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CNN Business
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Just three months ago, Apple became the top-selling smartphone brand in China for the first time in six years. Now it’s fallen back behind its Chinese rivals after suffering more than others from a first quarter slump in sales.

Two research reports published this week showed Apple

(AAPL) slipping to third spot, behind Chinese Android handset brands.

The change in market rankings comes as China faces a sharp economic slowdown, and as Covid restrictions slam the brakes on consumer spending.

Smartphone sales in China declined 14% in the first quarter, as volumes fell “close to the levels seen during the severe pandemic-impacted Q1 2020,” Counterpoint Research said in a report on Thursday.

Apple

(AAPL)’s sales plunged 23% in the three months to March, compared with the previous quarter, Counterpoint Research added. The company enjoyed rapid growth in China last year, right after releasing the iPhone 13.

Its market share in China now stands at 17.9%, compared with 21.7% in the quarter ended December.

A report by Canalys on Friday also showed Apple fell back from market leader in China to third spot, with its first quarter shipments down 36% from the previous quarter. Canalys tracks shipments by manufacturers to retail outlets, rather than sales to consumers.

Ivan Lam, senior analyst at Counterpoint Research, attributed Apple’s decline partly to the economic slowdown in China that has “affected money in people’s pockets.”

Chinese homegrown brands — including Vivo, Honor and Oppo̦ — fared better than Apple as their sales rebounded after suffering from the iPhone 13’s strong performance in the last quarter of 2021, Lam added.

Overall, a seasonal decline in demand and major economic uncertainty have dragged on the market in the first few months of this year.

“I don’t think Q2 data will improve much, as ongoing lockdowns will continue to affect consumers’ willingness to spend,” Lam told CNN Business.

There are full or partial lockdowns currently in place in at least 27 cities across China, affecting up to 165 million people, according to CNN’s calculations. Shanghai — the nation’s leading financial center and a major manufacturing hub — has been under lockdown for more than a month. The restrictions have forced many businesses to shut down and dealt a huge blow to economic activity.

China’s economy slowed sharply in the past couple of months. Retail sales contracted in March for the first time in more than a year. Unemployment, meanwhile, surged to a record 6% in 31 major cities.

“These factors, combined with the downward demand trend already visible in China’s smartphone market before the fresh pandemic wave, impacted the sector significantly,” Mengmeng Zhang, a research analyst for Counterpoint Research, said in the report accompanying the data release.

She expected China’s smartphone demand to remain “underwhelming” because of weak consumer sentiment and lack of new innovations to stimulate consumers.

It’s not just weak demand that’s hurting Apple in China. The company is also facing supply chain challenges stemming from China’s lockdowns. Foxconn, a major supplier for Apple, halted production at its Shenzhen factory for a few days last month as the city imposed a Covid lockdown. Pegatron, an iPhone assembler, also suspended operations in its Shanghai and Kunshan plants earlier this month.

CEO Tim Cook said Thursday during an earnings’ call that growing Covid restrictions in China, along with industry-wide silicon shortages, would impact the company’s next quarter by $4 billion to $8 billion.

“The supply chain issues continue to be a headwind in China and that will weigh on June quarter growth,” said Dan Ives, an analyst with Wedbush Securities.

Earlier this month, Canalys warned that smartphone vendors in the world face major uncertainty because of China’s rolling lockdowns, the Russia-Ukraine war, and the threat of inflation.

— Samantha Murphy Kelly contributed to this report.

CNN Business
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Airbnb won’t require most staffers to return to the office — ever.

The company told employees Thursday that they can permanently work remotely and can relocate anywhere within the country they currently work. Doing so won’t negatively impact compensation, the company said, meaning it will not adjust salaries downward if an employee opts to move to a city where the cost of living is lower.

