On March 18, US-based fintech firm Fidelity National Information Services (FIS) revealed plans to acquire payment processing company Worldpay. The $43bn deal is set to create one of the world’s largest providers of electronic payment infrastructure in the finance industry.
The figure of $43bn encapsulates a combination of cash and stock to be paid by FIS, which will also assume Worldpay’s debt. Shareholders of FIS will control roughly 53 percent of the integrated unit, while Worldpay investors will receive $11 a share in cash, as well as 0.9287 of an FIS share. As news of the acquisition emerged, the value of FIS shares rose by 10.4 percent.
As fintech businesses surge in value, firms like Worldpay are taking the fight to banks in a battle to dominate the digital payments market
The combined business, which will have a total revenue of around $12bn, will target the high-growth e-commerce industry. As consumers have changed the way they pay for products, the growth of contactless and mobile payments has seen companies scramble to adjust.
“At Worldpay, our focus has always been on delivering more value to our clients and partners, and making decisions that achieve our growth and performance objectives,” said Worldpay CEO Charles Drucker. “Combining with FIS helps us accelerate the achievement of that, now benefitting from new scale and capabilities that will truly differentiate the company globally.”
Ohio-based Worldpay was previously owned by the Royal Bank of Scotland, but the bank was forced to sell the company as part of its financial crisis bailout. Although Worldpay has been processing payments since the late 1980s, the company has experienced a number of significant changes in the last few years. In 2017, Worldpay merged with Vantiv, another payment processing company, in a deal valued in excess of $10bn.
Neil Wilson, Chief Market Analyst at Markets.com, told the BBC that he expects more deals to follow in the sector. A report from Boston Consulting Group and Swift, meanwhile, predicts revenue in the payments industry will reach $2.4trn by 2027. As fintech businesses surge in value, firms like Worldpay are taking the fight to banks in a battle to dominate the digital payments market – the competition is set to be fierce.
Federal prosecutors in New York are investigating Facebook’s data-sharing partnerships with other major technology firms, according to an investigation by The New York Times. Citing two anonymous sources, The New York Times revealed that a grand jury had subpoenaed records from “at least two prominent makers of smartphones and other devices”.
The companies are among an estimated 150 that allegedly signed deals with Facebook to give them wide-ranging access to the personal information of hundreds of millions of users. These agreements, which were first revealed by The New York Times last year, allowed partners to access users’ data without their explicit consent. Some were even reportedly able to access personal information from users’ friends who believed they had shut down any sharing function.
Facebook has defended these deals, claiming that its partners were not able to access personal information without permission. It has since phased out the majority of these partnerships.
According to The New York Times, prosecutors from the US Attorney’s Office for the Eastern District of New York are overseeing the grand jury investigation. The office has so far declined to comment or provide further information on the inquiry.
Facebook has found itself under intense scrutiny over its data-sharing practices since the Cambridge Analytica revelations broke in early 2018
Facebook has found itself under intense scrutiny over its data-sharing practices since the Cambridge Analytica revelations broke in early 2018. It is currently under investigation by the US Department of Justice for its role in the scandal, which saw the political-consulting firm harvest data from as many as 87 million Facebook users and utilise it to build tools to influence both the 2016 US presidential election and EU referendum campaigns.
The tech giant was also sued by Washington DC in December 2018 for allowing Cambridge Analytica to obtain personal information without consent. It remains under scrutiny from both the Federal Trade Commission and the Securities and Exchange Commission.
In response to the latest reports, a Facebook spokesperson told The New Economy: “We are cooperating with investigators and take probes seriously. We’ve provided public testimony, answered questions and pledged that we will continue to do so.”
Among a plethora of investigations, this grand jury inquiry is simply the latest and is unlikely to be the last. It is also an indicator that US lawmakers intend to hold Facebook accountable for its actions through every possible legal and regulatory avenue, sending a powerful message to companies across the globe that may be tempted to mishandle data.
