PayPal / iZettle merger given a provisional green light.

After an extended period of investigation, the UK antitrust watchdog has given a provisional thumbs up to the merger between the digital payment platforms of PayPal & Swedish fintech start-up iZettle.

Formally, The Competition & Markets Authority (CMA) held concerns over the overlap between the two organisations; both of whom make mobile point of sale devices enabling businesses to take “offline” payments through a card reader which can be plugged into tablets or smartphones.   

However, after an in-depth probe, the regulator has resolved that broadly speaking the digital payments sector has evolved somewhat.  Competition within the landscape has intensified, and as such the monopolistic presence of these two major providers has been neutralised by new, emergent businesses disrupting the space.

The body highlighted the growth of new players Square and SumUp, in particular as significant factors affecting their decision.  The ability for customers to switch to using devices made by larger payment services companies such as Barclaycard and Worldpay were also formative in their U-Turn.  Currently, these two sharks of the financial world account for two-thirds of the market.

This turn-around will come as a relief to PayPal who had already completed the takeover last September.  They may have been forced to reverse the deal if it had been found the merger would lessen competition within the market.  This would have been a particularly sore conclusion for PayPal. The acquisition was PayPal’s largest ever deal…iZettle are one of the most successful European fintech start-ups to date.

PayPal have issued a statement through president and chief executive Dan Schulman.  Of the decision, he remarks that PayPal look “forward to adding iZettle’s products and services to [the company’s] platform”.

He goes on to say that PayPal will continue to work in collaboration with the CMA throughout the remainder of their review until a final decision is made later in the Spring.

Google’s share price drops wiping $70bn off its market value.

Google have suffered their biggest fall in share prices since October 2012.  A disappointing first quarter has meant that the search giants have wiped $70bn (£54bn) off its market value.

On Tuesday, shares in Alphabet, the parent company of both Google and YouTube fell by more than 8% after the company released first-quarter results that were worse than expected.

By the close of trading on Tuesday, Google’s stock market value had fallen from more than $900bn to about $830bn.  The company also reported a 17% increase in revenue to $36.3bn. Although this figure is undeniably huge, this is actually its slowest revenue growth over a three-month period since 2015.

The performance of Alphabet was poor compared with its main tech rivals, Facebook and Amazon.  Despite poor PR of late, both companies still reported record revenue growth. Facebook grew its revenue to more than $15bn in the first quarter, while Amazon has succeeded to record four straight quarters of record profits.

Michael Nathanson of analysts, Moffett Nathanson, suggests that Google’s slower growth could just be a blip, rather than a red flag signalling something more significant.  He likened the slow down to that which happened to Facebook last summer where $119bn was wiped from Facebook’s market value – Following the Cambridge Analytica scandal, the social media giant suffered a significant drop in usership.  Almost a year on and it has to be conceded that this level of misfortune has not followed Facebook. Their record results from earlier this week are a testament to this.

Not helping matters, Google have been subject to a series of penalties by European regulators of late totalling €8.2bn in the past two years.  Most recently, they were subject to a €1.5bn fine for abusing its monopoly in online advertising. Commentators have noted that such action will not have carried favour with investors, however, analysts have dismissed the suggestion that it was the cheque made out to Brussels that will have initiated this drop in shares.

Nathanson is of the opinion that on this occasion YouTube are the weak link in the Alphabet chain.   He remarked that;

“We expect that much will be made of company commentary that YouTube clicks decelerated in the quarter and that improving YouTube’s environment is a top priority, as evidence that YouTube was to blame for the slowdown.”

Google seem to concur.  Chief executive, Sundar Pichai, said of drop that the company would continue to invest more in algorithms to monitor content on YouTube.  There have been notable incidents recently of the platform offering advertising slots alongside misinformation, hate speech and disturbing content targeting children.   He also promised to continue working on user privacy concerns.

Video-based hiring platform Tempo secures £1.75M funding.

On Wednesday, intelligent video-based hiring platform Tempo announced they have secured £1.75m in funding, taking the total funding raised by London based Tempo to £3m.

The additional funding will allow Tempo to continue on their impressive run of growth.  2019 has already seen them add Bulb Energy, OakNorth, Zellis and many others to an already impressive client base.  They could already boast Monzo, Uber and Babylon Health as clients. They will also be using these deeper pockets to take their product to new markets and invest more heavily in tech.

Ben Chatfield, CEO & Co-Founder at Tempo has ambitious plans for his recruitment platform.  His vision is to “turn recruitment on its head”, giving jobseekers “more options, more direct access to the employers, and ultimately the opportunity for a job they truly love”.  He goes on to say that starting a new job should be a highlight of professional life. He remarks that it heralds the start of a new journey and new opportunity. He believes that Tempo’s product can help combat “slow, monotonous and demoralising recruitment processes” and the agencies that practice them.  