In a lengthy email to staffers Thursday, CEO and cofounder Brian Chesky outlined its new policies and expectations. He noted that permanent flexibility will allow the company to “hire and retain the best people in the world,” rather than simply those who are within “commuting radius around our offices.” Airbnb said it has 6,000 employees globally, with more than 3,000 in the United States.

Chesky told staffers to consult with managers ahead of relocating about expectations, and added that given the complexities of international moves, “we won’t be able to support those this year.” He also noted “a small number of roles will be required to be in the office or a specific location to perform their core job responsibilities.”

The update is perhaps a no-brainer for Airbnb as Chesky has become a living and breathing marketing campaign for remote work in recent months — a trend his company, of course, stands to benefit from following the initial, devastating impact on its business in the earliest months of the pandemic. By December 2020, Airbnb went public. And a year later, the company said its revenue grew 25% in 2021 compared to 2019, or the year before the pandemic hit its business. Airbnb posts its first-quarter earnings on Tuesday.

In January, Chesky announced that he’d live in Airbnbs, staying in other people’s homes listed on its platform so he could hop from city to city every few weeks. Chesky said then that he thought the biggest travel trend in 2022 will be “people spreading out to thousands of towns and cities, staying for weeks, months, or even entire seasons at a time.”

“More people will start living abroad, others will travel the entire summer, and some will even give up their leases and become digital nomads,” he said, calling it a “decentralization of living.”

Now, Chesky is officially freeing up staffers to do just that. He encouraged those who want to take advantage of long stays in other countries to do so.

“Starting in September, you can live and work in over 170 countries for up to 90 days a year in each location,” he wrote. “Everyone will still need a permanent address for tax and payroll purposes, but we’re excited to give you this level of flexibility. Most companies don’t do this because of the mountain of complexities with taxes, payroll, and time zone availability, but I hope we can open-source a solution so other companies can offer this flexibility as well.”

Chesky added that staffers are responsible for sorting work visas. They should also expect more in-person gatherings next year at a cadence of about “every quarter for about a week at at time.” In the United States, the company will largely operate on Pacific Standard Time.

“Flexibility only works when you trust the people on your team,” said Chesky. “You’ve shown how much you can accomplish remotely. In the last two years, we navigated the pandemic, rebuilt the company from the ground up, went public, upgraded our entire service, and reported record earnings, all while working remotely.”

The company reported sales of $97.3 billion for its fiscal second quarter, up 9% from the year prior. Apple (AAPL)’s iPhone business grew 5% to $50.6 billion during the quarter. Revenue from its services business climbed 17% from a year earlier to nearly $20 billion in the quarter.Shares of Apple rose 4.5% in after-hours trading Thursday following the earnings results. Apple’s board of directors also authorized a $90 billion increase to its share repurchase program. The latest results follow Apple’s record revenue during its all-important holiday quarter even as it continued to grapple with supply chain shortages. In January, the company reported $123.9 billion in revenue for the final months of the year, an 11% increase from the year prior, fueled by demand for its latest lineup of iPhones and other devices as well as the strength of its services business.Last month, Apple hosted its first product event of the year where it showed off an upgraded iPad Air, a new desktop computer, a powerful new Mac chip and the first budget iPhone with access to 5G networks.

The tech giant on Thursday said it had a net loss of $3.8 billion in the quarter ended March 31, a sharp drop in income from the same period last year, when it made an $8.1 billion profit. It was also a big miss from the $4.4 billion profit that analysts surveyed by Refinitiv had forecast.The company attributed the loss largely to a $7.6 billion loss from its investment in electric automaker Rivian. Amazon (AMZN) shares sank around 10% in after-hours trading following the results, before recovering slightly. “The pandemic and subsequent war in Ukraine have brought unusual growth and challenges,” Amazon CEO Andy Jassy said in a statement. This is a developing story and will be updated.

CNN Business
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Weibo, China’s equivalent of Twitter, told users on Thursday it would start to publish their IP locations on their account pages and when they post comments, in a bid to combat “bad behavior” online.

