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2016-08-31

EU Nixes Apple's $AAPL $14.5B+ Tax Avoidance Scheme in Ireland (video)

EU action over Apple tax explained:

The European Commission has hit Apple with a record-breaking tax penalty of up to €13bn after finding the US tech group enjoyed a quarter of a century of illegal state support from Ireland that distorted competition in Europe. FT.com explains the dispute.

Apple's $14.5B+ Tax Avoidance Scheme in Ireland (EU graphic)

European Commission - State aid: Ireland gave illegal tax benefits to Apple worth up to €13 billion | europa.eu 30 August 2016:  "The European Commission has concluded that Ireland granted undue tax benefits of up to €13 billion to Apple. This is illegal under EU state aid rules, because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid. Commissioner Margrethe Vestager, in charge of competition policy, said: "Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014."..."

Vestager said under the tax avoidance scheme Apple was allowed to allocate almost all sales profits to a head office that “only existed on paper.” She said this head office “has no employees, it has no premises, and it has no real activities ... [and] was subject to no tax in Ireland or elsewhere.”

Customer Letter - Apple (IE) | apple.com: "... The Commission’s move is unprecedented and it has serious, wide-reaching implications. It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been. This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe. Ireland has said they plan to appeal the Commission’s ruling and Apple will do the same. We are confident that the Commission’s order will be reversed ..."--Tim Cook, Apple Inc.

See also:

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2016-08-30

China & Its Internet Are Different, Why U.S. Companies Can't Compete

How China Is Changing Your Internet | The New York Times:

The power of WeChat: China's "SuperApp" owned by China's largest tech company, Tencent, dominates the internet landscape in China. In China, a sheltered internet has given rise to this new breed of app, and American companies are taking notice. What was once known as the land of cheap rip-offs may now offer a glimpse at the future. Video above published August 9, 2016. Read the full story here (excerpt below)--Chinese tech firms forced to choose their market--China or the World:

"... not easy to tell Musical.ly is Chinese--and that’s deliberate. To find success in America, its parent company has ignored China, its home market and a country with 700 million internet users. The reason is simple, says Alex Zhu, co-founder of Shanghai-based Musical.ly: China’s internet is fundamentally different from the one used in much of the rest of the world. “It’s still very difficult to get into China,” said Mr. Zhu ...“It’s a closed environment, and you have to be quite different to compete in that market.” Two decades after Beijing began walling off its homegrown internet from the rest of the planet, the digital world has split between China and everybody else. That has prevented American technology companies like Facebook and Uber, which recently agreed to sell its China operations, from independently being able to tap the Chinese market. For China’s web companies, the divide may have even more significant implications ... Alibaba, Baidu and Tencent have grown to be some of the world’s largest internet companies, but they rely almost entirely on domestic businesses. Their ventures abroad have been mostly desultory, and prognostications that they will challenge American giants internationally have not materialized."--NYTimes.com.

Principal domains of companies noted:
  • Alibaba: alibaba.com; alibabagroup.com
  • Baidu: baidu.com
  • Tencent: tencent.com
  • WeChat: WeChat.com
Because social media services such as Facebook, Twitter, Instagram and Snapchat are inaccessible in China, there exists a whole Chinese ecosystem of social networking and messaging platforms that are immensely popular there, but hardly known anywhere else in the world. Platforms such as QQ, WeChat and Qzone have hundreds of millions of users and, just like Facebook owns Instagram and WhatsApp, they’re all owned by the same company. Their parent company Tencent recently became China’s largest tech company, after surpassing its rival Alibaba in terms of market capitalization. The chart below compares Tencent and Facebook in terms of financial and operating metrics. From an investor's point of view, both companies have been doing great over the past 12 months: Tencent's stock price soared 45 percent since August 2015, Facebook's is up by 30 percent.

Infographic: How China's Biggest Tech Company Compares to Facebook | Statista
source: Statista

Uber Joins Other U.S. Firms Stymied by China:

Uber Technologies is the latest U.S. internet-based company to fail to achieve its ambition to dominate China, the world's largest ride-hailing market. Published by WSJ.com on August 2, 2016.

Here's Why American Tech Companies Keep Failing in China:

Uber found out what many other U.S. tech companies realized long ago: China is an alluring trap. Most American web companies including Google, Facebook and Amazon are either banned from China or have flopped there. And their odds of success are only getting slimmer. Bloomberg Gadfly's Shira Ovide explains why it might be time for U.S. web companies to permanently give up on China. Published by Bloomberg.com on August 10, 2016.

See also:
  • The Humbling of American Tech Giants in China | Bloomberg.com: "All the kowtowing and meeting the leadership maybe won’t matter so much if Facebook won’t agree to allow some level of censorship, or allow the Chinese government access to data on the site, in exchange for market access," Kapron said. LinkedIn Corp. operates in China, but only by agreeing to abide by content restrictions. "Otherwise, he’s just hitting his head against the wall."
  • China ‘whisperers’ who get the big deals done in Silicon Valley | WashingtonPost.com: "Negotiating a joint venture is one of trickiest aspects of working with Chinese investors. In the last three years, Chinese regulations and practices have made it more complicated for U.S. companies to do business there, Chang says. For that reason, startups usually enter the market in the form of a partnership. Today, these partnerships are often based in the Cayman Islands because China doesn’t allow foreign ownership of companies. In negotiations, for example, Chinese partners often insist that the data of Chinese citizens cannot be stored on U.S. servers and that legal disputes must be settled in Chinese or Hong Kong courts. Previously, arbitration in Santa Clara County was a sticking point for U.S. companies; now that battle has largely been lost, she says."
  • Xi’s China: Smothering dissent - FT.com

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2016-08-29

More Than Half The World’s Population Still Not Using The Internet

Map showing More Than Half The World’s Population Still Not Using The Internet
More Than Half The World’s Population Still Not Using The Internet (source: itu.int)
Note: The map above is based on 2016 estimates. The base map for this infographic is based on the UN map database of the United Nation Cartographic Section. (Source: ITU.int)

 ITU, the UN specialized agency for information and communication technology (ICT), says 3.9 billion people remain cut-off from the vast resources available on the internet, despite falling prices for ICT services.

