NXP-Qualcomm $44B deal to clear China as Trump authorizes $50B tariffs

The U.S.-China trade battle enters an important new phase. The South China Morning Post is reporting that China’s Ministry of Commerce will clear Qualcomm’s pending $44 billion acquisition of NXP Semiconductors. One independent source also conveyed the same news to TechCrunch, although there has been no official word from Qualcomm, NXP or China at time of publication. That acquisition was expected to close months ago, but the Chinese government repeatedly delayed its assent to the deal as part of its ongoing fight with the Trump administration over the future of bilateral trade. China’s ministry remained the last competition authority worldwide pending to approve the deal, and presumably it will close rapidly now that antitrust review has been completed. The news of the approval broke just as The Wall Street Journal reported that the White House has authorized $50 billion in tariffs on Chinese goods. The final list of
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3,000 journalists covering Kim-Trump this week is WTF is wrong with media

Media businesses are in the dumper. Every week, we hear of new layoffs, budget cuts, diminished editorial quality, and more, way more. And yet, somehow, miraculously, more than 3,000 journalists managed to find the funds to travel to Singapore to cover the Kim-Trump Summit Extraordinaire this week. How many journalists got to see the summit activity? From Politico: “Most notably, the number of American journalists allowed to witness the meeting between Trump and Kim was limited to seven — a smaller group than would usually be present for such a summit, and one that excluded representatives from the major wire services” (emphasis added). It’s a huge news story, a major historical moment in the relations between the DPRK and the United States, and one that portends massive changes in that relationship going forward. The event should be fervently covered by the global press. Yet, 3,000 seems a stupendous number
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ZTE has few cards left to play to avoid ‘death penalty’

It’s not every day you see a company that employs 75,000 and once had a market cap of $20 billion facing instant doom on an hour-by-hour basis. But that’s the situation that Chinese telecom firm ZTE finds itself in right now. Following revelations that the company sold equipment with U.S. technology to Iran and North Korea in violation of U.S. sanctions, President Trump decided to kill the company. Then he decided not to kill it. Now, this week, Congress is deciding whether to kill it or not, much to the chagrin of the White House, who thought the matter closed. Senators like Tom Cotton (R-AK) this week have said they believe that the “Death penalty is right penalty for ZTE’s behavior.” Before we go further, let’s step back for a moment and just muse about what is happening here. Congress and the White House are
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Netflix and Alphabet will need to become ISPs, fast

This week completely scrambled the video landscape, and its implications are going to take months to fully understand. First is the district court’s decision to approve the merger of AT&T and Time Warner announced just moments ago. That will create one of the largest content creation and distribution companies in the world when it closes. It is also expected to encourage Comcast to make a similar bid for 21st Century Fox, further consolidating the market. As Chip Pickering, CEO of pro-competition advocacy org INCOMPAS put it, “AT&T is getting the merger no one wants, but everyone will pay for.” But the second major story was the final (final final) repeal of the FCC’s net neutrality rules yesterday that will allow telecom companies like AT&T to prioritize their own content over that of competitors. In the past, AT&T didn’t have all that much content, but the addition of Time Warner
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Automated dev platform CircleCI expands to Japan, first office outside US

CircleCI is on something of a tear. The company’s continuous integration and deployment build platform is used by hundreds of thousands of developers around the world to create their own software. It has also received $59 million in venture capital funding, including a $31 million Series C earlier this year. As it looks to continue growing, the company is expanding its global footprint. It has opened its first international office outside of its SF headquarters, in Tokyo, Japan. As part of the opening, CircleCI is intending to eventually build an office of 4-5 employees and create partnerships with local companies. The company has experience in the geography, with several remote workers stationed there. It’s also the third largest market for the company, after the United States and the United Kingdom, where it works with local companies like CyberAgent and DeNA. “We are really excited about Japan, excited about global,”
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With strategic investment, Insilico Medicine is using deep learning to defeat aging

Every once in a while, you meet an entrepreneur who is both fully present, but also has a head full of dreams. That was my experience meeting and hosting Alex Zhavoronkov, the founder and CEO of Insilico Medicine, a few weeks ago in Vienna at the Pioneers conference. There, he gave a presentation on how he is going to defeat aging using a set of deep learning AI tools, and also told me that I am going to live forever because I am young enough to benefit from the tech he is developing. I am a huge skeptic to be frank (particularly anytime deep learning gets bandied about), but after chatting with him both before and after getting on stage, I can’t preclude the possibility that aging is something that might be within humanity’s (or at least Zhavoronkov’s) grasp to control. That belief in the company’s mission is reflected
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M17 delays IPO debut after pricing this morning on NYSE

M17 Entertainment, a Taipei-based live streaming and dating app group, priced its IPO this morning on the NYSE and was expected to open trading today according to their final press release. But with just a little more than two hours to go before market closing, it’s still not trading, and no one seems to know why. An interview I had scheduled with the CEO earlier this afternoon was canceled at the last minute, with the company’s representative saying that M17 couldn’t comment since its shares were not yet actively trading, and thus the company remains under an SEC-mandated quiet period. M17 has had a rocky non-debut so far. Originally targeting a fundraise of $115 million of American Depository Receipts (shares of foreign companies listed domestically on the NYSE), the company concluded its roadshow raising less than half of its target, for a final investment of $60.1 million. The
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With index changes, Americans are sending billions to China (whether they know it or not)