The move, posted on Weibo’s official account, garnered over 200 million views and was widely discussed, with some users rattled by the perceived reduction in their online anonymity.

“Every IP address seems to be whispering in your ear: ‘You be careful,’” wrote user Misty.

Others, however, said they were supportive of the measures, in light of COVID-related misinformation.

“Especially at a time when the COVID situation is still serious, IPs being swiftly revealed can effectively reduce the appearance of disgusting content from rumor-makers and rumor-spreaders,” wrote user UltraScarry.

Weibo (WB), which has over 570 million monthly active users, said users’ IP addresses would be displayed under new settings which came into effect on Thursday and cannot be turned off by users.

For users in China, the platform will display the province or municipality where they are posting from, it said. For those using Weibo overseas, the country of users’ IP addresses will be displayed.

The settings are designed to “reduce bad behavior such as impersonating parties involved in hot topic issues, malicious disinformation and traffic scraping, and to ensure the authenticity and transparency of the content disseminated,” it said in a notice.

“Weibo has always been committed to maintaining a healthy and orderly atmosphere of discussion and protecting the rights and interests of users to quickly obtain real and effective information,” the notice read.

The effects of the new rules were already visible underneath the notice, as thousands of user comments all carried an extra label indicating the province or municipality of the user’s IP address.

Last month, Weibo said it would begin testing these settings on some users in response to misinformation relating to the Ukraine-Russia war.

China tightly controls its cyberspace and in the past year has been stepping up efforts to “clean up” the internet. Chinese social media sites that fail to censor critical content face financial sanctions as well as temporary suspensions of service under current law.

Weibo, which has been on the receiving end of several fines from China’s cyberspace regulator over the past year, frequently publishes notices about its efforts to combat bad behavior online, including posting the names of accounts punished.

It has not publicly addressed, however, instances of accounts being suspended or banned for merely expressing dissenting opinions, such as supporting Ukraine or criticizing Russia over the ongoing war.

The agreement, known as the Declaration for the Future of the Internet, aims to forestall an emerging “splinternet” characterized by the growing repression of internet users in closed regimes such as Russia and China — and the divergence of those countries from the internet’s founding principles of universal access and unfettered information flow.Concerns about the internet’s long-term trajectory have been amplified by the war in Ukraine, according to senior Biden administration officials, as Russia has moved to block western social media services and penalized the sharing of accurate information about the conflict.Russia’s information war, including its campaigns of online disinformation and propaganda, is just one of many examples of illiberal behavior the declaration is designed to counter, the US officials said.”We believe this particular struggle is a key part of the overall struggle between authoritarian governments and democracies,” one senior official told reporters Wednesday evening. The officials declined to say whether Russia and China had been offered a chance to sign.Thursday’s announcement follows months of deliberations among governments, civil society groups, Big Tech companies and other members of the internet ecosystem. Signatories range from US military allies to economic partners, including Canada, the United Kingdom, Israel, Taiwan and Ukraine.Among other problems, the declaration repeatedly highlights how cyberattacks and disinformation risk undermining human rights and the internet’s promise.”Online platforms have enabled an increase in the spread of illegal or harmful content that can threaten the safety of individuals and contribute to radicalization and violence,” the document added.Many of the commitments outlined in the agreement reflect existing US policy initiatives, and the administration officials described the declaration as a way to organize and harmonize those efforts internationally.Under the agreement, countries have pledged not to abuse internet technologies for illegal surveillance; block content or websites in violation of so-called net neutrality principles; or use digital tools to undermine trust in elections. They agreed to support multilateral efforts against cybercrime, an issue that’s grown in significance as businesses and governments alike have reeled in the face of devastating ransomware attacks.They committed to using only “trustworthy” network equipment, a nod to the spying risks the US and its allies have said are associated with Chinese vendors such as Huawei. (Huawei has denied that it poses any danger to its customers’ communications or security.)And they joined together in reaffirming support for the decentralized, consensus-driven approach that for decades has underpinned decisions about how the internet should work.”We and our allies are not here to splinter the internet, but to save it from splintering,” one of the senior US officials said.

