By KEN SWEET AP Business Writer
NEW YORK (AP) — Visa is purchasing the financial technology company Plaid for $5.3 billion, a major push by the payment processing giant into other types of money transfer systems outside of Visa’s traditional credit and debit card business.
Plaid allows consumers to link their bank accounts to financial services apps like Venmo, PayPal, Betterment and Transferwise. The company is an important but unknown middle man between the banks, who hold consumers’s cash, and the dozens of platforms who vie to be the platform of choice to send that cash. Bankers refer to companies like Plaid as “the plumbing” behind how these apps work.
This “plumbing” has become more important has more Americans use mobile wallets or send money to friends, families and businesses. Visa estimates that 1 in every 4 Americans who have a bank account have used the underlying technologies of Plaid to link their bank accounts with other money transfer apps.
The Monday announcement is Visa’s first big push into a product that isn’t just credit and debits cards. Visa is the world’s largest payment processing company, but it makes almost entirely all of its money from swipe fees it earns from merchants whenever its cards are accepted.
Visa expects the acquisition, which will close in three to six months pending regulatory approval, to increase the company’s revenue and profits starting next fiscal year.
The San Francisco company was already an investor in Plaid, and so is Visa’s biggest competitor, Mastercard. Both companies invested in Plaid in 2019. In a conference call with investors, Visa’s Chief Executive Executive Al Kerry said the seven-month-old investment gave Visa more than enough information to decide to buy the company outright.
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.”
Zuckerberg still under fire over inflammatory Trump posts
By BARBARA ORTUTAY AP Technology Writer
OAKLAND, Calif. (AP) — Facebook CEO Mark Zuckerberg isn’t budging over his refusal to take action on inflammatory posts by President Donald Trump that spread misinformation about voting by mail and, many said, encouraged violence against protesters.
His critics, however, are multiplying. Some employees have publicly quit over the issue and civil-rights leaders who met with him Monday night denounced Zuckerberg’s explanation for choosing to leave Trump’s posts alone as “incomprehensible.”
A day after dozens of Facebook employees staged a virtual walkout over the issue, the Facebook chief met Tuesday with employees for a Q&A session held via online video. During that session, which had been moved forward from later in the week, Zuckerberg reportedly doubled down on his stance to leave Trump’s posts alone — although he did suggest that the company was considering changes to its existing policies around “state use of force,” which Trump’s Minneapolis post fell under.
Facebook rival Twitter flagged and demoted a Trump tweet in which he referenced protests over police violence in Minneapolis using the phrase “when the looting starts the shooting starts.” But Facebook let an identical message stand on its service. Zuckerberg explained his reasoning in a Facebook post Friday, a position he has since reiterated several times.
“I know many people are upset that we’ve left the President’s posts up, but our position is that we should enable as much expression as possible unless it will cause imminent risk of specific harms or dangers spelled out in clear policies,” Zuckerberg wrote.
The resignations, which multiple engineers tweeted and posted on LinkedIn and Facebook, also began Tuesday.
“I am proud to announce that as of the end of today, I am no longer a Facebook employee,” tweeted Owen Anderson, who was an engineering manager at the company for two years. “To be clear, this was in the works for a while. But after last week, I am happy to no longer support policies and values I vehemently disagree with.”
Anderson did not immediately respond to a message for comment on Tuesday. But he wasn’t alone.
“Today, I submitted my resignation to Facebook,” Timothy J. Aveni, a software engineer who’d been at the company for a year, wrote on LinkedIn and on his Facebook page. “I cannot stand by Facebook’s continued refusal to act on the president’s bigoted messages aimed at radicalizing the American public. I’m scared for my country, and I’m watching my company do nothing to challenge the increasingly dangerous status quo.”
Aveni did not immediately respond to a message for further comment.
“We recognize the pain many of our people are feeling right now, especially our Black community. We encourage employees to speak openly when they disagree with leadership,” Facebook said in a statement. “As we face additional difficult decisions around content ahead, we’ll continue seeking their honest feedback.”
Barry Schnitt, who served as Facebook’s director of communications and public policy from 2008 until 2012, wrote a blistering Medium post Monday. “Facebook says, and may even believe, that it is on the side of free speech,” he wrote. “In fact, it has put itself on the side of profit and cowardice.”
“I do not think it is a coincidence that Facebook’s choices appease those in power who have made misinformation, blatant racism and inciting violence part of their platform,” he added, urging Facebook leaders to take responsibility and “show the world that you are not putting profit over values.”
Zuckerberg and other Facebook leaders also met with civil rights leaders on Monday night. That conversation apparently didn’t go well.
“We are disappointed and stunned by Mark’s incomprehensible explanations for allowing the Trump posts to remain up,” three civil-rights leaders wrote in a joint statement. “He did not demonstrate understanding of historic or modern-day voter suppression and he refuses to acknowledge how Facebook is facilitating Trump’s call for violence against protesters.”
