European Commissioner for Internal Market Thierry Breton (Hans Lucas/Getty Images)

Weird Money

The EU has absurd guidelines for fining American tech giants

It threatened to fine Elon Musk's X 6% of its global revenue, continuing a trend of massive fines for US tech companies

7/16/24 2:38PM

Last week, Elon Musk’s X came under fire from the European Commission for violating its Digital Services Act, and the commission has threatened to fine the platform up to 6% of its global revenue. From Reuters:

The Commission said X's verified accounts which carry a blue checkmark do not correspond to industry practice and negatively affect users' ability to make free and informed decisions about the authenticity of the accounts they interact with.
After buying the platform then known as Twitter in 2022, Musk altered the use of the blue checkmark, which previously indicated that an account belonged to a public figure whose identity was verified but was changed to indicate it belonged to a paid subscriber.
The commission said X had also failed to comply with a DSA requirement to provide searchable and reliable information about advertisements in a library for easy access.
X was also charged with blocking researchers from accessing its public data. The company, which will have several months to respond to the charges, could face a fine of as much as 6% of its global turnover if found guilty of breaching the DSA.

This is the latest example of the European Union threatening to fine American tech companies a percentage of their global revenue for failing to comply with European mandates.

In March, the EU launched an anti-steering investigation into Apple and Alphabet, claiming that the tech giants have violated its Digital Markets Act by making it difficult for companies using their app stores to steer customers to cheaper subscription options. Fines for violating the DMA can be 10% of a company’s annual worldwide revenue, and 20% for repeat infringements.

Apple also just settled a long-standing mobile payments probe concerning the company not allowing third-party developers to access Apple’s payment technology to build alternative mobile wallets, and the iPhone maker risked a fine of 10% of its annual revenue if it failed to comply.

To put the size of these proposed fines into perspective, Apple’s total net sales in 2023 were $383.3 billion, so a 10% fine of its global revenue would be $38.3 billion. Apple’s entire operating income in Europe is only $36.1 billion. If it failed to comply with the EU’s regulations, Apple would be fined more than it makes in the region.

It seems insane to me that American companies, whose largest markets are North America, could be subject to global revenue fines by European regulators that are more expensive than the companies’ operating incomes on the continent.

Beyond the questionable nature of the fines (while I think the current “pay-to-play” blue check model is inferior, threatening to fine the company that literally invented the “blue checkmark” for not corresponding with an “industry practice” regarding blue checkmarks is absurd), how does the European Union have the right to enforce fines on California-based companies’ revenue generated in New York, Tokyo, and Rio? It makes zero sense.

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Rani Molla1s

Netflix creates new made-up metric for advertisers

It’s not quite WeWork’s community-adjusted EBITDA but it’s also not quite a real number: Netflix announced today that it has 190 million “monthly active viewers” for its lower-cost advertising tiers. The company came up with MAVs by measuring the number of subscribers who’ve watched “at least 1 minute of ads on Netflix per month” and multiplies that by what its research assumes is the number of people in that household.

The metric builds on Netflix’s previous attempt at measuring ad viewership, monthly active users, which is the number of profiles that have watched ads (94 million as of May). The MAV measurement, of course, is a lot bigger and bigger numbers are more attractive to advertisers, who are spending more and more on streaming platforms.

“After speaking to our partners, we know that what they want most is an accurate, clear, and transparent representation of who their ads are reaching,” Netflix President of Advertising Amy Reinhard explained in a press release. “Our move to viewers means we can give a more comprehensive count of how many people are actually on the couch, enjoying our can’t-miss series, films, games and live events with friends and family.”

Netflix last reported its long-followed and more easily understood paid membership numbers at the beginning of the year, when it crossed 300 million.

Netflix’s Third Season of Ads and a Look Ahead at What's Next - About Netflix

Netflix last reported its long-followed and more easily understood paid membership numbers at the beginning of the year, when it crossed 300 million.

Rani Molla1h

Ahead of Musk’s pay package vote, Tesla’s board says they can’t make him work there full time

Ahead of Tesla’s CEO compensation vote at its annual shareholder meeting tomorrow, The Wall Street Journal did a deep dive into how Elon Musk, who stands to gain $1 trillion if he stays at Tesla and hits a number of milestones, spends his time.

