By the London technology team
Too big to succeed?
Recent weeks have witnessed a number of high profile tech separations. Hewlett-Packard, eBay and Symantec have all split from previously happy unions. Do the splits represent overdue acceptances of previously flawed business decisions or are they simply realisations that their useful time together has ended?
A particularly lucid exploration of this question can be found in this recent FT article. The article suggests that mergers and acquisitions (M&A) are often directly in the interests of those in control of such processes. Accordingly there are always seemingly good reasons to acquire and grow; usually based on cost savings and potential syntheses but (cynically) are often driven by expectations of a bigger salary pot.
An active M&A market can be considered as a barometer of business confidence and investor sentiment but desire for conglomeration flies in the face of recent historical evidence. On average, mega tech mergers can be evidenced to reduce profitability and dilute innovative cultures. Costly mergers can be a symptom of over-confidence in their in-house ‘formula’ to replicate success across all activities. However, there are a number of the largest Silicon Valley giants that have shown themselves capable of sustaining near continuous expansions of their service offerings.
Facebook is a prime example of a large tech company that has enjoyed sustained success from rapacious acquisition sprees. At the other end of the scale, merging with a large parent company can sidestep the need to get sign up from reluctant or risk-averse investors and is simply the easiest method of securing the capital necessary for aggressive expansion or high cost R&D programmes.
The fact that recent corporate splits have been warmly welcomed by the markets is evidence that investors may have taken heed of past M&A failures. As this recent FT article suggests, perhaps experienced investors have decided they would rather establish their own diversified portfolios rather than “pay a CEO to do this by expensively building a diversified group.”
It may be too soon to decree that we’ve passed peak M&A in the tech sector, but taken alone, evidence from the last few weeks would certainly support that conclusion.
Health apps: When to regulate?
Following the inclusion of the ‘Healthkit’ in Apple’s recently released iOS 8 software, there has been a flurry of news articles on the subject of health apps, particularly regarding the issue of whether they need regulating. With an ever increasing array of health apps becoming available, including ones which allow the user to monitor their weight, blood pressure, cholesterol levels, heart rate, sleep quality and even detect cancer, all the signs suggest that the debate is likely to intensify as health apps become more popular.
Much of the debate on this subject is focused around when a health app should be classified as a medical device and an excellent article by Fiona Graham on this exact issue was published by the BBC this week. In summary, if a health app is categorised as a medical device, it must be subject to regulation (such as the CE mark in the UK, or compliance with Food and Drug Administration guidelines in the USA). A particularly significant moment in the story of health apps was in September 2013 when the FDA published guidance for app developers, defining when an app would count as a medical device.
This is clearly an area where a high degree of caution is required on the part of both the user and the app developer. Understandably, much controversy surrounds health apps that make misleading claims, especially as their use may cause more harm than good. This lack of clarity as to the efficacy of many health apps has led to a number of platforms being launched, providing users with the chance to compare notes on which ones actually work.
Thought-provoking articles on this subject and the launch of ‘Healthkit’ have recently been published by the BBC, Medical News Today and Cnet.
May we keep all your data? Home Secretary defends mass internet collection in front of MPs
Home Secretary Theresa May MP made a well-publicised appearance in front of the Intelligence and Security Committee (ISC) this week, making some of the strongest comments yet heard on internet privacy post-Snowden, saying to find a needle in a haystack “we have to have a haystack to be able to find the needle that we need to keep the public safe”. She said systematically collecting and storing massive amounts data was not surveillance due to the fact the majority will never be looked at, but it needed to be there so police and others can get to it in an investigation. Controversially, May also defended Government secrecy on the issue, which the Committee felt needed to change in light of the very public way the Snowden leaks came out.
The ISC is carrying out a review into surveillance laws and has heard evidence from a range of people, including former Home Secretary David Blunkett who said the Snowden revelations undermined public confidence in the intelligence services and said more transparency was needed to restore trust.
Electorally, mass collection of data and surveillance isn’t a big deal for voters. Labour and the Conservatives are committed to increasing access to communications data, but the Liberal Democrats vetoed the Draft Communications Data Bill and said they will do so again. With May saying a Bill will feature in the 2015 Tory manifesto; this has the potential to be a contentious issue in any future coalition negotiations.
For those interested in the extent MPs ‘get’ technology, Michael Ancram’s question ‘is the cloud based in California’ should cause the most face-palms, but on the whole the committee understood the arguments for and against bulk collection of user data.
The evidence session can be watched here via BBC Democracy Live and was covered extensively in the Guardian, Daily Telegraph and amusingly in Russia Today. In a Daily Express poll on mass surveillance, votes remain very evenly split (51% opposed to collection).