By TALI ARBEL and MICHAEL LIEDTKE AP Technology Writers
Apple’s Friday decision to close stores in four states with surging coronavirus cases highlights a question that other businesses may soon face: Stay open or prepare for more shutdowns?
Apple, like many other major U.S. retailers, shut down all of its U.S. locations in March. On Friday, it said it would shut 11 stores, seven in Arizona, two in Florida, two in North Carolina and one in South Carolina, that it had reopened just a few weeks ago.
The move heightens concerns that the pandemic might keep the economy in the doldrums longer than expected. Those worries sent stocks on Wall Street lower. It’s not clear whether other retailers will follow en masse, although one analyst expects hard-hit stores to stay open unless forced to close by local authorities.
Many other businesses, including manufacturing, travel, dining, and entertainment, have been steadily reopening where they can while taking health precautions. But some have recently pulled back or paused their plans. The Cruise Lines International Association, for instance, announced Friday that ships will not be sailing from U.S. ports until at least Sept. 15, extending a pause put in place because of the coronavirus pandemic.
The auto industry, meanwhile, has seen its efforts to restart production hampered in part by infected workers.
Because U.S. efforts to contain the pandemic haven’t been particularly successful, the situation “could ultimately lead to a need for more prolonged shut-downs” that would reduce consumer spending and cost jobs, said Eric Rosengren, president of the Federal Reserve Bank of Boston. In public remarks Friday, Rosengren said he expected the economic rebound this year would be less than what was initially hoped for at the pandemic’s outset, and that the unemployment rate would remain in double-digits.
States such as Utah and Oregon are pausing the reopening of their economies amid a spike in cases, while others like Texas and Arizona have not changed their plans. Arizona this week did mandate that businesses implement social distancing, and Phoenix made masks mandatory in public.
Like many of the biggest players in the technology industry, Apple has been faring far better than most companies amid pandemic-induced recession. The store closures won’t put a significant dent in Apple’s sales, said Wedbush Securities Daniel Ives, but they are “a worrisome trend.”
The Cupertino, California, company has continued to sell iPhones and other products online, and other retailers can do so as well if they decide to close, said Craig Johnson, president of retail consultancy Customer Growth Partners.
“I don’t think this is going to be a giant stumbling block for Apple or anybody else. You can still get almost everything you need online somewhere,” he said.
Johnson noted that the country’s biggest retailers, Walmart and Target, did not shut down, and neither did appliance chains like Home Depot and Lowe’s. If other chains that aren’t deemed essential do shut down stores, he would expect closures to be limited to areas with rising cases.
Still, retail has been hit hard, with declining profits and bankruptcies. Retail earnings shrank 70% in the first quarter, excluding Walmart, said Ken Perkins of Retail Metrics, and second-quarter earnings are expected to drop another 45%. Department stores Neiman Marcus and J.C.Penny and clothing chain J. Crew have all filed for bankruptcy protection. Home-goods chain Pier 1 is shutting down.
“Remaining open may be existential for some retailers and I would expect they will stay open where local regulations allow,” Perkins said in an email. He expected that they would offer curbside pick-up “at a bare minimum” even if doors were shut again in specific areas where they are required to do so.
Disney, which has been planning to reopen Disneyland in California and Disney World in Orlando, Florida, in July, is not changing its plans. Universal Orlando, Busch Gardens Tampa Bay and SeaWorld have already reopened in Florida. Cases are also rising in Florida, and some restaurants and bars said they were temporarily closing again.
Movie theater chains are also reopening, with Cinemark beginning the process this week in Dallas and going nationwide in July. Regal and AMC are also set to open again in July — with mask requirements for employees and customers.
The Navajo Nation’s gambling operation had hoped to reopen its casinos in Arizona and New Mexico in mid-June but they’ll stay closed until at least early July because of the outbreak. Other casinos have closed temporarily.
Arbel reported from New York; Liedtke from San Ramon, California. Associated Press Writer Joseph Pisani in New York and Economics Writer Christopher Rugaber in Washington, D.C. contributed to this report.
