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Qatar Airways targets expansion strategy to ‘defeat’ regional blockade

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Qatar’s flagship airline is embarking on a strategy of expansion in part to counter losses borne by the regional embargo imposed on it in 2017 by several neighboring states.

Qatar Airways CEO Akbar Al-Baker told CNBC on Tuesday that he would bring an end to the “illegal” blockade through a policy of increased flight frequencies.

“We are focusing everywhere in the world, we’ve been increasing frequencies into Eastern Europe, Southeast Asia, increasing our network into the sub-continent, so we are going all over the place,” he said. “We are very determined to make sure that this illegal blockade is defeated in a very, very strong way.”

Several Arab countries led by Saudi Arabia cut diplomatic ties with Qatar last June, accusing the tiny oil-rich state of supporting terrorism. Qatar rejected the accusations.

Saudi Arabia, the United Arab Emirates, Bahrain and Egypt imposed a blockade on their neighbor, closing their land, sea and air borders with Qatar.

Qatar Airways initially predicted losses for the 2017 financial year due to the blockade, but Al-Baker suggested Tuesday that these will be softer than first anticipated. The company’s annual financial results will not be out until late March.

“In addition to this we are expanding, we’re keeping on stretching our global network, we are increasing frequencies and we are doing other investments that will give us positive returns on our balance sheet,” Al-Baker said.

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Microsoft hunts for big acquisitions as antitrust spotlight on rivals

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CEO of Microsoft Satya Nadella gives a lecture about dream, struggle and creation at Tsinghua University on September 25, 2014 in Beijing, China. Nadella visited China for the first time on Thursday.

Visual China Group | Getty Images

Twenty years ago, the United States government filed suit against Microsoft for abusing its market power. Today, Microsoft is empire building because the country’s regulatory focus is on its biggest rivals.

Microsoft announced Monday it had acquired Nuance Communications for $16 billion ($19.7 billion including net debt). The deal gives Microsoft a company that specializes in voice transcription and related artificial intelligence software. Nuance has a particular niche in health care, providing software to digitize conversations from doctor’s visits and facilitate clinical documentation.

The acquisition comes about a month after Microsoft closed its $7.6 billion deal for ZeniMax, the parent company of video game publisher Bethesda. That transaction is meant to boost Microsoft’s Xbox against growing video gaming competition. Microsoft has also been in talks to acquire Discord, a voice, text and video-chatting platform for games, for more than $10 billion. Those discussions have happened concurrently to the Nuance transaction discussions, which started in December, according to a person familiar with the matter.

Microsoft’s recent deal talks don’t stop there. The company nearly acquired TikTok’s U.S., Canadian, Australian and New Zealand operations last year in a deal that was being discussed in the $20 billion to $30 billion range. Microsoft has also recently approached Pinterest to gauge their interest in selling, according to a Financial Times report in February. Pinterest has a market capitalization of more than $51 billion.

Less than three years ago, Microsoft paid $7.5 billion for GitHub. Less than five years ago, Microsoft paid more than $26 billion for LinkedIn.

Spending tens of billions on acquisitions is starkly different from the strategies of the world’s other technology super giants — Apple, Amazon, Google and Facebook. It also just so happens that Congressional Democrats and government agencies including the DoJ and FTC have taken a close look at whether Apple, Amazon, Google and Facebook have abused their market power, and are considering separating their businesses or unraveling previous large acquisitions.

Other than Microsoft, Amazon is the only member of the big five that has spent more than $5 billion on an acquisition in the last five years, buying grocery foods chain Whole Foods for more than $13 billion in 2017.

Nuance is Microsoft’s fourth such takeover.

Not ‘some aggregation play’

Apple, Amazon, Google and Facebook, well aware they’re under regulatory fire, are all proceeding cautiously with larger acquisitions, according to people familiar with the matter. A major purchase for any of them would almost certainly draw political attention, especially as their market capitalizations have ballooned during the pandemic. It’s possible a big M&A transaction would become the catalyst for more draconian actions, such as a company breakup or forced divestitures.

