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Zuckerberg Denounces Apple’s Monopolistic “Stranglehold” On Your iPhone

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Facebook CEO Mark Zuckerberg took a swing at Apple on Thursday, calling the iPhone maker’s app store monopolistic and harmful to customers during a companywide meeting.

“[Apple has] this unique stranglehold as a gatekeeper on what gets on phones,” Zuckerberg said to more than 50,000 employees via webcast. He added that the Cupertino, California–based company’s app store “blocks innovation, blocks competition” and “allows Apple to charge monopoly rents.”

While the Facebook CEO was specifically answering a question about Apple blocking gaming-related apps, his comments came at a time where authorities are scrutinizing both Silicon Valley giants for antitrust behavior. Last month both Zuckerberg and Apple CEO Tim Cook, as well as the heads of Amazon and Google, testified in a House of Representatives hearing examining potentially monopolistic practices at the United States’ largest technology firms.

Zuckerberg’s comments were another signal that there’s no love lost in the long-contentious relationship between the leader of the social network and the $2 trillion electronic device maker.

“That’s innovation that could really improve people’s lives,” Zuckerberg said on Thursday. “And Apple’s just balking at it.”

A Facebook spokesperson declined to comment on Zuckerberg’s remarks. An Apple spokesperson declined to comment.

After this story was published, Facebook made video of the meeting public.

On Thursday, Apple refused to allow Facebook to notify people that the iPhone maker would collect 30% of in-app purchases made through a new feature on the Facebook app that lets businesses sell tickets to online events on the platform. After Apple told Facebook that a notification was “irrelevant information,” the social network was forced to scrub the message out of its app before Apple let the feature through.

Earlier this month, Apple also made Facebook strip a feature called Instant Games from Facebook Gaming, an app that primarily lets people watch other people playing video games.

Zuckerberg also criticized a change in Apple’s upcoming iOS 14 operating system for iPhones and iPads that would make it much harder for companies like Facebook to target people using those devices with ads. Zuckerberg estimated that Facebook’s ad targeting on iPhones and iPads would lose about 50% of its effectiveness once iOS 14 was released and suggested that if Facebook could distribute its apps outside the App Store, it could avoid that kind of scenario.

Apple, which this month became the first US company to be valued at $2 trillion, is under global scrutiny for the way it runs the App Store, the only way to buy and download apps on iPhones and iPads. In the last few months, app developers criticized the company for taking a 30% commission on every in-app purchase, and not allowing iPhone and iPad users to download apps from outside the App Store on their devices.

Earlier this month, Apple kicked the popular video game Fortnite off the App Store after Epic, the game’s creator, added a feature that let players buy virtual currency with their own credit cards, bypassing Apple’s 30% cut.

In response, Epic filed a lawsuit against the company, and Apple threatened to revoke the company’s developer accounts. This move had implications beyond Fortnite, jeopardizing all software that used the Unreal Engine, an Epic-owned platform used by other developers to make video games.

Earlier this week, a California judge stopped Apple from revoking Epic’s developer accounts.

In his address to employees, Zuckerberg said Apple’s decision to block the Unreal Engine was “just an extremely aggressive move” that was “quite problematic.”

Apple was not the only rival that the Facebook CEO discussed in the meeting.

Zuckerberg also addressed a recent story in the Wall Street Journal, which reported that he had raised concerns about Chinese internet companies threatening American businesses in a private dinner with President Donald Trump at the White House in October.

Shortly after, the US government launched a national security review into Bytedance-owned TikTok, the most popular Chinese app used in the United States, and one of Facebook’s largest competitors. Last month, Trump declared TikTok a “national emergency” and signed an executive order that threatened to ban the app unless it was sold to an American company. On Monday, TikTok sued the Trump administration.

“Trump certainly brought up China or some of the actions that he was taking, but I don’t think TikTok or any of this stuff specifically came up there,” Zuckerberg told his employees on Thursday.

At an all-hands meeting earlier this month, Zuckerberg conceded that there were “valid” national security questions around TikTok, but maintained that banning it would set a “really bad long-term precedent,” and that “it needs to be handled with the utmost care and gravity whatever the solution is.” He repeated those views in his talk on Thursday.

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How Reddit Took On Wall Street

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Investors on Reddit have launched an attack that’s both trolling and serious on Wall Street firms by purchasing shares in GameStop, pushing the stock price up over 480% in a week, costing hedge funds millions of dollars, and skyrocketing young investors’ portfolios and egos.

Popular subreddit r/WallStreetBets (WSB), whose tagline is “Like 4chan found a Bloomberg Terminal,” has over 2 million members reading and posting “stonks” tips and news. Its biggest obsession in recent weeks has been raising the stock price of GameStop, the old-school video game mall retailer.

“They’re digitally doing it in a coordinated attack,” Howard Lindzon at Social Leverage, an early stage seed investment fund, told BuzzFeed News.

