Daily Tech Snippet: Monday, August 3

Microsoft Said to Invest Big Sum in Uber; Latest Round Values Firm at $51 Billion: Microsoft has agreed to invest in Uber, according to people with knowledge of the matter, as part of a funding round that values the ride-hailing company at around $51 billion. If the deal is finalized, Microsoft’s contribution would be a substantial amount of the financing, which totals about $1 billion, according to the people, who spoke on the condition of anonymity because the details of the fund-raising are not public. This new round cements Uber’s place as one of the most richly valued private companies ever, along with other start-ups like Xiaomi, the Chinese electronics company valued by investors at around $45 billion, and Airbnb, the short-term lodging service valued at more than $24 billion. It is also the latest fund-raising spree undertaken by Uber, which has added billions of dollars to its surging war chest. Uber has earmarked significant money for expansion into new markets like China, India and greater Southeast Asia. On Thursday, an Uber representative said the company had set aside $1 billion to spur growth specifically in India, where the company has faced stiff competition from local ride-hailing services. Uber has a history of bringing in important partners during funding rounds. In December, Baidu, the Chinese search giant, invested hundreds of millions in Uber. And in March, Times Internet, the digital venture of the Times of India Group media conglomerate, said it had agreed to a strategic investment in Uber.

Google, Amazon Show Investors Cost Control Is Key for Tech: Investors have started to reward Internet companies that can show both financial discipline and a path to long-term growth, making Amazon and Google the clear winners of the technology earnings season. Google kept costs in check in the second quarter, and shareholders cheered with a 16 percent stock gain after the search giant released better-than-expected results. Amazon also surged after posting a surprise profit, demonstrating that the Web retailer is capable of making money when it puts a brake on spending. By contrast, Facebook , which vowed to keep its brisk pace of investments to lure users and advertisers, fell as Chief Executive Officer Mark Zuckerberg was short on details about money-making plans for the company’s newer initiatives, like WhatsApp and Oculus. LinkedIn and Twitter slumped over concerns that user growth is slowing. Microsoft Corp. posted its largest-ever quarterly loss. And Apple failed to meet analysts’ predictions for iPhone sales and growth for the current quarter.

India’s Snapdeal, an Amazon Competitor, Raises $500 Million From Alibaba, Foxconn and SoftBank: Alibaba finally has its ally in India, perhaps the world’s hottest e-commerce market. The Chinese e-commerce giant has invested in Snapdeal, an India-based e-commerce startup, as part of a $500 million round, according to multiple sources. Foxconn, the Taiwanese company best known as a manufacturer of Apple’s iPhones, also invested, alongside existing Snapdeal investor SoftBank. Snapdeal had previously raised more than $1 billion from investors including SoftBank, eBay, BlackRock, Bessemer Ventures and Indian venture firms such as Kalaari Capital and Nexus Venture Partners. Alibaba and Foxconn were considering the investment earlier this year, which would value Snapdeal at $5 billion, the Wall Street Journal reported in June. The company has undergone several iterations since Kunal Bahl and Rohit Bansal founded it in 2010, including one as a Groupon clone. Today, it’s an online shopping marketplace that sells a wide range of products, from cameras to jeans to toys — pitting it against Flipkart, a homegrown competitor currently valued at around $15 billion, and Amazon, which is investing billions of dollars into its Indian business. In the past year, Snapdeal has started to develop an ecosystem of sites by acquiring companies focused on different areas of online commerce. It bought FreeCharge, a popular service in India that allows people to add money to prepaid phone plans and prepaid TV plans. It also acquired RupeePower, a comparison shopping site for credit cards and loans. The approach is not all that different from Alibaba’s, which runs a host of different marketplaces focused on different types of buyers and different regions. While Flipkart has more market share in India, Snapdeal CEO Bahl thinks that company and Amazon are thinking too narrowly by being focused mainly on the sale of physical products, he told Re/code during an interview at Snapdeal’s Indian headquarters in April. Snapdeal, on the other hand, is going after what Bahl believes will eventually be a $250 billion opportunity — bringing all kinds of other transactions online in addition to the sale of products. “What’s the delta between retail and consumption?” Bahl asked rhetorically, referring to the difference between the two. “It’s things like financial services, education, utilities, health care. But today, all everyone is doing is products.” “Others are building aircraft carriers,” he added. “We are building an army of speedboats.”

Why Some Start-Ups Are Called Tech Companies and Others Are Not: these days, every company is at least a little bit of a tech company. Some Wall Street banks employ more tech workers than all but the biggest Silicon Valley companies. And large manufacturers like General Electric are leading the way in efforts to put Internet-connected sensors on things as varied as streets and turbines. So why then are some start-ups called tech companies and others just … companies? “Tech means more than just producing hardware or software,” said Mark Zandi, the chief economist at Moody’s Analytics. “It is synonymous with innovation, research and development, long-term thinking.” The label is a signal that “you want to work for me. You want to buy things from me at a higher price. You want to give me capital at a lower cost,” Mr. Zandi said. It is difficult to say what the financial windfall of the tech label is to today’s start-ups since most of them are still private companies, though no doubt they benefit from being close to the tech industry’s deep-pocketed financiers. But toward the end of the dot-com boom at the turn of the century, Raghavendra Rau, now a professor of finance at the University of Cambridge Judge Business School, was the co-author of a study that documented the temporary surge in the stock prices of companies that added the dot-com suffix to their names. Those temporary dot-coms took advantage of an investor behavior called “categorization,” said Mr. Rau. Categorization helps us understand something if we’re not familiar with it. “We build up a story in our heads on what we think we are going to see,” he said. “Even if the firm has no cash flows or no profits, we think we know what the story is. And firms are good at seeing what is popular and trying to fit in with that mental map.” Today’s happy adopters of the tech label, however, should note the follow-up research by Mr. Rau and his co-authors after the dot-com bubble popped early last decade. He found that double-switchers — companies that added and later dropped their dot-com identity — saw their stock prices over one month move 38.5 percent ahead of companies that kept the dot-com name. In a few years, maybe being labeled a logistics company won’t be such a bad thing.

Yahoo to Acquire Polyvore in Shopping-Advertising Push: Yahoo is buying shopping-service Polyvore Inc., seeking to improve its online fashion content and boost shopping-related advertising. Polyvore, which combines social and e-commerce tools for apparel and accessories, will initially be integrated into Yahoo’s magazines that focus on beauty and style, according to Simon Khalaf, senior vice president at Yahoo. Terms of the deal, subject to customary closing conditions, weren’t disclosed in a statement Friday by the companies. Chief Executive Officer Marissa Mayer is pushing to add more news, entertainment and shopping information to the Web portal in order to draw a bigger audience and sell advertising. Polyvore lets users put together themed collections of items, like those seen in fashion magazines. People can browse through the collections and then buy the items. Polyvore will add more than 350 retailers to Yahoo’s advertising platform, the companies said.