The Technology 202: Tech industry takes big stock hit from coronavirus spread

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The stock market carnage in the tech industry shows it isn’t immune to deepening fears about the spread of coronavirus.  

Apple, Facebook, Google, Microsoft and Amazon lost more than $238 billion in value yesterday, according to CNBC’s Jessica Bursztynsky, as part of a broader market dive and concerns about global economic havoc as the virus mushrooms beyond China. 

Apple is the tech giant perhaps most exposed to the economic threat of coronavirus, because much of its supply chain is in China, said Tom Forte, an equity analyst at D.A. Davidson & Co. The company also relies on selling its smartphones to Chinese consumers. 

But Wall Street is more broadly concerned that coronavirus will become rampant in multiple countries and continents simultaneously, Forte said. Such a pandemic would severely impact the global business of Silicon Valley firms. 

“If it does become a pandemic, then the risk for disruption is far greater,” Forte told me. 

The stock plunge was at odds with the message emanating from Washington, as President Trump and his allies sought to reassure investors that they had the situation under control. 

But it’s clear Wall Street is waking up to a more sobering reality that coronavirus could affect everything from the availability of goods for Amazon Prime Day to spending on digital Facebook and Google ads. 

Apple said last week that the coronavirus would cause it to miss its revenue goals in the current quarter. The company warned investors that iPhone production was resuming more slowly than expected even as Chinese factories reopened, and it also saw a dampening in consumer demand for its products in the country. 

Amazon has said little publicly about how it anticipates coronavirus will impact its bottom line. (Amazon chief executive Jeff Bezos owns The Washington Post).  

But Forte estimates that more than 50 percent of products sold on Amazon are sourced out of China, including consumer electronics, clothes and toys. If factories in China aren’t back at full capacity soon, it could have a ripple effect on major shopping days on the platform, such as Prime Day, Forte warns. 

Amazon sent urgent emails to brands on Wednesday about Prime Day, signaling that it has begun worrying about inventory for the event, The New York Times reported last week. Amazon has also been making bigger orders of Chinese-made products that have already been shipped to the United States. Some Amazon suppliers have scaled back advertising on the platform so they don’t run out of products too fast. 

Meanwhile, Facebook and Google are more insulated from the coronavirus head winds in China because of their other problems there. The Chinese government has largely blocked them from offering their services in the mainland over censorship concerns. 

However, Forte said the companies’ stock dive yesterday reflected growing jitters that a potential coronavirus pandemic could lead to a recession. Traditionally, businesses spend less on advertising during recessions, which could affect a key piece of their business . 

The recent increase of coronavirus cases in South Korea was particularly a harbinger of the potential troubles to come because it’s a key market for tech product sales, Forte said. Other countries where instances of the virus were reported, such as Iran, are relatively smaller. 

BITS, NIBBLES AND BYTES

BITS: Facebook investigated whether suspicious content boosting Sen. Bernie Sanders’s presidential bid was linked to Trump supporters or Russia, the Wall Street Journal’s Emily Glazer and Dustin Volz report. The company was unable to substantiate those links. 

Some Facebook leaders were recently briefed on the investigation. The Wall Street Journal could not confirm whether the probe was ongoing. 

The company investigated the content after an outside researcher flagged it as suspicious, Facebook spokesman Andy Stone told Emily and Dustin. He also said that the company has not been notified by the intelligence community. 

“Had we found a campaign of coordinated inauthentic behavior, we would’ve removed it and announced it publicly, just as we did more than 50 times last year,” Stone told Emily and Dustin.

At least two separate independent researchers flagged what they believe is evidence of inauthentic pro-Sanders activity on Facebook that may have links to Russian operatives or Trump supporters, the Journal reports. 

U.S. intelligence officials briefed Sanders that Russia is attempting to help his presidential campaign to interfere with the 2020 Democratic primary, my colleagues reported last week. It wasn’t immediately clear what form that assistance took this election, but U.S. prosecutors uncovered a Russian effort in 2016 using social media to boost Sanders’s candidacy. 

NIBBLES: Artificial intelligence baby monitor companies are selling parents on software the companies say can detect when a baby is ill and even save them from injury or death. But experts warn that there’s little research to back the manufacturers’ claims, and the products could come with profound privacy trade-offs, my colleague Drew Harwell reports. 

Demonstration videos provided by the companies to The Post revealed imprecise results. For instance, one monitor alerted that a baby’s face was dangerously covered when her fingers were in her mouth. The false findings could stoke panic — or lull parents into a false sense of security.

“Fear is the quickest way to get people’s attention,” Brian Lin, chief strategy officer of camera company Cubo AI, told The Washington Post. 

There are broad concerns about the accuracy of facial recognition. It’s less effective on darker skin tones, and there’s little research showing it’s advanced enough to detect emotions. Babies’ faces are less distinct than those of adults, making it hard to train A.I. to detect them.

Developers for the companies say they have trained the A.I. using methods such as using training sets of videos of babies and offering free systems to parents in exchange for collecting data. But that can also come with privacy trade-offs for parents who might not closely keep track of what data the company is collecting, Jamie Williams, a staff attorney at the Electronic Frontier Foundation, a digital-rights group, told Drew.

For some parents, the trade-off is worth it. “I’d rather put the baby’s safety over privacy,” Craig Caruso, a father who uses a Cubo to get alerts when his 3-month-old son is crying or in possible danger, told Drew. “His face is going to change, anyway.” 

BYTES: Apple and TikTok declined to appear at a March hearing designed to probe their relationships with China, the office of Sen. Josh Hawley (R-Mo.) told my colleague Tony Romm. This is the second time the two companies have declined to testify at a hearing on the issue, ratcheting up concerns from lawmakers who see the companies’ ties with China as a threat to Americans’ privacy and security,

TikTok, which is owned by Chinese parent company ByteDance, told Hawley it would dispatch a top aide to appear at an unspecified later date, the company confirmed. It pointed to a recent raft of new hires at senior ranks of the company, which includes its first vice president of U.S. public policy, Michael Beckerman, as to why it couldn’t dispatch anyone next week. The company, which lawmakers have accused of following orders from Beijing to censor content, also recently announced a search for a director of content moderation policy.

Apple did not respond to a request for comment. Hawley blasted the American tech giant for storing Chinese users’ data locally in accordance with government rules at his hearing last year.

Hawley still plans to hold the March hearing, his office told Tony. U.S. law enforcement officials are set to testify.

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CHECK-INS

— Today:

• The National Transportation Safety Board meeting for Mountain View, CA, Tesla crash will take place today at 1 p.m.

— Coming up:

• The House Oversight Committee will host a hearing on “Voter Suppression in Minority Communities: Learning from the Past to Protect Our Future” tomorrow at 11am.
• The University of Chicago Harris School of Public Policy will host an event titled “Politics and Privacy in a Digital World” at the National Press Club from 5:30pm-8:30pm on Thursday.
• Nava Public Benefit Corporation will host a conversation moderated by the Technology 202’s Cat Zakrzewsk on “Impact at Scale: From Big Tech to Civic Tech” at 6pm on March 10.
• SXSW will take place in Austin March 13-22.
• The Game Developers Conference will take place in San Francisco March 16-20.