Daily Tech Snippet: Wednesday, August 31

• EU hits Apple with $14.5 billion Irish tax demand: The European Commission ordered Apple Inc to pay Ireland unpaid taxes of up to 13 billion euros ($14.5 billion) on Tuesday as it ruled the firm had received illegal state aid. Apple and Dublin said the U.S. company's tax treatment was in line with Irish and European Union law and they would appeal the ruling, which is part of a drive against what the EU says are sweetheart tax deals that usually smaller states in the bloc offer multinational companies to lure jobs and investment. Analysts said the size of the claim underlined the Commission's aggressive stance, but since each case involves different circumstances and tax rules, lawyers said it was hard to see if further big claims were any more or less likely. Apple, which had more than $200 billion in cash and readily marketable securities at the end of June, is likely to see the case drag out for years in EU and possibly Irish courts. Apple warned investors in a July regulatory filing that the Commission's investigation could lead to "material" liability for further tax payments, but that it could not estimate the impact. On Tuesday the company said it expects to place "some amount of cash" in an escrow account. Tax experts say the European Commission faces a tough battle to convince courts to back up its stand. While the EU has found that certain tax regulations are anti-competitive, it has never before ruled whether countries have applied tax regulations fairly in the way it has with Apple, Starbucks and others. As a result, some lawyers and accountants said they doubted Apple would end up paying back any tax.

• Twitter is finally paying its best users to create videos: Twitter wants the kind of video creators YouTube has — and the massive audiences that come with them. To make this dream a reality, the company is pulling a page from YouTube’s playbook: It’s going to sell ads alongside creator videos and share that ad revenue with the people making the content. And Twitter is offering very appealing terms. Unlike YouTube, which gives 55 percent of the money to creators and keeps 45 percent, Twitter is using the same revenue split it already offers other Amplify video partners, like the NFL: 70 percent to the content creator and 30 percent back to Twitter, according to a person familiar with the arrangement. Of course, Twitter needs to offer an appealing revenue split like this. It’s nowhere close to the video destination YouTube and even Facebook have become, and it’s late to the game when it comes to paying creators. The network’s high-profile stars have wanted a revenue split for some time — it’s been a point of contention for the company’s stable of “Vine stars,” many of whom have left for places like YouTube where their videos actually make money.

• A few dozen Nest Labs employees just headed to Google; here’s why: Nest Labs, the maker of smart thermostats and smoke detectors, is parting ways with a few dozen employees who work on its Internet of Things platform. According to a Fortunereport that we’ve independently confirmed, those employees are joining Google per a restructuring. Both companies are subsidiaries of parent company Alphabet. The move would seem to make sense. Like Nest, Google has delved into the business of the connected home, including with its OnHub wireless router and Google Home, a portable speaker that’s powered by voice assistance technology and will take direct aim at Amazon’s popular Echo product once it ships later this year. Nest’s thermometers and cameras promise to communicate with Google Home. Nest employs roughly 1,000 people, including in engineering, product marketing and product management. Though its platform team was responsible for building out Nest’s APIs (so Nest products can communicate with other devices), as well as Nest’s Weave protocol (which allows Nest devices to communicate with each other), Nest will continue to build and develop software around its app, site and other services.

Daily Tech Snippet: Tuesday, August 30

• Alphabet’s Legal Chief Steps Down From Uber Board: David Drummond, the chief legal officer at Alphabet Inc., has stepped down from Uber Technologies Inc.’s board of directors as the two companies move further into each other’s territories. Drummond joined the board in 2013 when GV, the venture capital arm of Alphabet formerly known as Google Ventures, led a $258 million round of financing for Uber. It remains GV’s largest investment, and the two companies worked together on projects, including the ability to call a car through Google Maps. However, relations between Alphabet’s Google unit and Uber have become strained in recent years. Bloomberg reported last year that Google had been working on a ride-hailing service using self-driving cars. Uber acquired Otto, an autonomous driving startup staffed by former Google employees, and is working with Volvo on driverless vehicles of its own, which the companies expect to begin rolling out in Pittsburgh this month. Uber has been developing its own mapping operation and is shooting street photography to create an alternative to Google’s map data. 

• EU to hand Apple Irish tax bill of $1.1 billion, source says: The European Commission will rule against Ireland's tax dealings with Apple (AAPL.O) on Tuesday, two source familiar with the decision told Reuters, one of whom said Dublin would be told to recoup over 1 billion euros in back taxes. The European Commission accused Ireland in 2014 of dodging international tax rules by letting Apple shelter profits worth tens of billions of dollars from tax collectors in return for maintaining jobs. Apple and Ireland rejected the accusation; both have said they will appeal any adverse ruling. The source said the Commission will recommend a figure in back taxes that it expects to be collected, but it will be up to Irish authorities to calculate exactly what is owed. A bill in excess of 1 billion euros ($1.12 billion) would be far more than the 30 million euros each the European Commission previously ordered Dutch authorities to recover from U.S. coffee chain Starbucks (SBUX.O) and Luxembourg from Fiat Chrysler (FCHA.MI) for their tax deals. Apple employs 5,500 workers, or about a quarter of its European-based staff in the Irish city of Cork, where it is the largest private sector employer. It has said it paid Ireland's 12.5 percent rate on all the income that it generates in the country. Ireland's low corporate tax rate has been a cornerstone of economic policy for 20 years, drawing investors from major multinational companies whose staff account for almost one in 10 workers in Ireland. Some opposition Irish lawmakers have urged Dublin to collect whatever tax the Commission orders it to. But the main opposition party Fianna Fail, whose support the minority administration relies on to pass laws, said it would support an appeal based on the reassurances it had been given by the government to date.

