By Associated Press | Updated: 10 November 2020
Federal regulators are requiring Zoom to strengthen its security in a proposed settlement of allegations that the video conferencing service misled users about its level of security for meetings.
The settlement, approved by the Federal Trade Commission in a 3-2 vote, was announced Monday. A complaint filed by the agency accused Zoom of deceiving users over security since at least 2016. It said the company held on to cryptographic keys that allowed it to access content from its customers’ meetings, and secured meetings with a lower level of privacy encryption than it promised customers.
Zoom has become a staple during the coronavirus pandemic because it allows people to meet online rather than in person. The company claims some 300 million users, boosted by the tens of millions of workers around the world who were suddenly ordered to work from home in the spring as the virus outbreak shut down wide swaths of the economy.
The FTC alleged that Zoom “engaged in a series of deceptive and unfair practices that undermined the security of its users.”
The company’s misleading claims gave users a false sense of security, the regulators said, especially for those who used the videoconferencing platform to discuss sensitive topics such as health and financial information. They noted that in blog posts, Zoom promoted its level of encryption as a reason for consumers, whether families, schools, social groups or businesses, to use the services.
The proposed settlement doesn’t include any financial penalties for the company or restitution for affected users.
Zoom, based in San Jose, California, would be required under the settlement to take specific measures, such as establishing a programme for resolving privacy vulnerability. Company personnel would be required to review any software updates for security flaws.
Zoom said it has already addressed the problems cited by the FTC. The settlement “is in keeping with our commitment to innovating and enhancing our product as we deliver a secure video communications experience,” the company said in a statement Monday.
“The security of our users is a top priority for Zoom,” it said. “We take seriously the trust our users place in us every day, particularly as they rely on us to keep them connected through this unprecedented global crisis, and we continuously improve our security and privacy programs.”
The vote was 3-2 to propose the agreement, with the FTC’s two Democratic commissioners, Rohit Chopra and Rebecca Kelly Slaughter, dissenting because it doesn’t require refunds or other redress for affected customers. The proposal will be opened to public comment for 30 days, after which the agency will decide whether to make it final.
“Zoom has ‘cashed in’ on the pandemic,” Chopra said in his dissent. “Zoom stands ready to emerge as a tech titan. But we should all be questioning whether Zoom and other tech titans expanded their empires through deception. Zoom could have taken the time to ensure that its security was up to the right standards.”
Microsoft Said to Be in Advanced Talks to Tap Into Oyo at $9-Billion Valuation Before Its Potential IPO
By Reuters | Updated: 30 July 2021
Microsoft is in advanced talks to invest in Indian hotel chain Oyo at a $9-billion (roughly Rs. 66,850 crores) valuation, a source familiar with the matter said.
The deal could be announced in the coming weeks and would be a prelude to an initial public offering (IPO) by Oyo, the source said.
Founder and Chief Executive Officer Ritesh Agarwal said earlier this month that Oyo would consider a potential public offering, but did not provide a timeline.
The deal may involve Oyo shifting to use Microsoft’s cloud services, TechCrunch reported earlier on Thursday, citing people familiar with the matter.
Oyo is one of India’s largest startups. Founded by Agarwal in 2013, it aggregates bookings for budget hotels around the world.
The hotel aggregator, in which SoftBank Group owns 46 percent stake and is one of its biggest bets, has endured months of layoffs, cost cuts and losses since the COVID-19 pandemic outbreak last year.
© Thomson Reuters 2021
Amazon Sales Growth Slows as Online Shopping Surge Eases, New CEO Andy Jassy’s Tenure Sees a Tame Start
By Reuters | Updated: 30 July 2021
Amazon on Thursday said sales growth would slow in the next few quarters as customers venture more outside the home, a tepid start to CEO Andy Jassy’s reign after 27 years with Jeff Bezos at the retailer’s helm.
Spending growth by Prime members, Amazon’s most valuable customers, has eased as well, the company said. Shares fell 7 percent in after-hours trade.
More than a year into the COVID-19 pandemic, Amazon’s financial luster is fading slightly. When brick-and-mortar stores closed, Amazon posted record profits, drew more than 200 million Prime loyalty subscribers, and recruited over 500,000 workers to keep up with surging demand.
Now, the company is facing the tough task of climbing higher still. While revenue surged 44 percent in the first quarter of this year, that figure dropped to 27 percent for the period ended June 30. Sales may only rise as much as 16 percent in the third quarter, Amazon said.
Brian Olsavsky, Amazon’s chief financial officer, attributed this to a difficult comparison to last year, when consumers stayed more indoors and relied on e-commerce for their everyday needs. In the United States and Europe, customers are now out and about.
