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Here’s why Ant Group is about to shatter IPO records

Inside Telecom Staff

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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.

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US to seek automated braking requirement for heavy trucks

Associated Press

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In a reversal from Trump administration policies, U.S. auto safety regulators say they will move to require or set standards for automatic emergency braking systems on new heavy trucks.

The Department of Transportation, which includes the National Highway Traffic Safety Administration, announced the change Friday when it released its spring regulatory agenda.

It also will require what it said are rigorous testing standards for autonomous vehicles, and set up a national database to document automated-vehicle crashes.

The moves by the administration of President Joe Biden run counter to the agency’s stance under President Donald Trump. NHTSA had resisted regulation of automated-vehicle systems, saying it didn’t want to stand in the way of potential life-saving developments. Instead it relied on voluntary safety plans from manufacturers.

NHTSA had proposed a regulation on automatic emergency braking in 2015 before Trump took office, but it languished in the regulatory process. The agency says it has been studying use of the electronic systems, and it plans to publish a proposed rule in the Federal Register in April of next year. When a regulation is published, it opens the door to public comment.

“We are glad to see NHTSA finally take the next step in making large trucks safer by mandating AEB,” said Jason Levine, director of the Center for Auto Safety, which was among the groups that petitioned for the requirement in 2015. “Unfortunately, at this rate, it will still be years until the technology that could help stop the 5,000 truck crash deaths on our roads is required,” he said in an email.

A trade group representing independent big rig drivers says the technology isn’t ready for heavy vehicles and can unexpectedly activate without reason.

“Our members have also reported difficulties operating vehicles in inclement weather when the system is engaged, which has created safety concerns,” the Owner-Operator Independent Drivers Association said in a statement.

The association says that while the technology is still being perfected, legislators and regulators shouldn’t set time frames for requiring it on all trucks.

However, the Insurance Institute for Highway Safety, a research group supported by auto insurers, found in a study last year that automatic emergency braking and forward collision warnings could prevent more than 40% of crashes in which semis rear-end other vehicles. A study by the group found that when rear crashes happened, the systems cut speeds by more than half, reducing damage and injuries.

Cathy Chase, president of Advocates for Highway and Auto Safety, another group that sought the regulation from NHTSA in 2015, said the agency is moving too slowly by not publishing the regulation until next year.

“I don’t understand the delay,” she said. “I know that might sound impatient, but when people are dying on the roads, 5,000 people are dying on the roads each year, and we have proven solutions, we would like to see more immediate action,” she said.

In 2016, NHTSA brokered a deal with 20 automakers representing 99% of U.S. new passenger vehicle sales to voluntarily make automatic emergency braking standard on all models by Sept. 1, 2022. But that deal did not apply to big rigs.

The announcement of the requirements comes two days after four people were killed when a milk tanker going too fast collided with seven passenger vehicles on a Phoenix freeway. At least nine people were injured.

The U.S. National Transportation Safety Board, which investigates crashes and makes recommendations to stop them from happening, said Thursday it would send a nine-person team to investigate the Phoenix crash. The agency said it would look at whether automatic emergency braking in the truck would have mitigated or prevented the crash.

Since at least 2015 the NTSB has recommended automatic emergency braking or collision alerts be standard on vehicles.

At present, there are no federal requirements that semis have forward collision warning or automatic emergency braking, even though the systems are becoming common on smaller passenger vehicles.

The systems use cameras and sometimes radar to see objects in front of a vehicle, and they either warn the driver or slow and even stop the vehicle if it’s about to hit something.


DETROIT (AP) — By TOM KRISHER AP Auto Writer

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Google pledges to resolve ad privacy probe with UK watchdog

Associated Press

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Google has promised to give U.K. regulators a role overseeing its plan to phase out existing ad-tracking technology from its Chrome browser as part of a competition investigation into the tech giant.

The U.K. competition watchdog has been investigating Google’s proposals to remove so-called third-party cookies over concerns they would undermine digital ad competition and entrench the company’s market power.

To address the concerns, Google on Friday offered a set of commitments including giving the Competition and Markets Authority an oversight role as the company designs and develops a replacement technology.

“The emergence of tech giants such as Google has presented competition authorities around the world with new challenges that require a new approach,” Andrea Coscelli, the watchdog’s chief executive, said.

The Competition and Markets Authority will work with tech companies to “shape their behaviour and protect competition to the benefit of consumers,” he said.

The promises also include “substantial limits” on how Google will use and combine individual user data for digital ad purposes and a pledge not to discriminate against rivals in favor of its own ad businesses with the new technology.

If Google’s commitments are accepted, they will be applied globally, the company said in a blog post.

Third-party cookies – snippets of code that log user info – are used to help businesses more effectively target advertising and fund free online content such as newspapers. However, they’ve also been a longstanding source of privacy concerns because they can be used to track users across the internet.

Google shook up the digital ad industry with its plan to do away with third-party cookies, which raised fears newer technology would leave even less room for online ad rivals.


LONDON (AP).

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Amazon now says remote work OK 2 days a week

Associated Press

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Amazon now says remote work OK 2 days a week

Corporate and tech employees at Amazon won’t have to work in offices full time after coronavirus restrictions are lifted.

The Seattle Times reports the online retail giant said in a company blog post Thursday that those workers can work remotely two days a week. In addition, the employees can work remotely from a domestic location for four full weeks each year.

Amazon’s work policy update follows backlash from some employees to what they interpreted as the expectation they would have to return to the office full time once states reopen.

Some tech companies had launched recruiting campaigns that seemed targeted in part at Amazon workers’ dismay over an end to remote work.

Most Amazon employees will start heading back to offices as soon as local jurisdictions fully reopen — July 1 in Washington state — with the majority of workers in offices by autumn, the company said previously.

Amazon has about 75,000 employees in the greater Seattle area. The company’s new remote-work plan is similar to other large tech companies.

Google said last month that it expected roughly 60% of its workforce to come into the office a few days a week, and for 20% to work from home full time. Google also gave all employees the option to work remotely full time four weeks per year. Facebook and Microsoft have both said most workers can choose to stay remote.

Amazon’s new policy could add to the challenges faced by Seattle’s traditional business core. In pre-pandemic times, tens of thousands of Amazon workers commuted into the South Lake Union neighborhood north of downtown every day. Most haven’t returned.

More than 450 downtown retailers, restaurants and other street-level business locations have closed permanently in the 16 months since the pandemic sent office workers home, according to a Downtown Seattle Association survey.

Of the roughly 175,000 people who worked in downtown offices before the pandemic, 80% continue to work remotely, according to association data.


SEATTLE (AP)

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