• You earn a million dollars a year and can’t get funded? If you’re in the position of struggling to raise funds, here are some reasons why your pitch may not be resonating. You paid $1.2 million to make $1 million: The most common case of seemingly successful businesses struggling to raise funding is when they are paying $1.2 million to generate $1 million. Or, it’s not clear how you’ll turn $1 million into $10 million: We seriously don’t expect every company to be a billion-dollar business. Our model works with $50 million and $100 million exits, but if you’re going to raise venture capital, youshould also be able to explain how you’ll achieve step-function growth — convincingly. A hockey-stick growth path to a billion dollar valuation isn’t required; it can be as simple as taking revenue from $1 million to $10 million. So… If you’ve built a million-dollar business and are struggling to convince VCs, we’d love to talk to you! Just know that when you’re pitching investors, not all revenue is valued equally, and it’s just one factor among many that investors will use to evaluate your business. Bryce Roberts put it well when he tweeted “Not all good businesses are good investments. Not all good investments are good businesses.” Your favorite neighborhood restaurant might generate a million dollars a year in revenue, but it would be a bad bet for VCs. Facebook lost money for years before going on to dominate global communication. If youdecide you want to play the VC game, just be sure to learn how the score is tallied.

Daily Tech Snippet: Wednesday, May 25

• Toyota and Volkswagen Step Up Investments in Tech Start-Ups: On Tuesday, two of the world’s largest automakers, Toyota and Volkswagen, said they were stepping up to invest in technology start-ups that are working to change the way people travel by car. Toyota said it had formed a partnership with and invested an undisclosed amount in Uber, the biggest ride-hailing company. Gett, the app popular in Europe, said it was working with Volkswagen, and the automaker was investing $300 million in the start-up. The alliances are the latest in a string of pairings between technology companies and traditional automakers that are scrambling to reposition themselves. For decades, automakers had abided by the well-worn formula of making bigger and more powerful cars to fuel their growth. But start-ups like Uber and Lyft and technology companies like Google and Tesla have disrupted that cadence. These companies, mostly located in Silicon Valley, have in the last few years sped the development of self-driving cars, electric vehicles and ride services. Automakers have become increasingly concerned about those technologies and their potential to help people travel easily and cheaply without owning a car — or even without knowing how to drive. In January, General Motors invested $500 million in Lyft, the ride-hailing app popular with American users, with a focus on developing networks of autonomous vehicles. Ford Motor is making over its Dearborn, Mich., headquarters into a Silicon Valley-like campus of green buildings connected by self-driving shuttles. And a few weeks ago, Fiat Chrysler and Google agreed to produce a test fleet of driverless minivans. Both BMW and Mercedes-Benz have started to pilot ride services. Even other technology companies only tangentially related to automobiles are becoming more involved in ride services. Apple, which is working on its own autos project, said this month it had invested $1 billion in Didi Chuxing, a Chinese ride-hailing company that competes fiercely with Uber.

• French Tax Investigators Swoop on Google’s Paris Offices: French police and prosecutors swooped on Google’s Paris offices on Tuesday, intensifying a tax-fraud probe amid accusations across Europe that the Internet giant fails to pay its fair share. The raids are part of preliminary criminal investigation opened in June 2015 after French tax authorities lodged a complaint, according to a statement from the nation’s financial prosecutor. The probe is seeking to verify whether Google’s Irish unit has permanent establishment in France and whether the firm failed to declare part of its revenues in France. Prosecutors will probably go after Google’s management in Ireland, according to Alain Frenkel, a tax lawyer in Paris. “That doesn’t mean Google won’t also face a recovery order from France’s tax authorities,” he said in a phone interview. The raids come as Google, which is part of parent company Alphabet Inc., faces outrage in Europe over the small amount of tax it pays in the region. France has called on the company to pay back taxes of about 1.6 billion euros ($1.8 billion). While no one has been charged of any wrongdoing, French penalties for aggravated tax fraud have recently been ramped up. Convicted managers can potentially face as long as 7 years in jail and a 2 million-euro fine.

• Hewlett Packard Enterprise will spin off its troubled services business in an $8.5 billion deal: Six months after the Silicon Valley stalwart Hewlett-Packard split into two companies, one half announced a surprise plan to split yet again. Hewlett Packard Enterprise said it will spin off its long-troubled services unit and merge it with the IT services firm CSC in a deal worth about $8.5 billion. The complex deal, in which HPE will combine its $20 billion Enterprise Services unit — accounting for more than one third of HPE's 2015 revenue — with CSC into a combined company of which HPE shareholders will end up owning about half. The total consideration of the deal includes the creation of $4.5 billion of new shares, a cash dividend worth $1.5 billion, and the transfer of about $2.5 billion in debt and other liabilities off HPE's books and into the new company. HPE also expects to trim its operating costs by about $1 billion as a result of the spinoff. What will remain at HPE is a leaner $32 billion company that leads the world in sales of servers, the computers that are stacked together in data center racks that power the Internet. It competes with networking giant Cisco Systems in selling gear for corporate networks, with EMC in data storage gear, and also sports a small software business that did about $3.6 billion in sales last year. The new company — HPE and CSC are calling it Spinco for now — will be a pure player in the low-margin, IT outsourcing market that had been a shrinking, expensive weight around the old HP's neck during the time it was struggling to bounce back. Revenue in the unit has declined for several years, during years that its customers went through wrenching changes in how they purchase and consume technology. The move will also unwind what in hindsight has turned out to be one of the worst acquisitions in the old HP's history, the $14 billion acquisition of the IT services firm EDS, consummated in 2008 under yet another prior HP CEO, Mark Hurd, now the CEO of Oracle.

Daily Tech Snippet: Tuesday, April 12

• Apple Watch verdict a year later: Half of those surveyed think it’s a dud: More than half of those surveyed by the advertising technology company Fluent said they considered the Apple Watch a flop. That sentiment — expressed by the majority of the 2,578 adults in the U.S. who responded last week to an online survey — reflects how the device is perceived by the tech press and industry insiders, many of whom have been pessimistic about the Apple Watch from the start. Asked whether they considered the Watch a successful product for Apple, 53 percent responded “no.” But Fluent’s survey also offers a more nuanced picture of Apple’s first wearable device,which launched on April 24, 2015. A significant majority of Apple Watch owners — 77 percent — consider the smartwatch a success and about two-thirds said they plan to upgrade when the next version comes out. Those owners surveyed said they take advantage of a range of the smartwatch’s features, including monitoring their activity and receiving notifications (79 percent), listening to music (75 percent) and checking email or chat (66 percent). This survey supports the more comprehensive findings of Wristly’s “Pulse on Wristware,” released earlier this year. The research group, which surveys some 2,500 smartwatch and fitness band owners every week, says that despite some views of the Apple Watch as a “mediocre novelty,” it enjoys “astoundingly high customer satisfaction ratings.”

