Bloomberg

(Bloomberg) — Amazon.com Inc. is closing its primary care and telehealth service, a sudden move that follows the company’s deal to buy the One Medical chain of clinics. 

Amazon Care, which was launched in 2019, will close by the end of the year, Senior Vice President Neil Lindsay said in an email to the company’s health care team. 

“This decision wasn’t made lightly and only became clear after many months of careful consideration,” Lindsay said in the email, which was reviewed by Bloomberg. “Although our enrolled members have loved many aspects of Amazon Care, it is not a complete enough offering for the large enterprise customers we have been targeting, and wasn’t going to work long-term.”

Lindsay said many displaced workers will have opportunities to join other teams within Amazon.

Kristen Helton, who ran Amazon Care, is on a break that began earlier this summer, Bloomberg reported earlier this month.

Amazon Care overlaps with services provided by One Medical, which Amazon said in July it would acquire in an all-cash deal valued at $3.49 billion. One Medical, whose parent is called 1Life Healthcare Inc., operates 182 medical offices in 25 markets in the US. Customers pay a subscription fee for access to its physicians and round-the-clock digital health services. Amazon in February announced plans to expand Amazon Care to 20 additional cities, including New York, Chicago, Miami and San Francisco.

News of the closing came as a surprise to members of the team, according to a person familiar with the matter, who requested anonymity to discuss a private matter.

“It just seems like there weren’t enough health care hires from the start,” the person said. “A lot of internal Amazon people were working in a space they didn’t know anything about.”

Amazon for years has been trying to break into the health care industry. It purchased mail-order pharmacy PillPack Inc. in 2018 and joined a much ballyhooed health care venture with JPMorgan Chase & Co. and Berkshire Hathaway Inc. that fizzled out after three years.

(Updates with internal email, background throughout)

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(Bloomberg) — The Senate Judiciary Committee will hold a hearing featuring testimony from Twitter whistle-blower Peiter “Mudge” Zatko on Sept. 13, the panel’s leaders announced on Wednesday.

The committee said it had subpoenaed Zatko, the company’s former security chief, to appear a day after he went public with allegations that Twitter has failed to adequately protect data on its hundreds of millions of users, leaving their personal information open to hackers and spies. 

“Mr. Zatko’s allegations of widespread security failures and foreign state actor interference at Twitter raise serious concerns,” said Senator Dick Durbin of Illinois, the chair of the Senate Judiciary Committee, and the panel’s top Republican, Chuck Grassley of Iowa. 

“If these claims are accurate, they may show dangerous data privacy and security risks for Twitter users around the world,” the senators said in the statement.  

The committee plans to investigate further with a full hearing and take additional steps as needed to get to the bottom of the allegations, according to the statement. 

Zatko, who oversaw Twitter’s security from 2020 until he was fired six months ago, submitted reports outlining his claims to the US Securities and Exchange Commission, the Justice Department and the Federal Trade Commission. He alleged that Twitter’s head of site integrity told him that the social media company didn’t know how many bots, or automated accounts, are on its platform.

Twitter rejected the whistle-blower’s claims, describing them in a statement as a false narrative “riddled with inconsistencies and inaccuracies.” Zatko was fired for “ineffective leadership and poor performance,” Twitter said.

John Tye, chief disclosure officer of Whistleblower Aid, which is representing Zatko in the complaint, said Wednesday evening that “Mudge stands by everything in his disclosure, and his career of ethical and effective leadership speaks for itself.” 

“The focus should be on the facts laid out in the disclosure, not ad hominem attacks against the whistle-blower,” Tye added.

Legal experts said Zatko’s claims could bolster Elon Musk’s legal case against Twitter. The Tesla Inc. founder, who is seeking to back out of his bid to buy the social media site, is arguing in court that Twitter misled him about the amount of bots and spam on the platform.

Lawmakers on several congressional committees have vowed to investigate Zatko’s claims and have argued that his revelations highlight the need for federal privacy legislation.