Digital divide means more than half the world is still offline: By the end of 2016, more than half of the world’s population – 3.9 billion people – will not yet be using the internet. While almost one billion households in the world now have Internet access (of which 230 million are in China, 60 million in India and 20 million in the world’s 48 Least Developed Countries), figures for household access reveal the extent of the digital divide, with 84% of households connected in Europe, compared with 15.4% in the African region.

ICT Facts & Figures 2016 shows that developing countries now account for the vast majority of internet users, with 2.5 billion users compared with one billion in developed countries. But Internet penetration rates tell a different story, with 81% in developed countries, compared with 40% in developing countries and 15% in the Least Developed Countries.
“Access to information and communication technologies, particularly broadband, has the potential to serve as a major accelerator of the 2030 Agenda for Sustainable Development. Global interconnectedness is rapidly expanding, however more needs to be done to bridge the digital divide and bring the more than half of the global population not using the Internet into the digital economy.”--ITU Secretary-General Houlin Zhao
ITU’s ICT Facts & Figures also reveals that mobile phone coverage is now near-ubiquitous, with an estimated 95% of the global population – or some seven billion people – living in an area covered by a basic 2G mobile-cellular network. Advanced mobile-broadband networks (LTE) have spread quickly over the last three years and reach almost four billion people today – corresponding to 53% of the global population. But while the number of mobile-broadband subscriptions continues to grow at double digit rates in developing countries to reach a penetration rate of close to 41%, mobile-broadband penetration growth has slowed overall. Globally, the total number of mobile-broadband subscriptions is expected to reach 3.6 billion by end 2016, compared with 3.2 billion at end 2015.

Fixed broadband growth strongest in developed countries. Growth in China is driving fixed-broadband in Asia and the Pacific, where penetration is expected to surpass 10% by end of 2016. Mobile-broadband services have now become more affordable than fixed-broadband services, with the average price for a basic fixed-broadband plan more than twice as high as the average price of a comparable mobile-broadband plan. By the end of 2015, 83 developing countries had achieved the Broadband Commission’s affordability target.

Internet bandwidth: By early 2016, international Internet bandwidth had reached 185,000 gigabits per second, up from a low of 30,000 gigabits in 2008. However, bandwidth is unequally distributed globally, and lack of bandwidth remains a major bottleneck to improved Internet connectivity in many developing and Least Developed Countries.

Read the full ICT Facts & Figures 2016 report. See also: ICT Facts and Figures 2016 | itu.int.

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2016-08-28

News Review: Fear Campaigns; Dot Registry Challenges ICANN Monopoly

Domain Mondo's review and look ahead [pdf], starting first with the macro view, the big picture, after cutting through all the noise, which is also this week's first feature:

Feature • Fear Campaigns: EU referendum vote for Brexit 'would spark year-long recession' | BBC.com May 24, 2016. Sound familiar? Citigroup: A Trump Victory in November Could Cause a Global Recession | Bloomberg.com August 25, 2016.

 Reality check: While no one knows who will win the U.S. Presidential election (as of August 27, the USC Dornsife/Los Angeles Times "Daybreak" tracking poll shows Clinton and Trump virtually tied 44.6%-43.3%), any "expert" opinion that a Trump victory, or a Clinton victory, will cause a "global recession" should be treated as conjecture, hyperbole, bias, or just plain old hysterics. Legendary investor Warren Buffett, who endorsed Hillary Clinton, doesn't think that: Warren Buffett on Trump Presidency: We'll Be Fine | Fortune.com: "Predicted the country, the economy and his company would continue to grow."  A Trump victory would most likely lead to a surge in economic prosperity according to billionaire bond investor Jeffrey Gundlach, who has not endorsed Trump nor said whether he would vote for him, but has predicted Trump will win:
Not only will Donald Trump win the November election, but his victory will propel U.S. economic growth higher. Trump will fuel a debt-driven increase in government spending, which will push GDP growth to levels reminiscent of the Ronald Reagan era. Trump will move ahead in the polls, despite criticism from the media, and as Trump’s inauguration approaches, the market will rally “for reasons people won’t understand." --Gundlach: Trump Will Be an Economic Success | AdvisorPerspectives.com
Even staunch Clinton supporter, and Nobel Prize-winning economist, Paul Krugman, agrees that Trump Is Right on Economics | Paul Krugman Op-Ed in The New York Times. And in fairness to the Citigroup "expert" source of the Bloomberg story first cited above, the headline is misleading. If you read the story all the way to the end, the source states that there could be a boost to the economy under either a Trump or Clinton administration.

None of this is meant to suggest voting for either Trump or Clinton (frankly, at this point I have grave reservations about both candidates), but I am pointing out that "fear" is a human emotion exploited by politicians, media, pundits, and hucksters (e.g., FUD, FOMO). Caveat Emptor!

And what about that Brexit Project Fear campaign waged, unsuccessfully, by the Remain camp? Well, besides Remain leaders David Cameron and George Osborne losing their jobs as Prime Minister and Chancellor of the Exchequer, respectively, the UK economy has not collapsed into recession either. Pro-Remain establishment media, e.g., the Financial Times (FT.com), are now beginning to eat crow:


Brexit apocalypse? No. The FT.com's economics reporter Emily Cadman and Lex writer Giles Wilkes take the temperature of the post-Brexit referendum economy. Video published August 25, 2016. See also: Pro-Remain billionaire Sir Martin Sorrell changes his tune on Brexit and calls on Theresa May to get us out of the EU as soon as possible | TheSun.co.uk.

Chart: FTSE 100 UP 7.89% since Brexit Vote on June 23rd
FTSE 100 UP 7.89% since Brexit Vote on June 23rd
The London Stock Exchange benchmark indexes: FTSE 100 up +7.89% since Brexit vote (see chart above) and FTSE 250  up +3.45% since the Brexit vote on June 23rd. Meanwhile the German DAX is ahead only 3.22%, and the French CAC40 (-0.54%) is still in negative territory, since June 23rd.