• Israel to Levy New Taxes on Google, Facebook in Policy Shift: Israel has expanded its definition of who must pay taxes on commerce, targeting digital multinationals such as Facebook Inc. and Google that critics say get a free ride. Because much of today’s trade is carried out on the Internet, a foreign firm may now be considered a “permanent establishment” and subject to tax even if most of its presence is virtual, the Israel Tax Authority said in an e-mailed statement. The authority said Internet multinationals will be required to pay value-added tax, which is 17 percent for Israelis. The new taxes, which take effect immediately, will eventually add hundreds of millions of shekels a year to state revenue, the authority said. A Google representative in Israel couldn’t immediately be reached for comment. Facebook “pays taxes according to the law in every country it operates, including Israel,” a spokeswoman said via e-mail. Although Israel’s relatively small population of 8.5 million means the new taxes won’t clobber the international giants, they build on broader efforts worldwide to level the playing field between foreign Internet companies and local commerce. Russia is pushing to raise taxes on U.S. Internet companies to help its local industry and governments across Europe and beyond are trying to extract more revenue from Google, Apple Inc. and other multinationals with increasingly complex billing and ownership structures.

• Cloud-based video production platform 90 Seconds lands $7.5M Series A led by Sequoia India: Despite the increasing ubiquity of online videos, making a professional-looking one is still a complicated process that usually involves chains of emails and uploads. 90 Seconds wants to fix that problem with its cloud-based platform, which lets users handle almost every part of the video production process in one place. Today, the startup announced it has raised a $7.5 million Series A led by Sequoia India. Other investors in this round include pay television provider SKY TV New Zealand, Airtree Ventures, Beenext and Oleg Tscheltzoff, founder of stock image agency Fotolia.com. Now based in Singapore, 90 Seconds was launched in Auckland in 2010 by CEO Tim Norton after he struggled to find an online video production service for shoots in different places. 90 Seconds started with online production tools before launching its marketplace, which now lists 5,000 video professionals from 70 countries. The company plans to continue adding to the mobile version of its software until clients can manage every part of the production process — from commissioning a video to reviewing footage and uploading to YouTube and social media platforms — on their tablets or smartphones. Timeliness is important for 90 Seconds’ users, who have included Visa, Samsung and Microsoft, because they need to take advantage of trending topics and search terms. More companies are also using the platform to handle longer shoots, like TV spots. Hooking up companies with creators and giving them all the software tools they need to produce a video is how 90 Seconds differentiates from other video production sites (which include Visually, Userfarm and SmartShoot) and also what it hopes will future-proof its business model from new competitors as demand for online videos grows.

• Dell's SecureWorks valued at $1.42 billion in year's first tech IPO: Dell's cyber security unit, SecureWorks Corp, could be valued at up to $1.42 billion in its initial public offering, the first major U.S. listing of a technology company this year. Atlanta, Georgia-based SecureWorks said on Monday its offering was expected to be priced at $15.50-$17.50 per Class A share, raising as much as $157.5 million.  The share issue market worldwide plunged to a seven-year low in the first quarter, more than halving from a year earlier to $106.6 billion, as worries over slowing economic growth kept investors wary, according to Thomson Reuters data. In the past few years, several cyber security firms such as FireEye, Rapid7 and Mimecast have gone public to take advantage of growing investor interest in them after a spate of hacking attacks on companies including major banks and retailers. However, shares of Rapid7 and FireEye, which popped 70-80 percent in their debut, are now trading way below their IPO prices. Mimecast, which jumped 20 percent on its listing day, has also slipped below its offering price. Ritter warned against premium pricing for stocks of cyber security firms, saying that these companies were fighting for market share, which would keep their profit growth muted.

Daily Tech Snippet: Monday, November 16

• For Indian tech startups, 'Winter is here… and why this is a great time to invest':  The horizontal e-commerce Unicorns in India – Flipkart, Snapdeal, Amazon, and adding ShopClues and even a more diversified Paytm – are in a dogfight with no end in sight. It doesn’t help that Amazon keeps on growing from strength to strength and getting more aggressive. The online classified players have even bigger issues. Unlike the e-commerce Unicorns, Quikr, OLX, the real estate and car classified firms and other listing-related ones like Zomato have yet to see a serious revenue jump that matches their astounding valuation surge. They all have a serious dogfight coming with no one being particularly dominant in their segment (well Zomato is, but is revenue growth justifying valuation?). Ola and Uber? Ditto, serious dogfight with no end in sight. Ad-tech? Tough for InMobi and Pubmatic to claim resilience and justify high valuations when Facebook and Google want to eat it all. Payments? Paytm has an extraordinary franchise but is it too distracted with other possibilities? Probably the only secure privately-held Unicorn in India is MuSigma – no surprise there as it has real profits and real cash generation. All the rest of the Unicorns are work in process. For early-stage startups, good news and very bad news. The good news is that several Series A funds have lots of dry powder – Accel, Kalaari, Matrix, Nexus, SAIF, Sequoia, etc. will all continue to invest and there will be some fantastic opportunities as the extraordinary customer adoption, benefits of a hyper-connected world and improvements in broadband infrastructure will continue. This is a great time to invest, much like 2008-2011 when many Unicorns of today were created. Many investors have seen such down cycles before and they will not retreat. We also plan to continue investing at our regular rate of one to two deals per quarter. However, Series A investors have to be prepared to fund fewer deals and fund the winners more as Series B/C will not be easy to come by as the ‘hedgies’ boosting up this market and valuations are more or less gone. Indian startups are not a good ‘trade’ anymore! The really bad news is that funding will be available to only a small number of players, as investors get overly conservative. There will be mass closures or scale downs and heavy bleeding for many angel, seed and Series A investors. Capital will vanish for not only the vague and fluffy ideas but even for some good ones as they will get washed away with the tide and sink.