There have been two major developments in Chinese equities this month that have the potential to rewire the world financial system. The first, which I have covered extensively on TechCrunch, is the launch of Chinese Depository Receipts, which will provide domestic Chinese investors access to foreign stocks for the first time. Major Chinese tech companies are publicly traded in the U.S. and Hong Kong, which means that potentially trillions of dollars of mainland capital will be unlocked for these companies. The other major story took place last week, when MSCI included Chinese A-shares in its indexes. This is a major, yet underreported, story, and critical for understanding the changing financial tides between China and the world. MSCI is one of the most important index-makers in the world, particularly for emerging markets. The MSCI Emerging Markets Index is the gold standard for benchmarking the asset class, and the index
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ZTE fined $1 billion

After much negotiation with the Trump Administration, Secretary of Commerce Wilbur Ross confirmed this morning that ZTE, the Chinese telecommunications giant, has agreed to a $1 billion fine. That penalty was assessed following an investigation showing that ZTE had violated U.S. sanctions by selling telecom technology to Iran and North Korea. Ross made the comments on CNBC’s morning show Squawk Box. This was an incredible scare for ZTE. As part of the original settlement with the U.S. government last year, ZTE had agreed to accept a $1.19 billion fine and made personnel changes to satisfy U.S. regulators. The Trump administration then took that penalty even further, banning U.S. companies from selling components to ZTE for seven years, components critical to ZTE’s entire product line. That decision was expected to kill the company, which employs roughly 75,000 workers and had been worth about
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Xiaomi CDRs, SoftBank’s successors, and China’s Samsung investigation

The weekend provided no rest to news-wary reporters, with major announcements coming from Xiaomi, SoftBank, and the Chinese government the past few days that will continue to change the global tech landscape.

Xiaomi Chinese Depository Receipts

One of the most important yet underreported stories of 2018 has been the development of Chinese Depository Receipts (known as CDRs). I wrote a comprehensive primer on the investment mechanism a few weeks ago, but the summary is that CDRs will give mainland Chinese investors access to overseas-listed stocks that setup the right custodian accounts. Due to domestic capital controls and relatively weak stock exchange rules in China, many Chinese tech giants are listed on overseas stock exchanges in New York and Hong Kong. Beijing-based Xiaomi, which produces a line of phones and offers mobile software services, is launching one of most anticipated IPOs of the year, with a valuation expected to
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Coord will get you there one way or another with its new APIs

Humans still have an edge over computers when it comes to navigating a city. In areas we are familiar with, we know precisely the cadence of traffic, when to avoid the subway, when biking makes sense, and how that all fits with the current weather and our moods. We have transit intuition, which is why we get so frustrated when Google Maps suggests a route that just doesn’t match the available options to get around. Yet, even humans are starting to break down under the increasing complexity of mobility options. Whether its subways or buses failing or new options like bikeshares, electric scooters, or crowdsourced bus routes becoming available, our intuition on how to get to our destinations can be out-of-date or quite simply wrong. In the patchwork quilt of transit options available in most American cities, people often need to take two or even four different modes of transit
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U.S. announces timeline for 25% tariff on Chinese tech products

After significant back-and-forth over the past few months, the White House intends to follow through with a pledge to place tariffs on imported Chinese technology goods while also tightening restrictions on investments by Chinese firms into American companies. In a statement posted by the White House this morning, the administration said that it would impose a 25% tariff on $50 billion of Chinese high-tech goods “containing industrially significant technology.” That follows the conclusion of the U.S. Trade Representative’s Section 301 investigation into China’s industrial and intellectual property policies. What goods will be included in the tariff policy has been up for debate, but the final list will be released on June 15th. This package of tariffs is different than a separate package of tariffs focused on steel and aluminum production announced earlier this year. The regulations around investment restrictions by Chinese companies will be announced at
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GDPR, China, and data sovereignty are ultimately wins for Amazon and Google

The Great Privacy Policy Email Deluge of 2018 may have finally petered out, but we are just starting to build an understanding of who the winners and losers will be in this newly regulated data economy. Most of the attention so far has been focused on the losers post-GDPR, which can be broadly summarized as “advertising networks.” Indeed, as Jessica Davies at Digiday reported over the weekend, programmatic advertising in Europe plummeted post-GDPR this weekend, potentially threatening profits at product lines like Google’s DoubleClick network (at least temporarily until they figure out all the compliance issues). However, the more interesting analysis is around who the winners of these laws will be (besides the lawyers of course). To me, it’s clear that the complexity around these data sovereignty laws ultimately benefits highly-scaled service providers who can manage the nuanced regulations around these laws in an automated fashion. That means,
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The national security implications of Chinese venture capitalists are overblown

