Author: The New Economy

Facebook invests $5.7bn in Indian telecoms firm Reliance Jio

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On April 21, Facebook announced it had invested $5.7bn in Indian telecoms firm Reliance Jio – the social network’s largest single investment in another company aside from acquisitions. The stake, which accounts for almost 10 percent of Jio’s total equity, makes Facebook the firm’s biggest minority shareholder.

Since its founding in 2016, Reliance Jio has managed to attract nearly 400 million subscribers by undercutting existing service providers such as Bharti Airtel and Vodafone. Now the largest telecoms operator in the country, Jio should help Facebook fight off competition from other online content platforms in what is the world’s second-largest online market.

Reliance Jio has managed to attract nearly 400 million subscribers by undercutting existing service providers such as Bharti Airtel and Vodafone

“One focus of our collaboration with Jio will be creating new ways for people and businesses to operate more effectively in the growing digital economy,” explained David Fischer, Facebook’s Chief Revenue Officer, and Ajit Mohan, the firm’s VP and Managing Director for India, in a joint blog post. “For instance, by bringing together JioMart, Jio’s small business initiative, with the power of WhatsApp, we can enable people to connect with businesses, shop and ultimately purchase products in a seamless mobile experience.”

Another potential benefit for Facebook could be the strengthening of ties with Mukesh Ambani, Reliance Jio’s owner and India’s richest man. The country’s regulatory environment has not always been the most welcoming to western firms, so Ambani’s close connection to Prime Minister Narendra Modi’s government may prove advantageous. In fact, Ambani made specific mention of Modi’s Digital India campaign when announcing the new partnership.

Of course, Facebook’s investment will also deliver benefits for Reliance Jio. The Indian firm’s debt has risen sharply as it has pursued an aggressive expansion plan – Facebook’s cash injection will help bring this debt down to a more manageable level.

Uniti unveils $19,618 electric vehicle

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On October 14, Swedish automotive start-up Uniti unveiled its new electric vehicle (EV), the Uniti One. The futuristic three-seater will be priced at €17,800 ($19,618) and can achieve a range of up to 186 miles. Most strikingly, the car comprises one centrally positioned driving seat and two rear passenger seats.

Uniti believes this design will give the driver more space and provide additional legroom for passengers. The battery is located beneath the car’s floor to save even more space and, with just three passengers, the Uniti One can store up to 155 litres of cargo. The rear seats can also collapse to create a single-person carrier.

The Uniti One is just the latest example of a trend towards compact EV models for city dwellers

The standard model has a 12kWh battery unit with a capacity of 93 miles between charges, but an optional 24kWh battery pack can lengthen that range to 186 miles. The larger battery can be charged from 20 percent to 80 percent in 17 minutes with a 50kW combined charging system, while the 12kWh model can achieve this feat in just nine minutes, according to the company’s press release.

The ultra-compact vehicle weighs only 600kg. It has two driving modes, ‘city’ and ‘boost’, the latter of which will sharpen the responsiveness of the accelerator and add artificial weight to the steering wheel. The Uniti One can reach 62mph in 9.9 seconds and has a top speed of 75mph.

Customers in Europe can order a Uniti One now, with those in the UK benefitting from a £3,500 ($4,420) government subsidy. The first deliveries are planned in Sweden and the UK from mid-2020.

The Uniti One is just the latest example of a trend towards compact lightweight EV models for city dwellers. It has been designed for the daily commute and will target the second family car market. What distinguishes the Uniti One from other EV models is its unique one-plus-two seat design, though a second Uniti model is expected to come with a more conventional two-plus-two set-up.

Insiders raise concerns as Tesla’s China factory gears up to start production

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Tesla insiders have raised concerns as to whether the electric carmaker’s China factory – which aims to start production this month – will be able to meet its year-on-year production targets, Reuters reported on October 2. Sources familiar with the matter cited uncertainties around orders, labour and suppliers.

The new factory in Shanghai will allow Tesla to cut shipping costs, avoid US tariffs and attract more Chinese customers. It is set to play a critical role in Tesla’s plan to achieve an annualised production rate of 500,000 vehicles by the end of the year.