• The War on Campus Sexual Assault Goes Digital: According to a recent study of 27 schools [in the United States], about one-quarter of female undergraduates and students who identified as queer or transgender said they had experienced nonconsensual sex or touching since entering college, but most of the students said they did not report it to school officials or support services. Some felt the incidents weren’t serious enough. Others said they did not think anyone would believe them or they feared negative social consequences. Some felt it would be too emotionally difficult. Now, in an effort to give students additional options — and to provide schools with more concrete data — a nonprofit software start-up in San Francisco called Sexual Health Innovations has developed an online reporting system for campus sexual violence. Students at participating colleges can use its site, called Callisto, to record details of an assault anonymously. The site saves and time-stamps those records. That allows students to decide later whether they want to formally file reports with their schools — identifying themselves by their school-issued email addresses — or download their information and take it directly to the police. The site also offers a matching system in which a user can elect to file a report with the school electronically only if someone else names the same assailant. Callisto’s hypothesis is that some college students — who already socialize, study and shop online — will be more likely initially to document a sexual assault on a third-party site than to report it to school officials on the phone or in person.

• As Bubble Deflates, A Cottage Industry Emerges Around Startup Investors Trying to Cash Out: With Silicon Valley startups staying private longer these days, investors, company executives and rank-and-file employees are increasingly eager to cash out early. In recent weeks, growing fears of a bubble have given insiders even more incentive to sell their shares. Typically company founders try to limit such transactions, but a cottage industry has sprung up to help facilitate the sales on the quiet. Selling shares early isn’t entirely new. Before Facebook Inc. went public in 2012, a secondary market emerged that helped early employees and investors cash out to buy houses, cars or build a nest egg. A network of brokers helped facilitate the private deals, and firms such as DST Global Ltd., run by Russian billionaire Yuri Milner, were eager to amass positions in the growing social network. Many of the current crop of promising startups -- among them Palintir, Dropbox, Flipboard -- have reached or surpassed their fifth year of existence. That’s when early employees increasingly need the cash, said Mark Dempster, a partner at Founders Circle, which buys officially sanctioned secondary shares. Adding to the anxiousness among those with equity in startups is a drop in valuations for some high-profile companies. Fidelity cut the valuation of Snapchat Inc. by about 25 percent in the third quarter, BlackRock Inc. trimmed the value of storage-company Dropbox Inc. and payments company Square Inc. is seeking an IPO market capitalization that’s significantly lower than its valuation as a privately held company. There’s no shortage of eager buyers attempting to buy a stake in a hot startup. Some aspiring investors even cold call insiders asking to buy shares. organized sales clearly aren’t meeting all the demand to cash out. Many employees and investors are finding other ways to sell shares on their own. Several companies have sprouted up to help find buyers for their shares. EquityZen, based in New York, offers “forward contracts,” where an employee trades the rights to their stock in exchange for cash now. The company sends out regular e-mails offering stock in companies such as Spotify, AppDyanmics and Chartboost. The sellers “get the cash they are looking for,” said Chief Executive Officer Atish Davda said in an interview. More traditional financial institutions also are participating in the secondary market, with mutual funds, hedge funds and asset managers like BlackRock Inc. occasionally buying shares this way. Last month, Nasdaq bought Secondmarket Solutions Inc., the operator of a software platform that helps facilitate the sales of shares in private companies.

• After Outcry, Ireland Adjusts Its Corporate Tax Draw: While lawmakers often play down its importance, Ireland’s 12.5 percent tax rate (versus 35 percent, before deductions, in the United States) has been a mainstay in the country’s decades-long strategy to attract the world’s largest companies. With few natural and manufacturing resources, Ireland and its politicians instead have turned to one of the world’s lowest corporate tax rates as the country’s primary competitive advantage in the global economy. In recent years, other European countries have accused Ireland of acting like an unfair low-tax haven. The European Commission, for example, is investigating whether Ireland gave Apple a preferential tax deal that broke the region’s tough state-aid rules. While lawmakers and the company have repeatedly denied wrongdoing, the country is already phasing out the most controversial loopholes. Ireland has since turned to a new inducement: a low tax rate on revenue generated from patents and other intellectual property held in Ireland. Such an incentive — announced last month to be 6.25 percent, or half of the country’s corporate tax rate — could be most attractive to patent-heavy industries like technology and pharmaceuticals. But many tax experts say the benefits will be significantly smaller than many had expected, particularly for global tech giants. Because of recent changes to global agreements, Ireland must limit what type of intellectual property can be included in these low-tax structures, known locally as a “knowledge development box.” Such restrictions have been demanded by several European countries, particularly Germany, which raised concerns that Ireland and other countries would turn to such structures to unfairly bring down corporate tax rates. Under international law, Ireland and other countries like Britain and potentially the United States can offer the tax breaks only on intellectual property derived from research carried out in their national borders. Much of the research and development for technology companies is done outside Ireland. So revenue from global patents like those linked to Google’s search algorithm, many of which were developed in the United States, will not be eligible for the reduced tax. Still, for regulators who have tried to limit Ireland’s tax advantage, the restrictions placed on the country’s knowledge development box represent a victory in the global push to close unfair tax loopholes. Some companies in Ireland had lobbied for a wider definition of what type of intellectual property, especially linked to online advertising and search patents moved from other countries to Ireland, could be included in the tax mechanism. Those efforts, though, failed.

• Sensor and Chip Makers stand to win as automakers battle for high-tech dominance: Automakers hope semi-autonomous features will, over time, help drivers and regulators get over fears of riding in vehicles that accelerate, steer and stop themselves, making potentially life-or-death judgments. Shorter term, car companies want these features to make driving more convenient - and cars more profitable. Ford's Active Speed Limiter comes at 560 euros ($602.78), and it's too soon to tell how popular it will be. Among the biggest winners for now are the companies that produce electronic sensors, cameras and software that make self-driving features possible. The growing list includes the high-tech units of traditional automotive suppliers such as Germany's Continental AG, Israel's Mobileye Vision Technologies, and consumer-technology giants Google, Apple, Samsung Electronics Co, Sony Corp and more. At Silicon Valley's Nvidia Corp, for example, video games remain the biggest market, but automotive revenue is the fastest-growing segment.

