Biznews (#3-4 March-April 2021)

Biznews

China may impose record fine on Alibaba

The Chinese authorities may impose a record fine on Chinese Internet giant Alibaba Group Holding Ltd.

The expected fine will exceed the record one in Chinas corporate, and could be as high as
USD 975 million. China launched an antitrust investigation into the companys activities back in December 2020.

Moreover, the company will be required to sell assets not related to its core online commercial operations.

The Chinese governments intention is not to destroy Alibaba, but to distance it from its founder Jack Ma, and to make it cooperate more closely with the ruling Communist Party.

There is another fact in favor of maintaining the busi-
ness in the Middle Kingdom Alibaba is considered the pride of China, an example of technological innovation. Moreover, the company plays a key role in the Chinese economy.

For a company whose annual income is USD 20 billion, even a large fine is not a threat. However, there are threats that a fine is not the only tool at the disposal of the Chinese regulators for exerting pressure on Alibaba.

Israeli company might join development of the Black Sea shelf by Naftogaz

Naftogaz and Naphtha Israel Petroleum have signed a memorandum of understanding on a potential geological exploration of hydrocarbons in the Ukrainian sector of the Black Sea.

According to Otto Waterlander, CEO, Naftogaz, Naphtha is a management company and the owner of the unit investment trust of Isramco Negev 2, LP, which is involved in developing the Tamar field in cooperation with Chevron and Delek Drilling. Therefore, it has proven experience dealing with the necessary deepwater technologies and business relationships with leading operators in the development of marine deposits.

Morgan Stanley to allow wealthy clients to invest in Bitcoin funds

Morgan Stanley will be the first large bank in the United States to allow customers with assets of more than USD 2 million to invest in bitcoin funds. For investment firms, the requirements are set at
USD 5 million.

The investment bank informed its financial advisers that it would soon provide its clients with access to three funds that allow Bitcoin cryptocurrency holding.

In both cases, bank accounts must have been opened at least six months earlier. Now, therefore, Morgan Stanley will reduce the risks related to cryptocurrencies.

However, even for investors who meet these criteria, there may be another limitation. For example, Morgan Stanley said it would limit the sum of investment in Bitcoin to 2.5% of the total amount.

Ukrainian online educational startup Preply attracted USD 35 million in investment

The Preply
educational platform, which was founded by a Ukrainian team, attracted USD 35 million in investment under financing round B.

The round involved Owl Ventures and Full In Partners, as well as Point Nine Capital, Hoxton Ventures, EduCapital, All Iron, Diligent Capital, and Evli Growth Partners, which had previously invested in the company.

Also, the round involved business angels Niklas Ostberg, co-founder and CEO of Delivery Hero, Arthur Kosten, co-founder of Booking.com, David Helgason, co-founder of Unity Technologies, Przemyslaw Gacek, co-founder of Grupa Pracuj.

According to Kyrylo Bigay, Preplys CEO, the funds raised will be used to increase staff numbers as the company plans to double the staff in all regions where it operates.

Preply was founded in 2013 and this round total exceeded all the investments that the company had ever attracted.

Due to the popularity of online education during the ongoing pandemic, as well as the AI technologies used in training, the company has recently increased the number of active students and tutors. The number of lessons per student increased by 16%.

Preply is an online platform uniting more than 40,000 tutors who teach 50 languages to students in 180 countries.

The company offices in Kyiv and Barcelona have 250 employees.

Australia passed much discussed law obliging Facebook and Google to pay for news

Australia is the first country in the world to pass a law aimed at forcing Google and Facebook to pay for news content posted on their platforms.

The US tech giants vehemently opposed the law, and Facebook initially blocked all news content for Australians. However, the social network then agreed to reverse its decision after talks with the government, which were followed by changes in the law aimed at addressing some of their concerns.

The law is seen as a model one for similar regulations around the world. The document encourages tech giants and news organizations to enter into payment agreements with each other and obliges Facebook and Google to invest tens of millions of dollars into local digital content.

If negotiations are unsuccessful, an independent adjudicator may set the price to be paid to domestic media, and analysts claim that newsgroups will benefit.

The government argues this implies a more fair negotiation process between the parties, as it gives news organizations more leverage opportunities.

The Australian Competition and Consumer Commission (ACCC) the market regulatory authority says publishers have so far been unable to negotiate as they are heavily dependent on technology monopolies like Google and Facebook.

Publishers have been complaining for years that the two tech giants are simply devouring all the ad dollars that keep news agencies afloat. On their part, technology companies claim that they provide something of value by connecting the world.

Thus, lawmakers and regulatory authorities from Australia to the USA are looking at various models to oblige Facebook and Google to pay a fraction of the cost for newsgathering.

On the other hand, tech executives say state that news websites provide their content to search engines and social platforms for free. Facebook and Google claim they wish to cooperate with news agencies and enter into financial relations with them, at the same time both companies have objected to some features of the new Australian legislation.

As a result, other countries say they will follow Australias example. For example, Canada and some other countries have already said they wish to apply their own versions of the mentioned laws.

Zoom revealed annual financial results: almost USD 1 billion in income

The American video conferencing service Zoom earned net income of USD 995.7 million during the fiscal year which ended
31 January 2021, as compared to
USD 101.3 million in the previous year.

Total profit in 4Q was
USD 882.5 million, which is 369% more on the same period a year earlier.

Annual revenue increased by 326% to USD 2.651 billion, and income per share rose from 15 cents to USD 1.22.

According to Eric Yuan, Zoom CEO, despite the fact that the pandemic created difficult conditions for business, it made Zoom one of the most popular applications of the year.

He expects continuous growth in 2021: the company forecasts revenue of USD 3.76 billion USD 3.78 billion.

Shares in Zoom rose by almost 9.7% following publication of the financial results.

S&P expects economic growth at 4% in 2021

The rating agency S&P
Global Ratings
expects Ukraines GDP to grow by 4% in 2021 after the expected economic downturn of 4.2% in 2020, with a further slowdown to 3.5% in 2022.

A steady economic recovery is forecast for the second quarter. According to analysts, the inflow of funds transfers and government support, including an increase in retirement benefits, should support a recovery in consumption.

The key risk of the forecast is uncertainty about the vaccination campaign, which is slowly spreading in Ukraine and is reportedly not supported by half of the population.

We consider that sanctions imposed recently by the Biden administration against oligarch Igor Kolomoisky are the assertive resumption of Western support for President Zelenskys reforms, the statement said.

And despite difficulties in negotiations with the IMF due to problems in the anti-corruption sphere and judicial reform, analysts predict a tranche of USD 0.7 billion in 2021, given the high budget deficit in 2021.

This will result in additional loans from the World Bank and the European Union to the tune of about USD 1.5 billion. Despite this, S&P expects public debt to grow by USD 5-6 billion due to new external and internal borrowing.

The agency notes that investment in 2020 was only 5.3% of GDP as compared to 12.6% in 2019, and this year this figure is expected to be 9.4% of GDP.

According to the agencys estimates, the average annual inflation rate will accelerate from 2.7% in 2020 to 7.7% this year, and then slow down to 5.5% in 2022.

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