No one can "know" what the long-term impact of Brexit will be, on either the UK or EU, until the details are "known" of a post-Brexit UK-EU trade agreement, as well as other UK non-EU trade initiatives. Projections based on assumptions are speculative at best.  All of this just reaffirms what I cited three weeks ago: "There are no experts on the future. Explaining the present and the past requires expertise: “it’s your carburetor/prostate”. In forecasting the future, experts are generally no better than everybody else. They might be worse."--rationaloptimist.com. See also Barry Ritholtz on the folly of forecasts (and see this, this and this), "... it is worth reminding ourselves just how terrible humans are at predicting ... what will happen in markets and/or the economy."
____________

Feature • Dot Registry Challenges ICANN Monopoly

On Friday, new gTLD applicant Dot Registry LLC, filed a motion in the Ninth Circuit Court of Appeals (No. 16-55693, No. 16-55694) for leave to file an Amicus Curiae ("friend of the Court") brief in support of Plaintiff-Appellee DotConnectAfrica Trust (DCA Trust). The motion and tendered brief can be reviewed in full here and here (pdf) (highlighting added). Dot Registry is supporting DCA Trust's argument that ICANN's "release" from liability required of all new gTLD applicants is unenforceable under California Civil Code Sec. 1688 and is also unconscionable. In its tendered brief, Dot Registry refers to ICANN as a monopolist and repeatedly refers to ICANN's "monopoly" in the domain name space:
"ICANN exercises monopoly power over a critical channel of commerce. It may not lawfully use that power to exempt its decisions from any binding review by a court or arbitrator in any forum. California courts will not enforce contracts that are unconscionable. [citing authorities]"--p. 11
Dot Registry Amicus Curiae Brief  Table of  Contents
Other ICANN and Domain Name News:

•  ICANN and UDRP Trademark Abuse: Mystery over entertainment tycoon’s web of trademarks, domains and company names | Blog | WorldTrademarkReview.com: "manipulating trademarks to reverse hijack domain names through [ICANN's] UDRP"--i.e., how some lawyers and other "bad actors" grab domain names using ICANN processes. ICANN set up the UDRP [Uniform Dispute Resolution Process] in 1999 and provided no penalties for anyone filing meritless UDRP claims or otherwise attempting to take domain names through UDRP processes via trademark abuse. ICANN has known about this problem since at least 2001--see ICANN Hates Fairness and Predictability? So What's New?--but, in typical ICANN GNSO fashion has "put the cart before the horse" by delaying a review of the issue in its current GNSO working group:
"GNSO Working Group that will be conducting a Policy Development Process (PDP) to Review all Rights Protection Mechanisms (RPMs) in all gTLDs. This PDP is being conducted in two phases, as described in the approved charter: Phase One will focus on a review of all the RPMs that were developed for the 2012 New gTLD Program, and Phase Two will focus on a review of the Uniform Dispute Resolution Policy (UDRP)." 

•  Another Government Land Grab in the [Domain] Name Space | InternetGovernance.org: "... ICANN has paved the way for [governments] ... to assert sovereignty and property rights over two letter domains at the second level domain of new gTLDs (2LSLDs) ..."

•  Sticky or Stuck? Has anyone successfully pointed a Weebly hosted Domain to Webflow? [Solved] Webflow Forums | webflow.com: "... Apparently if you purchased a domain name via Weebly, you can only change nameservers, and A/CNAME records are not available for modification. I suggest transferring the domain name to a proper domain name registrar."

•  Crowdfunding campaign for new gTLD .GAY applicant dotgay LLC via Generosity.com.

•  Comments close this coming week at ICANN on:

•  Tech News:
  1. EU vs Apple and Ireland: Brussels poised to strike down Apple ‘state aid’ | FT.com: "Brussels is poised to hand down an adverse ruling against Ireland after a three-year inquiry into claims the country granted an illegal tax arrangement to Apple, the world’s biggest tech company." See also US Treasury White Paper (pdf).
  2. Google's Russian antitrust case, global implications "... the Russian agency has issued a fine and given Google eight days to update its distribution deals and inform existing Android users about ways they can install competitive apps. Google has one more appeal left ... other governments, including the U.S., South Korea and in the EU, could be reevaluating their antitrust reviews of the Android operating system, the crux of Google’s global growth plan."--POLITICO.com
  3. Google petitions Supreme Court on Chrome and Patent Claims | Fortune.com: “Overbroad patent claims are a plague, especially in the vital and growing high-tech sector … All of this plays into the hands of entities that buy patents and then use litigation or the threat of litigation to extract settlements from alleged infringers,” says Google petition. See also Patentlyo.com.
  4. Peter Thiel is investing in startup Legalist (domain: legalist.us), that analyzes lawsuits to determine likelihood of victory and offers funding in exchange for half the judgment--TheGuardian.com. Caveat: see Champerty and maintenance | Wikipedia.org.
  5. Relaxing Privacy Vow, WhatsApp Will Share Some Data With Facebook--NYTimes.com.
  6. Alphabet's X division puts new leader on Project Loon: Tom Moore, co-founder of WildBlue Communications (acquired by ViaSat in 2009).--Bloomberg,com. See also Alphabet CEO ordered Google Fiber to downsize--ArsTechnica.com.
  7. The Metagame: A Monetization Opportunity For Twitter? "Twitter gets the metagame trend. Monetizing a metagame platform ..."--SeekingAlpha.com
  8. Evidence points to another Snowden at the NSA: "NSA may prove to be one of Washington’s greatest liabilities rather than assets."--Reuters.com
  9. In the Bitcoin Era, Ransomware Attacks Surge: "The Federal Bureau of Investigation said ransomware attacks cost victims $209 million in the first three months of the year, including costs, such as lost productivity and staff time to recover files, that is an average of about $333,000 an incident, based on complaints that it has received. The total is up from $24 million for all of 2015, or about $10,000 an infection, the FBI said."--WSJ.com
  10. Apple iPhone vs Web Services: "... Why buy a $700 iPhone when a $200 Android phone can access the same YouTube or Amazon Music as everyone else? All you need to do to get new Facebook features is refresh your browser or update your app. You don't need a high-performance device to participate in the 21st century ... And it could be a dire omen for high-margin hardware companies like Apple."--BusinessInsider.com
  11. Eleven Reasons To Be Excited About The Future of Technology--Chris Dixon, Medium.com.

