Google Announces Plans to Tighten its Hold on Internet Advertising Even Further
Bottom Line: Google (NASDAQ: GOOG) recently announced their plans to phase out support for third-party cookies on Chrome within the next two years. These third-party cookies are used to help advertisers and marketers track users across their web browsing primarily in order to personalize advertisements. Once this change comes into effect it will certainly provide increased privacy for users, an area where Chrome lags other competitors, most notably Firefox and Safari, but it will also help tighten Google’s hold on web-based advertising in general. Guess the analysts who came up with the chart below better get to revising Google’s share!
This is a hell of a chart. Facebook and Google each grow $80B over the next 4 years.
"Rest of Online Ad Marketplace" shrinks over same period.
h/t @gbattle pic.twitter.com/nHDXYOdpIH
— Jonathan Mendez (@jonathanmendez) January 6, 2020
The Long Tail of the Browser Wars that Have Already Been Lost
Bottom Line: Google’s Chrome web browser and Apple’s (NASDAQ: AAPL) Safari browser account for more than 90% of mobile browsing, according to Net MarketShare. But there are many other browsers fighting to stay alive in niche categories. Whether it’s Brave that offers a way for users to send payments to publishers using cryptocurrency, Mozilla that is focusing much of its recent efforts on privacy features but who recently began laying off staff, or the Opera (NASDAQ: OPRA) browser that is focusing on developing markets.
But earlier this week Hindenburg Research released a report on Opera outlining not only its shrinking revenues and influence in browser-related revenues but also brought up some other serious questions about the business. The core of the risk outlined in Hindenburg’s report relates to Opera’s micro finance business. That business offers apps that provide short-term loans in Africa and Asia. According to Hindenburg’s report, the loan terms offered by the apps are in violation of Google’s app store policy related to the minimum duration of the loan repayment and deceptive descriptions and interest rates.
We agree that the evidence presented by Hindenburg on this point is clear. However, when/if the apps are removed from the the app store, the violations could be corrected and the apps could be re-instated. The Hindenburg report also outlines some questionable business practices by Opera’s management, but as we’ve seen in the past with Hindenburg reports, those types of allegations are ones that can be recovered from.
Opera’s share price took a significant hit on the day the report was released, closing the day down nearly 19%.
Windows 7 Support Ending Is Helping Drive PC Sales
Bottom Line: Both IDC and Gartner reported on 2019 PC sales and showed increasing sales for the first time in 7 years thanks in most part to demand for Windows 10 machines as Microsoft ends support for Windows 7 this week. While the two research firms define PC sales differently (IDC includes Chromebooks while Gartner excludes them but includes tablets) both showed growth in shipments for 2019 compared to 2018. IDC reported a 2.7% increase in shipments while Gartner reported a 0.6% increase year over year.
The uptick in shipments should be a short-term tailwind for both Microsoft (NASDAQ: MSFT) as well as major PC manufacturers such as HP (NYSE: HPQ) and Dell (NYSE: DELL). ZDNet also estimates that there may be as many as 200 million Windows PCs still running Windows 7, thus PC shipments for 2020 may also benefit from the continued upgrading of machines throughout the year.
Visa Pulling out the Plastic for Fintech API Provider Plaid
Bottom Line: Visa (NYSE: V) announced this week the acquisition of Plaid, a fintech startup that connects mobile apps to banks through APIs (Application Programming Interfaces) and through relationships with banks, for $5.3 billion.
Plaid, which was last valued at $2.65 billion in late 2018 through its Series C funding round, is one of the first big exits for the emerging fintech sector and will definitely not be the last. The move by Visa will give them the possibility to have even more access to the lucrative and rapidly growing consumer financial services industry including digital payments and investing apps. On a conference call with investors following the announcement, Visa said they expect the Plaid acquisition will increase top-line revenues by as much as 1% in fiscal 2021 assuming the deal closes in a timely manner this year.
CES in All its Gadget Glory
Bottom Line: Last week we shared with you a preview of some of things to watch for at CES and this week we’re sharing Steven Sinofsky’s excellent roundup of all the trends and interesting products from the show. Sinofsky is a former Microsoft executive and long-time CES attendee who combed the entire show and documented it all. He outlines the folding screen trend, the newest in TV tech, all the home automation/security products, as well as how AI and ‘smart’ tech has invaded everything.
The most interesting of Sinofsky’s insights in my opinion were some of the products he covered in the last category of his roundup, energy and batteries. The constant move to mobile everything as well as the gradual shift towards electric vehicles and renewable energy sources are going to make energy storage one of the most important development areas in the coming decade in my opinion.
Tech Investing Chart of the Week
Grizzle had you covered in 2019 for all the big tech IPOs. We’re gearing up for an exciting 2020 as well, with Casper likely being the first to the gate after having released their prospectus last week. But just how big a year was 2019? The chart below from Pitchbook looked at the total value of IPOs, buyouts and acquisitions for venture-backed companies and found that total exit value nearly doubled over last year.
According to Pitchbook, 78% of that exit value, just under $200 billion, was driven by IPOs which is more than 2016-2018 combined! So even though the failed WeWork IPO may have spooked some companies in Q4, all in all venture capitalists, early investors, and founders had a banner year.
Source: Pitchbook
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