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Protocol Index

Good morning. This Monday: COVID may have changed gig economics forever, the boom in edtech adoption, and a very busy calendar.

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What Matters This Week

  • It's a big week for earnings. Alphabet and AMD report Tuesday; Spotify, Samsung, Microsoft, Facebook, Tesla, Qualcomm and eBay on Wednesday; and Amazon, Apple, Nokia and Twitter on Thursday.
  • We'll also get first-quarter GDP data for the U.S. on Wednesday, followed by European data on Thursday. Tomorrow's consumer confidence data and Thursday's personal income and spending numbers will show whether people are still shopping. Friday's manufacturing index is also one to watch.
  • The Fed meets this week, though investors aren't expecting any major decisions, instead hoping to get the group's thoughts on the current economic outlook.

Layoff Watch

Today's News

As of 4:15 a.m. PDT: Nasdaq Futures: 1.11% | Euro 600: 1.62% | Nikkei: 2.71% | Hang Seng: 1.88%



  • Apple is reportedly delaying 2020 iPhone production by a month.
  • The FCC said it may stop China Telecom Americas, China Unicom Americas and Pacific Networks Corp from operating in the U.S., citing security concerns.
  • Uber said new regulations meant it could no longer deliver to a low-income San Francisco neighborhood. One "disgusted" politician called the move "retaliation" and "blatantly discriminatory."
  • Amazon lost its appeal in a French court case, meaning it's still forbidden from delivering non-essential items until warehouse risk evaluations are done. Amazon said its French distribution centers would remain shut.
  • U.K. neobank growth rates dropped as much as 36% last month.
  • Google's new U.K. headquarters may not be ready until 2024, eight years behind schedule.
  • Ireland's prime minister said the next government should consider making Facebook and Alphabet share ad revenue with news publishers.
  • China told ByteDance to temporarily pull its workplace app Feishu, reportedly because the app let Chinese citizens access Facebook and Twitter.


Diving Deeper

Have gig economics permanently changed?

On Friday, analysts at Morgan Stanley put forward an interesting thesis: that coronavirus could upend gig economy companies' business models.

  • The crisis "has highlighted the need to improve the safety net for gig economy workers," the analysts wrote, with governments and companies offering sick pay and unemployment benefits to gig workers who otherwise wouldn't qualify.
  • Those measures are framed as temporary, but the analysts think they could stick around. "Once a courier has started to receive benefits like sick pay, they are unlikely to want to relinquish them," they wrote.
  • And shareholders might not want companies to withdraw them. "Our conversations with investors suggest a renewed focus on companies' treatment of employees," the analysts said.

To figure out what that might mean, the team looked at the potential effect on Just Eat's U.K. business.

  • "Just Eat delivery orders are currently losing £2.90 per delivery order," the team estimates. And if the company had to pay statutory sick pay, costs could increase 12%, bringing per-delivery losses to £3.70.
  • That could reduce EBITDA by 13%, the analysts found, because the costs will likely be borne by the service provider. "Consumers are still very sensitive to delivery fees," making it hard to raise prices. That's unlike ride-sharing, where consumers aren't as price-sensitive.

The situation could be even worse for other providers, like DoorDash and Uber Eats. Around 79% of Just Eat's orders come from its marketplace, where restaurants arrange their own delivery. Services that rely more on their own couriers could be even more affected.

  • That could lead to consolidation, less funding from investors, and fewer new players entering the market. "Structurally higher costs could accelerate market rationalisation," the analysts said.
  • But it could also give services a way to differentiate themselves. If sick pay is given based on how many shifts couriers have done on a certain app, they'll be less likely to use multiple apps. "The level of benefit provided could be a source of differentiation."


  • "The U.S. is no longer very good at coming up with new ideas and technologies relevant to our most basic needs." — MIT Technology Review's David Rotman thinks the crisis has highlighted the problems with Silicon Valley.
  • "40% [of U.K. startups] assess their runway at less than a year." — A new survey by VC firm LocalGlobe also found that 40% of startups saw revenues drop 25% last month.
  • "Most broad-based semiconductor companies are highlighting the following themes: decelerating automotive and consumer products, strong data center/compute trends, 5G infrastructure holding up well, and relatively stable memory equipment sales." — Piper Sandler analysts have spotted some trends from chipmakers' earnings report.
  • "The smartest executives have adopted a similar communication strategy in the age of coronavirus: Act dumb." — Kyle Stock writes in Bloomberg Business that forecasting the future is a fool's errand for CEOs right now.


Understanding kids is a lucrative business

If my colleagues' struggles are anything to go by, home-schooling kids is hard. It's no surprise then that edtech companies have seen a surge in demand in recent weeks, with parents and teachers alike desperate to make this new normal work.

  • "We've seen a huge influx of interest," Dr. Patricia Scanlon, CEO of SoapBox Labs, told me last week. SoapBox makes speech recognition technology designed specifically to understand children's voices. The tech is used in literacy apps which provide instant feedback on whether kids have correctly read the sentences in front of them.
  • Educators have been interested in the tech for a while, but "now it's just so much more of a need." Product developers are realizing that they need tools like speech recognition to make them more engaging to kids, Scanlon said.

And it's now unlikely to go away. "Once you've realized that something can ... help you with your efficiencies, you're highly unlikely to stop using it," Scanlon said, arguing that the current crisis is "going to accelerate" the adoption of tech like SoapBox's.

  • She hopes schools that were reluctant before might stick with the tech: "The nice thing about it is people will be used to it."

SoapBox recently raised funding, and Scanlon said investors were keen. "The interest in voice technology and remote learning has been only gaining traction," she said.

  • "There's a lot of people very urgently wanting to put their money in speech recognition" and a scarcity of independent companies to invest in, she added.
  • As for what's next for the market, Scanlon thinks it'll be computers that can understand "multimodal communications" — things like gestures, intonation and expression.

Closing Bell

Even virtual banks are cutting interest rates

The best thing I saw this weekend was this headline: "Nintendo Slashes Interest Rates In Animal Crossing: New Horizons." Players estimate the rate was cut from around 0.5% to 0.05%, and payouts are now capped. No one knows quite why Nintendo made the change: It's seemingly at least in part to discourage time travel exploits but might also be to encourage players to spend rather than just hoard wealth. Video games are becoming more realistic by the day.

Thoughts/feedback/tips? Email me — — or anonymously contact Protocol. And subscribe to get Index in your inbox each morning. Thanks for reading, see you tomorrow.

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