Weekly Tech Update: Nikola, Nikola, Nikola
Welcome to The Macro Mail’s Tech Newsletter. Every week we highlight stories from three technology subsectors and provide insights into their implications. Today’s focus will be on Automotive, Software, and Cybersecurity.
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AUTOMOTIVE: Nikola, Nikola, Nikola
Nikola Motor Company via YouTube
What happened:
Shares of Nikola plunged by as much as 14% on Wednesday when JP Morgan expressed skepticism on Nikola’s partnership with General Motors to produce the ever-so-hyped Badger electric pickup truck. The deal is expected to be renegotiated, and shares are currently down more than 20% premarket. How did we get here?
Early September: GM finalized a $2 billion deal with Nikola giving GM an 11% stake in the EV company in exchange for batteries, fuel cell technology, and manufacturing responsibilities for the Badger truck.
Mid-September: Hindenburg Research released a damning report casting doubt on Nikola’s design competency and misleading advertising.
Late September: Trevor Milton stepped down as CEO after the Hindenburg report was published and allegations of sexual assault surfaced. He was replaced by Mark Russell.
Early November: The SEC and Department of Justice subpoenaed Milton and other Nikola executives to investigate claims laid out in the Hindenburg report.
Last Week: Skepticism over the Badger truck’s future and Nikola’s partnership with GM grew.
What it means:
When asked about the GM partnership for manufacturing the Badger truck, CEO Mark Russell said on CNBC’s Mad Money:
“We've got to have a partner. [The Badger truck] isn't in our core plan. If you look at our core plan, that's about heavy truck and hydrogen… which is why we said from the beginning it takes a partner. So, we have a partner, it's in play. If we don't have a partner, it's not."
GM and Nikola have until December 3 to renegotiate the original deal. Considering the doubt surrounding the Badger project, GM will likely push for more equity in the company whereas Nikola will likely push for a stronger focus on its Class 8 truck.
SOFTWARE: SalesForce vs. Microsoft
What happened:
While the tech sector has seen robust growth since the pandemic began, inflated valuations have led to a quiet year for major software acquisitions. However, reports on Tuesday revealed that SalesForce is in advanced discussions to acquire Slack (which was up 38% on the news). Work from home mandates and government lockdowns have accelerated growth for cloud-based applications, video conferencing, and collaboration/sales tools, launching companies like Microsoft, Zoom, and Twilio to all-time highs.
Slack, which only went public in April of last year, has been no different. Best known for its enterprise communication suite, the company has seen substantial growth from the remote work boom. Slack does not report active user numbers but has disclosed that over 130,000 organizations now deploy the software, up 30% from last year. However, unlike platforms like Zoom which also have broad B2C appeal, Slack’s reach has been limited to B2B. Leveraging SalesForce’s extensive B2B reach will further accelerate Slack’s growth, while giving SalesForce a key piece to the holistic enterprise suite puzzle.
What it means:
SalesForce and Microsoft have an established history of competing for enterprise software dominance:
Round 1: Recall that Microsoft and SalesForce both entered a bidding war for LinkedIn in 2016. Microsoft ended up winning with a hefty $27 billion price tag, but the result was acquiring an established enterprise sales platform to compete against SalesForce’s advanced customer relationship management (CRM) tools.
Round 2: The rivalry continued last year when SalesForce acquired Tableau, whose data visualization suite directly competes with Microsoft’s homegrown Business Intelligence (BI) tools.
And now Round 3: SalesForce is on the verge of adding an alternative to Microsoft Teams with Slack. While Slack has gained momentum in the pandemic, its growth has paled in comparison to Microsoft Teams, which now boasts over 115 million users (up 88% since April). By bundling Teams with an Office 365 subscription, Microsoft keeps the upper hand with seamless integration with dominant productivity software.
CYBERSECURITY: Parler Tricks
What happened:
One of the newest players in social media, Parler, is facing scrutiny regarding its security practices after an unsubstantiated viral tweet alleged that accounts and DMs of “well-known figures” were compromised. The tweet originated from conceptual artist Kevin Abosch, and although it was deleted a few hours later, the data breach rumors persisted.
While there is no evidence of a hack targeting Parler itself, an investigation revealed two things:
A WordPress database hosting Parler’s blog was hacked in July.
A separate security flaw may have leaked user data through one of Parler’s advertising partners.
As far as users are concerned, the former is considered a non-issue since Parler’s blog did not contain any user data and WordPress has since patched the vulnerability. However, the latter remains under investigation with findings expected to be released within the next 2 weeks.
What it means:
Government entities are increasingly questioning Big Tech, with data giants Google, Facebook, and Twitter facing the greatest scrutiny. Aside from Department of Justice-led antitrust lawsuits, tech companies are facing a public perception challenge. In right-leaning circles, Twitter has been accused of pushing a liberal agenda, especially since it began fact-checking and issuing warnings over misleading tweets.
As a new player in the space, Parler remains free of the “Big Tech” architype. With its lax terms and conditions (read: no warnings over content validity), it has been welcomed by conservative users as a platform that enables free speech. Like any new platform, early adoption is critical to Parler’s success. Its rising popularity has proven that a niche exists for users who want unmoderated content, but it must shore up its cybersecurity reputation before it can take significant share from existing social media giants.
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