The EU’s “Hit List”
Silicon Valley Back in the Spotlight Overseas
Last week, a House of Representatives subcommittee announced tech giants Apple (AAPL), Facebook (FB), Google (GOOGL), and Amazon (AMZN) are getting too big and squeezing out competitors. This week, regulators from the European Union are also aiming to rein in big tech’s power. On Monday, the EU reported it’s working on a “hit list” that will target up to 20 major tech companies. The list could include Facebook, Google, and Apple.
Regulators plan to look carefully at businesses that dominate a big portion of market share and have many users. They’ll also take a look at companies whose platforms are so big that competitors have to use them in order to operate their businesses. These criteria, among others, make it likely the effort to monitor companies will focus mainly on American ones. “Big platforms are invasive, they pay little tax and they destroy competition,” said one person close to the EU talks.
Beyond the “Cost of Doing Business”
The EU promises its new regulations will include more than just fines. This pledge follows recent complaints that Europe’s existing regulatory structure hasn’t been effective in encouraging competition or controlling American tech giants.
Typically, when the EU fines companies for antitrust infractions, big tech companies pay up and move on. Tech companies see those fines as the “cost of doing business,” and the EU argues they’ve grown too big to care about financial penalties. This time, however, regulators could attempt to break up the greatest offenders. At a minimum, the EU could require companies to share data with competitors.
Meanwhile, the EU is working on a new Digital Services Act to establish new rules for how platforms operate on the internet in Europe. This is the first time in 20 years the EU has worked on new rules for the internet.
Google Faces Challenges Back Home
Stateside, Google specifically is facing looming charges for alleged antitrust violations that could force the company to pare off Google Chrome and divide up its advertising business. Competitors have accused Google of taking advantage of user’s web histories on the Chrome browser to target them with advertisements. Last Friday, people close to the Department of Justice said charges against Google could be coming soon. If prosecutors don’t ask Google to sell Chrome, they may restrict how Google can use Chrome data in advertising and other products. Chrome is used by a majority of desktop computers—almost 60% according to some estimates.
Separately but related, the Justice Department could charge Google as soon as this week with violations of competition in search. If the DOJ decides to move forward, the case could be the biggest one against an American tech company in decades. Regardless, Big Tech companies like Google and others are facing increasingly heated tension on both sides of the pond.
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QVC-Style Home Shopping Reborn in Instagram Age
Pandemic Shopping Meets the Live Stream
Shopping for fall clothing trends during the pandemic looks a little different this year. In fact, it’s actually a little retro. In a nod to the pre-internet days of television shopping networks, brands like Tommy Hilfiger (PVH), Revolve (RVLV), Levi’s (LEVI), and Rebecca Minkoff are showing off their new designs in live-streamed shows where customers can see fashions on models and ask questions of the designers.
The events have been a success—over 12,600 shoppers attended a stream on Tommy Hilfiger’s website where models and stylists showed off the fall collection and helped shoppers with tips on how to wear the clothes.
The live streams are aimed at customers who don’t feel comfortable shopping in stores during the pandemic but still have holiday shopping to do. Customers who miss engaging with real people while making purchases seem to appreciate the events. “It was almost like having a personal shopper,” one viewer said.
Live Streamed Sales Take Off in China
These live sales events might feel novel—with a hint of old-fashioned—in the United States, but they are already huge in China. In August, 14 million viewers tuned in from China for a single Tommy Hilfiger livestream. Those viewers bought 1,300 hoodies within two minutes.
Live streamed events aren’t completely new to the United States either. Levi’s has been streaming shopping events on Amazon (AMZN) since 2018, but it took this year’s lockdowns for this shopping format to really catch on. Designers and retailers say they’re a good substitute for the experience people have when they go to stores and talk with salespeople.
Research group Coresight expects the digital shopping events to stick around in the United States. By 2023, the events could even generate $25 billion in sales.
Introducing DIY Home Shopping Networks
While big brands are seeing supersized numbers from their live-streamed events, any retailer with an internet presence can get in on the action. In fact, many smaller companies are also starting to hold live events to recreate some of the community spirit that’s been lost during the pandemic.
CommentSold LLC manages the platforms some small businesses use to hold their live sales. CEO Brandon Kruse says technology has made it possible for smaller retailers to keep up with their larger competitors. “It’s a democratized version of the Home Shopping Network,” Kruse said.
The actual Home Shopping Network and QVC (QRTEA) are also getting in on the action with channels on Roku and Amazon Fire TV. The networks might find new customers who would have turned up their noses at home shopping a few years ago. It’s an industry unexpectedly coming back to life during the COVID-19 pandemic.
Twilio’s $3.2 Billion Takeover
API Companies Grow Through Acquisitions
API companies Twilio (TWLO) and Segment will join forces in a $3.2 billion deal. The merger was rumored to be in the works over the weekend and was confirmed on Monday morning. Twilio will acquire Segment using its Class A common stock by the end of the year. After the announcement, Twilio’s stock jumped over 7% on Monday.
“By joining forces and applying our customer data platform to Twilio’s engagement cloud, we’ll be able to make the entire customer experience seamless from end-to-end,” Segment CEO Peter Reinhardt said in a statement. Reinhardt said the deal will help Segment speed up its growth by “five to 10 years.”
Twilio Spends Record Amount
For the first 10 years after its 2008 launch, Twilio focused on communications services. In 2018, it pivoted to the cloud with the launch of its Flex customer service API and with the acquisition of email marketing API company SendGrid. Now, Twilio will be able to use Segment’s customer data with SendGrid and Flex to help companies understand even more about their customers.
Twilio paid a premium for this power. Segment is the eighth company Twilio has acquired, but this deal will close for over $1 billion more than what it paid for SendGrid. However, it’s projecting the big price tag will pay off. In an investor presentation, Twilio said the Segment purchase will grow its total addressable market, or TAM, by $17 billion.
Cloud Companies Expand in Pandemic Market
The pandemic has increased the value of companies like Segment, which gathers customer data from a bunch of different sources and then pulls all of that information into a single view.
Since the start of COVID-19, it’s been more than just businesses that need to communicate with customers online. As schools and non-profit organizations shift their operations to the internet, the demand for cloud software has skyrocketed.
The BVP Nasdaq Emerging Cloud Index, which tracks publicly traded software companies like Twilio, has grown 82.8% in 2020. Twilio shares have ballooned by 235% so far this year.