They are “doing other things besides shopping,” he said.
Revenue was $113 billion (roughly Rs. 8,39,770 crores) for the second quarter, shy of analysts’ average estimate of $115 billion (roughly Rs. 8,54,630 crores), according to IBES data from Refinitiv. Profit rose 48 percent to $7.8 billion (roughly Rs. 57,970 crores), the second-largest Amazon ever announced.
Amazon expects this lower growth to continue for the next few quarters, Olsavsky told reporters.
The outlook comes just after Jassy on July 5 inherited Amazon’s top job, which has never been bigger or more complex. Last quarter Amazon announced a deal to buy the film studio MGM for $8.5 billion (roughly Rs. 63,170 crores), expanding in Hollywood at the same time as it is running a grocery chain, building a healthcare business and facing scrutiny from regulators worldwide.
Olsavsky said the company hopes COVID-19 will subside and that the economy will continue to bounce back. While peers Alphabet and Facebook said they will require vaccines for workers returning to offices, Amazon has made no such announcement.
The company in the pandemic has grappled with staff protests over safety precautions and a high-profile, failed unionisation bid in a facility in Bessemer, Alabama.
Brian Yarbrough, an analyst with Edward Jones, said it was “not feasible” for Amazon to maintain its breakneck pace.
“It’s still phenomenal growth when you think of the sheer size of the business,” he said. “Obviously the pandemic helped them, but they’re not going to be able to grow that rapidly on top of those numbers.”
The world’s biggest online retailer had moved its annual marketing blitz, Prime Day, to June, hoping to peddle goods before shoppers headed out on vacation. This only helped so much: Sales since May 15 have been up just in the mid-teens excluding Prime Day, Olsavsky told analysts.
Amazon Web Services has fared better. The cloud computing division that Jassy long ran grew revenue 37 percent to $14.8 billion (roughly Rs. 1,09,970 crores), ahead of estimates of more than $14.1 billion (roughly Rs. 1,04,740 crores). Though AWS has lowered prices, it has signed new multi-year agreements with large customers, Olsavsky said.
Enormous challenges have come with Amazon’s size.
Costs continue to rise, aside from the $200 million (roughly Rs. 1,490 crores) in extra stock Amazon plans to pay Jassy over the next 10 years. The company has offered an average $17 (roughly Rs. 1,260) in hourly wages plus signing bonuses to attract 75,000 workers during a labour shortage.
Olsavsky said he expects wage pressure to stay for the near future, as industry reopenings, government payments, and back-to-school impact individuals’ willingness to work.
“It’s a very competitive labor market out there, and certainly the biggest contributor to inflationary pressures that we’re seeing in the business,” he said.
The No.2 US employer this winter became a rallying point for organised labour, which wanted to form Amazon’s first US union and inspire similar efforts across the country. Amazon is awaiting a decision on whether a US National Labor Relations Board regional director will overturn its landslide victory in the Bessemer, Alabama union election and call for a rerun.
Following the April vote count, Bezos said he aimed to make Amazon a better place to work. It is unclear how he will govern from the sidelines in the role of executive chair of Amazon’s board.
Olsavsky said Jassy has “hit the ground running,” though Bezos would continue to weigh in on decisions where there was no turning back.
“We’ve had a good handoff,” Olsavsky said. But Bezos “will not be leaving. He’s obviously continuing to be very involved.”
© Thomson Reuters 2021
Robinhood, Gateway to ‘Meme’ Stocks, Raises $2.1 Billion in IPO
By Reuters | Updated: 29 July 2021
Robinhood, the owner of the trading app that emerged as the go-to destination for retail investors speculating on this year’s ‘meme’ stock trading frenzy, raised $2.1 billion (roughly Rs. 15,600 crores) in its IPO.
The company was seeking to capitalise on individual investors’ fascination with cryptocurrencies and stocks such as GameStop, which have seen wild swings after becoming the subject of trading speculation on social media sites such as Reddit. Robinhood’s monthly active users surged from 11.7 million at the end of December to 21.3 million as of the end of June.
The IPO valued Robinhood at $31.8 billion (roughly Rs. 2,36,050 crores), making it greater as a function of its revenue than many of its traditional rivals such as Charles Schwab, but the offering priced at the bottom of the company’s indicated range.
Some investors stayed on the sidelines, citing concerns over the frothy valuation, the risk of regulators cracking down on Robinhood’s business, and even lingering anger with the company’s imposition of trading curbs when the meme stock trading frenzy flared up at the end of January.
