Technology Roundup – FCC Chairman Pai says he’ll revisit social-media law, Big Tech sentiment gets shaky

Published on: October 15, 2020
Author: Amy Liu

FCC Chairman Pai says he’ll revisit social-media law to clarify meaning (updated)

Federal Communications Commission Chairman Ajit Pai says his agency will move forward with a rulemaking to clarify Section 230 of the Communications Act – the liability shield that applies to social media/Internet companies.

That comes amid widespread controversy today over Facebook’s (FB -2.7%) and Twitter’s (TWTR -1.5%) approach to a political-football story on Hunter Biden.

And today’s debate was predated by President Trump’s longstanding pressure on his administration to revisit the legal protections.

“Members of all three branches of the federal government have expressed serious concerns about the prevailing interpretation of the immunity set forth in Section 230 of the Communications Act,” Pai says.

“Many advance an overly broad interpretation that in some cases shields social media companies from consumer protection laws in a way that has no basis in the text of Section 230,” he says. “The Commission’s general counsel has informed me that the FCC has the legal authority to interpret Section 230. Consistent with this advice, I intend to move forward with a rulemaking to clarify its meaning.”

“Social media companies have a First Amendment right to free speech,” he continues. “But they do not have a First Amendment right to a special immunity denied to other media outlets, such as newspapers and broadcasters.”

The coming debate will center on whether the social media platforms still differ from newspapers and broadcasters with regard to editorial control (previous debates in this area have focused on whether they are more like “common carriers” who simply transmit others’ messages).

Other related names: Snap (SNAP +1.3%); Alphabet (GOOG -1%, GOOGL -0.9%); Pinterest (PINS -1.6%).

Updated 3:12 p.m.: We’re in the midst of an election,” Democratic FCC Commissioner Geoffrey Starks says. “The President’s Executive Order on #Section230 was politically motivated and legally unsound. The FCC shouldn’t do the President’s bidding here.” The other Democratic commissioner, Jessica Rosenworcel, says “The FCC has no business being the president’s speech police.”

Big Tech sentiment gets shaky after three strong weeks: At the Open

Equities are facing increased pressure before the bell as concerns over the COVID spread and increased lockdown measures in Europe are resulting in broad-based selling.

This morning, the U.K. put London on a higher level of restrictions, while yesterday France has put a host of major cities, including Paris, under a curfew, with a rollback in new measures not expected for six weeks.

At times likes this, Wall Street has usually reverted to the new safety stocks: megacaps and stay-at-home plays. But the Fab 5 are among the worst performers premarket, putting their outsized pressure on the futures.

Apple (AAPL, -2%), Amazon (AMZN, -1.8%), Facebook (FB, -1.7%), Microsoft (MSFT, -1.3%) and Alphabet (GOOGL, -1.2%) are all lower.

But the Fab 5 may not be seeing the same flight to Big Tech trade this session simply because of the strong run they’ve had in the last three weeks, taking the broader market with them.

The S&P (SP500) is up nearly 8% since its recent low at Sept. 23.

Since that date, Apple is up 13%, Amazon is up more than 12%, Facebook is up more than 9%, Microsoft is up 10% and Alphabet is up nearly 11%.

Looking at sectors, Information Technology (XLK, -1.7%) is nearly the worst performer premarket, just behind Energy (XLE, -1.75%). Along with the two megacaps, Tech is also seeing weakness in high-flying chip names like Nvidia.

From a technical perspective, XLI looks set to drop below its 10-day simple moving average of $119.04 when trading begins. It hasn’t closed below that level since the end of September.

Sector Watch

The volatile Energy sector is getting hit again as crude futures tumble nearly 4% to below $40/barrel.

Crude’s sensitivity to demand and the latest spike in COVID cases will likely overpower any fundamental factors, but traders will still get the latest EIA inventory numbers this morning (a day late at 11 a.m. ET due to Columbus Day).

Last night API said its weekly measure of U.S. crude stockpiles fell by 5.4M, much larger than expectations for a draw of 2.8M barrels.

IBM deploys flexible and scalable disaster recovery site for KAZ Minerals

To help KAZ Minerals (OTCPK:KZMYF), a leading copper production company in Kazakhstan, IBM (NYSE:IBM) has built a disaster recovery site using IBM Cloud infrastructure to protect and maintain operations – even in case of a disaster.

The disaster recovery site built using IBM Cloud Bare Metal Servers and VMware Site Recovery Manager with vSphere Replication is designed to automate the processes of migrating, recovering, testing, re-protecting and failing-back virtual machine workloads and achieve target service-level objectives.

“With our asset base mainly consisting of large scale and low cost copper mines, we need to keep the operating overheads at bay and the IBM’s cloud-based disaster recovery solution does exactly that – by eliminating the need for additional capex while providing a clear price/usage pattern,” said Stanislav Dmitriyev, Group IT Director at KAZ Minerals.

Taiwan Semiconductor EPS beats by $0.09, beats on revenue

Taiwan Semiconductor (NYSE:TSM): Q3 GAAP EPS of $0.90 beats by $0.09.

Revenue of $12.14B (+29.1% Y/Y) beats by $210M.

“Our third quarter business benefitted from the strong demand for our advanced technologies and specialty technology solutions, driven by 5G smartphones, HPC and IoT-related applications,” said Wendell Huang, VP and Chief Financial Officer of TSMC. “Moving into fourth quarter 2020, we expect our sequential growth to be supported by strong demand for our industry-leading 5-nanometer technology, driven by 5G smartphone launches and HPC-related applications.”

Fastly downgraded after ‘surprising’ Q3 revenue guidance cut

Yesterday, Fastly (NYSE:FSLY) surprised investors by cutting its Q3 revenue outlook from $73.5M-75.5M to $70M-71M, citing lower than expected business from TikTok, the company’s largest single customer.

Baird downgrades Fastly from Outperform to Neutral and drops the price target from $105 to $85, calling the guidance “surprising given strong broader e-commerce trends.”

The firm says the “big question for us is what’s driving reduced revenue from customers beyond ByteDance” and what that means for Q4 and 2021 trends.

Baird sees the lack of visibility as a “significant near- to medium-term overhang.”

Stifel moves Fastly from Buy to Hold and trims the target from $98 to $77, saying the lower TikTok usage is concerning but it’s more worrying that “several other customers had lower than-expected usage,” suggesting competitive pressure rather than just macro uncertainties.

The firm doesn’t think the reduced usage for some Fastly customers indicates “broader slowing in demand for consumption-based infrastructure vendors.”

Fastly shares are down 29% pre-market to $87.50.