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Justice Dept. Case Against Google Is Said to Focus on Search Dominance

WASHINGTON — The Department of Justice’s impending lawsuit against Google has narrowed to focus on the company’s power over internet search, a decision that could set off a cascade of separate lawsuits from states in ensuing weeks over the Silicon Valley giant’s dominance in other business segments.

In presentations to state attorneys general starting on Wednesday, the department is expected to outline its legal case centered on how Google uses its dominant search engine to harm rivals and consumers, said four people with knowledge of the plan, who spoke on the condition of anonymity because the details were confidential. Meeting with the state attorneys general is one of the final steps before the department files its suit against the company, they said.

The Justice Department’s action against Google is set to be narrower than what some states and several career lawyers in the department had envisioned. The department also investigated Google’s reach in ad technology and how the company prices and places ads across the internet. But in an effort to file a case by the end of September, the agency decided to pick the piece that was furthest along in legal theory and that it felt could best withstand a potential challenge in court.

The department has not written the final draft of its complaint against Google, and the document is expected to change over the next few days to reflect internal deliberations and input from constituents like the state attorneys general. Suing Google would fulfill a push by Attorney General William P. Barr to take action against a tech giant around the end of September, an effort that has taken on greater urgency ahead of the Nov. 3 election as President Trump fights for a second term.

The Justice Department and 48 states agreed to open their investigations into Google’s dominance a year ago as a bipartisan effort, but the last-minute jostling about what is included in the cases and how they should play out has exposed political fault lines. The department is seeking support of the search case and is set to file a lawsuit even without bipartisan support from state attorneys general, two people with knowledge of the plan said.

On Wednesday, Republican state attorneys general will also attend a meeting with Mr. Trump and Mr. Barr over concerns of censorship by social media companies, according to two people with knowledge of the plan.

If Mr. Barr brings the case by the end of this month, he will override lawyers who worked on the investigation and who said they needed more time to bring what they considered to be a strong lawsuit.

Mr. Trump has supported efforts to restrain the power of Amazon, Apple, Facebook and Google. Last summer, the Justice Department and the Federal Trade Commission opened antitrust investigations into the four tech companies, which combined are valued at more than $5 trillion. The investigations were buttressed by state investigations and a separate House inquiry into alleged monopoly abuses by the four giants.

The Justice Department and Google declined to comment.

The department’s complaint could come as early as next week and is expected to start a multipronged battle against Google, the search giant owned by Alphabet. While details are still being completed, the case on search is expected to focus on Google’s agreements with other companies like Apple, which set its search engine as the default option for users on iPhones and other devices. Those agreements give Google’s search engine an advantage over other rivals.

The complaint is expected to be followed by other antitrust actions against Google by the end of the year, according to people with knowledge of the plans by the department and states.

Image
Credit…Al Drago for The New York Times

Separately, an investigation by state attorneys general of Google’s behavior in digital advertising — the source of virtually all of Alphabet’s $34 billion in annual profit — is nearly complete. That investigation, led by Ken Paxton, the Republican attorney general of Texas, is expected to result in a suit accusing Google of using tactics that have undermined competition in the market for online advertising, a person briefed on the inquiry said.

That suit, the person said, should be ready to be filed soon, with the Justice Department potentially joining as a plaintiff but with Texas taking the lead. A spokeswoman for Mr. Paxton did not immediately respond to a request for comment.

There is also the potential for an additional, broader suit by the states, led by Phil Weiser, the Democratic attorney general of Colorado. It would include more wide-ranging allegations of Google using its dominance of the search market to favor its shopping and other services, the person said.

That investigation is still in progress, and a case, if filed, would come later than the other two, the person said. Mr. Weiser declined to comment.

Google controls about 90 percent of web searches globally, and rivals have complained that the company extended that power by making its search and browsing tools the defaults on many smartphones. Google also captures about one-third of every dollar spent on online advertising, and its ad tools are used to supply and auction ads that appear across the internet.

The contracts Google reaches with other tech companies to serve as a default search engine have already attracted attention internationally, in inquiries that may provide a preview into the argument by the Justice Department.

Britain’s Competition and Markets Authority said in a report this summer that the scale of Google’s payments to mobile phone makers like Apple for its search engine to be the default on those devices was “striking and demonstrates the value that Google places on these default positions.” The regulator also found that those agreements were “a barrier to expansion for other search engines.”

