Musk overtook Jeff Bezos on Thursday morning. He's now worth $188.5 billion, versus Bezos' $187 billion.
The change came as Tesla's stock continued to soar. The company is now worth almost as much as Facebook.
Informed of the news by a Twitter user, Musk simply said: "How strange," followed by, "Well, back to work..."
Shakeel Hashim ( @shakeelhashim) is a former growth manager at Protocol, based in London. He was previously an analyst at Finimize covering business and economics, and a digital journalist at News UK. His writing has appeared in The Economist and its book, Uncommon Knowledge.
Tech industry groups NetChoice and CCIA have filed an emergency application with the Supreme Court, asking the court to stay the Fifth Circuit's ruling this week which enabled Texas’s so-called social media “censorship” law to go into effect.
Protocol first reported Thursday that NetChoice and CCIA, the plaintiffs in the case, would file their application on Friday. The two groups had warned other advocates of their intention to file and asked for their support in the form of amicus briefs.
The Fifth Circuit lifted an injunction on the law Wednesday pending appeal, offering no opinion laying out their decision.
“The divided panel’s shocking decision to greenlight an unconstitutional law—without explanation—demanded the extraordinary response of seeking emergency Supreme Court intervention,” Chris Marchese, counsel for NetChoice, told Protocol.
The Texas law, HB 20, prohibits social media platforms with more than 50 million users in the U.S. from moderating content on the basis of “viewpoint,” but that term is not well-defined and creates catastrophic new liability for tech platforms serving Texas. The law also, not coincidentally, contains provisions that aim to prohibit tech platforms from walling off their services in Texas altogether.
NetChoice and CCIA argue that the Texas law is unconstitutional, because it essentially amounts to the government compelling private businesses to carry speech they otherwise would remove. “The First Amendment prohibits Texas from forcing online platforms to host and promote foreign propaganda, pornography, pro-Nazi speech, and spam,” Marchese said. “Left standing, Texas HB 20 will turn the First Amendment on its head—to violate free speech, the government need only claim to be ‘protecting’ it.”
The emergency order doesn’t seek a final ruling on the underlying law, HB 20, but rather asks the Supreme Court to reinstate the injunction on the law, while the appeals case proceeds through the Fifth Circuit. The groups are arguing that denial of their request could cause “irreparable harm” to businesses covered by the law. That includes tech giants like Meta, YouTube and Twitter among others.
The Texas law declares that these platforms are common carriers and therefore can be subject to these speech requirements. Texas lawmakers aren’t alone in making that comparison. Justice Clarence Thomas has also flirted with the idea in a series of statements, where he has called on the court to rein in Section 230 protections and reconsider whether tech platforms are really so different from phone companies.
"A traditional telephone company laid physical wires to create a network connecting people," Thomas wrote last year. "Digital platforms lay information infrastructure that can be controlled in much the same way."
But forcing tech platforms to carry all, or even most, legal speech no matter how vile, risks turning them into even deeper cesspools of spam, pornography, hate speech and gore than they already are.
The Texas case could now be decided on the court’s shadow docket, through which it issues orders without hearing arguments. The decision of whether to take up the case in this way is now up to Justice Samuel Alito, who is assigned to the Fifth Circuit. He will decide whether to rule unilaterally or refer the case to the full court. If the court does take up the case, the decision could come within days.
While it’s historically rare for the Supreme Court to intervene in a case while it’s still pending appeal, experts on the shadow docket say that’s beginning to change, particularly when it comes to cases with the potential to have a huge impact. “The reality here is that the Fifth Circuit stay is going to create such an immediate impact that it’s going to be hard for the court to think that it's appropriate to wait,” Steve Vladeck, a University of Texas at Austin law professor and author of the forthcoming book The Shadow Docket, told Protocol earlier this week.
On Nov. 17, the price of gyen, a crypto stablecoin, briefly spiked to $0.0234. The next day, the price fell back down to about $0.0087, approximately the worth of one Japanese yen — the fiat currency the stablecoin was supposed to be pegged to. Then, on Nov. 19, Coinbase froze trading, citing a “technical glitch.”
Some Coinbase users are still up in arms six months later, saying the marketplace misled them about the coin’s stability by listing it on the exchange. A group of California investors filed a lawsuit Thursday against Coinbase and gyen issuer GMO-Z Trust, saying they cost the plaintiffs “untold millions,” and are seeking to have it certified as a class action.
“In the one year since it was first issued, gyen has been anything but stable,” the complaint reads. “Coinbase holds itself out as a centralized marketplace for cryptocurrency traders, but is essentially an unregistered broker-dealer of unregulated financial instruments.”
A listing by Coinbase is seen as a stamp of approval by many crypto traders. The exchange has been trying to become more transparent about when and how it decides to list a particular coin.
The lawsuit is the latest in a string of bad news for Coinbase, whose share price fell by roughly 30% after a disappointing earnings report earlier in the week. It’s down 80% from its peak last year amid a widespread market downturn that’s hitting crypto especially hard: The price of bitcoin is at just over 40% of its November peak. Falling asset prices have also hit Coinbase's trading activity: Monthly active users were down 2.2 million from the fourth quarter to 9.2 million.
The bad news continued Wednesday, when people took note of an SEC filing that said the firm would treat customers as “unsecured creditors” should it go bankrupt. CEO Brian Armstrong asserted that customers had nothing to fear, because the company was nowhere near bankruptcy.