• Four most popular posts (# of pageviews Sun-Sat) this week on DomainMondo.com:
  1. News Review [21Aug]: IANA Stewardship Transition, Vint Cerf Retrospective (video):
  2. New gTLD AFRICA Appeal: DCA Trust Answering Brief vs ICANN & ZACR
  3. Strange Bedfellows: Vanke, Chinese Tycoon Wang Shi, and China (videos)
  4. Italy's Banks in Crisis, Final Nail in the Coffin for the EU and Euro? (videos)

• 4 Other Reading Recommendations:
  1. China's Best Bank Called 'Mirage' of Shadow Lending | Bloomberg.com: "Case of Bank of Tangshan highlights opaque financial risks across the nation."
  2. Here’s another reason not to trust TV news reports about election polls | WashingtonPost.com: "... Such judgments may lead news outlets to distort the true state of the race ..." See also: Bizarre Media Blackout Of Hacked George Soros Documents | investors.com
  3. "Markets Are Ripe For A Black Swan Event" - Why Most 'Well Hedged' Funds Won't Survive | Zero Hedge.com and "Seven Signs Of A Deeply Dysfunctional Market" - Why Citi Is Also Warning Of "Surprising, Sudden, Intense" Tail Risk | ZeroHedge.com.
  4. Retirement? Indie Publisher Fahrenheit Press on Running a Small Publishing House | DigitalBookWorld.com: "I was quite reluctant, but the truth is that retirement is boring. I decided that if I was going to do it at all I should do it properly but only if I could do it 100 percent on my own terms."

 -- John Poole, Editor, Domain Mondo 

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2016-08-27

Corporate Brand Images, How to Design a Logo (video)

How to Design a Logo:

How to Design a Logo - Sagi Haviv, a partner at design firm Chermayeff & Geismar, shows Bloomberg's Businessweek the easy steps to designing a corporate brand image (Video originally published by Bloomberg.com, April 11, 2013).

 More information:
  1. Brand Mark
  2. Word Mark
  3. Letter Mark
  4. Combo Mark
  5. Emblem



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2016-08-26

Strange Bedfellows: Vanke, Chinese Tycoon Wang Shi, and China (videos)

Strange Bedfellows: A Chinese Tycoon and the State:

Wang Shi is the head of Vanke (Domain: vanke.com), the world's largest home builder by sales. After decades of success, the star Chinese entrepreneur is fighting to retain control of the empire he created from scratch. Published  August 5, 2016, by WSJ.com.

 China’s largest developer, Vanke (see stock chart below), has been involved in an eight-month takeover battle for control when conglomerate Baoneng Group emerged as Vanke’s largest shareholder with a 25 per cent stake. To fend off Baoneng, Vanke’s chairman Wang and his senior management team have sought out Shenzhen Metro, the state-owned city subway operator, as a white knight.

Bloomberg.com video August 21, 2016:
If above video does not play on your device, go here.

Stock chart of China Vanke Co., Ltd.
Stock chart of China Vanke Co., Ltd.
Vanke (Chinese: 万科) is a large residential real estate developer in the People’s Republic of China. It is engaged in developing, managing and selling properties across more than 60 mainland Chinese cities in the Pearl River Delta, Yangtze River Delta and Bohai-Rim Region, with the provision of investment, trading, consultancy services and e-business. It also has expanded into Hong Kong, the United States, and Malaysia since 2012. It is headquartered in Shenzhen, Guangdong province. Vanke was listed on the Shenzhen Stock Exchange in 1991, the second listed company in the Shenzhen Stock Exchange after Shenzhen Development Bank. It had the largest market capitalization in 2006 on the Shenzhen Stock Exchange. source: Wikipedia
Vanke holds its ground, reiterates management’s preference for Shenzhen Metro as its white knight | South China Morning Post | scmp.com August 22, 2016: "Vanke’s founder and chairman Wang Shi and president Yu Liang both skipped the company’s Monday earnings press conference in Hong Kong, instead leaving it to other executives to face the media ... the intrigue continues over Vanke’s control ... the uncertainties are distracting it from the business of building and selling real estate ... As many as 31 of Vanke’s projects have been affected, and the developer has faced “suspensions or even terminations because of uncertainties over the company’s future,” said Zhang Xu, executive vice president. Some senior staff are heading for the exit ..." See also Shareholder dispute dents China Vanke results | FT.com: "Banks have reduced Vanke’s access to loans, according to its interim report, and global rating agencies have warned that the group’s corporate rating could be affected."  See also bloomberg.com video (Aug 21) here.
Evergrande Raises Vanke Stake to 5% by Purchasing More A-Shares | Bloomberg.com August 8, 2016: "Vanke has been at the center of a battle for control since last year when Baoneng Group displaced China Resources (Holdings) Co. as the largest stakeholder. The emergence of Evergrande as a shareholder was among recent twists in a dispute that has drawn scrutiny from China’s securities regulator."
China Vanke chief Wang Shi raises the stakes | FT.com June 28, 2016: "... In addition to maintaining his sense of humor amid the drama, Mr Wang appears philosophical about it all. In a social media post at the weekend, he noted that “sometimes the heavens will rain and brides will run away” — a flowery way of saying, in effect, whatever will be will be. The stakes are in fact rather higher than his casual tone suggests. The stage has been set for a remarkable showdown that will test the resolve of the Communist party to stand aside as market forces, depending on its viewpoint, either work their magic or wreak their havoc." See also: Baoneng raises stake in Vanke with $223m sneak attack - FT.com July 6, 2016.


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2016-08-25

Italy's Banks in Crisis, Final Nail in the Coffin for the EU and Euro? (videos)

Will Italy's Bank Crisis Be the Final Nail in the Coffin for the EU?

University of Chicago Booth School of Business Professor Luigi Zingales and Bank of America Merrill Lynch Head of Global Rates Research David Woo discuss the plight of European banks and the future of the European Union. They speak on "Bloomberg Surveillance." Video above published August 8, 2016.

