Inside a Ferrari Hypercar, Lyft’s IPO, and More Car News

Let the unicorn feast begin! On Friday, ride-hail galumphed onto the markets with the opening day of trading for little bro Lyftt. (Big rival Uber is reportedly on its way to its own IPO.) Lyft had a strong first day of trading, reaching a share price high of $87.24 before sliding to $78.29 at market’s close. Now the big question, which will answer itself in the weeks and months to come: How do investors feel about the prospect of the mustachioed company actually making money? How about the gig economy at large?

Still, plenty of transportation interestings were happening off Wall Street this week. We took a look at the current state of automotive software safety standards, and talked to people wondering how self-driving cars might fit into the mix. We reminded ourselves that self-driving cars aren’t going to be driverless for a while, and about the role of remote drivers in the ecosystem. We drove a Jeep Gladiator, the company’s adorably tough mini-pickup.

It’s been a week: Let’s get you caught up.

Headlines

Stories you might have missed from WIRED this week

Dress Rehearsal of the Week

Porsche promises its first all-electric sports car, the Taycan, will hit the market at the end of the year. Which means it’s time for the fun stuff: test drives! This week, the German automaker said it will have tested the Taycan on 3.7 million miles of road before its official launch, in the snows of Sweden, the heat of the UAE (up to 120 degrees Fahrenheit!), and the chill of Finland. More details on the Taycan’s testing regime here.

Stat of the Week

$911.3 million

The amount of dough Lyft lost last year, according to a filing submitted to the SEC in early March. For more stats on the ride-hail company, and to help you understand its IPO this week, check out these five charts.

Required Reading

News from elsewhere on the internet
Uber acquires Middle Eastern rival Careem for $3.1 billion, though the deal needs regulatory approval and may not be finalized until the end of the year.

Recode points out: “To bet on Uber—as is increasingly clear with this Careem purchase—is to bet not on Uber but on a global ride-hailing spoke model in which San Francisco-based Uber Technologies, Inc is merely the hub.”

Lyft rings in its IPO with a “City Works” pledge, investing $50 million or 1 percent of profits (whatever’s bigger) in city infrastructure, clean energy tech, and transportation access for disadvantaged communities. Anthony Foxx, the former secretary of transportation and Lyft’s current chief policy officer, clarified to WIRED that this doesn’t necessarily mean Lyft will write $50 million in checks—”Some of it will be in-kind,” he said—but that it will continue its current work on those three target areas in close partnership with cities.

Meanwhile, Lyft and Uber drivers went on strike in California this week, demanding higher wages after Uber cut their per-mile pay.

I Rode an E-Scooter as Far From Civilization as Its Batteries Could Take Me

Oh Wow, oh no: A budget airline suddenly ceased operations.

In the Rearview

Essential stories from WIRED’s canon
Via 1998: “How the beer company that created the first Internet IPO is shaking up the stock market.”

4 Things That Pundits Who "Predict" the Future Always Seem to Get Wrong

Peter Thiel has pointed out that we wanted flying cars, but got 140 characters instead. He’s only partly right. For decades futuristic visions showed everyday families zipping around in flying cars and it’s true that even today we’re still stuck on the ground. However, that’s not because we’re unable to build one. In fact the first was invented in 1934.

The problem is not so much with engineering, but economics and safety. We could build a flying car if we wanted to, but to make one that can compete with a regular automobile is another matter entirely. Besides, in many ways, 140 characters are better than a flying car. Cars only let us travel around town, the Internet helps us span the globe.

That has created far more value than a flying car ever could. We often fail to predict the future accurately because we don’t account for our capacity to surprise ourselves, to see new possibilities and take new directions. We interact with each other, collaborate and change our priorities. The future that we predict is never as exciting as the one we eventually create.

1. The Future Will Not Look Like the Past

We tend to predict the future by extrapolating from the present. So if we invent a car and then an airplane, it only seems natural that we can combine the two. If family has a car, then having one that flies can seem like a logical next step. We don’t look at a car and dream up, say, a computer. So in 1934, we dreamed of flying cars, but not computers.

It’s not just optimists that fall prey to this fundamental error, but pessimists too. In Homo Deus, author and historian Yuval Noah Harari points to several studies that show that human jobs are being replaced by machines. He then paints a dystopian picture. “Humans might become militarily and economically useless”, he writes. Yeesh!