Daily Tech Snippet: Monday, September 7

• Google hopes to reenter China by fall: Google expects to return to mainland China as early as this fall following a five-year absence, tech website The Information reported on Friday. The company hopes to get Chinese government approval for a China version of its Play store mobile app, The Information reported, citing people familiar with the plan. The tech giant is also planning to extend support of a version of Android for wearable devices in the country, The Information cited one of the people as saying. Google has assured Chinese authorities that it will follow local laws and block Play store apps that the government deems objectionable, one person familiar with the plans told the website. The Play store app will only work on devices running the recently unveiled "M" version of Android, and only on devices that comply with China's Ministry of Industry and Information Technology requirements, The Information reported. Google is also planning to offer new incentives to phone makers to upgrade Android phones to the latest versions of its operating system, one person familiar with the plans told the website.

• New Apple TV Is Said to Focus on Games, Challenging Traditional Consoles: Apple is expected to make games a primary selling point of its new Apple TV product, which is scheduled to be announced on Wednesday in San Francisco, according to people briefed on Apple’s plans who spoke on the condition of anonymity. This is a big change from Apple’s previous versions of Apple TV, a device shaped like a hockey puck that for the first eight years of its existence has mainly been used to stream videos and music. “I think Apple’s going to create a big new category in gaming, one that others have tried and failed to create before,” said Jan Dawson, chief analyst at the technology research firm Jackdaw Research. “What the Apple TV has the potential to do is to bring casual gaming to the living room and make it a much more social activity.” Most game executives and analysts see little chance that Apple will be able to woo hard-core fans of the leading high-end game consoles, the Xbox One from Microsoft and the PlayStation 4 from Sony — both of which will most likely still have better graphics than the new Apple TV. Gamers who fancy big-budget games like Call of Duty and Destiny will probably not be easily persuaded to switch systems. That still leaves a large market of casual gamers whom Apple could target with the new Apple TV: people who find traditional game controllers complicated and who enjoy lighter, less epic forms of content. The new product is expected to have a starting price around $150, according to the people briefed on the product. While that is more than double the price of the least expensive Apple TV on sale today, it is significantly less than the latest traditional game consoles, which range in price from $300 to $500, depending on the maker and configuration. The business opportunity for Apple could be huge. The company now takes nearly a third of the revenue from sales of any games and other software purchased in its app stores. Total revenue from console games is expected to be more than $27 billion this year, which is more than a third of the $75 billion global games business, according to estimates by PricewaterhouseCoopers.

• Ireland Seen Losing Apple Tax Skirmish, Triggering Legal Battle: Ireland will probably face censure from European authorities within months in relation to its tax dealings with Apple Inc., according to a person with knowledge of the matter. A finding against Ireland will spark a legal battle that may last years, as the government is ready to fight the decision in the European Union Court of Justice, according to the person, who asked not to be named because the case is ongoing. In preliminary findings last year, European antitrust authorities said Apple’s tax arrangements were improperly designed to give the iPhone maker a financial boost in exchange for jobs in the country. Apple said in 2013 it had paid an effective tax rate of less than 2 percent in Ireland over the previous ten years. The EU inquiry comes amid a global crackdown on corporate tax-affairs, with the European Commission estimating that tax avoidance and evasion in the region cost about 1 trillion euros ($1.11 trillion) a year. In a worst-case scenario, Apple may face a $19 billion bill if the government in Dublin ultimately loses and is forced to recoup tax from the company, according to JPMorgan Chase & Co. analyst Rod Hall.

Daily Tech Snippet: Monday, May 25

• Google adds a Buy Button to YouTube "TrueView" Pre-Roll Ads - Initial Results Very Positive: Google today announced that its YouTube TrueView ad product will now come with an optional "click to shop" button on pre-roll spots. The new button will often appear adjacent to the "Skip" button that YouTube fans know very well. A few brands have been testing the ads, which allow viewers to click through to e-commerce pages and add items to their shopping carts. Per Google, home goods merchant Wayfair has been getting three times the digital revenue compared to previous YouTube campaigns, while the cosmetics retailer Sephora saw more than an 80 percent jump in brand consideration and a 54 percent lift in ad recall. The move for Google is designed to shift YouTube's ad business into a higher gear as the site faces increased digital video competition—chiefly from Facebook, although Snapchat, Kik and other mobile startups also pose a threat. Jonathan Opdyke, CEO of HookLogic, predicted the feature would be a hit with merchant brands. Sridhar Ramaswamy, svp of ads and commerce at Google, revealed the new feature while speaking earlier this afternoon at the ad:tech conference in San Francisco.

• Amazon to Stop Funneling European Sales Through Low-Tax Haven: In a move that could put pressure on its rivals to follow suit, Amazon will start paying taxes in a number of European countries where it has large operations, instead of funneling nearly all its sales through Luxembourg, a low-tax haven that is the home base in the region for Amazon and many other large tech companies. Several European countries, including Germany and France, have criticized the tax strategies of some American tech companies, including Google, which use complicated structures that sharply reduce the amount of tax they pay in individual European countries. The European Commission, the executive arm of the European Union, is also investigating whether Apple and Amazon receive unfair state support through low-tax agreements in Ireland and Luxembourg, respectively, where the companies run their European operations. On May 1, Amazon said that it had started reporting revenue from its operations in Britain, Germany, Italy and Spain. By altering how it reports its revenue, the online retailer may become liable for larger tax charges in certain nations, though it may still be able to reduce its tax burden through other complex accounting practices.Amazon reported a 14 percent rise in European revenue, to 13.6 billion euros, or $15 billion, in 2013 (the latest full-year figures available), according to company filings.The changes to the company’s tax arrangements, however, are likely to put pressure on other tech companies in the United States that funnel the majority of their European revenue through low-tax countries like Ireland and the Netherlands. In Britain, George Osborne, the country’s finance minister, has championed a so-called Google Tax that imposes a 25 percent tax on the local profits of international companies that are perceived to route money unfairly overseas. The new policy came into effect last month. And in response to mounting criticism from other European countries, Ireland announced late last year that it would phase out a tax loophole called the “Double Irish” that would often be used by tech companies. The structure allows corporations with operations in Ireland to make royalty payments for intellectual property to a separate Irish-registered subsidiary. That subsidiary, though incorporated in Ireland, typically has its home in a country that has no corporate income tax. The Double Irish policy has allowed companies like Google to limit how much tax they pay on their international operations. The policy was phased out for new companies at the beginning of 2015, and will be stopped entirely by the end of the decade. Yet, despite the growing clampdown on tax structures used by American tech companies and others, analysts say that European countries are still vying to attract international companies through low-tax policies. Britain, Ireland and the Netherlands have already created new policies that allow companies to apply for a lower tax rate on profits that result from certain patents that are held locally. The European Commission, however, is currently reviewing the legality of these so-called patent boxes.

