Apple puts health at the centre — and privacy is the moat

October 18, 2023
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on October 18th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

Slowly but surely, Apple is moving ever closer to the most intimate thing we have — our bodies and our wellbeing. And in doing so, it is drawing yet another line against competitors such as Alphabet (Google), Meta (Facebook), and ByteDance (TikTok).

At Apple’s developer conference WWDC in June this year, the company outlined new features pointing to an ever-greater focus on an area that fits perfectly with its emphasis on privacy: health.

Walking alongside the Apple Park Pond — a pond located inside the company’s new, saucer-shaped headquarters — health chief Sumbul Ahmad Desai described the new initiatives. “We are moving into two new areas that are always grounded in science with privacy at the core,” she explained, referring to mental health and eye health.

Apple’s new software is designed to help users understand what contributes to their mental wellbeing, and to reduce the risk of myopia — the nearsightedness that affects 30 percent of the population — which can be influenced by spending a lot of time looking at screens. Those with an iPhone can also set it to different focus modes, so the phone does not disturb its owner when working, sleeping, or wanting a break from notifications.

The choice is no coincidence. Apple has selected two areas for which tech companies have previously drawn heavy criticism. The initiative thus becomes a kind of alibi for the responsibility the industry has been accused of shirking.

Mental health data is a particularly sensitive subject — something many people would prefer to share only with loved ones or professional care providers.

Here, Apple — whose multi-year commitment to protecting data and privacy is well established — can stake out a position that is hard for competitors to match. Nobody wants information about their mental state to feed targeted advertising.

Apple’s commitment is not entirely altruistic, however. Having a service where users track their wellbeing is also a way of ensuring they do not switch to a different mobile platform. And one way to prevent myopia is to get plenty of daylight — something Apple measures with its watch. In the presentation, Apple Watch is suggested as ideal for children, to ensure they spend enough time outdoors each day. So now even tech companies want children to go outside and play — provided they have a device on their wrist, of course.

Apple Watch has become the hub for a series of health initiatives in recent years. It can now perform basic ECG tests, measure nighttime body temperature, and track blood oxygen levels.

This makes the watch a kind of medical device that requires regulatory approval before it can be sold — a slow and administratively complex process, for understandable reasons, and not something a tech company would take on if it were not important.

That Apple has chosen to do so anyway says something about its ambitions in this space. Privacy, health, and hardware are converging into a strategy that its competitors — who built their business models on advertising — are structurally ill-placed to follow.

The search engine that refused to die: Yahoo is back

October 11, 2023
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on October 11th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

They were the centre of the entire internet during the 1990s, but lost that position to the tech giants. Now there is talk of a possible new stock listing. Has the legendary internet company Yahoo come back to life?

Jim Lanzone looked pleased and flattered at a so-called fireside chat — a relaxed on-stage interview format — about how he thought when he took on the legendary internet company Yahoo. Once one of the world’s most popular search engines, it had become the archetype of what used to be called a “homepage” on the internet. But that was many years ago.

“The problem with being a good turnaround guy is that people keep calling with more turnarounds,” said the interviewer.

The comment was a nod to the fact that people who can come in and turn around struggling companies are rare — and tend to keep ending up in similar situations.

Lanzone laughed, but quickly changed the subject. He had been involved in turning around companies before — including another search engine, Ask.com. But he did not seem to think Yahoo was a typical turnaround case at all. It was mostly just misunderstood.

The former internet giant Yahoo appears to be heading back into the spotlight. After serving as many people’s first internet experience from the late 1990s onwards, it was absorbed into telecom giant Verizon’s vague content play — alongside another classic internet company, AOL — between 2015 and 2017.

Despite its low profile, Yahoo managed to retain a loyal user base across many of the services it offered. The problem was more about explaining to the outside world what Yahoo actually was. The company was involved in so many different things — from photo storage to stock quotes — that something of an identity crisis emerged.

Things got darker when owner Verizon — as is so often the case with telecom companies — suddenly changed strategy. Swede Hans Vestberg was called in and announced they would focus on the core business: mobile networks and 5G. The value of Yahoo and AOL was written down by $4.6 billion, just 2.5 years after the deal was done. Yahoo was stuck in no-man’s land — unwanted by its owner and without focus.