Joseph Stiglitz - The Euro: How a Common Currency Threatens the Future of Europe:

Video above published July 27, 2016: Peter Goodman of the New York Times interviews Joseph E. Stiglitz, Columbia University professor and economist, author of The Euro: How a Common Currency Threatens the Future of Europe. Interview transcript (pdf)

 See also:


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2016-08-24

New gTLD AFRICA Appeal: DCA Trust Answering Brief vs ICANN & ZACR

DotConnectAfrica Trust v. ICANN UPDATE September 9, 2016: ICANN’s Reply Appellate Brief [PDF, 276 KB] and ZACR's Reply Appellate Brief [PDF, 195 KB].

UPDATE September 2, 2016: ZACR's Reply in Support of Motion to Intervene [PDF, 46 KB].

 UPDATE August 29, 2016: Plaintiff DotConnectAfrica Trust's Response to ZACR’s Motion to Intervene [PDF, 412 KB], embedded below (highlighting added):

UPDATE August 26, 2016: New gTLD applicant Dot Registry, LLC, has filed motion for leave to file amicus curiae (friend of the court) brief in support of DCA Trust . Motion with attached Amicus Curiae Brief embedded below (highlighting added):

--original post below--

Map of Africa | DomainMondo.com
"ICANN expressly agreed to process gTLD applications fairly and transparently. Instead, ICANN colluded with ZACR to award the .Africa domain to the AUC [African Union Commission]. The district court properly granted DCA’s motion for a PI [preliminary injunction] and properly affirmed the PI on reconsideration. DCA respectfully requests this Court affirm those decisions."--Conclusion of Answering Brief filed by DocConnectAfrica Trust (DCA Trust), infra (emphasis added)

DotConnectAfrica Trust (DCA Trust), appellee, has filed its Appellate Answering Brief together with Supplemental Excerpts of the Record (both embedded below), in response to briefs filed by appellants ICANN and ZA Central Registry (ZACR). The issues in this consolidated interlocutory appeal by ICANN and ZACR to the Ninth Circuit Court of Appeals, involve whether the U.S. District Court properly granted DCA Trust's motion for preliminary injunction "barring ICANN from delegating the rights to .AFRICA until this case is resolved." See District Court Order (pdf).

Case Status: ICANN's and ZACR's optional reply briefs are due September 9, 2016. Meanwhile the U.S. District Court has assigned the case to a 10-12 day jury trial beginning February 28, 2017. See Scheduling Order (pdf).

For more on this case, see the previous posts (and links therein), on Domain Mondo: ICANN and Dot AFRICA: Dismissed Party ZACR Files Notice of Appeal (includes ICANN brief); and .AFRICA: DCA Trust v ICANN, ZACR Motion to Intervene & Opening Brief.

Appellee DCA Trust's Answering Brief (pdf) embed below (highlighting added):


Supplemental Excerpts of the Record (pdf) embed below (highlighting added):


Most document filings in this case are available on the ICANN website at: DotConnectAfrica Trust v. ICANN | ICANN.org. 
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2016-08-23

Could We Be Very Close to a Global Recession? (video)

Why We Could Be 'Very Close' to a Global Recession: 

Above video: Asia Times Columnist David Goldman on "Bloomberg Surveillance" August 12, 2016. See also 6 Factors That Point to Global Recession in 2016 | Investopedia.com.
"I'm not predicting a recession any time soon, in fact our early warning indicators are only now getting us a little bit of our antenna up. One of them is the unemployment rate versus 12 month moving average. For very understandable economic reasons, you never get a recession with the unemployment rate below it's 12 month moving average. Well, it's about to go above. There's a 9 basis point difference between the unemployment rate and its 12 month moving average. It doesn't guarantee anything, but unless that crosses over, you really can't have a recession."--Jeffrey Gundlach, August 19, 2016
Gundlach's 3 Favorite Recession Indicators Say Everything's Fine—For Now: The first is when the annual change in America's index of leading economic indicators goes into negative territory. The second is unemployment rate (see quote above) and the third, Gundlach's 'granddaddy' of recession signals: When the quarterly unemployment rate breaches its three-year moving average, that's a sure sign that a recession has arrived: "In fact it is so eerily predictive of the onset of a recession when [the quarterly unemployment rate] goes above its 3-year moving average that one almost thinks it is secretly the indicator the [Bureau of Labor Statistics] is using to define recession," said Gundlach. "It is so amazingly accurate." This indicator isn't going to rise above that three-year moving average for the next year, barring the onset of a substantial, negative economic shock, he said, and as such, this indicator "doesn't say recession for the U.S."--Bloomberg.com May 6, 2016

See also: Jim Grant: "This Will Turn Out To Be Very Bad For Many People" | ZeroHedge.com




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2016-08-22

Winner or Loser? Finance, Snapchat, Ben & Jerry's, Google Maps (video)

Snapchat Hits a Snow Storm:

  • Winner: Finance. Nearly half of new American billionaires work in the financial sector, often at hedge funds.
  • Loser: Snapchat. The platform has hit a roadblock in Asia, where it faces a steep challenge from homegrown alternatives including Korean app Snow.
  • Winner: Ben & Jerry's. By investing heavily in product-focused Instagram posts, the brand has generated impressive engagement.
  • Winner: Google Maps, which just added its first underwater images of the world's oceans: https://www.google.com/maps/about/behind-the-scenes/streetview/treks/oceans/.
Video above published August 18, 2016, by L2inc.com. Host is Scott Galloway, Marketing Professor at NYU Stern. Video transcript below.

 Winners: 2016's Tech Billionaires
Infographic: 2016's Tech Billionaires | Statista
Chart source: Statista

Chart above shows the net worth and main source of wealth of the ten richest tech billionaires in the world. While individuals associated with U.S. companies dominate, Chinese e-commerce giant Alibaba and its executive chairman Jack Ma (net worth of almost 26 billion dollars) ranks eighth and ninth is Tencent CEO, Ma Huateng with 22 billion dollars.