Zatko alleged that Twitter prioritized growth over reining in the scourge of spam accounts, and even offered millions of dollars in cash bonuses to executives that increased the number of daily active users. He also claimed the Twitter sales team has continued to misuse phone numbers for targeted advertising, potentially violating its 2011 consent decree with the Federal Trade Commission.

(Updates with Twitter comment, in seventh paragraph.)

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(Bloomberg) — Alameda Research Co-Chief Executive Officer Sam Trabucco is stepping down, saying he’s chosen “to prioritize other things” and that he couldn’t “continue to justify the time investment” of being an integral part of the crypto trading firm. 

Caroline Ellison, the co-CEO, will lead the company and Trabucco will serve as an adviser, he announced in a series of tweets Wednesday. Alameda, the trading affiliate of FTX crypto exchange controlled by Sam Bankman-Fried, confirmed the changes. FTX is one of the world’s largest platforms for trading digital-assets. 

Trabucco, 29, and Ellison became co-CEOs after Alameda co-founder Bankman-Fried stepped down from the position. Trabucco, who joined Alameda in 2019, said he had been reducing his involvement with Alameda and would no longer have a strong day-to-presence with the company. He said that during his time at the Bahamas-based firm, it was difficult to spend a normal amount of time at work and that he had purchased a boat and had been enjoying spending time with friends and family.   

Alameda, which Bankman-Fried, 30, launched prior to co-founding FTX, has been credited with helping to propel the crypto billionaire to international fame and success. But despite being one of the industry’s top market makers and an investor in major startups like crypto bank Anchorage Digital, nonfungible token marketplace Magic Eden and crypto payments platform MobileCoin, Alameda has made major missteps during Trabucco’s tenure.

The firm offered a $485 million loan to Voyager Digital, a crypto lending platform that the firm had previously invested in. Despite the massive lifeline, Voyager still collapsed into bankruptcy. Bankman-Fried blamed the debacle on a lack of time to conduct full due diligence.

“We gave what was a fairly substantial line of credit that would have fully backed all of their liabilities, but we were a little bit nervous and uncertain about how that one was going to play out,” Bankman-Fried said in a previous interview with Bloomberg. “We put ourselves in a situation where we might lose money.”

After the company filed for bankruptcy, Alameda and FTX offered to buy most of Voyager’s digital assets and digital asset loans, other than those to disgraced hedge fund Three Arrows Capital, in cash at market value. Voyager called the proposal a “low-ball bid” that disrupted the bankruptcy process.

FTX and Alameda’s distressed deal-making during crypto winter has also provided fodder to critics who believe Bankman-Fried is consolidating power over the crypto industry, which many think should be decentralized.

Alameda has faced other criticism. Last year, the decentralized finance platform Reef Finance accused Alameda of trying to dump tokens it received as part of an investment and threated to have the Reef tokens delisted on major exchanges if the firm didn’t move forward on a deal. Alameda denied strong-arming the firm.

Alameda also has a $12.7 million claim as a loan party against Celsius Network, a crypto lender that filed for bankruptcy in July. The company is Celsius’s 13th-biggest unsecured creditor, according to court filings. Bankman-Fried previously told Bloomberg that FTX passed on the opportunity to bail out Celsius prior to the company’s descent into bankruptcy.

Trabucco previously worked at Susquehanna International Group’s bond ETF desk and graduated from MIT in 2015, the same university that Bankman-Fried attended.

(Updates with deal history beginning in the fourth paragraph.)

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(Bloomberg) — California is poised to phase out sales of nearly all new, gas-burning cars by 2035 under rules regulators are expected to approve Thursday, a move that could dramatically accelerate the transition to electric vehicles nationwide if other states follow suit.

Governor Gavin Newsom first announced the 2035 goal in an executive order two years ago, but the new rules would set a firm timetable for reaching it, requiring automakers to steadily increase their sales of zero-emission cars in the nation’s largest auto market. And because 17 other states typically follow California’s auto-emissions standards, Thursday’s vote by the California Air Resources Board could reverberate far beyond the Golden State’s borders, forcing the auto industry to speed up its switch to electric cars.It could also burnish Newsom’s climate-change credentials at a time when the Democratic governor is widely believed to be weighing a run for the White House.