The turning point came in 2021, when private equity giant Apollo Global Management (yes, the same one that has been involved with the airline SAS) bought out Yahoo and AOL for $5 billion. Jim Lanzone was then brought in as CEO.

Since then, Yahoo has undergone an impressive transformation and streamlining. It has sold off businesses in video, search technology, and the rights to its Japanese operations — something SoftBank bought for $1.6 billion. Instead, several acquisitions have been made in both financial and content services, to strengthen the areas that are working well. Among them is Yahoo Finance with 100 million users, Yahoo Mail with 225 million users, and Yahoo News with 900 million monthly readers.

For those who know their internet history, it is impossible not to remember when Yahoo was in exactly that company — among the most visited sites in the world, with services you could hardly avoid if you wanted to use the internet.

Being that important attracted attention even then. In early 2008, Microsoft tried to buy Yahoo for $41.6 billion — more than 450 billion kronor at today’s exchange rate. The bid went as high as $47 billion. But then-CEO and co-founder Jerry Yang turned it down with what is now an infamous quote: “we believe Microsoft’s bid substantially undervalues Yahoo.”

Yang badly misjudged the situation, and less than ten years later the company had been sold for roughly one tenth of what Microsoft had once offered.

A comeback may now be visible on the horizon. Lanzone’s Yahoo has cleaned up the company and found a new core to build on. The search engine that was once the source of its greatness has been set aside in favour of editorial investments in finance, news, and sports. Yahoo Finance now also offers trading and mortgage services, expanding it into a broader financial platform. Talk of a potential IPO is linked to Apollo’s likely desire for an exit — SoftBank is already an investor.

This is an internet comeback story. There are not many companies capable of sustaining such a long gap between their period of greatness and a potential second act.

The glory days will be hard to match again, but Yahoo does seem to be making a comeback — now more as a modern media company than a search engine. CEO Jim Lanzone has reason to be satisfied. He now has the opportunity to reintroduce Yahoo to an entirely new generation of internet users.

Bankman-Fried is not the scapegoat the industry is hoping for

October 4, 2023
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on October 4th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

He has been called “the new JP Morgan,” but now his colleagues have abandoned him. When the main trial against Sam Bankman-Fried opened on Wednesday, many were hoping for a conviction.

Sam Bankman-Fried was freshly trimmed when he appeared in the New York courtroom on Tuesday. A fellow detainee had helped with his hair. The day was spent selecting jury members. Several of them disclosed that they had lost money on cryptocurrencies.

For Bankman-Fried, a life sentence is sitting in one pan of the scales.

That the cryptocurrency market is under pressure is, of course, nothing new.

But there is no great show of solidarity from the industry behind its former colleague. On the contrary, many are hoping that Bankman-Fried gets convicted. For them, he becomes a scapegoat — someone to distance themselves from.

The reasoning is that the crash of FTX was down to a single individual who made mistakes, not the industry as a whole. Remove him from the picture, and everything is fine.

Since FTX collapsed just under a year ago, regulators have started cleaning up among bad actors and become clearer about what is and is not permitted. It sounds like an industry that has been through a purifying ordeal and is now on the road to recovery — doesn’t it?

But it is not quite that simple.

Even if Bankman-Fried’s fall is the most spectacular in the crypto market, he is far from alone in ending up there. Projects such as Terra, Celsius Network, and the entire NFT market have all crashed dramatically. As in the dotcom collapse, sites post news almost daily about various crises, security breaches, and outright fraud occurring in the crypto world. The list of projects that have collapsed — often with retail investors losing their money — is very long.

The FTX crash is different in that it also bears many similarities to the conventional financial system. The company had near-nonexistent risk management, large amounts of illiquid assets — and subsequently suffered a bank run. When customers went to withdraw their money, it was no longer there.

The situation was further complicated by the fact that they were trading cryptocurrencies — where regulation and oversight were entirely absent, and transparency around how FTX managed its affairs was very limited.

The trial concerns precisely this, along with associated fraud and money laundering. Customers’ assets were, according to the prosecution, used improperly. There is talk of houses in the Bahamas, sports arena naming rights, and expensive celebrity-fronted advertising campaigns. Money appears to have flowed almost freely between the trading platform FTX, Bankman-Fried’s hedge fund Alameda Research, and his personal finances. There are 1,300 pieces of evidence that prosecutors intend to present at trial.