Cecilia Kang and Katie Benner reported from Washington, Steve Lohr from New York and Daisuke Wakabayashi from Oakland, Calif. David McCabe contributed reporting from Washington.

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Apple launches its online store in India

For the first time in more than 20 years since Apple began its operations in India, the iPhone-maker has started selling its products directly to consumers in the world’s second largest smartphone market.

Apple launched its online store in India on Wednesday, which in addition to offering nearly the entire line-up of its products, also brings a range of services for the first time to consumers in the country. India is the 38th market for Apple where it has launched its online store.

Consumers in India can now purchase AppleCare+, which extends warranty on products, and access the trade-in program to get a discount on new hardware purchases. The company said it will also offer customers support through chat or telephone, and let users consult its team of specialists before they make a purchase. The company is also letting customers order customized versions of iMac, MacBook Air, Mac Mini and other Mac computers — something it started offline through its authorized partners only in late May in India.

The company is also offering customers the ability to pay for their purchases in monthly instalments. TechCrunch reported in January that the company was planning to open its online store in India in the quarter that ends in September. The company plans to open its first physical retail store in the country next year, it has said.

Jayanth Kolla, chief analyst at consultancy firm Convergence Catalyst, argued that the launch of the Apple’s online store in India is a bigger deal for the company than consumers in the country.

Apple typically starts investing in marketing, brand building and other investments in a market only after it launches a store there, he told TechCrunch.

Apple does oversee billboards and ads of iPhones and other products that are displayed in India, but it’s the third-party partners that are running and bankrolling them, said Kolla. “Apple might provide some marketing dollars, but those efforts are always led by their partners,” he said.

In recent years, Apple has visibly grown more interested in India, one of the world’s fastest growing smartphones markets. The company’s contract manufacturers today locally assemble the latest generation of iPhone models and some accessories — an effort the company kickstarted two years ago.

The move has allowed Apple to lower prices of some iPhone models in India, where for years the company has passed custom duty charges to customers. The starting price of iPhone 11 Pro Max is $1,487 in India, compared to $1,099 in the U.S. (It started to assemble some iPhone 11 models in India only recently.) The AirPods Pro, which sells at $249 in the U.S., was made available in India at $341 at the time of launch.

Apple has also been trying to open its store in India for several years, but local regulations made it difficult for the company to expand in the country. But in recent quarters, India has eased many of its regulations. Last year, New Delhi eased sourcing norms for single-brand retailers, paving the way for companies like Apple to open online stores before they set up presence in the brick-and-mortar market.

This year, India also launched a $6.6 billion incentive program aimed at boosting the local smartphone manufacturing. South Korean giant Samsung, and Apple’s contract manufacturing partners Foxconn, Wistron and Pegatron among others have applied for the incentive program.

Unlike most foreign firms that offer their products and services for free in India or at some of the world’s cheapest prices, Apple has focused entirely on a small fraction of the population that can afford to pay big bucks, Kolla said. And that strategy has worked fine for the company, Kolla argued. Apple commands the segment of premium smartphones in India.

That’s not to say that Apple has not made some changes to its price strategy for India. The monthly cost of Apple Music is $1.35 in India, compared to $9.99 in the U.S. Its Apple One bundle, which includes Apple Music, TV+, Arcade, and iCloud, costs $2.65 a month in India.

Some Apple customers say that even as they prefer the iPhone-maker’s ecosystem of products over Android makers’ offerings, they wish Apple made more of its services available in the country. A range of Apple services including Apple News and Apple Pay are still not available in India.

The launch of Apple’s online store in India comes weeks before the company is expected to unveil the new-generation iPhone models and a month before the festival of Diwali, which sees hundreds of millions of Indians spend lavishly.

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China says it won’t approve TikTok sale, calls it ‘extortion’

The September 20 deadline for a purported TikTok sale has already passed, but the parties involved have yet to settle terms on the deal. ByteDance and TikTok’s bidders Oracle and Walmart presented conflicting messages on the future ownership of the app, confusing investors and users. Meanwhile, Beijing’s discontent with the TikTok sale is increasingly obvious.

China has no reason to approve the “dirty” and “unfair” deal that allows Oracle and Walmart to effectively take over TikTok based on “bullying and extortion,” slammed an editorial published Wednesday in China Daily, an official English-language newspaper of the Chinese Communist Party.

