When Cars Become Computers

Catch up with this week’s Five on Friday!

#TeslaDrop

Shares of Tesla dropped sharply on Thursday after the electric carmaker reported disappointing delivery numbers.

What does this mean?

While CEO Elon Musk was busy composing an ill-advised rap song about a certain deceased primate, Tesla’s delivery numbers sent a chill of a different kind down the collective spine of its investors. The company announced yesterday that it had delivered roughly 63,000 cars in its first quarter, significantly below analysts’ expectations of 76,000 deliveries. Deliveries of the Model 3 were also worse than expected, coming in at 50,900 versus Wall Street’s estimated 52,450. In a statement, Tesla warned that its quarterly income is likely to be negatively affected due to “lower than expected delivery volumes and several pricing adjustments.” One of the challenges laid out by the company was the fact that manufacturing is limited to its primary factory in Fremont, California. The company has other assembly plants in Nevada and New York State — its famous “Gigafactories” — and is working towards completing a site in China, too. Despite the setback, Tesla restated its full-year forecast of 360,000 to 400,000 deliveries, suggesting the revelation may not be as gloomy as it seems.

#SiliconWheels

The world of digital technology has been forging ever-closer ties with the automotive industry as two major deals between German carmakers and American tech giants were announced in recent weeks.

What does this mean?

Last week, Amazon revealed it was partnering with Volkswagen to build an “industry cloud” aimed at improving efficiency across the carmaker’s global network. With 122 factories worldwide, Volkswagen said that the new data infrastructure enabled by Amazon Web Services (AWS) will allow it to standardise production and inventory management. Though the deal highlighted the growing industry dominance of AWS, Amazon’s rivals aren’t going down without a fight. On Monday, Microsoft and BMW Group announced a similar partnership aimed at stimulating growth in the smart factory segment. The Microsoft-BMW collaboration will work to “transform digital production efficiency across the industry,” according to Microsoft executive Scott Guthrie. In both cases, we’re seeing car companies make large investments in cloud technology in a bid to keep up with rapidly developing changes in the sector. Thanks to high-tech companies like Tesla, cars are increasingly being understood as “hardware” rather than industrial goods, meaning that automotive veterans need to keep apace with innovations in machine learning and cloud software or else risk obsolescence.

#NetflixVsHollywood

The Department of Justice warned this week that any attempt to exclude Netflix from the Oscars could result in a violation of antitrust laws.

What does this mean?

In a surprising twist to the long-running debate, it was revealed on Tuesday that the Justice Department’s antitrust chief contacted the Academy last month to warn that any change to the eligibility guidelines for award consideration could spark antitrust concerns. The letter stated that any new rules which would “exclude certain types of films, such as films distributed via online streaming services, from eligibility for the Oscars” could also “diminish the excluded films’ sales”, which would, in turn, violate an act that deals with illegal restraints on trade. This caution was submitted ahead of a meeting by the Academy’s board of governors meeting later this month. Though accolades are probably far down on the list of priorities for Netflix at the minute, the debate over what can and cannot be included at award ceremonies has reflected the concerns of a rapidly changing film industry. Indeed, Netflix has run into similar issues previously with the Cannes film festival and has allowed for limited cinematic runs for some of its biggest releases in order to meet eligibility criteria.

#ControversialBill

The Australian Parliament provoked outrage this week after it passed legislation criminalizing the distribution of violent videos on social networks.

What does this mean?

In the wake of the Christchurch atrocities — for which Facebook was heavily criticized after the gunman live-streamed his shooting rampage on the platform — governments and digital companies alike have been struggling to formulate an appropriate response. Australia’s decision to severely penalize social media companies (including fines of up to 10% of annual turnover and possibly even jail time for some executives) if violent or “snuff” content is allowed to proliferate on their platforms represents perhaps the most dramatic reaction yet. The Sharing of Abhorrent Violent Material bill has drawn furious reactions from legal bodies and Big Tech in a way that recalls last week’s European Union copyright reforms. The Law Council of Australia called the bill a “knee-jerk reaction to a tragic event”, while Scott Farquhar, CEO of Australian tech darling Atlassian, suggested its wording was dangerously vague. “If the material in question is uploaded and you don’t take it down “expeditiously”, you can go to jail. What is expeditiously? Not defined! “Who” in a company? Not defined!” Farquhar tweeted, nicely summarizing the general tenor of concern.

#AndFinally

As a rule, the traditional opponents of Big Tech — and of the enormous power it wields over its rivals — have been politicians, with figures like Elizabeth Warren and Bernie Sanders coming out fiercely against corporate overreach. This week, however, we heard from those rivals themselves. Apple and Amazon, two of the world’s largest companies, faced separate accusations of using their influential platforms to self-promote, even if that meant bending their own rules. In the case of Apple, the trouble started when third-party developers on the App Store noticed something odd about how it pushed its new service, Apple News+. Apple played down the $9.99 subscription price by using the smallest available font, a tactic developers claimed would be flagged during the company’s review process and could even lead to an outright rejection. A similar complaint was made by sellers on Amazon who noticed that the service’s search engine was favouring private label Amazon items over third-party products. However, increased scrutiny appears to be working. Already, the e-commerce giant has begun scaling down these unfair promotions. Whether Apple will follow remains to be seen.

What does this mean?

Never underestimate the little guy (or noisy Democratic presidential candidates).

The Week In Numbers

0%

of Burger King’s brand-new Impossible Whopper contains meat, though few testers could tell the difference.

450 million

Facebook user records were left publicly exposed this week, according to security researchers.

$1 billion

is how much Disney’s superhero blockbuster “Captain Marvel” has made in its first month.

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MyWallSt operates a full disclosure policy. MyWallSt staff may hold long positions in some of the companies mentioned above.