But to achieve this, the factory will need to have produced at least 1,000 Model 3s per week by the close of 2019. Tesla is notorious for falling short of its output targets, and sources familiar with the matter warn that the new factory’s aims may not be achievable.

The new factory in Shanghai will allow Tesla to cut shipping costs, avoid US tariffs and attract more Chinese customers

“We aim to start some production in October, but the actual production volume depends on many factors, including [the] car orders we received, performance of newly hired workers, [the] supply chain and so on,” a Tesla source told Reuters. “It’s unclear when we can reach the 1,000-2,000 units per week target.”

The $2bn factory is Tesla’s first overseas car manufacturing site. Its launch comes shortly after monthly sales of new vehicles in China started declining for the first time in more than two years. Sales of new energy vehicles contracted in August for the second month in a row, leading the China Association of Automobile Manufacturers to slash its sales forecast for 2019 to 1.5 million vehicles, down from 1.6 million.

Nevertheless, Tesla still has reason to believe in the long-term success of its China strategy. In the first seven months of 2019, Tesla sales in China rose 98 percent, according to research firm LMC Automotive. Further, Tesla stands to profit from China’s increasing openness to foreign companies in the electric vehicle space, with the US carmaker already having benefitted from the state’s decision to exempt it from a 10 percent car purchase tax.

Israel kick-starts plans to launch 5G by 2020

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On July 14, Israel launched a tender for the development of 5G wireless networks in the country. The winning telecoms operators will be announced by the end of the year, with 5G expected to launch in 2020 and continue through 2023.

As the fifth generation of mobile network technology, 5G is expected to be 10 times faster than its predecessor, 4G. Industry commentators believe it could bring about a new technological revolution by opening the door to self-driving cars, smart homes and remote surgeries. As part of the tender, Israel is auctioning frequencies ranging from 700MHz and 2,100MHz, which are also used for 4G, to 2,600MHz and 3,800MHz.

In light of its struggling telecoms sector, Israel is trying to reduce the financial impact that 5G integration could have on its main operators

Among those expected to bid are Israel’s main telecoms operators, Cellcom, Partner Communications and Pelephone. In recent years, these companies have struggled to stay profitable. For example, revenue in Israel’s mobile sector fell 5.6 percent in 2018, according to data from the country’s Ministry of Communications. This is partly a knock-on effect from new operators having entered the market in 2012, which caused a price war and led to the three main operators losing subscribers and revenue. Developing 5G would be sure to give these operators a competitive edge.

In light of its struggling telecoms sector, Israel is trying to reduce the financial impact that 5G integration could have on these companies. In Italy, the government’s tender came at a high cost to businesses: bidders in the Italian sale paid a total of $7.6bn for 5G frequencies, well above the prices paid by companies in the UK and Spain. By comparison, Israel is offering companies incentives of up to ILS 500m ($141.4m), while its Ministry of Communications will give grants to operators who implement at least 250 5G antennas.

Although Israel is home to a thriving tech start-up scene, it still has relatively slow internet speeds and has so far lagged behind other countries on 5G adoption. Spain, South Korea, Switzerland and the UK have already started to rollout 5G services. Through this tender, Israel is pushing to improve its internet infrastructure and ultimately secure the country’s digital future.

Indonesia set to build 7km sea bridge to connect Batam and Bintan

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Indonesia will begin construction of its longest sea bridge next year in a bid to connect two of its islands, the country’s cabinet secretariat announced on July 11. It’s hoped the bridge, which will link Batam and Bintan, will spur economic growth and encourage trade with neighbouring Singapore.

The Batam-Bintan Bridge will be approximately 7km in length and cost up to IDR 4trn ($284.7m) to construct. While proposals to build the bridge have long enjoyed support from the Indonesian Government, they have struggled to take off. This announcement marks a significant push to finally get the project underway, with the government estimating it will take three or four years to complete.

The Batam-Bintan Bridge is likely to increase tourism and attract Singaporean firms to the Indonesian islands

The islands of Batam and Bintan sit adjacent to Singapore. As such, the bridge is likely to increase tourism and attract Singaporean firms to the Indonesian islands. In recent years, the two neighbours have been forging stronger ties and working together through the private sector for mutual benefit. For example, a large-scale technology park was launched in Batam last year in the hope of serving as a ‘digital bridge’ between the two nations.

