<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Associated Press</span></p><p class="caption">Elizabeth Warren's call for breaking up the big-tech companies threatens to shine a bright spotlight on their business practices.</p></div><p></p></div></div></p><ul class="summary-list"><li><a href="https://www.businessinsider.com/category/elizabeth-warren">Elizabeth Warren's</a> call for breaking up <a href="https://www.businessinsider.com/category/amazon">Amazon</a>, <a href="https://www.businessinsider.com/category/facebook">Facebook</a>, and <a href="https://www.businessinsider.com/category/alphabet">Alphabet</a> represents a real threat to those companies, even if she doesn't become president.</li><li>Her proposal threatens to put a spotlight on those companies and their business practices, one that could expose them to reputational harm.</li><li>Moreover, it represents an attempt to gain support for a rethinking of antitrust policy, one in which regulators scrutinize the effects of concentrated corporate power on things other than just consumer prices.</li><li>Amazon, Facebook, and Alphabet's power looks benign if only viewed from the lens of consumer prices.</li><li>Their power looks much worse if its broader effects are taken into account.</li></ul><p>It's been a long time since antitrust policy has been a major topic of a presidential election.</p><p>Elizabeth Warren is trying change that - and it's bad news for Amazon, Facebook, and Google parent Alphabet.</p><p>Warren <a href="https://medium.com/@teamwarren/heres-how-we-can-break-up-big-tech-9ad9e0da324c">declared Friday</a> that if she's elected president, one of her centerpiece policies <a href="https://www.businessinsider.com/elizabeth-warren-plan-to-break-up-amazon-facebook-google-big-tech-2019-3">will be to break up those three big-tech firms</a>. She wants to unwind their past mergers and split up other parts of their business to rein in their power and increase competition.</p><p>Right now, Warren's still <a href="https://www.realclearpolitics.com/epolls/2020/president/us/2020_democratic_presidential_nomination-6730.html">a long shot</a> to secure the Democratic Party nomination, much less win the 2020 election, so the tech firms aren't in immediate danger. But Jeff Bezos, Mark Zuckerberg, and Larry Page would be foolish to dismiss the threat she just unleashed.</p><p>Warren is tapping into public angst about tech's influence on our lives and channeling it into a legal mechanism that, however rusted it's become over the years, has the capacity to subjugate even the most powerful businesses.</p><p>With a two-year election cycle just getting started, the tech industry is now officially America's number one corporate villain - more dangerous than Wall Street bankers or Martin Shkreli - and the debate is now focused on real reforms centered on legitimate antitrust policy rather than mere populist rage. </p><p>Even if she's not elected president, Warren's move has increased the chance that the rulers of the tech universe are going to draw damaging fire, no matter who is.</p><h2>Warren wants to shine a spotlight on the big tech companies</h2><p>The tech industry has really never faced this kind of scrutiny. Yes, certain companies in the industry have faced antitrust actions, including Microsoft in the famous trial at the turn of the last century. And some of those actions, including the Microsoft trial and the AT&amp;T breakup of the 1980s drew widespread public attention.</p><p>But discussion over what to do about those companies' conduct was generally left up to the courts or federal agencies. It wasn't a big topic of debate in a presidential election. In 2000, for example, George W. Bush said little about the then-ongoing Microsoft trial, and it was an open question when he took office how his administration would approach the case. When his Justice Department agreed to a settlement that stopped short of breaking up the company, the decision came as something of a surprise.</p><p>Warren's doesn't want antitrust policy to be ignored this time around. Instead, she wants antitrust policy to be in the spotlight, and she wants a public debate about how these big tech companies should be regulated. If she succeeds, it would be one of the first times that corporate concentration of power has been a major election issue since the Progressive Era of the early 1900s.</p><p>Part of the danger for the tech companies is what the bright light that Warren wants to shine on them is going to reveal about them - and how the public is going to react to what they see.</p><h2>Neither Facebook nor Microsoft looked good in lights</h2><p>For Facebook, we already have a good sense of this. The social networking company spent much of the last two years with a Klieg light shining on it. The company's reputation wilted under the intense lights, which exposed its casual treatment of customers' private data, its questionable business practices, and the way its core product, the newsfeed, had been hijacked to spread dangerous propaganda.</p><p>Amid these revelations, Facebook's user growth has stalled in the US and Europe, its revenue growth has slowed, and people are using it less. It's also facing a major fine from the Federal Trade Commission, and the exposures have bolstered calls by critics to impose new restrictions on its business.</p><p>A similar thing happened with the Microsoft antitrust trial two decades ago. When the government first started scrutinizing the software giant, it was among the most respected and loved companies with the public at large. But the revelations from the trial about its ruthless business practices and particularly the sheer arrogance and disdain that then CEO Bill Gates displayed in his testimony in the case helped sour public perceptions of the company.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Reuters/Jeff Christensen</span></p><p class="caption">Bill Gates</p></div><p></p></div></div></p><p>Arguably, the reputational hit that Microsoft took from the trial created as much of an opening for its competitors as did the restrictions the government placed on its business as part of the settlement that ended the case. In the wake of the trial, consumers and businesses were much more willing to try rival services such as Google's search engine and, later, its suite of productivity tools.</p><p>Meanwhile, other corporations were much more guarded about doing business with Microsoft, not wanting to put themselves in the same beholden position as the PC makers in the 90s, where the software giant dictated all the terms of the relationship.</p><p>Amazon and Google could face similar trouble if Warren's able to focus the spotlight on them too.</p><h2>Warren's trying to fundamentally change antitrust policy</h2><p>But Warren's call represents a bigger danger for Amazon, Facebook, and Google, because she's trying to fundamentally change the terms of the debate. Under the influence of conservative economists from the University of Chicago, the federal government in the early 1980s completely rethought how it scrutinized corporate power.</p><p>Instead of viewing concentrations of corporate power in a dim light, federal regulators generally came to view them favorably. Rather than worrying about the effects of such power on competition in particular markets or other potential problems of corporate concentration, they started focusing on just one aspect: price. In general, they only worried about enforcing antitrust laws if a company used its market power to raise prices on consumers or was likely to do so.</p><p><strong><em>Read this: </em></strong><a href="https://www.businessinsider.com/antitrust-regulators-need-to-curve-the-power-of-facebook-et-al-2018-4"><em>Facebook, Google, Apple, and Amazon have too much power - so it's time for regulators to take on tech's titans</em></a></p><p>But in recent years, a growing collection of academic experts on the left have pushing back against this focus on price. Such a limited lens ignores the broader harms caused by concentrated corporate power, they argue. Backed in many cases by extensive research, they contend that curtailed competition across a broad range of industries has <a href="https://www.vox.com/policy-and-politics/2017/7/31/16021844/antitrust-better-deal">kept wages low, discouraged the formation of new companies and new job growth, hindered innovation, and undermined democratic government</a>.</p><p>To date, the debate over whether to take a broader view of antitrust policy has largely been confined to academic circles and policy wonks. Warren, whose proposals are built on the research and arguments of the left-wing advocates of renewed robust antitrust enforcement, is making a bid to take their view of competition policy mainstream by putting it front-and-center in the presidential election.</p><h2>Amazon, Facebook, and Google would prefer to stick with prices</h2><p>That's something Amazon, Facebook, and Google - not to mention other corporate giants that dominate their own markets - really don't want.</p><p>If antitrust policy continues to focus just on price, Amazon, Facebook, and Google could easily argue that they don't pose a problem. Facebook and Google offer their services for free to consumers, and Amazon is renowned for the low prices it charges on its goods.</p><p>But if regulators start scrutinizing the broader effects of their power, and how it's distorting their respective markets, they're much more likely to see the need to crack down on the big-tech companies.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Justin Sullivan/Getty Images</span></p><p class="caption">Google cofounder Larry Page</p></div><p></p></div></div></p><p>The European Union, which isn't fixated on consumer prices, has already found that Google illegally tried to thwart competition by rivals and has <a href="https://www.businessinsider.com/google-fined-by-eu-android-2018-7">fined it billions of dollars</a>. Publishers have complained for years that Facebook and Google's <a href="https://www.businessinsider.com/google-and-facebook-dominate-the-world-of-online-advertising-charts-2017-12">dominance over the digital advertising business</a> has left little room for them to build sustainable businesses.</p><p><em><strong>Read this:</strong> <a href="https://www.businessinsider.com/why-margarethe-vestager-wrong-to-oppose-google-breakup-2018-7">Europe's competition czar is wrong - it's long past time to break up Google</a></em></p><p>And retailers and goods makers have accused Amazon of undermining their businesses. In part due to Amazon's power over ecommerce, they feel compelled to offer their goods on its site. But they charge that Amazon uses information it collects about their sales to identify their most popular products and offer competitors that undercut them on price.</p><p>Google, Facebook, and Amazon would almost certainly rather not have to defend such practices to regulators or before a court. But thanks to Warren, they may soon have to.</p><p>Warren may never be president, and she may never get a chance to put in place the policies she proposed Friday. But she's raised the chances that Amazon, Google, and Facebook are going to see a comeuppance whoever takes the White House.</p><ul class="read-more-links"><li>Read more about Elizabeth Warren's proposal:</li><li><a href="https://www.businessinsider.com/elizabeth-warren-plan-to-break-up-amazon-facebook-google-big-tech-2019-3" data-read-more-link="" data-e2e-name="read-more-link">Elizabeth Warren says she wants to break up big tech companies, including Amazon, Google, and Facebook</a></li><li><a href="https://www.businessinsider.com/elizabeth-warren-tech-regulation-would-roll-back-amazon-whole-foods-deal-2019-3" data-read-more-link="" data-e2e-name="read-more-link"> Elizabeth Warren's plan to break up tech giants would force Amazon to roll back its acquisition of Whole Foods</a></li><li><a href="https://www.businessinsider.com/elizabeth-warren-break-up-amazon-marketplace-proposal-2019-3" data-read-more-link="" data-e2e-name="read-more-link">Warren's plan to fight big tech directly threatens one of Amazon's most successful businesses</a></li><li><a href="https://www.businessinsider.com/elizabeth-warren-wants-google-to-divest-in-waze-nest-doubleclick-2019-3" data-read-more-link="" data-e2e-name="read-more-link">Elizabeth Warren wants to force Google to divest its acquisitions of Waze, Nest, and DoubleClick</a></li></ul><p class="tagline">Get the latest Google stock price<a href="http://markets.businessinsider.com/stock/GOOG-Quote"> here.</a></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/amazon-jeff-bezos-divorce-hq2-wild-year-2019-2">What's going on with Jeff Bezos and Amazon</a></h3>        <div>                    </div>    </div>

Elizabeth Warren pulled a ninja move to turn tech angst into a crackdown with real teeth, and tech is going to suffer even if she's not president