Robinhood said it sold 55 million shares in the IPO at $38 (roughly Rs. 2,820) apiece, the low end of its $38 (roughly Rs. 2,820) to $42 (roughly Rs. 3,110) price range. This makes it one of the most valuable US companies to have gone public year-to-date, amid a red-hot market for new listings.
In an unusual move, Robinhood had said it would reserve between 20 percent and 35 percent of its shares for its users.
Robinhood’s platform allows users to make unlimited commission-free trades in stocks, exchange-traded funds, options and cryptocurrencies. Its simple interface made it popular with young investors trading from home during the COVID-19 pandemic.
Robinhood enraged some investors and US lawmakers earlier this year when it restricted trading in some popular stocks following a 10-fold rise in deposit requirements at its clearinghouse. It has been at the center of many regulatory probes.
The company disclosed this week that it has received inquiries from US regulators looking into whether its employees traded shares of GameStop and AMC Entertainment before the trading curbs were placed at the end of January.
In June, Robinhood agreed to pay nearly $70 million (roughly Rs. 520 crores) to settle an investigation by Wall Street’s own regulator, the Financial Industry Regulatory Authority, for “systemic” failures, including systems outages, providing “false or misleading” information, and weak options trading controls.
The brokerage has also been criticized for relying on “payment for order flow” for most of its revenue, under which it receives fees from market makers for routing trades to them and does not charge users for individual trades.
Critics argue the practice, which is used by many other brokers, creates a conflict of interest, on the grounds that it incentivises brokers to send orders to whoever pays the higher fees. Robinhood contends that it routes trades based on what is cheapest for its users, and that charging a commission would be more expensive. The US Securities and Exchange Commission is examining the practice.
Robinhood was founded in 2013 by Stanford University roommates Vlad Tenev and Baiju Bhatt. They will hold a majority of the voting power after the offering, these filings showed, with Bhatt having around 39 percent of the voting power of outstanding stock while Tenev will hold about 26.2 percent.
The company’s shares are scheduled to start trading on Nasdaq on Thursday under the ticker “HOOD”
Goldman Sachs and J.P. Morgan were the lead underwriters in Robinhood’s IPO.
© Thomson Reuters 2021
Didi Global Considers Going Private to Calm China, Compensate Investor Losses: Report
By Reuters | Updated: 29 July 2021
China’s Didi Global is considering going private to placate Chinese authorities and compensate investor losses since the ride-hailing firm listed in the United States, the Wall Street Journal reported on Thursday.
The company has been mulling delisting plans as crackdown in China widens and it has received support from cybersecurity regulators, according to the report, which cited people familiar with the matter.
The about-turn by Didi comes just about a month after it listed on the New York Stock Exchange. Days after its $4.4 billion (roughly Rs. 32,690 crores) US listing, China’s cyberspace regulator launched a probe into the company and asked it to stop registering new users, citing national security and the public interest.
The regulator also said it will remove the mobile apps operated by Didi from app stores.
Didi has been in talks with bankers, regulators, and key investors to figure how to resolve the problems following its listing on the New York Stock Exchange, the report said.
The company has asked its major underwriters to assess investors’ views regarding a privatization plan, as well as the pricing range that they would accept, the report said.
US-listed shares of Didi, which surged 40 percent to $12.42 (roughly Rs. 920) in premarket trading, have lost about 37 percent since listing on the NYSE on June 30.
The company did not immediately respond to Reuters request for comment.
A take-private deal that would involve a tender offer for its publicly traded shares is one of the preliminary options being considered, the report said.
Didi’s listing is the biggest stock sale by a Chinese company since the 2014 listing of Alibaba.
© Thomson Reuters 2021
ShareChat Raises $145 Million From Temasek, Others at Near $3-Billion Valuation
By Reuters | Updated: 28 July 2021
Indian content-sharing platform ShareChat has raised $145 million (roughly Rs. 1,078 crores) in fresh funding from Singapore’s Temasek Holdings and two other investors, giving it a valuation of $2.88 billion (roughly Rs. 21,418 crores), the company told Reuters on Tuesday.
The funding signals growing fascination for Indian content-sharing and short-video apps that have become popular ever since New Delhi last year banned ByteDance’s TikTok and some other Chinese apps following an India-China border clash.
ShareChat allows users to post content in 15 Indian languages. After TikTok was banned, the Indian firm also launched a similar short-video sharing app named Moj which has since become popular and clocked millions of downloads.
The latest funding round was led by Temasek and Moore Strategic Ventures, with participation from a fund jointly set up by Mirae Asset and South Korean web portal Naver Corp, ShareChat said in its statement. Reuters is first to report the fund raise.