Furthermore, Batam and Bintan enjoy strategic locations along major shipping routes. Since Batam is Indonesia’s only free trade zone, the island is particularly well placed to benefit from the US-China trade war. In fact, Taiwanese electronics manufacturer Pegatron, one of Apple’s biggest suppliers, will open its first factory in Batam this year in a bid to shield itself from the impact of the trade conflict.

Indonesian President Joko Widodo has promised to invest $400bn into the country’s infrastructure over the coming years. By connecting Batam to Bintan, Widodo intends to transform the region into a shipping and manufacturing hub, as well as bring in $60bn in new investment. In order to achieve this goal, Indonesia has also earmarked Batam and Bintan as pilot locations for the development of an industrial zone for the processing halal goods.

Vertical farming start-up AeroFarms raises $100m in Series E funding round

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AeroFarms, a vertical farming start-up, has raised $100m in a Series E funding round. The investment will help the US-based company expand its indoor farms and explore the new types of produce it can grow in these facilities.

As reported by the Financial Times, the fundraising will bring AeroFarms’ valuation up to $500m. The round was led by the venture capital arm of Ingka Group, IKEA’s parent company and an existing investor in AeroFarms.

AeroFarms’ crops are grown under LED lights, on top of a layer of cloth suspended over a solution chamber. Here, aeroponic systems mist their roots with water, nutrients and oxygen. Thanks to this closed loop system, the process uses 95 percent less water than field farming, according to AeroFarms’ website.

AeroFarms can grow the exact same seed in half the time it would take a farmer using traditional methods, resulting in 390 times more productivity per square foot

The company also closely monitors the plants’ nutrition intake. This means that AeroFarms can grow the exact same seed in half the time it would take a farmer using traditional methods, resulting in 390 times more productivity per square foot. Earlier this year, AeroFarms closed a ‘farm-to-plane’ partnership with Singapore Airlines, agreeing to provide fresh produce for its in-flight meals.

According to Grand View Research, the global vertical farming market is expected to grow to $9.96bn by 2025. At present, the farms primarily produce salad greens, but companies are hopeful they can expand their portfolios. For example, Plenty, an indoor vertical farming company that received a $200m investment from SoftBank in 2017, is now experimenting with strawberries, cherry tomatoes and more exotic fruits.

Given their high yields and low water usage, vertical farms certainly seem to be a more sustainable option than traditional field farms. However, it is yet to be seen whether they are financially viable: the facilities are expensive to set up and run, with LED lights and ventilation ramping up energy costs. Nevertheless, demand for this new method of farming is likely to rise as climate change impacts harvest output and the challenge of feeding a growing population becomes more pressing.

New Exodus spyware app found to be targeting iPhone users

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Researchers have revealed that a spyware app previously found to target Android devices has also been pursuing iPhone users. On April 8, mobile security firm Lookout announced that an iOS version of the spyware known as Exodus had been made available to iPhone users through phishing sites that imitated Italian and Turkmen mobile carriers.

These sites would direct unsuspecting victims to download an app disguised to offer mobile carrier support. The app was then able to extract contacts, audio recordings, photos, locations and more from devices.

“Though different versions of the app vary in structure, malicious code was initialised at application launch without the user’s knowledge, and a number of timers were set up to gather and upload data periodically,” said Adam Bauer, a senior security intelligence engineer at Lookout.

An iOS version of the spyware known as Exodus had been made available to iPhone users through phishing sites that imitated Italian and Turkmen mobile carriers

The Android apps, which were uncovered in March, were subsequently removed from the Google Play Store, but not before being downloaded hundreds of times. According to an investigation by the non-profit Security Without Borders, the apps were capable of gaining root access once installed onto devices, allowing the spyware to extract data from messaging apps, read emails, take pictures and unveil Wi-Fi passwords.

One difference between the Android and iOS cases was that while hackers were able to put their Android apps straight into the Google Play Store, they needed to use the Apple Developer Enterprise Programme to bypass Apple’s tightly controlled App Store. Apple has now revoked the enterprise certificates, meaning the app can no longer be installed on iOS devices and existing installations will not run.