Does a guilty verdict for Bankman-Fried mean the end of the crypto era?

Probably not. But not because he is so different from the rest of the industry — however much they might want people to think so.

What argues against it is simply the price of bitcoin. The underlying interest in bitcoin — the hub of the entire market — has risen 66 percent since the start of the year. How the price develops over the roughly six weeks the trial is expected to last, nobody knows, but bitcoin as an asset appears not to have been materially affected by the FTX drama so far. The core of the cryptocurrency world is volatile — as it always has been — but largely untouched by this particular episode. Confidence in this part of the market remains.

Sam Bankman-Fried made his name by applying traditional financial methods to what was then a fairly virgin crypto market. On several occasions, he described how he exploited price differences for bitcoin between Japan and the US. By buying and selling bitcoin across the two markets, he could pocket the spread — a practice known as arbitrage.

It was also there that he realised it would be more profitable to own the entire exchange, rather than to make individual trades. The idea behind FTX was born.

But there are reasons why not every player at the roulette wheel starts their own casino. It is more complex than it first appears.

For both Bankman-Fried and the more than one million customers at FTX, things would have been better had he stayed an ordinary trader — anonymous and understated, making good money in quiet. Instead, he bought Super Bowl advertising and luxury villas in the Bahamas. Just as with individual roulette bets, it does not always end well — even when you own the casino.

Sam Bankman-Fried maintains that he is not guilty. Now it is up to the court in New York to decide the matter.

American giants are swallowing Sweden’s tech successes

September 25, 2023
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on September 25th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

With new laws, the EU has American tech giants in a firm grip. But Europe has yet to produce a single one of its own.

EU Commissioner Thierry Breton looked visibly pleased as he looked into the camera and delivered the following message:

“It is D-Day for the DMA. This is a very important milestone for freedom and innovation in Europe.”

Breton was referring to the legislative package known as the DMA — the Digital Markets Act — which had just published its list of tech companies the new laws would apply to.

The names on it were familiar to most: Apple, Amazon, and Meta, for example.

More interesting is where those companies come from. All of them are American, with the exception of ByteDance, which is Chinese. Europe’s new laws therefore do not apply to a single European company.

That the EU has been at the forefront of regulating tech companies is well known. The question worth asking is the opposite — what has it done to foster them?

For a well-functioning tech company, there are few reasons to remain listed in Europe today. SvD’s analysis shows how large the valuation gap between European and American stock markets really is. Comparable companies are often traded at significantly higher multiples on the other side of the Atlantic. Firms like Cevian Capital are now actively looking at moving some of their listed holdings to the US to unlock more value.

Part of the problem with European stock markets is low liquidity. Look at how individual sectors are distributed across the Nordic exchanges, for example. Both tech and gaming companies are noticeably more concentrated on the Stockholm Stock Exchange than their counterparts in Copenhagen or Helsinki. And even if it is technically possible to trade across borders, smaller silos form that limit liquidity. In a small region like the Nordics, there is not an unlimited pool of investors to draw from.

The same reasoning applies more broadly to all of Europe.

Add to that currency risk in certain countries — Sweden in particular — and there are many reasons not to list a successful company in either the Nordics or Europe. Spotify — Sweden’s most brightly shining star among tech companies — chose, as is well known, to list in New York in 2018.

Europe’s problem is not a lack of ideas or capital. A report from Swedish venture capital firm Creandum shows that Europe has captured a growing share of early-stage investment capital (what is known as seed). Over 20 years, that figure has risen from 8 percent to 28 percent. The amount of money raised by European venture capital funds for further investment also reached a record level in 2022.

So there are upward-pointing arrows for Europe in tech as well.

The concern grows when you look at where the value of these companies is ultimately realised.

Most tech companies — those that survive at all — will be acquired rather than going public. And who is doing the acquiring? Again, Americans are in the driving seat. The European M&A market for tech is very limited. There are very few large players in Europe buying companies at the same level as their American counterparts.

Looking at a selection of major Swedish tech deals, a clear pattern emerges. On the selling side: Swedish tech successes. On the buying side: American companies. The list is long. The European equivalent, by contrast, is short.

Nothing suggests this trend will reverse. On the contrary — due to the weak krona, Swedish companies have never been cheaper for those buying in dollars.

