DDI Intel – Tech | Week of August 28 | With Alpha Trades
An avalanche of IPOs, China doing their own thing, Microsoft-government disaster response, and a TikTok ballad of the ages.
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In The News
Like that Twister movie, but with robots: As hurricane season rages on and storms wreak havoc in the American Midwest, The Department of Energy teams up with Microsoft to develop disaster-response AI.
They dubbed it the “First Five Consortium,” alluding to the importance of the first five minutes of large-scale disaster response.
White House is all-in with AI and quantum computing: The US government will invest $1 billion in AI and quantum computing R&D. Beyond improving disaster response efforts, the incentive for investing in bleeding-edge tech is unsurprising; stay ahead of China.
IPO frenzy: That segues nicely into the fact that a heap of tech startups filed for an IPO in the past couple of weeks. One company that perked our interest was Desktop Metal, a 3D printing company poised for a $2.5 billion valuation after its SPAC-lead IPO. Investors include Ford, BMV, and Google.
Dance-Off for the TikTok Bid
We’re anticipating some exceptional TikTok memes to come out of this.
Refresher: Last week, TikTok sued the US government, arguing the executive order robbed the company of due process.
Trump has extended Bytedance’s time window, but it’s still a scramble with under 90 days to make a deal.
The competition: In one corner is Oracle, easily the most boring company making a bid on TikTok. Most of the app’s over 100 million US users, mainly composed of the Gen Z crowd, are more interested in dance-offs than enterprise software and cloud computing solutions. However, Oracle may have a couple of heavyweights ready to offer support, namely Sequoia Capital, General Atlantic, and the Republican Party.
In the other corner, you have Microsoft, teaming up with Walmart. Microsoft has a history of excellent dance videos, so this may be a boon.
Microsoft is already a Big Data powerhouse up to its neck in gaming and workplace software data. Adding TikTok to its repertoire would give the company access to a massive social media behavioral data resource. Not to mention the company could incorporate TikTok into its $7 billion advertising business.
Microsoft already owns the business-centered social media company LinkedIn, as well as the company behind Minecraft, Mojang. Oh, they also own Xbox and Github, that’s likely a big deal. These past acquisitions allowed those companies to do their own thing mostly, and Microsoft has also discussed allowing TikTok to be a standalone operation.
The other two corners of the ring have Twitter and Netflix, but the likelihood of these two securing a deal is slim. The competition has greater firepower and connections (Microsoft’s cash reserves outweigh Oracle’s over three times).
Think you can break the internet with your TikTok buyout memes? Tag us on Twitter: @dd_invest
Other China Tech News
Open-source with Chinese characteristics: Open source code repository Gitee is gaining traction as an alternative to Github in China when US-China tensions threaten developer access to Github in the country. The Ministry of Industry and Information Technology (MIIT), a central Chinese tech policymaker, chose Gitee in a project to build an “independent, open-source code hosting platform for China.” (TechCrunch)
That’s a huge ant: Chinese fintech giant Ant Group is ready to go public with a whopping $3.5 billion in profit over the last six months. Alibaba owns 33% of Ant, which in turn owns Alipay, the mobile payments network relied on by over 900 million people in China. Ant plans to hit the public market with a $200 billion valuation, more valuable than Goldman Sachs, and rivaling PayPal’s current $220 billion. (WSJ)
The World Factory No Longer Exists
Taiwan-based electronics manufacturers Foxconn and Pegatron plan to open factories in Mexico as the US-China trade war heats up. Foxconn announced it would construct factories in India earlier this year.
Why this matters: Asia-based multinationals can potentially inject billions of dollars into Latin America at a time of widespread recession. A concept tossed around the White House these days is “nearshoring,” in which there may be incentives for companies to move their operations from Asia to the US, Latin America, and the Caribbean.
The flight of capital and industry from Asia to places like Mexico would be a boon for that country and the region as a whole.
It’s IPO Season
Palantir, and Snowflake, Asana, JFrog, Sumo Logic, and Unity all filed for IPOs in the past few days.
Snowflake, a cloud data warehousing startup, filed its S-1 this week. Revenue for the company is exploding, but so are expenses. Snowflake is targeting a $20 billion valuation.
The IPO-of-the-week award goes to Unity, creator of the Unity Engine used by game devs, automotive designers, and film producers. Unity dominates 50% of the game development market, with over 1.5 million creators using the engine monthly. The company was last valued at $6 billion.
Mounting competition: Unity is a direct competitor to Epic Games and its Unreal Engine. Unity dropped their S-1 while Epic is in a legal battle with Apple and Google for breaking policy on in-app payments via Epic’s virally popular game, Fortnite.
Update on Fortnite: A district court ruled that Apple does not have to restore Fortnite to the iOS App Store. However, Apple cannot prevent the use of Unreal Engine from the iOS developer community. The judge stated that removing developer access to Unreal Engine would significantly damage the gaming industry as a whole.
The gaming industry is going to take over the planet. Get the run-down at Data-Driven Investor.
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In other tech news
Apple became a $2 trillion company, which only took the tech giant two years to accomplish.
Amazon drops a new AR shopping tool: This one nearly pulled me down the rabbit hole of potential that is augmented reality. I had to resist, or this newsletter would never have concluded.
Ever since someone introduced me to Pokemon Go, I knew AR would have a giant impact on e-commerce and brick-and-mortar retail. It’s a bridge between the two. Amazon’s Room Decorator app will give you that same godlike sensation that some of us remember from playing The Sims and decorating your digital dream house.
Fitbit releases the Sense smartwatch, which comes equipped with stress management specs like state-of-the-art heart-rate tech, PurePulse 2.0, and a skin temperature sensor to detect fevers. With COVID shaking up the medtech space, this gadget’s bound to see a jump in sales this Christmas. The price tag for the Sense is $329.95. (MarketWatch)
SpaceX’s Starlink has a long way to go: Current Starlink download speeds range around 42.8Mbps while upload speeds rest around 4.5Mbps to 17.7Mbps. While far from the company’s ultimate goal of 1Gbps, this is still an improvement for many rural internet users. (PCMag)
SpaceX has launched 600 satellites into the Starlink megaconstellation, with thousands scheduled to enter orbit to achieve global broadband coverage of speeds up to 1Gbps.
Fun & interesting
Dazzling space imagery
Recap from the last issue
Target and Walmart make waves in e-commerce as the industry explodes. Both companies joined the trend with record-breaking growth on several metrics. As people continue to avoid in-person shopping, there’s no stopping the e-commerce wave.
SoftBank doubled-down on Big Tech this month, investing in Amazon, Alphabet, Microsoft, and Tesla. Other big names on the list are Adobe, Netflix, Nvidia, Shopify, Paypal, and DocuSign.
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