What is too invasive?

4

October

2020

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Amazon-Always-Home-Cam-800x445

At the moment tech-giants like Google and Amazon are performing a balancing act between providing more personalized hardware to consumers and preventing a possible backlash when it comes to extended data collection.

Take Amazon’s most recent in-house hardware for example; the Ring Always Home Cam (see picture). This flying drone will patrol the house and look for possible intruders. While knowing when there is an intruder in your house is a noble goal, having a camera flying around 24/7 is a giant invasion of someone’s personal space. Consumers buying these products either are ignorant of these invasions or place great faith in the integrity of a company. For Amazon these developments are understandable. With Alexa the company already has voice data gathered, a camera would provide more valuable data on their consumers. It seems like the next step for ecosystem drivers to gather even more information about their end-consumers.

Google also has shown intentions to gather increasingly more information and with Google Home they have a direct competitor for Amazon’s Alexa. Their recent $2.1bn acquisition of Fitbit cannot be seen separately from these data collection developments. This is where regulators drew the line however. The EU threatened to cancel the deal if concessions were not made. An agreement seems to have been reached, with (among others) a promise by Google to not use the Fitbit data for targeted advertisements for the next 10 years.

This begs the question where the line actually is. What do you think? Is buying privacy-invading  equipment fully the responsibility of the consumer? Or, as tech gets more advanced and complicated, regulators like the EU should step in to protect the consumer?

Sources:
https://www.ft.com/content/8eaf8ee5-b074-4d48-b4fa-15d35a185a5d
https://www.ft.com/content/78c9ba4d-f613-4f69-889a-35b1636c2d99

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another-bubble.com

19

September

2020

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Snowflake, a cloud-based warehousing firm working towards an IPO, was valuated at $75 to $85 dollar per share early in September. Later, as anticipation grew, analysts expected a valuation of $100 to $110 dollar. When the company’s IPO took place the 16th of September, it priced its own shares at $120 each. Demand was so strong however that the stock quickly shot up to $245 dollar (an incredible 96% increase). The stock has come down a bit but still stands at $240 a share (19-09).

This has made it the biggest IPO for a software company in history. The current market valuation of $70bn is 140 times larger than its current annual revenue. Such incredible valuations seem to be based on unlimited faith in the companies’ future performance. It reminds one of the dot com bubble in the late 90’s where anything ‘dot-com’ related was valuated positively, regardless of underlying business performance.

While Snowflake has seen significant business growth and solid performance over the past years, investors seem to only look at the upside. A quick look at the competition in the cloud-warehousing should be enough to be at least a bit skeptical: Amazon, Google and Microsoft are all battling for market-share.

Other tech-stocks, like Apple and Microsoft have been soaring as well. One explanation for this is that they were helped by the pandemic, increasing the need for IT-solutions. These are established companies that have been growing steadily over many years now however.

With the S&P 500 (tracker of US stocks) showing pre-Covid levels and the unemployment rate relatively high, it is clear that the market has already lost its touch with the underlying economy.

I am not going to argue that tech has proved its importance during the pandemic so the rise in certain tech-stocks seems validated. The question is, is the current faith and validation in companies like Snowflake still justified? Or are we seeing a second dot-com bubble ready to burst?

What do you think? Is this another tech-bubble waiting to burst or is it fundamentally different this time? Let me know in the comments!

Sources and references:

https://www.ft.com/content/e9ecee89-491e-4495-9b18-61d9e86dab1b
https://edition.cnn.com/2020/09/16/investing/snowflake-ipo/index.html
https://www.snowflake.com/
https://www.ft.com/content/844ed28c-8074-4856-bde0-20f3bf4cd8f0
https://www.bls.gov/news.release/pdf/empsit.pdf
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