Lindzon thinks the investors chatting across Reddit — who tend to be millennial and Gen Z men — are just having a fun time causing trouble for hedge funds who’d bet on shares in the gaming retailer dropping. “They’re just playing a game,” Lindzon said. “And they’re having a blast.”

For months, there has been chatter encouraging WSB day traders — or “degenerates,” as they call themselves — to buy up GameStop (GME) stock. Chewy CEO Ryan Cohen has been pushing GameStop to investors for months. He owns at least 13% of the company’s stock and is now on its board, which many took to mean it would move in a more digital direction.

But Wall Street hedge funds, including Citron Research and Melvin Capital, had shorted the stock, meaning they had bet against it and needed it to drop in price in order for their investments to be successful.

After Andrew Left from Citron Research posted a video last week arguing that GameStop’s share price would soon drop to $20, people attempted to hack his Twitter account. (He subsequently called the Reddit investors an “angry mob.”)

But instead, the GME stock price rose even higher as redditors called on investors to put as much money into the company as they could. In recent weeks, some have declared they were putting their entire retirement and life savings accounts into the company, complete with lots of rocket emojis and declarations that they would not sell.

Trading of GameStop has halted multiple times over the last week because the stock price has jumped so quickly it’s triggered market protections. On Monday, the stock surged again, opening at $96 and then jumping to $159 an hour later, its highest-ever price. By the end of the day, it was back in the $70s.

On Tuesday, it opened at $88 and jumped 90% by close. In after-hours trading, it jumped another 50%, to over $230.

A year ago, the share price was $4.

“Any rational person knows this type of trading behavior is short lived,” Left told Bloomberg.

By encouraging everyday investors, also known as retail investors, to buy up GME stock and increase its price, hedge funds would have to sell out in order to cut their losses from having shorted the stock, which increases the stock price even further.

“Hedge funds are getting their asses kicked by the retail investor,” Lindzon said.

He noted that millennial investors have been sharing information across Reddit and social networks for years, but the sheer number of them now means they are a force to be reckoned with. “It’s like the velociraptors in Jurassic Park; they get smarter, and eventually they hop the fence,” he said.

The moment has also been a chance for young investors — many of whom have flocked to investing since the pandemic was declared, causing the stock market to jump, helped in part by free brokerage apps such as Robinhood — to flip the bird at established Wall Street firms.

“What I think is happening is that you guys are making such an impact that these fat cats are worried that they have to get up and put in work to earn a living,” wrote one of the WSB subreddit moderators in a post on Sunday. “That fuzzy sensation you are feeling is called RESPECT and it is well earned. Wall Street no longer dismisses your presence anymore.”

“We put the F U back in fundamentals,” one redditor wrote on Tuesday in a post about how many millions of dollars Melvin is estimated to have lost because of the GME surge.

Their actions are having a very real impact on those hedge funds. Two firms announced they were investing over $2 billion into Melvin on Monday — “an emergency influx of cash,” as the Wall Street Journal described it — aimed at stabilizing the fund.

But not all the young investors on WSB are making money from GameStop’s rise.

On Monday, David — a 25-year-old who works in corporate finance for a private tech company in the Bay Area and lives in the Midwest but asked that his last name not be used in this story — bought about $14,000 in GME stock after reading about it on WSB.

He said he’d been watching the chatter about GameStop for months but finally decided to buy in on Monday. “I just figured that the market is completely irrational and that everything I learned in college means nothing,” he told BuzzFeed News.

He bought about $7,000 worth of stock priced at $115 on Monday morning. After watching it rise, he bought another $7,000 at $155 — except that ended up being the stock’s highest point that day.

David panicked as he realized he was possibly about to lose 15% of his total portfolio. He sold all of his GME investment and only lost about $600 in total. If he hadn’t sold them just moments after buying them, by the end of the day he would have been down around $10,000 (although he would have been up by the end of Tuesday).

“Honestly, the majority of bad trades on WSB are due to FOMO,” he told BuzzFeed News over Reddit. “I paid a large (but relatively small) price to learn that lesson.”

But for many on WSB, the attitude is a mix of “eat the rich” and “get rich quick” (with some redditors saying that their investments are up millions of dollars), as well a smug joy that their trolling worked and the investing and media worlds were suddenly paying close attention to them.

“A good way to check how many hedge fund managers there are in your building is to check the pavement outside,” posted one redditor on Tuesday. “It should be covered in blood.”

“Any man that dies holding GME will be greeted by the All-Father himself in Valhalla,” another wrote.

Beyond redditors, other investors also see this moment as one when young internet investors are able to have a significant impact on the big Wall Street firms.

Alexis Ohanian, the cofounder of Reddit, believes it reflects a fundamental change. “2021: the mainstream will realize finance will be revolutionized from the bottom-up bc of the internet: Robinhood investors, Alts, crypto, the list goes on..,” he tweeted.