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Getty Images / Michael Cohen</span></p><p class="caption">Larry Fink, BlackRock CEO</p></div><p></p></div></div></p><ul class="summary-list"><li>BlackRock's Mark Wiedman was promoted to a new role overseeing the international business and corporate strategy. The move positions him as Larry Fink's 'heir apparent,' said one BlackRock analyst. </li><li>His promotion led to two other management changes for the firm's hot exchange-traded funds platform and its US wealth advisory business. </li><li>In a memo obtained by Business Insider, Fink hinted at more changes later this year. </li></ul><p>BlackRock chief executive Larry Fink stirred more speculation about his successor on Wednesday when he promoted Mark Wiedman, formerly head of one of the firm's fastest-growing businesses. </p><p>Wiedman, who ran the firm's $1.9 trillion exchanged-traded-funds business and index investments known as iShares, is now the h<span>ead of international and of corporate strategy, Fink said in a Wednesday employee memo obtained by Business Insider. In his new role, Wiedman will focus on "high-growth markets" in Europe, the Middle East, Africa, and Asia-Pacific. He'll also oversee marketing, which is led by former BuzzFeed chief marketing officer Frank Cooper, who will report to both Wiedman and Fink. </span></p><p><span><em><strong>See more:</strong> <a href="https://www.businessinsider.com/blackrock-launches-digital-rebrand-2018-10">'Bite-size, usable, and shareable': BlackRock's CMO explains the $6.4 trillion giant's digital rebrand</a></em></span></p><p><span>"The changes transforming our industry put a premium on strategy to drive growth, on unifying our focus on international markets, and on using our brand to drive our business," Fink wrote in the memo. </span></p><p>Wiedman has overseen explosive growth in ETF platform iShares, which <a href="https://www.businessinsider.com/blackrocks-etf-platform-sets-new-money-record-2019-1">saw a record $44 billion in new money last month</a>. He left a previous role overseeing corporate strategy in 2011 to lead iShares, which has expanded its assets by 14.8% annually on average. </p><p>Fink has made no public statements about retiring, but Wiedman's promotion fueled talk of who could replace the BlackRock co-founder. Other potential successors include another two other Marks - head of active equities Mark Wiseman and head of Americas Mark McCombe- and two Robs, president Rob Kapito and chief operating officer Rob Goldstein. </p><p>Rich Kushel, who runs the m<span>ulti-asset strategies and global fixed income groups, is another potential contender to replace Fink. </span></p><p>"If you think about the future - how they talk about the future of their company and where the growth is coming from, a lot of the technology initiatives they've been growing, like Aladdin for wealth [management] - it all seems to come back to iShares and how they sell it and use it in more creative ways," Patrick Davitt, an analyst at Autonomous Research, told Business Insider. "Through that lens, it feels like it makes sense to have the person who's been building and running that business to be the heir apparent" to Fink. </p><p>Salim Ramji, the firm's head of US wealth advisory, is replacing Wiedman as head of iShares and index investments. Martin Small, the US head of iShares, is taking over Ramji's role. </p><p>In Wednesday's memo, Fink hinted at more changes "we'll make later this year" at the $6.4 trillion asset manager.  </p><p>Wiedman's move, along with references of more to come, comes as Wall Street has grappled with how to replace founders and longtime leaders. Blackstone, for example, elevated former real estate head Jon Gray to president last year <a href="https://www.businessinsider.com/blackstone-grooms-six-executives-for-schwarzmans-job-2012-8">after grooming multiple leaders </a>to run the world's largest private equity firm. Goldman Sachs had two co-presidents under CEO Lloyd Blankfein, before <a href="https://www.businessinsider.com/lloyd-blankfeins-heir-apparent-harvey-schwartz-just-unexpectedly-retired-2018-3">one retired this spring</a>, leaving David Solomon to <a href="https://www.businessinsider.com/goldman-sachs-david-solomon-ceo-2018-7">replace Blankfein this fall</a>.</p><ul class="read-more-links"><li><strong>Read more:</strong></li><li><a href="https://www.businessinsider.com/influx-in-passive-money-boosts-largest-asset-managers-2018-12" data-read-more-link="" data-e2e-name="read-more-link">There's one clear winner in the asset-management business in 2018, and it shows how the industry's changing</a></li><li><a href="https://www.businessinsider.com/blackrock-inks-retirement-partnership-with-microsoft-2018-12" data-read-more-link="" data-e2e-name="read-more-link">BlackRock and Microsoft want to make retirement investing as easy as ordering an Uber</a></li><li><a href="https://www.businessinsider.com/blackrock-spends-1-billion-on-tech-2018-12" data-read-more-link="" data-e2e-name="read-more-link">BlackRock now has a higher percentage of technologists than JPMorgan, and it says a lot about the future of the money-management industry</a></li><li><a href="https://www.businessinsider.com/blackrock-buys-minority-stake-in-evestnet-2018-11" data-read-more-link="" data-e2e-name="read-more-link">BlackRock is buying a stake in a financial technology company to reach more than 90,000 money-managers</a></li></ul>

BlackRock just promoted the head of its $1.9 trillion ETF business and it could mean he's a potential successor to CEO Larry Fink

<ul class="summary-list"><li>Khalil Smith is the vice president of research, consulting, and practices at the NeuroLeadership Institute, a learning and consulting firm that has worked with Microsoft, IBM, and other large companies.</li><li>As a business leader who is black, he's getting a lot of questions about our moment in history.</li><li>During this time of uprising against <keyword id="53374" type="PERSON" weightage="60" keywordseo="Police-Brutality">police brutality</keyword> toward <keyword id="1706586" type="PERSON" weightage="60" keywordseo="Black-Americans">black Americans</keyword>, Smith says that black workers across the US are being met with unhelpful, if well-intentioned, messages of "I can't believe this is happening" from their non-black colleagues.</li><li>While many non-black Americans are having epiphanies about systemic injustice, <keyword id="44060" type="PERSON" weightage="60" keywordseo="Racism">racism</keyword> is not "new," Smith says.</li><li>If you want to practice <keyword id="9352866" type="UNKNOWN" weightage="60" keywordseo="allyship">allyship</keyword>, Smith says it's OK to reach out to offer support, but make it clear you don't need a response, and use actions (not words) to show that you're in this for the long haul.</li></ul><p>I have the fortune of knowing and working with incredible people of all backgrounds and ethnicities. And as a black leader who has held senior-level positions, I am frequently being asked about this moment in history. Given what I'm being asked by my non-black friends and peers, and what I'm being told by my black friends and peers, it seems as if we could benefit from making a few things known.</p><h2>1. Black people are not monolithic</h2><p>If you want to understand my point of view on what has been brought into the public consciousness and how it affects me, I appreciate you asking. If you want me to speak about the experience all black people are having across all of America right now, that is going to be a much tougher request to process. Black people come in all shapes and sizes, and so do our experiences. Some managers, leaders, and executives have come from what might be considered a background of privilege, with emotional, educational, and financial support the likes of which would make most of us jealous. Others have clawed their way out of hardships and misfortune that would crush the average person.</p><p>Likewise, some have experienced the type of racism and overt bigotry that is being documented through Twitter and Facebook feeds right now, and others have experienced the undercurrent of bias and prejudice exemplified by phrases like "you talk like a white person" and "are you sure you're black?"</p><p>Regardless of the tone or tenor of the slights, I assure that your black leaders and coworkers have had their share of tough experiences, and yet those experiences are theirs and theirs alone. There are similarities, and we can speak to the general experience that is a cornerstone of growing up black in America, but don't assume that my experience is the same as the close to 44 million black people in America.</p><p>We all see the world through our own lens. Understanding the black experience in America means educating yourself beyond the handful of people most readily available to you.</p><h2>2. This isn't 'new'</h2><p>I've spoken with dozens of black workers who work primarily with non-black coworkers, and the refrain is the same: They are met with a chorus of "I can't believe this is happening right now," to which we respond (out loud or not), "This isn't new." Your black coworkers most likely got The Talk from their parents or grandparents. The talk about how to engage with the police, how to bury their dignity if the officer was disrespectful, mean, or abusive — because coming home with a bruised ego was better than not coming home at all. We've talked about this in the black community for as long as there has been a black community in America, and we tried to talk to others.</p><p>We told you about the times when we were shopping in a store while being followed by an employee. We told you about the times we were pulled over for no objectively good reason and the officer had a few too many questions. We told you about the way the level of customer service took a significant decline when we were next in line to pay or asked to see an expensive watch or pair of shoes. And you didn't believe us.</p><p>You may have explained away the perceived injustice by asking whether we heard what we think we heard or saw what we think we saw. And so we stopped bringing it up. The ubiquity of cellphones, and, along with them, video-recording capabilities, has shattered that illusion for you. But it didn't shatter it for us. The stench was always there, but now you're able to smell it too. So as you have your moment of epiphany, for which we are truly thrilled, remember that the racism, police brutality, and pain aren't new; they're new to you.</p><h2>3. We may be having a tough time working</h2><p>Several times over the past weeks I've been sent a thoughtful piece by Shenequa Golding, "<a href="https://medium.com/@shenequagolding/maintaining-professionalism-in-the-age-of-black-death-is-a-lot-5eaec5e17585">Maintaining Professionalism In The Age of Black Death Is….A Lot</a>." I recommend giving it a read.</p><p>The essence of the piece is that it's tough to work right now. In addition to dealing with the disproportionate rates of death in the black community as a result of COVID-19, we've been dealing with sudden societal awareness and associated shock.</p><p>Those two things, layering and amplifying each other, are making it tough to care about the quarterly updates, performance reviews, strategic plans, or a new software push that we're meant to be working on. We're preoccupied.</p><p>If they're like me, they've cried multiple times every day as they see more news, more <keyword id="6354896" type="UNKNOWN" weightage="60" keywordseo="protests">protests</keyword>, and more videos of the very brutality being protested against. They are contending with how to show up, get work done, be a resource to others, take care of themselves, be a "professional," and moderate how much it's OK to show emotion without being labeled emotional.</p><p>It's a lot to process, and some of the other aspects of our work, like filling out expense reports, just seem pretty trivial. And in that triviality we're asking ourselves whether what we do in our job right now is where our talents are best utilized. We've learned to navigate the complex and byzantine corporate world, so how should we use those skills? And that question has sprung to the forefront of our conscious thought, now more than ever, for many. It's a lot to process, so a bit of grace goes a long way.</p><h2>4. We can't take care of you right now</h2><p>We love that you want to be an ally. We appreciate that you're fired up and ready to help. We see it in the emails we receive, the texts of support, and the fact that, as of this writing, both "<a href="https://www.amazon.com/White-Fragility-People-About-Racism/dp/0807047414">White Fragility: Why It's So Hard for White People to Talk About Racism</a>" and "<a href="https://www.amazon.com/How-Be-Antiracist-Ibram-Kendi/dp/0525509283">How to Be an Antiracist</a>" are sold out on Amazon.</p><p>And yet we need you to offer your support in a way that isn't a burden on us. When you send an email of comfort that requires a response, that is putting work on me, and I've got enough of that. When you say you really want to talk right now, that creates a pressure to reply.</p><p>Let us know that you're here if we want to talk. Let us know that you're going to invest in your education, and that whenever the time is right, you'd like to connect. But don't assume that now is a good time to talk, because largely it's not.</p><p>One of my favorite quotes embodies this moment: "A failure to plan on your part does not constitute an emergency on mine." If you're really in this for the long haul, as we are, reach out with some words of support, and make it clear that you don't need a response. This will be a long journey; we've got time. A truly ally will be there 30, 60, 90, and 180 days from now.</p><p>Even with these things that we want you to know, the most important thing we want you to know is that we're happy you're in this with us. That this moment of insight has been hard, that we wish the tragedy didn't happen, and that we know you're dealing with a lot too. We want you to know that when we commit to real change, beyond the outrage and into real and substantive systemic and pervasive change, that we're OK with each possible misstep, because a stumble in the right direction is better than being sure-footed and silent. We want you to embrace the clumsy conversation, because it means you're leaning in, educating yourself, and using your position of power to push for real change. And know that's all we've been asking for.</p><p><em><a href="https://twitter.com/khalilsmith_">Khalil Smith</a> is the vice president of research, consulting, and practices at the <a href="https://neuroleadership.com/">NeuroLeadership Institute</a>.</em></p>

4 things your black employees and coworkers wish you knew —and how you should offer allyship and support

