12-02-2018

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22 BUSINESS A.M. FEBRUARY, MONDAY 12 - SUNDAY 18, 2018 TECHNOLOGY&INNOVATION Google-Nest merger raises privacy issues Business a.m. TECH GIANT ALPHABET is merging its Google and Nest divisions together. Nest was initially a start-up before being acquired by Google’s parent company The firm suggests the move will aid its efforts to build hardware and software to “create a more thoughtful home”. Nest had run as a standalone unit since its $3.2bn (£2.3bn) takeover in 2014. Its smart home products benefit from gathering data about its users. Nest previously pledged the data would be kept separate from Google’s other operations. Privacy campaigners have raised concerns at the reorganisation. But Google has said it will be “transparent” about any changes that might be made. ‘Consumer choice’ Nests’s products include: internet-connected security cameras for inside and outside the home thermostats that use motiondetecting sensors to detect when the owners are about a camera-equipped doorbell a movement-detecting alarm system and smoke detector In addition, the division’s app can be set to gather data from other products - including cars, ovens, fitness trackers and even sensor-equipped beds - to help “save energy... and stay safe”. Nest’s latest products include an alarm system that registers when users leave and return to their home In July 2015, Tony Fadell - the co-founder and former chief of Nest - told the BBC that consumers could be reassured that efforts had been made to ringfence this data and prevent it being mixed with all the other information Google gathered about the public. “When you work with Nest and use Nest products, that data does not go into the greater Google or any of [its] other business units,” he explained. “We have a certain set of terms and policies and things that are governed. “So, just when you say we may be owned by Google, it doesn’t mean that the data is open to everyone inside the company or even any other business group - and vice versa. “We have to be very clear on that.” When the BBC asked Google if that promise would be respected in the future it provided the following statement: “Nest users’ data will continue to be used for the limited purposes described in our privacy statement like providing, developing, and improving Nest services and products,” it said. “As we develop future plans and future product integrations, we will be transparent with users about the benefits of those integrations, any changes to the handling of data, and the choices available to consumers in connection with those changes.” The firm also provided a link to its current privacy statement, which states that it will provide notice of any changes on its website or by contacting customers’ directly. ‘Data harvesting’ The Big Brother Watch campaign group said it was concerned by the development. “Google already harvests an incredible amount of detailed information about millions of Internet users around the globe,” said director Silkie Carlo. “Now, Google is becoming embedded in the home, through ‘smart’ soft surveillance products. “Adding data from Nest’s home sensors and security cameras will significantly expand Google’s monopoly on personal data. Many customers will be justifiably anxious about Google’s growing, centralised trove, especially given that its business model relies on data exploitation.” Another company watcher said there could be benefits from allowing Google engineers working on the Home smart speaker and other Assistant-enabled hardware to work alongside their Nest counterparts. But he acknowledged that some device owners would still be concerned. “It would be naive to expect that as Nest is folded into the bigger Google entity, that there aren’t efforts to bring its platforms and all of the intelligence together,” commented Ben Wood from the CCS Insight consultancy. “It will be positioned as enhancing the products, but for some customers that may be something that they feel uncomfortable about.” Snap trying to lure Instagram advertisers by offering them free ads Remilekun Davies Snap wants to attract new advertisers — specifically, it wants to attract advertisers who are spending money with its biggest competitor, Instagram. To lure them over, Snap is reaching out to those advertisers that are buying vertical video ads on Instagram and other competitors, and offering them free advertising credits to give Snapchat a try. A Snapchat spokesperson confirmed that the company has indeed started reaching out to advertisers who are spending money on competing services. Snap is directing advertisers to an online application, which requires them to upload a proof of purchase that they bought ads on a Snapchat competitor “sometime within the past three months.” Snap is then offering those advertisers credits in the range of “several hundred dollars,” according to a source. Snap hasn’t been shy about its need to increase its pool of advertisers. The company sells almost all of its vertical video ads through a process called programmatic ad buying — in other words, automated software programs that auction off ad spots to the