• Contest for Nokia's maps business heats up; German carmakers, Uber and Baidu, and Tencent are all in the fray: The contest for Nokia's maps business has become a three-way race between German carmakers, a consortium including Uber and Baidu, and a third group including China's Tencent and Navinfo, people familiar with the process said. Finland's Nokia has started an auction of its maps business HERE while it completes its 15.6 billion euros ($17.2 billion) takeover of network equipment maker Alcatel Lucent. German automakers Daimler , BMW and Volkswagen's premium brand Audi have teamed up with private equity firm General Atlantic to form what is being described as the "Industry consortium", two sources familiar with the matter told Reuters on Thursday. Nokia, Daimler, BMW and General Atlantic declined to comment. The automakers have agreed to contribute potentially more than 700 million euros, but below 1 billion euros, said one auto industry source, who declined to be named. The consortium could be widened to include more carmakers, the source added. Another group consists of Chinese media, mobile and Internet services firm Tencent Holdings, Chinese map maker Navinfo, and Swedish buyout firm EQT Partners, three sources who declined to be named said. Navinfo and Tencent were not immediately available for comment. EQT declined to comment. Private equity firm Apax has joined U.S.-based taxi service Uber and China's Baidu in a third consortium, a financial source who declined to be named said. Apax and Uber declined to comment. Baidu was not immediately available for comment. Analysts put the potential value of HERE at 2 billion euros to 4 billion euros.

• Chinese Car-Hailing App, Backed by Both Alibaba and Tencent, Gives Away Free Rides to Fend Off Uber: Chinese car-hailing app operator Didi Kuaidi will give away 1 billion yuan ($161 million) worth of rides to commuters starting next week to promote its new chauffeur service. The company, backed by Alibaba Group Holding Ltd. and Tencent Holdings Ltd., is expanding into the market for ride-sharing and carpooling after winning an estimated 99 percent of the taxi-hailing market share. The giveaway is expected to hit Uber Technologies Inc. and Yidao Yongche, two other companies competing for the estimated $1 trillion-a-year market for transportation services in the world’s most populous country. China’s car-hailing industry is currently dominated by Didi and Kuaidi, which together account for a combined 78 percent of ride bookings, with Uber a distant third at 11 percent, according to Analysys International, an industry researcher. “Three years from now, our goal is to allow everyone to hail a taxi or get a ride within three minutes and to serve 30 million people per day,” Cheng Wei, chief executive officer of Didi Kuaidi, said in a statement. The company hopes to meet the demand by supplying more cars in a more flexible way, he said in the statement. Starting May 25, commuters in 12 Chinese cities will enjoy free rides for Didi Kuaidi’s chauffeur service every Monday for a month, according to the company. Didi Kuaidi aims to create the largest “one-stop transportation platform” in the world, the company said. The goal is to cover commuting needs from hailing taxis through mobile apps, to carpooling and booking premium cars with chauffeurs, it said. Formed out of an alliance of two competing apps, the two former rivals had engaged in intense competition, giving out subsidies to drivers and riders, before agreeing to work together in February. Alibaba and Tencent own 10 percent and 13 percent, respectively, in the merged company. Didi Kuaidi won a breakthrough this month after Shanghai said it will include the company in a new taxi-booking platform, the first official recognition of mobile-booking apps. The company is in talks with more local governments about cooperating on car-hailing services, Cheng said, declining to name the cities. By contrast, local media reported Uber’s offices in Guangzhou in southern China were raided by local authorities.

• EBay Plots European Growth With Click-and-Collect Expansion; Surplus Space at Supermarkets Adds to Opportunity: EBay Inc. plans to expand its click-and-collect service in the U.K. and across Europe, after buyers on its site collected 1.5 million parcels from British store chain Argos in the first 18 months of the service. Click and collect is becoming “the dominant way that consumers want their online purchases to be fulfilled” in the U.K., EBay’s senior vice president for Europe Paul Todd said in an interview at Bloomberg’s London headquarters. EBay, based in San Jose, California, is looking at all kinds of partnerships to boost its presence, Todd said. The Argos service, covering about 750 stores across Britain, is used by about 160,000 EBay merchants. Click-and-collect services are booming in Europe as more shoppers choose to fetch their purchase from a store rather than risk missing a home delivery. More than half of online orders placed with John Lewis department stores in the U.K. last Christmas were picked up from a store. France’s Darty Plc said Thursday that 20 percent of all Web sales in the fourth quarter were collected, up from about 10 percent a year ago. Surplus space in U.K. supermarkets may be one avenue that the company explores to boost its collection capabilities. J Sainsbury Plc said this month that about a quarter of its stores will have some under-utilized space in the next five years. The need for grocers to fill that space presents a “huge opportunity” for EBay, Todd said.