Although Facebook claims it has taken steps in the last year to tackle data misuse, even announcing that it would be pivoting to a privacy-based model, it is sorely mistaken if it believes these will be enough to pacify federal investigators. Rather, it must buckle up, take responsibility for its misgivings and accept the consequences, which are likely to be as damaging to its business model as its data exploits were for its users.
The issue of data privacy and security has been cast into the international spotlight in recent years. In fact, since the Cambridge Analytica scandal lifted the lid on the extent of data misuse within the technology sector, numerous investigations have exposed further instances of hacking and impropriety.
Despite these prevalent issues, digital forces – from social media to the Internet of Things – continue to play an increasingly significant role in our lives. Indeed, it is nearly impossible to get through the day without using a form of technology that is at risk of being hacked for surveillance purposes.
As the threat of illegal spying looms over businesses and consumers alike, The New Economy lists the five top surveillance scandals to have surfaced in recent years.
Huawei smartphones
Chinese telecoms giant Huawei has been the focal point of a serious debate around national security this year, with a number of countries – including the US, Australia and New Zealand – having voiced concerns that the Chinese Government could use the smartphone manufacturer to spy on foreign nations.
Although the UK’s National Cyber Security Centre has described the risk posed by working with Huawei as ‘manageable’, others remain wary. According to a report in the South China Morning Post, the firm’s products have been banned from government systems in Taiwan due to spying concerns. The Wall Street Journal has also reported that the US is investigating Huawei for allegedly stealing trade secrets from a number of US business partners, including T-Mobile.
Huawei, the second-largest smartphone maker in the world, is now suing the US Government for banning its products from federal agencies. The company has pushed back on allegations that the Chinese Government could influence it, with founder Ren Zhengfei telling the BBC: “Our company will never undertake any spying activities. If we have any such actions, then I’ll shut the company down.”
While internet-enabled gadgets have become a permanent fixture in many of our homes, they can be susceptible to hackers or spies
Smart home devices
Fears have long been growing around the security of smart home devices. While these internet-enabled gadgets have become a permanent fixture in many of our homes, they can be susceptible to hackers or spies if the proper precautions are not taken when installing them.
In 2018, Wired reported that a group of Chinese hackers had developed a new technique to take control of Amazon Echo’s voice assistant and turn it into a surveillance tool. Although Amazon responded quickly with security fixes – the hackers had presented their findings openly at a security conference – big tech companies are continually making missteps around security and privacy.
In February, for example, reports emerged that Nest Guard, a part of Google’s Nest Secure home security and alarm range, had been equipped with a microphone without informing customers. A Google spokesperson told Business Insider that failing to mention the microphone in the product specifications was “an error” and that it “was never intended to be a secret”.
“The microphone has never been on and is only activated when users specifically enable the option,” the spokesperson said. Despite this, the original omission will have done nothing to reassure users who already had trust issues with big tech firms.
Employee complaints at Tesla
Since 2018, two former employees of electric carmaker Tesla have accused the company of illegally spying on workers.
According to The Verge, Karl Hansen, a former member of Tesla’s security team, filed a whistleblower tip with the US Securities and Exchange Commission (SEC) claiming that Tesla had installed “specialised router equipment… designed to capture employee cell phone communications and/or retrieve employee cell phone data”, among other things.
In March 2019, Business Insider reported that Sean Gouthro, Tesla’s ex-global security lead, had filed a separate complaint with the SEC that corroborated Hansen’s tip.
A Tesla spokesperson told The Verge that Gouthro’s claims – and those of other ex-Tesla employees represented by the law firm Meissner Associates, including Hansen – were “untrue and sensationalised, [and] only intended to seek the attention of the media”.
Prior to TechCrunch’s investigation into the Facebook Research app, Facebook had been accused of using a similar app, Onavo, to gather information on its rivals
The Facebook Research app
In January, an investigation by TechCrunch found that Facebook had paid volunteers as young as 13 years old to install the Facebook Research app, giving the tech giant wide-ranging access to the data on their phones. Since the news emerged, Apple has banned the app for violating its developer guidelines, while Facebook has said it will terminate the market research programme.
