Bloomberg

(Bloomberg) — Apple Inc. and Broadcom Inc. will get a new trial on damages in an infringement case over California Institute of Technology patents on Wi-Fi technology, after a U.S. appeals court vacated a $1.1 billion verdict the school won in 2020.

A two-tier damage award of damages of $270.2 million against Broadcom and $837.8 million against Apple that involved different royalty rates from each company is “legally unsupportable,” the U.S. Court of Appeals for the Federal Circuit in Washington ruled. The January 2020 verdict was one of the largest jury awards in a patent case in U.S. history.

The court also affirmed the jury finding that Apple and Broadcom infringed two CalTech patents, but ordered a new trial of infringement on a third patent. One of the three judges on the panel said he would have thrown the whole case out, believing none of the patents were infringed.  

The case was remanded to a court in Los Angeles for a new trial on infringement of one patent and to determine how much Broadcom and Apple should pay. 

CalTech said it was pleased that the validity of the patents and part of the infringement findings were upheld.

“This is recognition of Caltech’s inventions in the field of data communications, which are now widely used in Wi-Fi products because they significantly improve the quality, bandwidth, and range of wireless data transmission,” the school said in a statement Friday. “We are confident that the value of the patents will be fully recognized at the damages retrial.”

Officials with Broadcom and Apple didn’t respond to queries seeking comment.

The high damage award was based in large part on the broad range of Apple products that were accused of using the university’s inventions for wireless data transmissions. The case targeted Broadcom chips and any Apple smartphone, tablet or computer that that has one.

CalTech argued that it would have negotiated two licenses — one with Broadcom for chips that weren’t sold to Apple, and then with Apple for the devices that included Broadcom chips “at a vastly different royalty rate,” according to the opinion.

“The mere fact that Broadcom and Apple are separate infringers alone does not support treating the same chips differently at different stages in the supply chain and does not justify submitting such a two-tier damage theory to the jury,” the Federal Circuit ruled. 

“In the absence of a compelling showing otherwise, a higher royalty is not available for the same device at a different point in the supply chain,” according to the court.

In an unrelated case involving patent claims against Apple, a different three-judge Federal Circuit panel ordered a new trial on damages in a $85.23 million verdict won by Quarterhill Inc.’s Wi-Lan over a way to allocate bandwidth in wireless communications. 

The court ruled that Wi-Lan’s damages expert used a “flawed” methodology that was “untethered to the facts of this case,” but also that the trial court erred in ruling that Apple iPhones with Intel Corp. chips had a perpetual license to the Wi-Lan patent.

The cases are California Institute v Broadcom, 20-2222, and Apple Inc. v. Wi-Lan Inc., 20-2011, both U.S. Court of Appeals for the Federal Circuit (Washington).

(Updates with CalTech comment in fifth paragraph.)

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — The beleaguered decentralized cryptocurrency exchange Sushi has become the target of a potential takeover attempt by several supposedly autonomous rivals. 

In a proposal posted on Sushi’s forum Wednesday, DeFi bank Ondo Finance — headed by a former digital assets associate at Goldman Sachs Group Inc. — is proposing that a slew of DAOs, or decentralized autonomous organizations, band together to take over some parts of the governance of Sushi. If Sushi’s community favorably responds to the “temperature check,” the group will submit a more formal proposal, Ondo Chief Executive Officer Nathan Allman said in the post.

“There’s a first to everything,” Allman, who is 27, said in an interview. “They need some renewed leadership. A coalition of DAOs is a new way of trying to find that balance of community buy-in and the ability to move quickly.”

The proposal comes just days after another DAO coalition, Frog Nation, said it would “clean up and bring efficiency back into Sushi.” That group was headed by Daniele Sestagalli, one of the leaders of the Wonderland project, which was rocked by the recent discovery that one of its core team members was a felon. Wonderland’s token tanked on the revelation. Following the upheaval, which included a contentious vote over the future of Wonderland, Frog appears to have abandoned its involvement with Sushi.

“We’ve had a number of conversations with Sushi holders, individuals and VCs, and many of them signaled very strong support” Allman said.

The Ondo group, called the Poke Bowl and also comprising Frax, Synapse, UMA and NEAR, wants to form a formal on-blockchain and legal offshore entity for the Sushi DAO. Allman is optimistic it may be able to raise $15 million in donations for Sushi’s development and to compensate its contributors.  

Sushi is revamping its leadership and structure amid infighting among developers. Sushi was supposed to be “a community-built open-source ecosystem,” in which users could trade directly with each other, without intermediaries, and make operational decisions. But it turned out to be largely controlled by a handful of mostly anonymous developers, who sometimes bypassed community votes. 

