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Virus outbreak delivers tech darlings a harsh reality check

Inside Telecom Staff

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By BARBARA ORTUTAY, DEE-ANN DURBIN and MICHAEL LIEDTKE The Associated Press

Just as the coronavirus outbreak has boxed in society, it’s also squeezed high-flying tech companies reliant on people’s freedom to move around and get together.

Since the beginning of March, for instance, Uber shares have lost a quarter of their value. Rival Lyft is down 28 percent. Over the same period, the S&P 500 has fallen just 10 percent, even with wild swings along the way. The picture is even less clear for other, still-private “unicorn” companies once valued at more than $1 billion, such as Airbnb and WeWork.

“What market pressure will mean for all companies is survival of the fittest,” said Allen Adamson, co-founder of the marketing firm Metaforce and a business professor at New York University. “If you are going into this storm in a bad shape, it’s not going to be pretty.”

Just few weeks ago, Airbnb was poised to cash in on a soaring stock market with its highly anticipated public offering. But with the market now reeling and few people looking to anywhere but home, Airbnb is reportedly racking up millions of dollars in losses while fending off a backlash from hosts who rely on its service to survive.

Hosts were furious when the company told guests they could cancel their stays without penalties. Last week, Airbnb agreed to pay hosts $250 million to make up for some of the money lost to cancellations.

AirDNA, a data firm that helps property owners set rental rates, says the impact on U.S. Airbnb hosts has been mixed. In New York City, bookings dropped 66% in March, but in outer suburbs they were up as people fled the city. Bookings in Westhampton Beach, N.Y., jumped sixfold. Similarly, bookings in the city of Chicago fell 11% last month, but in St. Joseph, Michigan — a lakeside community within driving distance — they were up by a factor of four.

Cary Gillenwater, who has an attached guest suite in Amsterdam listed on Airbnb, said 20 guests have canceled reservations between March and June, costing him nearly $11,000. He had hoped for compensation from the company, but was told that only reservations canceled through Airbnb that specifically mentioned the coronavirus would qualify. Several of his would-be guests contacted him directly to cancel; he refunded their money, but may be out of luck when it comes to reimbursement. Airbnb didn’t immediately respond to a request for comment.

The company got a lifeline of sorts on Monday, when two private equity firms — Silver Lake and Sixth Street Partners — invested $1 billion in debt and equity in the company. The firms say the expect Airbnb to emerge from the crisis in a stronger position.

The Wall Street Journal reported on Tuesday, however, that the company will pay interest of more than 10% on those loans and that it has made a “verbal commitment” to reduce fixed costs and to bring in supplemental management — terms that often mean layoffs and other cost-cutting. Airbnb didn’t immediately respond to a request for comment on the Journal report.

Uber, meanwhile, is trying to reassure jittery investors than its aggressive expansion plans for ride-hailing remain on track. Like its rival Lyft, it has seen ride demand hit a wall as states ratchet up stay-at-home orders. Both companies are trying to conserve cash so they can weather the pandemic’s fallout, in part by emphasizing deliveries of food and other goods.

Even in its worst-case scenario — an 80% decline in ridership through 2020 — the company said it would end the year with $4 billion in cash. That would still mean burning through almost $7 billion this year, which could create problems for Uber’s larger ambitions such as self-driving cars and air taxis.

Analysts, however, remain largely bullish. “We believe both Uber and Lyft will come out the other side still well placed to capture growth and opportunity,” said Wedbush Securities analyst Daniel Ives.

Drivers are another story. San Diegan Christopher Chandler, who’s been driving for both companies for two years, said he’s lost more than 80% of his income since riders all but vanished. “I’m going to have to make some hard choices about what bills I won’t pay this month,” said Chandler, who has switched to deliveries that don’t come close to covering his former ride income.

Other lesser-known companies, however, have benefited from the pandemic. Zoom, the video conferencing provider, has seen its stock soar to new highs in recent weeks; shares have nearly quadrupled compared to their IPO price just 11 months ago.

Not so long ago, the meal-kit maker Blue Apron was threatened with delisting from the New York Stock Exchange after its shares fell below the exchange minimum of $1. Since the beginning of March, however, company shares have more than tripled after it reported a sharp increase in consumer demand fueled by stay-at-home orders.

CB Insights lists more than 450 startups worldwide valued at $1 billion or more. While it can be hard to paint these unicorns with a broad brush because of their variety of business models and leadership styles, co-founder and CEO Anand Sanwal said that what COVID-19 is doing to the economy will be “tough for any company to weather, startup or not.”