At the same time, the European tech ecosystem erodes with every acquisition that takes place. The acquired companies never get the chance to grow into the kind of tech giants that buy rather than get bought.

In the middle of all this sits the EU with its new legislative package. The cumbersome data law GDPR was already in place. These laws have done much to keep tech companies in check. But very little to ensure they remain here in the first place.

Instacart’s IPO shows the tech market has sobered up

September 20, 2023
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on September 20th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

Optimism is returning to the tech market after delivery company Instacart’s listing on the American Nasdaq. But Instacart has what many tech companies still lack: profitability.

Lime-green canvas bags were everywhere in San Francisco in the mid-2010s. In shop after shop, people walked the aisles picking items that ended up in the bags. They were not shopping for themselves, though — they were doing it for someone who had placed an order through an app. The bag said “Instacart.”

The pitch was very simple. Someone else shops for you, at your favourite store. You get food delivered to your door within an hour. For the trouble, you pay a small fee, plus a tip.

Living in San Francisco at that time was like being subsidised by venture capitalists. In the race for growth, services were offered at unreasonably low prices. Why shop yourself when someone else will do it for you? It might sound like a luxurious life, but the cost was often negligible. There was one simple reason for that — someone else was paying. In this case, American venture capitalists who wanted companies like Instacart to win new customers.

On Tuesday, Instacart listed on the American Nasdaq. The core idea remains, but the company has undergone a substantial transformation since its founding. Going public with a business model where shareholders foot the bill is no longer particularly fashionable. In Instacart’s IPO prospectus, a profitable company emerges — with 5.4 billion kronor in adjusted earnings.

Going public as a tech company has been essentially off the table since 2021. Growth stopped being attractive and investors instead wanted to see profitability. Listing without having solved that question has been virtually impossible — there is simply no appetite for that kind of company.

Many tech companies have therefore spent the past two years trying to become profitable. Instacart’s listing now is because they managed to do exactly that. At the end of 2022, they turned a profit for the first time.

It is also interesting to look at how Instacart reached this sought-after profitability. It was not, as one might expect, the result of consumers simply paying more to have food delivered. Instead, Instacart has undergone a transformation and now has three legs to its business: food delivery, advertising, and software. The company’s stated vision is to “build the technology that enables every grocery transaction.” That does not quite sound like a delivery company anymore, does it?

What they are referring to is what they call the “Instacart Enterprise Platform” — a technology product sold to retailers, enabling everything from e-commerce to advertising management.

By holding data on every customer’s purchasing habits, they have built a highly attractive and successful advertising business. In the past year, the platform and advertising accounted for around 29 percent of revenue — more than 8 billion kronor in total. In the US, only 12 percent of grocery purchases happen online, which means there is a great deal of market share still to be gained. And the more people who shop through Instacart, the better their data becomes — and by extension, the more advertising revenue they generate.

On the first day of trading, Instacart rose around 12 percent, giving a company valuation of roughly $11 billion. Under normal circumstances this would be a major success — but that assessment depends on not knowing Instacart’s valuation in 2021, which was around $39 billion, nearly four times higher.

But that was a different time, as we know. Perhaps Instacart’s new valuation is a sign that the tech world has sobered up a little? The numbers are high, but not as astronomical as they once were. And — just as in the rest of the business world — it helps to be able to show that you can actually make money. When the next generation of tech companies reaches that point, the market appears to be open for them too.

Schibsted is the last owner Viaplay needs right now

September 14, 2023
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on September 14th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

When Schibsted buys into Viaplay, they acquire power without having to take responsibility. That is the last thing Viaplay needs right now.

There are phrases that a company in crisis does not want to hear from newly arrived owners.

“We see this as a financial investment” is precisely one of them.

These were the words of Jann-Boje Meinecke, investor relations director at the Norwegian media group Schibsted — which owns both Svenska Dagbladet and Aftonbladet — after announcing that it now owns 10.1 percent of the shares in streaming company Viaplay.

Viaplay has had a tough year — to say the least. The share price has fallen almost 80 percent since January, and recent months have been marked by executive departures and a pervading sense of crisis. If you ever wanted to own Viaplay stock, this is therefore an opportune moment — it has never been cheaper than right now.

Even Schibsted’s own share price fell on the news, and by considerably more than the cost of the Viaplay shares themselves.