In a statement given to TechCrunch, Facebook said there was nothing secret about its intentions: “[The Facebook Research app] wasn’t ‘spying’ as all of the people who signed up to participate went through a clear on-boarding process asking for their permission and were paid to participate.”
However, Facebook had previously been accused of using a similar app, Onavo, to gather information on its rivals. The company later removed Onavo from the App Store after Apple said it violated data-sharing guidelines.
US Senator Richard Blumenthal told TechCrunch: “[The Facebook Research app showed the company’s] complete disregard for data privacy and eagerness to engage in anti-competitive behaviour. Instead of learning its lesson when it was caught spying on consumers using the supposedly ‘private’ Onavo [virtual private network] app, Facebook rebranded the intrusive app and circumvented Apple’s attempts to protect iPhone users.”
US-China power struggle
A report by Nikkei Asian Review recently brought to light US tech firms’ fears that the Chinese Government could use server power cords and plugs to access sensitive data. In the report, cybersecurity experts confirmed the concerns were reasonable, with the complexity of the power supply systems making them vulnerable to hackers.
According to unnamed executives at Lite-On Technology – a Taiwanese electronics manufacturing services company that provides power supply systems to HP, IBM and Dell, among others – these concerns have further harmed the Chinese tech sector, prompting several US firms to ask for the production of some components to be moved out of mainland China.
Despite these moves, Tien Chin-wei, a deputy director at the Cybersecurity Technology Institute and one of the experts quoted in the Nikkei Asian Review report, believes there is still a threat of surveillance: “Every interface between components, or between motherboards and power supply systems, could be a loophole for malicious implants. You can only reduce or manage the risks, but it is not possible to entirely eliminate the threats.”
Uber finally brought a long-running legal dispute to a close on March 12, after it agreed to pay $20m to drivers in California and Massachusetts. The class-action lawsuit was originally brought against the ride-hailing firm in 2013, arguing that Uber treated its drivers as freelancers rather than employees in order to avoid paying the minimum wage and circumvent the need to provide other benefits. Those eligible for a payout include anyone who drove for Uber within the two states in question between August 16, 2009, and February 28, 2019.
The settlement, which is subject to approval from a judge, will allow Uber to continue classifying its drivers as ‘independent contractors’, but may not mean the end of the company’s legal troubles. In addition, Uber will make the process of removing drivers more transparent and add an appeals process. Drivers will also be offered classes to ensure ride quality can be improved where necessary.
The settlement allows Uber to continue classifying its drivers as ‘independent contractors’, but may not mean the end of the company’s legal troubles
“Uber has changed a lot since 2013,” a company spokesperson told TechCrunch. “We have made the driver experience even better through improvements like in-app tipping, a redesigned driver app and new rewards programmes like Uber Pro. We’re pleased to reach a settlement on this matter, and we’ll continue working hard to improve the quality, security and dignity of independent work.”
However, Shannon Liss-Riordan, the lawyer representing the drivers in the case, has stated that the payout does not mark the end of the dispute: “While we were able to pick up the pieces and achieve this substantial settlement for the drivers not covered by arbitration clauses, other drivers would need to pursue their claims in individual arbitration if they wanted to attempt to recover anything on their claims.”
Uber will be hopeful that any other legal disputes can be cleared up ahead of its planned initial public offering later this year. Reports indicate that Uber could be valued at around $120bn, a significant increase on its current estimated valuation of $70bn. And, in what is surely another tactic to appease its contractors, Uber is set to offer incentives to drivers who purchase company shares.
Uber’s decision to settle its 2013 lawsuit out of court signals that the gig economy is coming under increasing scrutiny. Once the ride-hailing firm makes its debut on the stock market, it is only likely to face more questions over its company practices and the rights of its workers.
Amit Singhal, a former senior vice president at Google, was awarded an exit package worth as much as $45m after being forced to resign from the company amid sexual harassment allegations, according to court documents released on March 11.
Singhal, who headed up Google’s search operations, left the company in 2016 after a female employee claimed he had groped her at an off-site event, according to a report by The New York Times. An internal investigation found that Singhal had been inebriated at the time, concluding that the employee’s account was credible, the court documents stated. Singhal has not yet responded to The New Economy’s request for comment.