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Dropbox</span></p><p class="caption">Dropbox cofounder and CEO, Drew Houston</p></div><p></p></div></div></p><ul><li><strong>Dropbox is aiming to have its IPO in the first half of 2018, according to reports.</strong></li><li><strong>Analysts aren't at all surprised, but have a few things at front of mind when it comes to anticipating how Dropbox will do as a public company.</strong></li><li><strong>The market for collaboration tools is huge, analysts say, but Dropbox needs to focus in on appealing to <keyword id="6356323" type="ENTERTAINMENT" weightage="100" keywordseo="Enterprise">enterprise</keyword> customers. </strong></li></ul><p><br />Dropbox has earned a consumer-friendly reputation by making it easy for non-techies to store family photos, school homework and other digital knick-knacks on the popular online service it launched ten years ago.  </p><p>But as the company prepares sell shares to the public in an IPO, it will need to button-up its image and win the favor, and the budgets, of picky business customers, according to analysts who follow the company. </p><p>"<span style="font-weight: 400;">The simple function of storing content is pretty well commoditized now and most of the people who are going to use that function are already using it," said Terry Frazier, a research director at industry research firm IDC. </span></p><p><span style="font-weight: 400;">The big growth for Dropbox, he says, will come by providing "increased functionality capabilities for business and enterprise customers."</span></p><p>Dropbox secretly filed the paperwork for an IPO, <a href="https://www.bloomberg.com/news/articles/2018-01-11/dropbox-is-said-to-file-confidentially-for-initial-offering">according to a Bloomberg report on Thursday</a>.  </p><p>The IPO has long been rumored to be in the works, and given Dropbox's last reported private market valuation of $10 billion, it's expected to be one of the biggest public offerings in tech this year.</p><p>Many of the details, including the size and valuation of Dropbox's planned IPO, are still unknown. The lens through which Wall Street will assess this big tech IPO is not ideal, however: <a href="http://markets.businessinsider.com/stock/SNAP-Quote">Snap's</a> much-hyped 2017 IPO has proven disappointing, with the stock now <a href="http://www.businessinsider.com/r-snap-shares-fall-below-17-ipo-price-for-first-time-2017-7">trading below its offering price</a>.</p><p>And Dropbox's closest parallel in the public markets, <a href="http://markets.businessinsider.com/stock/BOX-Quote">Box</a>, has faced a rocky ride on Wall Street. The stock soared 70% the day of its IPO in January 2015, then <a href="http://www.businessinsider.com/box-record-low-share-price-2015-8">plunged to its IPO price</a> and has only <a href="http://www.businessinsider.com/box-ceo-aaron-levie-is-proving-everyone-wrong-2016-3">recently returned</a> to the level it reached on its first day of trading.</p><h2>Dropbox is cash-flow positive, and it has room to grow</h2><p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span><a href="https://www.flickr.com/photos/techcrunch/9723831797/in/photolist-aFgaCp-6yZoBW-daMrKq-chgBH1-9ahi5b-jYepFr-fPgW1D-h6tZqA-h6tV3B-fPgVTZ-d9UvR6-chgCGd-chgBW9-h6cyWr-sVUVXi-jYeKHZ-h6uzbv-d9Uwyo-chgCe7-fPgVXx-p8jzjj-h6uCr9-fPgW34-chgCVm-fPytpo-oSRMiG-fPytfy-fPgbqn-d9Uwto-fPxHXy-8oaQMZ-fPytiJ-d9Uwzh-p8jzmJ-rwkAMk-d9Uw6h-8odi7j-s9PqYp-p8jzdY-d9UvqF-d9UvEH-rw98Q7-d9UZav-sbvguQ-sbzjBL-rwkAJV-s9LoSg-h6tZ29-sbGfUR-sbDcYB">Flickr/ TechCrunch Disrupt 2013</a></span></p><p class="caption">Aaron Levie, CEO of Box, a Dropbox competitor</p></div><p></p></div></div>The good news for Dropbox is that it's in a healthy, fast-growing market.</p><p>The so-called content collaboration market grew by 40% in 2017, and Gartner forecasts that it will continue to grow by double-digit percentage points through at least 2021. </p><p>This means that there's more than enough room for both Dropbox and its competitors at Box, <a href="http://markets.businessinsider.com/stock/GOOG-Quote">Google</a>, and <a href="http://markets.businessinsider.com/stock/MSFT-Quote">Microsoft</a>, according to Karen Hobert, an analyst with Gartner. </p><p><span style="font-weight: 400;">"It's not a fight to the death," Hobert said. "We've seen significant growth and we anticipate significant growth in this market." </span></p><p><span style="font-weight: 400;">For 2018, Gartner forecasts 34% growth in the space, with steady declines on an annual basis. Over time, Hobert said, that growth could stabilize around 8% to 12% annually.</span></p><p><span>As a private company, Dropbox's financials results are still under wraps, but the company said in January 2017 that it was on track to </span><a href="http://www.businessinsider.com/dropbox-1-billion-annual-run-rate-2017-1">generate $1 billion in revenue on an annualized run rate.</a> <span>CEO</span><span> Drew Houston said in June 2016 that </span><a href="http://www.businessinsider.com/dropbox-is-free-cash-flow-positive-2016-6">Dropbox was "cash flow positive,"</a><span> an important gauge of financial health followed by Wall Street. </span></p><p>This is good news for any company, but especially one with potential traders looking for signs that Dropbox stock will see returns in the long-run. </p><h2>It's a success with consumers, but Dropbox needs to focus on businesses </h2><p>Dropbox has two core products: a freemium consumer file sharing service, with paid upgrades; and an enterprise-grade storage and collaboration platform. The company has around 500 million customers, but it's unclear how many of those are individuals, and how many use it for work. </p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Oli Scarff / Getty Images</span></p></div><p></p></div></div></p><p>Though Dropbox has a strong reputation in the consumer space, analysts said that it will need to focus more on its business clients if it wants to grow its market share. </p><p>IDC analyst Frazier said that while Dropbox has been less focused on its business product than rival Box has been, there is "certainly potential" for them to succeed with those customers. </p><p>One big advantage is Dropbox's approach to security and infrastructure. Most of Dropbox's services run on services owned and operated by the company, rather than third-party cloud storage providers like Amazon Web Services or Microsoft Azure.</p><p><span style="font-weight: 400;">"I'm really impressed with the approach to security that Dropbox takes - because they run their own infrastructure, they have their arms around everything," Frazier said. "</span><span style="font-weight: 400;">If I were an enterprise buyer, </span><span style="font-weight: 400;">I would be looking at that really closely at that as a potential competitive advantage."</span> </p><h2>Dropbox could struggle to keep its 'creative' brand once public </h2><p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Karyne Levy/Business Insider</span></p><p class="caption">The Dropbox office T-shirt collection</p></div><p></p></div></div>In October, Dropbox rebranded to position itself as a the cool, creative collaboration tool. "We want to make work a place where creative energy flows," <a href="https://dropbox.design/">the company said in its announcement</a> of the rebrand. </p><p>Hobert thinks this positioning has worked for the company so far, but that it might pose a challenge to Dropbox once the company is facing constraints as a public company. </p><p><span style="font-weight: 400;">"Dropbox has always impressed me as a company that has a strong personal ethos around creativity and doing things the way they'd like to. Being private, they've benefited because they've been able to be innovative," Hobert said. </span></p><p><span style="font-weight: 400;">"Once they go public, they might have other pressures that hinder that ethos, that might put more imperative on delivering certain capabilities. </span><span style="font-weight: 400;">There will be a little bit of a sobering up because they no longer can be autonomous," she said. </span><span style="font-weight: 400;"></span></p><p class="tagline">Visit  <a href="http://markets.businessinsider.com/">Markets Insider</a> for constantly updated market quotes for individual stocks, ETFs, indices, commodities and currencies traded around the world. <a href="http://markets.businessinsider.com/">Go Now!</a></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/exercise-workout-shape-routine-2016-12">An exercise scientist reveals exactly how long you need to work out to get in great shape</a></h3>        <div>                    </div>    </div>

Dropbox needs to find a new 'ethos' and more business customers for an IPO home run

<p>Hello, and welcome to Power Line, a weekly clean-energy newsletter from Business Insider.</p><p>I'm <a href="https://www.businessinsider.com/author/benji-jones">Benji Jones</a>, a science-turned-energy reporter based in our New York office. I collected baseball-sized apple snails as a kid and did my high-school history fair project on global warming. I haven't changed much since then. </p><p>Here's what you need to know:</p><ul><li>Want to get Power Line in your inbox every Friday? <a href="http://newsletter.businessinsider.com/join/4np/power-line">Sign up here</a>, if you haven't already. </li><li>Most of our coverage is available exclusively to BI Prime subscribers. If you're looking for a discount on a subscription to BI Prime, <a href="https://www.businessinsider.com/subscription/prime-discount?r=birefer-bjoneshttps://www.businessinsider.com/subscription/prime-discount?r=birefer-bjones">click here</a>.  </li><li>Do you have any story tips or feedback? Shoot me an email at <a href="mailto:bjones@businessinsider.com">bjones@businessinsider.com</a>.</li></ul><h2><strong>Introducing … Power Line! </strong></h2><p>I'm thrilled to share the very first installment of Power Line, our new weekly newsletter focused on clean energy. It will come out around midday on Fridays. </p><p>What's it all about? In the face of climate change, the energy industry is going through a massive overhaul. Corporate giants are trying to decarbonize. Electric vehicles are replacing gas guzzlers. Startups are pursuing new energy sources. </p><p>In other words: There's a lot going on in the business of clean energy. And whether or not you're considering buying a Tesla, all of that change will affect you, assuming you use electricity.  </p><p>Power Line - and our new energy reporting, more broadly - exists to cover and contextualize this transition through a business lens. In short, the beat is the business of clean energy. </p><p>It's new for us, so we're just gearing up. As always, please send along whatever feedback you have on this newsletter or our coverage. </p><p>Let's get to it! </p><h2><strong>The top clean-energy startups</strong></h2><p>On Monday, we published a list of the <a href="https://www.businessinsider.com/list-top-clean-energy-startups-disrupting-energy-industry-2020-1">top 21 clean-energy startups</a>, ranked by their most recent post-money valuations. </p><ul><li>There were only five unicorns - companies valued at more than $1 billion. </li><li>Why is that? One source said it's because clean energy companies don't produce "networks of users," which are required to generate buzz. </li><li>To no surprise, many of the most valuable companies make batteries destined for EVs or consumer tech. (FYI: <a href="https://www.businessinsider.com/clean-energy-investor-tom-blum-wont-bet-on-batteries-2020-1">One top investor told me he thinks batteries are a terrible investment.</a>)</li><li>But in the No. 1 place ... a fusion-energy startup, TAE Technologies, which is backed by Google's parent company, Alphabet. If you're not familiar with fusion energy, I'm not surprised. It's complicated. <a href="https://www.businessinsider.com/bezos-backed-fusion-energy-startup-general-fusion-raises-65-million-2019-12">Check out this story (no paywall), which has some background</a>. </li></ul><p>Methods: I used data from the platforms PitchBook and Crunchbase and reached out to most of the companies for more up-to-date info. </p><p><strong>In other startup-list news</strong> … the research firm Cleantech Group <a href="https://www.businessinsider.com/cleantech-group-report-reveals-trends-shaping-the-energy-industry-2020-1">released its flagship report on this year's top 100 startups</a> on Thursday. </p><ul><li>The list is compiled using financial data from the firm's database, i3, in addition to input from 80 industry experts and analysts. </li><li>Nearly half of the startups are in the "power and energy" sector, while others are filed into categories like food and agriculture or materials and chemistry.  </li><li>This year, a large chunk of the energy startups make batteries, smart-grid technology, or smart-building technologies. </li><li><a href="http://info.cleantech.com/2020-Global-Cleantech-100-Report-Download.html?utm_campaign=2020GCT100&amp;utm_medium=Banner&amp;utm_source=Homepage">You can download the full report here</a>. </li></ul><h2><strong>Top clean-energy investors </strong></h2><p>OK, so we're into lists this week. I feel good about it. </p><p>We took <a href="https://www.businessinsider.com/top-10-most-active-clean-energy-investors-in-2019-bnef-2020-1">a look at the most active private equity and venture capital investors</a> in the clean energy space, based on deals in 2019. </p><ul><li>Well, well, well … Big Oil accounted for 4 of the top 10 positions. Shell was No. 1, with 9 deals last year. </li><li>Is that a surprise? Not really, when you consider that oil and gas giants are <a href="https://fortune.com/2019/05/12/oil-gas-corporate-rebranding-climate-change/">rebranding</a> to energy giants and making sizable commitments to clean energy. Plus, they know better than anyone where the industry is headed (hint: it's not towards fossil fuels.)</li><li>Other top positions were filled by big names in clean energy finance like Breakthrough Energy Partners, an investor coalition led by Bill Gates, and Energy Impact Partners. </li></ul><p>Bonus! Here are the top clean-energy investors by dollar amount in 2019, according to BloombergNEF (BNEF), which we didn't include in our story. </p><ul><li>Alberta Investment Management Corp ($1.6 billion)</li><li>Public Investment Fund of Saudi Arabia ($1 billion)</li><li>Amazon ($675 million)</li><li>Abu Dhabi Investment Authority ($412 million)</li><li>GIC ($412 million)</li></ul><h2><strong>So, how much did all those investors spend? </strong></h2><p>It depends on who you ask. Here are three figures for <a href="https://www.businessinsider.com/top-10-most-active-clean-energy-investors-in-2019-bnef-2020-1">private investment in clean energy</a> for 2019. </p><ul><li>$10.5 billion in private equity and venture capital, according to BNEF </li><li>$9.7 billion in venture capital, according to PitchBook </li><li>$35.2 billion in venture and corporate venture capital in cleantech, excluding deals above $350 million, according to Cleantech Group </li></ul><p>The bottom line: Clean energy won big in 2019, no matter what data you're looking at. </p><h2><strong>For some, investments really paid off</strong></h2><p>Let's talk about the hedge fund Lansdowne Partners. It manages a $221-million clean-energy fund, <a href="https://www.businessinsider.com/lansdowne-partners-clean-energy-hedge-fund-returned-37-in-2019-2020-1">which saw astonishing gains in 2019 on the tune of 37%</a>, according to an HSBC hedge fund report. For the record, 8% was the average across all hedge funds last year. </p><p>Why did it do so well? The fund manager <a href="https://www.businessinsider.com/lansdowne-partners-clean-energy-hedge-fund-returned-37-in-2019-2020-1">gave us three reasons</a>:</p><ul><li>2018 was a bad year. Two investments tanked, pulling the whole fund down. </li><li>Climate change, of course! It's given the renewable energy industry a strong tailwind. Especially wind companies. No, really. </li><li>Renewables are now cheaper than carbon energies in much of the world. </li></ul><h2><strong>What smart people told us this week</strong></h2><p><strong></strong></p><strong></strong><p><a href="https://www.businessinsider.com/hedge-fund-lansdowne-partners-is-investing-in-wind-vs-solar-2020-1"><strong>Per Lekander, energy fund manager at Lansdowne Partners: </strong></a>Wind is a better investment than solar. "I should probably be more bullish on solar, but I'm not. I'm way more bullish on wind." </p><p><a href="https://www.businessinsider.com/why-energy-impact-partners-fund-is-investing-in-consumer-tech-2020-1"><strong>Sameer Reddy, partner at Energy Impact Partners:</strong></a> A "fundamental paradigm shift" is coming in the way consumers think about electricity. People are becoming more energy conscious, which is great news for startups like Arcadia and Ecobee that give customers more control over their energy usage. </p><p><a href="https://www.businessinsider.com/cleantech-group-report-reveals-trends-shaping-the-energy-industry-2020-1"><strong>Jules Besnainou, director of Cleantech Group:</strong></a> Four major trends are shaping the energy industry. </p><ol><li>The rise of public pressure, fueled by climate change</li><li>A host of mega-corporations are committing to pollute less. (<a href="https://www.businessinsider.com/decarbonization-is-good-for-business-repsol-ceo-says-2020-1">Check out the interview I did with the chief executive of the Spanish oil giant Repsol, which recently committed to going carbon neutral by 2050</a>.)</li><li>To meet those commitments, companies are cooperating with startups. </li><li>An increasing share of foreign investment in clean tech is heading towards European startups. </li></ol><h2><strong>4 big stories I didn't cover</strong></h2><ul><li><a href="https://www.nytimes.com/2020/01/14/business/dealbook/blackrock-climate-change.html">The world's largest asset manager, BlackRock, is moving away from Fossil Fuels</a> (New York Times)</li><li>Microsoft made an ambitious pledge to become "carbon negative" by 2030. <a href="https://www.axios.com/microsoft-house-republicans-climate-change-7431f0d6-4bca-4cab-8cab-ba9379e55c87.html">Axios' Amy Harder reports that the software giant is also "supporting House Republicans' more modest efforts on the matter."</a></li><li>A whopping 76% of new power capacity in 2020 will come from solar and wind energy, <a href="https://www.eia.gov/todayinenergy/detail.php?id=42495">according to the  U.S. Energy Information Administration. </a></li><li><a href="https://www.greentechmedia.com/articles/read/volkswagen-will-be-worlds-biggest-ev-manufacturer-by-2030">Volkswagen will be the largest EV maker by 2030</a> (Greentech Media). Relatedly: Today, <a href="https://www.reuters.com/article/us-guoxan-m-a-volkswagen-exclusive/exclusive-volkswagen-to-buy-20-of-chinese-battery-maker-guoxuan-amid-electric-push-sources-idUSKBN1ZG0EK">Reuters reported</a> that the automotive giant is set to buy 20% of the Chinese battery maker Guoxuan.</li></ul><h2><strong style="color: #222222;">Finally, here are this week's top deals </strong></h2><ul><li><strong>Arrival, </strong>an EV startup, raised $111 million from Hyundai and Kia, according to PitchBook</li><li><strong>Agilyx, </strong>one of the most valuable clean-energy startups, raised $10.7 million in private equity from undisclosed investors, according to PitchBook. </li><li><strong>Pearl Certification, </strong>an energy efficiency certification startup, raised $6 million from undisclosed investors, according to Pitchbook. </li><li><strong>Rebound Technologies, </strong>a refrigeration startup, raised $5 million in a deal led by Clean Energy Ventures and Skyview Ventures, according to PitchBook. </li><li><strong>Mixergy,</strong> a thermal energy startup, raised $4.7 million Foresight Williams Technology and Centrica, according to Cleantech Group's i3 platform. </li></ul><p>That's it! Have a great long weekend.</p><p>- Benji </p>