Transcript of video above via YouTube:
0:02 A winner: finance.
0:03 The complexion of wealth in the US has changed dramatically over the last two decades.
0:06 More billionaires are earning their money versus inheriting it.
0:09 That's a nice fact, but that isn't necessarily a victory for entrepreneurship.
0:13 Almost half the growth in the billionaire class comes from the financial sector, compared with 14% in Europe.
0:19 How do you become a billionaire in America?
0:21 If you don't start the next Facebook, you need to work at a hedge fund.
0:25 Over 80% of hedge fund billionaires are American.
0:27 It's easy to hate hedge fund managers. I work with a lot of them, and I find they're just like you and me -
0:33 just smarter and harder working.
0:35 Who can you hate? Congressmen and senators.
0:37 In exchange for a few thousand bucks, they continue to give these guys carried interest tax deduction, which is immoral and plain stupid.
0:46 A loser: Snapchat. You don't hear that often.
0:48 The brand's quest for global domination has met a roadblock in Asia, where American social platforms face major challenges from homegrown alternatives.
0:57 Korean app Snow has similar functionality to Snapchat but targets Asian users
1:01 with filters including bottles of soju and fried chicken.
1:05 Snow's popularity in Asia underscores a new reality for American app makers:
1:09 popularity in the US does not guarantee success overseas.
1:14 A winner: Ben & Jerry's, whose oversized investment in Instagram is paying off.
1:18 Ben & Jerry's accounts for 4% of posts but generates 38% of interactions.
1:23 The lesson here?
1:24 Consumers want to see the product they love. Keep it simple.
1:28 Following the success of the brand's Bernie's Yearning flavor, we're campaigning for a new flavor.
1:32 My personal favorite: Guatemalan Syphilis ExperiMINT.
1:38 What's the greatest concentration of IQ in history? NASA? The Manhattan Project?
1:41 No, it's Google.
1:42 Now that the search engine has made the world's surface visible with Street View,
1:47 Google is setting its sights on the other 70% of the planet.
1:51 Maps just added its first underwater images, letting users explore the depths of the oceans.
1:57 We leave you with video on how some of those maps were made.
2:00 We'll see you next week.


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2016-08-21

News Review: IANA Stewardship Transition, Vint Cerf Retrospective (video)

"The U.S. government was the origin of this project [the internet], it started in the Defense Department, and I am very proud, not only of the Defense Department but other parts of the U.S. government including the National Science Foundation, and now NTIA, for persistently stepping away from control over this system and turning it over to a multistakeholder operation … this [the IANA transition] is the last step--Vint Cerf, August 17, 2016, see this week's FEATURE below.

Domain Mondo's review and look ahead [pdf], starting first with the macro view, the big picture, after cutting through all the noise:

•  Soros Doubles Down on Bet Against the S&P 500: According to WSJ.com, famed billionaire investor George Soros is shifting his fund’s focus back to the "big-picture economic global view that earned him recognition as he steadfastly continues to warn of a coming financial crisis, much as he did leading to the 2007 crash."  He continues to unwind his exposure to China "which he’s placed at the center of the next financial storm" along with commodities. He has a large derivative position on the SPDR S&P 500 ETF, the most widely traded fund that tracks the broad S&P 500 stock index. See also "Legendary Trader" Paul Tudor Jones Emerges As Latest Mega Bear With Record Surge In S&P Puts | ZeroHedge.com (Aug 19, 2016). NYSEARCA: SPY chart below:
NYSEARCA: SPY
•  Tencent (tencent.com) is now China's most valuable tech company, passing Alibaba (alibabagroup.com). Tencent's total revenue for Q2 2016, including its apps QQ (QQ.com) and WeChat (WeChat.com), came in at $5.38 billion. Read more: Tencent Surges; Becomes China's Most Valuable Tech Company | TheStreet.com. and Tencent Performance Highlights in Q2 2016 | ChinaInternetWatch.com: "WeChat monthly active users reached 806 million in Q2 2016." Note:
"China’s internet is fundamentally different from the one used in much of the rest of the world ...'It’s a closed environment, and you have to be quite different to compete in that market.' Two decades after Beijing began walling off its homegrown internet from the rest of the planet, the digital world has split between China and everybody else."--NYTimes.com (emphasis added)
•  2016 Olympics end August 21 but Brazil already knows Hosting The Olympics Is A Terrible Investment | FiveThirtyEight.com: "Research has repeatedly shown that in most cases the Olympics are a money loser for cities, particularly those in developing nations where the cost-benefit proposition tends to skew even worse."

•  U.S. Market:

•  Election 2016 Update: As usual in U.S. politics, things don't get serious until after Labor Day (September 5). Best to avoid the media "noise" until then. Jeffrey Gundlach predicted in January that Trump would win the Presidency, and hasn't backed off that prediction despite recent polling numbers and a pro-Clinton, anti-Trump, establishment media onslaught for weeks now. In fact, Gundlach now says:
"The centerpiece of my thesis on Trump remains that Hillary Clinton is an incredibly bad candidate. She will have plenty of stumbles in the stretch run and, at the end of the day, WikiLeaks is going to take her down. Julian Assange wants to time the releases of these horrific emails to coincide with maximum damage and I think there is plenty more to come. Say what you want about Trump, about his volatility and his inconsistency, Hillary will be deemed to be the unacceptable candidate. All Trump has to do is be as steady as possible and she will fall by the wayside."
Trump's biggest challenge? "Convince the country, as he had almost done by Cleveland, that he is an acceptable, indeed, a preferable alternative"--Don't Count Yer Clintons Yet - It Ain't Over Till It's Over | ZeroHedge.com. Trump doesn't have to match Clinton in fundraising, he has enough funding (Mercer, Adelson et al) to be competitive. He doesn't have to match the Clinton political operation, he has enough political operatives via the RNC, and Kellyanne Conway et al, to be competitive. Trump's biggest challenge (other than biased media* coverage) may be Trump. Read more here. [UPDATE August 21, 2016: Trump (45%) now leads Clinton (43%) in the Presidential Race according to the USC Dornsife / Los Angeles Times poll | latimes.com.]
*Media bias update August 21, 2016: American journalism is collapsing before our eyes | NYPost.com: "The largest broadcast networks — CBS, NBC and ABC — and major newspapers like The New York Times and Washington Post have jettisoned all pretense of fair play. Their fierce determination to keep Trump out of the Oval Office has no precedent."  See also Glenn Greenwald on Donald Trump, the DNC hack, and a new McCarthyism | slate.com:"The U.S. media is essentially 100 percent united, vehemently, against Trump, and preventing him from being elected president."

