Tok to me

MARKETS

• Well oil be damned: Oil prices are enjoying their best start to a year...ever. And base metals are cruising to their best Jan.-Feb. combo since 2008. How many base metals can you name?
• World news: Michael Cohen testifying on Capitol Hill; President Trump and North Korean leader Kim Jong-un meeting in Vietnam; two major rivals, India and Pakistan, clashing. It’s been a crazy past few days and you know markets around the globe are watching.

SOCIAL MEDIA

TikTok's Growing Pains

If we asked you what you thought of “TikTok” just a few years ago, you would have explained that no one but Kesha brushes their teeth with a bottle of Jack. But now, “TikTok” means one thing and one thing only—the social video app eating the internet.

TikTok, which lets users share videos of themselves lip-synching to popular music videos, just topped 1 billion downloads on iOS and Android, per data insights firm Sensor Tower.

• Around 663 million of those downloads happened in 2018.
• For a little context, Facebook saw an estimated 711 million new app downloads last year and Instagram 444 million.

The app spawning a new generation of #influencers is gaining on Zuck’s flagship platform. FYI, 15-year-old Facebook’s worth roughly $465 billion...compared to 7-year-old TikTok parent company ByteDance’s reported $75 billion valuation (FYI x2, ByteDance could be considering a huge IPO).

But (and as we say, there’s always a but) TikTok has joined Facebook in one very regrettable category: mismanagement of bad actors on its platform. The app has been labeled a “hunting ground” for abusers.

Which brings us to TikTok’s fat settlement with the FTC

The company forked over $5.7 million to settle allegations it illegally collected personal information from children. The FTC said that was the largest civil penalty it has ever obtained as part of a children’s privacy case.

The allegations? TikTok’s parent company knew many kids under the age of 13 were using the app (which was known as Musical.ly before ByteDance bought it in 2017). But it reportedly failed to seek out parental consent before collecting those underage kids’ data.

• A big chunk of TikTok’s more than 500 million global users are kids.

Bottom line: If you want to play with the big dogs, you better be ready to face the regulatory backlash. Which...is on its way—just two days ago, the FTC said it would launch a task force to monitor anti-competitive behavior by Big Tech.

RETAIL

Do Not Mess With the Geek Squad

After the quarter Best Buy just had, they’re probably feeling like they could take on a fried hard drive blindfolded.

In a holiday quarter earnings smash, Best Buy (+14.21%) offered a rosy profit forecast for the year alongside an estimate-topping $14.8 billion in quarterly revenue. Domestic same-store sales climbed 3%—up for the eighth-straight quarter. What happened?

Fortnite had Best Buy’s six. The battle royale game (with upwards of 200 million players) is free online, but wannabe Ninjas have cushioned Best Buy’s top line buying tons of gaming gear.

It’s all coming together for Best Buy. While other retailers have struggled against Amazon, Best Buy has managed not only to stay afloat, but to thrive.

• Instead of trying to beat Bezos at his own game, Best Buy has focused on customer services (like in-home tech support) to boost sales.
• Plus, it’s made moves to match prices and use stores to fulfill online orders.

That “improved experience” appears to be resonating.

#METOO

#MeToo Goes Back to Work

There wasn’t a precedent for those who accused 425+ well-known people of sexual misconduct in the first year of the #MeToo movement. Now, there’s no precedent for how and when those prominent people should return to work.

About 18 months after claims began, some of the accused are back at their 9-to-5s. Per Bloomberg, at least a dozen have been “hired, funded, and reinstated.”

• For example, Pixar co-founder John Lasseter (accused of unwanted touching and offensive gestures) is now head of an animation division at Skydance Media.

But Skydance’s assertion that his “mistakes have been recognized” wasn’t enough for some. Actress Emma Thompson pulled out of a Skydance film in protest of Lasseter’s hiring, and Paramount Pictures’s Mireille Soria told her team it didn’t have to work with Lasseter.

There’s also Wynn Resorts, which was just handed a $20 million fine (the largest in Nevada Gaming Commission history) for systematically ignoring employees’ sexual misconduct allegations against founder and ex-CEO Steve Wynn.

Bottom line: Businesses are now facing uncharted territory in the #MeToo movement—navigating how, exactly, the accused fit into the new reality.

TECH

10 Breakthrough Technologies of 2019

It’s curator inception: MIT Technology Review asked Bill Gates to curate a list of inventions that will improve the world this year, and we have the honor of curating a few inventions from that list for you.

1) Robot dexterity: Ask a robot to move an object on a predictable assembly line—no problem. Ask a robot to perform a complex motion such as doing your dishes—no chance.

But recent projects (like Dactyl from nonprofit OpenAI) are making progress with new methods of reinforcement learning.

2) Cow-free burgers: Maybe they don’t sound so appetizing, but neither do the egregious environmental impacts of industrialized meat production. Plant-based meat startups (including Beyond Meat and Impossible Foods) and legacy meat producers like Tyson are working on solutions.

3) Custom cancer vaccines: The treatment is intended to identify mutations unique to specific tumors and destroy only cancer cells. "If it works as hoped," contributor Adam Piore writes, the vaccine "could effectively shut down many types of cancers." It’s currently "on the cusp" of commercialization.

MEDIA

A Lot of Bones for Bones

Remember the show Bones? You know, the reason you decided to major in forensic anthropology? Well, an arbitrator just ruled its stars and producers had been defrauded by 21st Century Fox—and awarded them nearly $180 million in damages.

So what happened? A bunch of self-dealing by 21st Century Fox, the arbitrator said.

• Because the company owned the production studio as well as the network and streaming service the show aired on, it allegedly offered (itself) below-market licensing fees.
• The show’s talent accused 21st Century Fox of cheating them out of tens of millions.

21st Century Fox’s angry denial: "Fox will not allow this flagrant injustice, riddled with errors and gratuitous character attacks, to stand and will vigorously challenge the ruling in a court of law."

Zoom out: The Hollywood Reporter described the decision as “stunning.” It’s not only the second-largest award in TV industry history, but it serves as a warning to an entire media landscape bent on vertical integration.

WHAT ELSE IS BREWING

• PG&E (-3.78%) repeatedly delayed safety work at the high-voltage transmission line thought to be blamed for last year’s deadly Camp Fire in California, per the WSJ.
• Box, Booking Holdings, and a few other tech & internet companies watched shares fall after hours on poor earnings reports.
• Fed Chairman Jerome Powell said the central bank will unveil its plans to halt its balance sheet reduction “soon.”
• J.C. Penney (-0.80%) will end its clothing subscription service venture tomorrow.
• Southwest Airlines (+0.30%) *finally* earned FAA approval to fly to Hawaii. Aloha!

BREAKROOM

Greater Than, Less Than, or Equal to

1. Market cap of Waste Management compared to Activision Blizzard
2. Alphabet’s Q4 2018 revenue compared to Microsoft
3. How much the median worker makes at Starbucks compared to Wendy’s
4. Real GDP growth in the Dem. Rep. of the Congo compared to Peru
5. Number of tweets posted by Elon Musk compared to @realDonaldTrump

Breakroom Answers