But Microsoft has avoided the same level of scrutiny. That eliminates bidding wars and makes Microsoft the current buyer of choice — a role it likely wouldn’t have played five years ago.

This dynamic popped up during last year’s TikTok discussions, when Google felt it couldn’t lead a deal for the U.S. assets because of its regulatory positioning.

CEO Satya Nadella alluded to why he thinks the government has treated Microsoft — a company with a $1.9 trillion market valuation — differently in an interview with CNBC.

“Our job is to provide technology so that [doctors and providers] can keep all of the data secure,” Nadella said, speaking specifically about Nuance.

“This is not about some aggregation play. This is about pure platform providers. That makes Microsoft very distinct in how we approach most of what we do.”

In other words, Nadella is making the argument that Microsoft is agnostically providing technology while competitors are using consumer data in potentially harmful or monopolistic ways.

Microsoft shareholders will ultimately have to decide how much empire building they’re comfortable with. Nadella has turned the company around with his focus on enterprise technology. Nuance fits the focus. Other targets are further afield. But, as Wedbush analyst Dan Ives wrote in a note to clients, “clearly, Redmond is on the ‘offensive’ around M&A with the company in a clear position of strength.”

So far, shareholders are not showing any trepidation about the Nuance deal, sending Microsoft shares up about 0.5% in afternoon trading Monday.

WATCH: Microsoft, Nuance CEOs on $16 billion deal, cloud strategy, health-care AI solutions

Less than three years after Microsoft acquired GitHub for $7.5 billion. Less than five years ago, Microsoft bought LinkedIn for $26.2 billion.

None of the other technology giants — Amazon, Google, Apple or Facebook — have spent anywhere close

on the aspects of regulation. these are superi important tipioocs.

one ofthe things we are doing — al labout providers patiets doctors — their data. provide tech so they can in fact keep data secure — use evenAI to benefit health care. not an aggretaion play — pure platform providers. microsoft distinct in how we approach most of what we do.

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Kraken CEO Jesse Powell warns of cryptocurrency crackdown

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Yuriko Nakao | Getty Images

Governments around the world may start to clamp down on the use of bitcoin and other cryptocurrencies, the CEO of a top crypto exchange has warned.

A number of officials — from U.S. Treasury Secretary Janet Yellen to European Central Bank President Christine Lagarde — have sounded the alarm about the use of bitcoin for money laundering, terrorist financing and other illegal activities.

“I think there could be some crackdown,” Jesse Powell, CEO of Kraken, told CNBC in an interview. Cryptocurrencies have surged in value lately, with bitcoin hitting a record high price of more than $61,000 last month. The world’s most valuable digital coin was last trading at around $60,105.

Kraken is the world’s fourth-largest digital currency exchange in terms of trading volume. The firm is considering going public through a direct listing — similar to Coinbase — next year after achieving record trading volumes in the first quarter, CNBC reported last week.

Coinbase is set to go public on Wednesday, and could be valued at as much as $100 billion — more than major exchange operators like Intercontinental Exchange, owner of the New York Stock Exchange. Crypto investors are hailing the company’s stock market debut as a major milestone for the industry after years of skepticism from Wall Street and regulators.

Still, Kraken’s chief thinks regulatory uncertainty around crypto isn’t going away any time soon. A recent anti-money laundering rule proposed by the U.S. government would require people who hold their crypto in a private digital wallet to undergo identity checks if they make transactions of $3,000 or more.

“Something like that could really hurt crypto and kind of kill the original use case, which was to just make financial services accessible to everyone,” he said.

Cryptocurrencies like bitcoin have often been associated with illicit activities due to the fact that people transacting with it are pseudonymous — you can see where funds are being sent but not who sent or received them.

There are signs that the use of crypto for nefarious purposes may be falling. Illicit activity accounted for just 0.34% of all crypto transaction volume last year, according to blockchain analysis firm Chainalysis. That was down from roughly 2% a year earlier.

“I hope that the U.S. and international regulators don’t take too much of a narrow view on this,” Powell said. “Some other countries, China especially, are taking crypto very seriously and taking a very long-term view.”