• FEATURE: IANA Stewardship Transition - Full Speed Ahead!
The Obama administration (NTIA) made it crystal clear this week that the IANA functions contract will expire effective October 1, 2016, notwithstanding dissenting voices in Congress and elsewhere (see below). Read more at NTIA Tells ICANN: IANA Functions Contract Will Expire October 1, 2016. Vint Cerf gave a retrospective on ICANN and the IANA transition in a Bloomberg West interview this week:


Video above starting at 12:10: Vint Cerf Talks the Future of the Internet on 'Bloomberg West'--Google Chief Internet Evangelist Vint Cerf, often referred to as the "father of the Internet," on Bloomberg West, August 17, 2016, to discuss ICANN and the IANA Stewardship Transition, including the National Telecommunications and Information Administration's (NTIA) decision to allow the IANA functions contract expire October 1, 2016. 

•  Last Call for the Open Internet | WSJ.com by L. Gordon Crovitz: "... The administration naively thought crafting an alternative to U.S. oversight, which it dismissed as “largely clerical,” would be easy. By now it’s clear Mr. Obama’s solution to the nonproblem of U.S. protection is too half-baked for anyone who cares about the free and open internet." See also NTIA Violates Federal Law with IANA Transition | TechPolicyCorner.org.

•  ICANN the Machine… | CircleID.com by Shaul Jolles, Dot Registry CEO: "ICANN's new gTLD expansion is really quite an ingenious ploy to grow the once small California non-profit into an unstoppable machine, worth hundreds of millions of dollars, which soon plans to finally be free from any external oversight. I have no doubt that ICANN pats itself on the back for pulling the wool over so many eyes, including stakeholders, new gTLD applicants, politicians, and the global general public ..." (emphasis added)

•  Dot Registry IRP Declaration: Of the 18 Independent Review Process (IRP) proceedings brought to date to hold ICANN accountable for its actions, only three claimants have succeeded: ICM Registry (.XXX), DCA Trust (.AFRICA), and Dot Registry (.LLC, .INC and .LLP). All three were represented by Dechert LLP (dechert.com) lawyers, who recently wrote: Accountability and Transition in ICANN’s New gTLD Program | Lexology.com: "... the importance of the Dot Registry Panel's decision lies in its recognition that ICANN, as the regulator of the Internet, a global resource, must be held accountable for its actions. Today, ICANN is pressing for the privilege to oversee Internet governance without oversight by the U.S. or any government. This privilege comes with immense responsibility and requires accountability. As ICANN enters into the next phase of its transition away from U.S. government oversight, the global internet community will be watching to see whether ICANN undertakes much needed reforms." (emphasis added)

 •  A Lasting Legacy of Fadi's Follies: 1) Why does ICANN need 3 Hubs? L.A. is a large multi-ethnic 24x7 world-class metro, more than capable of staffing (even remotely) a 24-hour support center for the global internet community; 2) Why is one of those "hubs" located in Istanbul, Turkey, of all places?
Turkey to Release Tens of Thousands of Prisoners to Make Room for Coup Suspects | NYTimes.com: "Turkey said on Wednesday that it would empty its prisons of tens of thousands of criminals to make room for the wave of journalists, teachers, lawyers and judges rounded up in connection with last month’s failed coup."  Economist.com reports Turkey’s drift away from the West is accelerating as the government and most Turks believe Europe and the U.S. had something to do with the Turkish coup attempt. See also: A Parallel State | n+1 | nplusonemag.com: "Over the past ten years, the prospect of a coup has been the [Turkish] government’s pretext for suppressing every conceivable opposition."
Brick-and-mortar "hubs" for organizations like ICANN are inefficient relics of the twentieth century, indicative of a hierarchical organization or the narcissistic empire-builder mentality of its leadership, rather than the needs of a streamlined, flat organization, connected globally through the cloud, empowering its stakeholders and workers to engage and work remotely throughout the world, without need for edifices or facades.

•  Cannell Capital Sells 19,881 Shares in new gTLD registry operator Rightside Group Ltd.  An amended 13D filing with the Securities and Exchange Commission dated August 12, 2016, shows J. Carlo Cannell‘s Cannell Capital has lowered its stake in Rightside Group Ltd. (NASDAQ: NAME) to 1.21 million shares which account for 6.29% of the company’s outstanding stock. The fund previously held 1.23 million common shares, according to its latest 13F filing for the reporting period of June 30. Cannell Capital stated in the 13D filing:
"Mr. Cannell reserves the right to discuss various views and opinions with respect to the Company [Rightside] and its business plans with the Company or the members of its senior management. The discussion of such views and opinions may extend from ordinary day-to-day business operations to matters such as nominees for representation on the Company’s board of directors, senior management decisions and extraordinary business transactions. Mr. Cannell reserves the right to take such action as he may deem necessary from time to time to seek to maximize the value of the Shares. Such actions may include, but may not necessarily be limited to, pursuit of strategic initiatives to enhance shareholder value."
Remember Carlo Cannell's letter to Rightside ($NAME) earlier this year? It's a classic:
"While I am a believer in new gTLDs, it is going to be many years before their revenue in any way materially approaches the revenue potential of our registrar operations. In my view, NAME’s registrar has become like a crazy aunt kept in the basement, one that you refuse to adequately clothe or feed, but who steadfastly spins straw into gold used to subsidize a stable of largely substandard new gTLDs such as .democrat, .dance, .army, .navy, and .airforce. Most of these new gTLDs are irrelevant and will never be sold in material volumes. NAME is holding back the growth potential of your registrar by pushing garbage extensions to a user base that quietly knows better."--J. Carlo Cannell, Cannell Capital LLC, February 19, 2016 (emphasis and link added)
Rightside (NASDAQ: NAME) shares are down -9.66% since August 11, closing Friday at $10.85.