The stock market, then, was not exactly jubilant.

The question is whether Schibsted really intends to hold the stock for the long term.

Through a clever arrangement involving banks, the company managed to avoid notifying the stock market when it crossed the 5 percent ownership threshold. Instead, the announcement only came when they crossed the 10 percent barrier — by a small but very significant margin. The total holding is 10.1 percent.

Consider the following scenario: if someone were to make a bid for all of Viaplay, they could force out the remaining shareholders — provided they had reached 90 percent of shares. Now that Schibsted holds 10.1 percent, that kind of deal cannot be done without them on board. French television company Canal Plus already owns around 12 percent.

Taking Viaplay off the stock market in a quick deal suddenly became substantially more complicated — and probably more expensive. Calling this a “financial investment” for Schibsted can therefore be read in that light: any new owner must now negotiate with them directly.

The bigger question, however, is who would even want to make such a deal.

Whatever the share price, Viaplay’s problems have been building for a long time. Slowing streaming growth, increased competition from international players such as Netflix and HBO, expensive sports rights, and high interest rates have all contributed to squeezing the company. Being a Nordic streaming company with international ambitions has proven to be a very difficult strategy to execute.

Telia, which owns TV4 and C More, has also signalled in various ways that its TV business is likely up for sale. The outgoing CEO Allison Kirkby previously worked at Danish telecom giant TDC, where she fully separated the content business from the technology side. “Content is hard,” was how she described it at the time.

On the subject of TV4, Kirkby has said that “media should not be owned by operators.”

The problem is much the same there. TV4 appears to be for sale. But who are the potential buyers? Who looks at the media landscape today and concludes that Nordic streaming companies are what they want?

Schibsted’s move suggests they believe there are buyers out there. They do not need to be one themselves, despite the sizeable new stake.

Of course, Schibsted may have interest in specific individual assets, if that kind of solution is on the table.

“We hope we can support the company in creating value, and in further developing its strategy going forward. Whether that leads to us joining the board, we shall see,” Meinecke told Dagens Media.

Having multiple large shareholders who can block structural transactions, and who are not necessarily willing to roll up their sleeves on the board to address the company’s problems — is a nightmare scenario for Viaplay. All the underlying problems remain. But now there is an ownership problem on top of them.

Footnote: Svenska Dagbladet is owned by Schibsted. Journalists at SvD may own shares in Schibsted through the group’s employee share programme.

Arm Holdings: standing strong despite the market

September 13, 2023
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on September 13th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

When chip company Arm goes public, the world waits eagerly to see whether the appetite for tech listings has returned. But reading too much into Arm is risky — it is not an ordinary tech company.

A jubilant and excited Masayoshi Son, CEO of Japanese investment firm SoftBank, met the press in London in 2016.

“This is a company I have admired for the last ten years. This is the company I want to make part of SoftBank.”

The company in question is Arm Holdings, a British chip firm. The Japanese conglomerate SoftBank bought it out from the stock market in 2016 for around $32 billion.

The path since then has not been straightforward, at least when it comes to ownership. On Thursday, Arm will in all likelihood make its comeback on the stock market — and in doing so, open the window for other tech listings, a window that has been firmly shut for some time.

Arm is not just any tech company. Its market share for processors used in mobile phones is over 99 percent. There is not an iPhone or Android phone in existence that does not contain an Arm component. That kind of position is very different from the many software companies that are collectively considered “tech.”

Being so exposed to a single market comes with complications. Arm does make products beyond mobile processors, but the mobile phone market has faced headwinds in recent years. Growth has stalled, and for companies like Apple and Samsung the challenge is more about maintaining existing sales levels and supplementing with services and adjacent offerings. For Arm, this creates a kind of stability — but not the explosive growth that markets typically expect from tech companies.

On the other hand, the area of AI — with Nvidia leading the charge — has generated enormous interest in chip companies. It is partly this situation that owner SoftBank is looking to capitalise on. The company’s valuation at IPO could now exceed $50 billion.

There are additional reasons for the listing. SoftBank made its name with bold tech investments at enormous valuations. For several years, when capital was cheap and freely available, one of its strategies was to pour in as much money as possible into its portfolio companies — enough to simply outrun the competition. This worked well for a number of years.