The editorial argued that TikTok’s success — a projected revenue of about a billion dollars by the end of 2020 — “has apparently made Washington feel uneasy” and prompted the U.S. to use “national security as the pretext to ban the short video sharing app.”

The official message might stir mixed feelings within ByteDance, which has along the way tried to prove its disassociation from the Chinese authority, a precondition for the companies’ products to operate freely in Western countries.

Beijing has already modified a set of export rules to complicate the potential TikTok deal, restricting the sale of certain AI-technologies to foreign companies. Both ByteDance and China’s state media have said the agreement won’t involve technological transfers.

The Trump Administration said it would ban downloads of TikTok, which boasts 100 million users in the country, if an acceptable deal was not reached. It also planned to shut down Tencent’s WeChat, a decision just got blocked by a district court in San Francisco.

TikTok has collected nearly 198 million App Store and Google Play installs in the U.S. while WeChat has been installed by nearly 22 million users in the U.S. since 2014, according to market research firm Sensor Tower. Unlike TikTok, which has a far-reaching user base in the U.S., WeChat is mainly used by Chinese-speaking communities or those with connections in China, where the messenger is the dominant chat app and most Western alternatives are blocked.

Right before the proposed September 20 deadline for the app bans, China’s Commerce Ministry called on the U.S. to “give up its bullying acts” towards the video app and messenger or face Beijing’s countermeasures to “safeguard the legitimate rights and interests of Chinese companies.”

After the U.S. announced a series of detrimental curbs on telecoms equipment giant Huawei last year, China vowed to publish an “unreliable entity list” targeting foreign companies and individuals that “do not comply with market rules” and “seriously damage the legitimate rights and interests of Chinese enterprises,” but it has yet to reveal the list.

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Singapore-based Syfe, a robo-advisor with a human touch, raises $18.6 million led by Valar Ventures

Dhruv Arora, the founder and CEO of Singapore-based investment platform Syfe

Syfe, a Singapore-based startup that wants to make investing more accessible in Asia, announced today that it has closed a SGD $25.2 million (USD $18.6 million) Series A led by Valar Ventures, a fintech-focused investment firm.

The round also included participation from Presight Capital and returning investor Unbound, which led Syfe’s seed funding last year.

Founded in 2017 by chief executive officer Dhruv Arora, Syfe launched in July 2019. Like “robo-advisors” Robinhood, Acorns and Stash, Syfe’s goal is to make investing more accessible. There is no minimum amount required to start investing and its all-inclusive pricing structure ranges from .4% to .65% per year.

Syfe serves customers based in 23 countries, but currently only actively markets it services in Singapore, where it is licensed under the Monetary Authority of Singapore. Part of its new funding will be used to expand into new Asian countries. The startup hasn’t disclosed its exact user numbers, but says the number of its customers and assets under management have increased tenfold since the beginning of the year, and almost half of its new clients were referred by existing users.

Other Valar Ventures portfolio companies include TransferWise, Xero and digital bank N26. In a statement about Syfe, founding partner Andrew McCormack said, “The potential of Asia as a region, with a fast-growing number of mass-affluent consumers aiming to grow their wealth, combined with the pedigree of the team and strong traction, makes Syfe a very compelling opportunity.”

Before starting Syfe, Arora was an investment banker at UBS Investment Bank in Hong Kong before serving as vice president of product and growth at Grofers, one of India’s largest online grocery delivery services. While at UBS, Arora worked with exchange-traded funds, or ETFs.

“I could see how a lot of institutions and some ultra-high-net worth individuals who are clients of the bank were using the product, and I thought it was a great tool for individuals, too,” Arora told TechCrunch. “But what I realized was that people are actually not very aware of how to use ETFs.”

In many Asian countries, people prefer to put their money away in bank accounts or invest in real estate. As interest rates and property prices stagnate, however, consumers are looking for other ways to invest. Syfe currently offers three investment products. The first is a global diversified portfolio with a mix of stocks, bonds and ETFs that is automatically managed according to each investor’s chosen risk level. The second is a REIT portfolio based on the Singapore Exchange’s iEdge S-REIT Leaders Index. Finally, Syfe’s Equity100 portfolio consists of ETFs that include stocks from more than 1,500 companies around the world.