Here’s why Ant Group is about to shatter IPO records
HONG KONG (AP) — Stella Su, who lives and works in Shanghai, has used an ATM only once in the past year. Instead of cash, in recent years she has done almost all her business using the digital wallet Alipay –- shopping in a mall, buying stuff online or transferring money to friends.
“Now when I go out, I don’t even need to carry my wallet, all I need is my phone,” said Su, one of over a billion Alipay users in China and abroad.
Alipay, operated by Ant Group, is the world’s largest and most valuable financial technology (fintech) company and one of two dominant Chinese digital wallets in China, the other being rival Tencent’s WeChat Pay.
Thanks to the huge scale and potential of China’s fintech landscape, Ant Group is poised to raise about $34.5 billion in the world’s largest share offering, beating Saudi Aramco’s previous record of $29.4 billion. Ahead of the IPO, the company will be valued at about $280 billion.
To tap both Chinese and global investors, Ant Group is listing its shares both in Shanghai and Hong Kong. It is due to begin trading in Hong Kong on Nov. 5. The Shanghai debut has yet to be announced.
Even before announcing its IPO plans, Ant Group was the world’s most valuable fintech company, with a valuation of $150 billion after a 2018 fundraising round.
“Ant Group is much more than PayPal which only processes financial payments. It has a lot of businesses in other areas and with other services that would help 1.3 billion people in China,” Jackson Wong, asset management director at Amber Hill Capital Ltd., said in an interview. “We are betting that Ant Group will be able to grow at a very high pace in the future.”
Alipay and WeChat Pay have helped make Chinese society virtually cashless, at least in big cities, with consumers and merchants alike relying on digital payments using their phones.
“Think of Alipay as Visa, MasterCard, Citibank, Fidelity… all rolled up into one,” said Shaun Rein, founder and managing director of China Market Research Group in Shanghai. “On the Alipay platform, you pay for things, you buy insurance, you buy wealth management. Your whole life revolves around Alipay.”
Walk into a supermarket in China and one would be hard-pressed to find a customer digging around for loose change to pay for groceries. Instead, cashiers scan a QR code on a customer’s smartphone to deduct money from their Alipay or WeChat Pay digital wallets. The transaction takes seconds.
In restaurants, groups of friends often split the bill by transferring money to each other using their digital wallets, similar to how the Venmo app is used in the U.S.
“Ant Group is so valuable because Alipay is used on a day to day basis by a billion people on all of their purchases,” said Rein. “The scale of fintech in China dwarfs the regular financial transaction potential in the United States.”
Alipay evolved from e-commerce giant Alibaba, which was founded by Jack Ma in 1999 to help match buyers and sellers in China’s fast growing market. When Alibaba launched consumer e-commerce platform Taobao to rival eBay in China, Alipay was introduced as a payments method to boost users’ trust in the platform. Today, Alipay’s reach extends to almost every aspect of life related to money.
Ma’s foresight has made him the wealthiest person in China, with a fortune estimated at $58.8 billion according to the Hurun Research Institute, which follows the country’s wealthy.
Alipay was created in 2004 to serve as an escrow service between buyers and sellers on Alibaba’s e-commerce consumer platform Taobao. It held funds from buyers to be released to sellers after goods were received. Alipay’s revenue mostly comes from transaction fees charged to merchants. Users can link their bank cards directly to Alipay to top up their wallets, and transfers can also be withdrawn from users’ bank accounts.
Alibaba, which currently owns a third of Ant Group, spun off Alipay in 2011. The company was later rebranded as Ant as the company expanded the range of its financial services.
One of those is Zhima Credit – -a private credit-scoring system that rates the trustworthiness and creditworthiness of its users based on data such as whether users pay their bills on time via Alipay.
Zhima Credit scores can help people take out small loans from Ant Group’s consumer credit services Huabei and Jiebei to finance such things as iPhone purchases or school expenses. Such loans are hugely popular in China, where credit card usage is low and most people have no official credit history and are unable to borrow from banks.
Ant Group’s money market fund, called Yu’e Bao -– one of the world’s largest –- lets people put idle cash in their Alipay wallets to work and reap returns on investments as small as 100 yuan ($15).