One silver lining: Ark Invest, Cathie Wood’s firm, bought about $30 million of Coinbase shares Wednesday. Wood has some company, with shares jumping 23% in Friday trading, and relatively light short interest in the stock.
Stablecoins are a special area of focus for investors and regulators after the crash of the UST stablecoin and its associated luna token. There could be more legal trouble for exchanges given the heavy losses stablecoin holders are experiencing.
Correction: An earlier version of this story misstated the dollar amount of Coinbase shares Ark Invest purchased. This story was updated on May 13, 2022.
Peloton needs more people to buy its hardware and subscribe to its All-Access membership to turn its business around. Its next grand idea? Make a machine that people have been clamoring for for years.
The company is planning to release a rowing machine at some undetermined point in the future, it teased Friday at its annual Homecoming event for Peloton members. Peloton shares rose almost 10% on the news.
"The rumors are true — Peloton will be bringing its best-in-class fitness experience to the world of rowing!" the release said. "Combining cardio and strength — Peloton is excited to add this total body workout into its powerhouse arsenal of content and grow its connected fitness portfolio with even more options for engaging and challenging workout experiences."
The rowing machine has been a long time coming. Bloomberg reported in late 2019 that the company had been working on one to diversify beyond cycling and running. The hardware itself looks similar to Peloton's bikes and treadmills, with a screen and multiple company logos. The company's last product, a strength-training camera called Peloton Guide, was released earlier this year.
ICYMIpic.twitter.com/49VBKux2wz— Peloton (@Peloton) 1652454214
The new release comes after Peloton adjusted prices for its treadmills and bikes. The company dropped the prices of its Bike, Bike+ and Tread last month, and plans to hike the cost of its All-Access subscription beginning June 1, blaming the increase on its expanded suite of content.
Peloton has been pushing to get back on track after a shaky few months. Its stock dropped 20% earlier this week after reporting a big net loss, which CEO Barry McCarthy told shareholders was because the company was short on cash at the end of the first quarter and needed to borrow money as a result. The company also laid off 41% of its sales and marketing staff in February.
McCarthy is trying to turn the company around without seeking help from other companies. He took over as Peloton's head in February, and the company tapped longtime supply chain exec Andrew Rendich in March to oversee its supply issues. Companies like Amazon and Nike showed some interest in buying the company, but McCarthy said a sale isn't in the cards (for now).
Finally, Wall Street’s excited about Robinhood — thanks to Sam Bankman-Fried.
Robinhood shares rallied Friday after the FTX CEO disclosed in an SEC filing that he has acquired a 7.6% stake in the online brokerage. Robinhood’s stock was up about 20% in early trades, pushing the stock back up above $10.
The shares are still off more than 40% year-to-date, amid growing worries about the company’s sluggish growth. Robinhood recently posted a whopping 43% year-on-year drop in revenue, and announced that it was laying off 9% of its workforce.
Bankman-Fried’s move quickly raised eyebrows. CNBC’s Jim Cramer wrote that a Piper Sandler analyst “has no idea what Sam is doing.”
Bankman-Fried, who leads one of the world’s major crypto exchanges, recently became controversial after a Bloomberg interview in which he implied that "yield farming" in crypto was essentially a Ponzi scheme.
It's been a busy week of updates for workplace productivity tools: Calendly will let you screen meeting invites, Figma has dark mode, Superhuman is on Outlook now. Google also announced a slate of forthcoming Workspace updates at its I/O developer conference, some powered by AI. Many of the new features are aimed at making you look a lot less exhausted than you really are in Google Meet.
According to Google, Portrait Restore will enhance video on Google Meet despite bad lighting and low-quality web cameras. There's also portrait lighting, which will artificially improve lighting and let people adjust the brightness and position of the light in their video box. Other updates include de-reverberation, which limits annoying echoes, and automated meeting transcripts from a Meet to a Google Doc.
A major update is portrait restore, which Google says will enhance video on Google Meet despite bad lighting and low-quality web camerasGIF: Google
Video chatting services are experimenting with AI in all kinds of different ways in order to make videos better. The startup Headroom uses AI for "gesture recognition," automatically registering a thumbs-up or raised hand and displaying the reaction with emoji. But this experimentation is controversial when it comes to "emotion" AI, a technology Zoom was considering that uses AI to recognize and analyze people’s moods and emotions. The move, brought to light by Protocol's reporting, has prompted concern and activism from human rights groups.
Google's announced features are simply tackling video quality for now — and will likely receive a greater reception than Docs' "inclusive warnings" feature, which Motherboard called "very broken." It also plans to "help people focus on what's important" with automatic summaries of conversations in Spaces, Google Workspace's conversation hub.
Elon Musk paused his $44 billion Twitter takeover until he gets more information on the number of spam and fake accounts on the platform, he tweeted Friday.
In the tweet, Musk linked to a Reuters article that says Twitter estimates fewer than 5% of its monetizable daily active users are spam or fake accounts. It's unclear what additional details Musk wants on the topic. One of his biggest goals for Twitter is to remove spam bots entirely from the platform.
"Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users," he tweeted.
But don't worry, Musk still wants to buy Twitter. He tweeted a couple hours later that he's "still committed to the acquisition."
Twitter's stock plunged almost 18% in pre-market trading on the news. The company did not immediately return a request for comment.