Other Asia-focused “robo-advisor” services include Stashaway and Kristal.ai, and Grab Financial also recently announced a “micro-investment” product. Arora acknowledges that in the future, there may be more entrants to the space. Right now, however, Syfe’s main competitor is the mindset that banks are still the best way to save money, he added. Part of Syfe’s work is consumer education, because “it was culturally ingrained in a lot of us, myself included, to keep your money in the bank.”

Syfe differentiates with a team of financial advisors, including former employees of Goldman Sachs, Citibank and Morgan Stanley, who are on hand for user consultations. Arora said most Syfe users talk to advisors when they first join the platform, and about 20% of them continue using the service. Questions have included if people should use a credit card to invest, which Arora said advisors dissuade them from doing because of high interest rates.

“We definitely want to be a tech-first platform, but we understand there is a value, especially as you deal with some of the older audiences who are in their 50s and 60s, who are still adapting to these technologies,” he said. “They need to know that you know there is somebody out there to look after their products.”

While Syfe’s average user is aged between 30 to 45, one growing bracket is people in their 50s who are motivated to save for retirement, or want to create a supplement to their pension plan. Users typically start with an initial investment of about SGD $10,000 (about USD $7,340), and about four out of five users regularly top up that amount.

Some users have tried other investment products, like investment-linked insurance plans, but for many, Arora says Syfe is their first introduction to investing in stocks, bonds and ETFs.

“We’ve realized that a fair number of them are quite well-to-do professionals in their field, in their mid- to late 30s, who amassed a significant amount of wealth but never really had a chance to invest, or the right advice on how to invest,” said Arora. “I think this has been one of the biggest revelations for us and it made us realize we should have a human touch in our platform.”

The platform manages its products with a mix of an investment team and algorithms that help avoid human bias, said Arora. Syfe’s algorithms take into account growth versus value, the market cap of a stock, volatility and sector momentum. To balance risk, it also analyzes how individual assets correlate with other assets in the same portfolio.

Arora said Syfe is currently in advanced talks with regulators in several countries and expects to be in at least two new markets by the end of next year. It also plans to double the size of its team and create more consumer financial products.

During COVID-19, Arora said Syfe’s portfolios experienced significantly lower corrections than indexes like the S&P, so only a few users withdrew their money. In fact, many invested more.

“I feel people have been rethinking their finances and the future,” he said. “As banks cut interest rates across the world, including in Singapore, many of them have started looking at other options.”

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Elon Musk reveals the Tesla Model S ‘Plaid’ slated for late 2021

Tesla CEO Elon Musk revealed Tuesday the Model S Plaid, the newest variant to the company’s flagship sedan that boasts some eye-popping performance and range claims, including the ability to travel at least 520 miles on a single charge.

The Model S with this more powerful “Plaid” powertrain won’t be available until late 2021.  Tesla, however, has already opened up orders for the vehicle that starts just a skosh under $140,000.

In September 2019, Musk tweeted that “the only thing beyond Ludicrous is Plaid,” a teaser to a higher-performing vehicle and a nod to the movie “Spaceballs.” At the time, Musk said the new powertrain would go into production in about a year, which is right about now.

However, during the reveal, which was tucked in among the company’s so-called Battery Day, Musk announced that the Model S Plaid would go into production in late 2021. The Tesla website, which requires a $1,000 refundable deposit, says deliveries will begin in late 2021.

This new Plaid powertrain will have three motors, one more than the dual-motor system found in today’s Model S and X. The end result is a faster, longer range and more expensive version of the Model S. The powertrain produces 1,100 horsepower, achieves a top speed of 200 mph and can accelerate from 0 to 60 mph in under 2 seconds, Musk said.

Last year Musk had indicated the Plaid powertrain would also be available in the Model X and the upcoming Roadster. Musk made no mention of whether these models would receive the beefier powertrain.

Musk showed a clip of the Model S Plaid at the Laguna Sega raceway completing a lap in 1:30.3. That’s a six-second improvement over a test Tesla made on its Plaid powertrain and chassis prototype last year.

Image Credits: Screenshot/Tesla

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Tesla claims it can drive battery costs down even lower with new material science innovations

Amid a packed afternoon of announcements from Tesla around innovations the company is pursuing to slash the cost of electric vehicle production and energy storage through better battery design, the company said it’s made new advancements in material science for anodes and cathodes — key components of the lithium-ion batteries that are the heart of all of its products.

Tesla took an all-of-the-above approach to improving its battery from the manufacturing process that is still under development to the materials used in cathode and anode, the basic building blocks of any battery system.