Baidu (BIDU) and autonomous driving startup Pony.ai announced Thursday that they had won the country’s first permits to provide robotaxi ride-hailing services to the public. The permits do not require an operator to sit in the driver’s seat. The services were introduced in Beijing on Thursday, and allow passengers to call for taxis using each company’s respective apps during daylight hours.For now, each company will be restricted to a designated area of 23 square miles, and they will have to keep an operator in the front passenger seat to take over in case of emergencies. Currently, the programs are being offered for free to riders.The announcement marks a big step forward for self-driving technology in the world’s largest car market.Baidu is best known for its search engine but it also owns the largest autonomous driving fleet in China. It said it would start off with 10 vehicles under the program and add 30 more later.Pony.ai, a fast-growing startup that was founded by former Baidu engineers in Fremont, California, said that as many as 300,000 residents in Beijing would be able to try out the experience. The company is backed by automakers including Toyota (TM), and was last valued at $8.5 billion.China has become an important testing ground for autonomous vehicles, with a small pool of ambitious companies routinely notching new records on various fronts, such as removing the safety driver, opening up their services publicly or operating on public roads, and the number of miles their vehicles have been tested.Baidu had previously been allowed to offer ride-hailing services in autonomous vehicles in several cities, including Beijing, though a human was still required to stay in the driver’s seat.AutoX, another Chinese startup backed by Alibaba (BABA), also rolled out fully driverless robotaxis on public roads in Shenzhen in 2020, though that initiative could not accept regular passengers.

