A glimpse of Twitter after Jack Dorsey, European telecoms want Tech giants to bear some costs and other notable stories from this week. Welcome to “#SocialStocks,” The Fly’s weekly recap of Wall Street’s reactions to social media stock news.
The U.K.’s Competition and Markets Authority has found that the merger between Facebook (FB) and Giphy “has resulted or would result in a substantial lessening of competition in social media and display advertising, harming social media users and businesses.” The agency has decided that the only effective way to address the competition issues is for Facebook to sell Giphy, in its entirety, to a suitable buyer. In order to address the substantial lessening of competition it has found, the Competition and Markets Authority decided to require Facebook to sell Giphy, in its entirety, to a suitable purchaser. The 16 page report discussed a number of horizontal and vertical effects of the merger, while examining several pieces of evidence. In the end, the CMA concluded the following:
- The completed acquisition by Facebook of Giphyhas resulted in the creation of a relevant merger situation.
- The Merger has resulted or may be expected to result in an SLC: in the supply of display advertising in the UK due to horizontal unilateral effects arising from a loss of dynamic competition, and in the supply of social media services worldwide due to vertical effects resulting from input foreclosure.
- Due to the multi-sided nature of the markets in which the Parties operate, a lessening of competition in the supply of social media services also has effects on competition in the supply of display advertising. The vertical effects resulting in a loss of competition in social media that the CMA has highlighted therefore exacerbate the effects on competition in display advertising arising from the elimination of a potential competitor.
- In order to address the SLCs that we have found, the CMA has decided to require Facebook to sell GIPHY, in its entirety, to a suitable purchaser.
TWITTER POST JACK DORSEY:
Twitter (TWTR) announced that Jack Dorsey has decided to step down as CEO and that the board has unanimously appointed Parag Agrawal as CEO and a member of the board, effective immediately. Dorsey will remain a member of the board until his term expires at the 2022 meeting of stockholders. Bret Taylor was named the new chairman of the Board, succeeding Patrick Pichette who will remain on the board and continue to serve as chair of the audit committee. Agrawal has been with Twitter for more than a decade and has served as CTO since 2017. “I’ve decided to leave Twitter because I believe the company is ready to move on from its founders. My trust in Parag as Twitter’s CEO is deep. His work over the past 10 years has been transformational. I’m deeply grateful for his skill, heart, and soul. It’s his time to lead,” said Dorsey. Bret Taylor, Twitter’s incoming independent board chair added, “Parag understands Twitter and appreciates the Company’s unique potential. He has been instrumental in tackling our most important priorities, including accelerating our development velocity, and I know he’ll hit the ground running to strengthen execution and deliver results. The Board has the utmost confidence in Parag.” The company insisted that its previously issued guidance remains unchanged. “There are no changes to the Company’s previously shared outlook for the fourth quarter and full year 2021, or its 2023 goals,” the company said in a statement. Shares were up 5% following the announcement.
Twitter’s Jack Dorsey stated in a tweet “not sure anyone has heard but, I resigned from Twitter” following the company’s press release. In his tweet, Dorsey included a copy of the memo he shared with Twitter staff to explain why he decided “it’s finally time for me to leave,” including three reasons he believes “now is the right time.” Dorsey points to trust in Parag that he said is “bone deep”; Bret Taylor agreeing to become the company’s board chair; and the team at Twitter. In the memo Dorsey added: “I want you all to know that this was my decision and I own it… And there aren’t many founders that choose their company over their own ego. I know we’ll prove this was the right move.”
Elliott Investment Management released the following statement on behalf of Managing Partner Jesse Cohn and Senior Portfolio Manager Marc Steinberg regarding the leadership changes announced at Twitter: “Twitter is the leading global medium for real-time conversation and engagement, and our collaboration with Jack and the company for the past two years has been productive and effective. Twitter is now executing against an ambitious multi-year plan to dramatically increase the company’s reach and value, and we look forward to the next chapter of Twitter’s story. Having gotten to know both incoming Chairman Bret Taylor and incoming CEO Parag Agrawal, we are confident that they are the right leaders for Twitter at this pivotal moment for the company.”
The company wasted no time making changes following the announcement of Dorsey’s departure from the CEO role. Twitter Safety stated in a blog post: “As part of our ongoing efforts to build tools with privacy and security at the core, we’re updating our existing private information policy and expanding its scope to include ‘private media.’ Under our existing policy, publishing other people’s private information, such as phone numbers, addresses, and IDs, is already not allowed on Twitter. This includes threatening to expose private information or incentivizing others to do so… While our existing policies and Twitter Rules cover explicit instances of abusive behavior, this update will allow us to take action on media that is shared without any explicit abusive content, provided it’s posted without the consent of the person depicted. This is a part of our ongoing work to align our safety policies with human rights standards, and it will be enforced globally starting today.”