Yet the picture is not as dark as it may seem. Consider the retail apocalypse. Over the past few years, we’ve seen an unprecedented number of retail store closings. Those jobs are gone and they’re not coming back. You can imagine thousands of retail employees sitting at home, wondering how to pay their bills, just as Harari predicts.

Yet economist Michael Mandel argues that the data tells a very different story. First, he shows that the jobs gained from e-commerce far outstrip those lost from traditional retail. Second, he points out that the total e-commerce sector, including lower-wage fulfillment centers, has an average wage of $21.13 per hour, which is 27 percent higher than the $16.65 that the average worker in traditional retail earns.

So not only are more people working, they are taking home more money too. Not only is the retail apocalypse not a tragedy, it’s somewhat of a blessing.

2. The Next Big Thing Always Starts Out Looking Like Nothing At All

Every technology eventually hits theoretical limits. Buy a computer today and you’ll find that the technical specifications are much like they were five years ago. When a new generation of iPhones comes out these days, reviewers tout the camera rather than the processor speed. The truth is that Moore’s law is effectively over.

That seems tragic, because our ability to exponentially increase the number of transistors that we can squeeze onto a silicon wafer has driven technological advancement over the past few decades. Every 18 months or so, a new generation of chips has come out and opened up new possibilities that entrepreneurs have turned into exciting new businesses.

What will we do now?

Yet there’s no real need to worry. There is no 11th commandment that says, “Thou shalt compute with ones and zeros” and the end of Moore’s law will give way to newer, more powerful technologies, like quantum and neuromorphic computing. These are still in their nascent stage and may not have an impact for at least five to ten years, but will likely power the future for decades to come.

3. It’s Ecosystems, Not Inventions, That Drive the Future

When the first automobiles came to market, they were called “horseless carriages” because that’s what everyone knew and was familiar with. So it seemed logical that people would use them much like they used horses, to take the occasional trip into town and to work in the fields. Yet it didn’t turn out that way, because driving a car is nothing like riding a horse.

So first people started taking “Sunday drives” to relax and see family and friends, something that would be too tiring to do regularly on a horse. Gas stations and paved roads changed how products were distributed and factories moved from cities in the north, close to customers, to small towns in the south, where land and labor were cheaper.

As our ability to travel increased, people started moving out of cities and into suburbs. When consumers could easily load a week’s worth of groceries into their cars, corner stores gave way to supermarkets and, eventually, shopping malls. The automobile changed a lot more than simply how we got from place to place. It changed our way of life in ways that were impossible to predict.

4. We Can Only Validate Patterns Going Forward

G. H. Hardy once wrote that, “a mathematician, like a painter or poet, is a maker of patterns. If his patterns are more permanent than theirs, it is because they are made with ideas.” Futurists often work the same way, identifying patterns in the past and present, then extrapolating them into the future. Yet there is a substantive difference between patterns that we consider to be preordained and those that are to be discovered.

Think about Steve Jobs and Appl for a minute and you will probably recognize the pattern and assume I misspelled the name of his iconic company by forgetting to include the “e” at the end. But I could have just have easily been about to describe an “Applet” he designed for the iPhone or some connection between Jobs and Appleton WI, a small town outside Green Bay.

The problem with patterns is that the future is something we create, not some preordained plan that we are beholden to. The things we create often become inflection points and change our course. That may frustrate the futurists, but it’s what makes life exciting for the rest of us.

3 Stocks To Hold During The Economic Slowdown

Stocks are becoming more expensive. Yet earnings have not bolstered these prices. In fact, earnings surprises have been mostly negative, causing the Citigroup Economic Surprise Index to diverge with the price-to-earnings ratio of the market:

This index, almost by necessity, oscillates. As earnings continue to disappoint, analysts will inevitably lower their expectations, in turn creating an environment of more positive earnings surprises. This is bullish for the market, especially for companies reporting earnings in the coming months.

When earnings surprise, stocks rise. This is true even when stocks are perceived to be expensive. Those who are concerned with the inflated equity costs should be comforted to know that we are still in a bull market.

