💸 Fed Rate Pause and It's Impacts on Tech

Update 2023-05-04

What’s in today’s Business Edge update?

So today, we look into that Fed signals a possible pause in rate hikes, impacting tech companies, and FTC proposes new privacy restrictions with Meta striking back.

In other headlines, Bing Chatbot is now open to all with new features from Microsoft, UK watchdog investigates Adobe's $20B Figma acquisition, and Shopify's Q1 2023 sees a 15% GMV increase, plus a sell-off of logistics assets.

Don't miss out!

🌐 Digest

Concise summaries of must-know tech news

[1] Fed Signals Possible Pause in Rate Hikes Amid Economic Risks

The Federal Reserve has increased its benchmark overnight interest rate by 0.25% to a range of 5.00%-5.25%, marking a possible end to the tightening cycle that began in March 2022. The Fed's statement no longer mentions the anticipation of further rate hikes, indicating that the policy-setting committee might pause the increases. Fed Chair Jerome Powell highlighted inflation as the chief concern but acknowledged that the economy is showing signs of slowing down and potential credit crackdowns by banks.

More:

• The policy rate increased by five percentage points over ten meetings

• Powell says future rate hike decisions will be made on a "meeting-by-meeting" basis

• Unlikely for Fed to cut rates this year

• U.S. stocks and Treasury yields dropped, while the dollar weakened

_{Tags: #Regulation #Financial report #Federal Reserve}

Read more about it at —> (read time: 8 minutes)

Insight: The valuation of technology companies is more affected by the FED rate than traditional enterprises. This is because a growing tech company's cash-flows lie far in the future and, as the value of a company is determined by the sum of all future cash-flows discounted to today's date, the FED rate highly correlates with overall tech valuation.

[2] FTC Proposes New Privacy Restrictions; Meta Strikes Back

The Federal Trade Commission (FTC) has proposed several restrictions on Meta, accusing the firm of violating a 2020 privacy order. The regulator suggests prohibiting monetization of children and teens' data under 18, pausing new product launches, and extending compliance to acquired companies. The FTC also recommends limiting Meta's use of facial recognition technology and strengthening existing privacy program provisions from the 2020 order. Meta calls the FTC's move "a political stunt" and vows to fight the action.

More:

• FTC claims Meta has failed to fully comply with the 2020 privacy order

• Meta accuses FTC Chair Lina Khan of using baseless measures to antagonize American business

• The FTC has asked Meta to respond within 30 days

_{Tags: #Meta, #Privacy, #Regulation}

Read more about it at —> (read time: 4 minutes)

Insight: We classify this news as having a Company Impact. The proposed restrictions specifically target Meta, impacting its ability to monetize data and launch new products. The company's strong response demonstrates the potential impact of the restrictions on Meta's operations and future growth.

[3] Bing Chatbot Now Open to All; Microsoft Adds New Features

Microsoft has removed the waitlist for its Bing GPT-4 chatbot, making it accessible to everyone. The company also announced new features such as image and video results, chat history, and plug-in support.

More:

• Microsoft's Bing chatbot utilizes GPT-4 technology

• New features aim to enhance user experience and functionality

• Previously, the chatbot was only available to waitlisted users

_{Tags: #Microsoft, #Bing, #GPT-4, #AI}

Read more about it at —> (read time: 2 minutes)

Insight: This news is classified as having a Market Impact. Microsoft's decision to make the Bing chatbot available to all users and introduce new features indicates the company's intent to expand its user base and increase market share in the AI-driven chatbot segment. The move may also prompt competitors to enhance their offerings to keep up with Microsoft's advancements.

[4] UK Watchdog Investigates Adobe's $20B Figma Acquisition

The UK's Competition and Markets Authority (CMA) is looking into Adobe's proposed $20 billion acquisition of Figma, a digital design competitor.

More:

• CMA initiates a phase 1 merger inquiry, opening a two-week comment period

• The European Commission is also evaluating the acquisition on competition grounds

• If the CMA finds the deal reduces competition and consumer choice, it may impact Australia's crypto regulations timeline

• The US Department of Justice is rumored to be considering a lawsuit to block the deal

_{Tags: #M&A #Adobe #Figma}

Read more about it at —> (read time: 1 minute)

Insight: We classify this news as having an Industry-wide Impact because the acquisition could affect the entire digital design industry, potentially altering competitive dynamics and reducing consumer choice. The outcome of the investigation may also influence regulations in related markets like cryptocurrency.

[5] Shopify Q1 2023: GMV Up 15% to $49.6B, Sell of Logistics Assets

Shopify's Q1 2023 financial report revealed a growth of 15% in Gross Merchandise Volume (GMV) to $49.6 billion, and a 25% rise in total revenue to $1.5 billion. The company launched an AI shopping assistant on its Shop app, powered by OpenAI's ChatGPT API, providing a more personalized shopping experience for consumers. Additionally, Shopify entered partnerships with Intuit, IBM Consulting, and Cognizant.

More:

• Commerce Components by Shopify (CCS) launched for enterprise retail, offering a modern and composable stack

• Updated pricing for Basic, Shopify, and Advanced plans announced on January 23, 2023

• Partnerships with Intuit, IBM Consulting, and Cognizant to accelerate CCS and Shopify Plus adoption

• Shopify sells logistics assets to Flexport, receiving a 13% equity interest in Flexport

_{Tags: #Shopify, #FinancialReport, #AI}

Read more about it at —> (read time: 5 minutes)

Insight: We classify this news as having a Market Impact, as it affects a specific market within the e-commerce industry. The launch of the AI shopping assistant involves moderate technological advancements, and the partnerships with Intuit, IBM Consulting, and Cognizant have implications for the market. The sale of logistics assets to Flexport also impacts the competitive landscape for Shopify and its market segment.

⚡️Bites

Brief news summaries that provide quick and easy-to-consume information.

Salesforce introduces SlackGPT, integrating generative AI features into Slack for summarizing meetings and incorporating EinsteinGPT for enhanced functionality.(link)

Airbnb unveils Airbnb Rooms, featuring Host Passports and improved privacy, alongside 50+ new features to enhance guest and host experiences for post-pandemic travel surge. (link)

Pentagon awards Amazon, Google, Microsoft, and Oracle a multibillion-dollar cloud computing contract, Joint Warfighting Cloud Capability (JWCC), to enhance military data access and improve defense technology until mid-2028. (link)

Datadog reports Q1 loss of $24.1 million but beats Wall Street expectations with adjusted earnings of 28 cents per share and revenue of $481.7 million. Forecasts Q2 revenue of $498-$502 million. (link)

Mozilla acquires Fakespot, a startup helping users identify fake reviews, with plans to integrate its functionality into Firefox browser over time. (link)

Stripe and Uber enter a global partnership, expanding user payment options and reducing Uber costs. Shares of Uber jumped 3.61% on the news. (link)

Amazon brand aggregators, which raised $16 billion during the pandemic, face challenges as consumers return to stores and Amazon's sales growth declines. Rising interest rates, higher costs, and cooling online demand push some aggregators towards debt relief or mergers. (link)

🔍 Extra

A mix of learning links, software products, deals, and other interesting content.

ChatGPT Code Interpreter simplifies data visualization, enabling users to generate visuals without coding expertise, revolutionizing the no-code movement. (link)

NinjaTech AI, founded by top AI experts from Google, Meta, and AWS, aims to create the first AI-powered executive assistant for enterprises, using large language models and generative AI for efficient administrative tasks. (link)