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://www.reuters.com/technology/twitter-estimates-spam-fake-accounts-represent-less-than-5-users-filing-2022-05-02/\u00a0\u2026— Elon Musk (@Elon Musk) 1652435078
Affirm's stock took a beating this week after shares of small-business lender Upstart crashed, spooking investors generally about the fintech sector as markets dove and rising interest rates hung over the business. The "buy now, pay later" company turned things around with stronger-than-expected quarterly results. Its share price soared 33% after markets closed on Thursday to nearly $24.
The company brought in about $354.8 million in total revenue, with a net loss of $54.7 million compared to $287.1 million in Q3 2021. Its loss was 50% smaller than analysts expected, and revenue was a modest surprise.
Affirm highlighted its diversifying merchant portfolio in the call, announcing a multi-year extension of its partnership with Shopify and a strategic partnership with Stripe for its Adaptive Checkout product. CFO Michael Linford added that “no single merchant accounted for more than 10% of either revenue or GMV for both the three and nine months ending March 31.” For some time, Affirm was heavily dependent on financing Peloton sales — it's past that, which is a good thing given Peloton's current situation.
When asked about the effect of rising interest rates on the company, Linford said that they “really haven't had to take any action today.”
“It is true that as rates go up, there is pressure on the funding side of our business. But it is a mistake to think about that as a full flow-through on a linear basis,” he said. “I think in the very long run, so going out more than a year, you would expect us to narrow in but that's more of a long-term thing.”
Affirm halted a planned bond issuance in March amid market turbulence.
Tech groups fighting Texas’s social media “censorship” law may file an emergency application with the Supreme Court as early as Friday, according to two sources familiar with the case. The groups, NetChoice and CCIA, have said they plan to ask the justices to vacate the Fifth Circuit's Wednesday ruling, which lifted an injunction on the Texas law, allowing it to go into effect and prompting panic throughout the tech industry.
NetChoice and CCIA are now soliciting amicus briefs in their application to be filed by next week. NetChoice did not respond to Protocol's request for comment. CCIA wouldn't confirm its plans, but President Matt Schruers said in a statement, "We will take whatever steps are necessary to defend our constituents' First Amendment rights. These include the right not to be compelled by the government to carry dangerous content on their platforms."
The law would prohibit platforms with more than 50 million users from moderating content on the basis of “viewpoint,” opening the door to a deluge of lawsuits. The plaintiffs in the case had a number of options — none of them good. Simply pulling out of Texas completely would not only be politically disastrous, but it would also violate the law itself. Waiting for the Fifth Circuit to issue its final decision and then taking the case back to the trial court would also risk time companies don't have.
Supreme Court watchers immediately clocked the Texas decision as a sure bet for the much-maligned shadow docket. “The reality here is that the Fifth Circuit stay is going to create such an immediate impact that it’s going to be hard for the court to think that it's appropriate to wait,” University of Texas at Austin law professor Steve Vladeck told Protocol.
The opportunity to decide on whether the Texas law proceeds will be a test for Justice Clarence Thomas, who has written at length about the need to reconsider the concentration of power in a few tech companies' hands and has at times called on those companies to be regulated like common carriers. The Texas law seeks to do just that, requiring companies that currently enjoy their own First Amendment rights and Section 230 protections to carry speech they would otherwise take down.
In a Twitter thread Thursday, CCIA laid out its arguments as to why the Fifth Circuit's decision to let the law take effect was wrong. "The First Amendment protects our right to speak- or not speak- without [government] intervention," it read. "The [government] can’t force private businesses like newspapers or online platforms to publish speech, any more than it can force you or I to speak against our will."
The Eleventh Circuit is still considering whether to reinstate a similar law in Florida.
Bitcoin peaked in November above $60,000. Then came the Super Bowl ads, Crypto.com Arena and a flood of TikTok influencers promoting the latest altcoin. It wasn’t going to end well, was it?
The crypto crash has hit nearly every token and knocked even some stablecoins off their peg. But the carnage hasn’t been even. The luna token associated with the Terra blockchain lost almost all its value amid a run on its paired UST stablecoin. Bitcoin, ether and even dogecoin proved hardier than newer coins. The question now is when the market will find its bottom.
New activity on the Terra blockchain was halted Thursday as the luna cryptocurrency tumbled sharply and its sister stablecoin, known as UST, sank nearly to zero.
“Terra validators have decided to halt the Terra chain to prevent governance attacks following severe [luna] inflation and a significantly reduced cost of attack,” Terraform Labs said in a tweet. The blockchain resumed activity less than two hours later, after code patches had been applied.
The move capped a tumultuous week for luna and UST, which also turned a spotlight on the risks of stablecoins and the broader crypto market. The crisis was triggered by a sharp drop in the value of UST. The stablecoin was supposed to be pegged one-to-one to the U.S. dollar, and exchangeable for luna dollar-for-dollar, but began sinking below $1 over the last few days.
Unlike most stablecoins, which are backed by reserves of fiat currency or commercial paper, UST relies on algorithms that dynamically seek to control the supply of UST and luna to maintain the stablecoin’s value at $1.
The Luna Foundation Guard, a nonprofit launched by Terra founder Do Kwon, has reportedly bolstered its bitcoin reserve by $1.5 billion in order to back UST, but those reserves don't seem to be nearly enough to stem the losses. UST and luna were collectively worth $43 billion at the start of the year, but had fallen under $5 billion Thursday as both plummeted in value.
Alex Johnson, author of the Fintech Takes newsletter, said halting the Terra blockchain was not surprising given what has become a “death spiral.”