When the air went out of the tech market, however, SoftBank found itself stuck with a portfolio of holdings whose valuations had fallen, and with weaknesses in the underlying businesses. SoftBank ran into trouble. In its most recent quarterly report in August, the parent company recorded a loss of $3.3 billion — more than 36 billion kronor.

In the current AI boom, Arm presents itself as a saviour for the Japanese parent company. If Arm goes public, SoftBank can more easily leverage its remaining roughly 90 percent stake, and in that way build a new war chest to invest from.

This is not the first time SoftBank has tried to do a deal with Arm. Back in 2020, Arm was set to be sold to chip giant and partner Nvidia for a price tag of $40 billion. Nvidia was already enormous at the time, but the world’s interest in AI had not yet exploded. That deal fell through in February 2022, when both parties realised that the regulatory hurdles were too great. The combined company would have become so large and powerful that it would have distorted competition. The two companies continue to work closely together as partners, but without any ownership connection.

When the Nvidia deal collapsed, SoftBank had to rethink. And somewhere in that process the new plan was born: to bring Arm back to the stock market — where it had been before SoftBank bought it out in 2016.

The world is now watching closely to see how the market receives the listing. Shortly after Arm, delivery company Instacart and software company Klaviyo will likely also go public. All three will be scrutinised carefully by both the market and by tech entrepreneurs who did not manage to list their companies before tech stocks started falling. Many had planned to go public during 2022 but were quickly forced to find a new plan. If these three companies are well received by the market, it could trigger preparations for new listings at many mature tech companies. If they do poorly, that window will be pushed several more months into the future.

But reading too much into Arm is risky. It is a company with a near-monopoly on the mobile market, and with such a strong AI tailwind that the timing could hardly have been better. Partner Nvidia’s stock has risen more than 213 percent — this year alone. Not many “ordinary” tech companies can match that.

Forget the iPhone — Apple’s real ambition is health

September 11, 2023
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on September 11th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

Forget the new phones being announced — but do pay attention to the earbuds and the watches. The most interesting news from the event is Apple’s ever-growing ambitions in health.

When Apple’s CEO Tim Cook faces the world on Tuesday, he will present the company’s best iPhone yet. You can say that with confidence, since it happens every time at this occasion in September — every single year.

Apple needs to continuously release new hardware — the iPhone above all — to sustain its sales. This normally happens once a year as summer comes to a close, and sometimes there is a smaller update come spring. In addition, there are software upgrades that enable new functionality in existing devices.

Software has over time become increasingly important for Apple, as hardware sales have leveled off somewhat. Services such as Apple Music, Arcade (gaming), iCloud (cloud storage) — and the behemoth App Store — all belong to the segment loosely called “Services.” In the most recent quarter, these services accounted for around one quarter of total revenue.

It is also within services that you can see signs of where Apple is headed. That there will be a new iPhone with a slightly better camera is well known, and not something you can draw any particularly interesting conclusions from.

But at Apple’s developer conference WWDC in June this year, the company outlined news hinting at an ever-greater focus on an area that fits perfectly with its emphasis on privacy: health.

Walking alongside the Apple Park Pond — a pond located inside the company’s new, saucer-shaped headquarters — health chief Sumbul Ahmad Desai spoke about the new initiatives. “We are moving into two new areas that are always grounded in science with privacy at the core,” she explained, referring to mental health and eye health.

Apple’s new software is said to help users understand what contributes to their mental wellbeing, as well as reducing the risk of myopia — the nearsightedness that affects 30 percent of the population — which can be influenced by spending a lot of time looking at screens. An iPad can now alert users if a child is sitting too close to the screen, for example.

Those with an iPhone can also now choose to set it to different focus modes, so the phone does not disturb its owner when they are working, sleeping, or simply want a break from notifications.

The choice is no coincidence. Apple has selected two areas for which tech companies have previously drawn heavy criticism. The initiative thus becomes a kind of alibi for the responsibility the industry has been accused of shirking.

Mental health data is a particularly sensitive subject — something many people would likely prefer to share only with loved ones or professional care providers.

Here, Apple — whose multi-year commitment to protecting data and privacy is well established — can stake out a position that is hard for competitors to match. Nobody wants information about their mental state to feed targeted advertising, for example.