However, this is only the latest in a string of controversies surrounding Apple’s enterprise certificates. In February, an investigation by Reuters found that software pirates were distributing hacked versions of popular apps through the certificates. Before that, TechCrunch reported that Facebook was distributing an app to teenagers that would extract their data in exchange for $20 gift cards.

While Apple previously told Reuters that it would crack down on developers abusing its enterprise certificates, it is clear there is still some cleaning up to do.

Innolith’s “breakthrough” electric vehicle battery could increase range to 600 miles

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Innolith, an energy technology start-up based in Switzerland, claims to have made the world’s first rechargeable battery capable of powering an electric vehicle (EV) for more than 600 miles on a single charge.

On April 4, the firm announced that its high-density, lithium-ion batteries would be safer and cheaper than existing EV batteries, while also allowing drivers to travel further between charges. At a density of 1,000 watt-hours per kilogram (Wh/kg), Innolith’s battery would far exceed the capabilities of the Panasonic-made batteries used in the Tesla Model 3, which The Verge reports are an estimated 250Wh/kg. Currently, certain Tesla models can achieve a range of up to 330 miles per charge.

After an initial pilot production period in Germany, Innolith said it would look to sign partnerships with major battery and automotive companies. In three to five years, the company said its battery would be on the market.

At a density of 1,000 watt-hours per kilogram, Innolith’s battery would far exceed the capabilities of the Panasonic-made batteries used in the Tesla Model 3

“The EV revolution is currently stymied by the limitations of available batteries,” said Innolith CEO Sergey Buchin in a statement. “Consumers want an adequate range on a single charge in an affordable EV, and confidence that it is not going to catch fire. The Innolith Energy Battery is the breakthrough technology that potentially can meet all these needs.”

Although EVs are becoming increasingly popular among consumers – Bloomberg New Energy Finance predicts they will make up more than half of all new car sales by 2040 – range anxiety is still a major concern for those considering making the switch. A 2018 global survey by Deloitte found that driving range, alongside cost, a lack of EV charging infrastructure and charging time, continues to be one of the top four issues consumers have with EVs.

According to a report by Bloomberg, low-density batteries are also holding back the development of high-speed chargers at a time when more carmakers – including Volkswagen, Tesla and Ford – are seeking to enter the market.

Although Innolith’s claims about its groundbreaking battery will have to be verified and it won’t hit the market until 2022 at the earliest, a safer battery with a drastically improved driving range could prove a major turning point for the EV industry.

Jumio founder agrees $17.4m settlement amid SEC fraud claims

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The founder and former CEO of mobile payments start-up Jumio will pay $17.4m to the US Securities and Exchange Commission (SEC) to settle claims that he defrauded investors in order to boost his own wealth, the regulator said on April 3.

Daniel Mattes has been accused of exaggerating Jumio’s revenue by a factor of 10 between 2013 and 2014 in order to drive investor interest in the Silicon-Valley-based start-up. Mattes reportedly made $14.6m by privately selling shares between April 2014 and January 2015, funds which he hid from Jumio directors. He is also accused of falsely informing the company’s lawyers that the directors had approved the sale of the shares.

According to the SEC’s filing, Mattes told investors that he was not selling his own shares because there was “lots of great stuff coming up” and “he’d be stupid to sell at this point”. Jumio was forced to restate its financial results in 2015, wiping out most of its revenue. Shares in the company became worthless after it filed for bankruptcy in 2016.

Daniel Mattes has been accused of exaggerating Jumio’s revenue by a factor of 10 in order to drive investor interest in the Silicon-Valley-based start-up

“Mattes enriched himself at investors’ expense by making false claims about Jumio’s financial results,” said Erin Schneider, Associate Regional Director for the SEC’s San Francisco office. “Company executives must provide investors with accurate information irrespective of whether their companies are publicly or privately traded.”

Under the terms of the settlement, Mattes is permanently barred from serving on the board of a publicly traded company in the US. He will now pay over $16m in disgorgement fees, along with a $640,000 penalty, subject to court approval.