The latest investments come around four months after ShareChat raised $502 million (roughly Rs. 3,733 crores) from Tiger Global, Snap, Twitter and some others, which at the time valued it at just over $2.1 billion (roughly Rs. 15,617 crores).
“Investments raised this year including this additional capital infusion will help the company double down (on) its strategic priorities,” ShareChat said.
The company will continue to invest in artificial-intelligence capabilities of video app Moj and enhance its in-app editing tools, said CEO Ankush Sachdeva.
ShareChat has 180 million active users. Moj has 160 million users and counts Facebook’s Instagram Reels as its top rival.
India’s digital startups ecosystem is becoming a darling of investors.
China’s Ant Group-backed food delivery firm Zomato had a stellar debut on Indian bourses last week, valuing the firm at $13 billion (roughly Rs. 96,683 crores), while others including SoftBank-backed ride-hailing firm Ola are also eyeing IPOs.
ShareChat has no immediate IPO plans and the company for now will focus on expanding its current business and offerings, a source familiar with the strategy said.
© Thomson Reuters 2021
Robinhood CEO Vlad Tenev Says He Is Considering Offering US Retirement Accounts
By Reuters | Updated: 27 July 2021
Robinhood is considering launching U.S. retirement accounts, CEO and co-founder Vlad Tenev said on Saturday in a webcast with users of its trading app looking to participate in its initial public offering, which is set to price next week.
The online brokerage has about 18 million funded investment accounts on its platform, most of which are held by retail traders.
Offering individual retirement accounts (IRAs) and Roth IRAs, which offer tax advantages to those saving for retirement, would allow Robinhood to tap a vast market. Americans held $12.6 trillion (roughly Rs. 93,78,611 crores) in IRAs at the end of March, up 2.8 percent from the end of December, according to the Investment Company Institute.
“We are interested in building more account types, including IRAs and Roth IRAs, we’ve been hearing that a lot from our customers. We want to make first-time investors into long-term investors,” Tenev said in response to an investor question.
Due to the penalties involved in withdrawing money, IRAs tend to attract long-term investments, rather than the quick flip in stocks, options and cryptocurrencies that some investors turn to Robinhood for.
In his webcast, however, Tenev said: “We see evidence that the majority of our customers are primarily buy and hold.”
Robinhood, which is targeting a valuation of up to $35 billion (roughly Rs. 2,60,560 crores) in its IPO, has said it will allocate 20 percent to 35 percent of shares offered to its users, an unusual move for a high-profile offering. One of the reasons many IPOs enjoy a first-day trading pop is because the retail investors that Robinhood has invited are excluded and must buy shares in the open market.
Robinhood launched its IPO Access platform earlier this year to enable users to buy into the IPOs of other companies if it can negotiate deals with the investment banks handling them.
Some individual investors are calling for a boycott of Robinhood’s IPO on Reddit and other social media over its handling of the ‘meme’ stock-trading frenzy in January. Robinhood placed restrictions on buying GameStop and other stocks that hedge funds had bet against, on grounds it was needed for the financial and operational stability of its platform.
Tenev said in Saturday’s webcast that Robinhood had invested in the stability of its platform to avoid another such incident.
Payment for order flow
Robinhood’s popularity has soared over the past 18 months of coronavirus-induced social restrictions that have kept many retail investors at home. It has said its mission is to “democratize finance for all” by allowing users to make unlimited commission-free trades in stocks, exchange-traded funds, options and cryptocurrencies.
The brokerage has been criticized for relying on “payment for order flow” for most of its revenue, under which it receives fees from market makers for routing trades to them and does not charge users for individual trades, however.
Critics argue the practice, which is used by many other brokers, creates a conflict of interest, on the grounds that it incentivizes brokers to send orders to whoever pays the higher fees. Robinhood contends that it routes trades based on what is cheapest for its users, and that charging a commission would be more expensive.
Robinhood chief financial officer Jason Warnick left the door open for the company to change the practice if necessary.
“If a ban or other limitations on it were to be imposed, we believe Robinhood and the industry would adapt and explore other revenue sources,” Warnick said.
Robinhood was founded in 2013 by Stanford University roommates Tenev and Baiju Bhatt, who will hold nearly two-thirds of the voting power after the offering, a filing with the stock exchange showed.
Robinhood customer Minjie Xu, who works as a software engineer in Missouri, remained unimpressed after the presentation on concerns the offering was overpriced.
“This is not unique to them, as I think most IPOs are overpriced,” Xu told Reuters.
© Thomson Reuters 2021
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