China Consumer Firms Struggle, Meta CEO pressured to Remove Covid Content, TEMU Owner PDD Plummets 29%

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Aug 27, 2024

PDD’s Warning Highlights Growing Strain on China Consumer Firms - Bloomberg

PDD Holdings warns that its revenue growth will slow down due to competition and economic headwinds, reinforcing concerns about the state of Chinese consumer firms.
Alibaba Group Holding Ltd.'s anemic revenue growth after its Chinese commerce business shrank for the first time in at least a year adds to the gloom for the e-commerce sector in China.
Analysts say that if PDD isn't immune to the industry's troubles, there's little chance that its peers will be able to withstand the pressure.

Malaysia Plan to License Social Media Platforms Sparks Pushback - Bloomberg

Technology industry group urges Malaysia to pause plan to regulate media and messaging platforms
Proposed regulation will negatively impact innovation and deter future investments

Meta CEO Says He Was ‘Pressured’ by Biden to Pull Covid Content - Bloomberg

Facebook was pressured by the US government to censor content related to Covid-19 during the pandemic
Meta Platforms was also pressured by senior officials to remove certain COVID-19 content, including humor and satire
Facebook took down more than 20 million pieces of content in just over a year to draw ire from critics of lockdowns, vaccines, and masking mandates
There is a growing global debate over how far social media companies should go in policing the comments, images, and other content posted by their users.

BYD Says Fate of Lithium Project Is in Hands of Chile Government - Bloomberg

BYD Co. is still negotiating with authorities in Chile to settle terms for its lithium project, which could delay the start of production by the end of 2025.- The Chinese automaker was granted access to preferential prices for lithium carbonate produced by SQM to feed a plant that would start making lithium iron phosphate for cathodes by 2025.
The project offers a foothold in Chile, which has the world's biggest reserves of lithium, and is part of a push to move further down the battery supply chain. However, lithium prices have slumped to three-year lows as global demand for electric cars slows.

Temu Owner PDD Plunges 29% on Warning of Slowing Sales - Bloomberg

PDD Holdings Inc. shares fell the most on record after its owner warned that revenue growth will inevitably dwindle, highlighting the challenges of sustaining its expansion against rivals.
Co-founder Chen Lei stressed that PDD's current trajectory wasn't sustainable, and the company needs to invest more in supporting merchants to compete in the cutthroat Chinese e-commerce industry.
The company reported revenue of 97.1 billion yuan ($13.6 billion) for the June quarter, missing the average estimate of 100 billion yuan, and its first revenue miss in 10 quarters. The European Union is working on a proposal to close an import tax loophole for cheap goods bought online, primarily targeting Chinese retailers including PDD.

Edgar Bronfman Jr. Drops Pursuit of Paramount - New York Times

Edgar Bronfman Jr. dropped his 11th-hour bid for Paramount, a day before the deadline to submit a final offer for the owner of CBS and MTV.
Skydance is set to acquire Paramount in an $8 billion merger, clearing the way for the Hollywood studio to take control of the company
Mr. Bronfman had been preparing to offer $6 billion to acquire a controlling stake in Paramount
Paramount and its parent company, National Amusements, applied scrutiny to his bid over the last week
Some people involved in the deal were skeptical of his ability to prove financing to justify his bid in time
Bronfman did not provide detailed evidence that his backers had enough capital on hand for a deal, and vetting ground to a halt
The bid was stymied by the go-shop process and tight time constraints on the submission and analysis of his bid.

Why Plastic Water Bottles May Not Contain as Much Recycled Plastic as Advertised - New York Times

A green accounting method called “mass balance” certifies that something was manufactured with recycled plastic.
The amount of recycled plastic that went into making the bottles may be nowhere near 50%.
Eastman Chemical introduced the durable plastic called Tritan Renew four years ago, telling manufacturers it was made with “up to 50 percent recycled content from waste plastic.

A Trial Asks: If Grocery Rivals Merge, Do Workers Suffer? - New York Times

Federal regulators are opposing the proposed merger between Kroger and Albertsons, arguing that the deal will harm consumers and workers.
The merger would be the biggest supermarket merger in history, creating a company with 700,000 employees and the biggest in history if it goes through. The United Food and Commercial Workers International Union (U.F.C.W.) has spoken out against the proposed deal, but the union has a powerful ally in the Federal Trade Commission (F.T.C.), which represents most in-store workers at the two chains. The FTC argues that the merger will decrease competition and erode the bargaining power of unions, leading to higher prices for consumers and lower wages for workers.
Regulators under the Biden administration have made cracking down on corporate concentration a priority, and merger guidelines outline their emphasis on how corporate mergers could reduce competition for workers and result in lower wages or worse benefits. The Pavilions where Leonard De Monte works is on the list of stores that could be sold as part of the merger. The two chains have agreed to sell 579 stores out of about 5,000 in an effort to satisfy antitrust regulators.

