Amazon Delivers Softer-Than-Expected Earnings; Stock Falls After Hours

Amazon reported second-quarter results that were a bit softer than Wall Street had expected, sending shares down more than 2% in after-hours trading.
The stock closed Thursday trading at $1,973.82, down 1%, before falling further after hours. It has advanced 28% in 2019 thus far, outpacing the 7% year-to-date gain in the S&P 500.
Amazon welcomed more new Prime members on July 15 than any previous day, and almost as many on July 16, making these the two biggest days ever for member signups. Prime Day — actually a two-day happening on July 15 and 16, was again the largest shopping event in company history, Amazon said. It was also the biggest event ever for Amazon devices, when comparing two-day periods.
The Department of Justice said this week it has launched an investigation into the business practices of tech companies to determine if they are anti-competitive. Facebook paid $5 billion and agreed to stricter controls in a settlement with the Federal Trade Commission. Regulatory scrutiny has kicked in for Amazon and other large tech firms in a serious way, after a decade or two of relative laissez-faire existence.
Revenue increased 20% to $63.4 billion in the second quarter, slightly ahead of estimates and up from $52.9 billion in second quarter 2018. The company said earnings came to $5.22 a share, well below the consensus forecast of Wall Street analysts of $5.57, according to Refinitiv.
Aside from restating recent programming announcement, the earnings release included no additional insights into Prime Video.” />
"We’ve received a lot of positive feedback and seen accelerating sales growth,” he said. “Free one-day delivery is now available to Prime members on more than ten million items, and we’re just getting started." Nevertheless, in the company's earnings release, founder and CEO Jeff Bezos pointed to one-day delivery as a quarterly highlight.
A 21% rise in expenses in the quarter, in part due to the push to roll out one-day delivery, dented profits.

Facebook Stock Perks Up On Reports Of $5B Settlement With U.S. Regulators

Multiple published reports that the Federal Trade Commission voted to approve a $5 billion settlement with Facebook sent shares in the tech giant up 1% in the final minutes of Friday's trading session.
It wanted to assess how the company is treating the personal data of its billions of users (one of many issues that has led to increasing calls for Facebook to be broken up). In March 2018, after a string of revelations about the rogue data firm Cambridge Analytica soon metastasized into larger trust issues for Facebook, the FTC opened an investigation into the company.
Founder and CEO Mark Zuckerberg has frequently emphasized in his recent remarks, including before Congress, that he is open to regulation. In addition to the money involved (certainly not a fortune by the company's ultra-rich standards), the decision is expected to usher in a new era of restrictions on how Facebook handles users' personal information.
If it is approved by the U.S. Department of Justice, the $5 billion fine would be the stiffest penalty ever assessed against a technology company. Shares finished at $204.87, up nearly 2% on the day, and have reached their highest level in nearly a year. Investors increasingly see the company's results more than compensating for any concerns about the potential harm of regulation.
The 3-2 vote followed party lines at the Republican-controlled agency, according to numerous reports. When contacted by Deadline, Facebook and the FTC both declined to comment on the settlement.
"We believe it's premature to assume any significant near-term downside on tech-related antitrust concerns" at the tech giants, he wrote. Analyst John Blackledge of Cowen issued a note to clients late Friday mirroring the market's reaction and noting other regulatory probes of Google parent Alphabet as well as Amazon.
On Thursday, a "social-media summit" was held at the White House, but Facebook, Twitter and YouTube were not invited. Trump has criticized Silicon Valley companies for allegedly maintaining a bias against conservative views and even "trying to rig the election" in 2020.” />

Facebook Says Instagram Password Breach Larger Than Initially Thought

Facebook did not give a specific number of those affected in its updated blog post.
The social media giant is under investigation by numerous government agencies, including the Federal Trade Commission and the Department of Justice, for its data collection and privacy practices.” />
In its March 21 blog post, Facebook said it found the user password issue as part of a routine security review in January, but stressed that the passwords were never visible to anyone outside of Facebook and that they had found no evidence that anyone internally abused or improperly accessed the passwords. "We have fixed these issues and as a precaution we will be notifying everyone whose passwords we have found were stored in this way," Facebook said.
Facebook now says millions of Instagram users’ passwords were accidentally stored in a readable format on its servers, not tens of thousands as it initially thought.
Facebook revealed the new information in an updated blog post Thursday morning.
Facebook had initially reported March 21 that it believed "tens of thousands" of Instagram passwords had been affected.
We will be notifying these users as we did the others. Our investigation has determined that these stored passwords were not internally abused or improperly accessed." "We now estimate that this issue impacted millions of Instagram users. "Since this post was published, we discovered additional logs of Instagram passwords being stored in a readable format," Facebook said in its post.

Lawmakers Raise Privacy Questions About Amazon Echo Dot For Kids

"Amazon takes privacy and security seriously," the spokesperson said. "And FreeTime on Alexa is no different."
They want to know what third parties have access to this data, and whether it's used for marketing purposes. Markey and Barton ask if Amazon is building a profile or "voiceprint" of each child who uses the Echo Dot Kids Edition and how long Amazon holds on to this information if a parent doesn't delete it.
Amazon does not share audio recordings with developers, who are prohibited from collecting personal information. FreeTime on Alexa voice recordings are only used for delivering and improving the Alexa voice service and FreeTime service—they are not used for advertising or product recommendations, the spokesperson said.
The Cambridge Analytica scandal heightened awareness of technology companies' data collection practices and created public backlash. Facebook CEO Mark Zuckerberg spent 10 hours testifying before Congress about how the not-bankrupt political consulting firm gained access to the personal information about 87 million users, in its efforts to influence the outcome of the 2016 presidential election.
The legislators also ask what steps Amazon has taken to comply with the parental consent requirements of the Children's Online Privacy Protection Act.
An Amazon spokesperson acknowledged receipt of the letter this morning and said the company will work directly with the legislators to respond to their questions. However, she sought to reassure consumers that the Echo Dot Kids Edition device and its companion FreeTime service comply with the Children's Online Privacy Protection Act.
The voice-activated device, which retails for $80, is promoted on Amazon's site as a benign digital nanny: "a kid-friendly DJ, comedian and storyteller." It comes with a year's free access to a service called FreeTime Unlimited, which provides ad-free radio stations and playlists, 300 Audible books for kids, including Beauty and the Beast and Peter Pan, and games and other content from Disney and Nickelodeon.
When children talk to an Amazon Echo Dot for kids, who, exactly, is listening?
Parents can access all their children’s voice recordings in the Alexa app, and delete them individually or all at once, which also deletes them from the Amazon server. Amazon said that during set up, the Alexa app asks for parental approval and provides information about the privacy and security of their children’s voice recordings.
"While these types of artificial intelligence and voice recognition technologies offer potentially new educational and entertainment opportunities, Americans' privacy, particularly children's privacy, must be paramount," wrote Markey and Barton.
They want to know if parents can review and delete these recordings, or any other information Amazon collects along the way. The lawmakers asked Bezos to provide details about whether Amazon records and saves children's interactions with the device and if these conversations are converted to text and stored.
Ed Markey and Rep. Sen. Joe Barton posed that question in a letter sent to Amazon CEO Jeff Bezos asking how the online retail giant protects the privacy of children who use the smart speaker.
Last month, nearly two dozen child advocacy and watchdog groups called on the Federal Trade Commission to investigate Google for allegedly violating children's privacy laws with its YouTube video service.
Parents can find more information on Alexa and overall privacy practices here.” /> This is by hardware design: no power = no audio in. Customers can press the mute button on the top of the device, which electrically disconnects the microphones.
UPDATED with response from Amazon