The discord led to accusations of extravagant spending and self-enrichment without community approval or oversight, and the quiting of the exchange’s chief technology officer in December. Sushi is still trying to regain control of its Discord channel from the contributor who quit. It’s been hard for DeFi projects to retain talent as their tokens, used to pay the developers, dropped in the past seven months.

“DeFi as a project is working as designed. But DAOs as a structure are not,” said Jeff Dorman, chief investment officer of Arca, which has invested in Sushi. “This is the state of DeFi right now, developers are often trying to burn the house down from the inside, but the houses are proving non-flammable.” 

Sushi is the world’s eleventh-biggest decentralized exchange, with $115 million in volume in the last 24 hours, according to data tracker CoinMarketCap.

“Everything in this space is experimental,” Dorman said. 

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) —

Bitcoin gained the most in four months as investors show signs of renewed risk appetite following a volatile week across financial markets. 

The largest cryptocurrency by market value jumped as much as 10% to $40,730, the most since Oct. 1. It hasn’t been above $40,000 in more than two weeks. Ether climbed as much as 12%. Even SOL, the native currency of the Solana blockchain that has tumbled in the wake of the Wormhole project hack, surged about 12%.

The top cryptocurrencies began to rally in overnight trading after strong earnings from Amazon.com Inc. bolstered confidence in technology stocks, which digital tokens have largely tracked over the past months.

Meanwhile, a report showed U.S. employers extended a hiring spree last month despite a record spike in Covid-19 infections and related business closures, with surging wages adding further pressure on the Federal Reserve to raise interest rates.

“The fact that AMZN’s earnings went the way of AAPL, MSFT and GOOGL — and not the way of FB — has given investors more confidence to reengage with the risk-on trade,” said Matt Maley, chief market strategist at Miller Tabak + Co., said.

Stephane Ouellette, chief executive and co-founder of institutional crypto-platform FRNT Financial, said Bitcoin seems to be consolidating in a similar way to equities around the 200-day moving average. Over the last two days, Bitcoin correlated to Facebook declines, and on Friday to Amazon gains, according to Ouellette. 

“In spite of today’s move from a technical perspective I don’t think we can start saying anything definitive until at least a definitive breakout beyond” $40,000 to $41,000, he said.

The big cryptocurrencies have been largely trapped in a range over the past couple of weeks, after experiencing widespread declines in January. Their struggle to break out came as growth stocks and other riskier assets faltered amid investor concern about the impact of imminent Fed rate hikes and a trend toward tighter monetary policy globally.

“Although there were concerns about accelerating monetary policy, there is now a sense among many capital markets that a 50 basis point rate hike is priced in given recent movements in equity markets,” said Hayden Hughes, chief executive officer at Alpha Impact, a trading social media platform. He also cited the restoration of $320 million from the Wormhole hack and oversold technical levels for bolstering the mood.

Read more: Meta Erases $251 Billion in Value, Biggest Wipeout in History

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — U.S. regulators should crack down on banks that partner with fintechs to charge interest rates that would be illegal in the lenders’ home states, a coalition of advocacy groups said.

The Federal Deposit Insurance Corp. and other U.S. agencies need to stop banks they oversee from “engaging in high-cost predatory lending” through their work with financial-technology firms, the National Community Reinvestment Coalition, Consumer Reports, the NAACP, the Center for Responsible Lending and other groups said in a letter Friday.

“Rent-a-bank schemes have flourished at FDIC banks in the past few years and it is time for that to come to an end,” the coalition said in the letter to the heads of the FDIC, the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency. “The FDIC has the tools that it needs to prevent its banks from fronting for predatory lenders that are evading state law and making grossly high-cost installment loans and lines of credit” with annual percentage rates as high as 225%.

The letter follows Congress’s move last year to overturn the OCC’s Trump-era “true lender” rule that made it easier for banks to partner with fintechs without running afoul of state interest-rate limits. In signing the bill, President Joe Biden said the change would “protect borrowers against predatory lenders” who have found workarounds for interest-rate caps and trapped borrowers in “a cycle of debt.”

The FDIC, meanwhile, hasn’t proposed similar changes and “appears to have done nothing to curtail the predatory lending that has exploded on its watch,” the coalition of advocacy groups said in its letter.

“The FDIC has permitted its banks to use their charters to enable these practices,” Adam Rust, senior policy adviser at the National Community Reinvestment Coalition, said in a statement. “Now that the board of the FDIC is under new leadership, it is the time to close this loophole.”

FDIC Chairman Jelena McWilliams, appointed by former President Donald Trump, is leaving the regulator. Board member Martin Gruenberg, a Democrat, will be acting chair.

Forty-two U.S. states and the District of Columbia “have at least one predatory lender using a rent-a-bank partnership,” the coalition said in its statement. Such loans are offered through check-cashing stores, online and even at pet stores, auto-repair shops and furniture retailers, the group said.