At the time of his departure, Singhal said he wanted to focus on his philanthropy, a claim that was substantiated by Google’s Leadership Development and Compensation Committee. In a statement to the Associated Press in 2017, Singhal further claimed he had not been accused of harassment and had left Google on his own terms.
Details of Singhal’s exit package were revealed as part of a shareholder lawsuit filed against Google’s parent company, Alphabet, in early January. Previously released documents had been redacted, but full versions that include quotes from Alphabet board committee meetings have now been made public.
Google is reported to have approved severance packages worth $135m to two executives accused of sexual misconduct
The documents reveal that Singhal received two $15m payments and another payment of between $5m and $15m as part of his separation agreement, meaning his total payout could have reached $45m. Singhal reportedly did not receive the full amount, however, as it was contingent on him not working for a competitor, a clause he violated when taking a role at Uber. According to the court documents, Singhal was fired by Uber in February 2017 for failing to disclose the allegations of sexual harassment against him.
The shareholders brought the legal action against Alphabet’s board members for their “active and direct participation in a multi-year scheme to cover up sexual harassment and discrimination at Alphabet”. Plaintiffs said that, by concealing and agreeing pay packages for those accused of misconduct, the board had caused significant financial and reputational damage to both Google and its parent company.
Singhal is the second executive to receive a substantial payout after departing Google amid sexual harassment allegations. The first, Andy Rubin, was awarded a $90m severance package after he was accused of sexual misconduct dating back to 2013.
According to an investigation by The New York Times, Rubin was accused of coercing a fellow Google employee into performing sexual acts on him in a hotel room in 2013. Google carried out an internal investigation and found the allegations to be credible.
Court documents also allege that Rubin engaged in human sex trafficking while at Google, notably by “paying hundreds of thousands of dollars to women to be, in Rubin’s own words, ‘owned’ by him”. Rubin has maintained that these claims are part of a smear campaign by his ex-wife to sully his name amid a divorce and custody battle.
We’re now aware of TWO multi-million dollar Google payouts to sexual harassers. The known total? $135M. Tomorrow, use the hashtag #GooglePayoutsForAll to join us in highlighting other ways that money could have been used. #GoogleWalkouthttps://t.co/mosn4iYhyH
— Google Walkout For Real Change (@GoogleWalkout) March 12, 2019
In total, Google is reported to have approved severance packages worth $135m to the two executives accused of sexual misconduct. A Google spokesperson told The New Economy:“There are serious consequences for anyone who behaves inappropriately at Google. In recent years, we’ve made many changes to our workplace and taken an increasingly hard line on inappropriate conduct by people in positions of authority.”
Reports of how the tech giant had handled accusations of sexual harassment by Rubin and other senior executives sparked a mass walkout by Google employees in November 2018. In a tweet on March 12, the Google Walkout for Real Change organisers launched a new campaign in response to the latest allegations, calling on its Twitter followers to “use the hashtag #GooglePayoutsForAll to join us in highlighting the other ways [the $135m] could have been used”.
Tesla has reneged on its decision to close its physical stores, as the company looks for new ways to keep the price of its Model 3 vehicle down. On March 11, 10 days after the firm’s initial announcement, Tesla confirmed that it would only close half as many stores as initially planned. Meanwhile, car prices across the fleet will rise by three percent, though Tesla has vowed the increase will not apply to its ‘affordable’ Model 3, which is currently priced at $35,000.
On March 1, the California-based business announced it would close a number of its brick-and-mortar stores and transition to online sales in order to offset the lower price it was offering for its Model 3.
While it is unknown which stores will shut, Tesla has said certain showrooms in high-visibility locations will now reopen, albeit with fewer staff
Now, the Model S, Model X and the more expensive variants of the Model 3 will all increase in price as of March 18, contrary to the six percent reduction the company pledged last month. Tesla CEO Elon Musk has previously declared that his firm’s cars are “too expensive for most people”.