Sanwal said he’s already seeing a decline in early-stage seed investments that help launch new tech startups. But he said investors who have poured big sums into unicorn startups will likely try to do what they can to help keep them healthy, at the very least by grooming them for sale rather than standing by as they collapse.

“Investors are going to make some hard decisions about whether this is a temporary downturn, or a company that doesn’t have a shot,” he said.

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AP Technology Writer Matt O’Brien contributed to this story.

By BARBARA ORTUTAY, DEE-ANN DURBIN and MICHAEL LIEDTKE The Associated Press

We’re a diverse group of industry professionals from all corners of the world. Our desire is to provide a high-quality telecoms publication that caters to an international market, offering the latest and most relevant telecoms information to businesses, entrepreneurs and enthusiasts.

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Study: Autonomous vehicles won’t make roads completely safe

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By TOM KRISHER AP Auto Writer

DETROIT (AP) — A new study says that while autonomous vehicle technology has great promise to reduce crashes, it may not be able to prevent all mishaps caused by human error.

Auto safety experts say humans cause about 94% of U.S. crashes, but the Insurance Institute for Highway Safety study says computer-controlled robocars will only stop about one-third of them.

The group says that while autonomous vehicles eventually will identify hazards and react faster than humans, and they won’t become distracted or drive drunk, stopping the rest of the crashes will be a lot harder.

“We’re still going to see some issues even if autonomous vehicles might react more quickly than humans do. They’re not going to always be able to react instantaneously,” said Jessica Cicchino, and institute vice president of research and co-author of the study.

The IIHS studied over 5,000 crashes with detailed causes that were collected by the National Highway Traffic Safety Administration, separating out those caused by “sensing and perceiving” errors such as driver distraction, impaired visibility or failing to spot hazards until it was too late. Researchers also separated crashes caused by human “incapacitation” including drivers impaired by alcohol or drugs, those who fell asleep or drivers with medical problems. Self-driving vehicles can prevent those, the study found.

However, the robocars may not be able to prevent the rest, including prediction errors such as misjudging how fast another vehicle is traveling, planning errors including driving too fast for road conditions and execution errors including incorrect evasive maneuvers or other mistakes controlling vehicles.

For example, if a cyclist or another vehicle suddenly veers into the path of an autonomous vehicle, it may not be able to stop fast enough or steer away in time, Cicchino said. “Autonomous vehicles need to not only perceive the world around them perfectly, they need to respond to what’s around them as well,” she said.

Just how many crashes are prevented depends a lot on how autonomous vehicles are programmed, Cicchino said. More crashes would be stopped if the robocars obey all traffic laws including speed limits. But if artificial intelligence allows them to drive and react more like humans, then fewer crashes will be stopped, she said.

“Building self-driving cars that drive as well as people do is a big challenge in itself,” IIHS Research Scientist Alexandra Mueller said in a statement. “But they’d actually need to be better than that to deliver on the promises we’ve all heard.”

Partners for Automated Vehicle Education, a group with many self-driving vehicle companies as members, said Thursday that the study incorrectly assumes superior perception and lack of distraction are the only ways autonomous vehicles can drive better than humans.

Autonomous vehicles, for instance, can be programmed to never break traffic laws, which the study blames for 38% of crashes. “The assumption that these behaviors could be altered by passengers in ways that so dramatically reduce safety is inconsistent with what our members tell us about the culture they bring to AV development,” said a statement from the group, which includes Ford, General Motors, Waymo, Lyft, Daimler, Volkswagen and others.

Study numbers show autonomous vehicles would prevent 72% or crashes, the group said, but the vehicles are so complex that the ultimate impact is only a guess.

Yet Missy Cummings, a robotics and human factors professor at Duke University who is familiar with the study, said preventing even one-third of the human-caused crashes is giving technology too much credit. Even vehicles with laser, radar and camera sensors don’t always perform flawlessly in all conditions, she said.

“There is a probability that even when all three sensor systems come to bear, that obstacles can be missed,” Cummings said. “No driverless car company has been able to do that reliably. They know that, too.”

Researchers and people in the autonomous vehicle business never thought the technology would be capable of preventing all crashes now caused by humans, she said, calling that “layman’s conventional wisdom that somehow this technology is going to be a panacea that is going to prevent all death.”

IIHS researchers reviewed the crash causes and decided which ones could be prevented, assuming that all vehicles on the road were autonomous, Cicchino said. Even fewer crashes will be prevented while self-driving vehicles are mixed with human driven cars, she said.

Virginia-based IIHS is a nonprofit research and education organization that’s funded by auto insurance companies.