The coalition said it’s identified six companies working with high-cost, non-bank lenders offering loans that would be illegal for the banks to make directly: Republic Bank & Trust, chartered in Kentucky; Lead Bank, chartered in Missouri; and FinWise Bank, Capital Community Bank, First Electronic Bank and Transportation Alliance Bank, all chartered in Utah.

Representatives for the banks didn’t immediately respond to phone calls and emails seeking comment.

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — Apple Inc. is targeting a date on or near March 8 to unveil a new low-cost iPhone and an updated iPad, according to people with knowledge of the matter, kicking off a potentially record-setting year for product launches.

The announcement will mark Apple’s first major event since a new MacBook Pro debuted in October. Like the company’s other recent launches, it’s expected to be an online presentation rather than in-person, said the people, who asked not to be identified because the deliberations are private.

Apple is coming off a holiday quarter that far exceeded Wall Street predictions, helping quell fears that supply-chain problems would hurt sales. Now the company is setting its sights higher for 2022. The March announcements — along with the usual flood of product news expected later in 2022 — suggest Apple will introduce its biggest crop of new devices ever in a single year.

Given that the planned timing is still more than a month away, the company’s plans may change in the face of production delays or other changes, the people said. An Apple spokeswoman declined to comment on the company’s plans.

The new phone will be the first update to the iPhone SE model in two years, adding 5G network capabilities, an improved camera and a faster processor. But the design itself is expected to be similar to the current version, which debuted in April 2020.

The new iPad, meanwhile, will be an update to the Air model that features a faster processor and 5G. The company is also planning a new Mac with Apple-designed chips, which could also come as early as March. 

In addition to announcing new devices, the company is planning to release iOS 15.4 in the first half of March, the people said. The software update will add Face ID support for people wearing masks to iPhones and iPads, making it easier for users to unlock their devices. It also has new emojis and Universal Control, which lets customers use a single keyboard and trackpad across multiple iPads and Macs. 

Following the March event, the company will likely hold its annual Worldwide Developers Conference in June to announce software updates for the iPhone, iPad, Mac and Apple Watch. It’s then expected to hold multiple keynote events in the fall to launch the iPhone 14 and new Macs.

The 2022 lineup is likely to include new iMac and Mac Pro desktops, a redesigned MacBook Air, an updated low-end MacBook Pro, three Apple Watches, four iPhone 14 models and new AirPods. The company is also planning new services, such as a feature that lets the iPhone accept payments with the tap of a credit card. 

Apple is working on a high-end mixed reality headset as well, but that’s now more likely to be released in 2023. The company had aimed to announce the device as early as the end of 2022, but development challenges have delayed the timing, Bloomberg reported last month.

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — SoftBank Group Corp.’s Vision Fund accused Credit Suisse Group AG of shifting the blame over claims the investment group was responsible for losses the Swiss lender’s clients suffered from the collapse of finance firm Greensill Capital, according to documents seen by Bloomberg.

The documents, which include an internal memo and a letter sent to Credit Suisse’s lawyers, show that SoftBank’s leadership views the bank’s imminent suit as a “highly damaging publicity campaign” being run against them. The internal communications come ahead of an anticipated U.K. suit.

Credit Suisse is trying to reclaim $2.7 billion in overdue loan payments from borrowers including Katerra Inc., a U.S.-based construction company in which SoftBank was a major investor.

In the memo sent to the board of the Vision Fund in late January, the company’s legal department said that the Zurich-based bank will “continue with its desperate, unwarranted attempts to blame other institutions – including SoftBank – for Credit Suisse’s poor investment decisions.”

The proposed suit is simply an attempt to “placate” Credit Suisse’s own investors, Softbank Vision Fund’s lawyers wrote.

The memo goes on to detail ways in which Softbank believes Credit Suisse had deliberately misconstrued the reasons about hundreds of millions of dollars of losses it suffered.

The Swiss lender won a court order last month allowing it to seek documents from SoftBank as part of a lawsuit the bank has said it plans to file in England stemming from the collapse of Greensill Capital. 

Representatives for Credit Suisse and SoftBank declined to comment.

Collapse

The collapse of financier Lex Greensill’s empire was the first of two big hits to Credit Suisse last year, with the implosion of Archegos Capital Management coming shortly afterward.

In late 2020, Greensill restructured its relationship with Katerra and wrote off $440 million of obligations it was owed by Katerra, obligations that Greensill had earlier used to back the identical dollar amount of notes it had sold to Credit Suisse.  

Credit Suisse believes SoftBank concocted the restructuring so that it could pull its own money out knowing full well that Greensill, already in freefall, would be unable to repay the $440 million it owed to Credit Suisse.