While it is unknown which stores will shut, Tesla has said certain showrooms in high-visibility locations will now reopen, albeit with fewer staff. Currently, the firm has 378 stores worldwide.
“Over the past two weeks we have been closely evaluating every single Tesla retail location, and we have decided to keep significantly more stores open than previously announced as we continue to evaluate them over the course of several months,” read a Tesla statement.
“As a result of keeping significantly more stores open, Tesla will need to raise vehicle prices by about three percent on average worldwide. There will be no price increase to the $35,000 Model 3.”
Tesla made 0 cars in 2011, but will make around 500k in 2019
Musk is currently facing a lawsuit from Tesla shareholders for tweeting what they allege to be “repeated misstatements”. In February, he claimed that Tesla would manufacture 500,000 cars in 2019, despite official figures signalling a significantly lower production rate – a statement that “hurt” investors.
Tesla faced a challenging 2018, forcing the company to cut its 45,000-strong workforce by 3,000. Musk himself has faced questions over his erratic behaviour, having recently been forced to step down as Tesla chairman to settle fraud charges. The latest U-turn by Musk is unlikely to inspire confidence in his ability to take the company forward.
In a blog post on March 8, Y Combinator (YC) announced that Sam Altman had left his position as president of the famed start-up incubator. Altman will transition into the role of chairman, a move that will allow him to dedicate more time to his non-profit foundation, OpenAI.
According to the post, Altman will remain responsible “for the long-term social and economic success of YC”. The company also claimed that Altman’s move would not have any significant operational impact, as YC is run as a partnership.
Altman joined YC in 2011 as a part-time partner, before succeeding YC founder Paul Graham as president in 2014. He has first-hand experience as a start-up entrepreneur, having founded location-based social network Loopt in 2005. Prepaid card issuer Green Dot bought Loopt for $43.4m in 2012, at which point the app was closed down and its features incorporated into other products.
Under Altman’s watch, YC has grown to become one of the most influential incubators in Silicon Valley, nurturing the likes of Airbnb, Dropbox, Reddit, Stripe and Coinbase. When he joined the company on a full-time basis in 2014, YC had graduated just 67 start-ups; today, that number has risen to 1,900, boasting a combined valuation of around $150bn.
Altman’s transition to Y Combinator chairman will afford him more time to develop OpenAI, the non-profit he set up with Elon Musk in 2015
In October 2015, Altman announced that the YC family would be expanding to include YC Continuity, a $700m growth-stage equity fund, and YC Research, a not-for-profit research lab that has completed investigative projects into universal basic income, healthcare and city infrastructure.
In the past two years, YC has also launched Startup School, a free 10-week online course for budding founders, and YC China, a standalone incubator programme based in Beijing and headed up by former Microsoft and Baidu executive Qi Lu.
In a brief interview with The Wall Street Journal, Altman said he would still play a role in shaping the strategic direction of YC, adding: “I’ll still have a voice at that table.”
Altman’s transition will afford him more time to develop OpenAI, the non-profit he set up with Elon Musk in 2015. According to its website, the company seeks to research and develop AI technology that will have a beneficial impact on humanity and is free from financial concerns. Tesla CEO Musk no longer has any involvement in OpenAI, having left in February 2018 to avoid any conflict of interest between its AI research and Tesla’s own machine learning efforts.
Alongside his work at YC and OpenAI, Altman is a significant angel investor, having offered funding to Asana, Pinterest, Teespring, Stripe and Change.org, among others.
YC has not yet indicated whether it will be replacing Altman.
On March 7, home-sharing company Airbnb announced it had purchased last-minute hotel booking service HotelTonight for an undisclosed fee. The acquisition will help broaden the San-Francisco-based tech giant’s travel offering ahead of plans to go public later this year.
The acquisition is part of a wider branding overhaul taking place at Airbnb. The firm recently revealed plans to introduce tours and immersive trips led by local experts in 12 cities across the world, including Havana, Detroit and London. Within a year, Airbnb hopes to extend its new services to 50 cities.