Power Line: Introducing a new clean-energy newsletter from Business Insider, and a look at the top clean-energy startups

<a class="zoomin" href="https://static-ssl.businessinsider.com/image/596e001fa47cb5de468b4669-960/mira%20founders.jpg"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Mira</span></p><p class="caption">Bottom left: COO Matt Stern. Top Left: CPO Montana Reed. Top Right: CEO Ben Taft. Bottom Right: CTO Evan Bovie.</p>Most college kids around their senior year look for internships or a killer beach house for the summer.<p>Not the founders of <a href="http://mirareality.com">Mira</a>. As their fourth year at the Jimmy Iovine and Andre Young Academy at USC approached, they were working on prototypes and seeking funding for a new device that they hoped would supercharge the young and hot augmented reality industry.</p><p>They succeeded landed $1.5 million in funding led by Sequoia Capital, and now their company, Mira, <a href="http://mirareality.com">is launching an augmented reality headset for $99</a>, a fraction of the cost of high-end competitors like Microsoft's Hololens. </p><p>Augmented reality is a technology with interest from giants like Apple and Facebook because it integrates computer graphics with the real world. In a best-case scenario, some believe sufficiently advanced AR glasses could replace the smartphone and all other screens in a user's life. </p><p>But unlike the $3,000 Hololens, Mira's Prism headset is affordable because it uses an iPhone for the headset's brain: Mira apps run on an iPhone, and the iPhone screen is part of the display. It's a similar approach as Google Cardboard, which is by far the most common VR headset, although it's been criticized for offering a low-end experience.</p><p>"Right now this is the only accessible hardware solution for AR," Mira CEO Ben Taft said. </p><a class="zoomin" href="https://static-ssl.businessinsider.com/image/596e0120552be55f008b4fb7-960/miraprismproduct001.jpg"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Mira</span></p><p class="caption">An iPhone fits into the Prism headset and becomes its processing center and part of its display.</p>"This is really a vehicle to deliver our software platform and the content we're co-creating," Mira COO Matt Stern said. "It's all about creating an accessible solution that people aren't scared of - not putting a big machine on their head that costs multiples of $1,000."<p>With Mira, the iPhone's screen reflects onto a custom-molded clear lens. The result is sharp, colorful images on top of the real world. There isn't a whole lot of software that takes advantage of this new kind of display yet, but Taft and his cofounders hope that Mira can spark a whole gold rush of developers who see phone-based AR like what's happening with Apple's ARKit software, but want to see how it works on a headset. </p><p>"The industry is getting really interested in this area. There doesn't seem like there is a good low-cost way to learn about and experiment and figure out why AR really matters. And that's what really excited us about Mira," Omar Hamoui, partner at Sequoia Capital, told Business Insider. </p><h2>In the fishbowl </h2><p class="source"><span>Mira</span></p>Before Mira was a funded startup with backers including Salesforce CEO Marc Benioff and will.i.am, it was the dream of friends at the University of Southern California. <p>Taft and  Stern were classmates in a new program designed to encourage creative thinking and entrepreneurial risk-taking that was funded by Beats founders Jimmy Iovine and Dr. Dre after they sold their company to Apple for $3.2 billion. </p><p>"We were classmates first, then we became best friends, and then we became coworkers, and then we became cofounders," Taft said. </p><p>They were looking for a way to start developing in AR, a very trendy technology, but they couldn't afford a Microsoft Hololens, which has a list price of $3,000.</p><p>"Originally, rather than pooling money together to buy a Hololens, we literally started sourcing Android spec phones from China and components from Alibaba - we were building these makeshift headsets," Stern said. "Literally thousands of 3-D printed prototypes." </p><p>Although the cofounders hooked up with a professional industrial designer to finalize the design, when they started pitching venture capitalists, including Sequoia, their headset was definitely in the prototype stage. Even as the project got more serious, the Mira founders still found a way to get stuff done on the cheap. </p><p class="source"><span>Mira</span></p>"To get custom one-off optics custom coated and everything would've cost us $10,000 and we simply didn't have that. To save money, instead of going a very complicated route, we basically were like, how can we make the low-cost version of that?" Taft said.<p>"We realized these plastic fishbowls on Amazon had a radius of curvature that was exactly right for what we needed, so we ordered $10 fishbowls on Amazon, cut out square lenses, and then the same film you put over windows to make them semi-reflective. We just prototyped it," he continued.  "And that's what we raised the seed round on." </p><p class="source"><span>Mira</span></p><p class="caption">The Prism headset comes with a remote control. The founders call the virtual representation of this remote a "tentacle."</p>"When we invested, the demo was crazy hacking, a fishbowl headset," Hamoui said. "That's part of what we loved about it, to be honest. The crazy hacking was really promising to us. It's nice to see people who are still getting things done with what they have, as opposed to going and raising $3 million seed from who's who and spending all this money to do what they could've done with a fishbowl."<p>Now the company has some money in the bank, 12 employees, an office in downtown L.A., and headsets coming off the assembly line in China - but the founders still have to complete their senior year at USC.</p><h2>A software company </h2><p class="source"><span>Mira</span></p><p class="caption">Other participants can peek into a Mira experience on a separate phone.</p>The founders still see Mira as ultimately a software company, not a headset maker in the long run. "It's going to be hard to compete with those giant vendors" like Microsoft, Taft says. So a lot of emphasis has been put on making social software in the demos they've created so far. <p>One of the more striking features built into Mira's software is called Spectator Mode, which allows other users to see what the user is seeing through her headset on a smartphone. It also allows users to record video or share photos of an experience online, helping AR spread the same way that photos of people with Pokemon in Pokemon Go helped that game become a viral sensation. </p><p>There's also a demo of a game which two headsets can gaze on the same virtual object at the same time. </p><p>For now, much of the content on Mira is meant to demonstrate the capabilities of the technology. They're demos. But Mira's founders want there to be a wealth of games and other experiences available for the headset by its planned consumer launch this December. </p><p>So Mira is planning to use its seed funding to bankroll some content, and it's also developing a software development kit for the headset that will enable users to port their AR software to Mira.</p><p>Developers who preorder now should receive their headset by the fall. </p><h2>Here's what it's like: </h2>            <h3>NOW WATCH: <a href="http://www.businessinsider.com/apple-ios-11-best-new-features-review-2017-6">I've been using the new iOS on my iPhone - here are the new features that impressed me the most</a></h3>                                    Please enable Javascript to watch this video

Two USC seniors walked into Sequoia Capital with a prototype made out of a fishbowl and landed $1.5 million