This latest investment was led by Hambro Perks and Michael and Derek Jacobson, with participation from Chris Bruce and Michael Whitfield; the founders of Thomsons Online Benefits.   Dominic Perks, founder of Hambro Perks is just as optimistic about the future of its latest beneficiary. He says “Hambro Perks is delighted to back Tempo. We are excited by the company’s growth plans and its mission to reinvent the recruitment industry.”

Planned new laws will secure Internet of Things

Internet-connected gadgets are collectively known as The Internet of Things.  Under plans for new laws announced this week, this rapidly growing tribe of IoT devices would have to be made more secure.

According to market analysts Gartner, there looks set to be 14.2 billion internet-connected devices in use worldwide by the end of 2019.  Such products include TVs for example, smart speakers and wearable tech with internet connectivity.

With such a rush of devices on the market, they often become targets for cyber-attackers looking to steal personal data, spy on users or remotely take control of devices to otherwise misuse them.

Technical director of the UK’s National Cyber Security Centre (NCSC), Ian Levy acknowledges these risks.

“Serious security problems in consumer IoT devices, such as pre-set unchangeable passwords, continue to be discovered – and it’s unacceptable that these are not being fixed by manufacturers,”

There are products on the market focussed on providing security for our connected devices.  Investors are spotting this as an opportunity, and as such are ploughing money into these offerings.  Indeed, Last week Our Week in Digital reported that Tel-Aviv startup VDOO have recently raised $32million to extend their platform which identifies and fixes IoT device security vulnerabilities.

Prevention is better than cure though and this new proposed legislation would mean that devices would have to come with security measures as standard.  Companies making these devices would also have to introduce a new labelling system informing customers how secure an IOT product is.

To gain a label and enter the market, IOT devices would have to be sold with unique passwords.  They would also need to state clearly for how long security updates would be made available and offer a public point of contact to whom any cyber-security vulnerabilities may be disclosed.

Initially, the scheme would be voluntary. Eventually, however, retailers failing to display products with these labels would be banned from selling IoT devices.

Digital Minister, Margot James believes that these proposals would help to solidify the UK’s bid to be a “global leader in online security”.  Cyber-security expert Ken Munro, who himself has exposed many flaws in IoT devices has added weight to the proposals. He believes these to be “positive step(s)” to protect consumers.  However, he is not without his concerns and hopes the legislative proposals do not become “watered down” during the consultation process. He states that he is “particularly pleased to see product security labelling being proposed so that buyers can make informed decisions.”

And Finally:

If Silicon Valley were a country, it would be one of the richest on earth!

The world of tech is constantly surprising us with incredible and almost unbelievable stats.  This week is no exception, as we learn that should it be a country, Silicon Valley would be among the richest on earth.

With $128,308 per capita in the annual gross domestic product (GDP), its residents across California’s tech belt, outproduce almost every nation on the planet.  To put this into some sort of context, the valley’s output has been pegged at $275bn by the federal Bureau of Economic Analysis – higher than that of Finland.

Qatar’s per-capita GDP, estimated by the World Bank at $128,647 in 2017, is the world’s highest.  However, the per-person output from Silicon Valley outstrips this by some way. Indeed, it puts the region in line with other wealthy territories such as China’s casino peninsula Macau (per-capita GDP $115,367) and Luxembourg, which has an estimated per-capita GDP of $107,641.

The San Jose metro area of which the Silicon Valley is a part has a population of nearly 2 million and covers an area of only 179.97 square miles.  The valley itself has a square mile area of just 47.

Small but mighty, it is, however, the residential home of nearly half of tech billionaires, as well as Google’s Mountain View headquarters and Apple’s base in Cupertino.

Such wealth has come at a price though.  Just like other US high per-capita GDP areas – Boston, Seattle and southwestern Connecticut for example – the valley has suffered soaring house prices, problematic cultural shifts and political clashes borne from rising inequality.

Lew Daly, co-wrote “Beyond GDP: New Measures for a New Economy”.  He believes that GDP is not a good indicator of how an economy is growing and that it may even be a negative thing if the growth is inequitable and unstable.  Instead, Daly and his peers advocate holistic gauges of economic health; ones that capture more than just consumption and investment for example. He does acknowledge though that sometimes these alternative measures do highlight an overlap.  The Human Development Index, for example, is considered to be a more progressive metric. This too agrees that Silicon Valley is the nation’s most well-developed place.

 

About the author: I work hard to find the best opportunities for my candidates and the best talent for my clients. My honest and pragmatic approach helps me to build lasting relationships and deliver real value.  I have extensive experience helping organisations overcome their critical challenges in the digital environment, and have worked with everything from start-ups to major global brands.

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