Signing that statement were Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights; Sherrilyn Ifill, president and director-counsel of the NAACP Legal Defense and Educational Fund and Rashad Robinson, president of Color of Change.
“Mark is setting a very dangerous precedent for other voices who would say similar harmful things on Facebook,” the three leaders added.
Zoom booms as pandemic drives millions to its video service
By MICHAEL LIEDTKE AP Technology Writer
SAN RAMON, Calif. (AP) — Zoom Video Communications is rapidly emerging as the latest internet gold mine as millions of people flock to its conferencing service to see colleagues, friends and family while tethered to their homes during the pandemic.
Tuesday’s release of the once-obscure company’s financial results for the February-April period provided a window into the astronomical growth that has turned it into a Wall Street star.
Zoom’s revenue for its fiscal first-quarter more than doubled from the same time last year to $328 million, resulting a profit of $27 million — up from just $198,000 a year ago.
The numbers exceeded analysts’ already heightened expectations, providing another lift to a rocketing stock that has more than tripled in price so far this year while the benchmark Standard & Poor’s 500 index has fallen 5%.
After a big run-up leading up to Tuesday’s highly anticipated announcement, Zoom’s stock initially rose even higher in extended trading. But it abruptly reversed course and fell more than 3% after company executives acknowledged during a video discussion that some of its newfound users might depart during the second half of the year if health worries caused by the novel corornavirus dissipate.
Even if the shares trade in similar fashion during Wednesday’s regular session, the stock will still be hovering around $200 — more than five times the company’s initial public offering price of $36 less than 14 months ago.
The surge left Zoom with a market value of about $59 billion through Tuesday — greater than the combined market values of the four largest U.S. airlines, which have seen their businesses hammered by the coronavirus outbreak that has dramatically curtailed travel.
“Videoconferencing is going to become a mainstream service,” predicted Zoom CEO Eric Yuan, who co-founded the company nine years ago. He made the remarks during the video conference that at one point attracted more than 3,000 participants, a reflection of the intense interest in the company and its hot stock.
In a sign that the company still expects phenomenal growth in the months ahead, Zoom forecast revenue of roughly $500 million for its current quarter ending in July, more than quadrupling from the same time last year. For its full fiscal year, Zoom now expects revenue of about $1.8 billion, nearly tripling in a year.
Zoom’s boom has come despite privacy and security problems that enabled outsiders to make uninvited — and sometimes crude — appearances during other people’s video conferences.
The concerns prompted some schools to stop using Zoom for online classes that have become widespread since February, although the company’s efforts to introduce more security protection has brought some back to the service. More than 100,000 schools worldwide are now using Zoom for online classes, according to the company.
Overall, Zoom now has more than 300 million daily participants attending a meeting held on its service, up from 10 million five months ago. Those numbers include people who join multiple Zoom meetings during the same day, something that has been happening more recently in recent months.
But the once-weak privacy controls also helped make Zoom extremely easy to use, one of the reasons it became such a popular way to hold online classes, business meetings and virtual cocktail hours after most of the U.S. began ordering people to stay at home in effort to reduce the spread of the coronavirus that causes COVID-19.
Zoom also offers a free version of its service, another factor in its popularity at a time when about 40 million people in the U.S. have lost their jobs since mid-March, raising the specter of the worst economic downturn since the Great Depression of the 1930s.
The San Jose, California, company has always made most of its money from companies that subscribe to a more sophisticated version of its service that traditionally has been used for business meetings among employees working in offices far apart from each other.
But the pandemic-driven shutdown turned Zoom into a tool for employees who once worked alongside each other, but have been doing their jobs from home during the past few months.
Zoom ended April with 265,400 corporate customers with at least 10 employees, more than quadrupling from the same time last year. About 30% of the company’s revenue in the most recent quarter came from users with fewer than 10 employees, up from 20% in the November-January period.
Although Zoom remains focused on servicing its corporate customers, Yuan is hoping to figure out ways to make money from the all the socializing and learning that is happening on the service, too. Some analysts have speculated that eventually may involve showing ads on the free version of Zoom, although the company hasn’t given any indication it will do that. “There are a lot of opportunities ahead of us,” Yuan said in Tuesday’s video conference without elaborating.
If it hopes to continue to expand, Zoom also will also will likely have to do a better job of protecting the privacy of its video conferences. To help achieve that goal, Yuan has been consulting since April with Alex Stamos, a highly respected online security expert who previously worked at Yahoo and Facebook. Both those companies encountered their only security and privacy problems, too.
Zoom’s success is also drawing stiffer competition from much larger companies, including Microsoft, Google and Facebook.
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