“That’s what they're trying to prevent by pausing it,” he told Protocol. “I don't really know what pausing it is going to do, because once you shake the confidence in this thing, it may take a little while, but eventually it goes down to zero.”
Other stablecoins have been feeling the pressure. Tether, which has faced questions about the strength of its reserves, briefly lost its peg to the dollar Thursday, falling to 95 cents before recovering.
The crypto market overall has lost more than half of its value since its peak in November.
David Marcus, until recently a top-ranking Meta executive, is back with a new crypto startup that will remind many of his recent work — but has some crucial differences.
The Los Angeles startup, Lightspark, has raised series A financing led by a16z crypto and Paradigm, with participation from firms such as Matrix, Thrive Capital, Coatue, Felix Capital, Zeev Ventures and Ribbit Capital. Lightspark declined to disclose the amount, and didn't offer an explanation as to why.
The company is focused on "extending the capabilities" of bitcoin and is working on building technical infrastructure for the Lightning Network, it said. The Lightning Network is a project designed to create faster and cheaper transactions on top of the bitcoin network.
While the company is not saying much about what it is doing, its focus on bitcoin and Lightning is notable. At Meta, Marcus was leading a team building a new stablecoin first called Libra, then Diem, along with a crypto wallet, Novi. While the goal was to build a decentralized token, it suffered from the involvement of Meta, which drew immediate scrutiny from regulators and lawmakers. Marcus testified on Capitol Hill, but his hearing performance didn't pacify politicians, and the project struggled. Marcus resigned from Meta in November, and the company eventually sold off the technology to a partner bank, Silvergate.
Now with Lightspark, Marcus is developing a new company that is working on the most decentralized of blockchains, bitcoin.
Marcus is going back to his roots as a founder, said Dana Stalder, general partner at Matrix Partners, in a statement. "When I met David in 2010, he was in his early 30s and had never really had a job. He’d always been a founder. It is who he is — a startup founder through and through. While he had a highly successful tour through PayPal and Facebook, he is back to playing to his strengths."
Block, which is developing hardware and software focused on bitcoin, is another key player in the area where Marcus plans to compete. The payments company has started a division called TBD devoted to blockchain development tools.
Energy markets have been a mess due to the supply chain and the Russian invasion of Ukraine. But in a weird twist, the chaos may actually be benefiting renewables.
The energy upheaval in recent months has sent prices climbing for everything from gas to solar panels. An International Energy Agency report published this week found that the cost of building onshore wind and utility-scale solar installations is up between 15% to 25% globally this year compared to 2020. That's not great, but the report shows that the cost of fossil fuels has risen more steeply, making renewables more competitive with their polluting counterparts.
The shift has largely hinged on Russia’s invasion of Ukraine. That's sent gas prices climbing and led Europe — which is heavily dependent on Russian oil and gas — and other countries to seek out alternatives. “In many countries, governments are trying to shelter consumers from higher energy prices, reduce dependence on Russian supplies and are proposing policies to accelerate the transition to clean energy technologies,” the IEA found. (The group has also put out a list of recommendations to further reduce Russian oil dependence.)
Even before Russia started a war in Ukraine, the world was making headway on renewables. The report found more renewable energy was added to the grid in 2021 than ever before, with 295 gigawatts of renewable capacity coming online despite pandemic-related supply chain issues. The IEA expects another 320 gigawatts of capacity to be added this year, an amount roughly equivalent to Germany’s entire power demand. Solar is expected to account for 60% of that growth — a fact which the IEA attributes to “a strong policy environment in China and the European Union" — followed by wind.
Renewables not only undercut the power of petrostates, of course. They're also exactly what the world needs more of if it wants to avert climate catastrophe. While installing a record amount of renewable capacity is great, the recent United Nations climate report found the world needs to invest even more in renewables while simultaneously winding down the use of fossil fuels to get on track.
Looking to 2023, though, the IEA projected that the growth of renewables is likely to stabilize. “Unless new and stronger policies are implemented in 2023, global renewable capacity additions are expected to remain stable compared with 2022,” the report said. Solar installation will likely continue to break records, but hydropower’s share of the growth is expected to decline, in large part because fewer projects are coming down the pipe in China.
Japanese conglomerate SoftBank is severely cutting its planned startup investments through next March, Chief Executive Masayoshi Son said in a Thursday earnings call. With the announcement, Son joins a chorus of VCs who have been vocal about an economic downturn forcing them to tighten their belts.
“It depends on our LTV levels and investment opportunities, and we strike balance, but I will say compared to last year, the amount of new investments will be half or could be as small as a quarter,” said Son, according to a company-provided translation of the call.
VC funding has slowed down markedly amid a turbulent market. After a heady 2021 for much of the industry, startups have turned to quick cost-cutting and layoffs. The Dow has seen the longest downturn since 2020 this week, while crypto markets also fell 10% between Thursday and Friday alone. Some entrepreneurs and investors have gone so far as to question whether the industry is approaching something like the dot-com crash, with VC David Sacks calling it the "Panic of 2022" on Twitter.
The impact on VC looks particularly dramatic in the case of SoftBank, which is coming off a record-breaking 2021. Its $100 billion Vision Fund and $50 billion Vision Fund 2 (which includes $30 billion of its own money) made it and Tiger Global among the biggest players in VC last year. It also made headlines with the announcement of a $100 million Opportunity Fund, which has helped finance the projects of diverse founders who have struggled to find funding.