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Getty</span></p><p class="caption">Facebook CEO Mark Zuckerberg's company has faced scrutiny of late for its power and influence.</p></div><p></p></div></div></p><ul><li><strong>In the wake of the <a href="http://www.businessinsider.com/facebook-suspends-cambridge-analytica-strategic-communication-laboratories-2018-3">Cambridge Analytica scandal,</a> Facebook has been facing scrutiny about its size and power. </strong></li><li><strong>The company has indeed become immensely powerful, but so too have Google, Apple, and Amazon.</strong></li><li><strong>Their power has numerous bad effects for consumers and society, including the destruction of whole industries and even slow national economic growth.</strong></li><li><strong>But for decades regulators have been ignoring such consequences of the concentration of corporate wealth.</strong></li><li><strong>It's long past time for US regulators start focusing on such problems - and to do something about them.</strong></li></ul><p><br />In an <a href="https://www.npr.org/2018/04/05/599761391/full-transcript-facebook-coo-sheryl-sandberg-on-protecting-user-data">extended interview</a> with Facebook's Sheryl Sandberg last week, National Public Radio host Steve Inskeep asked if she and her fellow executives at the company had ever asked themselves whether the social networking giant they oversaw had become too powerful.</p><p>Sandberg, Facebook's chief operating officer, assured Inskeep that was something she and her colleague had in fact thought about. But she didn't exactly give an answer to that question.</p><p>So let me answer it for her: Yes, Facebook has become too powerful. Guess what, so too have Google, Amazon, Apple, and maybe a few other tech giants.</p><p>Their power is having negative effects in a wide range of areas. Facebook and Google's <a href="http://www.businessinsider.com/facebook-and-google-dominate-ad-industry-with-a-combined-99-of-growth-2017-4">duopoly control of digital advertising industry</a> is helping kill off much of the publishing industry. Facebook's unprecedented scale and the sheer amount of data it has on its users has allowed propaganda artists to influence national elections.</p><p>Meanwhile, Amazon's growing market dominance is undermining the traditional brick-and-mortar <keyword id="6354851" type="UNKNOWN" weightage="60" keywordseo="retail">retail</keyword> industry. Apple is <a href="https://www.marketwatch.com/story/apple-smartphone-profit-share-fell-in-third-quarter-analysts-say-2017-12-27">siphoning off nearly all of the profits</a> in the smartphone industry, hindering other companies' ability to innovate or compete.</p><p>More broadly, there's growing evidence that the outsized market dominance of a handful of giant US companies is the <a href="https://www.vox.com/policy-and-politics/2017/7/31/16021844/antitrust-better-deal">cause of the slow economic growth we've seen in recent years and the years' long stagnation in workers' wages</a>.</p><p>It's long past time for government antitrust regulators to step in. Because the companies are distinct from each other and exercise their control in different ways, the actions regulators will have to take will vary. Regardless, we as a society need to get serious about these companies' power - and constrain it.</p><h2>Regulators have focused too much on consumer prices</h2><p>This problem has been a long time coming. Arguably it <a href="https://www.washingtonpost.com/archive/opinions/1999/06/13/when-antitrust-helped-and-why-it-doesnt-now/68ea1edd-bd6b-484f-82b4-88243ef818a7/?utm_term=.310a49372a94">dates back to the early days of the Reagan Administration</a>, when officials - under the influence of the pro-business, anti-regulatory Chicago school of economics - reinterpretted antitrust law.</p><p>Prior to that, regulators actively tried to prevent companies from concentrating their power, blocking mergers or barring them from particular lines of business and even, the case of AT&amp;T or Standard Oil, moving to break them up.</p><p>But the Reagan administration took a different tack on antitrust law. They no longer viewed sheer size or power as a problem. Instead, they thought it could be beneficial, if a company used its market power and scale to reduce prices. Beginning with those officials, antitrust regulators in general only worried about corporate power when it led to increases in the consumer prices.</p><p><div class="KonaFilter image-container display-table float_left"><div><div class="image on-image"><p class="source"><span>Beck Diefenbach/Reuters</span></p><p class="caption">Under CEO Sundar Pichai, Google dominates web search, search <keyword id="35666" type="COMPANY" weightage="60" keywordseo="advertising">advertising</keyword>, smartphone operating systems, the streaming of user-generated videos, and the web browser market.</p></div><p></p></div></div>In recent years, though, some policy makers and economists have begun to realize that if you look at corporate power only through the lens of consumer prices, you miss out on lots of other bad effects of business concentration.</p><p>Google's dominance of the web-search market has no direct effect on consumer prices; we consumers get to use its service for free. But the lack of competition in search means that Google has enormous power over what we see and access on the internet, and critics have charged repeatedly that it's used that power to favor its own services.</p><p>Likewise, Facebook's dominance of the social-networking market doesn't affect the price consumers pay; like Google, it offers its service for free. But from the widespread dissemination of fake news to the leaking of profile data on likely more than a billion users, there are big problems related to Facebook's enormous size.</p><p>But the antiregulatory zeal of the Chicago School-influenced policy makers has led them to ignore even more obvious examples of monopoly power. For example, Facebook and Google combined account for more than 70% of the US digital advertising market and more than 80% of all the growth in that market. Together, they now account for more than 25% of the global market for advertising of all kinds.</p><p>In the past, that kind of concentration of power would have spurred regulators to intervene in the market. Instead, they've just let Facebook and Google continue to get bigger, including, in Facebook's case, by buying promising - and potentially threatening - <a href="https://www.wired.com/story/facebooks-aggressive-moves-on-startups-threaten-innovation/">startups such as tbh</a>.</p><h2>Google has been given a pass for allegedly doing the same stuff that got Microsoft in trouble</h2><p>The antiregulatory fervor has also led US regulators to give a pass to what look to be even blatant violations of antitrust law. One of the foundational principles of US competition law is that while it's legal to have a monopoly, such companies are generally forbidden from trying to use that power to extend their dominance into another market. It's that principle that led to the government's antitrust case against Microsoft; the company was accused of trying to use its dominance in PC operating systems to thwart competition in the nascent market for web browsers.</p><p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>The Bill and Melinda Gates Foundation</span></p><p class="caption">When Bill Gates was CEO of Microsoft, the company was prosecuted for violating antitrust laws.</p></div><p></p></div></div>Google is accused of doing the same thing. The company's Android software is in a similar position to Windows 20 years ago; Android is the dominant smartphone operating system. According to the European Commission - which does take monopoly power seriously - Google has required Android smartphone makers that want to be able to offer customers access to its Google Play app store or to its search app to include a whole suite of other Google apps. That's almost the exact same thing that Microsoft was accused of, yet unlike in that case, US regulators have done nothing to stop it.</p><p>That laissez-faire attitude may soon change. Some in the Republican party have long expressed reservations about Google's power. Many politicians on both sides of the aisle are raising questions about Facebook following revelations about its role in the 2016 election and, more recently, in the wake of the <a href="http://www.businessinsider.com/category/cambridge-analytica">Cambridge Analytica scandal</a>.</p><p>Meanwhile, President Trump and Bernie Sanders both have criticized Amazon. And the need to take on corporate power more generally has become a rallying cry among Democrats, especially amid new research about how the lack of competition is stymying economic growth and wages.</p><h2>Here's an action list for regulators</h2><p>But if US regulators do start to take corporate power more seriously, what should they do?</p><p>Here are some suggestions:</p><p><strong>Force the companies to break apart into smaller pieces.</strong> Take Alphabet Inc. Its Google unit controls the markets for search, search advertising, mobile operating systems, and, through YouTube, the streaming of consumer-produced videos. Its Chrome business dominates the browser market and computers running the Chrome OS operating system dominate the education market. Google sister company Waymo has a leading position in self-driving cars.</p><p>Regulators intent on curbing Alphabet's power might easily conclude that not all of those businesses ought to be controlled by the same company. They might try to force Google to divest itself of YouTube or demand a separation of its search and mobile apps businesses. Similarly, they could force Facebook to give up Instagram and WhatsApp.</p><p><strong><div class="KonaFilter image-container display-table float_left"><div><div class="image on-image"><p class="source"><span>Reuters</span></p><p class="caption">Under CEO Tim Cook, Apple bars users from choosing which web browser or mail program they want to be the default apps on their iPhones.</p></div><p></p></div></div>Block new acquisitions.</strong> The tech giants ought to be barred from making purchases that make them bigger or further restrict competition. Regulators who were truly concerned about Facebook's dominance of the social networking market would never have given it a free pass to buy WhatsApp.</p><p><strong>Block schemes in which the companies try to extend their power to new areas.</strong> Again, this is just fundamental to US antitrust law. You can't allow a company that dominates in one area to use that power to try to seize control of another one. In practice, that would mean taking a serious look at the licensing terms Google uses to promote its smartphone apps. It also might give regulators a way to take on Apple and the preferential treatment it gives on the iPhone to its own apps, such as the Safari browser, and its own services, including Apple Music.</p><p><strong>Force the giants to lower switching costs.</strong> The tech giants don't want you to switch, and they spend a lot of their time trying to design their services so that you'll stick around - both because everything within them works together so well, but also because it would be just too painful to go elsewhere. Regulators ought to make companies to make it easier to go to the competition.</p><p>For example, it's literally impossible to change the default apps on the iPhone. If you want to use Chrome as your default browser or Outlook as your default mail app, you're out of luck. Regulators could insist that Apple give consumers the power to set their own defaults.</p><p>Or take Amazon. Arguably one of the reasons it's been so successful is because it knows so much about its consumers; it can predict what they will want and set its prices and inventory accordingly. It might make sense for regulators to force the company to allow consumers to be able to take their shopping data to rival stores.</p><p><strong>Force the giants to open up their systems.</strong> One way to get more competition would be to require the tech giants to make their technology available to potential competitors. Sure, companies must be able to benefit from their intellectual property and their innovation - that's fundamental to a vibrant economy. But when a product becomes an essential utility, leaving it in the hands of a single player can stiffle innovation and run counter to the best interests of society.</p><p>In the case of Google, that might mean making its search algorithms public so that other companies can copy and modify them. In the case of Amazon, it might mean forcing it to share its anonymized insights on consumer purchase behavior. For Apple, it might mean forcing the company to allow other companies to build devices using iOS or macOS, either by licensing them to competitors or by eliminating the copyright protection on older versions of those operating systems to push them into the public domain.</p><p>I'm sure there are other ideas out there; this isn't meant to be an exhaustive list. Some of these ideas may not work or may not be allowed under current law. And you can be sure the tech giants will fight tooth-and-nail against any attempts to curb their power.</p><p>But that's precisely what the present moment requires. These companies are way too powerful, and it's long past time that we get them under control.</p><p class="tagline">Get the latest Google stock price<a href="http://markets.businessinsider.com/stock/GOOG-Quote"> here.</a></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/neuroscientist-explains-why-reality-hallucination-meaning-2018-3">A neuroscientist explains why reality may just be a hallucination</a></h3>        <div>                    </div>    </div>

Facebook, Google, Apple, and Amazon have too much power - so it's time for regulators to take on tech's titans

Inside Symphony's battle to break into a $28 billion market for Wall Street chat - and avoid becoming Bloomberg roadkill

