent of US hospitals.

A key to its success has been has ensuring in deals with customers that it could use their data to advance its voice recognition systems, according to former chief executive Paul Ricci and another former employee.

For instance, a Nuance contract with Augusta University Medical Center, obtained by Reuters this year through a public records request, reads, “Customer shall provide Nuance access to voice and text data…and grants Nuance a perpetual, royalty-free license to copy, use and analyse such data for speech recognition research.”

Big cloud vendors such as Amazon and Microsoft typically do not have unfettered access to customers’ data for research and development. But the opportunity to acquire those relationships and data explains Microsoft’s interest in Nuance, the former employees said.

Other providers of health transcription technologies include 3M and Philips.

© Thomson Reuters 2021

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Internet

Pegasus Scandal: Israel Issues Stricter Guidelines for Use of Its Cyber Tech Exports

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By Reuters | Updated: 7 December 2021

Israel said on Monday that countries interested in buying its cyber technologies would have to commit to using them to prevent only a limited list of terrorist acts and serious crimes.

The move announced by Israel’s Defence Ministry was the latest step in enhancing its oversight following concern over possible abuses abroad of a hacking tool sold by Israeli firms like NSO Group.

An updated certificate to be signed by purchasing countries lists in detail what qualifies as “terrorist acts” – like attacks on people, public facilities, seizures of aircraft, the release of dangerous substances – as well as “serious crimes” referring to those that warrant imprisonment of six years or more.

“The definitions for serious crimes and terrorist acts have been sharpened in order to prevent the blurring of boundaries in this context,” the Defence Ministry said.

It also spells out uses that are prohibited – like targeting people for political affiliation or applications that break that country’s privacy laws – for which Israel could revoke licences and the systems be shut down.

Israel has been under pressure to rein in exports of spyware since July, when a group of international news organisations reported that NSO’s Pegasus tool had been used to hack into phones of journalists, government officials and rights activists in several countries.

Those reports prompted Israel to review the cyber export policy administered by the Defence Ministry.

Last month, Israel was reported to have slashed the list of countries eligible to buy its cyber technologies.

NSO has denied any wrongdoing, saying it sells its tools only to governments and law enforcement agencies and has safeguards in place to prevent misuse.

© Thomson Reuters 2021

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Apps

Apple’s ‘Hands-Off’ Approach With Roblox Draws Focus in US Antitrust Probe: Report

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By Reuters | Updated: 7 December 2021

US prosecutors are looking for instances in which Apple is unevenly enforcing rules for app developers such as gaming firm Roblox and some others, the Information reported on Monday, citing people familiar with the matter.

The Department of Justice (DOJ) is probing key revelations from the antitrust trial between Apple and Epic Games in May, according to the report, in which the Fortnite maker had argued that Apple had given a free pass to Roblox, whose app lets people pick from a selection of games to play.

Following this, Roblox had removed reference to the word “game” and changed it to “experiences”, the Information reported.

The DOJ recently asked Roblox why it made the language change and also wants to know whether Apple’s 2019 launch of its Arcade game app store made it more difficult for game developers to compete with the iPhone maker, according to the report.

Apple, DOJ did not immediately respond to Reuters requests for comment. Epic Games declined to comment.

The tech news website had reported in late October that the DOJ was accelerating its two-year-old antitrust probe on Apple in the last several months, increasing the likelihood of a lawsuit.

© Thomson Reuters 2021

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