California, birthplace of Tesla Inc., has long been the nation’s top market for electric vehicles, and they account for 15% of new cars registered in the state this year, according to the California New Car Dealers Association.  The proposed regulations would set annual targets for boosting that percentage, starting at 35% in 2026 and hitting 68% in 2030. Plug-in hydrids, which switch between electricity and gas, and hydrogen fuel-cell cars would also count toward those goals. California already has its own clean-vehicle incentive program, offering rebates of as much as $7,000 toward the purchase of zero-emission vehicles, although cars costing more than $45,000 don’t qualify.Read More:  California Electric Vehicle Plan Misses Equity, Advocates SayThe move would dovetail with President Joe Biden’s efforts to push electric car sales. The Inflation Reduction Act he signed last week includes tax credits of up to $7,500 to EV buyers, although income restrictions apply. And last year’s infrastructure law included $5 billion to build a nationwide network of charging stations along major highways, to convince drivers they won’t get stranded without power on a trip if they make the switch.While most automakers have announced plans to ramp up production of EVs, the industry has expressed concern about getting locked into specific timelines for their adoption and that many consumers may not be ready to ditch gasoline. Electrics made up less than 6% of new car sales in the first half of this year, according to the Edmunds automotive information service. And EV prices, already higher than gas-powered cars, are rising as the war in Ukraine, supply chain problems and rising demand make the metals inside their rechargeable batteries more expensive. The average sales price for an EV in July was nearly $62,900, according to Edmunds, compared with $47,200 for all vehicles.“It’s a worthy goal, but may be unrealistic given the charging infrastructure and likely increasing demand for power,” Brian Moody, executive editor for Kelley Blue Book and Autotrader, said in an emailed statement.  

Still, Edmunds analyst Jessica Caldwell said Wednesday that the industry should be able to meet California’s goals. “If automakers can pick up production, sufficient investments are made in charging infrastructure and the power grid, and financial incentives can be made more available, this milestone should be achievable—if not surpassable,” said Caldwell, the company’s executive director of insights.

 

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(Bloomberg) — Twitter Inc. provided data for spam and robot accounts that was “explicitly an estimate” to billionaire Elon Musk, who hasn’t shown any reason why that information is relevant to his plan to ditch a $44 billion buyout of the social-media platform, the company’s lawyer told a Delaware judge.

Musk, who claims the bot accounts inflated Twitter’s usage figures, is demanding the data because he wants a “do-over” so his experts can “analyze the number and see if they can come up with a different number,” Twitter lawyer Bradley Wilson said Wednesday during a court hearing. 

The request by Musk also raises user privacy issues, and involved “trillions upon trillions of bits of data going back more than two years,” he said.

Chancery Court Judge Kathaleen St. J. McCormick is conducting a hearing on Musk’s request that Twitter identify the employees responsible for evaluating how much of the platform’s customer base is spam and robot accounts.

Earlier, Musk’s lawyer said Twitter has “stonewalled” requests to nail down how much of the social-media platform’s activity is generated by bot accounts.

“We’re been left in position that core metric of their business, they aren’t providing the data necessary,” Musk attorney Alex Sprio said. “It puts us at a huge disadvantage. We’re the would-be buyer.” 

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(Bloomberg) — The font Blooming Elegant is admired for its loping, cursive lettering, described by its creator as “playful” and “super flirty.” A download for personal use costs $17. On Wednesday, the font’s designer, Nicky Laatz, accused the online retailer Zazzle Inc. in US federal court of stealing the design and using it to fraudulently generate hundreds of millions of dollars for itself.

Zazzle, which sells custom-printed day planners, coffee mugs and other goods online, offered Blooming Elegant until recently among the hundreds of fonts available for customers to decorate their trinkets. In her complaint filed in a Northern California district court, Laatz claims Zazzle representatives asked the British font designer in 2016 to license her product. She didn’t respond and says a Zazzle employee, a senior network engineer, then bought a license meant for individual use and helped carry out the alleged fraud. Zazzle did not immediately respond to a request for comment.