But in the last few months, the conglomerate’s VC strategy has done a 180. SoftBank recently reported a loss of $20.5 billion at its Vision Fund for the last fiscal year. The accompanying drop in SoftBank's value, along with the market slide, has meant Son taking a huge financial hit — some $25 billion, or almost two-thirds of his personal fortune.
In the wake of Elon Musk's deal to acquire Twitter, two pivotal company leaders are leaving and Twitter is hitting the brakes on hiring and some spending, according to a memo obtained by The New York Times.
Kayvon Beykpour, who oversees Twitter's consumer division, was fired from the company. Jay Sullivan, the company's current head of consumer product, will replace him. Bruce Falck, Twitter’s general manager for revenue, is also leaving. Twitter confirmed the departures to Protocol.
Twitter CEO Parag Agrawal in the memo said the company made these decisions after struggling to meet audience and revenue growth goals.
“It’s critical to have the right leaders at the right time,” Agrawal wrote, according to The Times.
"The truth is that this isn’t how and when I imagined leaving Twitter, and this wasn’t my decision," Beykpour wrote in a Twitter thread Thursday. He said Twitter CEO Parag Agrawal asked him to leave the company, "letting me know that he wants to take the team in a different direction." Beykpour is currently on paternity leave.
"When all is said and done, it's the work that matters: We upgraded our ad serving, prediction, analytics, attribution, billing, API and many more systems, substantially improving our reliability and scalability," Falck wrote in a separate Twitter thread.
Interrupting my paternity leave to share some final @twitter-related news: I\u2019m leaving the company after over 7 years.— Kayvon Beykpour (@Kayvon Beykpour) 1652372715
I wanted to take a moment to thank all the teams and partners I\u2019ve been lucky enough to work with during the past 5 years. Building and running these businesses is a team sport— bruce.falck() \ud83e\udd97 (@bruce.falck() \ud83e\udd97) 1652374438
Protocol reached out to Beykpour for comment and will update this story with a response. A Twitter spokesperson told Protocol the company had no additional comment.
Their departures come as Elon Musk plans to acquire Twitter. Musk wants to take the company private and has told investors he wants to bolster Twitter's revenue by 2028. His plans for Twitter have sparked frustrations amongst employees, and more departures seem likely if the deal goes through. The company is reportedly preparing for what one worker called an "employee exodus" that could see people from marginalized backgrounds leave over criticisms of Musk's laissez faire view of content moderation.
Musk, who may become Twitter's CEO once the takeover is said and done, wants to move away from advertising, which is its current core business model. He reportedly wants to cut executive board pay and help people monetize from tweets, like ones that go viral.
Twitter is a special case given Musk's takeover, but other companies have looked to reduce or freeze hiring in the wake of dismal quarterly earnings and a stock market downturn. Meta implemented a hiring freeze for the rest of the year, and Uber is getting more selective on hires.
This is a developing story.
The supply chain is still hurting Rivian. But the electric vehicle maker thinks things can only go up from here. (Thanks for jinxing it, Rivian.)
"We believe we’ve seen really the worst of it or sort of the valley, if you will, of these supply constraints," Rivian CEO RJ Scaringe said on an earnings call on Wednesday. "And the suppliers are leaned in. We have very high levels of visibility into what the allocations will be on a go-forward basis. And that gives us the confidence of what the ramp will look like as we look out through the remainder of this year."
A little easing of the supply chain woes would be a big deal for Rivian, which has not had a good couple of weeks (or months, for that matter). The company lost $1.59 billion and delivered 1,227 vehicles in the first quarter of this year. Its stock also plummeted to record lows on the news that Ford had sold a sizable stake in the company. Meanwhile, other automakers from Tesla (supposedly) to Ford are ramping up production of vehicles that will compete directly with Rivian's SUV and pickup truck.
Inflation and the high cost of materials have also hampered the company. Rivian raised EV prices in early March, then quickly reversed course after the predictable backlash. The company has already cut its production goals to 25,000 vehicles this year because of supply chain issues. And last month, Scaringe said he expects the supply of EV batteries to become an even bigger problem than the chip shortage over the next years.
The supply chain untangling talk on Wednesday reflects a slightly more optimistic outlook than Scaringe's comments last month on the chip shortage. The company also said it has produced 5,000 vehicles so far and is still on track to produce a total of 25,000 in 2022. Rivian said it also has more than 90,000 reservations for its R1T and R1S EVs, nearly 10,000 more than the number of reservations last month. Scaringe said the company is still preparing to introduce R2, its new EV platform that Rivian created to be more affordable, by 2025.
Rivian's shares were up about 6% this morning.
Instacart confidentially filed documents for an IPO, the company announced Wednesday.
The IPO could take place this year, but talks are still in progress, Bloomberg reported, citing anonymous sources who said the company could still remain private. Goldman Sachs and JPMorgan Chase are working on the offering with Instacart, according to Bloomberg.
Instacart spent much of last year staffing up in preparation for an IPO, recruiting leaders from companies like LinkedIn, Google, Uber and Amazon. Last summer, Fidji Simo also left her role as head of the Facebook app to take over as CEO of Instacart.
By the end of the year, Instacart had pushed back plans to go public. In March, the company slashed its 409A valuation, an internal measure used to set employee stock compensation, from $39 billion to $24 billion in an attempt to get ahead of a declining market and potentially help recruiting.
Instacart faces increasing competition in grocery delivery, with DoorDash and Uber Eats offering groceries alongside restaurant meals. Amazon is expanding its grocery delivery options, as is Walmart. New startups are also promising faster grocery deliveries in as little as 15 minutes, though it's not clear that model can be profitable.