More than 60 companies have applied to test autonomous vehicles in California alone, but they have yet to start a fully-robotic large-scale ride-hailing service without human backup drivers.

Several companies including Alphabet Inc.’s Waymo and General Motors’ Cruise had pledged to do it during the past two years, but those plans were delayed when the industry pulled back after an Uber automated test vehicle hit and killed a pedestrian in March 2018 in Tempe, Arizona.

Tesla Inc. CEO Elon Musk last year promised a fleet of autonomous robotaxis would start operating in 2020. But recently he has said he hopes to deploy the system with humans monitoring it in early 2021, depending on regulatory approval.

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Germany, France hope cloud data project to boost sovereignty

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By GEIR MOULSON Associated Press

BERLIN (AP) — Germany and France on Thursday launched a project to set up a European cloud computing platform that they hope will enhance European economic sovereignty in the wake of the coronavirus crisis and break the continent’s dependence on U.S. and Chinese companies.

The platform, entitled GAIA-X, is meant to be up and running — at least in prototype form — at the beginning of next year and be open to users from outside Europe that commit to adhere to European standards. German Economy Peter Altmaier said that the aim is “nothing less than a European moonshot in digital policy.”

Germany and France will set up a non-profit association to coordinate and organize the data infrastructure, Altmaier said. Conceived last year and initially announced in October, GAIA-X follows on the heels of an existing push by the European Union’s two biggest economies to set up a car battery consortium aimed at catching up with Asian rivals.

The cloud computing project “could not have been more timely” as Europe tries to dig itself out of a deep recession caused by the coronavirus crisis, French Economy Minister Bruno Le Maire said.

“With the COVID crisis, companies massively shifted to teleworking. This makes the need for (a) secure and European cloud solution all the more urgent,” Le Maire told a news conference by video link from Paris.

“The crisis also showed that the giant tech companies are the winners … the European digital space has to be protected,” he added, pledging that the new platform “will ensure the application of policy rules based on EU values and standards.”

“We are not China, we are not the United States — we are European countries with our own values and our own economic interests that we want to defend,” Le Maire said. He stressed the importance of “interoperability,” allowing companies to switch easily to the new system without losing any data.

The two ministers said the project has brought together 22 companies in France and Germany, including Dassault Systemes, Orange, Siemens, SAP, Robert Bosch and Deutsche Telekom. They didn’t give financial details. Le Maire called on “all other European companies and countries” to join the initiative.

Beyond that, “the idea is that we invite companies across the world providing their cloud services according to European standards and rules,” Altmaier said. “Everyone who wants to have the label of GAIA-X will have to respect and to satisfy several sets of rules,” including on interoperability and data migration.

He said that the project’s success “will be crucial for Germany, for France and for Europe as far as our economic strength, our competitivity and our sovereignty are concerned.”

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Snapchat to stop ‘promoting’ Trump amid uproar over tweets

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Snapchat to stop 'promoting' Trump amid uproar over tweets

By BARBARA ORTUTAY AP Technology Writer

OAKLAND, Calif. (AP) — Snapchat will stop “promoting” President Donald Trump on its video messaging service, the latest example of a social media platform adjusting how it treats this U.S. president.

Last week, Twitter placed fact-check warnings on two Trump tweets that called mail-in ballots “fraudulent” and predicted problems with the November elections. It demoted and placed a stronger warning on a third tweet about Minneapolis protests that read, in part, that “when the looting starts the shooting starts.”

Snapchat’s action is more limited. It means only that the president’s posts will no longer show up in the app’s “Discover” section, which showcases news and posts by celebrities and public figures. Trump’s account will remain active on Snapchat and visible to anyone who searches for or follows it.

The decision, which Snap — the owner of Snapchat — says was made over the weekend, puts the Santa Monica, California-based company in Twitter’s camp after that company escalated its actions against Trump.

Facebook, meanwhile, has let identical posts stand, although the company and CEO Mark Zuckerberg face growing criticism over the decision.

“We will not amplify voices who incite racial violence and injustice by giving them free promotion on Discover,” Snap said in a statement Wednesday. “Racial violence and injustice have no place in our society and we stand together with all who seek peace, love, equality, and justice in America.”

Snapchat has 229 million daily active users. Twitter, by comparison, has 166 million. Unlike Twitter and even Facebook, Snapchat is generally used as a private communications tool, with friends sending each other short videos and images and, to a lesser extent, following celebrities and other accounts.

In a tweet, Trump campaign manager Brad Parscale said Snap CEO Evan Spiegel “would rather promote extreme left riot videos & encourage users to destroy America than share positive words of unity, justice, and law & order from our President.”

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