Like a similar piece from The New York Times in September, this one has a lot of fun details. Read it all, but here are some to tide you over:

Musk spent so much time at xAI this summer that he held meetings there with Tesla employees.
He personally oversaw the design of a sexy chatbot named Ani, who sports pigtails and skimpy clothes and for whom “employees were compelled to turn over their biometric data” to train.
The chatbot, which users can ask to “change into lingerie or fantasize about a romantic encounter with them,” has helped boost user numbers, which are still way lower than ChatGPT’s.
Executives and board members have told top investors in the past few weeks that they can’t make Musk work at Tesla full time. Board Chair Robyn Denholm explained that in his free time, Musk “likes to create companies, and they’re not necessarily Tesla companies.”

Tesla Is Obsessed With Musk’s Pay Package. Musk Is Obsessed With AI.

Like a similar piece from The New York Times in September, this one has a lot of fun details. Read it all, but here are some to tide you over:

Musk spent so much time at xAI this summer that he held meetings there with Tesla employees.
He personally oversaw the design of a sexy chatbot named Ani, who sports pigtails and skimpy clothes and for whom “employees were compelled to turn over their biometric data” to train.
The chatbot, which users can ask to “change into lingerie or fantasize about a romantic encounter with them,” has helped boost user numbers, which are still way lower than ChatGPT’s.
Executives and board members have told top investors in the past few weeks that they can’t make Musk work at Tesla full time. Board Chair Robyn Denholm explained that in his free time, Musk “likes to create companies, and they’re not necessarily Tesla companies.”

Jon Keegan3h

Motion Picture Association to Meta: Stop saying Instagram teen content is “PG-13”

In October, Meta announced that its updated Instagram Teen Accounts would by default limit content to the “PG-13” rating.

The Motion Picture Association, which created the film rating standard, was not happy about Meta’s use of the rating, and sent the company a cease and desist letter, according to a report from The Wall Street Journal.

The letter from MPA’s law firm reportedly said the organization worked for decades to earn the public’s trust in the rating system, and it does not want Meta’s AI-powered content moderation failures to blow back on its work:

“Any dissatisfaction with Meta’s automated classification will inevitably cause the public to question the integrity of the MPA’s rating system.”

Meta told the WSJ that it never claimed or implied the content on Instagram Teen Accounts would be certified by the MPA.

Exclusive | Motion Picture Trade Group Pans Instagram’s Use of ‘PG-13’ With Cease and Desist

“Any dissatisfaction with Meta’s automated classification will inevitably cause the public to question the integrity of the MPA’s rating system.”

Meta told the WSJ that it never claimed or implied the content on Instagram Teen Accounts would be certified by the MPA.

Rani Molla4h

Dan Ives expects “overwhelming shareholder approval” of Tesla CEO pay package

Wedbush Securities analyst Dan Ives, like prediction markets, thinks Tesla CEO Elon Musk’s $1 trillion pay package will receive “overwhelming shareholder approval” at the company’s annual shareholder meeting Thursday afternoon. The Tesla bull, like the Tesla board, has maintained that approval of the performance-based pay package is integral to keeping Musk at the helm of the company, which in turn is integral to the success of the company. Ives is also confident that investors will back the proposal allowing Tesla to invest in another of Musk’s companies, xAI.

“We expect shareholders to show overwhelming support tomorrow for Musk and the xAI stake further turning Tesla into an AI juggernaut with the autonomous and robotics future on the horizon,” Ives wrote in a note this morning.

The compensation package has received pushback, including from Tesla’s sixth-biggest institutional investor, Norway’s Norges Bank Investment Management, and from proxy adviser Institutional Shareholder Services.

Rani Molla6h

Tesla has a new EV, robotaxi, humanoid robot, AI chip, and flying car competitor

An electric vehicle maker is not content to merely manufacture cars, but has far greater ambitions that involve robotaxis, humanoid robots, and even flying cars.

Sound familiar? It’s not Tesla.

Rather, Nasdaq-listed Chinese EV maker XPeng announced that next year it will launch three robotaxis made with in-house AI chips and begin mass production of its humanoid robots. It’s also developing a flying car — a concept Tesla CEO Elon Musk has only hinted at.

Tesla has been facing increased competition from Chinese automakers like XPeng and BYD, though neither can sell in the US — and neither has a Musk. Still, XPeng Co-President Brian Gu seems to share some of his gumption. “We didn’t want to be a traditional automaker or EV maker from the very beginning,” Gu said. “The future of cars is not electrification, but intelligence.”

Chinese EV maker Xpeng to launch robotaxis, humanoid robots with self-developed AI chips

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