Washington — as Washington does — is barreling towards a new reform plan designed to protect American innovation from overseas investors (which should really just be read as the Chinese these days). Earlier this week, congressional committees passed a measure designed to strengthen CFIUS, the Committee on Foreign Investment in the U.S., which we have written extensively about on TechCrunch. The bill would expand the powers of the committee to review transactions in more contexts, beyond its current mandate of looking only at changes in controlling interests. Washington — as Washington does — has turned the debate, which was once deeply technical about the machinations of a mostly unknown government agency created during the Korean War, into a histrionic fight about the future of American innovation. Along the way, this classic DC dramatization threatens to rollback the robust market of Chinese venture capital flowing to Silicon Valley
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Subscriptions for the 1%

We are in a subscription hell. Paywalls are going up across the internet, at aggregated prices few but Jeff Bezos can afford. The software I used to pay for once now requires an annual tax, because … “updates.” We are getting less every day, and paying more for it, all the while the core openness that made the world wide web such a dynamic and interesting place is rapidly disappearing. I’m not a subscription hater. Far from it: subscriptions are vital, because they provide sustainability to the content and software I care about. Regular, recurring income helps make the business of creation more predictable, ensuring that creators can do what they do best — create — rather than stress about whether the next book or app is going to generate their yearly earnings. Greed, though, has managed to make subscriptions deeply unpalatable. Sustainability has become usurious, with news subscriptions
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MoviePass parent drops another 46%

There’s been another bomb at the box office, and it isn’t a movie. MoviePass parent Helios & Matheson lost nearly half of its remaining value today as investors continued to flee the cash-burning movie service. That drop followed a 31% dive yesterday, after the company filed a statement with the SEC warning that it would have to sell equity in the coming weeks for it to remain solvent. Since Thursday’s opening bell last week, the stock has moved from $2.13 to $0.79, a drop of 63%. The company’s market cap is now $51.44 million. MoviePass CEO Mitch Lowe said in a written statement that “Our burn rate has been slashed by 35-40% by the implementations and abuse prevention measures we have put in place over the last few weeks. We have always known, from when MoviePass took off in August, that it was going to be
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A Google I/O conversation

Hey Google, what happened at Google I/O today? Artificial intelligence. Okay, that’s non-specific. I heard Android P was released today. What’s new? Artificial intelligence. Hmm. Has Google added any features to make battery life longer on Android? Artificial intelligence. Let’s move on. What about the brightness settings? I heard there was something new there too? Artificial intelligence. How the hell can brightness use artificial intelligence? And why do you only say one thing? Let’s move on to some apps. What’s new with Google Maps? Artificial intelligence. Photos? Artificial intelligence. Lens? Artificial intelligence. News? Artificial intelligence. Gmail? Artificial intelligence. Gboard? Artificial intelligence. You are the worst assistant ever. Did Google update Assistant at all? Artificial intelligence. Argh. I heard Google released a lot of dev tools today. What’s ML Kit about? Artificial intelligence. And Duplex? Artificial intelligence. And tensor processing un…you know never mind. I get the damn picture. At least
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MoviePass parent drops 31% on looming cash crunch

The big question in the media world today is whether MoviePass parent company Helios and Matheson can stanch the bleeding of its cash flows before it becomes insolvent. In a new filing today with the SEC, Helios informed investors that it had $15.5 million in available cash, with another $27.9 million in accounts receivable from members of MoviePass on longer-term subscriptions. Under accounting rules, those dollars can’t be used to fund current expenses. The company said that it has lost $21.7 million a month between September and April this year. Investors dumped the stock following the filing, and the stock was down 31 percent at the close of the equity markets today. While linear math would seem to indicate that the company is on track for insolvency in a matter of days, the filing and its CEO are maintaining an optimistic line. The company said that
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White House will host tech industry for AI summit on Thursday

Artificial intelligence has been a mainstay of the conversation in Silicon Valley these past few years, and now the technology is increasingly being discussed in policy circles in DC. Washington types see opportunities for AI to improve efficiency and increase economic growth, while at the same time, they have growing concerns around job automation and competitive threats from China and other countries. Now, it appears the White House itself is getting involved in bringing together key American stakeholders to discuss AI and those opportunities and challenges. According to Tony Romm and Drew Harwell of the Washington Post, the White House intends to bring executives from major tech companies and other large corporations together on Thursday to discuss AI and how American companies can cooperate to take advantage of new advances in these technologies. Among the confirmed guests are Facebook’s Jerome Pesenti, Amazon’s Rohit Prasad, and Intel’s CEO Brian Krzanich.
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Backstage Capital launches $36m fund to boost black female founders

Conceiving a product and turning it into a successful high-growth startup is challenging work, but it can be absolutely punishing for underrepresented founders. While a strong product and a great go-to-market is critical for early success, that’s not enough to ensure a successful venture capital fundraise. Instead, what often matters is building relationships with investors, and the evidence is clear that people love to work with people who look just like them. In an industry dominated by white men, it can be hard for founders to find investors who look like them. That’s why Arlan Hamilton built Backstage Capital. Her firm’s mission is to provide early seed financing exclusively to founders who are women, people of color, and LGBT — groups that are massively underrepresented among Silicon Valley founders compared to the general population. “I think the figures speak for themselves: less than .2% of all early stage venture funding
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