The SEC also settled in a separate case with former Jumio CFO Chad Starkey, after accusing him of “failing to exercise reasonable care concerning Jumio’s financial statements”. Starkey will pay approximately $420,000 in disgorgement fees. Starkey and Mattes neither admitted to nor denied the SEC’s claims.

In the past, the US regulator has principally concerned itself with offences relating to public companies. Over the past few months, however, it has taken a number of private firms to task for fraud. In February, for example, it charged two former executives of Lucent Polymers with defrauding customers, alleging that the entire business model was based on falsified claims.

In a statement to Plastic News, Kevin Tierney, attorney to former Lucent  Polymers CEO Kevin Kuhnash, said it would be “premature to make a comment [on the SEC’s allegations] at this time”, while the company’s former COO, Jason Jimerson, was unavailable for comment.

Through this change in approach, the SEC is sending a powerful message that no business – private or public – is immune from regulatory scrutiny.

Walmart and Google launch voice-activated grocery shopping feature

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The world’s largest retailer has teamed up with Google’s smart-home assistant, Google Home, to allow customers to order groceries using only their voices. Launched on April 2, Walmart Voice Order will add items directly to customers’ online shopping carts following the instruction: “Hey Google, talk to Walmart.”

In a statement announcing the new feature, Walmart’s Senior Vice President of Digital Operations, Online Grocery and Last Mile Delivery, Tom Ward, said that by using information from previous purchases, each customer’s preferred items would be learned over time.

“If a customer says ‘add milk to my cart’, we’ll make sure to add the specific milk the customer buys regularly,” Ward said. “Instead of saying ‘one gallon of one percent Great Value organic milk’, they’ll simply say one word: ‘Milk.’” However, USA Today has reported that the feature will only be available to customers near a Walmart that offers store pick-up or delivery services.

Walmart Voice Order will add items directly to customers’ online shopping carts following the instruction: “Hey Google, talk to Walmart.”

Walmart is currently working to build on its delivery capabilities: in January, the retailer added four companies to its delivery team to help expand its online grocery shopping network. At the time, Walmart Grocery delivery was only available in around 800 of the company’s 5,000-plus stores. Walmart aims to add delivery offerings to a further 800 stores in 2019.

Online grocery shopping has been slow to take off in the US. A survey by consulting firm Bain & Company found that just three percent of grocery spending in the US currently takes place online, while just four percent of shoppers said they had used voice assistants for grocery planning. Over the next decade, however, the report expects the US to experience a major increase in online grocery shopping, with e-commerce penetration expected to at least triple.

The partnership between Google and Walmart dates back to August 2017, when the pair first announced they would work on voice-activated grocery shopping. But earlier this year, Bloomberg reported that the company had quietly withdrawn from Google’s shopping and delivery services.

Amazon is currently miles ahead of Google in the voice-ordering e-commerce space. According to Consumer Intelligence Research Partners, Amazon Echo devices accounted for 70 percent of all smart speakers installed in US homes as of December 2018. Google Home, meanwhile, accounted for less than a quarter of the market.

If Google hopes to claw back more of the growing smart speaker market, a partnership with Walmart, which remains the world’s largest retailer in spite of Amazon’s advances, will be an important step forward.

AI developers win Turing Award for neural network progress

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A trio of computer scientists nicknamed the ‘Godfathers of Deep Learning’ have won the prestigious Turing Award for their pioneering work in the development of neural networks.

Geoffrey Hinton, an emeritus professor at the University of Toronto and senior researcher at Google Brain, Yann LeCun, a professor at New York University and chief AI scientist at Facebook, and Yoshua Bengio, a professor at the University of Montreal and co-founder of Element AI, will share the $1m prize, which is presented annually by the Association for Computer Machinery (ACM).

The trio worked both independently and collectively on the development of neural networks, which allow machines to better understand the world around them. Neural networks are part of an area of computer science known as deep learning – the process of educating machines through the construction of multi-layered networks that allow them to teach themselves to perform certain tasks.

By using a neural network to analyse thousands of old phone calls, for example, a machine can learn to recognise spoken words. Without these networks, a computer scientist would have to code individual rules into the system – a far more time-consuming approach.