Musk, of course, is notoriously unpredictable but one thing seems clear: Twitter’s leadership will likely look much different after the deal than it does today. There are a few obvious initial indicators that this will happen. Twitter’s board on Monday announced it had agreed to sell the social media company to Musk in a deal valued at $44 billion. The deal came just 11 days after Musk — who was initially offered a seat on the company’s board but declined — made what he called his “best and final” offer for the company. In his offer letter, Musk said, “I don’t have confidence in management.” In an all-hands meeting for employees that Agrawal and board chair Bret Taylor held later Monday, Taylor said the company’s board of directors “no longer exists on the other side of this transaction.” Then on Tuesday, Musk publicly criticized two of the company’s top legal executives on Twitter, leading each to face a barrage of hateful comments on the platform. “[Musk is] probably not happy with the management team and the board, and I think that’s a big reason why the initial offer to sit on the board and see how things play out over the next two years is something he just wasn’t interested in,” said Angelo Zino, senior industry analyst at CFRA Research. Twitter declined to comment on this story. Musk did not respond to a request for comment. The fate of Twitter’s CEOMany analysts agree that Agrawal will probably be among those ousted when Musk’s acquisition closes. Agrawal told employees on Monday that he is “optimistic” about the company’s future, but it was already unclear what kind of working relationship he would have with Musk. After it was announced that Agrawal would take over the top job from Dorsey in November, Musk tweeted a photo comparing the new CEO to former Soviet leader Joseph Stalin. “It’s hard for me to see a situation where [Agrawal] remains as CEO after the deal,” said Daniel Newman, principal analyst at tech research firm Futurum Research. “It’s unfortunate because I don’t think his tenure was long enough to actually fully indict him. … I just think with Musk’s comments, it’s pretty clear that he wants to go in kind of a hard right from where the strategy was,” he said. In some ways, the leadership shakeup — if it does happen — may reflect Twitter’s longstanding struggles to turn its powerful user base and outsized influence in the worlds of media and politics into a healthy business, according to Wedbush analyst Dan Ives. Twitter (TWTR) shares are currently trading only 15% higher than their IPO price from nearly 10 years ago, compared to rival Facebook (FB) whose stock has gained 273% over the same period. Musk will also likely seek to shift the internal culture at Twitter to better align with his vision for the company. It’s not exactly clear what that vision is. On one hand, Musk has said he wants to “unlock” Twitter’s “enormous potential.” But on the other, he’s said his acquisition is not about money and made suggestions for the platform, such as removing content restrictions, that could run counter to Twitter’s core advertising revenue model. Whatever his plans, Musk will almost certainly want to stack the company’s management team with leaders who are on the same page. “He’ll be hiring people that understand his vision, understand the kind of work, product and culture he’s trying to create,” Newman said. “There’s no question that this is going to be a 180-degree culture shift. Tesla is known as being a very hard culture, pretty demanding of people, [while] Twitter was kind of seen as a little bit of a softer culture, a little more thoughtful about people and obviously was very attentive to a lot of social issues. … I think Musk is going to be very prudent to make sure he sorts out the talent who he thinks can help him carry his mission forward.” Billionaire bromance?Even if Musk does clean house at Twitter, it seems unlikely that the Tesla and SpaceX CEO will want to run Twitter himself, at least not for long, given his many commitments. He would also almost certainly learn quickly about the not-so-fun parts of being a social media CEO. Such a role faces intense scrutiny and risks being called to testify before lawmakers about decisions related to harmful content, data privacy and more. Already, Musk has received a warning from EU Commissioner Theirry Breton that Twitter must abide by Europe’s heightened new standards for content moderation or else risk fines or even a possible ban. Musk may want to avoid putting himself in that position, given how reliant his other companies are on government contracts. Many followers of the company are now speculating about whether Musk might encourage Dorsey — who stepped down as CEO in November and is set to leave the board in May — to return to a leadership role at Twitter after the deal is complete. While the Twitter cofounder also has other things on his plate as the CEO of financial services firm Block, Musk and Dorsey seem to get along, and may agree on a vision for the platform. The two eccentric, billionaire, crypto-loving tech titans have traded friendly remarks on Twitter over the years. When Twitter was facing pressure from an activist investor in 2020, Musk tweeted: “Just want [to] say that I support @Jack as Twitter CEO. He has a good ❤️.” More recently, Musk complimented the new “Block Head” title Dorsey has taken on at Block. On Monday night, Dorsey responded to Musk’s planned acquisition of Twitter in a somewhat cryptic tweet thread, which kicked off with a link to the Radiohead song “Everything In Its Right Place.” “Elon’s goal of creating a platform that is ‘maximally trusted and broadly inclusive’ is the right one,” Dorsey said. “This is the right path…I believe it with all my heart.” Dorsey also noted that Twitter has been “my sole issue and my biggest regret,” saying, “It has been owned by Wall Street and the ad model. Taking it back from Wall Street is the correct first step.” In recent weeks, Dorsey has criticized Twitter’s board and suggested he takes issue with its stance as a public company. “It wants to be a public good at a protocol level, not a company,” Dorsey said. “Solving for the problem of it being a company however, Elon is the singular solution I trust.” In some ways, a Dorsey return under Musk would seem surprising. The Twitter cofounder oversaw the platform during many of its struggles to grow its user base and increase profits. Dorsey has also undoubtedly had at least some influence on Twitter’s existing culture, which Musk may try to overhaul. And Twitter has said Dorsey was responsible for many of the company’s biggest and most controversial decisions, most notably removing former President Donald Trump’s account, which Musk appears to oppose. Still, if Musk’s plans for Twitter align with “what Dorsey saw the company as but lost his handle on it over the years, it could be an interesting way for him to return and run the company that he always envisioned running but never had the support to do,” Newman said.