“The reality is that prior to the Katerra restructuring, the Vision Funds loaned Greensill $440 million—the precise amount owed to Credit Suisse—to enable Greensill to buy-back the Katerra notes from the Credit Suisse fund and hold them on Greensill’s balance sheet,” the memo says.

The memo goes on to note that Greensill’s lawyers expressly acknowledged the $440m in financing the Vision Fund was providing was to be used to settle the Credit Suisse notes

Credit Suisse has said it cut ties with SoftBank in May last year, deciding to no longer do any new business with the Japanese firm, after the implosion of Greensill’s collapsed supply-chain finance empire and amid conflict of interest allegations, people with knowledge of the decisions earlier told Bloomberg.

Credit Suisse and SoftBank stopped doing business with each other last year, according to people familiar with the matter. The bank had concerns about potential conflicts of interest after the implosion of Greensill while the Japanese firm was worried about multiple controversies faced by the Swiss lender, the people said.

“We continue to have serious questions about the motives of Credit Suisse and the future of this institution,” SoftBank’s Vision fund lawyer said in the memo. 

SoftBank’s motion to quash Credit Suisse’s subpoena in a Californian court is due by Feb. 11.

The Swiss bank’s shares fell 0.9% in Zurich on Friday.

(Changes first graph to note that Vision Fund accused Credit Suisse)

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — After a year of mostly horrific returns tied to the real world, sponsors of three new blank-check companies are turning to the metaverse in search of takeover targets.

The ventures include one led by a former Sony PlayStation executive, and another from the video-game pioneer behind the Tomb Raider franchise; both managers have serious chops with highly successful track records. 

But to some observers, the new wave is an example of blank-check companies once again chasing the latest futuristic fad, after the industry’s bets on green vehicles and crypto went sour. This week’s volatility for tech and metaverse stocks likely made matters harder for sponsors of so-called special-purpose acquisition companies, which collectively are down more than 40% from last February’s peak.

That’s the nature of the beast, said Matthew Tuttle, chief executive officer of Tuttle Capital Management, which runs an index that tracks SPAC returns. “You have to do something to get and keep investor interest,” he said. “How do you do that? You find the new toy.” 

In this case, it’s the metaverse, a virtual reality world that people explore using headset systems, currently dominated by Oculus from Meta Platforms Inc. and PlayStation VR from Sony Group Inc. Meta CEO Mark Zuckerberg calls it “the next frontier” and Bloomberg Intelligence reckons the metaverse could be an $800 billion market by 2024. 

Warcraft Veteran 

Into this nascent arena comes Jack Tretton’s PowerUp Acquisition Corp., a SPAC looking to raise $225 million. Another led by Ian Livingstone called Hiro Metaverse Acquisitions I has already raised about $156 million.

SPACs are known as blank checks because they raise money from investors in an initial public offering with the goal of buying a private business that isn’t identified yet. They cite the expertise of their management team as a reason people should invest.

Tretton, for instance, is the former CEO of Sony Computer Entertainment America with a 35-year career in the gaming industry, according to the prospectus. His team includes Bruce Hack, the former CEO of Vivendi Games and vice chairman of Activision Blizzard Inc., who is listed as overseeing the launch of World of Warcraft, one of the industry’s iconic games. Their targets could include video-game companies and “new metaverse video gaming businesses.”

Efforts to reach New York-based PowerUp for comment weren’t successful; a phone number listed in its prospectus wasn’t in operation. A call to the law firm listed on its prospectus, McDermott Will & Emery LLP, wasn’t returned. Matthew Ball, the metaverse theorist listed in the prospectus as chief strategy officer, said on Friday he’s no longer part of the PowerUp SPAC.

Livingstone founded Eidos Plc, the U.K. company that created Tomb Raider, and was non-executive chairman of Sumo Group before it was sold for more than $1 billion to Tencent Holdings Ltd. Hiro plans to focus on the metaverse, e-sports, interactive streaming and “Gen Z social networks,” according to filings, with games and the metaverse expected to be “a large proportion of the new economy of the 2030s.” 

Untapped Market 

European entrepreneurs and creators produce about a third of all the video-game content played worldwide, but only about 3% of the industry’s global public market capitalization, Livingstone said in a Jan. 31 statement. Hiro declined to comment, pointing to a filing where Livingstone touts a “deep experience of the rapidly evolving gaming industry” and the SPAC’s position “to identify and fund a target company that is further along its growth curve and still has high value creation potential.”

Evergreen Corp. is a SPAC aiming to raise $100 million with plans to buy a company involved in the metaverse, artificial intelligence, fintech or various other tech sectors, according to its prospectus. It’s led by CEO Liew Choon Lian, whose track record shows stints working with various large tech companies, and building a firm valued in the filing at $195 million. Officials at Malaysia-based Evergreen didn’t return a call seeking comment. 