Don’t Worry Yet

Leading economic indicators tell us not to worry just yet. For example, ISM New Orders show continued growth in customer demand – 38 consecutive months of growth, in fact.

Note that new orders trend down before recessions:

We might be seeing slower growth, but we still see growth. Eventually, the top will be in, and leading economic indicators will start to decay before the next recession. For now, the economy is as strong as ever but with slowing growth.

Because the economy influences company earnings and because the economy is still strong, the Citigroup Economic Surprise Index being low is likely the result of analysts’ expectations being too high. With growth slowing, this makes sense. Analysts have been assuming the fast growth in corporate earnings will continue, neglecting the slowdown in economic growth.

Peak Growth

Currently, the slope of leading economic indicators (LEIs) is flattening. This could be a temporary stall, but we often see this toward the end of a bull market. The economy is likely leaving the expansion phase of the business cycle and entering a slowdown phase:

At this point, the risk/reward curve begins to become concave, meaning that the downside risk is beginning to outweigh further upside reward. From here, we will likely see lower volatility as the market makes its way up to a peak for this bull market. Before we hit the recession phase of the business cycle, we will likely see another rally, but one of much lower volatility and speed than the post-December rally.

The bull market is not over. With foreign economies clearly being deep in the slowdown phase, the US market is one of the last places for bulls. Yet the fact that the economy is slowing down means investors should be rebalancing their portfolios for the sake of maintaining alpha.

Outperforming Sectors

According to research on sector performance during the business cycle, at this point, investors should be ditching real estate and consumer discretionary stocks in favor of healthcare and consumer staples:

Drawing inspiration from this, here is my list of positions to hold during the coming economic slowdown:

Macquarie Infrastructure (NYSE:MIC)

This company falls in the “industrials” sector. This is a B2B service company – or set of companies, rather.

MIC has seen a stable, positive growth rate since around 2013. The slowdown earlier this decade did not make a significant impact on the company’s growth, implying that we should see growth continue during the next slowdown:

(Source: Damon Verial; data from ADVFN)

Cash flows too have been strong and growing:

(Source: Damon Verial; data from ADVFN)

Putting it all together, I calculate the company as undervalued as per its discounted cash flow valuation. Here is my discounted cash flow valuation plotted against the stock:

(Source: Damon Verial; data from ADVFN)

You can see that MIC was not underpriced until the last selloff. My chart only generated a buy signal in 2018. The valuation implies a 60% upside.

Four analyst downgrades after February’s earnings brought the stock to a discounted level. We know this was an overreaction because the stock is quickly filling the down area gap that appeared after earnings:

(Source: Stockcharts.com)

One key reason for my choice of MIC is its mispricing. Yet once the gap fills, the post-earnings drift will be officially over. Get in on this one early for some excess returns and to lock in on the company’s 10% dividend yield.

TreeHouse Foods (NYSE:THS)

This food and beverage company falls in the “consumer staples” category. It attracted my attention last month with an odd earnings reaction. The company reported a revenue decline of over 10%, causing the stock to fall.

Yet it was bought right back up, with dip-buying erasing all losses. The stock carried on as if nothing happened. This type of post-earnings reaction shows a strong investor base, which limits news-based drawdowns:

(Source: Stockcharts.com)

I dug into the earnings call transcript to see if I could find anything of interest. Lexical analysis is useful here. Proper financial lexical analysis can generate management sentiment, which is a predictor of a stock’s price over the coming month.

THS’s earnings calls were quite interesting. Rarely does a call contain more pessimism than optimism. However, THS was the rare exception for most of this and last year – except for the recent quarter.

Its most recent earnings call was roughly as optimistic as the average company. Because the previous quarter and year showed negative sentiment scores, I cannot make a comparison. Suffice to say, management is indirectly pointing to an inflection point in the company.

Here are a few flagged statements from the earnings call:

“Importantly, pricing execution has gone a lot more smoothly than last year with a minimal disconnect between inflation and pricing.”

– A tangible factor for the recent turnaround in sentiment.

“We worked hard as an organization to resolve the majority of our service issues and to restore customer trust and TreeHouse’s ability to deliver.”

– A similar statement; an admission of problems that are being corrected. Acknowledgement of issues and plans for resolution remains a strong indicator of excess returns, according to financial lexical analysis. (The downplaying of problems in contrast implies negative excess returns.)

