Google has to pay a penalty of $US170 million for collecting statistics of children below 13 years, who are engaged in watching toy videos and television shows on You Tube. Regulators accused Google of viewing the history of kid-specific channels, often viewed by the younger audience. The regulatory body also claimed that the company was targeting the group on account of advertising revenues worth a million dollars and hence violated the federal children’s privacy laws.
In reply to the above allegations, Google agreed to pay the fine and said that it will focus on resolving the charges imposed by the Federal Trade Commission (FTC) and the attorney general of New York. The company was advised to make alterations in its business practices of collecting data on kids’ specific content. Again, the company has been instructed to put a tag on the contents created specifically for kids by the video creators.
FTC chairman Joe Simons expressed his views that Google is targeting children to earn corporate profits. However, Google refused to accept the allegations and replied that they were not directly targeting the kids.
Earlier, during April 2019, the company was accused by more than 20 consumers and privacy groups of violating children’s interests according to the Children's Online Privacy Protection Act (COPPA).
As part of the sanctions by the government officials, they pointed out several discussions between Google’s marketing team and makers of Barbie brands, Mattle and described You Tube as the fastest reaching kids channel with the farthest reach. The chief executive of You Tube conveyed that they it would protect the interests of the kids and families and will abide by the rules and regulations prevailing across the world.
The above fine by FTC highlighted the efforts of lawmakers and the consequences of breaking it. Earlier, during July 2019, Facebook was charged a fine of US$ 5 billion for transferring personal information of the clients to other parties.
Stocks of Uber and Lyft marked record low on Thursday’s trade as investors feared that proposed California law that could go against the company’s business model. As per an assembly Bill 5, the California government could change the status of drivers from independent contractors to employees. The report came in at Thursday (AEST).
Lawmakers viewed that such changes would provide the drivers with minimum protection to their wages and paid leaves. The advocates also believe that the minimum protections for the drivers were much needed as there is no such guaranteed of minimum wage rate for drivers. A base level rate has been not been fixed with reference to which drivers can receive a guaranteed minimum payout on a per-day basis.
A technology analyst at DA Davidson Research said that the imposition of the above regulation could affect the performance of companies like Uber and Lyft. As per Tom White, the analyst, the law is getting tighter, which might result in some ambiguities. On Friday, the shares of Lyft closed at 4.09% down at $US44.50. The market capitalization of Lyft stood at $US 13.03 billion.
The shares of Uber fell 2% to $US 31.86 on Friday last and was down by 31.3% from its highest price on 28 June 2019 of $US 46.38. Currently, the market capitalization of the company stood at $US54.16 billion. The company, during the time of listing, was estimated to surpass a market capitalization of $US 100 billion.
Due to changing regulations, the loss-making companies are estimated to max out their taxes and other expenses. Both the companies proposed to pay $US21 per hour to their respective drivers including, all the benefits and paid leaves, in consultation with California Legislators. However, as per the indications from the California Senate, their votes can go against the above proposal. The Senate is expected to approve the above bill in coming days with the final approval from the state governor.
Representatives from both the companies opined that they will challenge the law in court, if the above amendment gets passed by the senate. During last week both the companies collaborated with upcoming food delivery service Door Dash to support a ballot measure in FY20 worth US$ 90 million. The above strategy could save them from reclassifications and lay out options.
According to one of the drivers, the amendment is likely to go against the drivers and will hurt the interests of the drivers only. Again, as per general belief, the above amendment would give higher benefits to the drivers, but it tends to destroy shareholders’ interests as both the companies are publicly traded.
The minimum commission garnered by Uber is 25% on the total fare. however, a minimum wage rate would be beneficial for the drivers who underperforms. Thus, there would be tough competition during the hiring of Uber drivers. The above amendment would result of higher service charge paid by the consumers. It would hinder the overall ecosystem of cab drivers; it will lower drivers on the road because the company would be forced to pay a minimum wage irrespective of whether a driver is on a booked trip or not and create difficulty in scheduling shifts.
As per Uber CEO Khosrowshahi’s commentary, the company is targeting 30% revenue growth during the second half of the current financial year. He also highlighted that the total expense would rise, but in terms of revenues, the total expenses have come down. During the last quarter, the company made a loss of $5.2 billion due to higher stock-based compensation. The company delivered higher losses than the previous corresponding quarter. The CEO also highlighted that the fares across New York city had been increased due to stricter regulations from the city’s Taxi and Limousine Commission. The management further believes that CY19 would be the top investment year for the company while the company aims at break-even during FY20-21.
If the stock-based compensations were kept aside, the company’s losses were more than 30% wider than the previous year. Stock-based compensation is a common phenomenon in Silicon valley.
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