Mission statements for SPACs leave a fair amount of wiggle room in what they might actually buy. “It’s likely they came up with the idea a few months ago and obviously the market changes very quickly,” said Julian Klymochko, who manages a SPAC-focused fund at Accelerate Financial Technologies. “They don’t have to stick with the mandate and oftentimes they do not.”

Waves of volatility have hit the SPAC industry as the mania faded in the past year. The IPOX SPAC Index plunged 42% since its record high last February and the De-SPAC Index, which tracks 25 former blank-check firms that bought something, has lost nearly two-thirds of its value.

To some, the pain is a signal of an over-saturated market that had focused on unproven technologies at high valuations. Skepticism remains high with interest rates rising and profitability still far off for many startups in the immediate future, said Ed Moya, a senior market analyst at Oanda Corp.

Still, SPACs tend to trade on “price-to-yearnings” rather than price-to-earnings, which could provide a lift for the new breed.

“Following last year’s bursting of the SPAC bubble, many traders are cautiously looking for companies that might capitalize on the explosive growth that will happen with Web 3.0 and the metaverse,” Moya said.

(Updates sector performance in 14th paragraph; a previous version was corrected to show Matthew Ball is no longer part of the PowerUp SPAC.)

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — The U.S. said any conflict would hurt China’s international interests. NATO’s chief rejected a demand made by Russian President Vladimir Putin and Chinese President Xi Jinping that the military alliance halt any expansion eastward, reasserting that European states have the right to choose their own paths. 

Putin, in Beijing for the opening of the Winter Olympics, met with the Chinese leader on Friday to exchange views and pledge a bilateral friendship with “no forbidden zones.” Meanwhile, Russia’s foreign minister brushed off U.S. claims that Moscow plans to release a fake video as a way to justify an invasion. 

Moscow has repeatedly denied that it plans to attack Ukraine, while the U.K. and U.S. say it has massed almost 130,000 troops close to the border. Russia has decried the use of NATO forces near Russia’s frontiers. 

Key Developments

• Putin’s Financial Fortress Blunts Impact of Threatened Sanctions
• Putin Courts China’s Xi for Help in Showdown With the West
• Russia Signs Energy Deals With China as Relations With West Sour
• Ukraine Briefing Spurs Greater Urgency on Sanctions in Congress
• What we know so far about potential U.S.-EU sanctions on Russia
• Where military forces are assembling around Russia and Ukraine

All times CET

U.S. Says Conflict Would Hurt China’s Interests (7:14 p.m.)

Biden administration officials have cautioned Beijing that conflict between Ukraine and Russia would affect China’s international interests, White House Press Secretary Jen Psaki said following the meeting between Xi and Putin. 

“We’ve also conveyed that a destabilizing conflict in Europe would impact China’s interests all over the world and certainly China should know that,” Psaki told reporters on Friday after she was asked about U.S. reaction to the meeting between the two American adversaries.

The Biden administration, she said, has its own relationship with China in which “we engage directly at a very high level.” But she added that “our focus right now is continuing to unite with allies and partners to respond decisively if Russia further invades Ukraine.”

Lithuania Seeks Greater Deterrence Efforts (6:28 p.m.)

Lithuanian Foreign Minister Gabrielius Landsbergis called on NATO to step up deterrence on the eastern flank of the alliance as Russia moves more troops to Belarus.

“The growing number of Russian military forces in Belarus raises questions not only about the future of Belarus as an independent state but also increases the threat to the security of Lithuania and the Baltic region,” Landsbergis said in a statement.

Stoltenberg Dismisses Russia-China Demand to Halt NATO (3:29 p.m.) 

NATO Secretary General Jens Stoltenberg rejected claims that the 30-member alliance has expansion ambitions as “wrong.” “This is about respecting the sovereign right of independent nations to choose their own path,” he said in an interview with Bloomberg Television. 

Stoltenberg also said that the alliance is keeping an eye on China and Russia as they coordinate more closely militarily. “They are operating more together, they have more exercises together,” he said. “Just a few days ago they had a joint naval exercise with also Iran. So of course this is something we follow and monitor.”

Baltic Leaders Show Common Front on Energy Security (2:46 p.m.) 

NATO’s Baltic members have gas reserves and a liquid natural gas terminal, making them resilient to any potential shutoff of supplies by Russia, Latvian Prime Minister Krisjanis Karins said at a press conference with his Estonian and Lithuanian counterparts. 

The three prime ministers discussed energy security at their meeting in Riga, the Latvian capital. Estonian Prime Minister Kaja Kallas said she wasn’t convinced Russia would hold off using gas supplies as a weapon.

Russia Funneling Fuel, Hardware, Drones to Donbas, Kyiv Says (1:55 p.m.) 

