The owners of chip designer Arm and the TikTok video app are reportedly both in talks to dispose of their valuable assets, but they face a Switzerland and China problem respectively.
Bloomberg reports that graphics chipmaker Nvidia has made an approach in recent weeks for Arm, with SoftBank known to be exploring its options for a company it paid $32bn for in 2016.
But any such deal appears unlikely. As an independent company, Arm supplied its underlying designs for processors to just about everyone in the chip industry. As well as being embedded in nearly every mobile phone, it will be in the newest Macs from Apple and the world’s fastest supercomputer is Arm-based.
SoftBank was a neutral buyer, but Arm’s “Switzerland” status in the chip industry would be severely jeopardised if a semiconductor maker was to acquire it. That would mean a likely regulatory inquiry and damage to Arm’s business as Nvidia’s rivals looked to alternatives.
Taking Arm public again would be a better option for all concerned, and SoftBank is reported to be contemplating this for 2021, two years earlier than originally mooted.
Meanwhile, ByteDance has been approached by US investors, led by VC firms General Atlantic and Sequoia Capital, looking to buy its TikTok app. TikTok has been banned in India and is facing similar action from the Trump administration, which has warned the user data it collects can end up in the hands of the Chinese government.
The investors are in discussions with the US Treasury and other regulators to see if spinning out TikTok and firewalling it from its Chinese parent would satisfy US concerns about the app. ByteDance, most of whose profits stem from Douyin, the Chinese TikTok, is reported to be reluctant to share its technology with a rival company, making the VC-led effort “the only viable plan”.
Pricing the deal seems a big issue as well, with TikTok not thought to be profitable despite hundreds of millions of users, and rivals including Facebook seeking to copy its successful formula.
The Internet of (Five) Things
1. Twitter looks at subscription services
Twitter shares are up more than 8 per cent today after it reported usage surged during the coronavirus pandemic and civil rights protests, adding 20m new daily users in its second quarter from the previous three months. However, sales fell 19 per cent year-on-year as it warned of a choppy advertising market. Twitter chief Jack Dorsey said users would “likely see some tests” of new subscription-based services later this year. Earlier, Twitter admitted that cyber attackers accessed the private messages of as many as 36 of the well-known users that were hacked last week.
2. Credit to Tesla for another profit
Tesla shares are down 4 per cent despite the electric carmaker reporting its fourth consecutive quarterly net profit on Wednesday. It reported a net profit of $104m in the quarter to June, against a loss of $408m last year. Alphaville points out it would have made a loss if not for $428m of regulatory credits it sold to other auto manufacturers who need them to meet emissions standards.
3. Microsoft revenues boosted by lockdown
Microsoft is down 3 per cent today, even though the gaming boom stemming from this year’s lockdown — supported by a jump in working and learning from home — pushed revenues more than $1bn ahead of Wall Street expectations in the latest quarter. There was though a slowdown in revenue growth for the Azure cloud platform, which has been core to Microsoft’s strategy in recent years. It fell to 47 per cent, from 59 per cent in the preceding three months.
4. EU wants Google to share Fitbit data
The EU has demanded that Google make major concessions relating to its $2.1bn acquisition of fitness-tracking company Fitbit if the deal is to be allowed to proceed imminently. Concerns over Google’s access to Fitbit’s health data mean EU regulators now want the company to pledge that it will not use that information to “further enhance its search advantage” and that it will grant third parties equal access to it
5. Paris e-scooter free-for-all becomes three-for-all
Paris has granted licences to three electric scooter companies, ending a messy free-for-all in Europe’s biggest market for the mobility devices. The US company Lime, Germany’s Tier Mobility and France’s Dott were chosen for two-year licences out of 16 companies that applied. Each will be allowed to operate 5,000 electric scooters in the city. Among those that missed out were Bird Rides, the well-funded start-up that pioneered electric scooter sharing in California, Stockholm-based Voi and the Estonian start-up Bolt.
Forwarded from Sifted — the European start-up week
On the face of it, it’s a wonderful time for the European Venture Capital industry. In the second quarter of the year alone, 33 new funds raised almost €3bn in fresh capital. The disruption of coronavirus has accelerated the move towards digital, meaning many tech companies are booming through the pandemic. But look a little deeper and there are reasons to be less cheerful. Is all the new money being raised reflecting the optimistic mood of late 2019 rather than the apocalyptic one of 2020? Are new EU rules making it less appetising for US funds to raise and deploy money in Europe? Nicolas Colin looks at the dark clouds on the European VC horizon.
Elsewhere in European start-ups this week, popular US no-fee trading app Robinhood has scrapped the launch of its investing app in the UK. It was a disappointment to the thousands who had signed up to the wait-list, but a relief to local rivals such as Revolut and Freetrade. Robinhood has a huge war chest and had taken in an extra $320m in funding.
There was also a debate this week about whether or not customers would pay for “premium” bank accounts after London-based bank Monzo became the latest neobank to try its hand at a paid-for product, launching Monzo Plus — a service centred around aggregating various bank accounts for £5 a month. Will it work?
Tech tools — Halo Infinite
Even though we’re late in the cycle, Microsoft’s gaming business saw 64 per cent growth in its last quarter (see above), with Xbox hardware revenue jumping 49 per cent. That’s despite its new console, the Xbox Series X, being just around the corner. Microsoft has been staging an online event today revealing the games produced by its own studios that will feature on the X from November. Halo Infinite was the inevitable star of the show. Ars Technica says the first ever glimpse was given of a built-in map, complete with marked mission locations — proving that “Halo Infinite is likely an open-world adventure in the Halo-verse”.
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