Tech Update: IPOs in London and Lucid
Welcome to The Macro Mail’s Tech Newsletter. This week’s newsletter dives into Facebook’s troubles in Australia, IPOs and SPACs across the globe, and IBM’s bet on cloud storage.
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SOCIAL MEDIA: Facebook in Australia
This week saw the conclusion to the stand-off between social media company Facebook and the government of Australia over a new law that would force tech companies to pay for news published on their platforms. After Facebook pulled all news articles from its site in protest to the law, the Australian government allowed the concession for companies like Facebook to negotiate with publishers.
The law - the first of its type in the world - was passed on Thursday 25th February 2021. It will oblige websites including Facebook and Google to pay Australian publishers when their work is published on their online platforms
Big tech companies were originally hostile to the law, with Google threatening to cut off online services to the nation. Facebook prevented all Australian news organizations from publishing or interacting on their social media platform; controversially this extended to blocking viewers from seeing accounts linked to charities and public health services
After lawmakers agreed to pass the law without the original strict bargaining rules that would govern the amount that tech companies would have to pay to publish news, Facebook reversed the ban. The law was passed easily through Parliament, uniting the minority government Liberal party with the opposition Labor party
Despite the conciliation, Facebook remains ambivalent towards the new law. Nick Clegg, Facebook’s vice-president of Global Affairs and a former Deputy Prime Minister of The United Kingdom, denounced the new law, writing “we neither take nor ask for the content for which we were being asked to pay a potentially exorbitant price”
Big tech may have found a compromise in Australia, but the conflict will have ramifications for the industry across the world in the coming years. Lawmakers in Canada and the United Kingdom are supposedly considering introducing similar laws, and Facebook is currently facing anti-trust probes in the US. With over half of American adults getting their news at least “sometimes” from Facebook, it seems increasingly likely that the social media giant will face increased regulation in their home market.
GOING PUBLIC: IPOs in London and Lucid
A range of tech IPOs have been making waves in the industry this week. Despite declines in the broader market, investors remain enthusiastic about bringing new companies to the market, in the hope of anticipating the huge growth that has been achieved by ambitious tech companies over the past few years.
Lucid Motors, an electric car company which has yet to produced a functioning car for public sale, has officially announced its plans to go public. It will merge with a special purpose acquisition company, Churchill Capital, valuing the carmaker at $12bn
Lucid plans to release its first car, the Lucid Air, later in 2021. It will target the luxury market with prices starting at $69,900, and currently claims a 500 mile range on a single electric charge. Main competitor Tesla currently achieves 260 miles on its standard Model 3 electric car
In another SPAC deal, the flying taxi startup Joby Aviation has been valued at $6.6bn in a merger with a Reinvent Technology Partners. Joby plans to use the $1.6bn raised by this deal to develop four-seating flying taxis which can be used in metropolitan areas
This enthusiasm isn’t restricted to America. Danish consumer review website Trustpilot plans to IPO on the London Stock Exchange at a £1bn ($1.4bn) valuation. This comes one week after the £1.5bn IPO of online card and gift seller Moonpig
Already investors are speculating on the possible multi-billion pound IPO of online food delivery service Deliveroo. March 8th has been identified as a possible date on which Deliveroo might announce what would be one of the UK’s largest tech IPOs
The excitement over tech IPOs has shown no signs of stopping, with extremely optimistic valuations for companies. Only time and earnings growth will tell whether this tech boom is sustainable.
CLOUD COMPUTING: IBM Hybrid Cloud
After a “disappointing” 6% drop in revenue for the most recent quarter, International Business Machines Corp has responded with plans to restructure its operations, focusing towards the growing market for data storage.
IBM Cloud Satellite will provide internet storage to corporations that need large scales and highly security, targeting industries such as healthcare and finance. The cloud’s platform will be provided by Lumen Technologies, which previously worked with IBM under the name CenturyLink
Despite lagging behind competitors Microsoft and Amazon, IBM has identified that only 20% of enterprise data is currently stored on a cloud. According to the head of Hybrid Cloud, IBM plans to capitalize on this that by specializing towards companies from whom developing cloud computer has been “too complex, too expensive, and a huge amount of risk”
Meanwhile, IBM is considering selling off its Watson Health division. Launched in 2011, Watson Health used IBM’s proprietary Artificial Intelligence to advance the healthcare sector by analyzing both medical and logistical data
Despite $1bn in revenue, Watson Health has remained unprofitable. With no obvious buyers, IBM is said to be consider selling the division to either a private equity company or a SPAC
Since beginning as CEO in April 2020, Arvind Krishna has been focused on restructuring the company towards new technology. Having served as vice president of the cloud and cognitive software division, Krishna will be confident in his ability to turn IBM Cloud Satellite into the business’s core offering.
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