“In the past, wealth management products offered by banks had many requirements, maybe a minimum of 50,000 yuan (about $7,500),” said Chen Zhoumin, who works in a bank in Zhengzhou, a city in central China’s Henan province. “But Alipay has made it very convenient to invest money, because it made wealth management accessible and convenient.”
To compete with Yu’e Bao, banks have begun providing more flexible investment products with lower capital requirements, said Chen, who often invests idle cash in Yu’e Bao since it’s easy to do.
“Digital wallets like Alipay and WeChat have revolutionized payments in China,” he said. “Now, there’s also less worry that we might get counterfeit notes, or that our wallets may get stolen or robbed since everything is done digitally now.”
By ZEN SOO AP Technology Writer
AP journalist Alice Fung in Hong Kong and researcher Chen Si in Shanghai contributed to this report.
3 social media CEOs face grilling by GOP senators on bias
The CEOs of Twitter, Facebook and Google are facing a grilling by Republican senators making unfounded allegations that the tech giants show anti-conservative bias.
The Senate Commerce Committee has summoned Twitter CEO Jack Dorsey, Facebook’s Mark Zuckerberg and Google’s Sundar Pichai to testify for a hearing Wednesday. The executives agreed to appear remotely after being threatened with subpoenas.
With the presidential election looming, Republicans led by President Donald Trump have thrown a barrage of grievances at Big Tech’s social media platforms, which they accuse without evidence of deliberately suppressing conservative, religious and anti-abortion views.
The chorus of protest rose this month after Facebook and Twitter acted to limit dissemination of an unverified political story from the conservative-leaning New York Post about Democratic presidential nominee Joe Biden, an unprecedented action against a major media outlet. The story, which was not confirmed by other publications, cited unverified emails from Biden’s son Hunter that were reportedly disclosed by Trump allies.
Beyond questioning the CEOs, senators are expected to examine proposals to revise long-held legal protections for online speech, an immunity that critics in both parties say enables the companies to abdicate their responsibility to impartially moderate content.
The Justice Department has asked Congress to strip some of the bedrock protections that have generally shielded the tech companies from legal responsibility for what people post on their platforms. Trump signed an executive order challenging the protections from lawsuits under the 1996 telecommunications law.
“For too long, social media platforms have hidden behind Section 230 protections to censor content that deviates from their beliefs,” Sen. Roger Wicker, R-Miss., the Commerce Committee chairman, said recently.
In their opening statements prepared for the hearing, Dorsey, Zuckerberg and Pichai addressed the proposals for changes to so-called Section 230, a provision of a 1996 law that has served as the foundation for unfettered speech on the internet. Zuckerberg said Congress “should update the law to make sure it’s working as intended.”
“We don’t think tech companies should be making so many decisions about these important issues alone,” he said, approving an active role for government regulators.
Dorsey and Pichai, however, urged caution in making any changes. “Undermining Section 230 will result in far more removal of online speech and impose severe limitations on our collective ability to address harmful content and protect people online,” Dorsey said.
Pichai urged lawmakers “to be very thoughtful about any changes to Section 230 and to be very aware of the consequences those changes might have on businesses and consumers.”
Assistant Attorney General Stephen Boyd told congressional leaders in a letter Tuesday that recent events have made the changes more urgent. He cited the action by Twitter and Facebook regarding the New York Post story, calling the companies’ limitations “quite concerning.”
The head of the Federal Communications Commission, an independent agency, recently announced plans to reexamine the legal protections, potentially putting meat on the bones of Trump’s order by opening the way to new rules. The move by FCC Chairman Ajit Pai, a Trump appointee, marked an about-face from the agency’s previous position.
Social media giants are also under heavy scrutiny for their efforts to police misinformation about the election. Twitter and Facebook have slapped a misinformation label on content from the president, who has around 80 million followers. Trump has raised the baseless prospect of mass fraud in the vote-by-mail process.
Starting Tuesday, Facebook was not accepting any new political advertising. Previously booked political ads will be able to run until the polls close next Tuesday, when all political advertising will temporarily be banned. Google, which owns YouTube, also is halting political ads after the polls close. Twitter banned all political ads last year.