Ukrainian intelligence services indicated that Russia continues to supply Kremlin-backed militants and Russian military personnel in the separatist-controlled areas in the eastern Donbas region, the Defense Ministry in Kyiv said in a statement.

Russian authorities dispatched 9,000 tons of fuel, several tanks, armored vehicles, self-propelled artillery units, Russian-made drones and other weapons by rail and road to Donetsk and Luhansk on Ukraine’s eastern border, the ministry said.

U.K. Backs U.S. Claim of Fake Video (1 p.m.)

U.K. Prime Minister Boris Johnson’s office said U.S. claims that Russia plans to make a graphic video of a Ukrainian attack to justify an invasion were “credible and extremely concerning.” 

“We’ve conducted our own analysis on this intelligence and share the US’s conclusion,” Johnson spokesman Max Blain told reporters at a regular briefing. The U.K. is “considering options for further military deployments to support NATO’s eastern flank”, Blain added. 

“We have high confidence Russia is planning to engineer a pretext blaming Ukraine for the attack in order to justify a Russian incursion into Ukraine,” Blain said. Russian Foreign Minister Sergei Lavrov earlier called the U.S. allegations “delusional.” 

Finland Bemoans EU Inaction (12:55 p.m.) 

Finland’s President Sauli Niinisto said the European Union must recognize that when its members are pulled into the Russia-Ukraine fray, it is also affected. 

Speaking to reporters in Helsinki, Niinisto referred to Russia’s demand that NATO agree not to expand eastward, which would effectively close the door to the military alliance for Finland and Sweden — although neither Nordic country has applied to join NATO. The EU’s lack of response on the subject stands in contrast to the solidarity that typically emerges quickly during financial crises, Niinisto said. 

NATO Chief to Depart After Central Bank Appointment (11:51 a.m.) 

NATO’s Stoltenberg has been appointed governor of Norway’s central bank and will take up the post later this year.  

NATO chief since 2014, Stoltenberg has pledged to serve out his term, which ends Oct. 1. The U.S. and Germany were among countries that had asked Stoltenberg, who’s leading the alliance’s talks with Russia over its military buildup near Ukraine, to stay on, Norwegian newspapers had reported.

Kremlin Says No Basis for Putin-Zelenskiy Meeting (11:40 a.m. CET)

There’s no basis yet for a meeting between Putin and Ukrainian President Volodymyr Zelenskiy on the tensions, Kremlin spokesman Dmitry Peskov said. 

“For this there needs to be an understanding of what will come out of it and what will be discussed, and there isn’t one yet,” Peskov said on a conference call. The same goes for another so-called Normandy summit that would include the leaders of France and Germany to discuss eastern Ukraine, he said. 

Turkish President Recep Tayyip Erdogan reiterated his offer to mediate between the two sides but Peskov said any visit by Putin to Turkey would be focused on bilateral issues. 

Putin, Xi See ‘No Forbidden Zones’ (11:17 a.m.) 

Putin and Xi see no limits to the Russia-China friendship and “no forbidden zones” in cooperation between their countries, the two leaders said in a joint statement after talks in Beijing — their first face-to-face meeting since 2019.  

China “treats with understanding and supports” Russia’s demands for binding security guarantees from the U.S. and NATO, and the two states oppose further expansion of the military alliance, according to the statement.

The pair also said in the statement that Russia opposes Taiwan’s independence in any form. The two leaders described the “new type” of relations between Moscow and Beijing as superior to the Cold War-era blocs.

YouTube Blocks Separatist Accounts (10:55 a.m.)

YouTube blocked several accounts associated with separatists in two eastern Ukraine regions, Tass reported, citing media representatives of the self-proclaimed republics. 

The Luhanskinformcenter in the unrecognized Russian-backed Luhansk People’s Republic and the Ministry of Information in the Donetsk People’s Republic were among the channels affected, Tass said. 

The moves could expose Alphabet’s Google, which owns YouTube, to new criticism in Russia, where it’s under increasing pressure from the government. The company is facing potentially huge fines for blocking a Russian TV channel’s account on the video service and in December was hit with a $95 million penalty for not removing content. 

Russia Blamed for German Energy Cyber Attack (11:00 a.m.)

A Russia-linked cybercrime gang was allegedly responsible for ransomware attacks that took down a swath of Germany’s fuel-distribution system this week. Hackers using “Black Cat” ransomware infected computers at Mabanaft GmbH and Oiltanking GmbH Group, say people familiar with an investigation of the breaches.

While there’s no confirmed link to the Russian state, the attacks come as the U.S., U.K. and others warn of the risk of cyberattacks as part of a campaign to put pressure on Europe for its support of Ukraine. 