“Quite frankly, solving the Snacks issue right now is our most important and where all the focus is.”

– A continued focus on problems. Should the company again succeed, we will likely see another quarter of strong sentiment, implying upward pressure on the stock price.

THS has outperformed the US food market to a great extent: 68% annual returns versus -4%. Yet my analysis hints that mean reversion is still underway, as the company still has a lower price-to-book than the average food stock. The company is expected to see a 60% earnings growth over the next year, making now a good entry point.

Because THS does not offer a dividend, you can use options instead for this play. I recommend the Aug 16 $60 calls. These have a delta of 100, allowing you to fully mimic holding 100 shares of THS per contract at a cost of around $650 and with minimum theta decay.

Madrigal Pharmaceuticals (NASDAQ:MDGL)

This company falls in the “healthcare” category. Investing in MDGL gives you exposure to a pipeline of cardiovascular, liver, and metabolic treatments. The stock is trading at under half its previous price because shares were diluted via a public offering for the sake of raising capital.

This capital will be used to finance the company’s pipeline. The timing was smart: just before a slowdown. The company will be able to focus on its pipeline with little regard to decaying economic conditions.

The options market is pricing the stock at $130, which is slightly above MDGL’s current price. I, too, see the stock as undervalued. Over the past year, MDGL has outperformed the biotech sector with 8% returns versus -1% returns.

Since 2016, MDGL has had no long-term debt and can cover its short-term debt with its current cash and assets. With its moat of cash, MDGL can continue working on its pipeline without worrying about earnings. A strong clinical trial result or two should draw investors into this company, and the stock will rally in response.

This stock is more of a gamble than the other two, so do look into the pipeline to see if anything strikes your fancy. Biotech stocks are notoriously hard to predict, and so my philosophy is to bet on those that are (1) outperforming the sector, (2) have a decent pipeline or high-sales product, and (3) are financially healthy, whether that mean strong earnings or enough cash runway to support the pipeline.

This is a rather unpopular stock for the general public, but is popular with the “smart money”: venture capitalists, hedge funds, and institutions:

(Source: Simply Wall St)

If you want to play this without putting too much capital at risk, I suggest the June 21 $130 call options. If the option market’s prediction is correct, these contracts are currently underpriced. Aim for roughly 25% ROI over the next quarter and roll the options over quarterly.

Conclusion

The US economy is at peak growth. From here, it will soon (or already has by some measures) enter into the slowdown phase of the business cycle. During this phase, three sectors show excess returns: industrials, consumer staples, and healthcare.

While you could simply buy ETFs in these sectors, if we are to seek alpha, we should look for stocks that are to outperform in these sectors. Thus, we gain excess returns upon excess returns. I gave my three picks, one from each sector.

We have MIC, an industrial with strong growth; THS, a food company that is at an inflection point, having solved many of its major problems, and a management, which has recently traded pessimism for optimism; and MDGL, a biotech company that is cash-rich and focusing on its pipeline. All things being equal, holding these companies in your portfolio during the inevitable slowdown will produce alpha. Happy trading.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Lyft Kicks Off Highly-Anticipated ‘Year of the IPO’

Lyft’s initial public offering on Thursday is the first of a series of highly-anticipated debuts by tech companies in public markets. And so far, Lyft is proving that it’s the right time to make the leap.

“With what we’re seeing with the excitement and feedback from the investment community, this IPO market could end up being historic,” said Barrett Daniels, national IPO services leader at Deloitte & Touche.

Lyft, which will begin trading on Nasdaq on Friday, was one of several big tech companies expected to go public this year. In the IPO, the company priced its shares at $72, at the high range of what it had initially anticipated.

“This IPO is a ‘watershed’ event for the tech sector as well as the ridesharing industry that in our opinion has become one of the most transformational growth sectors of the U.S. consumer market over the past five years,” analysts at Wedbush Securities wrote in a note following Lyft’s IPO.

Meanwhile, Pinterest, which filed its public paperwork with the Securities and Exchange Commission on March 22, is expected to begin trading on the New York Stock Exchange in April. Lyft rival Uber, also expected to go public in April on the NYSE after filing confidentially, could have a valuation of up to $120 billion and become one of the largest IPOs in history. Postmates, Zoom, Slack, and Airbnb, also are anticipating debut later this year.