highest bidder. The problem for Snap thus far has been that many of its auctions don’t have much competition, meaning that there aren’t enough advertisers bidding for the ads, and those that are using the service are getting the ads on the cheap, since few other advertisers (or no other advertisers) are bidding against them. More advertisers would mean more competition, and theoretically, higher ad prices and more revenue for the company. On Snap’s last earnings call, when the company reported better-than-expected results, CFO Andrew Vollero called Snapchat’s ad auction “the engine that drove the growth in the fourth quarter.” It’s also impossible to ignore the thinly veiled swipe at Instagram, which is without a doubt Snapchat’s biggest competitor. Broadcom fails in second attempt to buyout Qualcomm with revised $121bn offer Edidi Abdulrafiu THE DOMINANT PHONE chips maker said the proposal to acquire all outstanding shares for $82 per share “materially undervalues” Qualcomm and contains “serious deficiencies in value.” The new proposal doesn’t adequately address the risk that the transaction could fail because of antitrust concerns. After rejecting the revised $121 billion buyout offer from Broadcom on Thursday, Qualcomm Inc. suggested the two companies meet to address what it called the proposal’s “serious deficiencies in value and certainty.” Broadcom originally launched an unsolicited bid for Qualcomm, the world’s largest maker of chips and processors for phones in November 2017, for $70 per share or $105 billion. If the acquisition was successful, the move would have been the biggest in tech history, surpassing AOL’s purchase of Time Warner in 2001. A combination of the two companies would create a chip giant supplying components to a wide array of electronic gadgets found in your home or pocket. A deal would also mark a surprising turnaround from nearly a decade ago, when the companies were bitter courtroom rivals. In a letter to Broadcom CEO Hock Tan, Qualcomm Chairman Paul Jacobs addressed concerns about a deal falling through, saying, “If you are not willing to agree to do whatever is necessary to ensure a transaction closes,” Jacobs wrote, “we will need you to be extremely clear and specific about exactly what actions you would refuse to take, so that we can properly evaluate the risk to Qualcomm’s shareholders.”
OLX, Efritin, Konga exit High data, operating cost challenge e-commerce growth in Nigeria Business a.m. E-COMMERCE, POPU- LARLY referred to as the fourth industrial revolution, the age driven by the digital space, which includes online business, transactions, activities and interactions is challenged in Nigeria by myriad of issues including ease of doing business, infrastructure deficit, culminating in high data and operating cost. The e-commerce success story of Amazon has inspired the evolution of new firms in the Nigerian and African market. From Jumia, Konga, Dealdey, Wakanow, Jiji, OLX and Payporte, Nigeria had its fair share of companies driving the e-commerce service in Nigeria, providing jobs to a young vibrant population in the country while seeking to bring a shift to online shopping in the country. However, the impact of the sector is waning due to inhibiting challenges to operations, including ease of doing business, respect for contracts, infrastructure and broadband deficit, and a host of others that have left some of the startups either exiting the country or selling out. As at 2017 the e-commerce market industry in Nigeria, according to reports was valued at $13 billion (N4.5 trillion). The National Bureau of Statistics (NBS) is projecting that in 2018 it could hit N10 trillion. These are promising projec- BUSINESS A.M. FEBRUARY, MONDAY 12 - SUNDAY 18, 2018 tions, but there are challenges and concerns at the moment. OLX, Efiritin have since left and lately investors in Konga have sold out, all because of operating challenges. However, Zinox, which acquired Konga, has assured that the acquisition of the company will boost the e-commerce ecosystem. But the OLX development raises concerns over the impact of the business model in Nigeria. Analysts say there are great potentials for the e-commerce segment to thrive in Nigeria and position it as a market leader in Africa, from a huge population, ready market of over 180 million, an increased adoption of mobile technology, spread of telecommunications coverage to an increase in internet data usage. “The challenge of the e-commerce industry in Nigeria seems huge and enormous but surmountable,” they said, adding that the pathway is in collaboration, strong ecosystem, viable reforms and policies, deploying new technologies, respect for contracts, improved broadband penetration, infrastructure, cost of doing business and the repositioning of NIPOST. “We believe the e-commerce industry has a bright outlook in Nigeria, but the spate of businesses shutting down operations raises concerns, but if the aforementioned issues are addressed there are prospects of sustainability instead of the survival race for the businesses,” one analyst told business a.m. TECHNOLOGY&INNOVATION Google faces $21.1m anti-trust fine for search bias in India