• Tinder Gets Into Music by Offering Zedd's New Album for $3.99: Tinder users who spot Zedd's fake profile and "swipe right"—which indicates interest in someone—receive a link to download his new True Colors album for $3.99 (compared to $7.99 on iTunes or Google Play). The profile is also tied to a contest to win an autographed CD. It may be the initial foray for Tinder in terms of selling music, but it's not the first time the red-hot dating app has linked up with music. Earlier this year, pop singer Jason Derulo created a profile to drive views of his YouTube music video. A Tinder rep confirmed to Adweek that the Zedd promo is not an actual ad—it's a partnership that the dating app has been testing with a number of marketers, such as Twentieth Century Fox, E!, and New York's Urban Mudder event on July 25. Bud Light was the first and only brand to run Tinder ads last month as part of its "Whatever, USA" campaign.

• Consolidation in China's online travel sector: Expedia gives up on China partner, sells off $671M majority stake in eLong: Ctrip, China’s top travel site, this afternoon announced it has taken a US$400 million stake in long-time arch-rival eLong. The deal, which closed today, was done by acquiring eLong shares from Expedia. Ctrip now has a 37.6 percent stake in its erstwhile rival. Expedia has sold off its entire 62.4 percent stake in eLong, worth US$671 million, by selling the remaining shares to three other buyers (Keystone Lodging Holdings, Plateno Group, and Luxuriant Holdings), the US-based company said today. As a result of this deal, Ctrip says that it and Expedia have agreed to cooperate with each other on “certain travel product offerings for specified geographic markets.” Expedia’s brief statement did not make clear why it’s exiting eLong. The huge Expedia sell-off marks a major sea-change in China’s highly competitive travel ecommerce sector. It seems to be a huge win for Ctrip, which has now tamed its closest competitor. That leaves Ctrip freer to focus on newer and fast-growing rivals such as Baidu-owned Qunar, Tuniu, and LY. Ctrip has US backing of its own in the form of Priceline, which owns about eight percent of the company.

Daily Tech Snippet: Tuesday, March 24

• Uber Sells $24M Stake to India’s Times Group in Marketing Deal: Uber Technologies Inc. said the publisher of India’s most-read English newspaper has taken a small stake in the ride-hailing application company as part of a strategic partnership to support its expansion. The investment made by Times Internet is worth about 1.5 billion rupees ($24 million), the Indian company said in an e-mailed reply to a question. The Economic Times newspaper, also published by Bennett, Coleman, had first reported the value of the deal citing people familiar with the transaction. The deal with Times Internet Ltd. will help increase the marketing and distribution of Uber’s services to more than 200 million consumers in India, the San Francisco-based company said in a statement on its blog, without giving details of the investment. Times Internet is a fully owned unit of Bennett, Coleman & Co., the flagship company of the Times of India Group and publisher of The Times of India newspaper. Uber counts India as its biggest market outside the U.S. and the fastest growing globally. Baidu Inc., China’s largest Internet search engine, in December agreed to invest in Uber and said the company will connect its map and mobile-search features with the ride-hailing service. Uber’s service is available in 11 Indian cities and offers three types of cars, including hatchbacks for as little as 7 rupees (11 cents) a kilometer.

• Chinese city Hangzhou cracks down on Taobao seller-on-seller dirty tricks: China’s online ecommerce market is massive, but it’s also kind of a jungle. Especially in the C2C wilderness that is Taobao, shop owners use all kinds of shady tactics like brushing to make sure they get the sale, whether or not the consumer is actually getting what they want. Now Hangzhou, they city that plays host to Alibaba HQ, has passed a new set of regulations on ecommerce transactions that makes behavior like that illegal and punishable by local authorities. The new regulations will require Hangzhou sellers to register as businesses with the ecommerce platform they use, and levy fines of RMB 10,000 to RMB 30,000 (US$1,600-4,800) on platforms that don’t collect the proper information. Sellers can also be fined between RMB 10,000 to RMB 30,000 for doing any of the following: (1) Using the name or trademark of a famous company, product, brand, person, social organization, or government organization without permission (2) Leave negative reviews for, slander, or falsely report rival sellers and shops (3) Buying products in bulk and then returning all of them or refusing to accept delivery to harm rival shopkeepers’ profits (4) Falsifying internet transactions [like “brushing”] to get good reviews (5) Using technological measures to interfere with search rankings (6) Releasing fake products or false service information Harming national interests, public interests, or the lawful rights of others (6) Additionally, sellers can be fined between RMB 2,000 and RMB 20,000 (US$320-3,200) if they engage in any kind of customer harassment like calling customers who left negative reviews and berating or threatening them until they change their review score. Because these laws were passed by the city of Hangzhou and not China’s national government, they don’t apply to all online sellers yet. But they certainly provide a window into the kinds of dirty tricks that some Chinese C2C shopkeeps go in for, and the dangers consumers still face when shopping on C2C marketplaces like Taobao.

• Apple Pay’s pitch: Simpler is better. But some security experts disagree. When Apple introduced its pay-by-smartphone feature last fall, the company touted the simplicity of the setup. All shoppers needed to do was wave their iPhones in front of a special scanner at the cash register — no need to fumble through pockets and purses for plastic cards or identification. But a sharp rise in reports of fraudulent Apple Pay transactions is raising questions about the security of the first mobile payment system to find a measure of popular success. One payments analyst, Cherian Abraham, estimated that as many as 6 percent of Apple Pay purchases are completed with stolen credit cards, or 60 times the rate of the old-fashioned plastic swipe. The problem is that Apple Pay may be too simple to set up, security analysts said. Fraudsters have been loading stolen cards onto iPhones to buy things at stores. As it turns out, it might have been better if Apple Pay required users to do more to prove their identities when they sign up for the service, these experts said. The balance between security and ease of use has long bedeviled technologists, especially those pushing for a new payment system to replace the plastic cards that are highly vulnerable to thieves. That need has grown more urgent as credit card hacks — such as those that have afflicted Target and Home Depot in recent years — have risen in scope and frequency. Mobile payments offer a potential solution. They are considered much harder to hack than traditional payment systems. And they avoid the swipe — a critical advancement since a lot of credit card numbers are stolen by fake card readers. But consumers, banks and retailers have been slow to embrace the technology, partly because of its complexity. Launched in October, Apple Pay was billed as simple to use, and the universe of stores and banks accepting the service has been growing steadily over the past few months. Apple boasts that Apple Pay is now accepted at hundreds of thousands of store locations. Bank of America said customers added 1.1 million of its credit and debit cards to Apple devices in the first two months of Apple Pay. JPMorgan Chase cited a similar figure. But reports of fraud are now giving retailers and banks some pause. “The issuers were probably so eager to be involved that they kind of forgot best practices and sidestepped some procedures they normally would’ve had [in order] to accept Apple Pay,” said Michelle Evans, senior analyst for consumer finance at market research firm Euromonitor.