COLLABORATION OF TECH GIANTS:
Amazon Web Services, or AWS, an Amazon (AMZN) company, announced that Meta has deepened its relationship with AWS as a strategic cloud provider. Meta uses AWS’s infrastructure and capabilities to complement its existing on-premises infrastructure, and will broaden its use of AWS compute, storage, databases, and security services to provide privacy, reliability, and scale in the cloud. Meta will run third-party collaborations in AWS and use the cloud to support acquisitions of companies that are already powered by AWS. It will also use AWS’s compute services to accelerate artificial intelligence, or AI, research and development for its Meta AI group. In addition, Meta and AWS will work together to improve the performance for customers running PyTorch on AWS and accelerate how developers build, train, deploy, and operate artificial intelligence/machine learning models. AWS and Meta will help machine learning researchers and developers by further optimizing PyTorch performance and its integration with core managed services such as Amazon Elastic Compute Cloud and Amazon SageMaker for building, training, and deploying artificial intelligence models at scale. The companies are enabling PyTorch on AWS to orchestrate large-scale training jobs across a distributed system of AI accelerators. The companies will work together to offer native tools. The companies will continue to enhance TorchServe, the serving engine native to PyTorch. AWS and Meta plan to help organizations bring large-scale deep learning models from research to production faster and easier with optimized performance on AWS. “Meta and AWS have been expanding our collaboration over the last five years,” said Kathrin Renz, VP of business development and Industries at Amazon Web Services. “With this agreement, AWS will continue to help Meta support research and development, drive innovation, and collaborate with third parties and the open-source community at scale. Customers can rely on Meta and AWS to collaborate on PyTorch, making it easier for them to build, train, and deploy deep learning models on AWS.” “We are excited to extend our strategic relationship with AWS to help us innovate faster and expand the scale and scope of our research and development work,” said Jason Kalich, VP of production engineering at Meta. “The global reach and reliability of AWS will help us continue to deliver innovative experiences for the billions of people around the world that use Meta products and services and for customers running PyTorch on AWS.”
META TICKER CHANGE DELAYED:
Meta Platforms the new name for Facebook, announced that it will postpone the change to its Class A common stock ticker symbol until Q1 2022. The company had previously announced its plans to change its ticker symbol, effective December 1, 2021. In the interim, Meta’s Class A common stock will continue to be listed on Nasdaq under the ticker symbol (FB), which has been used since the company’s initial public offering in 2012. Additional details will be provided prior to the new ticker symbol becoming effective in Q1 of 2022.
META EXECUTIVE STEPS DOWN:
In a series of Tuesday tweets, David Marcus, a Meta executive and co-creator of the not-yet-launched Diem digital currency, said, “Personal news: after a fulfilling seven years at Meta, I’ve made the difficult decision to step down and leave the company at the end of this year. While there’s still so much to do right on the heels of launching Novi – and I remain as passionate as ever about the need for change in our payments and financial systems – my entrepreneurial DNA has been nudging me for too many mornings in a row to continue ignoring it. The one thing I’m the proudest of during my time here is the amazing kickass team we’ve assembled over the last three years. This is the most resilient, passionate, determined and talented group of humans I’ve ever worked with. I find comfort and confidence in knowing that they will continue to execute our important mission well under @skasriel’s leadership, and I can’t wait to witness this from the outside. I know there’s greatness ahead… I now look forward to having more free time in the months to come before I start building something new and exciting again. Onward!”
TELECOMS CALL OUT BIG TECH:
U.S. tech giants should bear some of the costs of developing Europe’s telecoms networks because they use them so heavily, chief executives of Deutsche Telekom (DTEGY), Vodafone (VOD) and 11 other major European telecoms companies said on Monday, Reuters’ Foo Yun Chee reported. The call by the CEOs comes as the telecoms industry faces massive investments for 5G, fiber and cable networks to cope with data and cloud services provided by Netflix (NFLX) and Google’s (GOOGL) YouTube and Facebook, the author noted. “A large and increasing part of network traffic is generated and monetized by big tech platforms, but it requires continuous, intensive network investment and planning by the telecommunications sector,” the CEOs said in a joint statement seen by Reuters. “This model – which enables EU citizens to enjoy the fruits of the digital transformation – can only be sustainable if such big tech platforms also contribute fairly to network costs,” they said. While no tech companies were mentioned specifically by name, Reuters understands that Netflix and Facebook are two of the companies insinuated. The letter was signed by CEOs of Telefonica (TEF), Orange (ORAN), KPN (KKPNY), BT Group (BTGOF), Telekom Austria (TKAGY), Proximus (BGAOY), Telenor (TELNY), Telia Company (TLSNY), Swisscom (SCMWY) and others. The CEOs also took aim at high spectrum prices and auctions, saying that these force unreliable entrants into the market artificially. “We estimate that they would forcibly remove over 2 billion euros revenues from the sector in a 4 year period, which is equivalent to 2.5% of the sector’s yearly investment capacity for mobile infrastructure,” the companies said.
Shares of “stay-at-home” pandemic winners were trading higher in the pre-market session on Friday as investors grapple with the news of a new Covid-19 variant with a large number of mutations that is spreading in South Africa. Zoom (ZM) stock gained double-digits over 10% following news of the omicron variant. Daiwa analyst Stephen Bersey upgraded Zoom Video to Underperform from Sell. Cathie Wood’s ARK Investment bought 162K shares of Zoom Video following the rise in shares.
Originally Posted on December 1, 2021 – #SocialStocks: Facebook Forced to Sell Giphy by CMA
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