The upshot: a reduction in cost of the cathode and anode materials, while boosting performance that on its own could extend the range of its batteries by 20%, Tesla said.

On the anode side, the company is looking at ways to integrate more silicon into its batteries by using metallurgical grade silicon. One of the most abundant materials on earth, most of the silicon used in microchips, batteries, and even solar panels has been highly processed using expensive treatments to make it work for different applications. With batteries, the issue is its propensity to degrade when it’s fully charged with lithium.

“With silicon, the cookie crumbles and gets gooey,” said Elon Musk during the company’s “battery day” presentation. That gooeyness means that the material loses its energy retention and storage capacity. Every time a battery charges, the degradation means shorter life cycles for the battery.

That’s why most companies use some sort of treatment on silicon to make the material hardier — or use as little silicon as possible in their batteries. “They enable some of the benefits of silicon, but they don’t enable all of it and they’re not scalable enough,” said Andrew Baglino, the company’s SVP of powertrain and energy engineering.

Instead of throwing the silicon out, Tesla said it is working with a new treatment method that can take cheap, metallurgical grade silicon and incorporate that into its new battery designs.

“What we’re proposing is a step-change in capability and a step-change in cost and to go to the raw metallurgical silicon itself,” said Baglino. “Design for it to expand [and] think of it in the electrode design … If you use simple silicon it is dramatically less than the silicon that is used in batteries today.

Baglino expects that by using new treatment methods, the company could drop the cost to $1.20 a kilowatt hour.

That involves starting with raw, metallurgical silicon that’s stabilized with a low-cost, elastic, ion-conducting polymer that’s integrated into the electrode with a highly elastic binder. 

That innovation alone could increase the range of Tesla vehicles by 20%. “When we take that anode cost production, we’re look at a 5% dollar-per-kilowatt reduction at the battery pack level,” Baglino said.

But the company doesn’t intend to stop at the anode. It’s also looking at using different material science innovations to increase the efficiency of the cathode too.

Both the anode and the cathode need to be able to maintain their structure while having charged particles bounce off of them. They’re basically storage containers for electricity even as that electricity is moving around — charging and discharging.

Baglino and Musk likened the materials to bookshelves, where the charged particles are the books and the shelves are the cathodes.

Batteries in this analogy are basically libraries, where the cathodes store the books and the anodes are the librarians moving the books (energy) out into the world where they can be read or used (I think I’ve taken that analogy about as far as it can go).

“You need a stable structure to contain the ions. You want a structure that hold its shape with ion. As you move the ion back and forth you lose cycle life and your battery capacity drops very quickly,” said Musk. 

Several different materials can be used as cathodes, but the cheapest, by far, is nickel. It also has the highest energy density. But most batteries use cobalt because it’s a more stable material.

Tesla said today that it is working on a way to stabilize nickel for use as a more robust storage material. That means the nickel can store the energy (books) without the risk of toppling or degrading.

“We can get a 15% reduction in cathode dollar per kilowatt hour,” said Baglino.

Musk said that Tesla wouldn’t be throwing out its existing chemistries, but that the addition of new nickel-based batteries would enable the company to pursue some of its other goals.

“We need to have a three-tiered approach to batteries,” Musk said. “Iron — medium range, nickel manganese as medium-plus, and high nickel for the Cybertruck and the Semi.”

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Tesla CEO Elon Musk touts new tech at ‘Battery Day,’ offers 2020 delivery guidance

SpaceX founder Elon Musk looks on at a post-launch news conference after the SpaceX Falcon 9 rocket, carrying the Crew Dragon spacecraft, lifted off on an uncrewed test flight to the International Space Station from the Kennedy Space Center in Cape Canaveral, Florida, March 2, 2019.

Mike Blake | Reuters

Tesla CEO Elon Musk offered new delivery predictions for 2020 at the company’s shareholder’s meeting on Tuesday, where the company also detailed a new battery design that it claims will make its cars cheaper to produce.

Musk said he expects vehicle deliveries to increase by 30 to 40 percent over last year, when the company reported deliveries of 367,500 vehicles. The new guidance from Musk implies deliveries of between 477,750 and 514,500 cars, a range that encompasses the company’s previously stated goal to deliver half a million cars in 2020.

“In 2019, we had 50% growth. And I think we’ll do really pretty well in 2020, probably somewhere between 30 to 40 percent growth, despite a lot of very difficult circumstances.”