• Google Fiber Plans Experiment With Targeted Ads for Television: In a note to customers who subscribe to Google’s Google Fiber Internet and television service in Kansas City, Kan. and Kansas City, Mo., the search giant said it would soon begin a trial of local TV ads that will be aimed at a viewer’s locality and viewing habits. A spokeswoman who confirmed the service said Google expected it to roll out in the coming weeks. The move, if it were widely adopted by rival cable companies, could represent a sea change in how television ads are viewed and sold. For starters, it would mean that people in the same city might see different ads while watching the same show. It could also change how ads are sold by giving advertisers more leeway over when ads are shown, to whom and how often — the same kinds of control they have when advertising online. Google’s trial — which for now is aimed only at customers in the Kansas City area, who can opt out of having their viewing history used for advertising purposes — will use ads that are targeted by geography and what kinds of shows they view most often. “Fiber TV ads will be digitally delivered in real time and can be matched based on geography, the type of program being shown (like sports or news), or viewing history,” Google said in a online forum for Google Fiber. “If you’re a local business in Kansas City, just as with digital ads, you’ll only pay for ads that have been shown, and can limit the number of times an ad is shown to a given TV.” Analysts had been expecting Google to start experimenting with targeted television ads from the moment it announced its Google Fiber Internet service, which is about 100 times faster than the standard broadband connection. The company makes about $60 billion in annual revenue based largely on its ability to mine its user information to deliver highly targeted ads. Invidi Technologies, based in Princeton, N.J., makes software inside around 30 million United States cable boxes that can be used to target television ads based on age, gender, income, whether the viewer owns a dog or if their car lease is about to expire. Verizon, Dish, DirecTV and Comcast are all customers. “It is like direct mail for television,” said Michael Kubin, an executive vice president at Invidi.

• China's tax environment is tightening - regulator to reap Alibaba windfall as tightens up on tax: China could make billions of dollars from taxing gains made by employees of e-commerce giant Alibaba Group (BABA.N) who are free to sell their shares for the first time since its IPO, as the country tightens up its leaky mechanisms for tax collection. On Wednesday, a six-month lock-up period for the recently New York-listed stock expired, allowing insiders who bought 437 million shares prior to the IPO to sell their stock, though 100 million of them are subject to trading restrictions that apply to employees until the company reports results in May. The total lock-up represents roughly 18 percent of Alibaba's shares, which if sold would fetch just over $37 billion at Friday's closing price. Although Alibaba did not disclose the identity of the shareholders subject to the lock-up, many will be taxable in China, where most of its 22,000 people are employed, and its share scheme is subject to a number of controls that will help ensure China gets its tax. Current and former employees hold around 26.7 percent of the company, having built up holdings through stock options and other incentives since 1999, according to a Reuters report from June using IPO securities filings. Those subject to the expiring lock-up will have obtained their shares at different times and costs, so the gains figure is unknown, but the tax is expected to reach billions of dollars for China's State Administration of Taxation (SAT). While tax on employee compensation is withheld by employers, tax on share sales must be declared by employees, meaning it's typically harder for the authorities to track. It is not uncommon for employees participating in Chinese company stock incentive schemes to transfer their shares to offshore trusts in the Cayman or British Virgin Islands to avoid tax, according to a person who helps create such structures. But Alibaba's newly minted millionaires won't escape the gaze of the tax inspector, said a Beijing-based accountant. "Because it was such a large IPO, the tax bureau will for sure be monitoring that." While the potential tax windfall is tiny relative to China's total fiscal revenue of 14 trillion yuan ($2.26 trillion) last year, it reflects the government's more rigorous stance on tax.

• Facebook May Host News Sites’ Content: Nothing attracts news organizations like Facebook. And nothing makes them more nervous. With 1.4 billion users, the social media site has become a vital source of traffic for publishers looking to reach an increasingly fragmented audience glued to smartphones. In recent months, Facebook has been quietly holding talks with at least half a dozen media companies about hosting their content inside Facebook rather than making users tap a link to go to an external site. Such a plan would represent a leap of faith for news organizations accustomed to keeping their readers within their own ecosystems, as well as accumulating valuable data on them. Facebook has been trying to allay their fears, according to several of the people briefed on the talks, who spoke on condition of anonymity because they were bound by nondisclosure agreements. Facebook intends to begin testing the new format in the next several months, according to two people with knowledge of the discussions. The initial partners are expected to be The New York Times, BuzzFeed and National Geographic, although others may be added since discussions are continuing. The Times and Facebook are moving closer to a firm deal, one person said. To make the proposal more appealing to publishers, Facebook has discussed ways for publishers to make money from advertising that would run alongside the content. Facebook has said publicly that it wants to make the experience of consuming content online more seamless. News articles on Facebook are currently linked to the publisher’s own website, and open in a web browser, typically taking about eight seconds to load. Facebook thinks that this is too much time, especially on a mobile device, and that when it comes to catching the roving eyeballs of readers, milliseconds matter. In addition to hosting content directly on Facebook, the company is talking with publishers about other technical ways to hasten delivery of their articles. Even marginal increases in the speed of a site, said Edward Kim, chief executive of the analytics and distribution company SimpleReach, generally mean big increases in user satisfaction and traffic. So it is likely, he said, that Facebook’s plan focuses on those small improvements, rather than on getting money from deals with media companies. “But there are a lot of implications for publishers,” he added. “It really comes down to how Facebook structures this, and how they can ensure this is a win on both sides.” The issue is also pressing, he said, because some media companies have seen a drop in traffic from Facebook that could be attributed to the company’s prioritizing of video — a much more lucrative medium for ad sales.