The Redwood City, California-based company was founded in 2005 and has been inching toward an initial public offering as soon as this year. Zazzle hired Citigroup Inc. and Barclays Plc for an IPO and could seek a market value of $1 billion to $2 billion, Bloomberg reported in February. (More recently, uncertainty in the public markets has led many companies to delay their listings.)

After the font was made available on Zazzle, it became one of the most popular on the site, according to the complaint. Its distinguished letters adorn wedding invitations, business cards, glittery flasks and smartphone cases. Laatz complained about the single-user license in 2020, but, she alleges, Zazzle kept using Blooming Elegant for two years after that.

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(Bloomberg) — Stock traders remained hesitant to make any huge wagers ahead of Jerome Powell’s speech on Friday, which may provide clues on how hawkish the Federal Reserve will be in the face of mounting economic challenges.

After wandering aimlessly earlier Wednesday, the S&P 500 notched a small gain. For a second day in a row, its swing was capped within 1%. Such a stretch of intraday calm occurred only three other times in 2022. Tesla Inc., which is getting ready to trade on a split-adjusted basis Aug. 25, pared most of its rally. Treasury 10-year yields remained above 3% on bets the Fed will continue to lean toward tighter policy.

In the run-up to the all-important Jackson Hole annual conference that will be attended by Powell and policy makers from around the world, traders had to digest more hawkish talk. Fed Bank of Minneapolis President Neel Kashkari said late Tuesday it’s “very clear” that officials need to tighten and bring inflation back under control.

“We don’t expect any shock-and-awe, Volcker-style, hyper-aggressive articulation by Powell or anyone else for that matter,” said Troy Gayeski, chief market strategist at FS Investments, referring to former Fed Chair Paul Volcker, who tipped the economy into recession to conquer inflation in the 1980s. “However, it’s very clear that the rally since the June bottom works directly against what the Fed has been trying to achieve, which is tighter financial conditions to slow economic growth and slow inflation.”

Read: Lockstep Markets Primed for All-or-Nothing Sweepstakes on Powell

Economic reports have been mixed at best, underlining the delicate task policy makers face in bringing down high inflation without sparking a recession. Data Wednesday showed US pending home sales fell to the lowest since the start of the pandemic. While orders placed with US factories for core capital goods beat forecasts, the picture might change in the coming months amid higher borrowing costs and uncertainty about the growth outlook.

Central banks that hike borrowing costs too aggressively to tame supply-driven inflation risk exacerbating price gains, according to Nobel laureate economist Joseph Stiglitz. Meantime, Guggenheim Partners Chief Investment Officer Scott Minerd is warning investors away from junk bonds and stocks because slowing economic growth and higher interest rates likely will produce deeper losses in risk markets.

In late trading, Salesforce Inc. sank on a disappointing revenue forecast, while Snowflake Inc. jumped on an upbeat outlook. 

Read: Goldman Says Hedge Funds Back Betting Big on Megacap Tech Stocks

Will the meme mania fizzle out? That’s the theme of this week’s MLIV Pulse survey. Click here to participate anonymously.

What to watch this week:

• US GDP, initial jobless claims, Thursday
• Kansas City Fed hosts its annual economic policy symposium in Jackson Hole, Wyoming, Thursday
• ECB’s July minutes, Thursday
• Fed Chair Powell speaks at Jackson Hole, Friday
• US personal income, PCE deflator, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.3% as of 4 p.m. New York time
• The Nasdaq 100 rose 0.3%
• The Dow Jones Industrial Average rose 0.2%
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was unchanged at $0.9970
• The British pound fell 0.3% to $1.1799
• The Japanese yen fell 0.2% to 137.10 per dollar

Bonds

• The yield on 10-year Treasuries advanced six basis points to 3.11%
• Germany’s 10-year yield advanced five basis points to 1.37%
• Britain’s 10-year yield advanced 12 basis points to 2.70%

Commodities

• West Texas Intermediate crude rose 1.6% to $95.28 a barrel
• Gold futures rose 0.2% to $1,765.20 an ounce

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(Bloomberg) — India’s business and consumption activity showed conflicting signs of recovery in July as elevated inflation, rising borrowing costs and fears of a global slowdown weighed on Asia’s third-largest economy.