HotelTonight – also based in San Francisco – was valued at $463m during its most recent funding round in 2017. Its backers include Accel, Battery Ventures, First Round Capital, Coatue Management and GGV Capital. HotelTonight has raised $131m in its nine years of operation.
The acquisition of HotelTonight is part of a wider branding overhaul currently taking place at Airbnb
By partnering with establishments in the Americas, Europe and Australia, HotelTonight offers unsold rooms and catering to travellers looking to make last-minute arrangements. The company will maintain its own brand and website following the purchase, but some of its listings will also appear on Airbnb’s platform.
In a statement announcing the acquisition, Airbnb said: “We are making it easier for people who use Airbnb to find last-minute places to stay when Home hosts are often already booked. The availability of boutique hotels – in addition to private rooms and entire homes that are instantly bookable – helps ensure authentic, high-quality stays are available on demand, especially at the last minute.”
Airbnb, which launched in 2008, expects to have surpassed 500 million guest arrivals by the end of Q1 2019. The firm’s rapid expansion has often put it at odds with regulators and lawmakers at both a local and national level, with concerns often centring on the inflationary affect listings can have on the rent being paid by local residents.
A number of unicorn tech start-ups are seeking to go public in 2019. Lyft recently unveiled its S-1, while Uber, Slack and Pinterest are set to follow. It is thought that Airbnb has also targeted a public listing by June 2019 – expanded services should make it a more attractive option to investors.
Founder and CEO of Facebook Mark Zuckerberg has announced a new, privacy-focused vision for the social network that veers away from the open sharing model he originally pioneered.
“Facebook and Instagram have helped people connect with friends, communities and interests in the digital equivalent of a town square,” Zuckerberg said in a blog post shared to Facebook on March 6.
Some critics have seen the move as an ill-disguised strategy to salvage Facebook’s reputation, providing commercial benefits for the company but not for its users
“But people increasingly also want to connect privately in the digital equivalent of a living room,” he continued.
The billionaire founder of Facebook went on to set out his vision for a new, privacy-centric model that will be based on intimate interactions, encryption, safety and secure data storage.
Zuckerberg also pledged to reduce the permanence of user-added content, saying: “We won’t keep messages or stories around for longer than necessary to deliver the service or longer than people want them.”
Facebook has been hit by a series of privacy scandals in recent years, the most significant of which saw the personal data of about 50 million individuals harvested and passed on to political targeting consultancy Cambridge Analytica.
Zuckerberg addressed the lack of trust in Facebook’s security measures in his post, saying: “We don’t currently have a strong reputation for building privacy protective services.”
Some critics have seen the move as an ill-disguised strategy to salvage Facebook’s reputation, providing commercial benefits for the company but not for its users. Ashkan Soltani, a former chief technologist for the Federal Trade Commission, tweeted: “While positioned as a privacy-friendly play, its timing suggests a competition play to head off any potential regulatory efforts to limit data sharing across services.”
BREAKING: @Facebook moves to combine its multiple Messaging platforms.
While positioned as a privacy-friendly play, it’s timing suggests a competition play to head off any potential regulatory efforts to limit data sharing across services https://t.co/BNKOlpryiT
The BBC’s North America technology reporter Dave Lee also highlighted concerns that if content shared on Facebook is more private and increasingly temporary, it may be more difficult to hold the tech giant liable for any future misuse of data.
Zuckerberg also described an ongoing commitment “not to build data centres in countries that have a track record of violating human rights like privacy or freedom of expression”. He conceded that this pledge, together with the encrypted model, would limit Facebook from entering certain new markets, or may mean the social network is blocked in some countries. “That’s a tradeoff we’re willing to make,” he added.
These comments appear to refer to China, a market that Zuckerberg has long attempted to enter, but with little success due to the country’s stringent data storage laws. Internet service providers in China are obliged to keep all personal data produced by its citizens on computers within the country’s borders; to comply with these regulations, Facebook would be forced to build a data centre on Chinese soil.
An anonymous Facebook source told Buzzfeed News that the company “does not see a way forward in China”, a move which has been welcomed by critics. Facebook’s former Chief Security Officer, Alex Stamos, tweeted: “Zuck [sic] has clearly given up on entering China, as these changes makes [sic] that impossible. Good.”