Under the Jobs Act of 2012, companies can prepare for an initial public offering without having to make their financials available for public view. Though the law provides for secrecy, companies often choose to disclose the fact of a confidential filing to forestall leaks or control the release of news. Instacart put out a statement about its filing following an initial report by Bloomberg of its plans.
It's been a challenging market for newly public companies. The Renaissance IPO Index, which tracks the post-listing performance of companies that have recently gone public, is down nearly 50% since the beginning of the year.
The SEC is investigating Elon Musk for the late disclosure of his stake in Twitter which allowed him to accumulate a large amount of shares at a lower price than he might otherwise have paid, the Wall Street Journal reported on Wednesday.
Musk submitted a Schedule 13G filing filing detailing his purchase of more than 9%, or 73 million shares, of the company on April 4, which was at least 10 days later than it should have been filed. The late filing allowed Musk to save a considerable amount — more than $143 million, according to the Wall Street Journal, and $165 million by Protocol's calculations. Musk paid $2.6 billion for his shares, which are now worth around $3.32 billion, as Twitter's closed at $45.60 per share on Wednesday.
Musk also initially filed the wrong form, first disclosing his stake in a 13G, which is for passive investors, rather than a Schedule 13D. Twitter revealed Musk's activist intentions when it disclosed that it had had conversations with Musk about joining its board.
Along with the SEC's investigation over this late disclosure, the FTC is separately investigating whether Musk violated a law requiring investors to report large transactions to antitrust-enforcement agencies, according to the Wall Street Journal and the Information. Investors usually need to wait 30 days after reporting their transactions before buying more shares.
Twitter shareholder Marc Bain Rasella is also suing Musk for his tardiness. In the lawsuit filed in mid-April in a district court in New York, Rasella accused Musk of securities fraud for lowering the prices of Twitter's stock artificially, claiming that "Investors who sold shares in Twitter stock between March 24, 2022 ... missed the resulting share price increase as the market reacted to Musk's purchases and were damaged thereby."
The SEC historically has rarely punished investors who fail to make disclosures on time. But under the leadership of Gary Gensler, enforcement of SEC rules has been on the rise.
Though the SEC is taking aim at Musk's Twitter share purchase, regulators are apparently helpless in the face of his plan to buy the company outright. On May 2, Federal Communications Commission commissioner Nathan Simington shut down talk of the agency stepping in to block Elon Musk’s acquisition of Twitter, saying the the FCC doesn’t have the authority to block his $44 billion takeover of the social media company.
The SEC probe, according to the Wall Street Journal, is also unlikely to derail the takeover bid.
Apple, move over. Saudi Aramco has overtaken the erstwhile consumer electronics company as the most valuable company on Earth on Wednesday. It's a reflection of both the vagaries of the market and the weird state of the world.
Saudi Aramco closed out trading on Wednesday with a market cap of close to $2.43 trillion, beating Apple's closing market cap of $2.37 trillion after the tech company's stock fell 5% over the course of the day. Apple's shares have tumbled 20% since hitting a peak of more than $182 in early January, which had brought the company to a market capitalization of $3 trillion. That ends a nearly two-year run for Apple as the world's most valuable company.
Meanwhile, Saudi Arabia's state-owned, publicly traded oil company has seen its shares shoot up since the start of the year. The company's success comes as oil, natural gas and energy stocks rise; January through March was the best quarter for the sector since 1970, with public companies in the sector up 49% since the start of the year.
Tech stocks are stumbling, though. The Nasdaq index has lost nearly 28% in value since the calendar turned to 2022. That's been accompanied by spending cutbacks and layoffs as economic uncertainty rises.
The fossil fuel industry has been a different story, though, as the war in Ukraine sends oil and gas prices climbing. That's translated to record profits for the industry. The flip flop between Apple and Saudi Aramco is symbolic in that regard, showing the fortunes of two different industries as the world's economy responds to the ongoing pandemic and war.
But it's also not exactly great news for the climate, which needs oil companies to have less influence, not more in determining the fate of the world. Saudi Aramco and other oil companies have raked in billions of dollars in profits even as gas prices hit new highs. An analysis by the Guardian published on Wednesday shows the world's dozen biggest oil companies are planning to spend $103 million every day for the rest of the decade searching for more fossil fuels that, according to the report, "cannot be burned if the worst impacts of the climate crisis are to be avoided."
The record profits will make it easier for those firms to keep digging, drilling, fracking and flaring the world toward the brink of climate disaster.
Microsoft is reportedly thinking about bumping many employees' pay, following similar moves from other tech giants, in a bid to stay competitive with its rivals.
Citing two unnamed sources, Insider reported Wednesday that Microsoft may announce a change “as soon as Monday.”
Microsoft has reason to worry about retention, Insider reports. In Microsoft’s most recent “Employee Signals” poll, which employees reportedly answered in March, only two-thirds of respondents said they’re getting “a good deal” in terms of what they’re giving the company and receiving in return.
Microsoft is reportedly concerned about employees leaving for (or being poached by) Amazon specifically. The company more than doubled its base compensation cap from $160,000 to $350,000 earlier this year, and has reportedly been handing at a record amount of stock grants — $6 billion, to be exact.