Democrats have focused their criticism of social media mainly on hate speech, misinformation and other content that can incite violence or keep people from voting. They have criticized Big Tech CEOs for failing to police content, homing in on the platforms’ role in hate crimes and the rise of white nationalism in the U.S.
Facebook, Twitter and YouTube have scrambled to stem the tide of material that incites violence and spreads lies and baseless conspiracy theories.
The companies reject accusations of bias but have wrestled with how strongly they should intervene. They have often gone out of their way not to appear biased against conservative views — a posture that some say effectively tilts them toward those viewpoints. The effort has been especially strained for Facebook, which was caught off-guard in 2016, when it was used as a conduit by Russian agents to spread misinformation benefiting Trump’s presidential campaign.
The unwelcome attention to the three companies piles onto the anxieties in the tech industry, which also faces scrutiny from the Justice Department, federal regulators, Congress and state attorneys general around the country.
Last week, the Justice Department sued Google for abusing its dominance in online search and advertising — the government’s most significant attempt to protect competition since its groundbreaking case against Microsoft more than 20 years ago.
With antitrust in the spotlight, Facebook, Apple and Amazon also are under investigation at the Justice Department and the Federal Trade Commission.
By MARCY GORDON AP Business Writer – WASHINGTON (AP)
Chinese FinTech could shatter records with $35B share offer
The world’s largest fintech company, China’s Ant Group, will try to raise nearly $35 billion in a massive public offering of stock that would shatter records.
Alibaba-affiliated Ant Group, which operates a suite of financial products including the widely-used Alipay digital wallet in China and one of the world’s largest money market funds, will hold dual listings in Shanghai and Hong Kong.
Its Shanghai stock was priced at 68.8 yuan ($10.26) each, while its Hong Kong stock is priced at 80 Hong Kong dollars apiece ($10.32), according to filings on Monday.
The company will raise about $34.5 billion from the share offering, which is expected to surpass oil company Saudi Aramco’s $29 billion share sale last year, making Ant Group’s offering the biggest in the world.
Ant Group will list on the Hong Kong stock exchange on Nov. 5, according to an exchange filing. A trading date for Shanghai has not been fixed.
The company has its origins in Alipay, which was initially created to serve as an escrow service between buyers and sellers on Alibaba’s e-commerce platform. Alipay would hold the money paid by the buyer until the transaction was complete, before releasing the funds to the sellers in order to boost trust on the platform among consumers.
In 2011, Alipay was spun off from Alibaba into a separate company. It was later renamed Ant Financial, before its recent name change to Ant Group.
Over the years, Ant has introduced more financial services, and now operates Alipay as a digital wallet which allows users in China to transfer money to others and pay for purchases both online and offline. Its money market fund Yu’e Bao is also among the world’s largest.
In recent years, Ant Group has also partnered with digital wallets around the world and expanded its services to merchants to allow Chinese tourists to pay via Alipay abroad. The company has over a billion users globally.
Ahead of the IPO, Ant Group would be valued at about $280 billion. If the company exercises its greenshoe option, which would allow it to sell more shares than initially planned, it could raise another $5.17 billion, taking its valuation to about $320 billion.
The company plans to issue up to 1.67 billion shares in both Hong Kong and Shanghai, taking the total number of shares issued to about 3.4 billion.
Alibaba, which currently owns a third of Ant Group, will subscribe to 730 million shares and will hold a stake of about 32% after the IPO.
The pricing announcements for Ant Group’s dual IPOs also came days after Alibaba founder Jack Ma called the company’s offering a “miracle”, as it was the first time that such a big listing was priced outside of New York.
“We didn’t dare think about it five years, or even three years ago,” Ma said at a financial conference in Shanghai on Saturday.
Ma also criticized banks in China, saying that they were operated like “pawn shops” since they typically require one to have sufficient collateral before making loans.
He advocated for financial reform, saying that China’s relatively young financial system should be driven by technologies such as big data, cloud computing and blockchain, instead of following traditional methods of banking that involves large amounts of red-tape.
HONG KONG (AP) — By ZEN SOO undefined.
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