Business a.m with agency ANOTHER ANTI- TRUST FINE for Google. India’s competition commission has issued a 1.36BN rupees (~$21.1M) penalty on the search giant for abusing its dominant position in the local search market for online general web search and web search advertising services. “Google was leveraging its dominance in the market for online general web search, to strengthen its position in the market for online syndicate search services. The competitors were denied access to the online search syndication services market due to such a conduct, writes the Competition Commission of India (CCI) in a press release. “Further, prohibitions imposed under the negotiated search intermediation agreements upon the publishers have been held to be unfair as they restricted the choice of these partners and prevented them from using the search services provided by competing search engines.” Detailing a specific instance of Google’s search bias, the CCI says its investigation found that Google was directing web users who were searching for flights to its own flight search page — and thereby disadvantaging businesses trying to gain market access, while also unfairly imposing its products on users of general search services as well. The watchdog did also clear Google of any competition violations related to other elements of its business — specifically specialized search design (OneBoxes), AdWords, online intermediation and distribution agreements. The original complaint against the company was filed in India in 2012 by a local matchmaking website. Commenting on the order, a Google spokesman told us: “We have always focused on innovating to support the evolving needs of our users. Further, prohibitions imposed under the negotiated search intermediation agreements The Competition Commission of India has confirmed that, on the majority of issues it examined, our conduct complies with Indian competition laws. “We are reviewing the narrow concerns identified by the Commission and will assess our next steps,” he added. The size of the CCI’s fine was calculated based on Google’s revenue from its operations 23 FedEx, UPS hit as Amazon ‘plots shipping expansion’ AMAZON IS REPORT- EDLY EMBARKING on further expansion of its shipping services with a programme to pick up from companies that sell on its site. The firm is considering offering the service to other businesses as well, according to Wall Street Journal report. Investors dumped shares of existing shipping companies FedEx and UPS in response to the news. Amazon already offers shipping services to merchants that use its warehouses. Under its Fulfillment by Amazon and other programmes, Amazon handles delivery of products that merchants store in the firm’s warehouses, including to non-Amazon customers. The new programme goes a step farther, including pick-up from the vendor, according to the WSJ report. It has started in London and expects to launch soon in Los Angeles, with the aim of expanding to other cities this year, the report said. Amazon did not respond to a request for comment. The e-commerce giant has long focused on speeding delivery of online purchases, eliminating the lag time that provides traditional stores an edge, while trying to reduce the costs of shipping, which hit $21.7 billion (£15.7bn) in 2017. The focus has led the firm to invest billions in its logistics network, building warehouses, deploying aircraft and hiring delivery trucks. Amazon also purchased upmarket grocer Whole Foods last year. This week, the firm said it would start making two-hour grocery deliveries from the stores for Prime customers in some cities. As Amazon’s network expands, it has led to increased questions about how well longstanding shipping companies such as FedEx and UPS - which count Amazon as a customer - will compete. FedEx and UPS shares fell by more than 2 percent on Friday morning as the market volatility continued. in India only, and equates to around 5 per cent of its turnover in the market. Meanwhile Google’s parent company, Alphabet, reported full year revenue of $110.8BN for 2017. So $21M really is just pocket change for the US tech giant — which also continues to flesh out the feature set of its vertical search products. Last summer the European Union’s Competition Commission made its presence more firmly felt by slapping Google with a record breaking $2.7BN antitrust fine relating to the Google Shopping search comparison service and following a multi years investigation. In that case search placement that privileges Google’s own commercial products also got the company into hot water. The EC’s antitrust watchdog objected to it systematically privileging its own shopping product in search results and also found that it had been demoting rival vertical search services in its general search results. That combination of actions was deemed illegal under the bloc’s competition rules. In the EU Google has since made changes to how it displays shopping search results to try to remedy the situation — and avoid further fines — by letting anyone bid for the ads it displays at the top of productrelated search results.
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