Kraken’s CEO said he feels the U.S. is more “short-sighted” than other nations and “susceptible” to the pressures of incumbent legacy businesses — in other words, the banks — that “stand to lose from crypto becoming a big deal.”

“I also think it might be too late,” Powell added. “Maybe the genie’s out of the bottle and just trying to ban it at this point would make it more attractive. It would certainly send a message that the government sees this as a superior alternative to their own currency.”

The U.S. isn’t the only country considering strict new rules on crypto. In India, for example, the government is considering a law that would ban cryptocurrencies and penalize anyone holding or trading them.

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Huawei blames global chip shortage on U.S. sanctions

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The U.S. flag and a smartphone with the Huawei and 5G network logo are seen on a PC motherboard in this illustration taken January 29, 2020.

Dado Ruvic | Reuters

Huawei said Monday that it believes U.S. sanctions on the company are partly to blame for the ongoing global chip shortage.

Eric Xu, Huawei’s rotating chairman and CEO, said the sanctions imposed over the last two years on the Chinese tech company are, “hurting the global semiconductor industry” because they have “disrupted the trusted relationship in the semiconductor industry.”

Speaking to analysts in Shenzhen at Huawei’s Analyst Summit, Xu said: “The U.S. sanctions is the main reason why we are seeing panic stockpiling of major companies around the world.”

He added: “Some of them never stockpiled anything but because of the sanctions they are now having three months or six months of stockpiles.”

Huawei itself has built up a stockpile of chips to try and ensure its business — focused on telecoms equipment and consumer electronics — can continue as normal.

Some companies in other industries, such as the automotive sector, have been forced to temporarily shut down operations as a result of the chip shortage.

Up until recently, the semiconductor supply chain “was running on the assumption that it should be flexible with zero stockpiles,” said Xu, one of three Huawei executives that takes it in turns to be CEO.

“That’s why the panic stockpiling in recent days has added to the supply shortage of global semiconductor industry,” he said. “That has disrupted the whole system. Clearly the unwarranted U.S. sanctions against Huawei and other companies are turning into a global and industry wide supply shortage.”

The U.S. has accused Huawei of building backdoors into its equipment that could be exploited by the Chinese Communist Party for espionage purposes and imposed sanctions on the company.

In 2019, Huawei was put on a U.S. blacklist called the Entity List. This restricted American companies from exporting certain technologies to Huawei. Google ended up cutting ties with Huawei, meaning the Chinese giant could not use Google’s Android operating system on its smartphones. Last year, the U.S. moved to cut Huawei off from key chip supplies it needs for its smartphones.

Huawei strongly denies the U.S.’ allegations.

$1 billion into self-driving cars

Huawei is pursuing new avenues after the sanctions imposed by the Trump administration left its once-leading smartphone business in tatters, while also hindering progress in its semiconductor and 5G businesses.

Xu said he doesn’t expect the Biden administration to change the rules any time soon and the company is investing in new areas like healthcare, farming, and electric cars to try and mitigate the impact of being blacklisted by the U.S.

“We believe, we’ll continue to live and work under the entity listing for a long period of time,” he said. “The overall strategy as well as the specific initiatives for Huawei are all designed and developed in a way that the company would be able to survive and develop while staying on the entity list for a long time.”

Huawei said Monday that it plans to invest $1 billion into self-driving and electric car research and development as it looks to compete with the likes of Tesla, Apple, Nio and Xiaomi.

Xu claimed that Huawei’s self-driving technology already surpasses Tesla’s as it allows cars to cruise for more than 1,000 kilometers (621 miles) without human intervention. Tesla’s vehicles can’t do more than 800 kilometers and drivers are meant to keep their hands on the wheel for safety purposes.

Huawei will initially partner with three automakers on self-driving cars including BAIC Group, Chongqing Changan Automobile Co and Guangzhou Automobile Group. The company’s logo is likely to be put on cars in the same way that Intel’s logo is put on some computers.

“Once self-driving is achieved, we’re able to disrupt all of the related industries, and we think that in the foreseeable future, namely in the next decade, the biggest opportunity and breakthrough will be from the automobile industry,” Xu added.

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