Wednesday Jan.22, 2020

🖐 Amazon wants you to pay with your hands

_OMW to make an Amazon purchase_
_OMW to make an Amazon purchase_

Hey Snackers,

Who's DJ'ing the Sports Illustrated Super Bowl party alongside the Black Eyed Peas and Marshmello? Goldman Sachs CEO David Solomon (aka DJ D-Sol). A banker who drops bangers. Never limit yourself.

The World Economic Forum kicked off yesterday in Davos, Switzerland, and global markets dipped on reports a deadly virus outbreak in China entered the US.

Pay

Amazon wants to turn your palm into a wallet — the next frontier of frictionless payments

Hands-on is the new hands-off... Amazon is creating check-out terminals that put your payments (literally) at the palm of your hand, according to WSJ sources. Gives "palm reading" a whole new meaning. Here's how Amazon's handy payments go down:

  • Palm: Amazon patented a "non-contact biometric identification system" that scans your hand.
  • The idea: Link your credit card to your hand print so your hangry self can breeze past the Sunday morning bagel line.
  • The real customer: Amazon's pitching these terminals to physical fast food spots and coffee shops that you visit repeatedly.
  • Credit Collab: Amazon's already working with Visa (and is in talks with Mastercard). It's also in discussions with card issuers like JPMorgan Chase, who's wondering whether to collab with a potential competitor, or risk being cut out.

It's getting out of hand... How far is too far when it comes to convenience? This hand-scanning thing would just shave down the time it takes you to pull out your phone or plastic (honestly, cool if you're shopping while on a jog). Your palm-info would still have to be transmitted and processed. Is saving a few seconds worth giving up more personal info to Big Tech?

If money talks, spending screams... More info on your shopping habits could mean better targeted ads — and tech can charge advertisers more $$$ for that. It also means actionable info on what you actually splurge on, which Amazon could use to stock its ecommerce site. That's why Big Tech is pushing deeper into customers' wallets:

  • Amazon: Launched Amazon Pay and checkout-less Amazon Go stores
  • Apple: Shipped Apple Pay for mobile and its own Apple titanium credit card
  • Google: Has Google Pay and will begin offering checking accounts this year
Drive

Uber is letting some drivers set their own fares (to avoid paying them as employees)

I'm an app, duh... Uber, to the California government. Uber is now letting some CA drivers set their own fares as part of a test in response to CA's new gig-economy law (aka, AB5). The law forces companies like Uber, Lyft, or Postmates to treat workers as employees (give them sick days, benefits, etc). But Uber wants to prove its drivers are independent contractors. So it's made these changes:

  • Last month, Uber let CA drivers see where riders are going before deciding whether to accept or reject a ride (wasn't a thing before).
  • This month, Uber put a 25% cap on commissions drivers pay to Uber.
  • Now, Uber is letting drivers who pick-up/drop-off from airports in Santa Barbara, Palm Springs, and Sacramento price their rides up to 5X basic Uber fares (or charge as little as 1/10th).

It's a tech company, I swear... Uber's trying to prove it's just an app with independent drivers (nothing to see here), in an effort to dodge the 20%-30% cost increase that would come with turning their contractors into employees. The gig-law could also make rides pricier for riders, which could reduce demand for rides overall.

Uber's current pricing method is all about efficiency... 11PM Saturday rides are pricier than 10AM Sunday rides because surge pricing factors in demand. This new bidding-style pricing might mean higher fares for drivers, but could also mean lower fares if drivers compete for the cheapest price. This auction-like system is less efficient, but Uber is hoping it'll help prove that drivers have autonomy, and should therefore be treated not like employees.

What else we’re Snackin’

  • Unwined: President Trump reaches a truce with France (for now) - he won't tariff French wine/cheese if France doesn't tax US tech companies
  • Subscript-ify: Mercedes-Benz launches a car-subscription pilot in Nashville and Philly starting at $1,095 a month (swap whenever you get bored)
  • Un-Eazey: Weed delivery leader Eaze (aka, "the Uber of pot") is almost out of cash and struggling to pay the bills — it may start selling directly through its own depots
  • Take Out: Uber sells its Uber Eats India biz to Indian food delivery rival Zomato for $350M
  • GIF-y: Venmo will roll out animated GIFs for your transaction notes (add that dancing pizza when you pay back your half of the pie)

Wednesday

Disclosure: Authors of this Snacks own shares of Uber and Amazon

ID: 1065228

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Business

The FTC vs. Big Handbag

The Federal Trade Commission has sued to block big tech, big grocery, big vacuum, and now, big… “affordable luxury handbag.”

Yesterday, the FTC sued to block Tapestry Inc’s $8.5B acquisition of Capri holdings. The agency is worried that a merger between Tapestry, which owns the Coach and Kate Spade brands, and Capri, which owns Michael Kors, would eliminate competition in the market.

The crux of the FTC's argument lies in the scope of the "accessible luxury" handbag market, where Tapestry competes with Michael Kors, with the FTC saying the following:

Where Tapestry and Capri most vigorously compete against one another – mainly between Tapestry’s Coach and Kate Spade brands against Capri’s Michael Kors brand – is in the “accessible luxury” handbag market. Today, Coach, Kate Spade and Michael Kors continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or lower handbag prices.