•  ICANN's Competition, Consumer Trust, and Consumer Choice Review Team (CCT-RT) will be meeting in Vienna, Austria, on 29-30 August 2016. The CCT-RT face-to-face meeting agenda includes an Analysis Group economic study that is examining pricing trends and competition indicators in the Global Domain Name market, the Nielsen registrant survey that is studying consumers' perceived trust and choice in the Domain Name System, and AM Global's interviews conducted with applicants. Join in-person to observe the meeting or online via Adobe Connect. More info here and on the wiki.

•  No comments close this coming week at ICANN.

•  Tech News:
  1. The Twilight of China’s Online Consumer Paradise | Bloomberg.com: "... Consumer loyalty means nothing in China ... volume of private equity and venture capital flowing into China’s tech sector, as well as investments in the country as a whole, peaked last fall ... “The slowdown is a global phenomenon, and it’s still ongoing: we’re in the middle of the winter,” says Kai-fu Lee, founder of prominent VC firm Sinovation Ventures in Beijing. “The Chinese market has a tendency to accelerate uptrends as well as downtrends: When things are trendy, they will double or triple quickly – and then when they’re out of favor, they will drop like a brick.”"
  2. Google’s High-Speed Web Plans Hit Snags | WSJ.com: "After initial rollouts prove costly, Google Fiber rethinks how to deliver connections in metro areas ... Now the company is hoping to use wireless technology to connect homes, rather than cables, in about a dozen new metro areas, including Los Angeles, Chicago and Dallas, according to people familiar with the company’s plans. As a result Alphabet has suspended projects in San Jose, Calif., and Portland, Ore."
  3. Uber and Lyft Replace Public Transportation in Florida and Colorado: "... the Uber partnership and partial ride subsidization proved significantly cheaper than maintaining a bus system. In its pilot program, the town pays for 50 percent of the cost of a ride (up to $3 per rider) and estimates the program will cost $40,000 a year--a quarter of what it cost to run two bus lines that were replaced by the arrangement. Lyft is set to launch a similar partnership in Centennial, Colorado, later this month."--POLITICO.com
  4. Chrome starts retiring Flash in favor of HTML5 | ArsTechnica.com: "Non-visible Flash content blocked in September; Flash fully deprecated by December."
  5. Back to the Future: Nokia Android phones are coming: see BusinessInsider.com and Meet the man charged with reviving Nokia's phone brand | CNET.com.
• Five most popular posts (# of pageviews Sun-Sat) this week on DomainMondo.com:
  1. News Review: ICANN Says It Is Ready for the IANA Transition, Is It Really?
  2. NTIA Tells ICANN: IANA Functions Contract Will Expire October 1, 2016
  3. Afilias Challenges New gTLD WEB Auction Results in Letter to ICANN
  4. Jet.com Deal: A $3 Billion Acquihire Botox Shot For Walmart? (videos)
  5. Facebook At War With Ad Blockers, But Ad Blocking Trend Increasing
• 10 Other Reading Recommendations:
  1. Market Manipulation? A $35 Billion Stock, an SEC Halt and Suspicions of Manipulation | Bloomberg.com: "Neuromama ... began to draw more scrutiny this year after its paper value more than quadrupled to $35 billion on scant volume. Before its suspension, the market cap of Neuromama, which was based in southwest Siberia before moving to a beach community near Tijuana, Mexico, was greater than even Tesla Motors Inc."
  2. Growth Hacking? How Lending Club’s Biggest Fanboy Uncovered Shady Loans | Bloomberg.com: "... Silicon Valley tends to venerate mildly deceptive tactics when they’re used in service of a scrappy upstart—it’s known as “growth hacking” ...  loans containing seemingly misleading information, tied to SEC-registered securities. Maybe it wasn’t fraud, but it wasn’t exactly transparent ..."
  3. I Hire Engineers At Google--Here's What I Look For (And Why) | FastCompany.com: "... Yes, engineers need to be able to code ... on your resume, instead of listing your GPA (which we no longer use to determine candidacy), give us details about your experience at hackathons, coding competitions, or programming assignments at work. Just because it isn't an academic credential doesn't make it any less relevant. Not only does this create a more textured portrait of your abilities, it’s a great way to prove your engineering chops if you majored in sociology, for instance ..."
  4. Obama Administration Wants to Give You Money to Learn to Code. Here's Why That's a Problem | Bloomberg.com: "Let me get this straight: They're going to partner untested for-profit entities with institutions with a proven track record of doing poorly by their students, and the Department of Education is expecting excellent outcomes?" said Alexander Holt, policy analyst at Washington-based think tank New America."
  5. Dinosaur Watch: Broadcast & Cable TV - TV Ratings: Rio [Olympics] Hits Competition Low on Friday | HollywoodReporter.com: "... numbers are still down from London four years ago, but NBC Sports continues to see record returns from [online] streaming ..."
  6. 'Walmart destroyed retail' | BusinessInsider.com: "The root of the problem, according to Kniffen, is that there are simply too many physical retail stores in the US. Kniffen isn't alone. Last week, Macy's CFO, Karen Hoguet, said in an earnings call that 'this country is over-stored, given evolving customer shopping habits.'" See also Walmart’s Out-of-Control Crime Problem Is Driving Police Crazy | Bloomberg.com.
  7. Bill Gross Warns "Central Bankers Are Destroying The Engine Of The Real Economy" | ZeroHedge.com
  8. Dollar Vans: The Economist.com: "In parts of New York City, if you know what to look for, you will find a vast and quasi-legal transport network operating in plain sight. It is made up of “dollar vans”, private 15-passenger vehicles that serve neighbourhoods lacking robust public transport ..."
  9. UK’s Nuclear Future Threatened by Chinese Espionage, Brexit | WolfStreet.com: "The cancellation of Hinkley Point could crush EDF and the French nuclear industry – or is Britain’s move a Brexit negotiating ploy?"
  10. Virtu Never Loses (Well, Almost Never) in Quest to Upend Markets | Bloomberg.com: "Virtu and other relative newcomers, including Jump Trading, DRW Holdings, and Citadel Securities, as well as smaller, nimbler enterprises, are filling voids created by new regulations and technologies."
-- John Poole, Editor, Domain Mondo 

feedback & comments via twitter @DomainMondo


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