Investors’ appetites are strong for these “decacorns,” or companies with valuations larger than $10 billion, Daniels said. Lyft’s IPO was oversubscribed a week before it went public, signaling the heavy demand for its shares that helped send its market value to $24.3 billion, higher than the $23 billion valuation it had initially expected. Meanwhile, Airbnb was privately valued at more than $30 billion during the last two years, while Pinterest was most recently valued at $12 billion.

“These are not your Boomer-generation IPOs,” said Duncan Davidson, general partner at venture firm Bullpen Capital. “We killed the small IPO after 2000.”

That’s because for years, the venture capital market has bet big on newer ventures, allowing companies to stay private and well-funded for longer periods of time. But generally, investors expect a return on their investment. So this year, those heavily venture-capital-backed companies are finally making the big move, in an effort to take advantage of the current strong market conditions.

The excitement for Lyft will likely spill over into Uber’s expected initial public offering, Davidson said. But that doesn’t mean that all tech IPOs will get the same reception because some companies don’t have a clear path to profitability.

“It won’t be … the tide that lifts all boats,” Davidson said. “The market will still be selective.”

What excites investors most about these large tech companies, most of which are unprofitable, is revenue growth, according to Deloitte’s Daniels. Lyft’s revenue in 2018 doubled to $2.2 billion while it lost $911 million, 32% more than the year before.

“A lot of these startups made a conscious decision early in their lives to grow and grow quickly,” Daniels said. “It would appear they’re going to be rewarded for it.”

Daniels says most companies that have been considering IPOs are speeding up the process to ensure they debut this year. Though a couple of companies may opt for a direct listing, a process that foregoes underwriters, he expects this to be the year of the IPO.

“It feels like it’s going to be real exciting here for the next couple of months” and continuing into the year, Daniels said. “It’s going to be a historic year.”

Facebook charged with racial discrimination in targeted housing ads

The Facebook logo is reflected on a woman’s glasses in this photo illustration taken June 3, 2018. REUTERS/Regis Duvignau/Illustration

(Reuters) – The U.S. Department of Housing and Urban Development (HUD) charged Facebook Inc on Thursday with violating the Fair Housing Act, alleging that the company’s targeted advertising discriminated on the basis of race and color.

HUD said Facebook also restricted who could see housing- related ads based on national origin, religion, familial status, sex and disability.

Facebook said it was surprised by the decision and has been working with HUD to address its concerns and has taken significant steps to prevent ads discrimination across its platforms.

The social media giant said last week it would create a new advertising portal for ads linked to housing and employment that would limit targeting options for advertisers.

“Facebook is discriminating against people based upon who they are and where they live,” HUD Secretary Ben Carson said. “Using a computer to limit a person’s housing choices can be just as discriminatory as slamming a door in someone’s face.”

The Fair Housing Act prohibits discrimination in housing and related services, which includes online advertisements, based on race, color, national origin, religion, sex, disability, or familial status.

Reporting by Akanksha Rana in Bengaluru; Editing by Saumyadeb Chakrabarty

Data Sheet—Why Twitch Pivoted to Video Games, and Why It Worked

Upgraded. Remember that meeting between Google CEO Sundar Pichai and the Pentagon? It seems it turned into more of an Oval Office affair, as President Trump tweeted about talking with the tech exec, too. Pichai “stated strongly that he is totally committed to the U.S. Military, not the Chinese Military,” Trump wrote. At the other end of the political spectrum, the Human Rights Campaign, the largest U.S. LGBTQ group, withdrew its positive corporate rating of Google over an app in Google’s Play store promoting conversion therapy.

Third class. After three generations of failure, Apple is finally apologizing for its terrible butterfly keyboard design–sort of. Wall Street Journal columnist Joanna Stern mocked the design in a piece titled “Appl Still Hasn’t Fixd Its MacBook Kyboad Problm,” prompting the company to issue a statement saying the problem was limited to a small number of users “and for that we are sorry.” Hopefully, the laptop maker comes up with a new design soon instead of an apology. (I am also not a fan, as you may have read.)

