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A grab bag of thoughts to start your week in tech:
* I didn’t get to comment last week on Jeff Bezos’s annual letter to shareholders. Here are some words no one likely ever expected to find in this letter: “databases for specialized workloads,” “key-value stores,” “in-memory databases,” “time series databases,” and “ledger solutions.” These are all enterprise software products, specifically the types Oracle dominates, that Amazon Web Services now provides cheaply as part of its growing service. Bezos used to joke that “your margin is my opportunity.” Oracle, a slow-growing, high-margin business, can’t be happy about these offerings. I encourage you to read the entire letter as it’s written in plain English and contains more than a few priceless business chestnuts.
* Ford shuffled its management last week, naming marketing veteran Jim Farley to run its “mobility” business. This is a matcher of sorts, seeing as General Motors assigned its president, Dan Ammann, to run Cruise, GM’s expensively-acquired self-driving-car technology business.
* Speaking of transportation, I still haven’t read Uber’s IPO prospectus. I did read a lot of the coverage, though. Uber doesn’t make money and the growth in its core business–which is typically the reason why investors rationalize paying a high valuation for unprofitable companies–is slowing. Other than wishful thinking, it’s a head scratcher why, if Uber doesn’t make money or grow impressively anymore, it is worth $100 billion. Or $90 billion. Or $80 billion. And so on.
* Another knock on Uber is its competition, including from Lyft. And speaking of Lyft, its bike-rental business has suffered a black eye. It is pulling from the market some 3,000 pedal-assist electric bikes in San Francisco, New York, and Washington, D.C., due to braking problems. (I am a loyal and highly satisfied user of Ford GoBike, the sponsor of Lyft’s San Francisco service. I am going to miss those bikes.) The ride-hail business was supposed to be a good one because the “platforms” don’t hold physical assets. Bikes are assets, though. And Lyft’s are broken.
* Netflix reports earnings on Tuesday. Investors are sure to ask about Disney+
Inside view. Hackers penetrated Microsoft’s Outlook.com online email system and, for a small group of customers, gained access to the contents of emails, the company admitted on Sunday.
Shopping spree. Cash can be a weapon and Apple is deploying its hoard to bolster its service business now. The company paid $100 million for magazine offering Texture, with another $385 million due over the next three years, the New York Post reports. Separately, Apple is spending hundreds of millions of dollars to secure exclusive games for its Arcade service, the Financial Times reports. Speaking of Apple, the Wall Street Journal goes behind the scenes of the company’s patent and royalty war with Qualcomm. A trial between the two behemoths of the mobile phone market starts Tuesday in San Diego.
Tracking the trackers. Big advertising firm Publicis is buying big consumer data service Epsilon from current owner Alliance Data Systems for almost $4 billion. Publicis, which owns such storied ad shops as Saatchi & Saatchi and Leo Burnett, could use the data firm to battle the increasing threat to its business from Facebook and Google.
Hullabaloo two. After its New York City office deal collapsed, Amazon is now facing a challenge over about $100 million of subsidies to add jobs in Nashville. “This is one area where libertarians and socialists can agree on something: this is a bad idea,” John Mozena, president of the Center for Economic Accountability, tells The Guardian newspaper.
FOOD FOR THOUGHT
On the day ordinary people have to pay their tax bill, it may be timely to evaluate the structure of the current tax system. The giant corporate tax cut of 2017 was promoted as a way to boost employment and investment in plants and equipment. An examination by Bloomberg reporters Nico Grant and Ian King finds that, at least in the tech industry, hiring slowed, R&D increased slightly, capital spending posted an impressive gain, but stock buybacks surged more than all the other categories nearly combined.
Some of the largest U.S. technology companies pushed for a corporate tax overhaul in 2017 by suggesting they would go on hiring sprees and boost the economy. Just over a year after getting what they wanted, data show these firms gave most of their huge tax savings to investors. The top 10 U.S. tech companies spent more than $169 billion purchasing their shares in 2018, a 55 percent jump from the year before the tax changes, according to data compiled by Bloomberg. The industry as a whole authorized the greatest number of share buybacks ever recorded, totaling $387 billion, according to TrimTabs Investment Research. That’s more than triple the amount in 2017.
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BEFORE YOU GO
Microsoft co-founder Paul Allen died last year but his vast fortune ensures that many of his favorite causes live on. Allen’s gigantic airplane, with a 385-foot wingspan, finally made its first flight on Saturday. The mega-craft, designed to launch small satellites, reached an altitude of 17,000 feet and a maximum speed of 189 miles per hour. “We all know Paul would have been proud,” his sister Jody Allen said.