Lavrov Calls U.S. Claim of Fake Video ‘Delusional’ (10:10 a.m.)

Foreign Minister Sergei Lavrov dismissed claims by the U.S. that Russia plans to produce a graphic propaganda video that purports to show a terrorist attack on Russian-speaking people.

“I read on the internet that the State Department made some statements that Russia is allegedly preparing a fake video with an apparent attack by Ukrainian soldiers on Donbas,” Lavrov said in a clip posted by Ren TV. “This kind of fantasy is delusional in my opinion, and they are more and more of them every day.”

U.S. officials warned previously that Moscow may be planning a false flag event that would create a justification for sending troops into Ukraine, and have said it used similar tactics when it occupied Crimea and fought a war with Georgia.

Carlsberg CEO Downplays Impact on Business (9:30 a.m.)

The Danish brewer Carlsberg A/S said its business won’t be hit too hard by a possible Russia-Ukraine conflict. Carlsberg gets less than 8% of its profit from the two countries, CEO Cees ‘t Hart said in a Bloomberg Television interview. A decade ago, eastern Europe accounted for almost half of the company’s earnings. 

Putin, Xi Meet; Russia will Supply Gas From Far East (9:13 a.m.) 

In their first in-person meeting since 2019, Putin told China’s Xi that Russia will supply 10 billion cubic meters of gas per year to China from the Far East under a new contract. 

During the summit, timed to show solidarity on the sidelines of the Winter Olympics, Putin said conditions between the two countries were of an “unprecedented nature and an example of a dignified relationship.” 

EU Warned of New Russian Cyber Threat (8:40 a.m.) 

European Union institutions were warned Thursday of a new Russian-backed cyber threat that’s been running credential harvesting activity since mid-2021, according to an alert seen by Bloomberg News. 

The alert says it’s possible the capabilities will be used for cyberespionage purposes. No institutions have been targeted yet. The alert didn’t mention Ukraine. 

The group, known as Reuse Team or Callisto, has been involved in state-sponsored espionage and criminal activity since the early 2000s, the alert said. The group has recently targeted an EU body and was involved in a campaign that targeted a European ministry of foreign affairs in 2020. It has gathered intelligence related to foreign policy in Eastern Europe and the South Caucasus, according to a 2017 report by F-Secure, a cyber security research firm. 

Gazprom Reliability in Doubt, Von Der Leyen Says (8:31 a.m.) 

Gazprom is abiding by its contracts with the EU but unlike other suppliers isn’t shipping more gas than planned to Europe, and that’s casting doubt on its reliability, European Commission President Ursula von der Leyen said in an interview with Les Echos and Handelsblatt.

Gazprom’s behavior is “weird,” and Russia is using gas deliveries as a way to put pressure on Europe, she said.

Von der Leyen also described the EU’s sanctions package in the event of a Russian invasion of Ukraine, which includes including shutting Moscow off from foreign capital, and controlling exports of critical goods to Russia needed in areas such as artificial intelligence, weapons, quantum computing, lasers and space technologies.

Macron to Visit Russia, Ukraine Next Week (8:21 a.m.) 

French President Emmanuel Macron will travel to Moscow on Monday and Ukraine on Tuesday, an Elysee official said, as he continues an active diplomatic role in the crisis. 

The trips will follow three calls in the past week between Macron and Vladimir Putin to discuss the Ukrainian situation.    

U.S. Lawmakers Briefed by Top Security Team (11:00 p.m.) 

U.S. lawmakers are rushing to draft a new round of potential sanctions on Russia intended as a deterrent to any aggression against Ukraine. The sense of urgency in Congress escalated following day-long briefings Thursday by top national security officials. 

Negotiations had been slowed as Democrats and the Biden administration resisted Republican efforts to impose more sanctions on Russia now. Both sides agree on the need for more punishing penalties should Russia invade Ukraine, which the Kremlin denies it plans to do. 

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — When Amazon.com Inc. announced it was raising the price of its Prime program, the company said an annual subscription would climb $20 to $139. But slightly more than half of Prime members will end up forking over almost $180 a year. 

That’s because they pay each month, a fee that’s rising to $14.99 from $12.99. The company introduced the monthly subscription in 2016 to attract more middle- and low-income shoppers. The strategy worked, and 52% of subscribers now pay each month, according to Consumer Intelligence Research Partners. 

Even though they pay more, monthly subscribers are almost as loyal as annual members, with about 97% of them likely to renew compared with 99% for their counterparts, said the Chicago research firm, which conducts quarterly surveys.

“Even though monthly members pay somewhat more on an annual basis, members like that they have a smaller cash outlay and the perceived flexibility,” said Josh Lowitz, CIRP’s co-founder. “Despite the option to pause and re-start monthly membership, our data suggests that only a very small percentage truly cherry-pick their Amazon Prime months.”

