Benner on Tech: Google Gets Slapped

Katie Benner is a Bloomberg View columnist who writes about technology, innovation, and the cult and culture of Silicon Valley. She lives in San Francisco.
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The EU Files Charges Against Google

The past year has made clear that Europe hates Google’s search market dominance, as well as the privacy issues that Google searches can create for citizens. Last spring the European Court of Justice ruled that the company would have to honor some requests to take down links about individuals in order to protect a person’s “right to be forgotten.” Last fall the European Parliament passed a non-binding resolution to break Google up.

When the Wall Street Journal revealed that there had been a Federal Trade Commission faction that wanted to sue Google for violating anti-trust laws, it started to feel inevitable that European regulators would pick up where the U.S. had left off and file charges against the company. The Europe-will-sue-Google meme has been so loud lately that when reports hit yesterday saying that the EU will issue a statement of objection regarding Google search product, it felt sort of anti-climactic.

For Google, things probably feel … more exciting. In an internal memo leaked to Re/code, the company told employees that an action by the EU would be “very disappointing” but also create “an opportunity for Google to tell our side of the story.” The note makes clear that the company is girding its employees for what will be a months-long back and forth with that could very well end in a settlement. But a settlement could still be an expensive end result. The Journal said charges could open Google up to more than $6 billion in fines. Regulators could also push Google to change its business practices, which it did in the U.S. in part to avoid a Federal Trade Commission lawsuit. I don’t see this fundamentally changing Google in a big essential way, but I do see it creating a huge distraction at a moment when the company should be focused on how to eventually replace online search as its most important business.

Lending Club Is Citigroup’s Friend

Lending Club, as you probably know, is an online lending platform that matches lenders and borrowers and takes no actual balance sheet risk itself. It’s a conduit that’s attracted hedge funds that are looking for higher-yielding credit investments in a very low-interest world. So the hedge funds are lending to people to borrow money from a platform on the Internet. With good credit risk measures in place, it’s a win for everyone.

Before Lending Club went public, investors told me that they’d worked hard to resist pressure from hedge funds to bring riskier borrowers -- those who could be charged higher interest rates but who were statistically more inclined to default -- onto the platform. From their point of view, there was a huge supply of lenders. Why risk sinking the platform with a couple of high-profile defaults? That would be a ludicrous thing to do, especially before an IPO.

Well, Lending Club just announced a deal with Citigroup and the hedge fund Varadero Capital to extend more loans to lower income (statistically riskier) borrowers. (Lending Club shares jumped more than 4 percent on the news. Remember, the company doesn’t take balance sheet risk.) The deal is not quite an actual Rube Goldberg machine, but it’s not simple. And this plan, in theory, should spread out the risks associated with taking on “underserved” borrowers. My colleague Matt Levine wrote what is absolutely the best breakdown of this new loan process here. He explains why Lending Club isn’t disintermediating banks -- a popular conclusion to draw -- but is instead further disaggregating the functions of the bank.

Mayer Comes Alive

Yahoo CEO Marissa Mayer is the subject of a new Fast Company profile. The basic crux is well known -- Yahoo needs mobile ad growth to offset declines in its display ad business. But it’s a nice look at the changes Mayer’s made to the mobile division, whose success or failure will greatly influence the company’s overall fortunes. The story also hinted at a less polished, more human version of Mayer that’s sort of refreshing.

I ask Mayer if she ever managed to convince those who doubted that native apps would trump web apps in the long run. She bursts into her unexpectedly bumptious guffaw: "Convinced? Coached them to go elsewhere? You can pick your favorite verb."

Earnings Roundup

Intel’s first quarter results met analyst expectations. The company’s revenue hit $12.8 billion and net income hit $2 billion. The data center division offset declines in the PC division. (Bloomberg)

Netflix reports today.


Airbnb hosts face more regulations in San Francisco, including capping hosts at 120 days per year. (TechCrunch)

Datazen Software, a mobile business intelligence company, was acquired by Microsoft. Deal terms weren’t disclosed.

DJI, the Chinese dronemaker, is talking to investors including Accel Partners and Kleiner Perkins about a funding round that could value the company at about $10 billion. (the Wall Street Journal)

Docker, a platform for building software applications, has raised $95 million from investors including Insight Venture Partners, Coatue, Goldman Sachs and Northern Trust, and is now valued at about $1 billion. (Bloomberg)

Foursquare introduced Pinpoint, which lets marketers use its data to target ads on mobile and the web. (Ad Week)

Jawbone will introduce payment technology in a future fitness band and is working with American Express on the project. (the Wall Street Journal)

Uber’s UberX service has been halted in Geneva for violating local taxi regulations. (the Wall Street Journal) The company partnered with Samsung to offer Galaxy S6 and S6 Edge users a $25 ride credit. (VentureBeat)

Venture financing in the first quarter of this year fell to $11.3 billion from $13.7 billion during the fourth quarter of last year as other sources of funding squeeze VCs out of deals, according to a new report from CB Insights. VC-backed companies raised $17.7 billion in the first quarter when hedge fund, mutual fund and private equity investors are factored in.

People and Personnel Moves

Antonio Lucio, who worked as Visa’s chief brand officer, will join Hewlett-Packard’s printer business. (Bloomberg)


Apple banned selfie sticks from its Worldwide Developers Conference that takes place in June. (Apple Insider) The company bought LinX Computational Imaging, an Israeli company that makes cameras for phones and tablets. (the Wall Street Journal)

Google talked to advertisers about using information like e-mail addresses to better target ads. (the Wall Street Journal) The company started a program that lets developers identify their apps as “family-friendly.”

Nokia announced a deal to acquire Alcatel-Lucent for $16.6 billion. The combined company will use the Nokia brand. (The Verge) My colleague Leonid Bershidsky explains how Finland’s fortunes are closely tied to those of Nokia. (Bloomberg View)

Security Watch

Data breaches affected about 29 million U.S. health records between 2010 and 2013. (The Verge)

Media Files

HBO wants to crack down on Periscope and Meerkat users who illegally live-streamed the season premiere of "Game of Thrones." (CNN Money)

Reddit is starting a weekly newsletter, “Upvoted Weekly,” that curates the best stories from the site’s vast sea of content. (Mashable) **Only semi-related: Here’s how Vox does aggregation, which it calls “a positive-sum endeavor.”

Music industry revenue fell by 0.4 percent to $14.97 billion in 2014. Ad-supported and subscription streaming revenues grew from 25 percent in 2013 to 32 percent in 2014. (Billboard)

News and Notes

Instagram has a TMZ. (the New York Times)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the editor on this story:
Maria Lamagna at