Without neural networks, a computer scientist would have to code individual rules into a system – a far more time-consuming approach

Hinton first proposed applying a machine-learning approach to AI in the early 1980s. Alongside LeCun and Bengio, Hinton built upon this conceptual foundation over the following 30 years with the aid of powerful graphics processing units computers and an open access to huge datasets. The model that they pioneered is used today in the development of facial-recognition software, self-driving cars and warehouse robots.

“The growth of and interest in AI is due, in no small part, to the recent advances in deep learning for which Bengio, Hinton and LeCun laid the foundation,” said Cherri Pancake, President of the ACM, in a statement. “Anyone who has a smartphone in their pocket can tangibly experience advances in natural language processing and computer vision that were not possible just 10 years ago.”

Jeff Dean, Google Senior Fellow and Senior Vice President for Google AI, added: “Deep neural networks are responsible for some of the greatest advances in modern computer science, helping make substantial progress on long-standing problems in computer vision, speech recognition and natural language understanding. At the heart of this progress are fundamental techniques developed starting more than 30 years ago by this year’s Turing Award winners.”

The Turing Award – sometimes referred to as the ‘Nobel Prize of computing’ – is named after Alan Turing, the British mathematician who formalised the concepts of algorithm and computation. He also invented the Turing machine, which was used to crack the German Enigma code during the Second World War. Turing is widely considered to be the father of theoretical computer science and AI.

“One person who strongly believed the root of intelligence was learning was Turing,” Hinton told MIT Technology Review in an interview. In the 1950s, Turing developed a test for discerning whether a machine could be classed as being ‘intelligent’ or not, and suggested that, like a human mind, a computer could be subjected to a course of education to learn about the world around it. This paved the way for the development of neural networks and deep learning.

As such, the fact that this year’s award has been given to pioneers who furthered the concept of deep learning and built upon Turing’s original concept is a particularly poignant way to honour his legacy.

Garuda Indonesia attempts to cancel multibillion-dollar Boeing order

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On March 22, Indonesian national airline Garuda Indonesia confirmed that it had sent a letter to aircraft manufacturer Boeing requesting to cancel its order of 49 737 Max 8 jets, a deal thought to be worth in the region of $4.9bn. The airline said that its passengers had lost confidence in the model – which has been grounded in dozens of countries – after two high-profile crashes in the past five months.

In total, 346 people have died following accidents involving fellow Indonesian airline Lion Air and Ethiopia’s flagship carrier, Ethiopian Airlines. While this is the first recorded order cancellation for the aircraft, several other airlines have reportedly threatened to withdraw their purchases – putting Boeing’s reservation list, worth over $600bn, in jeopardy.

In total, 346 people have died following accidents involving Indonesian airline Lion Air and Ethiopia’s flagship carrier, Ethiopian Airlines

Reports indicate that Garuda may seek to exchange its 737 Max 8 order for another type of Boeing plane, likely a wide-body craft suited to longer international routes. One of the 49 planes has already been delivered to the Indonesian airline – it is as yet unclear whether Garuda plans to utilise the jet.

“[Passengers] always ask when they make a reservation if it is a [Boeing 737 Max 8 aircraft] or not,” Garuda spokesperson Ikhsan Rosan told the Financial Times. “If it is, we need to book [them] on another flight. Because of the low confidence in the Max by our passengers, we need to inform Boeing we have to cancel our order.”

A Boeing spokesperson, meanwhile, said they were “unable to comment on customer discussions”.

During both of the recent accidents, the jets crashed shortly after take-off. While investigations are ongoing and, at present, no conclusive evidence has linked the disasters, the data recorder on the Ethiopian Airlines flight has suggested “clear similarities” between the two.

At the heart of the investigation is Boeing’s new ‘anti-stall’ feature, the manoeuvring characteristics augmentation system, which is widely believed to have played a role in the crashes. In a bid to address concerns regarding the plane’s safety, Boeing has assured airlines that a software update is forthcoming.

It appears, however, that the changes may have come too late. The company’s shares have dropped by more than 11 percent in the wake of the accident in Ethiopia, and many have raised questions over the reliability of the latest version of Boeing’s best-selling aircraft. Airbus’ A320 family has consistently outsold the 737 since its introduction and recent incidents look to have given the firm a further leg-up on its long-standing rival.