The increase announced Thursday is the first since 2018. Amazon has invested billions of dollars to ensure packages get to customers on time amid an acute labor shortage and supply-chain bottlenecks. Prime subscribers also get access to movies, sports programming and photo storage, among other perks.

The company added millions of new subscribers after previous price increases, and analysts say Amazon probably won’t lose many customers once the latest hike goes into effect. Investors welcomed the increase and sent the shares soaring after the company reported robust results, fueled in part by a strong showing from its cloud-services division. 

“Amazon has historically sold the increase in Prime to consumers by saying ‘we have much more and much more items,’” said Tom Forte, a senior research analyst at D.A. Davidson & Co. “They’re spending billions more on content than they were four years ago. I think there’s a strong case to make for price increases. I think there’s a compelling case that the retention rate will still be high.”

Morgan Stanley analysts led by Brian Nowak wrote in a note on Friday that Amazon attracted a large number of households averaging $55,000 to $70,000 in annual income over the last two years. “The growing and aging of Amazon’s Prime sub base continues to be a key enabler of Amazon’s retail business,” the analysts wrote.

Amazon shares rose almost 15% at 1:15 p.m. in New York.

The price change goes into effect on Feb. 18 for new Prime subscribers; it will apply to current members who renew after March 25.

The Seattle-based company signed up a combined 60 million U.S. Prime members in 2020 and 2021, according to CIRP, bringing the total number to 172 million. The firm tallies Prime members, not subscriptions. One Prime subscription can have multiple members since many households share one account. CIRP attributes the surge in sign-ups to consumers’ stampede online during the pandemic. 

Prime helps Amazon convert occasional shoppers into loyal customers. Prime subscribers typically spend more on Amazon than non-members.

The price increase struck Evercore ISI retail analyst Greg Melich “as a bit early,” but he said it should “prove effective” given strong renewal rates and expanded benefits.

(Updated with shares.)

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.

(Bloomberg) — When Amazon.com Inc. announced it was raising the price of its Prime program, the company said an annual subscription would climb $20 to $139. But slightly more than half of Prime members will end up forking over almost $180 a year. 

The company introduced a monthly subscription in 2016 to attract more middle- and low-income shoppers. The strategy worked, and 52% of subscribers now pay each month, according to Consumer Intelligence Research Partners. Even though they pay more, they’re almost as loyal, with about 97% of them likely to renew compared with 99% for annual members, said the Chicago research firm, which conducts quarterly surveys.

“Even though monthly members pay somewhat more on an annual basis, members like that they have a smaller cash outlay and the perceived flexibility,” said Josh Lowitz, CIRP’s co-founder. “Despite the option to pause and re-start monthly membership, our data suggests that only a very small percentage truly cherry-pick their Amazon Prime months.”

The increase to $139 a year and $14.99 per month announced Thursday is the first price hike since 2018. Amazon has invested billions of dollars to ensure packages get to customers on time amid an acute labor shortage and supply-chain bottlenecks. Prime subscribers also get access to movies, sports programming and photo storage, among other perks.

The company added millions of new subscribers after previous price increases, and analysts say Amazon probably won’t lose many customers once the latest hike goes into effect. Investors welcomed the increase and sent the shares soaring after the company reported robust results, fueled in part by a strong showing from its cloud-services division. 

“Amazon has historically sold the increase in Prime to consumers by saying ‘we have much more and much more items,’” said Tom Forte, a senior research analyst at D.A. Davidson & Co. “They’re spending billions more on content than they were four years ago. I think there’s a strong case to make for price increases. I think there’s a compelling case that the retention rate will still be high.”

Morgan Stanley analysts led by Brian Nowak wrote in a note on Friday that Amazon attracted a large number of households averaging $55,000 to $70,000 in annual income over the last two years. “The growing and aging of Amazon’s Prime sub base continues to be a key enabler of Amazon’s retail business,” the analysts wrote.

Amazon shares rose 13% at 12:19 p.m. in New York.

The price change goes into effect on Feb. 18 for new Prime subscribers; it will apply to current members who renew after March 25.

The Seattle-based company signed up a combined 60 million U.S. Prime members in 2020 and 2021, according to CIRP, bringing the total number to 172 million. The firm tallies Prime members, not subscriptions. One Prime subscription can have multiple members since many households share one account. CIRP attributes the surge in sign-ups to consumers’ stampede online during the pandemic. 

Prime helps Amazon convert occasional shoppers into loyal customers. Prime subscribers typically spend more on Amazon than non-members.

The price increase struck Evercore ISI retail analyst Greg Melich “as a bit early,” but he said it should “prove effective” given strong renewal rates and expanded benefits.

More stories like this are available on bloomberg.com

©2022 Bloomberg L.P.