Nippon Steel’s $15 Billion U.S. Steel Takeover Bid Is in Peril - New York Times

Nippon Steel proposed a merger with U.S. Steel to offset anemic demand in Japan and strengthen its hand in a global steel business dominated by China.
The deal was announced on Dec 18, 2016, with a price of $14.9 billion, a 40% premium to US Steel's share price at the time.
However, political and labor opposition has prevented the merger from being completed, with politicians from both parties condemning the prospect of a storied American industrial company being acquired by a foreign corporation. The United Steelworkers union, the group that most forcefully opposed the deal, is based in Pennsylvania, a state that could determine the winner of the presidential election in November. The union has taken action under its labor contract to contest the acquisition in an effort to win concessions for workers.

How High Home Insurance Costs Threaten Affordable Housing - New York Times

Developers and landlords of subsidized housing are facing increasing property insurance costs that could put them out of business.
The skyrocketing cost of property insurance has put the network of nonprofit groups that use public and charitable funds to rehab or build affordable housing on shaky ground
In Houston, hundreds of apartments once protected from rising rents are being sold off to landlords who can charge the full market rate
Costs are rising for homeowners of all types, and in states like Florida, Texas, and California, it has become harder to get insurance at all
Coastal states, hit hard by severe weather, are particularly affected
A collapse of the affordable housing sector could increase homelessness and hurt the banks that have invested billions in housing projects through a federal tax credit program
Insurance costs forced Mary Lawler, the chief executive of Avenue, to make the difficult decision to sell units that had been earmarked for poor residents
Novogradac, which provides services for developers, is frustrated by the severity of insurance costs.

Zuckerberg says White House pressured Meta over Covid-19 content - Financial Times

Meta chief executive Mark Zuckerberg accused the Biden administration of pressuring the social media group to censor certain Covid-19 content during the pandemic.
Zuckerberg also said he would no longer make a contribution to support electoral infrastructure via the Chan Zuckerberg Initiative, his philanthropic group, as he had previously done.
The donations totalled more than $400mn and were made to non-profit groups including the Chicago-based Center for Tech and Civic Life. The president also said Meta should not have demoted a New York Post story about a laptop belonging to President Joe Biden's son Hunter ahead of the 2020 election.

China’s export curbs on semiconductor materials stoke chip output fears - Financial Times

Chinese export controls on semiconductor materials have led to a two-fold increase in prices in Europe over the past year
China produces 98% of the world's supply of gallium and 60% of germanium, highlighting its dominance of global supply of crucial resources
The controls were introduced in response to US-led controls on sales of advanced chips and chipmaking equipment
Analysts say Beijing is targeting western economic interests to hit back against the controls on China's access to cutting-edge chips and advanced technologies
Continued throttling of exports by Beijing could disrupt production of advanced microprocessors, fibre-optic products, and night-vision goggles
Each individual shipment needs approval, taking 30 to 80 days, making long-term supply contracts unviable due to uncertainty
Germanium prices have surged 52% since the start of June to $2,280 a kilogramme in China, according to data provider Argus.

British business groups call for automatic compensation for broadband outages - Financial Times

British business groups call for automatic compensation scheme for broadband outages
Improved network resilience and fewer disruptions would deliver significant productivity benefits to the UK economy
Recent research found 51% of UK fixed business connectivity customers experienced at least one outage in the past year
Some telecoms groups already provide compensation for disrupted service to a certain degree

Apple’s top finance executive to step down at end of 2024 - Financial Times

Apple CFO Luca Maestri will step down at the beginning of next year, ending a decade-long tenure as the company's top finance executive.
He will be succeeded by Kevan Parekh, Apple's vice-president for financial planning and analysis, and will stay at the company to lead its corporate services teams.
Apple has grown in to one of the world's most valuable companies, with its market cap eclipsing $3tn and billions of dollars in cash on hand.

23andMe hasn’t cracked code on life as a viable public company - Financial Times

Personal DNA testing company 23andMe is attempting to take private by founder Anne Wojcicki at 40 cents per share.
The company has a market capitalization of below $180mn after listing shares at a $4.5bn equity valuation through Branson's Spac deal in 2021
Most of the company's revenue comes from its consumer testing business, which generates just $220mn in total revenue and has a high customer acquisition cost and ebitda loss of $176mn
Directors have criticized the bid as lacking details and may not be interested in a superior bid than 40 cents
Remaining shareholders hope to avoid a takeover price set at 23 cents or less.