Demand for Indian goods and services softened, a cross-section of high-frequency indicators compiled by Bloomberg News showed. The needle on a dial measuring so-called animal spirits, however, remained steady at 5 last month as the gauge uses a three-month weighted average to smooth out volatility in the single month readings.

The Reserve Bank of India, which has raised interest rates by a total of 140 basis points in three moves this year, has signaled future tightening would be calibrated to ensure there isn’t a massive slowdown in the economy, and sees price pressures moderating from its recent peak. A pulse-check of the economy is due next week, with gross domestic product data for the April-June quarter likely to show a double-digit growth, reflecting demand thanks to a wider reopening from the pandemic.

Below are details of the dashboard. (For an alternative gauge of growth trends, follow Bloomberg Economics’ monthly GDP tracker — a weighted index of 11 indicators.)

Business Activity 

Purchasing managers’ surveys showed India’s services activity in July falling to the lowest level in four months on weaker sales growth and elevated inflation. While domestic demand for Indian services remained steady, international demand worsened, offsetting gains in the manufacturing sector that expanded to the highest level in eight months.

Moderation in business outlook in services pulled down the S&P Global India Composite PMI Index to 56.6 in July, from 58.2 a month earlier.

Exports

Trade deficit widened to a fresh record of almost $30 billion as exports growth slowed to a 17-month low led by weak global demand and a levy on outbound shipments of fuel, which makes up more than 15% of India’s exports.

Imports stayed near the record-high levels due to a weaker rupee, which was one of the worst performing Asian currencies in the last three months. Crude, which comprises about one-third of India’s imports, and coal with an 8% share, primarily contributed to the rise in inbound shipments.

Consumer Activity

Passenger vehicle sales rose for a second-straight month helped by a broad-based recovery in all segments, including two-wheelers. While supply issues due to semiconductor shortage are easing, automakers cautioned that costlier loans could crimp demand for new vehicles.

Bank credit continued to grow despite higher interest rates, rising the most in more than three years to 14.5% at the end of July. Liquidity in the banking system continued to remain in surplus.

Industrial Activity

Among signs of industrial activity, factory output as well as core sector signaled moderation in June as electricity consumption and coal production slowed down with the onset of monsoons. The year-on-year growth in Index of Industrial Production eased to 12.3% from a one-year high in May. The growth of eight key infrastructure industries also dropped to 12.8 from 19.3% in the previous month. Both the data are published with a one-month lag.

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(Bloomberg) — Peloton Interactive Inc. rallied after agreeing to offer bikes and accessories on Amazon.com Inc. as part of a turnaround plan, breaking with a longtime practice of selling products through its own channels.

The move to open a US storefront on Amazon’s sprawling online marketplace will help Peloton expand its distribution and make products more readily available, the company said in a statement Wednesday. Until now, its wares have just been available via its website and retail showrooms.

The news sent Peloton shares up 20% to $13.48 in New York, the biggest one-day jump in more than six months. Before Wednesday, the stock had lost more than two-thirds of its value this year as the company struggled with slowing demand, an inventory build-up and strategy changes.

Amazon had previously been cited as a potential acquirer of Peloton — and investors pressed for such a deal earlier this year. But Peloton Chief Executive Officer Barry McCarthy has said that he’s not trying to sell the company.

“Peloton’s retail partnership with Amazon.com in the US broadens its reach, though we don’t think of this as a precursor to M&A,” said Geetha Ranganathan, a Bloomberg Intelligence senior media analyst. “The pact should help boost Peloton’s top line, but — more importantly — trim distribution costs and help it turn free cash flow positive in fiscal 2023.”

McCarthy, a tech veteran who took the helm in February, is trying to turn around a business that thrived during the early days of the pandemic but slowed drastically in the past year. He’s looking to reinvigorate sales, boost efficiency and restore some of Peloton’s former cachet. 