Even as the last couple of weeks have seen powerhouses like Meta, Uber, Robinhood and Netflix initiate hiring freezes and layoffs, Big Tech is still feeling pressure to retain top talent. Apple and Alphabet have also made moves in recent months to boost morale and retention. At Apple, some employees have received six-figure “retention grants” and at Alphabet, employees can now receive bonuses “of nearly any size for nearly any reason.”
After Netflix fell from grace and CNN+ died on the vine, all eyes were on Disney+ as an indicator of whether streaming services were in big trouble. The answer, at least for Disney, is no. The company reported subscriber growth in its earnings call on Wednesday that beat Wall Street's expectations.
Disney+ added 7.9 million subscribers this quarter for a total of 137.7 million, topping analyst expectations of 135 million, according to CNBC. Subscribers are up 33% from the year-ago quarter, when the service had 103.6 million subscribers, and average revenue per domestic subscriber is $6.32, up 5% year over year. Disney now has a total of more than 205 million subscribers across all of its streaming services, adding a combined 8.6 million net subscribers on all platforms.
“Our strong results in the second quarter, including fantastic performance at our domestic parks and continued growth of our streaming services — with 7.9 million Disney+ subscribers added in the quarter and total subscriptions across all our DTC offerings exceeding 205 million — once again proved that we are in a league of our own,” Disney CEO Bob Chapek said on the company's earnings call.
Despite the company's better-than-expected performance in the streaming sector for the quarter, it still faltered slightly in trading after market close, its share price dropping a little over 3% due to the COVID-19 closures of its theme parks in Asia.
Disney's subscriber boom comes at a rough time for its rival Netflix, which reported its first subscriber loss in a decade in the most recent quarter, dropping around 200,000 users in the past few months and sending its stock tumbling. Netflix attributed the loss to password sharing, an issue which Disney is reportedly looking at tackling as well: The company recently sent out a questionnaire to subscribers in Spain asking why they are sharing their Disney+ passwords with people outside of their households (to which people mostly responded that they simply don't want to pay).
It's not exactly a beloved gadget like the iPod, but a workhorse of social commerce is also getting put out to pasture. Stephane Kasriel, the leader of Meta's financial services operation, announced that the company's retiring the Facebook Pay name in favor of Meta Pay.
Facebook Pay dates back to 2009, when Facebook had ambitions to harness payments within social gaming apps like FarmVille, charging a hefty cut of transactions. That business faded as mobile gaming took over and consumers got bored with clicking sheep, but Facebook Pay remained as a system for processing all sorts of commerce within Facebook's growing empire.
The Facebook Pay name clearly stopped making sense when Facebook Inc. renamed itself Meta Platforms Inc., but the company was also struggling with what to call its financial division, which encompassed Facebook Pay and the newer Novi crypto wallet. The whole division was set to be renamed Novi, but then executive David Marcus, the former PayPal president who oversaw Novi, left. Kasriel, his successor, renamed the group Meta Financial Technologies.
Kasriel suggested there might be a rethink of Meta's wallet offering across its products. "We’re in the very early stages of scoping out what a single wallet experience might look like and will have more to say further down the line," he wrote. Meta spokespeople didn't address the future of the Novi name in light of Kasriel's announcement, but a representative told Protocol in April that the crypto wallet was still called Novi for now.
The Meta Pay name, which Kasriel said would be rolled out soon, will make more sense for a number of initiatives the company is pushing. Instagram is heavily promoting its shopping features, but presents Facebook Pay as an option at checkout.
Meta's recently gotten blowback over its payment system for NFTs in Horizon Worlds. Instagram chief Adam Mosseri took pains to note that there wouldn't be a charge for a new feature that allows users to share NFTs on the platform.
A three-person panel of federal appeals court judges is letting a Texas law aimed at punishing social media companies for alleged anti-conservative bias go into effect for now.
In a ruling late Wednesday, the panel stayed a district court injunction that had paused the law while the judges consider an appeal of the lower court's move.
The decision, which was supported by two unnamed judges and was not immediately published with the court's reasoning, comes after a Monday hearing in which the jurists appeared to struggle with basic tech concepts, including whether Twitter counts as a website.
The decision is a win for conservative critics of the current interpretation of tech law, which underlies the operations of social media platforms such as Twitter and Facebook. Two tech trade groups that count the Big Tech companies as members had sued Texas over the law.
Until this week, industry observers widely expected the court to uphold a block on the law, which allows for lawsuits against social media services if they "censor" users. A different federal court also paused a similar Florida law, finding that it sought to punish private companies for their views and treatment of content in violation of the First Amendment.
In court, Texas argued that it is merely trying to force platforms to carry all content the way phone companies are expected to carry all calls.
Despite no prior history of courts and lawmakers treating social media as "common carriers" the way phone companies are, and the clear Supreme Court precedent arguing against government interference with internet content, some conservatives have increasingly argued for treating platforms that host user-generated content similarly.
Civil liberties experts and tech advocates argue that such treatment — even with exceptions for obscenity or spam — would poison the online environment, forcing companies to leave up hate speech, harassment, harmful misinformation and more.
"Given the stakes, we'll absolutely be appealing," a lawyer representing NetChoice, one of the organizations that filed the suit against the Texas law, said in a tweet. "HB 20 is unconstitutional through and through."
The decision also comes as many on the right celebrate Elon Musk's expected takeover of Twitter and his plans to scale back content moderation and restore former President Donald Trump to the site.
Coinbase caused a stir with a regulatory filing that contained a troubling message: Users could lose their crypto assets if the company goes bankrupt.
