Silicon Valley Tech News Roundup – April 24th

Netflix shares drop 35% – 4/22

In a trading update published on Tuesday, Netflix announced its total number of subscribers fell by 200,000 in the first three months of 2022. The company also expects to lose additional two million subscribers by July.

Netflix experienced continuous quarterly growth since October 2011 and remains the world’s leading streaming service with more than 220 million subscribers. However, several factors contributed to the loss of subscribers. The rise in the subscription prices for key markets resulted in 600,000 fewer subscribers in North America. Netflix pulled from the Russian market at the beginning of the Russian invasion of Ukraine costing the company 700,000 subscribers. Netflix is facing increasing competition from other streaming services and has problems expanding due to password sharing.

The company’s revenue grew by $7.8bn (up 9.8% compared to the same period last year), and the profits fell 6% to $1.6bn. The news resulted in a 35% drop in the Netflix shares value on Wednesday and decreased the company’s market value by $50 billion.

CNN+ to shut down a month after the launch – 4/21

In a statement published on Thursday, Chris Licht (Chairman and CEO of CNN Worldwide) announced the network will shut down the streaming service CNN+ just a month after it launched. The service will end on April 30th.

Licht stated: “This is not a decision about quality; we appreciate all of the work, ambition and creativity that went into building CNN+, an organization with terrific talent and compelling programming. But our customers and CNN will be best served with a simpler streaming choice.”

Based on the reports, the service averaged less than 10,000 daily active viewers in the two weeks since the launch.

In a meeting on Thursday, Licht and JB Perrette (the Head of Global Streaming for Warner Bros. Discovery) addressed the employees, and many expressed anger about the decision. An internal memo distributed to employees outlined how the process will work. CNN+ employs around 600 people, who will receive official severance notice and salaries and benefits for 90 days. They can apply for other positions within CNN, CNN Digital, and Warner Bros. Discovery. After that period passes, CNN+ employees who decide to leave will receive a minimum of six-month severance.

EU agrees on Digital Services Act – 4/23

On Saturday, European Member states agreed on the new Digital Services Act after a 16-hour marathon session. It represents a landmark piece of legislation that targets illegal and harmful content and wants to hold Big Tech companies more accountable by enforcing new obligations.

Big Tech companies will have to implement new procedures to remove illegal and harmful content. If they fail to comply, companies face fines of up to 6% of their global annual revenue. Likewise, the legislation also regulates how companies target users with online ads. The new legislation prohibits targeting users based on race, gender, or religion. Companies also cannot target children with online ads.

Another piece of legislation deals with the algorithms. It includes a measure that forces the Big Tech to be more transparent about algorithms and how they are used to recommend content to users.

Ursula von der Leyen (the President of the European Commission) released a statement saying: “Today’s agreement on the Digital Services Act is historic, both in terms of speed and of substance… It will ensure that the online environment remains a safe space, safeguarding freedom of expression and opportunities for digital businesses. It gives practical effect to the principle that what is illegal offline, should be illegal online.”

Apple spends a record amount on lobbying to prevent Anti-trust legislation – 4/22

Based on the documents filed to Congress, Apple spent $2.5 million on lobbying in the first quarter of 2022. It is a 71% increase compared to the same period last year. Likewise, it is a 34% increase compared to the previous quarter.

Meta spent $5.4 million and Amazon $4 million during the same period. It is a 13% and 4% increase respectively compared to the same period last year.

Big Tech companies are facing several anti-trust bills that are currently under consideration. The Open Markets Act is of particular interest to Apple since it would prevent the company from granting themselves preferential treatment. In February, the Senate Judiciary Committee voted to advance the bill.

Last week, at the IAPP Global Privacy Summit, Tim Cook (the CEO of Apple) criticized the bill. He said: “Here in Washington and elsewhere, policymakers are taking steps in the name of competition that would force Apple to let apps on the iPhone circumvent the App Store through a process called sideloading… That means data-hungry companies would be able to avoid our privacy rules, and once again track our users against their will.” Cook used the same argument previously to claim if the government regulates Apple, the company cannot secure iPhones.

But the public is overwhelmingly in support of anti-trust legislation. Morning Consult conducted a poll and found that 67% of U.S. adults believe the benefits Big Tech companies provide do not outweigh the dangers posed by their power.