Musk also said the battery and manufacturing advances Tesla is working on will soon lead to lower prices, which will be vital for getting more electric vehicles on the road. “About 3 years from now, we’re confident we can make a very compelling $25,000 electric vehicle that’s also fully autonomous,” he claimed. Musk is notorious, however, for being overly optimistic with his predictions.

In response to one shareholder’s follow-up question about lowering pricing, Musk acknowledged, “It’s not like Tesla’s profitability is crazy high. Our average profitability for the last four quarters was maybe 1%. It’s not like we’re minting money. Our valuation makes it seem like we are, but we’re not.”

He continued, “We do want to make the price as competitive as we can without losing money. If you keep losing money, you’ll die.”

The company’s shares dropped as much as 7% during the presentation, which took place after normal trading hours.

Battery improvements promised

During the “battery day” portion of the presentation, Tesla confirmed that it has designed and is producing its own battery cells at a facility in Fremont, as part of its quest to make its cars affordable to a mainstream buyer.

In general, the batteries of a Tesla — which contain thousands of cells — are the most expensive part of the car.

Tesla’s senior vice president of powertrain and energy engineering, Drew Baglino, described how the company’s new cells, dubbed “4680,” are larger and simpler to make than the “2470” cylindrical battery cells it purchases from Panasonic and other suppliers today. A Tesla battery pack would require fewer cells with the new shape and design.

Baglino said the larger cells, along with other manufacturing and design changes underway at Tesla, would eventually improve the range of its cars by more than 50%.

Near-term, Tesla says it aims to produce 10 gigawatt hours worth of the new battery cells at its pilot plant within a year. Musk noted that whatever cells it produces in Fremont would be supplemental to 100 gigawatt hours worth of cells it buys from suppliers, and said “To be clear, it will take about a year to reach the 10 gigawatt hour capacity.” 

With its new cells, Tesla is also seeking to reduce or completely avoid the use of some expensive materials used in lithium-ion battery production today, including cobalt. 

Associate Professor in Civil and Environmental Engineering at Carnegie Mellon University, Costa Samaras, said: “If Tesla can make a cheap, reliable battery with little or no cobalt, it will really improve the ability of EVs to scale up. Most cobalt is from the Democratic Republic of Congo and the mining has long generated human rights and child labor concerns.”

On Monday, Musk warned that the advances announced at battery day won’t find their way into mass production until 2021, sending the company’s stock down about 6% ahead of the event on Tuesday.

Due partly to Covid-19 health orders that limit the size of in-person gatherings, Tesla postponed its annual meeting from July this year to Sept. 22, 2020. The company previously held its shareholder meetings at the Computer History Museum in Mountain View, California but moved the event to the parking lot of its U.S. vehicle assembly plant in Fremont. Shareholders parked and sat in their cars at the meeting, which Musk characterized as a “drive-in.” They honked in lieu of applause.

Al Prescott, Tesla’s VP of legal, at the company’s socially distanced 2020 shareholders meeting, as attendees listen in their cars.

Those who wanted to attend had to obtain a winning lottery-style ticket (or other special access) to the meeting. Otherwise, shareholders could log into a website to ask questions to be answered during the live-streamed event.

Cannacord Genuity analyst Jed Dorsheimer wrote in a note to investors before the meeting:

“The big question will be on follow through. It’s one thing to announce all these breakthroughs, which might be great for momentum algorithms, but like most things TSLA, the devil will be in the details, which sadly will take some time to play out.”

Cannacord maintains a “Hold” rating and a price target of $442 on shares of Tesla currently.

Shares of the electric car maker are up more than 400% year-to-date.

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Jamie Dimon says he’s OK with higher taxes on the rich, but wealth tax is ‘almost impossible’

J.P. Morgan Chase CEO Jamie Dimon

Getty Images

SINGAPORE — J.P. Morgan Chase’s Chief Executive Jamie Dimon said he’s not against higher taxes on the rich, but a wealth tax is not the way to do it.

“A wealth tax is almost impossible to do,” he told CNBC-TV18 at the J.P. Morgan India summit on Tuesday when he was asked whether he’s in favor of such a proposal put forth by several Democrats.