Caught in the act. The Department of Housing and Urban Development announced on Thursday it is charging Facebook with violating housing discrimination laws over the company’s advertising targeting features. “Using a computer to limit a person’s housing choices can be just as discriminatory as slamming a door in someone’s face,” HUD Secretary Ben Carson said in a statement. No immediate response from the company, which has already moved to end the practice.

Challenging times. Four former IBM employees filed an age discrimination lawsuit against the company on Wednesday. All four were age 55 or older when IBM let them go in 2016. The suit also attacked IBM’s requirement that departing employees waive their right to collective legal action in order to obtain severance. “We are confident that our arbitration clauses are legal and appropriate,” the company told the San Jose Mercury News.

Nailed. Federal regulators uncovered one of those bogus tech support scams that relied on phony alerts generated by supposed PC cybersecurity apps. The bad guy? Retail chain Office Depot, which agreed to pay $25 million to settle the charges.

Auto1 may consider IPO in future but no need for cash now: CEO

BERLIN (Reuters) – German used-car dealing platform Auto1 said it could seek a public offering in future but a 2018 cash infusion from Japan’s Softbank means it has no immediate need for extra funding of its European growth plans.

FILE PHOTO: A worker loads a second hand car on a car transporter truck at the Auto1.com company grounds in Zoerbig, Germany January 28, 2017.REUTERS/Fabrizio Bensch /File Photo

Last year’s Softbank’s deal valued Berlin-based Auto1 at 2.9 billion euros ($3.27 billion), making it one of Germany’s top so-called tech unicorns.

It is virtually unknown to consumers except through its used car buying arm Wir Kaufen dein Auto (We Buy Your Car) in Germany and similar names elsewhere. It operates from Finland to Romania to Portugal, 30 countries in all.

Revenues rose by 32 percent to 2.9 billion euros last year, and although it is profitable in Germany, investments in other markets have led to a loss on group level.

“Currently, an initial public offering is not a topic for us,” Auto1 co-founder Christian Bertermann told Reuters, adding this could change in future.

Auto1 buys cars using its vehicle pricing database to calculate an offer within minutes and then sells the vehicles on to one of its roughly 35,000 dealerships for a commission.

Its platforms helped 540,000 vehicles change hands in 2018.

The company will now also start a retail platform to compete with Scout24’s Autoscout unit or Ebay’s Mobile.de offering, Bertermann said.

He confirmed a Reuters report about Auto1’s talks with Scout24 about an acquisition of Autoscout, adding that these would not lead to a takeover.

Scout24 in February agreed to be acquired by buyout groups Hellman & Friedman and Blackstone.

Auto1 was set up in Berlin by entrepreneur Christian Bertermann after having trouble selling two old cars owned by his grandmother, along with Koc, who previously worked at Rocket Internet-backed firms Zalando and Home24.

Reporting by Nadine Schimroszik,; Writing by Arno Schuetze; Editing by Alexandra Hudson

Bahrain to use Huawei in 5G rollout despite U.S. warnings

DUBAI (Reuters) – Bahrain, headquarters of the U.S. Navy’s Fifth Fleet, plans to roll out a commercial 5G mobile network by June, partly using Huawei technology despite the United States’ concerns the Chinese telecom giant’s equipment could be used for spying.

FILE PHOTO: Logos of Huawei are pictured outside its shop in Beijing, China, February 28, 2019. REUTERS/Jason Lee/File Photo

Washington has warned countries against using Chinese technology, saying Huawei could be used by Beijing to spy on the West. China has rejected the accusations.

VIVA Bahrain, a subsidiary of Saudi Arabian state-controlled telecom STC, last month signed an agreement to use Huawei products in its 5G network, one of several Gulf telecoms firms working with the Chinese company.

“We have no concern at this stage as long as this technology is meeting our standards,” Bahrain’s Telecommunications Minister Kamal bin Ahmed Mohammed told Reuters on Tuesday when asked about U.S. concerns over Huawei technology.

The U.S. embassy in Bahrain did not immediately respond to a request for comment.

The U.S. Fifth Fleet uses its base in Bahrain, a Western-allied island state off the Saudi coast, to patrol several important shipping lanes, including near Iran.