The deal would eliminate fierce head-to-head competition on many important attributes including on price, discounting, and design. Tens of millions of Americans that purchase Coach, Kade Spade, and Michael Kors products could face higher prices

While Capri and Tapestry are two of the largest players in this market, winning an antitrust case won't be so straightforward, as consumers have other options at similar price points, including Marc Jacobs (owned by competitor LVMH), Tory Burch, Cuyana, and Mansur.

The crux of the FTC's argument lies in the scope of the "accessible luxury" handbag market, where Tapestry competes with Michael Kors, with the FTC saying the following:

Where Tapestry and Capri most vigorously compete against one another – mainly between Tapestry’s Coach and Kate Spade brands against Capri’s Michael Kors brand – is in the “accessible luxury” handbag market. Today, Coach, Kate Spade and Michael Kors continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or lower handbag prices.

The deal would eliminate fierce head-to-head competition on many important attributes including on price, discounting, and design. Tens of millions of Americans that purchase Coach, Kade Spade, and Michael Kors products could face higher prices

While Capri and Tapestry are two of the largest players in this market, winning an antitrust case won't be so straightforward, as consumers have other options at similar price points, including Marc Jacobs (owned by competitor LVMH), Tory Burch, Cuyana, and Mansur.

Tesla had a good ride, but the stock’s price destruction is historic

Few people have created as much value as Elon Musk. The iconoclastic entrepreneur took Tesla from a market capitalization of roughly $2 billion at the time of its IPO in 2010 to $1.2 trillion in early 2023. That’s a return of about 55,000%. Musk made a lot of people a lot of money.

On the other hand, Tesla shares are down nearly 60% since their all-time peak. The company has ceded ground in EVs, prompting a series of profit crushing price cuts to preserve market share. The cumulative loss in market value over that period is pushing $800 billion. Few corporate executives have presided over such a degree of value destruction.

And it could get worse, as people are bracing for an ugly update when Tesla reports after the close Tuesday.

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Smaller AI models are in

Tech companies that have long touted the enormity of their AI models are now saying size doesn’t always matter.

Microsoft is the latest tech company to introduce smaller AI models, as part of its Phi-3 tech family. Last week Meta released two smaller models of its AI Llama 3 and earlier this year Alphabet did the same. All are open sourcing these models to encourage wider adoption.

Microsoft says its smallest model, which can fit on a smartphone and wouldn’t need to be connected to the internet to work, is nearly as good as OpenAI’s GPT-3.5. A Microsoft exec suggested this less expensive model could be a good fit for online advertisers, if not doctors.

Microsoft says its smallest model, which can fit on a smartphone and wouldn’t need to be connected to the internet to work, is nearly as good as OpenAI’s GPT-3.5. A Microsoft exec suggested this less expensive model could be a good fit for online advertisers, if not doctors.

$127

The average bitcoin-transaction fee hit an all-time high of $127 on Friday.

The temporary spike came as the halving cut miner rewards and traders forked over huge sums of BTC (skewing the average) to be included in the first post-halving block.

Adding fuel to the fee fire was the launch of Runes, a new protocol that lets developers create memecoins on top of the bitcoin blockchain. The debut was so popular that fees popped as traders fought for limited block space.

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All of the sudden, the stock market seems to be running out of steam.

There’s no big mystery here. War in the Mideast has pushed up oil prices, which will help keep inflation elevated. And annoyingly high price increases in March have already pushed the June Fed rate cuts the market was banking on farther into the uncertain future.

All that’s added up to higher interest rates and lower stock prices.

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AI needs so much electricity that tech companies are getting into the energy business

To accommodate tech companies’ pivots to artificial intelligence, tech companies are increasingly investing in ways to power AI’s immense electricity needs.

Most recently, OpenAI CEO Sam Altman invested in Exowatt, a company using solar power to feed data centers, according to the Wall Street Journal.

That’s on the heals of OpenAI partner, Microsoft, working on getting approval for nuclear energy to help power its AI operations. Last year Amazon, which is a major investor in AI company Anthropic, said it invested in more than 100 renewable energy projects, making it the “world’s largest corporate purchaser of renewable energy for the fourth year in a row.”

This can all feel like a bit of spin, as these tech companies move the narrative toward their use of green energy rather than questioning whether they truly need to be consuming so much energy in the first place.

That’s on the heals of OpenAI partner, Microsoft, working on getting approval for nuclear energy to help power its AI operations. Last year Amazon, which is a major investor in AI company Anthropic, said it invested in more than 100 renewable energy projects, making it the “world’s largest corporate purchaser of renewable energy for the fourth year in a row.”

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What’s on your mind?

Meta is rolling out a new chatbot, Meta AI, to its 3 largest social media properties: Facebook, Instagram and WhatsApp.

On Facebook the usual search bar for some users has been replaced with “Ask Meta AI anything” — a prompt that could give millions of people their first ever interaction with an AI chatbot.

Meta has been increasingly focused on AI ever since ChatGPT exploded into the mainstream in late 2022. In earnings calls, the focus has never been clearer: Facebook execs made ~10x more references to artificial intelligence than the Metaverse, the company’s previous primary focus which prompted its rebrand in October 2021.

Metaverse mentions

Meta has been increasingly focused on AI ever since ChatGPT exploded into the mainstream in late 2022. In earnings calls, the focus has never been clearer: Facebook execs made ~10x more references to artificial intelligence than the Metaverse, the company’s previous primary focus which prompted its rebrand in October 2021.

Metaverse mentions