<p><span style="line-height: 1.5em;"><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div><p></p></div></div>A recent </span><a href="https://medium.com/@furrier/original-content-the-story-of-aws-and-andy-jassys-trillion-dollar-baby-4e8a35fd7ed">interview</a><span style="line-height: 1.5em;"> with Amazon Web Services' chieftain Andy Jassy repeatedly touts the "trillion dollar opportunity" associated with the inexorable transition of enterprise IT to the cloud. Perhaps because his interlocutor was so busy inserting himself into the interview, Jassy isn't actually quoted uttering the T-word (although he does manage to land "TAM"). But he certainly isn't refuting the notion there are thirteen orders of magnitude associated with the Enterprise Cloud Jackpot (and I use Jackpot in a thoroughly </span><a href="http://www.amazon.com/gp/product/B00INIXKV2/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=390957&amp;creativeASIN=B00INIXKV2&amp;linkCode=as2&amp;tag=platformonomi-20&amp;linkId=OCYC4L3RL5GOIRL7">non-Gibsonian</a><span style="line-height: 1.5em;"> way, though legacy vendors may see it apocalyptically). As the cloud computing leader today, AWS is in the pole position for this tectonic shift. The question is whether being part of Amazon going forward is on balance more help or hindrance to AWS winning their fair share of the Jackpot.</span></p><p>Amazon obviously was able to conceive, nurture and build a heretical idea into AWS today. It is inconceivable any traditional IT vendor could have done this and hard to imagine other candidates with comparable wherewithal and "willingness to be misunderstood". But we're past the point of being misunderstood. Pretty much everyone now accepts that vast chunks of IT are shifting to the cloud (with the notable exception, admittedly, of legions of enterprise IT people clinging to their servers in a desperate bid to preserve the status quo). Even the <a href="http://www.platformonomics.com/2013/03/ibm-how-much-longer-do-the-good-times-last/">biggest technology dinosaurs</a> now recognize that the incoming cloud meteor is a potential extinction event.</p><p>AWS continues to innovate and execute well. Their near and medium-term success is not in doubt. But being part of Amazon raises questions about their ability to fully capture the big prize. Can they achieve generational dominance a la IBM or Microsoft in their primes? Will they be one major player among several? Or does their early lead whither away? Being part of Amazon brings benefits, but also significant baggage, specifically difficulty concentrating, having sufficient cash to compete and adverse cultural factors.</p><h2><span>Concentration</span></h2><p>Big as it is in its own right, AWS is a relatively small part of Amazon and gets lumped into their glamorous "Other" segment, which did $5.6B in 2014 (about 6% of Amazon's overall $89B in revenue). Notably, "Other" was the fastest growing segment at 42% vs. 20% for the company overall. The Amazon-branded credit card gets cited as another occupant of "Other", but our grasp of the AWS business remains tenuous.</p><p>Beyond the trillion dollar Enterprise Cloud Jackpot, Amazon's core e-commerce business still has tremendous upside. E-commerce in the US last year <a href="http://www.geekwire.com/2015/cha-ching-u-s-e-commerce-sales-surpass-300b-for-the-first-time-in-2014/">was over $300 billion and but only 6.5% of overall retail sales</a>. Amazon takes an expansive view of the ecommerce business, investing in drone and local delivery, a broad line of consumer hardware for direct distribution of digital goods, <a href="http://www.geekwire.com/2015/inside-amazons-heavy-duty-fulfillment-center-robots-humans-form-perfect-symbiosis/">a robot army</a> and private label brands for everything from diapers to TV shows.</p><p>In contrast to Apple who says "no" by default, when confronted by new opportunities Amazon seemingly leaps up on the table and screams "Yes! Yes! Yes!" Their bonfire of initiatives has resulted in some notable and expensive misfires of late, including the <a href="http://www.businessinsider.com/tablet-sales-and-market-share-kindle-struggling-2015-2">disappearing Kindle Fire</a>, the <a href="http://www.fastcompany.com/3039887/under-fire">disastrous Fire Phone</a> and the under-heralded <a href="http://blogs.wsj.com/digits/2015/01/21/amazon-is-pulling-its-private-label-diapers-to-tweak-the-design/">Fire Diaper blowout</a> And the jury is still out on <a href="http://www.cnet.com/products/amazon-fire-tv/">Fire TV</a>, the not-exactly-setting-the-world-on-fire<a href="http://www.cnet.com/products/amazon-echo-review/">Echo Fire</a>, <a href="http://www.amazon.com/The-Man-High-Castle/dp/B00RSGFRY8">The Man on Fire in the High Castle</a>, <a href="http://aws.amazon.com/workmail/">WorkMail Fire</a>, and "hair on fire" <a href="http://techcrunch.com/2015/02/17/amazon-prime-now-one-hour-delivery-goes-live-across-manhattan/">one hour delivery</a> amongst other efforts. And, for completeness, <a href="http://www.businessinsider.com/amazon-data-center-fire-2015-1">this</a> is an AWS Fire.</p><p>It can be argued the company has poor impulse control, is fighting too many battles on too many fronts and must allocate cash, talent and attention across a very wide range. Amazon's historical "willingness to be misunderstood" and success in defying past criticism (to which I hereby add my name to a long list) don't do anything to suggest new restraint is imminent. This scattershot approach may make sense before product-market fit, but AWS is beyond that point. Many of these other activities are a distraction given AWS is chasing a plausibly trillion dollar market.</p><h2><span>Cash</span></h2><p>Cloud computing is not for the light of wallet, requiring many billions of dollars to build cavernous data centers scattered around the planet, stuffed with millions of servers. GigaOm<a href="http://gigaom.com/2015/02/04/google-had-its-biggest-quarter-ever-for-data-center-spending-again/">breaks down last year's capex spending</a> by the big players:</p><p><div class="KonaFilter image-container"><div class="image"><a href="http://www.platformonomics.com/wp-content/uploads/2015/02/image.png"></a></div></div></p><p>Now these numbers aren't pure apples to apples comparisons. Amazon's capex also goes to erect even more <a href="http://www.geekwire.com/2015/inside-amazons-heavy-duty-fulfillment-center-robots-humans-form-perfect-symbiosis/">cavernous e-commerce distribution centers</a> with <a href="http://phx.corporate-ir.net/phoenix.zhtml?c=97664&amp;p=irol-newsArticle&amp;ID=2011894">"more than 15,000 robots in 10 fulfillment centers across the U.S."</a> Google and Microsoft both spend big on search infrastructure, and Google's numbers include YouTube, flotillas of <a href="http://motortrivia.com/2014/innovation-01/104/google-self-driving-cars-2014-02.jpg">automotive</a>, <a href="http://media.nbclosangeles.com/images/652*367/02-03-2014-google-barge.jpg">sea-going</a>, <a href="http://www.dragonblogger.com/wp-content/uploads/2013/06/google-loon.jpg">aerial</a> and<a href="http://www.engadget.com/2014/06/10/google-acquires-skybox-imaging-satellites/">space-faring</a> vehicles, and based on the sheer magnitude, maybe the odd <a href="http://www.fastcompany.com/3029138/world-changing-ideas/google-x-confirms-the-rumors-it-really-did-try-to-design-a-space-elevat">space elevator</a>.</p><p>For comparison (and in lieu of a much-delayed "So You Want to be a Cloud Wanna-be" post with etiquette and strategy tips for cloud also-rans), here are similar period capex numbers for some of the <a href="http://www.platformonomics.com/2015/01/a-dispatch-from-cloud-city-2014-retrospective/">cloud wanna-bes</a> and their growth (or lack thereof) over the preceding year as they try to play catch-up:</p><table style="width: 916px; height: 242px;" border="0" cellspacing="0" cellpadding="0"><tbody><tr><td valign="top" width="159"> </td><td valign="top" width="243"><p align="center"><span>CAPEX (TTM)</span></p></td><td valign="top" width="283"><p align="center"><span>Growth over 2013</span></p></td></tr><tr><td valign="top" width="159"><p>HP</p></td><td valign="top" width="243"><p>$956M</p></td><td valign="top" width="283"><p>+4%</p></td></tr><tr><td valign="top" width="159"><p>IBM</p></td><td valign="top" width="243"><p>$3,779M</p></td><td valign="top" width="283"><p>0%</p></td></tr><tr><td valign="top" width="159"><p>Oracle</p></td><td valign="top" width="243"><p>$727M</p></td><td valign="top" width="283"><p>26%</p></td></tr><tr><td valign="top" width="159"><p>Rackspace</p></td><td valign="top" width="243"><p>$430M</p></td><td valign="top" width="283"><p>-5%</p></td></tr><tr><td valign="top" width="159"><p>VMware</p></td><td valign="top" width="243"><p>$352M</p></td><td valign="top" width="283"><p>2%</p></td></tr></tbody></table><p>(These are the budgets from which <a href="http://www.platformonomics.com/2014/01/small-blue-and-the-bonsai-datacenter/">bonsai datacenters</a> are built).</p><p>Meanwhile, returning from Lilliput, Amazon has the shortest stack at the grown-up table, with $17.4 billion in liquid assets to Google's $64.4 billion and Microsoft's $90.2 billion. Google in particular intends to push Amazon to the wall financially, though it was Bill Gates who said, "Never get into a price war with someone who has more money than you." Amazon has notably lost its prior enthusiasm for price cuts and obliquely grouses about networking costs where Google and Microsoft have a huge advantage in terms of facilities.</p><p>It has always been a bit of a mystery how Amazon could serve more cloud computing customers, spend less than Google or Microsoft and support aggressive build-outs of both datacenters and distribution centers. The assumption was search required significantly more infrastructure and/or Amazon was just somehow more efficient. But we've <a href="http://www.fool.com/investing/general/2015/02/04/amazon-just-admitted-that-its-losing-billions.aspx">recently learned</a> that Amazon has used capital leases to keep billions in capital spending off their cash flow statement. So their capital spending is closer to double what has been reported. This means their free cash flow, the metric they have relentlessly told investors is the key lens onto the company, is actually negative and declining in recent years (remember this: we'll revisit it below when we talk about employee recruiting and retention).</p><p>It is an easy quip as a low margin retailer to say "your margin is my opportunity" but you still have to pay for your datacenters. Every dollar spent on half-baked consumer hardware (or worse,<a href="http://recode.net/2014/12/02/more-amazon-fire-phones-are-coming-jeff-bezos-says/">doubling down</a> on a failed consumer hardware brand) or random TV shows, or giant distribution centers and bright yellow robots to support the core e-commerce business, is a dollar that isn't going to AWS. And Amazon must continue to invest significantly in its core e-commerce business, whether defined narrowly or broadly.</p><h2><span>Culture</span></h2><p>It is an open secret, at least in Seattle and amongst top tier technology firms, that <a href="http://www.glassdoor.com/Overview/Working-at-Amazon-com-EI_IE6036.11,21.htm">not many people enjoy working at Amazon</a>. Many companies have come north to open offices (e.g. DropBox, Facebook, Palantir, Salesforce, Twitter) and usually say they are there to lure talent from Microsoft. Yet with the notable exception of recent SoCal immigrants Oculus and<a href="http://www.geekwire.com/2015/spacexs-new-seattle-area-office-redmond-elon-musk-visit-region-week/">SpaceX</a> who are on Microsoft's side of the lake, most choose to locate their offices a stone's throw from Amazon's campus.</p><p>Amazon relies heavily on its stock for both recruiting and retention. They pay below market salaries, offer signing bonuses that pay out over the first two years and after that rely on stock to both carry the compensation load and overcome the drawbacks of the work environment. Independent of stock performance, you see a lot of Amazon resumes on the street as soon as the signing bonuses are paid out.</p><p>Amazon's stock price obviously reflects perceptions of the company broadly. It has been run as a profitless machine yet been richly valued for most of its history. Skepticism has emerged over the last year or two about whether the company will ever get out of "investment mode" and focus on financial returns. Amazon <a href="http://www.businessinsider.com/r-aws-move-disclosure-suggest-amazon-yielding-more-to-wall-street-2015-1">turned in a strong Q4</a> including an unexpected profit (they have conditioned Wall Street well…) which popped the stock by over 25%, but it still trades below its all-time high even as the rest of the market hits record highs.</p><p>Amazon has guided investors to <a href="https://hbr.org/2014/10/at-amazon-its-all-about-cash-flow/">focus on its free cash flow as opposed to profits</a>. Yet they felt the need to more explicitly call out the significant use of capital leases in their most recent earning call, which had heretofore been buried and largely ignored amongst the footnotes. The free cash flow picture looks very different, in both magnitude and trend, when these leases are considered:</p><p><div class="KonaFilter image-container"><div class="image"><a href="http://www.fool.com/investing/general/2014/12/22/amazoncom-inc-is-losing-more-money-than-you-think.aspx"></a></div></div></p><p>And note this debt is being incurred today at unprecedentedly low interest rates, a phenomenon that is unlikely to continue much longer.</p><p>AWS is growing fast and needs to continue to hire rapidly as it chases the Jackpot. Dependence on Amazon's stock, and the company's ability to sell Wall Street on anything-but-profit metrics, adds risk to their ability to recruit and retain. AWS also needs to build a culture that can meet enterprise customer expectations and that culture surely looks different than today's Amazon.</p><p>For example, Amazon's secrecy fetish and chronic inability to put numbers on the y-axis of charts is inconsistent with need to provide long-term roadmaps for customers contemplating taking enormous dependencies on AWS. The secretive culture alienates a whole range of useful hires for AWS. Further, Amazon the retailer gets <a href="http://www.platformonomics.com/2011/08/amazon-retailer-or-platform-company/">confused</a> about what it means to be a platform company. AWS has generally done a decent job walking this fine line (and platforms and their ecosystems are never static, which is a topic for another day) but a deft touch in nurturing the ecosystem is critical to AWS's future success.</p><h2><span>Set the Cloud Free</span></h2><p>On balance, I think AWS would be better positioned to realize the opportunities in front of it as an independent company, away from the vanities and vicissitudes of Amazon.</p><p>A full spinout of AWS from Amazon or even a partial IPO a la VMware would establish a focused entity that can single-mindedly pursue the Jackpot, with its own culture and compensation model. Amazon can stake the new company and the transparency associated with being a pure play chasing a $1 trillion TAM should give it the opportunity to raise all the money it needs to compete, especially while growth is still in the mid double digits. More distance from Amazon would also help AWS land more customers. Many large retailers <a href="https://gigaom.com/2015/03/01/for-retailers-the-buy-or-build-cloud-decision-looms-large/">consider AWS verboten</a> and as Amazon's sprawl continues, that competitive dynamic could impact AWS's ability to sell to media, consumer products and other industries.</p><p>A spinout of AWS may already be in progress. Amazon<a href="http://gigaom.com/2015/01/29/surprise-amazon-cloud-shows-growth-in-q4/">announced it will start disclosing AWS numbers</a> this year, which could be a first step. These numbers will be scrutinized every which way and will be fascinating to see. We could learn that it is AWS's capex specifically that is being capitalized and thus intended to be portable. Rumors also suggest AWS gets far less attention from the chief product designer and octopus taster at Amazon.</p><p>Will AWS still be part of Amazon in two years?</p><p><em>This article originally appeared on <a href="http://www.platformonomics.com/" target="_blank">Platformonomics</a>. Copyright 2015. Charles Fitzgerald is a Seattle area angel investor and cloud watcher.<strong>  </strong>Read more posts from Charles at <a href="http://www.platformonomics.com/" target="_blank">Platformonomics</a>. Follow Charles on <a href="http://www.twitter.com/charlesfitz" target="_blank">Twitter</a>.</em></p><p class="tagline">Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/inventor-auto-tune-music-kanye-west-t-pain-andy-hildebrand-2015-2">Here's the unlikely story of how auto-tune was created</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="hvOGE1czq9Y2lLOX0M4NZLaRu-dBP8ZI" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