“I’m not against having higher tax on the wealthy. But I think that you do that through their income as opposed to, you know, calculate wealth which becomes extremely complicated, legalistic, bureaucratic, regulatory, and people find a million ways around it. I would just tax income,” he said, suggesting that it’s harder to cheat on such a tax because income is “given.” 

The wealthy in the U.S. have started preparing for tax increases that are likely to come in the coming years as government deficits at both state and federal levels rose due to the Covid-19 pandemic. Governments have increased spending to manage the health and economic crises, which at the same time caused their revenue to fall.

A study published last year by the Organisation for Economic Co-operation and Development found that the U.S. lost more tax revenue than any other developed country in 2018, largely due to U.S. President Donald Trump’s tax cuts.

I remind people, the world, when you slow down the economy, you are hurting the disadvantaged more than anybody else.

Jamie Dimon

CEO, J.P. Morgan Chase

Democratic presidential nominee Joe Biden had said that he would roll back most of Trump’s multitrillion-dollar tax cuts — which some reports said benefited businesses and higher-income individuals the most.

But Dimon said the president’s tax policies are among some of the “very good things” that he’s done for the U.S. economy. He explained that the U.S. has traditionally been a “red tape society” with a bureaucracy that “slows down a lot of business.”

“And I remind people, the world, when you slow down the economy, you are hurting the disadvantaged more than anybody else,” he said.

Dimon also said that governments should put more thought into how taxes are structured so that the economy can grow.

“There’re taxes which will slow down growth, like taxes on capital formation, or labor; and there’re taxes which will not affect growth like taxes on, you know, well-to-do people like me,” said Dimon.

“And I just think there should be far more thought about taxation … if you want an active, healthy growing economy.”

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House passes spending bill to avoid government shutdown, sends it to Senate

Speaker of the House Nancy Pelosi (D-CA) speaks during her weekly news conference at the U.S. Capitol on August 6, 2020 in Washington, DC.

Stefani Reynolds | Getty Images

The House passed a bill Tuesday that would fund the government into December and avoid a shutdown before a Sept. 30 deadline. 

After clearing the House in an overwhelming vote, the legislation heads to the Republican-held Senate. Earlier Tuesday, House Speaker Nancy Pelosi said she reached a spending agreement with Treasury Secretary Steven Mnuchin and Republicans. 

Pelosi said the proposal would include $8 billion for nutrition assistance for schoolchildren and families. It renews Pandemic EBT, a program that provides food benefits while schools are closed set to expire at the end of September, for a full year. 

It also adds increased accountability for farm aid money to prevent it from gong to large oil companies, according to Pelosi. Senate Majority Leader Mitch McConnell had criticized a lack of farm assistance funds in a bill House Democrats released Monday. 

The bill would fund the government through Dec. 11, avoiding a potentially chaotic shutdown during the coronavirus pandemic and before the Nov. 3 election. Lawmakers then aim to hash out an agreement to fund the government through Sept. 30, 2021, the end of the next fiscal year. 

Lawmakers have said they want to get past the shutdown threat to focus on passing more coronavirus relief, which they have failed to do for months amid disagreements over the size of a fifth aid package. 

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Can Luxury Fashion Ever Regain Its Luster?

This is usually a busy month for the luxury industry. Not long after glossy fashion magazines publish their all-important September issues, thousands of retail buyers, journalists and clients embark on a tour of New York, London, Milan and Paris.

Rolling from city to city to attend fashion weeks, they decide the trends that will power a global luxury goods market worth hundreds of billions — in 2019, 281 billion euros, or $334 billion.

Not this year. The ground beneath the industry is heaving under the weight of a pandemic that has caused a plunge in sales, shocked global supply chains and pushed American household names such as Brooks Brothers and Lord & Taylor to bankruptcy.

Those shifts have prompted big questions about the business model of luxury fashion. Should fashion weeks be dismantled and rebuilt? Are cycles of new items every six months still the best approach, at a time when garment overproduction is under scrutiny, restricted lifestyles are commonplace and runway spectacles can feel out of step in a world with different priorities?

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Credit…Jeenah Moon for The New York Times

The second quarter of 2020 was the luxury fashion industry’s worst. According to estimates by Boston Consulting Group, global luxury sales are set to contract by 25 percent to 45 percent this year, with industry growth unlikely to return to pre-pandemic levels until at least 2023 or 2024. At a time when many companies are battling for survival, many designers feel they cannot afford to skip an opportunity to show new wares.