The South Korean tech giant pulled in 77.8 trillion Korean won ($61.3 billion) in revenue and 14.1 trillion Korean won ($11.1 billion) in operating profit, roughly in line with its own forecast earlier this month. The solid earnings are attributed to sales of its memory chips, which were up nearly 40% year-on-year, taking in approximately 20.1 trillion won ($15.8 billion).Samsung’s mobile division also benefited from strong sales of its newest lineup of smartphones, which it said “centered on” the flagship Galaxy S22 Ultra. The models were launched at a splashy event in February. But the electronics maker also warned that headaches over long-running supply chain issues would “persist,” leading to component shortages for its devices. The company said it would continue to focus on efforts to shore up its stock of chips and image sensors this year. Samsung (SSNLF) also flagged that it expected weakened consumer sentiment for smartphones due to “prolonged geopolitical conflicts and lockdowns in some areas.” Research provider Canalys has pointed to a softening global smartphone market, with “an unsettled business environment” in the first quarter, according to the firm’s vice president of mobility, Nicole Peng.In a report last week, she noted that “vendors face major uncertainty due to the Russia-Ukraine war, China’s rolling [Covid-19] lockdowns and the threat of inflation. All this added to traditionally slow seasonal demand.”Still, Samsung led worldwide sales in the first quarter, beating out Apple (AAPL), according to Canalys. Samsung stock was down 0.5% in Seoul on Thursday morning.

Facebook’s parent company on Wednesday missed Wall Street revenue forecasts during the first three months of 2022, and posted its slowest revenue growth in years. It also narrowly missed analysts’ predictions for daily and monthly active Facebook users. And its profits, while ahead of expectations, were down 21% from the same period a year ago. Still, investors managed to find something to celebrate. Meta (FB) shares jumped more than 18% in after-hours trading following Wednesday’s earnings report. Investors were likely pleased with Meta’s user numbers — while they were slightly lower than expected, they did still grow. Monthly active Facebook users were up 3% and daily active Facebook users grew 4% year-over-year; monthly and daily active users on Meta’s family of apps also each grew 6%. That marks a reversal from the rare stagnation in user numbers during the previous quarter. Meta also lowered its projections for total expenses for the year, adjusting the upper limit of its expected spending from $95 billion to $92 billion. The adjustment was probably welcomed by investors wary of how much the company is shelling out on its plans for an augmented- and virtual-reality enabled future.The company reported total quarterly revenue up 7% year-over-year to $27.9 billion, and net income of nearly $7.5 billion, or $2.72 per share. “We made progress this quarter across a number of key company priorities and we remain confident in the long-term opportunities and growth that our product roadmap will unlock,” CEO Mark Zuckerberg said in a statement. Still, there remain some warning signs for the company, which is battling rivals like TikTok, struggling to monetize popular video content and facing disruption of its core advertising business because of changes to Apple’s privacy practices. The company reported that its average price per ad decreased by 8% from the same period in the prior year; by contrast, average price per ad was up 6% in the previous quarter. Meta also noted that its business was affected by Russia’s war in Ukraine — the company’s Facebook and Instagram platforms were blocked in Russia last month — and expects those challenges to continue in the current quarter. In the last quarter of 2021, Meta began breaking out its Reality Labs segment, which includes its AR and VR efforts, from its larger family of apps. In the first quarter of 2022, the Reality Labs unit posted a loss of nearly $3 billion during the quarter. And Zuckerberg warned analysts on Wednesday’s earnings call to expect continued challenges. “Based on the strong revenue growth we saw in 2021, we kicked off a number of multi-year products to accelerate some of our longer-term investments,” he said. “But with our current business growth levels, we are now planning to slow the pace of some of our investments.”Zuckerberg said Meta hopes in the coming years to generate sufficient operating income growth from its family of apps to fund its investments in Reality Labs while still growing the company’s overall profitability. “Of course, our priority remains building for the long-term, so while we’re currently building our plans to achieve this, it is possible that prolonged macroeconomic or business uncertainty could force us to trade off against shorter-term financial goals,” Zuckerberg said. “But we remain confident in our long-term opportunities.”