China's AI Engineers Are Secretly Accessing Banned Nvidia Chips - Wall Street Journal

Chinese AI developers are using American chips like Nvidia H100 chips without importing them to China due to US export controls
They are working with brokers to access computing power overseas, sometimes using techniques from the cryptocurrency world to mask their identity
The tactic comes in response to U.S. export controls that have prevented Chinese companies from directly importing sought-after AI chips developed by US-based Nvidia
Chinese users can still bring Nvidia's chips to China by tapping a network of gray-market sellers, but the process is cumbersome and can't supply all the needs of big users
Decentralized platforms like Aw have emerged in the past two years to take advantage of slower activity in the cryptocurrency field and rent out computing power to AI developers
Buyers and sellers of computing power use a smart contract to extend the anonymity of cryptocurrency to the contract itself, with both parties using blockchain technology
Lawyers familiar with US sanctions say the middlemen connecting buyers and sellers aren't breaking any laws
Nvidia complies with export controls and expects its partners to do the same.

JD.com Shares Fall as Walmart Plans Up to $3.7 Billion Stake Sale - Wall Street Journal

Walmart is selling its stake in JD.com worth up to $3.7 billion, allowing it to focus on its strong China operations for Walmart China and Sam's Club.
The sale signals Walmart's confidence in its ability to compete in the retail market in China
Citi analysts raised their full-year adjusted net profit estimate by 9.6% due to JD.'s strong profit beat in June and potential for net margin expansion this year
Walmart can now focus on expanding its stores in China once it no longer owns JD., but analysts warn of potential competition in general merchandise and supermarket categories.

Alibaba, Tencent Cast Wide Net for AI Upstarts - Wall Street Journal

Alibaba and Tencent are investing billions in incubating China's OpenAI challengers, valuing at least six startups developing large language models at over $1 billion each.
Both companies have shifted focus to making profits after being hamstrung by regulatory clampdowns, Covid-19 pandemic, and a faltering Chinese economy in recent years
Generative AI has emerged as a rare exception to their newfound conservatism
Investment in AI startups is a strategic effort to strengthen their technological edge and expand market influence
40% of Alibaba's deals in China and 30% of Tencent's have targeted AI startups since 2023
China's AI-model arena is getting increasingly crowded, with more than 190 products now on the market, raising fears among some companies that they are falling behind
Computing tasks typically form the majority of capital expenditure of LLM startups
Investors provide computing power support in different ways, including renting out hardware, selling cloud computing at discounted rates, and offering funds earmarked for purchasing chips.

Elon Musk's X to Close Operations in Brazil as Clash Over Content Escalates - Wall Street Journal

Elon Musk's X Corp is closing its Brazil operations after a clash over a judge's order to remove certain content.
The move does not affect users' ability to access the platform in Brazil, where authorities are clamping down on content on social-media and messaging platforms.
Musk's more hands-off approach to speech on the service he acquired nearly two years ago is colliding with concerns of officials in multiple continents who fear it enables hate speech and other dangerous content. b
X decided to close operations to protect the safety of its staff in the face of threats from a Supreme Court justice in Brazil. b- The Supreme Court judge Alexandre de Moraes has been wrangling with Musk for months over content moderation restrictions in an increasingly tense showdown over free speech in Latin America's biggest nation. c- The billionaire has dismantled much of Twitter's infrastructure around content moderation after he took over the company in October 2022. - Musk has clashed with officials in Europe and the US over content policies and advertising.

How the Sparkles Emoji Became the Symbol of Our AI Future - Wall Street Journal

The sparkles emoji is a symbol used in applications powered by artificial intelligence.
At least seven of the top 10 software companies by market capitalization use sparkles emojis in conjunction with their AI applications
Symbols and icons play an integral role in the user experience on computers
The first known use of sparkles on software dates back to 1990 when Adobe debuted the pixelated icon on Photoshop's wand tool
Sparkles emoji surged in popularity in mid-2020 after people on TikTok and other social-media platforms began using it for emphasis or sarcastic purposes
Jasper featured it in a content-creation tool and promotional materials in early 2021, which inspired its use in AI marketing
Big players like Google and Samsung have featured the symbol prominently in their new AI products
Zoom conducted heavy internal discussion and research on what icon to use and whether to create a new one.