So as the latest fashion week season began in New York last week, blockbuster catwalk shows and big crowds were out, replaced with a handful of small-scale or online-only presentations. In Italy and France, some brands have said they plan to host larger physical events, despite having only a handful of international guests, a number of high-profile designer absences and rising infection rates in Europe.

“Showing is not essential. However, sometimes you do need to show what you’re actually creating,” Antoine Arnault, head of communications at LVMH Moët Hennessy Louis Vuitton, told The New York Times on Sept. 9. “There’s a whole economy around these shows. That should not be underestimated,” he added, alluding to the thousands of freelance makeup artists, seamstresses, drivers, security guards and photographers who rely on fashion weeks for a sizable part of their incomes.

Large groups like LVMH, which owns brands including Dior, Louis Vuitton and Fendi, and its rival conglomerate Kering, which operates the likes of Gucci, Saint Laurent and Balenciaga, have been more insulated from the bitter pandemic headwinds than most smaller stand-alone businesses. (LVMH, though, has entered a court battle in an effort to extricate itself from a $16 billion commitment to buy the jeweler Tiffany & Company.)

In its latest quarterly earnings report, LVMH said it had seen a strong uptick in sales in the summer from Asian countries like mainland China, Japan and South Korea, where recent virus rates have stayed low. But sales for its fashion and leather goods unit fell by 37 percent, as international tourism ground to a halt and footfall into global stores was slow to recover. The impact has been even worse for brands in turnaround efforts like Salvatore Ferragamo and Burberry, debt-ridden department stores like Neiman Marcus, and the cash-poor independent brands with large exposure to those types of retailers (many of whom scrambled to cancel and return orders). Most companies are now struggling with a large glut of unsold inventory from the spring and summer collections this year.

“The luxury sector currently has more than double the amount of stock on its hands than it usually would at this time of year, much of which is now unlikely to be sold at full price,” said Stefano Todescan, managing director of Boston Consulting Group. Many brands have been using brick-and-mortar discount outlets or online marketplaces like the Dutch start-up Otrium to try to shift the designer clothes piling up in warehouses.

Mr. Todescan said the brands that fared better this year were generally those that relied on data to gain a granular understanding of where their stock was. This allowed them to move supply from the West to better performing regions like the Asian markets, where huge crowds unleashing pent-up demand for luxury goods inspired the phrase “revenge shopping.”

“The pandemic has further polarized luxury’s winners and losers and accelerated trends that were already underway before the crisis began,” Mr. Todescan added. “Brands like Hermes and Chanel, who never discount, are less trend-led and with product ranges that sell through multiple seasons, have emerged in particularly good shape.”

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Credit…Landon Nordeman for The New York Times

China, which was already the fastest-growing luxury market before the pandemic, will become even more vital to brands’ success as North American and European markets remain unpredictable. And everywhere, offline retail has had to go online — and fast — as consumers turned rapidly to digital shopping.

Amazon, whose customers have ordered over one billion fashion items via its mobile app in the last 12 months, has long looked for a way to become partners with luxury names, which had in the past largely rebuffed its advances. Last week, Amazon launched its mobile-only Luxury Stores with one brand: Oscar de la Renta. It said that more labels would be announced in the weeks to come.

Farfetch, the digital marketplace that allows upmarket vendors to sell their goods online, reported last month that it had seen a 60 percent surge in traffic for the second quarter compared with the same period last year — and 500,000 new customers.

“E-commerce represented just 12 percent of luxury sales in 2019. Since then there has obviously been a complete paradigm shift,” José Neves, Farfetch’s chief executive, said. Luxury used to be heavily associated with an in-store experience, he added. But for many consumers in 2020, convenience and safety are now front of mind, prompting many brands to fast-track their digital strategies. “For those who aren’t able to do that, it is going to be a struggle,” Mr. Neves said.

As the industry starts to offer up new looks, TikTok is hosting its own online fashion month for a potential audience of roughly 800 million users, with shows by Saint Laurent and JW Anderson. Expect to see smaller collections with more timeless pieces that can have extended shelf lives if necessary. Demand for evening wear and suits has plummeted now that no one has a reason to dress up, though many brands say they expect people to start buying high-priced items that aren’t sweatpants, despite a severe recession and ongoing layoffs.

With no fixed timeline for a Covid-19 vaccine, it will be hard to predict what customers will want six months from now. But for luxury fashion, the shows must go on.