7) The “Secure Data Storage” section is a massive shot across Tim Cook’s bow. Expect to hear a lot about iCLoud and China every time Cook is sanctimonious.
In other news, Zuck has clearly given up on entering China, as these changes makes that impossible. Good. pic.twitter.com/xvkdS4kN3b
Zuckerberg ended the post by setting out Facebook’s next steps, saying: “Working through these principles is only the first step in building out a privacy-focused social platform. Beyond that, significant thought needs to go into all of the services we build on top of that foundation.”
It’s unlikely that user experience on Facebook will change significantly in the short term as Zuckerberg is simply setting out the guiding principles for the new model. The details of how the social network plans to implement this new philosophy remain to be seen, and details will undoubtedly be heavily scrutinised as they emerge in the coming months.
On March 5, as part of efforts to rival Alibaba and Amazon, JD.com launched a new store on Alphabet’s online shopping site, Google Express. The move is the latest instance of cooperation between the two companies following Alphabet’s $550m investment in JD.com last summer.
In the months since its investment, Alphabet has provided financial backing to a number of small tech companies in China in order to gain a stronger foothold in the world’s most populous nation. Google’s search engine has been blocked in the country since 2010, forcing the company to look elsewhere for revenue.
Alphabet has provided financial backing to a number of small tech companies in China in order to gain a stronger foothold in the world’s most populous nation
The new JD.com site, named Joybuy, offers a range of ready-to-use electronic appliances such as chargers and kettles, as well as fashion items and accessories, sporting equipment and toys. The majority of items are produced by lesser-known brands and are priced under $100.
There is little further information regarding the partnership at this point.”What we can share at this stage is that we are conducting test operations during this early phase,” a JD.com spokesperson told Reuters.
Google Express was launched in 2013 as a direct competitor to Amazon, with the two online giants wrestling over advertising revenue. JD.com, meanwhile, is the main challenger to Alibaba across China and South-East Asia, with both firms recently embarking on forays into the US market.
So far, Google and JD.com have failed to knock their rivals off their perches. Joybuy, though, marks JD.com’s first substantial attempt to make a breakthrough in the US market and could pose the greatest threat yet to Alibaba.
Furthermore, Google and JD.com are expected to use the launch as a springboard for further collaboration – for instance, automated stores powered by AI.
This week, Alibaba also announced a lower-profile partnership with US business services firm Office Depot. With Chinese markets facing reduced demand as a result of the country’s cooling economy, Alibaba and JD.com have realised the importance of expanding their international customer bases.
However, with the US continuing to investigate Chinese telecoms company firm Huawei, trust between Western consumers and Chinese companies is fragile. It is yet to be seen whether the two businesses can make inroads into the US market.
Founder and CEO of Revolut Nik Storonsky has rejected allegations of negligence relating to the company’s anti-money laundering (AML) software.
British newspaper The Daily Telegraphpublished a report on February 28 claiming it had seen documents proving the digital bank had switched off an automated system designed to prevent suspicious transactions for a three-month period last year.
The $1.7bn fintech firm is currently the subject of regulatory probes in the UK and Lithuania
The newspaper said that, as a result, “thousands of illegal transactions may have passed through the London-based start-up’s digital banking system between July and September of 2018.”
According to the Telegraph’s report, this negligence also attracted attention from the UK’s Financial Conduct Authority.
Storonsky hit back against the newspaper’s claims, saying in a statement that there has been “some misleading information in the media relating to [the company’s] compliance function”.
According to Storonsky, Revolut had reverted to its previous AML systems after an upgrade started incorrectly blocking accounts. He said this action did not result in a breach of sanctions or AML regulations, meaning the company did not see fit to send a formal notification to the regulator.
“At no point during this time did we fail to meet our legal or regulatory requirements,” Revolut’s CEO said, adding that the company had conducted a thorough investigation of all transactions processed during the period in question and had found no breaches.