Tesla CEO Elon Musk, who has publicly battled with investors who’ve shorted his company and has a reputation for trolling behavior himself, tweeted a link to the WSB subreddit on Tuesday afternoon, writing, “Gamestonk!!”

Lindzon said he expects hedge funds to get smarter at handling these moments. He believes that even if there are millions of millennial investors, they can really only significantly impact one relatively small company, rather than a whole market, industry, or corporate behemoth, such as Apple.

But it’s also a reminder that stock markets are reliant on individuals, their feelings, and their actions.

“All of this is just raw human emotion masquerading around as something more profound,” wrote Peter Heilbron, the founder of wealth management company Trace Wealth Advisors, in a blog post about GameStop and Reddit. “Everyone wants to be invited to the party but no one wants to be the one left without a chair when the music stops playing… the friction that exists between those two things is what creates volatility.”

And that volatility exists until the game, well, stops.



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Alphabet, Facebook rise as Microsoft ad units do better than predicted

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Microsoft CEO Satya Nadella speaks during the annual Microsoft shareholders meeting in Bellevue, Washington on November 29, 2017. / AFP PHOTO / Jason Redmond (Photo credit should read JASON REDMOND/AFP via Getty Images)

JASON REDMOND | AFP | Getty Images

Shares of Alphabet, Facebook and other advertising-driven internet companies gained in extended trading on Tuesday after Microsoft‘s earnings report showed that its advertising businesses did better than expected.

The outcome for two parts of Microsoft that reflect advertisers’ activity could indicate improvement in global economic conditions as the coronavirus pandemic begins to respond to widespread vaccination programs.

Microsoft said its LinkedIn social network, whose Marketing Solutions division generates revenue from ads, delivered $2.58 billion in revenue in the December quarter, up about 23% on an annualized basis. Microsoft previously said that growth would be around the same as the previous quarter, which came in at 15.6%.

“LinkedIn’s advertising business had a record quarter accounting for more than a third of LinkedIn’s total revenue. LinkedIn’s Marketing Solutions was up over 50% as advertisers increasingly turned to the platform as the trusted way to reach professionals ready to do business,” Microsoft CEO Satya Nadella told analysts on a conference call.

LinkedIn has largely avoided getting caught up in political controversies, unlike Facebook and Twitter. Besides advertising, LinkedIn revenue comes from premium subscriptions and tools for recruiters and salespeople.

Microsoft’s search-advertising business, which competes with Alphabet’s Google segment, contributed $2.18 billion in third-quarter revenue, up 1%. In October Microsoft’s finance chief, Amy Hood, had forecast a decline of mid-to-high single digits (5% to 9%).

Hood also gave guidance for the current quarter.

“Our search and LinkedIn businesses should benefit from the improving advertising market,” she said.

In a note distributed to clients on Friday, analysts at Bank of America, who have a buy rating on Microsoft stock, had estimated flat revenue for the search business and 11% growth in LinkedIn.

In after-hours trading, Alphabet was up almost 1%, Facebook was up 1%, Snap rose 1% and Twitter was up almost 3%. Microsoft, meanwhile, rose almost 4% after the earnings report, which reflected strong growth in the company’s cloud computing business.

Nominations are open for the 2021 CNBC Disruptor 50, a list of private start-ups using breakthrough technology to become the next generation of great public companies. Submit by Friday, Feb. 12, at 3 pm EST.

WATCH: Jefferies Weisfeld breaks down Microsoft’s earnings


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GameStop jumps as Elon Musk tweets out Reddit board that’s hyping stock

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Tesla Motors CEO Elon Musk unveils a new all-wheel-drive version of the Model S car in Hawthorne, California October 9, 2014.

Lucy Nicholson | Reuters

Tesla CEO Elon Musk seemed to rally behind GameStop‘s epic surge on Tuesday, tweeting out a link to the Reddit board that’s largely hyped the stock.

Shares of GameStop, which jumped 92.7% Tuesday, were up more than 60% in after hours trading following Musk’s tweet, which linked to the “wallstreetbets” Reddit chat room that has more than 2 million subscribers. The Tesla CEO tweeted “Gamestonk!!”

The stock surged earlier in the day after Social Capital’s Chamath Palihapitiya said in a tweet that he bought GameStop call options, betting the stock will go higher.

Musk’s call outs to certain companies have influenced stock prices before. Earlier Tuesday, he tweeted about a hand-knit wool hat he bought for his dog on Etsy. That sent shares of the company up as much as 8% in premarket trading, though it ultimately closed down 2.1%.

The CEO has faced problems with the SEC for tweeting about Tesla’s stock. In August 2018, he said he wanted to take Tesla private at $420 per share and that he had secured the funding to do so. Musk and Tesla each had to pay the SEC a $20 million fine to settle the suit, and Musk has since agreed to submit his public statements about Tesla’s finances and other topics to vetting by its legal counsel. He infamously tweeted last year that Tesla’s stock was “too high,” sending shares even higher a week later.

— Lora Kolodny contributed to this report.

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