Apple’s commitment is not entirely altruistic, however. Having a service where one tracks one’s wellbeing is also a way of ensuring users do not switch to a different mobile platform. And one way to prevent myopia is to get plenty of daylight — something Apple measures with its watch, the Apple Watch. In the presentation, the watch is suggested as ideal for children, precisely to help ensure they are getting enough outdoor time during the day. So now even tech companies want children to go outside and play — provided they have a device on their wrist, of course.

Apple Watch, which is also being updated on Tuesday evening, has become the hub for a series of health initiatives in recent years. It can now perform basic ECG tests, measure nighttime body temperature, and track blood oxygen levels.

This makes the watch a kind of medical device that requires regulatory approval before it can be sold — a slow and administratively complex process, for understandable reasons, and not something a tech company would take on if it were not important. That Apple has chosen to do so anyway says something about its ambitions in this space.

There was a time when tech enthusiasts sat glued to Apple’s product launches. Now they have instead become part of the establishment, with all the predictability that brings.

The next iPhone 15 will likely feature a slightly better screen and a marginally smarter camera. The more interesting things lie in the smaller announcements. Are there new earbuds coming? And if so, will they be able to measure body temperature?

Slowly but surely, Apple is moving ever closer to the most intimate thing we have — our bodies and our wellbeing. And at the same time, the company is drawing yet another line against competitors such as Alphabet (Google), Meta (Facebook), and ByteDance (TikTok).

Pay particular attention to news about health and privacy. That is where you will find the clues to Apple’s strategy going forward.

Spotify’s evasion is remarkable

September 7, 2023
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on September 7th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

Spotify is happy to talk about how its platform reaches millions of people every day. But when SvD reveals it has been used for money laundering — the company declines an interview.

It was Spotify’s Capital Markets Day 2022, and CEO Daniel Ek opened to set the tone from the start. With stock analysts and retail investors in the audience, the star entrepreneur was going to try to convert a few skeptics.

“To begin with, we have an excellent product and our business is going very well. But beyond that, we are investing in building a fantastic, multi-sided platform with all the ingredients to become a truly unique, creative platform in the world.”

This is how it tends to sound when tech companies speak. Lots of talk about scalability and building platforms that enable others to express themselves. What they tend to talk less about is their responsibility for what goes on within those platforms.

SvD’s investigation shows that gang criminals have exploited Spotify for money laundering. When SvD contacts Spotify for an interview, the answer is no.

Companies having internal challenges is not something that requires a press release to the public. Money laundering, however, is a problem that affects far more people than just Spotify. It is a cornerstone of sustaining criminal operations over the long term.

It is therefore remarkable that the company avoids being interviewed about the platform it so readily promotes to the outside world in other contexts.

The situation is familiar. Meta, formerly Facebook, has found itself in similar positions on many occasions — including around the spread of misinformation. Tech companies’ approach follows a predictable pattern that tends to repeat itself when this type of issue arises.

Step 1: Create a platform that allows millions of people to use and participate in various ways. The number of users is so large that no manual oversight can be carried out to review them all.

Step 2: When problems of some kind arise — something that is often flagged from the outside — tech companies state that they have internal systems working to address them. But they are quick to add that the problem is so complex that an immediate and definitive solution is not available.

Step 3: If the problems continue, or are elevated politically, an internal review is launched and a tech executive comes out to say the company will do better and invest more. The issue disappears temporarily. Until the next — often very similar — problem arises again as a result of the large and ungovernable platforms.

What is missing from this cycle is tech companies’ recognition that these problems are self-created. It is not a given that an unlimited number of people should be able to freely use a platform without restriction. They are designed to have as little friction as possible for both new and existing users. The problems that arise become an acceptable side effect of tech companies’ demand for growth.

In Spotify’s case, concerns about money laundering were known internally. This is apparent from a report the company references when SvD requests an interview. At the same time, the streaming giant responds by email that it has no “evidence” that money laundering has occurred.

SvD’s reporting suggests the company is more reluctant to disable paid accounts used for fraud than free ones. Disabling premium accounts runs counter to Spotify’s entire strategy of building up that subscriber number.

Spotify disputes this characterization, writing that it “detects and addresses artificial behavior from both free and premium accounts.” What proportion of the disabled accounts belong to the latter category, the company declines to say.