It is time for Amazon Web Services to get out of Amazon

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Facebook</span></p><p class="caption">Brian Boland, Facebook VP of ad tech.</p></div><p></p></div></div>Facebook has shifted Atlas, <a href="https://techcrunch.com/2013/02/28/facebook-acquires-atlas/">the ad tech platform it acquired from Microsoft in 2013</a>, out of its ad tech group and into its measurement division.</p><p>The change, which took effect around two weeks ago, means Atlas now sits in Facebook's "marketing sciences" group, which is run by Brad Smallwood, the company's vice president of measurement and insights. </p><p>The ad tech division, which contains the lucrative Facebook Audience Network, will continue to be run by Brian Boland, Facebook's VP of ad tech. David Jakubowski, who was running Atlas, will also remain in Boland's team. The rest of Atlas will now work under Smallwood.</p><p>There will be no layoffs as a result of the change and the Atlas brand will stay for now, Facebook confirmed.</p><p>The restructure is a recognition of how Facebook's use of Atlas has dramatically changed since it was acquired all those years ago.</p><h2>It's all about "people based marketing" - not ad buying</h2><p>Back then, Facebook's acquisition of Atlas - an ad server and measurement platform - was seen as a way Facebook could make a huge dent to Google DoubleClick's monopoly of the display ad business. Atlas was a way advertisers could use Facebook's deep targeting data to buy ads on other websites not owned by Facebook.</p><p>Facebook had been working on building a demand-side platform (DSP) - software that lets advertisers use automated processes to buy online ads - but in March this year it pulled the project. <a href="http://www.businessinsider.com/facebook-pulls-demand-side-platform-from-atlas-2016-3">The company said it called off its DSP plans because there were too many bots and bad-quality ads on the open web</a>.</p><p>So Atlas became, predominantly, a measurement tag advertisers can use to match up users as they cross from one device to another. The ad server part of the platform still exists, but it's used mostly for "data fidelity" to ensure accurate measurement rather than acting as a true competitor to DoubleClick.</p><p>To some people, that will be seen as a shame - like buying a Ferrari only to use the steering wheel. <a href="http://adexchanger.com/platforms/facebooks-atlas-struggles-to-serve-its-market/">When AdExchanger reported on Atlas' progress in February</a>, the trade title was fairly derisory that most clients were simply using the platform for measurement, which it said was "not the promise of Atlas."</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span><a href="https://www.youtube.com/watch?v=Og0Fk-xvNH0">YouTube/IAB</a></span></p><p class="caption">Brad Smallwood.</p></div><p></p></div></div>Boland and Smallwood met with Business Insider during <keyword id="35666" type="COMPANY" weightage="100" keywordseo="advertising">Advertising</keyword> Week New York to explain how they think Atlas will perform better within the marketing sciences team, which combines Facebook's own measurement tools with partnerships from measurement firms like Oracle's Datalogix and Nielsen.</p><p>One of Facebook's big plays to advertisers is that it offers "people based marketing." The idea of Atlas is to take that approach to measuring ad performance to the entire web.</p><p>Facebook has expertise here because many of its users log into the social network on their mobiles, desktops, and tablets, which gives it first-party data. That means Facebook's Atlas can let advertisers know if someone who saw an ad (from across their entire digital campaign - not just ads on Facebook or ads bought through Facebook) for a pair of sneakers on their mobile phones went on to buy the product on their laptops. It also lets advertisers know if they reached the audience they paid to reach and not just the same people over and over again.</p><p>Boland said: "Our effort in measurement was to approach it not with a lens to do everything to make Facebook look good. It's to do everything to make people know and and believe this is truthful. We will stand by that truth: Either Facebook ads work [better than ads on other publisher sites] or they don't. And there's no hiding."</p><p>That comment is timely as it comes a week after Facebook admitted it had been over-inflating one of its video view metrics. Facebook has corrected the error and <a href="http://www.businessinsider.com/facebook-carolyn-everson-on-its-video-view-count-error-2016-9">VP Carolyn Everson has since said the company plans to be more public straight away if it makes mistakes again in future.</a></p><p>Smallwood said the aim isn't to encourage advertisers only to use Atlas, but to use a range of measurement partners to analyze their digital ads. However, Atlas charges advertisers on a cost-per-mille (CPM/cost per thousand impressions basis) so it's likely Facebook will be encouraging advertisers to use Atlas as their go-to digital ads measurement partner.</p><p>Ultimately, the move represents what was right to do for the business, according to Boland.</p><p>"I like that a work at a company where it is culturally acceptable for a bunch of people to move across the organization to a different place," he said "We have a culturally-installed set of values about doing what's right for the future of the business. I've shifted responsibilities a couple of times ... we're a very customer-centric organization and we look at ways to remove things that hinder you from executing well."</p><h2>It has been an eventful year for Facebook's ad tech group</h2><p>Atlas has never revealed the total number of advertiser partners it has (<a href="http://www.businessinsider.com/one-year-after-relaunch-atlas-reveals-its-brand-partners-2015-10">although it did disclose the names of 10 customers last year</a>), nor how much revenue it generates. The acquisition was nowhere near Facebook's biggest: <a href="https://techcrunch.com/2013/02/28/facebook-acquires-atlas/">TechCrunch reported the transaction price was between the $50 million to $100 million mark (but closer to $50 million)</a>. But nevertheless, it's certainly a change in direction product-wise from when Atlas was first bought in 2013 - even if the "people-based marketing" goal remains the same.</p><p>As for the ad tech group, that might change too.</p><p>Boland said: "I'm moving away from calling it the ad tech group. 'Ad tech' has lots of pre-conceived notions, very anchored to the LUMAscape of 2009 - cookies and desktop. I'm very focused on the monetization for publisher side of the business ... and how we solve real problems for advertisers, how it grows the ecosystem ... not in the abstract: People-based marketing."</p><p>(<a href="http://www.lumapartners.com/resource-center/lumascapes-2/">The LUMAscape </a>is the infographic created by investment bank LUMA Partners, which details where all the players in the ad tech ecosystem sit.)</p><p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image on-image"><a title_source="LUMA Partners" title_caption="The LUMAscape" class="zoomin" href="https://static-ssl.businessinsider.com/image/57ed56f9077dccca798b6e41-960/screen shot 2016-09-29 at 2.00.42 pm.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>LUMA Partners</span></p><p class="caption">The LUMAscape</p></div><p></p></div></div>There has been a lot of change in the ad tech division already over the past few months. Facebook shut two big projects this year: <a href="http://www.businessinsider.com/facebook-is-shutting-down-facebook-exchange-2016-5">FBX, its desktop exchange</a>, and <a href="http://www.businessinsider.com/facebook-shutting-down-liverail-2016-5">LiveRail, the video ad exchange it bought for around half a billion dollars in 2014</a>. </p><p>Facebook Audience Network (FAN) is Facebook's real ad tech strong point outside of Facebook's own ad platform. It's an old-school ad network model, but across mobile and it's a money-making machine. The company said FAN had a <a href="https://developers.facebook.com/blog/post/2016/01/07/evolution_LiveRail_Audience_Network/">$1 billion annual revenue run-rate last year</a>, although sources have told us the number now is closer to $2 billion. Boland declined to comment on the number.</p><h2>Facebook is "very good at learning"</h2><p>So, FAN aside, is the Atlas re-org a final nail in the coffin for Facebook and its attempts at building an ad tech stack? Has Facebook finally resigned itself to leaving that fight to Google and the rest of the LUMAscape?</p><p>Perhaps that's the wrong way to look at it.</p><p>Michael Collins, CEO of ad tech company Adelphic, told Business Insider: "Gaining access to Facebook's data outside their walled garden will improve measurement and attribution. Also, making this data available across real-time bidding and walled garden campaigns shows that Facebook is finally recognizing the value of the larger programmatic ecosystem."</p><p>Rob Norman, chief digital officer at WPP's media investment management division GroupM, told Business Insider he thinks Facebook has given up on building an alternative to DoubleClick.</p><p>He said: I think Facebook is interested in being big in the Facebook tech business. They are in love with their platforms and the potential number of use cases across Facebook, Messenger, Instagram, and elsewhere. The focus is to do more and better with these platforms."</p><p>Every now and then Facebook has made some bets that haven't worked, such its Facebook Paper curated article reader. <a href="http://www.theverge.com/2016/6/30/12062124/facebook-paper-shutdown">The app flopped and was shut down in July this year</a> but Norman suspects many elements from Paper were transferred across to its Instant Articles product. Norman predicts the same has and will happen with Facebook and its ad tech projects.</p><p>"They are very good at learning and you have to admire that about them," Norman said.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/new-research-hands-evolution-fish-fin-rays-genes-2016-9">Scientists discovered something 'shocking' that could rewrite a key part of human evolution</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="s0MjFzNTE6iJnX1xYTFzTNSH8EKFEp4H" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Facebook has shifted the focus of its ad tech platform Atlas and moved it into its measurement division

