Tech Update: The Million Dollar Tweet
Welcome to The Macro Mail’s Tech Newsletter. Since our last tech mail, a lot has happened… today’s newsletter discusses the recent hack on Microsoft software, the boom in NFTs and the much-awaited Roblox IPO.
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CYBERSECURITY: Microsoft Hack
Microsoft has revealed that their software had been hacked by a Chinese espionage group. An estimated 250,000 organizations globally fell victim to the cyberattack, which exploited weaknesses in the Microsoft Exchange Server network to gain administrator privileges in order to hijack private information.
On March 2nd, Microsoft released an emergency update to fix the four security holes used by the hackers. These weaknesses were zero-day bugs, meaning vulnerabilities that Microsoft’s security team had not been previously aware of
At least 30,000 organizations across the United States have been affected, especially the small businesses and local governments that lacked the funds to prepare for an advanced cyber-attack. Larger targets included the European Banking Authority and Norwegian Parliament. In the United Kingdom, the National Cyber Security Centre estimated that of the 7,000 victims affected, only half had been secured as of March 13th
Responsibility for the attack has been levied at Hafnium, an Chinese state-sponsored hacking group that Microsoft described as a “highly skilled and sophisticated actor”. Once details of the vulnerabilities had been revealed, a second wave of attacks was launched by copy-cat hackers. The Chinese government has denied responsibility
Microsoft is now investigating whether members of Microsoft Active Protection Program (MAPP) - a network of Microsoft antivirus and cybersecurity customers - had leaked details of the weaknesses to the hackers. MAPP incorporates several Chinese companies, including tech giants Baidu and Alibaba
These “significant” attacks “could have far-reaching impacts” according to White House press secretary Jen Psaki. After the Russian hack on SolarWinds that compromised US Government accounts last December, the White House announced a series of clandestine moves against Russia, a move described as "just an excuse to do nothing but look tough," by one cyber-security veteran. President Biden must now decide whether, and how, to retaliate against China. The magnitude of the problem will only be exacerbated if Microsoft does discover evidence of collusion between its security partners and the hackers.
CRYPTOCURRENCY: NFTs
Recent weeks have seen a boom in the market for non-fungible tokens (NFTs). Artwork, sports highlights and a $2.5m tweet have all been put up for sale using the new blockchain-powered technology.
NFTs give the buyer ownership, but not rights, over a piece of digital content. This week, interest has surged around Twitter co-founder Jack Dorsey’s first tweet, which has been listed for sale on Valuables, an auction website catering to NFTs
The post for sale, one of the first on Twitter from March 2006, reads “Just setting up my twttr”. Dorsey will retain control over the tweet, in particular, the right to delete it. The NFT has been compared to an autograph, with Valuables explaining that "owning any digital content can... hold sentimental value and create a relationship between collector and creator." The eventual buyer will likely hope that these digital certificates will become future online collectibles
The current bid stands at $2.5m, offered by tech CEO Sina Estavi. The auction will end only if and when Dorsey decides to cash in the highest offer, after which he will be paid in Ethereum, a cryptocurrency
The ability to resell NFTs on Valuables has yet to be implemented
Dorsey’s recent tech ventures haven’t been limited to NFTs: his tech conglomerate Square recently took a majority stake in Jay-Z’s music streaming service Tidal, and converted $50m into bitcoin
Last week, auction house Christie’s sold the NFT to a piece of digital art for $69m, after bidding from over 350 prospective buyers. Musician Grimes recently raised $6m from her own digital artworks. The National Basketball Association sold an NFT to a 10-second clip of player LeBron James for $208,000. Clearly, NFTs are becoming more prevalent, with speculators willing to pay out for digital certificates with no tangible value, either for sentimental reasons or in the hope that there will one day be a resale market in which such early collectibles will appreciate.
IPOs: Roblox Goes Public
The IPO of video game company Roblox Corporation is a success story from a company operating in an often-overlooked sector of the tech market. After a direct listing on the NYSE on Wednesday 10th March, shares leapt upwards driven by the hope that Roblox’s unique approach to gaming would give them an edge in the highly competitive industry.
Roblox’s main product is their eponymous online game, which can be played for free on phone, computer or Xbox. Users are able to make and sell their own minigames on the Roblox platform. Revenue is generated by the sale of Robux, digital tokens that can be used to buy in-game customizations. Game developers, often passionate individuals with no corporate backing, receive 30% of the sales generated by their contributions. There are 7 million active creators, who are expected to have made around $250m in 2020
The game first became available in 2006, but has seen huge boost in popularity since the start of the COVID-19 lockdowns. Roblox reported 32.6 million daily users by the end of 2020, up 85% from the previous year. Revenue rose 82% to $924m for 2020, though it still lost $253m, compared to just $71m the year before
Despite the popularity of the game, concerns have been raised over the inconsistent quality of amateur-developed minigames, and hostile behavior in the online live chat
On the first day of trading, Roblox shares rose 54%. The rally continued into Thursday, attaining a market cap of over $40bn. This was the latest company to go public via a direct listing; unlike an IPO, no new shares are created, but current investors are allowed to sell existing shares over a public exchange, in this case the NYSE
In 2018, music streaming service Spotify became the first large tech company to adopt a direct listing, at that time an obscure and relatively untested method of going public. Spotify is now worth over $50bn. This was followed by software company Slack in 2019. Last year, data analytics company Palantir saw their stock rise over 200% in two months after their direct public listing
Despite the optimism from investors, Roblox is not as confident in its ability to maintain this rapid growth. Post-pandemic, they expect revenue growth-rates to decline as they struggle to expand their user base. In their SEC filing, they highlighted the “significant potential to increase monetization.” Roblox will continue to invest in developing their platform, planning to expand into the education and business sectors. A joint venture with Songhua, a Tencent affiliate, will target expansion into the Chinese market. Roblox’s popularity is uncontested, but only time will tell whether they can convert their large user-base into a consistent profit.
Disclaimer: All material presented in this newsletter is not to be regarded as investment advice, but for general informational purposes only. You are solely responsible for making your own investment decisions. Owners of this newsletter, its representatives, its principals, its moderators, and its members, are NOT registered as securities broker-dealers or investment advisors either with the U.S. Securities and Exchange Commission or with any securities regulatory authority. By reading and using this newsletter or using our content on the web/server, you are indicating your consent and agreement to our disclaimer.
NFTs : a ploy to validate vaporware again!