There are many losers when fraud of this kind occurs. Spotify likely incurs high costs for staff and systems working to prevent it. Other artists — whose streams are genuine — receive a smaller share of revenues. Ordinary listeners look at the charts to get a sense of what is popular, without knowing the charts have been manipulated.

The situation is both messy and complex. One can have a degree of understanding for the difficulty of solving these issues quickly. But having a tricky self-created problem does not relieve Spotify of responsibility for managing a situation it made possible — even if unintentionally.

Money laundering is not a tech problem — it is a societal problem. The solution therefore does not need to come from Spotify alone. But more transparency about how it is contributing to the issue would be appropriate — for a player with so much power.

The stock market’s biggest winner is betting everything on AI

August 22, 2023
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on August 22nd, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

Nvidia crushed market expectations in May and the stock surged. Now everyone is waiting to see if the company can repeat the feat. But riding the AI hype comes with significant risk.

There is an old saying in business: “under-promise, over-deliver.” The well-tested model is about lowering expectations so that it is easier to surprise on the upside.

Jensen Huang, CEO and founder of the successful chip company Nvidia, works by a different playbook. Here, a great deal is promised. And yet the confident Huang manages to beat those expectations. Since AI technology exploded, his Nvidia has been the biggest winner on the stock market.

When Nvidia reported in May, it gave a forward-looking forecast that beat market expectations by over 50 percent. The stock surged. Total revenues for the coming quarter were projected at around $11 billion — roughly 120 billion kronor.

On Wednesday evening, we find out whether Huang has managed to live up to those numbers. Following the last success, some analysts believe Nvidia may surprise positively again.

The timing is in Nvidia’s favor. Interest in AI could hardly be greater, and now there are signs of a broadening customer base beyond the well-known tech giants like Google and Microsoft.

The United Arab Emirates has access to thousands of similar chips, and the UK is reportedly about to make a major investment in the area. Last week, the Financial Times reported that Saudi Arabia had purchased at least 3,000 of Nvidia’s H100 chips. That may not sound like much, but an H100 costs nearly 450,000 kronor — each.

The chips are primarily used for what is called generative AI, where products like ChatGPT and Midjourney have made their names. These purchases suggest that the centralization we have previously seen around cloud storage and similar services may develop differently in this wave of AI expansion. If more countries and companies invest in their own capacity, the market would grow substantially.

Beyond the initial investments to build AI capacity, Nvidia also offers services that help with refining and inferencing the available data. This is a more ongoing stream of work that extends several years into the future beyond the initial purchases.

Being exposed to a technology in an extreme hype does come with risks, however. Nvidia’s stock has almost become synonymous with a belief in AI. It is therefore worth considering what would happen to it if interest — and appetite to invest — in the technology were to diminish.

During the summer, preliminary research from Stanford and Berkeley universities showed that answers from ChatGPT had become significantly worse. It is unclear what may have caused this, but the question marks suggest we are still in a very early stage when it comes to artificial intelligence.

That new technology will revolutionize society and business is also something we have heard before. Most recently, it was blockchain technology and cryptocurrencies that were going to rewrite the balance of power in the economy — but which lately have mainly led to massive losses and scandals.

The crypto exchange Coinbase had a similar type of association, and went public in spring 2021 at a price of $381. The price now is just above $70. Coinbase is in every meaningful sense a completely different kind of company than Nvidia, but the strong association with a single new tech phenomenon looks similar — and points to a possible scenario that is not as glittering as the one Jensen Huang paints.

Nvidia does not appear particularly worried about this risk. On the contrary, they seem to be looking for more areas to expand their exposure to the industry. In winter 2022 they called off the billion-dollar acquisition of British chip developer Arm, owned by SoftBank. Objections from regulators in both the US and Europe were so significant that the deal could not go through.

But this does not appear to have deterred Nvidia. Instead, they are rumored to become an anchor investor in Arm’s IPO — announced this week — which may happen as early as next month. The two companies are already partners today — despite the failed acquisition — and the collaboration could now become even closer.

The sharp rise this year — a tripling of market capitalization since the start of the year — means that Nvidia’s performance affects more than just its own shareholders. It is now the fourth-largest company on the Nasdaq, and its weighting in the index is more than double that of companies like Cisco, Netflix, or Intel.

If Huang manages to beat expectations again, the whole market could be smiling.