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Andreessen Horowitz</span></p><p class="caption">Scott Kupor, managing partner at Andreessen Horowitz</p></div><p></p></div></div>What's notable about recent mergers and acquisitions (M&amp;A) activity in software companies (including <a href="https://a16z.com/category/software-as-a-service/" target="_blank">SaaS</a>) isn't the number of deals (7), their worth ($8.6B disclosed value), or even the timing (all took place in just the last 30 days).</p><p>What's notable is whether this recent wave of activity signals the arrival of more <em>growth</em> - as opposed to consolidation - deals by acquirers.</p><p>Why does that distinction matter? Well first, let's take a quick look at the deals: four of the seven deals were private equity firms (Vista Equity Partners, Accel KKR, and Thoma Bravo) acquiring companies (Marketo &amp; Ping Identity, Sciquest, and Qlik Technologies, respectively). That's just business as usual in line <a href="https://a16z.com/2015/04/10/whats-holding-tech-ma-back/" target="_blank">with past tech M&amp;A activity</a>: <em>Non-growth</em> transactions in the form of going-private deals (or consolidation by large, established technology companies) have largely driven tech M&amp;A volumes just shy of peak levels last seen in 2000.</p><p><div class="KonaFilter image-container display-table"><div><div class="image"><p class="source"><span>Andreessen Horowitz</span></p><p class="caption">Overall tech M&amp;A volume has been robust</p></div><p></p></div></div></p><p>Since not all M&amp;A is equal, the difference between non-growth and growth M&amp;A is important as it signals forward-looking investment in <a href="http://fortune.com/2014/10/13/what-ebay-and-other-tech-splits-say-about-the-future-of-cloud-computing/" target="_blank">a broader platform shift</a> and new product cycles.</p><p>That's why the other three recent cloud services deals - Salesforce.com's $2.9B acquisition of ecommerce software platform Demandware and Oracle's acquisitions of customer engagement and energy efficiency company Opower and construction contracts/payment management company Textura - are the ones worth paying attention to. They represent <em>growth</em> deals - product-line extensions, geographic extensions, and so on - orchestrated to increase top-line growth for the acquirer. As I've <a href="https://a16z.com/2015/04/10/whats-holding-tech-ma-back/" target="_blank">written about before</a>, this has been a lagging area of tech M&amp;A for the past 15 years and belies what was really happening underneath the superficial increase in M&amp;A activity in 2015 (i.e., growth volumes represented only about 20% of peak 2000 levels).</p><p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image"><a title_source="Andreessen Horowitz" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/5759972e91058424008c7d9d-960/consolidationvsgrowthdeals_a16z.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Andreessen Horowitz</span></p></div><p></p></div></div></p><h2>But is there now more growth M&amp;A activity on the horizon?</h2><p>The question is whether the recent acquisitions by Salesforce.com and Oracle foreshadow the impending arrival of more "growth" acquisitions from other large tech incumbents, such as the likes of Cisco and Microsoft. To answer this question, it helps to look at the broader context of what conditions tend to drive M&amp;A -</p><h2>Condition #1: Declining core revenue growth</h2><p>Tech is, by definition, a product-driven business. Products have cycles. Revenue tracks cycles. So when a company gets to the other side of a product cycle, revenue growth rates decline until the company finds a way to re-invigorate that cycle or, more likely, to invent - or acquire - a new product that is on the leading vs. lagging side of its product cycle.</p><p>IBM's 16 straight quarters of declining revenue growth are an example of what happens when a company is on the lagging side of a product cycle. What remains to be seen is if their long-term bets <a href="http://www.recode.net/2016/6/1/11830076/ibm-ginni-rometty-watson" target="_blank">in A.I. and blockchain</a> (CEO Ginni Rometty recently <a href="https://twitter.com/RecodeEvents/status/738059215973949444" target="_blank">revealed</a> that they have over 200 experiments going) can help get them to the other side. With most companies in this position - that is, in between short-term product cycles and long-term investment payoff or seeking new directions altogether - we might expect them to look to M&amp;A as a way to address that gap and decline in core revenue growth.</p><h2>Condition #2: High cash balances</h2><p>M&amp;A requires money. A measure of a company's ability to make acquisitions is the amount of cash on the balance sheet divided by the market capitalization of the company; if the result is high then that means the company has more degrees of freedom to use cash to fund acquisitions.</p><p>So, all things being equal, we would expect more M&amp;A activity when companies have a high percentage of cash relative to market cap. The most innovative companies, after all, are the ones that <a href="http://a16z.com/2014/09/05/why-amazon-has-no-profits-and-why-it-works/" target="_blank">re-invest</a> their cash into future growth - not just as dividends to stockholders - so they can continue to stay ahead and build even greater value.</p><h2>Condition #3: Increasing (or at least stable) PE multiples</h2><p>Every company wants to make acquisitions when its stock is trading at all-time high price-to-earnings (PE) multiples. Especially relative to the target company's PE multiple. Why? Because the earnings that the company acquires from the target company are valued post-deal at the acquirer's PE multiple, which makes the deal more palatable to the existing company's shareholders. Earnings dilution is bad and deters M&amp;A.</p><p>But, if you can't have all-time high PE multiples (as we saw in the 2000 tech bubble), then you at least want stable and increasing vs. decreasing multiples. Volatility in PE multiples makes it hard for boards to forecast dilution or accretion from M&amp;A and thus makes them more likely to sit tight until multiples stabilize.</p><p>Given our above conditions framework for thinking about tech M&amp;A, let's take a look at what's happening among the potential "incumbent" acquirer class.</p><p>Note, when we talk about the "incumbents", we mean large tech companies that have been public company leaders in their respective domains for a long time - EMC (now <a href="http://a16z.com/2015/10/26/dell-emc-vmware/" target="_blank">Dell-EMC</a>), Google, HP (now Hewlett Packard Enterprise and HP Inc), Microsoft, Oracle, Salesforce.com, SAP, VMware (also part of Dell-EMC), etc. We'd contrast these with the "new incumbents" - companies that have gone public in the past five years or so that are now establishing themselves as potential new leaders - Facebook, LinkedIn, Servicenow, Splunk, Workday, etc. Every successful startup, after all, goes on to become the new incumbent - and at faster time scales than ever before.</p><p><div class="KonaFilter image-container display-table"><div><div class="image"><p class="source"><span>Andreessen Horowitz</span></p><p class="caption">What drives M&amp;A?</p></div><p></p></div></div></p><p>The graph above shows the trends among the top tech incumbents against the three M&amp;A conditions I outlined:</p><ul><li>Declining core revenue growth - Check! In fact, from the bubble peaks, where revenue growth was around 40%, this group is now looking at ~10% trailing revenue growth.</li><li>High cash balances - Check! Cash as a percentage of market cap is approaching 20%, near the highs of the last 17-years. We haven't seen levels higher than this since 2002, when we were in the doldrums of the post-bubble crash and market caps were near all-time lows.</li><li>Increasing/stable PE multiple - Somewhat. While we are a ways off the peak 2000 PE levels of 140x, PE levels are still very robust and, most importantly, stable. Stability is more important even without super high multiples, because volatility is the enemy of M&amp;A activity.</li></ul><p>So if conditions are ripe for tech M&amp;A among the incumbent group, why haven't we seen more growth M&amp;A to date?</p><p>Well, it turns out that many of the same market characteristics that favor M&amp;A also make companies prime targets for the <a href="https://a16z.com/tag/activist-investorsshareholders/" target="_blank">activist shareholder</a> crowd. Activists screen for declining core businesses with high cash balances because they want that cash returned to shareholders in the form of dividends or stock buybacks. This means those activist targets can no longer invest in growth - in the form of new product-cycle M&amp;A or internal R&amp;D - because doing so would depress their near-term earnings and consume excess cash.</p><p>And that's exactly what's happened in tech: As the amount of assets under management by activists has grown…</p><p><div class="KonaFilter image-container display-table"><div><div class="image"><p class="source"><span>Andreessen Horowitz</span></p></div><p></p></div></div></p><p>…so too has the level of activist engagement among the tech incumbent crowd.</p><p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image"><a title_source="Andreessen Horowitz" title_caption="Activist targets" class="zoomin" href="https://static-ssl.businessinsider.com/image/5759a0fd52bcd028008c80b8-960/activisttargets_a16z.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Andreessen Horowitz</span></p><p class="caption">Activist targets</p></div><p></p></div></div></p><p>Notice what names are absent from the list of recent activist engagements above however - Salesforce.com and Oracle, both of whom feature prominently among the recent M&amp;A activity.</p><p>So why have they escaped the wrath of the activists? Salesforce.com has, quite straightforwardly, done a great job growing the business. Even though their revenue growth rate has slowed over the past 5 years, they've still grown the top line roughly 5x over that time period. That kind of growth is kryptonite to the activists. And Oracle, despite having basically flat top-line growth, is roughly 25% controlled by its founder, Larry Ellison. That kind of shareholder control is another kind of prophylactic that protects against activist intervention. It's for these reasons that Google, too (with its tri-class voting structure) has been an active acquirer among the incumbent crowd since it doesn't have to spend time fighting activists.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Andreessen Horowitz</span></p><p class="caption">"Unencumbered" incumbents</p></div><p></p></div></div></p><p>The good news is that activists might now be dialing back their tech activity overall. Besides obvious reasons like declining <a href="http://www.nytimes.com/2016/01/27/business/dealbook/activist-investors-may-have-met-their-match-a-down-market.html" target="_blank">returns/poor performance</a> for this asset class, many tech incumbents that would otherwise be attractive activist targets are on the other side of the activist cash curve. Or as I like to think of it, they've already "given at the office" - most of them survived the activist cashectomy by returning cash to their investors in the form of dividends and buybacks, or by <a href="http://fortune.com/2014/10/13/what-ebay-and-other-tech-splits-say-about-the-future-of-cloud-computing/" target="_blank">splitting themselves</a> (as eBay and HP did). Which means those companies' boards now have the freedom to re-constitute their shareholder base and pursue a growth agenda.</p><p>In fact, the M&amp;A activity reveals a number of strategic growth deals on the heels of requited activist campaigns. Post-split, we've seen eBay make two acquisitions (Cargigi, Twice); Paypal make three (Cyactive, Modest, Xoom); and HPE make three of its own as well (Aruba, Contextream, Stackato). And maybe it was mere coincidence, but within days of notorious activist investor Carl Icahn announcing that he had fully exited Apple stock, Tim Cook announced Apple's $1 billion investment in Didi Chuxing.</p><p>So the sky appears to be clearing when it comes to activists. But what then of the <a href="https://medium.com/@villispeaks/why-saas-consolidation-is-not-happening-2b9b722e0250" target="_blank">argument</a> that regardless of the broader macro and incumbent picture, SaaS is inherently harder to acquire than classic on-premise software companies? Besides the evidence of $8.6 billion SaaS deals in the past 30 days, my experience on the other side - not just as an investor but as a former manager of HP's global software support business - suggests that isn't a likely deterrent to M&amp;A.</p><p>While it's true that it requires a higher customer success standard to be a SaaS vendor - you have to support a run-time environment for your customers instead of dumping on-prem software onto the company's IT operations team to manage - it's actually <em>easier</em> to integrate SaaS companies when it comes to acquisitions. Why? Because of the "versioning debt" problem inherent in the on-premise alternative. Simply put, on-prem software requires huge engineering, support, and professional services costs to maintain multiple, legacy versions of the software. And, perhaps more significantly, these costs become <em>multiplicative</em> when you add in acquisitions.</p><p>At HP, we had to support 'n' versions of every legacy product family - not just HP's own Openview system, but products acquired from Opsware (which was how I came to HP), Mercury Interactive, Peregrine Systems, SPI Dynamics, and so on - each with its own unique configurations, integrations, and supporting back-end systems. The compatibility matrix of supported combinations made Microsoft's massive device driver library look like a beach-read novelette!</p><p>SaaS mostly rids us of the versioning debt problem by shifting the onus from the customer to the vendor, who determines the size of the compatibility matrix. (Not to mention that the SaaS vendor also has the data across multiple clients to make sure things really work given the inherent multi-tenant architecture <a href="http://a16z.com/2014/05/13/understanding-saas-valuation-primer/" target="_blank">of SaaS</a>).</p><p>None of this is meant to trivialize the support required of SaaS vendors to ensure customer success, but it does reduce a barrier to M&amp;A activity relative to traditional on-premise solutions. And owning the responsibility for the success of your customers - as SaaS vendors must do - is a great form of long-term customer-relationship management and stickiness. Instead of sitting on the shelf unused as often happens with on-prem software, SaaS products are <em>actually</em> used - tying the runtime success of the customer to the success of the vendor. There's no better example of an alignment in incentives that ensures SaaS M&amp;A would be more successful in the long run.</p><p><strong>* * *</strong></p><p>Ultimately, when it comes to software, SaaS, or any other M&amp;A it's useful to view it through the lens of "growth or non-growth?"; we can't treat both the same when it comes to objectives and outcomes. You can't judge a SaaS deal book by its cover.</p><p>And only time will tell whether "growth" M&amp;A among the tech incumbents is on the rise - or whether the activity of the past 30 days is simply a flickering mirage in a long-dry desert. But, if conditions remain ripe and the activist barrier is indeed on the decline, growth may be on the horizon.</p><p><em>Scott Kupor is the managing partner at venture capital firm Andreessen Horowitz. This post <a href="http://a16z.com/2016/06/08/saas-mergers-acquisitions-trends/">originally appeared on Andreessen Horowitz</a>. It is reprinted here with permission.</em></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/google-opens-campus-seoul-startups-korea-2015-5">Google opens up a 21,000-square-foot campus in South Korea for startups</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="swaHVhdTpQ39OXNWrkpqJkA-QbVzp7qe" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Not all software M&A is created equal

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>REUTERS/Fabrizio Bensch </span></p><p class="caption">A model poses with a Sony SmartWatch 2 at the Sony booth during a media preview day at the IFA consumer electronics fair in Berlin, September 5, 2013.</p></div><p></p></div></div>SAN FRANCISCO (Reuters) - Wearable computers like Google Glass and the Samsung Galaxy Gear watch may not have caught fire yet, but that hasn't stopped mobile game developers from rushing to create apps for the new devices, eager to seize what they hope is the next big moment in consumer technology.</p>
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<p>Niccolo DeMasi, the CEO of mobile games maker Glu Mobile, compares the potential of wearables to that of Apple Inc's iPhone launch in 2007 - an event that was the catalyst to create much of the mobile app world that exists now.</p>
<p>DeMasi and others are betting that by developing compelling apps designed with the wearables' special features in mind, they can create overwhelming demand for the products.</p>
<p>"A whole new app ecosystem is going to be born," said Shawn Hardin, chief executive officer of Mind Pirate, which will release "Global Food Fight," its first game for Google Glass, this month. "Those who are going to make that happen in a big way are going to be valuable companies because of it, and those who wait too late won't be a part of it."</p>
<p>The market for mobile game apps is expected to grow to $17 billion this year from just $6 billion in 2010, analysts said, and wearables could fuel growth in the years to come.</p>
<p>An array of new smartwatches and devices like fitness tracker Fitbit will go on display this week at the Consumer Electronics Show (CES) in Las Vegas, heralding a potential breakthrough for the devices in 2014.</p>
<p>Google Glass is expected to launch broadly sometime this year. So far, its user-testing version has only been available at a $1,500 price to about 15,000 developers and consumers who registered to be part of its early adopter program.</p>
<p>Galaxy Gear smartwatches from Samsung have garnered mixed reviews since their September launch, and consumers have not warmed to them yet.</p>
<p>Despite the slow start, Juniper Research expects more than 130 million smart wearable devices will ship by 2018. Moreover, global shipments of wearable "smart glasses" alone will reach 10 million each year by 2018, compared with an estimated 87,000 in 2013, according to the research firm.</p>
<p>Wearable computing devices basically function as mini-computers, mainly strapped on a user's wrist or face, though they may end up being worn on other parts of the body, too. In developing apps for them, programmers will focus on their voice-command features as well as GPS, gyroscope, compass and WiFi capabilities. Apps for more conventional mobile devices, by contrast, mostly use their touch-screen interface.</p>
<h3>FUN AND GAMES</h3>
<p>Glu wanted to get a jump on its rivals by creating a word puzzle game called "Spellista" for the prototype of Google Inc's Glass.</p>
<p>Because Glass allows hands-free experiences, Spellista's gameplay relies on voice commands and head movements that work with the device's gyroscope. With voice commands, a gamer can snap pictures on its 5-megapixel camera and create word puzzles to share with friends.</p>
<p>Another distinct feature of Glass is how it transmits sound. With Spellista, a user hears the game's tutorial through sound vibrations traveling through the skull behind the ear rather than traditional speakers. That lets the user simultaneously hear ambient sound.</p>
<p>Over 2,000 developers, including Glu, have access to the programming code and tools needed to design apps forGlass.</p>
<p>With Mind Pirate's app, "Global Food Fight," the Silicon Valley startup wants to demonstrate that wearable devices are well-suited for "micro-engagement" - or 30- to 90-second game sessions.</p>
<p>The three-dimensional app is designed for multiple players. Gamers can use head movements and taps on the Glass touchpad to virtually hurl tomatoes or gooey pies at one another and build obstacle courses to help them dodge hits.</p>
<p>"You could sit on a train and launch a food fight using voice commands, and you could be playing with multiple people" who could be virtually anywhere, Hardin explained.</p>
<p>Mind Pirate has set up an incubator program, providing resources to four developers to work on games and apps for Glass and other wearable computing devices in partnership with the Canadian Film Centre, a Toronto-based film training institute.</p>
<p>Timothy Jordan, senior developer advocate for Google Glass, said the game concepts that developers come up with need to be path-breaking.</p>
<p>"If something works well on another platform and you stamp it on Glass, you're doing it wrong," he said.</p>
<p>Games and apps have often popularized new hardware, helping to familiarize consumers with the technology. Rovio's Angry Birds demonstrated the iPhone's easy swipe and touch features, and the card game Solitaire made using the mouse on Microsoft Corp's Windows operating software seem intuitive.</p>
<p>"It's early days in wearables, but I would be unsurprised if 2017 to 2027 turns out to be a great 10-year wave for all wearable computing, whether it's watches or something like Glass," DeMasi said.</p>
<p>Companies such as Qualcomm Inc and Fitbit will use the Consumer Electronics Show to showcase wearable fitness trackers and smartwatches, in addition to single- and binocular-lens "glasses."</p>
<p>"There'll be a lot of competitive offerings - and I think some of these are going to be really, really well-suited for new kinds of entertainment and gameplay," Hardin said, without providing details.</p>
<p>To be sure, not all developers think wearable devices are destined for glory any time soon. There are plenty of questions over the price point, limited battery life and other concerns.</p>
<p>Misha Lyalin, CEO of ZeptoLab, which created the hit mobile game "Cut the Rope," says the category is mostly an R&amp;D project for most game developers at this stage.</p>
<p>"In order for you to succeed as a developer, you have to have a platform that will be massive," Lyalin said. "It's too early to place a bet on."</p>
<p>Venture capitalists are mostly taking a wait-and-see approach, though some want to make sure they are in a solid position, should the devices take off. Bessemer Ventures and Signia Venture Partners, for example, together have invested $2.5 million in Hardin's Mind Pirate.</p>
<p>Glass has not yet emerged as a mass consumer platform, said Jeremy Liew, managing director of Lightspeed Venture Partners, which joined some other investors to put a total of about $1 million into Lark, a Silicon Valley startup that makes a smart wristband and an app to track sleep and exercise patterns.</p>
<p>"But if it becomes one, that next new billion-dollar company will be built on top of it, and that's why it's worth paying attention to," Liew said.</p>
<p>(Editing by Frank McGurty and Jan Paschal)</p>
</div>

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