In another effort to goose sales, Peloton is redesigning its bikes so customers can assemble them at home and will explore letting users beam its content to rival workout machines. Investors will get more information on McCarthy’s comeback plans Thursday morning, when Peloton is due to report quarterly results.

Amazon provides Peloton with another way to work down its inventory pile-up, which it amassed as pandemic lockdowns faded.

McCarthy’s general strategy is to rely more on partners to operate the business — a push that’s furthered by the Amazon arrangement.

The New York-based fitness company announced plans earlier this month to lay off about 800 workers, raise the prices of its equipment, and outsource deliveries and some customer service functions. It’s also looking to wind down much of its retail footprint in North America starting next year.

It’s not hard to see why Peloton chose to sell its wares on Amazon. The Seattle-based company has a commanding position in online retail in the US. Insider Intelligence estimates Amazon will account for 38% of US retail e-commerce sales this year, with Walmart Inc. a distant second at about 6%.

“Expanding our distribution channels through Amazon is a natural extension of our business and an organic way to increase access to our brand,” Kevin Cornils, Peloton chief commercial officer, said in the statement.

(Updated share reaction in third paragraph.)

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(Bloomberg) — Twitter Inc. “stonewalled” Elon Musk on requests to nail down how much of the social-media platform is spam and robot accounts, and has refused access to data from a whistleblower who claimed the company was hiding the true figures, the billionaire’s lawyer told a judge.

Musk claims Twitter’s user figures are inflated by the accounts, citing them as a reason for ditching his $44 billion buyout of the company. That kicked off a legal fight in Delaware as Twitter seeks to get him to consummate the deal. Musk’s attorney asked a judge Wednesday to grant him access to employees who compile the data. 

“We’re been left in position that a core metric of their business, they aren’t providing the data necessary,” said Alex Sprio, who represented the billionaire at the hearing. “It puts us at a huge disadvantage. We’re the would-be buyer.” 

Twitter attorney Bradley Wilson said the company had provided Musk with information on spam and robot accounts that was “explicitly an estimate.” He also said Musk hadn’t shown any reason why that information is relevant to his plan to cancel the takeover.

Musk wants the data so he can get a “do-over” that would allow his experts to “analyze the number and see if they can come up with a different number,” Twitter lawyer Bradley Wilson said Wednesday during a court hearing. 

Twitter’s lawyer said the request by Musk also raises user privacy issues, and involved “trillions upon trillions of bits of data going back more than two years,” he said.

After the hearing Wednesday, Delaware Chancery Court Judge Kathaleen St. J. McCormick said she’d rule on Musk’s request later.

The dispute is the latest in an expanding legal fight, with Musk and Twitter issuing subpoenas to banks, investors and lawyers involved in the teetering deal agreement as they seek ammunition for an Oct. 17 trial. Jack Dorsey, Twitter’s former chief executive officer, was subpoenaed earlier this week. 

Whistle-Blower Claims

Spiro said Twitter repeatedly refused to turn over files and messages from Peiter Zatko, Twitter’s ex-head of security, who filed a whistle-blower lawsuit. Zatko claimed he raised questions about bots in early 2021 and was told by Twitter’s head of site integrity the firm didn’t know how many bots were on the platform. He also said his Twitter colleagues showed no interest in delving into the issue.

Musk’s lawyers have subpoenaed Zatko and he may be called to testify at the trial in October to determine if Musk must complete his acquisition of Twitter.

The billionaire’s legal team attempted to force Twitter to designate Zatko as a records custodian, but officials of the platform said he wasn’t involved in evaluating the number of bots embedded in its customer base, Spiro said. “They didn’t want him turning over his data and telling us what he knew,” Spiro said.

Zatko, fired earlier this year from Twitter, alleged “egregious deficiencies” in the platform’s defenses against hackers and privacy issues, according to a copy of his whistle-blower complaint.

The case is Twitter v. Musk, 22-0613, Delaware Chancery Court (Wilmington). 

(Updates with judge saying she’ll decide on Musk’s data request later.)

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