Data Sheet—Friday, December 30, 2016

Looking back, 2016 feels to me like an unresolved mega-cap sumo wrestling match. The biggest companies in the industry squared off against each other, grunted a lot, made some feints and jabs—but failed to push each other out of the ring. Facebook cruised for much of the year and then got blamed for threatening all civil life as part of the fake news controversy. Apple inched backward, not so much from a competitive shove as from saturation in its biggest market, smartphones, and the absence of its next big thing. Amazon sparkled with the power of its web services arm and the sizzle of its Echo speaker. But its gains were evolutionary, not revolutionary. Google (Alphabet, if you must) looked after its costs, a somewhat unnatural act. Samsung wobbled mightily after its latest, greatest smartphone was recalled, but hasn’t yet fallen down. The biggest private companies, Uber, Airbnb, Snap(chat), and Pinterest, all matured—and stayed private.

What’s next? That’s easy. Two thousand seventeen will be the year of artificial intelligence. It is when every industry will ask how the latest old trend in computing threatens to upend the existing order as they know it. If you haven’t read it, yet, I highly recommend this long feature published a couple of weeks ago in The New York Times Magazine about Google’s AI efforts. (You still have a long weekend to read it, which is what you’ll need.) It will help you understand how researchers are teaching computers to “learn,” though read carefully and you’ll understand that computer learning amounts to becoming far better at guessing highly probable answers.

In recognition of AI’s importance, Fortune has invited Stanford University professor, Baidu research head, and Google Brain co-founder Andrew Ng to speak at our annual CES dinner next week. I’ll interview him, and it should be a fascinating glimpse into the practical business implications of this cutting-edge technology.

Until Jan. 3, I wish you the happiest, healthiest, and most intelligent New Year.

BITS AND BYTES

Qualcomm's patent lawyers sure are busy. South Korea's antitrust regulators want the wireless chipmaker to pay a record $854 million fine for what they describe as unfair patent licensing practices and contracts at the expense of rivals like Intel and Samsung. The decision could serve as a "reference point" for investigations in Taiwan and the U.S., which suggests Qualcomm could be on the hook for even more damages. The good news is, however, that the company has settled a longstanding dispute with Chinese smartphone maker Meizu. (Reuters, Wall Street Journal)

AppDynamics files its IPO papers. The company, which sells technology for monitoring and optimizing the performance of software applications and services, is looking to raise $100 million. As of August, AppDynamics had about 1,800 customers including Kraft and Nike. It lost $95 million during the first nine months of 2016, on revenue of about $158 million. (VentureBeat)

In Amazon's future, even warehouses have wings. The e-commerce giant was granted a patent early this year for a concept known as the "airborne fulfillment center." The idea is to serve the company's futuristic drone delivery fleet from the sky. (Fortune)

Volkswagen picks up mobile payments startup. The German automaker is paying an undisclosed sum for PayByPhone, which sells an app used to pay for parking. The company hopes to turn its financing arm into a broader provider of mobile, digital payment services. (Fortune)

Cosmeticsgiant L'Oreal invests in another early-stage tech fund. The company is joining forces with Partech Ventures in an effort to expand its investment in new technologies, including the Internet of things. It invested in Silicon Valley startup incubator Founders Factory last May. (Reuters)

Fitbit drops patent claims against Jawbone. Fitbit, which is considered the market leader in fitness bands, was seeking an import ban against its struggling rival, but some of the patents it was wielding to support its case were declared invalid. The two fitness-wearables companies are still fighting over trade secrets. (Fortune)

This suggested Twitter feature should please President-elect Donald Trump. Twitter CEO Jack Dorsey is seeking new ideas for the social media service. One of the top suggestions so far: an "edit" button for tweets. (Fortune, Wall Street Journal)

PREDICTIONS TO PONDER

Next Year Could Be Rough for Microsoft, by Barb Darrow

Tech Merger Mania Is Possible in 2017 Under Donald Trump, by Aaron Pressman

Google Is Becoming a Lot Less Interesting, by Mathew Ingram

Apple Promises Big Updates and Big Changes, by Don Reisinger

5 Big Tech Stories to Watch, by Jeff John Roberts

Expect Heavy Combat Between Cable and Wireless, by Aaron Pressman

Amazon's Cloud Will Feel the Heat from Rivals, by Barb Darrow

THE DOWNLOAD

The gamblers behind tech's biggest deal ever. Michael Dell's namesake company was once the largest PC maker in the land. In 2013, along with private equity firm Silver Lake Partners, he took his baby private, a transaction worth $24.4 billion—the largest leveraged buyout since the Great Recession. The sequel, two years later, was even grander: Dell's $67 billion merger with data storage leader EMC rates as the biggest tech deal in history.

The combined Dell-EMC, now dubbed Dell Technologies, is—for now—the world’s No. 1 seller of storage systems, No. 2 of servers, and No. 3 of PCs. Can the bigger Dell successfully challenge archrival Hewlett Packard Enterprise? We're about to find out, thanks to the computer mogul and his close ally, private-equity rising star Egon Durban. These fellow Texans like to make big bets, even when popular opinion is against them.

IN CASE YOU MISSED IT

The Ugly Unethical Side of Silicon Valley, by Erin Griffith

Corporate Training Gets An Update for the Facebook Generation, by Heather Clancy

Bitcoin, the Top Currency of 2016, Nears the $1,000 Mark, by Jeff John Roberts

Virtual Reality's Quest for Real Money, by Jonathan Vanian

Would-Be Android Killer Cyanogen Has Called It Quits, by David Z. Morris

ONE MORE THING

Alexa, do you swear to tell the truth, the whole truth? Police want audio recordings from an Arkansas man's Amazon Echo home-automation device as part of a murder investigation. So far, the tech giant is resisting those requests, on privacy grounds. (Fortune, New York Times)

MARK YOUR CALENDAR

Consumer Electronics Show: An annual conference and exhibition dedicate to the business of consumer technology. (Jan. 5-8; Las Vegas)

IBM Connect 2017: Redefine work with Watson. (Feb. 20-23; San Francisco)

CIO Leadership Forum (West): Strategy in the age of digital disruption. (Feb. 26-28; Phoenix)

Microsoft Envision: Drive digital transformation. (Feb. 28-March 2; Los Angeles)

Pure//Accelerate: The future of data storage. (March 6-8; San Francisco)

Google Cloud Next: Products and perspectives for developers and customers. (March 7-10, 2017; San Francisco)

CIO Leadership Forum (East): Strategy in the age of digital disruption. (March 19-21; Hollywood, Fla.)

IBM Interconnect: Tap into advanced cloud technology. (March 19-23; Las Vegas)

MuleSoft Connect: Connect apps, data and devices. (April 18-20; San Francisco)

JiveWorld: Strategies and technologies for workplace collaboration. (May 1-3; Las Vegas)

Build: Microsoft's annual conference for software developers. (May 10-12; Seattle)

Cisco Live: Education for technology innovators. (June 25-29; Las Vegas)

This edition of Data Sheet was curated by Heather Clancy.
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