In a filing with the SEC, Coinbase said that “in the event of a bankruptcy” the crypto assets that the company holds in custody for its customers “could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors.”
The mention of “bankruptcy” quickly triggered chatter about the state of Coinbase after it posted dismal results Tuesday that sent its stock tumbling. Coinbase shares were down another 27% on Wednesday, and 85% from their November peak.
“There is some noise about a disclosure we made in our 10-Q today about how we hold crypto assets,” CEO Brian Armstrong said in a tweet. “Your funds are safe at Coinbase, just as they’ve always been. … We have no risk of bankruptcy.”
He said the company added the risk factor in connection with a new SEC accounting bulletin issued this year that advised companies holding cryptocurrencies on behalf of customers to record those assets as a liability on their balance sheets. They must also disclose potential risks to investors.
Coinbase said it held $256 billion in fiat currency and cryptocurrencies on behalf of customers as of March 31.
Alex Johnson, author of the Fintech Takes newsletter, said the timing of the disclosure was not ideal. “There’s something jarring about the company disclosing the risk and saying the quiet part out loud, especially given the turbulence in the crypto market right now,” he told Protocol.
In his Twitter thread, Armstrong also said the company is also updating its user terms for retail customers to clarify that “we offer the same protections ... in a black swan event” as those enjoyed by Prime and Custody customers.
Armstrong said the company should have made those disclosures sooner: “My deepest apologies, and a good learning moment for us as we make future changes."
Johnson called it a “bizarre” lapse. “I don't understand how they possibly could have forgotten to do that, but apparently they did,” he said.
The Senate on Wednesday confirmed Alvaro Bedoya to serve in the remaining open seat on the Federal Trade Commission, teeing up tech's de facto federal regulator to begin work on the many big swings it has planned to take at the industry.
Bedoya, a longtime privacy advocate, will serve as the third Democrat on a commission that had, in the Biden administration to date, faced a political deadlock on key issues, as it was staffed by two Democratic commissioners and two Republicans.
While Lina Khan, the agency's chair, has made waves with procedural changes that could help her realize her tough talk on tech, that stalemate has been getting in the way of some of her biggest ambitions. Those could include the filing of an antitrust lawsuit against Amazon following a long investigation, as well as the kickoff of a regulatory effort to rein in data abuse that could see the FTC trying to impose limits on business practices across tech and other industries.
Bedoya would likely oversee much of the latter effort, given his expertise on privacy.
In addition to the usual competition and privacy investigations, the FTC is looking into Microsoft's acquisition of Activision Blizzard, suing Meta and rewriting guidelines that would expand what kind of mergers it challenges in tech and other sectors. The FTC also plays a big role in children's privacy, the handling of AI that may violate consumer protection statutes, the uneven lurch toward consumer device-repair rights and the challenges of pervasive digital nudges known dark patterns, and is taking on an expanding role as far as examining labor agreements and the promises of ISPs.
Neil Bradley, chief policy officer at the U.S. Chamber of Commerce, said in a statement that Bedoya's confirmation "sends a clear message to businesses of all sizes: buckle up." The powerful lobbying group has been highly critical of Khan's leadership.
Bedoya's confirmation comes after months of delays in the Senate. The procedural obstacles, failed courting by Bedoya of Republican senators, long recesses and unexpected COVID-19 absences delayed the FTC from implementing its part of the Biden tech agenda until deep into the president's second year in office. Biden had also been slow to nominate Bedoya, but the holdup benefited business interests and Republican lawmakers who have criticized the FTC's expected moves.
On Wednesday, Bedoya was confirmed by the thinnest of margins, with Vice President Kamala Harris casting a tiebreaker 51st vote.
Google used its annual Google I/O developer conference Wednesday to tease a product that’s not scheduled to arrive for another year: a Pixel-branded Android tablet to complete Google's first-party hardware ecosystem and better compete with the iPad.
Aside from a teaser photo, Google didn’t share a whole lot of details about the new device. Google’s hardware chief Rick Osterloh said during a press briefing earlier this week that the device will be powered by Google’s Tensor chip, which is also at the core of the company’s Pixel phones.
Osterloh also described the tablet as a “premium-style” product, suggesting that it may be priced closer to an iPad than many of the existing budget Android tablets; he didn’t reveal a specific screen size, but said it would be “on the larger side.”
Google released its last first-party Android tablet, the Nexus 7, in 2013. Why return to Android tablets now? Osterloh said that there was clearly demand for the product category and that the Android team had been making a lot of progress in adapting the system to a tablet form factor.
Osterloh also positioned the device as part of the company’s strategy to provide a suite of first-party devices. “We think it's important for our users’ ecosystem,” he said. “We've heard pretty clearly from them that they would like a larger-format Pixel device.”
As part of that ecosystem play, Google on Wednesday also announced a Pixel Watch, a pro version of its earbuds and a new Pixel 6a phone. The phone and the Pixel Buds will be available in July for $449 and $199 respectively, while the Pixel Watch will be released later this fall.
Osterloh became Google’s top hardware exec in 2016 after previously leading Motorola’s mobile phone division. The company’s hardware efforts have since focused on providing an Android-based alternative to Apple’s device ecosystem, with mixed success: The company sold only 7.2 million phones in 2019, according to IDC.
Google hasn’t shared sales numbers of its own, but Osterloh said this week that it sold more Pixel 6 devices in the six months following its launch than Pixel 4 and Pixel 5 combined during their respective launch periods.