On March 1, it emerged that the company’s CFO, Peter O’Higgins, had resigned in January, saying that he wanted to “pass the reins over to someone who has global retail banking experience”. O’Higgins, however, had worked at JPMorgan for more than 12 years before joining Revolut. The Telegraph said: “His lengthy experience in the financial sector has been valuable for the start-up.” This inconsistency has led to speculation that O’Higgins may have left Revolut over concerns surrounding compliance.
The $1.7bn fintech firm is currently the subject of regulatory probes in the UK and Lithuania. Politicians in Lithuania, where Revolut received a European banking licence in 2018, have also put the company under the microscope over concerns relating to shareholder funding. While an initial investigation upon application for a licence is common practice, Revolut could be subjected to further probing, as lawmakers have raised concerns about the source of some stakeholders’ money.
The company’s internal culture has also come under fire, with former employees describing a toxic environment of unpaid work, high staff turnover and no work-life balance. In a message posted to the company’s Slack channel last year, Storonsky expressed surprise that senior staff were not working on weekends to hit targets and affirmed that team members with performance ratings “significantly below expectations” would be fired without negotiations in a subsequent review.
In an open letter posted on Revolut’s blog, Storonsky said that the company’s “internal working culture has been evolving as fast as our business”, adding that it had spent a lot of time working on its culture over the past 18 months. Revolut’s turnover rate is now less than three percent, according to the letter.
The scope and scale of these allegations and subsequent probes indicate that something had gone terribly wrong at Revolut – whether those errors amount to criminal behaviour remains to be seen. Regardless, it will be a challenge for the company to bounce back, and that could have huge implications for the fintech sector as a whole, given that Revolut is such a prominent player in the market.
Customers have come to expect that their banks will offer the same ease of use they get from the big four digital FANG companies – Facebook, Amazon, Netflix and Google. Customer-centricity is in vogue and the race is on for banks to deliver digital satisfaction.
APIs allow other organisations to dip into the customer data held by banks to create their own complementary or alternative financial apps
Referred to as ‘open banking’, customers will be able to make peer-to-peer transfers via third-party apps that are not associated with their banks. They’ll be able to use these apps to track their spending without switching banks.
Tech disruption
Banks will be obliged to grant these third parties access to customers’ accounts through open application program interfaces (APIs). APIs allow other organisations to dip into the customer data held by banks to create their own complementary or alternative financial apps.
As a result, tech leaders such as Google, Amazon, Facebook and Apple will be able to compete on the banks’ home territory. The banking industry must launch services of its own if it wants to stay ahead. With their large user bases, tech companies will be fierce competition, but banks have their advantages, too.
Consumers generally put greater trust in banks, which also benefit from established reputations and an entrenched customer base. It is also likely that an appointment at a physical branch will remain the first choice for customers seeking to have a discussion around more important decisions, such as mortgage advice and long-term financial planning.
Open to innovation
While PSD2 only relates to EU countries, the regulation will no doubt drive other markets around the world to catch up. To get a lead on the competition, banks can prepare for open banking ahead of the regulatory timetable by offering payment solutions that work regardless of the bank customers use.
A number of providers have already started doing this, including Vipps in Norway, Mobilepay in Denmark, Keks in Croatia and Blik in Poland. Even in the US, where PSD2 will hold no weight, banks sense the opportunities and threats that APIs will bring to banking.
Open APIs are causing excitement – though also worry. With open APIs, banks must be doubly assured there are no security concerns before they go live. Wells Fargo and JPMorgan Chase have a deal with financial software company Intuit: upon customer approval, customers’ financial information is loaded onto their Intuit software products, such as QuickBooks Online, Mint or TurboTax Online.
McKinsey & Company points out that Barclays and Santander have also built open API infrastructures to deliver a suite of services. McKinsey regards the open API as inevitable. In fact, its whitepaper on the topic ends on an insistent note: “Banks are better served getting ahead of and defining the trend rather than waging a futile battle to repel it.”
To be one of the players that defines the trend, banks must focus on their customers and tech-based disruptors. Communicating with customers has never been so important and is the key to better banking.
