News You Can Use: 2019 kicks off with FAANG woes, shutdowns, and streaming wars
New year, new News You Can Use.
That’s right, your favorite recurring segment on the CallRail blog is back. In this biweekly column, we review the top 5 most important recent news stories in business, marketing, and technology, and explore what it all will mean for your business.
As we’re fond of saying around here, staying on top of the news isn’t just good civics, it’s good for business. Now, let’s get to the news!
1) In ongoing trade war, US steps up pressure on Chinese telecoms (Reuters)
This week, US lawmakers in Congress introduced legislation that would ban the sale of hardware and components to Chinese telecom firms, including major manufacturers like ZTE and Huawei. The move comes as the ongoing trade war between Washington and Beijing shows no sign of cooling, with the US ratcheting up pressure over China’s alleged theft of trade secrets.
The bills were introduced shortly before the publication of a Wall Street Journal report that federal prosecutors were investigating allegations that Huawei stole trade secrets from US businesses like T-Mobile. An indictment is reportedly forthcoming over Huawei’s alleged theft of T-Mobile’s ‘Tappy’ technology, which smartphones can use to mimic and predict the input of human fingers.
It’s the latest sign that the current US-China trade war — ongoing since mid-2018 — shows little sign of stopping any time soon. The US Department of Justice has already moved to indict several Chinese manufacturers over theft of trade secrets, and plans to brings a raft of cases against the country in the near-future.
For digital marketers and those in the tech industry, these recent developments mark an especially critical escalation in this ongoing trade war. With smartphone hardware and device manufacturers squarely in their crosshairs, Washington’s latest move could seriously disrupt the supply chain for the mobile market, bringing pain to service providers and advertisers alike.
2) Apple facing cutbacks as growth slows and iPhone sales slump (Bloomberg)
Apple plans to make budget cuts and pare back its hiring plans for 2019, following sluggish sales of the company’s flagship iPhone device over the 2018 holiday quarter. CEO Tim Cook announced the news in a letter to investors that also highlighted difficulties the company has been facing in the Chinese market.
Cook also noted that iPhone upgrades were not as strong as expected due to fewer carriers subsidizing phone purchases, higher per-device prices, and users taking advantage of cheaper options for replacing phone batteries.
Apple has seen a slowdown in growth and revenue since the second half of 2018, and plans to shift towards a service- and subscription-oriented business model in order to boost lagging profits. The company recently announced its intention to crack open the gates of its (in)famous ‘walled garden’ and make its services available on non-Apple hardware, like Samsung TVs and Amazon smart devices.
It’s bad news for Apple, but great news for marketers: With the company adopting a raft of consumer-friendly stances, you’ll now have more opportunities than ever to reach the parts of your audience that use Apple devices. (And the increased competition should result in slightly reduced ad rates to boot!)
3) US gov’t shutdown creates snags for Net Neutrality rollback efforts (TechCrunch)
Due to the ongoing US government shutdown, the FCC had requested a delay to the Supreme Court hearing of its case concerning the rollback of Net Neutrality. However, the court denied the FCC’s request and ordered that oral arguments for the case begin as planned on February 1 of this year.
The move marks another setback for Ajit Pai’s embattled FCC, which has so far failed to block challenges to the department’s rollback of the popular Net Neutrality law. The FCC is among the US government organizations affected by the ongoing shutdown, with most of its workers furloughed or on leave without pay.
With the case set to proceed, tech industry activists are rallying support to restore Net Neutrality, making this an issue that most business should continue to watch closely. As we’ve discussed before on the CallRail blog, the end of Net Neutrality could mean higher prices and slower speeds for marketers and service providers.
4) Netflix sharply hikes subscription costs amidst uncertainty over debt (Hollywood Reporter)
The streaming company Netflix announced it will make its biggest price-hike ever, raising the price of its most popular plan from $11 per month to $13. Netflix says that the price rise is necessary to offset increased programming and production costs, which have skyrocketed in recent years as the company released a wide array of original content.
The announcement arrived just days after NBCUniversal unveiled plans to launch a rival streaming service in 2020, which may result in popular programming like ‘The Office’ being pulled from Netflix. Media companies like Disney and Warner are also planning to launch their own direct-to-consumer streaming services in the near future.
Analysts are struggling to divine meaning from this move by Netflix — Business 101 usually cautions against consumer-unfriendly moves like big price hikes right before a major competitor enters your marketspace. Most commentators are pointing to the company’s gigantic long-term debt load, which now totals more than $8.3 billion — when viewed in that context, an 18 percent price increase starts to make a lot more sense.
5) Facebook toughens advertising rules ahead of major elections (Reuters)
2018 was pretty much nothing but bad news for Facebook, which suffered a string of embarrassing PR crises around account security and the handling of user data. There were also damaging revelations about the extent to which the platform had been manipulated and exploited to spread misinformation and violent hate speech, as in Myanmar.
The company is, no doubt, attempting to start 2019 off on the right foot with their announcement that they’re tightening their rules and regulations around political advertising on the platform. In addition to the tougher rules, Facebook has also pledged to deploy tools to curb election interference ahead of major votes in Nigeria, India, Ukraine, and the European Union.
Under these new rules, advertisers will only be able to run election ads on Facebook if they actually reside in-country. The company also plans to create an indexed, searchable online library for all political ads in each country, allowing for easy access by both election officials and the wider public.
It remains to be seen whether these efforts will make a serious change on Facebook, or whether this is a case of ‘too little, too late.’ Marketers should pay careful attention to how these coming elections are handled — the results will be critical in determining whether Facebook has worked through the dysfunction that made it an unreliable marketing partner.