Nov 27, 2018

Axios Login

Ina Fried

1.7 days. Oh sorry, I thought you were asking how long it takes for a swallowed Lego to make it out the other end. Anyway, it's 1.7 days.

1 big thing: Stodgy Microsoft rivals Apple in market-cap race
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Data:, Yahoo! Finance; Chart: Harry Stevens/Axios

In the conversation about Big Tech, the discussion usually centers around Apple, Amazon, Google and Facebook, with Microsoft often overlooked or included as an afterthought.

And yet Microsoft is now neck and neck with Apple for the title of most valuable company in the world.

At market close on Monday, Microsoft was worth $817 billion, just shy of Apple's $829 billion. That comes amid a steady 2-year climb for Microsoft and a recent steep drop in Apple's valuation, which topped $1 trillion not long ago.

Between the lines: The story isn't just about the drop in Apple shares, but also the resilience of Microsoft despite having lost its seat at the cool kids' table. This year alone, Microsoft surged past Amazon and Google parent Alphabet.

Why? Microsoft has gradually moved from a consumer and business PC company to one that's increasingly focused on the less sexy, but highly profitable data center.

Yes, but: Aren't PC sales flat? They are. But Microsoft has managed to offset that with a fast-growing business in cloud computing.

What they're saying:

  • Bloomberg's Shira Ovide: "Microsoft is the tortoise in a technology world obsessed with hares. We know how that race turned out."
  • Business Insider's Kif Leswing: "The last time Microsoft was more valuable than Apple: The current iPhone was the 3GS. If you wanted to install Windows 7 it came on a CD. Instagram did not yet exist. Barack Obama was finishing out the first half of his first term."

Background: Apple and Microsoft have been rivals in the PC world since the early days. When it comes to valuation, though, they have spent most of their history far apart.

  • Apple went public before Microsoft (1980 vs. 1986) but Microsoft quickly eclipsed Apple in value and held the lead for the first 2 decades or so of the PC era, even having to bail Apple out with a $150 million cash infusion back in August 1997.
  • Buoyed by the iPhone, Apple surged back, overtaking Microsoft. It held the lead continuously over Microsoft until Monday, when Apple briefly dropped below the software giant, before closing at a slightly higher valuation.

But, but, but: The longer view you take, the more you need to think about adjusting for inflation. Today's $800 billion company isn't the same as $800 billion two decades ago.

The bottom line: Market cap is not an indication of innovation, but it does show where Wall Street is placing its bets on the future.

2. Report: 1.5 billion will be using 5G by 2024
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Data: Ericsson; Chart: Chris Canipe/Axios

The 5G wave will begin with a trickle of early adopters next year, but reach more than 1 billion subscribers by 2023 and 1.5 billion the following year. At that point, 5G networks will cover 40% of the earth's population and carry a quarter of the world's mobile data traffic, according to a new report from Ericsson.

Why it matters: That's the fastest global adoption ever of a new generation of wireless technology. In addition to faster speeds, 5G offers other benefits, including minimal delay that could pave the way for things like remote operation of vehicles.

By the numbers:

  • The total number of mobile subscriptions globally reached 7.9 billion in Q3 2018, with 120 million new subscriptions added during the quarter.
  • 5G will bring about a surge in Internet-of-things devices, with 4.1 billion cellular IoT connections expected by 2024 — an annual growth rate of 27 percent.

Go deeper:

3. Internet growth seen lagging in Latin America

A new report from Cisco forecasts that internet traffic will rise sharply in the coming years in Asia, North America and Europe, while growing far slower in emerging markets, particularly Latin America.

Why it matters: Latin America's lagging internet infrastructure capacity could hamper the deployment of new digital technologies like streaming or self-driving cars, Axios' Sara Fischer reports.

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Data: Cisco; Chart: Andrew Witherspoon/Axios

Details: Latin America is behind its competitors in Europe, North America and Asia in both public Wi-Fi access points and home broadband access, per Cisco's latest Visual Networking Index (VNI).

Be smart: A weak regulatory framework for increasing connectivity is likely what's to blame for this gap, according to Cisco senior director of technology and spectrum policy Mary Brown.

"If I were a regulator in Latin America, I'd be looking at this data with some degree of concern. Because Latin America is not doing what the Middle East and Africa are doing, which is using regulatory frameworks to create more internet competition."
Mary Brown

The bottom line: Latin American countries are far behind in creating meaningful internet accessibility policies, especially in comparison to North America, which is so far ahead that it's reaching a point of saturation.

  • "U.S. policymakers have done a much better job of getting wired networks out to U.S. households relative to almost any other economy on the planet," Brown says.

Go deeper: Sara has more here.

4. Lawmakers to press FTC over Facebook

Lawmakers will push members of the Federal Trade Commission today to provide details of their investigation into whether Facebook’s handling of the Cambridge Analytica data leak violated a previous legal settlement with the agency.

Why it matters: Facebook is under intense political pressure around the world, with hearings on both sides of the Atlantic challenging its commitment to treating its users fairly.

Details: The 5 members of the Federal Trade Commission, including Chairman Joe Simons, will appear Tuesday afternoon before a subcommittee of the Senate Commerce Committee, Axios' David McCabe reports.

The panel’s top Democrat, Connecticut Sen. Richard Blumenthal, said on Twitter this weekend that the "FTC, Justice Department, SEC, & Senate Commerce Committee — all must investigate Facebook. Privacy commitments, deceptive & misleading practices, shareholder disclosure, antitrust — everything must be on the table.”

Across the Atlantic, Facebook’s Richard Allan today faced policymakers from around the world who are part of a British parliamentary effort to question the company. In the hearing, Allan admitted that the no-show by CEO Mark Zuckerberg was "not great."

The big picture: The social network has been gripped in recent weeks by allegations that its leadership failed in key ways to manage the many scandals that have struck the company over the last 2 years.

Go deeper: David has more here.

5. Take Note

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  • Some comments by the Supreme Court members Monday suggested the high court will allow a consumer class action lawsuit against Apple to proceed. (Reuters)
  • A rash of fraud led to a greater-than-expected $40 million operating loss for PayPal-owned Venmo in the first quarter of this year. (WSJ)
  • In a speech in Brussels, IBM's CEO argued in favor of new privacy legislation and said web platforms should be liable for the content they publish. (Axios)
  • United Technologies plans to split itself into three companies, with one focused on defense technology, another on its Otis elevator business and the third on its climate, control and security business. (Axios)
  • At its re:Invent conference, Amazon announced that AWS customers can now build cloud-based applications for their robots (GeekWire)
  • Amazon announced its own custom-designed Arm processor will soon be an option for some AWS workloads. (CNBC
  • Amazon also says it posted its highest sales on record this Black Friday and Cyber Monday. (Axios)
  • Discord, a chat service popular with both gamers and the far-right, is getting interest from a number of potential acquirers. (Recode)
  • The U.K. and the Netherlands have fined Uber £385,000 ($491,000) and €600,000 ($679,000) respectively over its failure to disclosure a breach of customer data in 2016. (Axios)
6. After you Login

"Gentlemen, you can't fight in here, this is the war room." — Dr. Strangelove

Ina Fried