Bahrain expects to be one of the first countries to make 5G available nationwide, Mohammed said, although he cautioned it would depend on handset and equipment availability.

Early movers like the United States, China, Japan and South Korea are just starting to roll out their 5G networks, but other regions, such as Europe, still years away and the first 5G phones are only likely to be released in the second half of this year.

Bahrain’s state controlled operator Batelco is working with Sweden’s Ericsson on its 5G network, while the country’s third telecom Zain Bahrain is yet to announce a technology provider.

No foreign company is restricted by the government from providing equipment for Bahrain’s 5G network, Mohammed said, adding that the mobile operators chose who they worked with.

Australia and New Zealand have stopped operators using Huawei equipment in their networks but the European Union is expected to ignore U.S. calls to ban the Chinese company, instead urging countries to share more data to tackle cybersecurity risks related to 5G networks.

Mohammed said the rollout of the 5G network was an “important milestone” for Bahrain, which is hoping investments in technology will help spur the economy which was hit hard by the drop in oil prices.

“It is something we are proud to have,” he said.

Reporting by Alexander Cornwell; Editing by Kirsten Donovan

A Cab’s-Eye View of How Peloton’s Trucks ‘Talk’ to Each Other

Techno-optimist prognosticators will tell you that driverless trucks are just around the corner. They will also gently tell you—always gently—that yes, truck driving, a job that nearly 3.7 million Americans perform today, is perhaps on the brink of extinction. At the very least, on the brink of uncomfortable change.

A startup called Peloton Technology sees the future a bit differently. Based in Mountain View, California, the eight-year-old company has a plan to broadly commercialize a partially automated truck technology called platooning. It would still depend on drivers sitting in front of a steering wheel, but it would be more fuel efficient and, hopefully, safer than truck-based transportation today.

The company employs 10 professional truck drivers to help refine its tech, and I’m about to meet two of them out on Peloton’s test track in California’s Central Valley. Michael Perkins is tall, thin, and has been driving very big trucks for about 20 years. Jake Gregory is shorter and picked up truck driving in college, before taking a detour to the FBI.

We hit the highway first, because the rain has suddenly cleared. (Here’s an unfortunate reality about Peloton’s driver assistance tech: It doesn’t work great in the rain. Or snow. It’s a safety issue. More on that later.) Out on Interstate 5, Perkins’ long, white semitrailer cruises along in front of me. I’m on board the second, identical truck behind it, with Gregory behind the wheel. A small screen mounted on Gregory’s dashboard shows a camera view of what’s happening in front of Perkins’ rig. It’s like their trucks are connected. Which, in fact, they are about to be.

Peloton

Perkins radios in that he’s ready to go; Gregory says he is too. Inside the two truck cabs, each driver hits a button. Three ascending tones—la, la, la—means Peloton’s automated system has authorized the trucks to platoon on this stretch of highway. A dedicated short range communications (DSRC) connection is now established between the two vehicles. It’s like Wi-Fi but faster and easier to secure. Now, whatever the front truck does, the back truck will near-simultaneously “know”—and react accordingly.

Then Gregory speeds up, pulling his truck up so it’s tailgating about 70 feet from the leader. Sounds risky! But right now, the two trucks are platooning. Ours is on a kind of hopped-up cruise control, which means Gregory’s feet aren’t actually controlling the brakes or accelerator. At the same time, Gregory maintains control of his steering wheel. If Perkins were to brake hard, Gregory’s truck would too, faster than a human could. The robots have taken over. Kind of? Not really? More like, they’re collaborating, with some human oversight.

Peloton’s name, a reference to bicycle racing, helps explain how this platooning works. Just as the riders in the peloton, or main group of racing cyclists, preserve energy by drafting off of those around them, the following trucks in the truck platoon reduce their aerodynamic drag by drafting off the ones in front. The lead truck, meanwhile, get a little push. This saves fuel, according to Peloton—up to 10 percent for the following car and 4.5 percent for the first one, depending on the road and weather conditions and the following distance. It might also prevent crashes, since this tech has much faster reaction times (about 30 milliseconds) than puny humans (about 1 to 1.5 seconds).

Other companies in Europe, China, Japan, and Singapore are seriously experimenting with truck platooning. The American military has hosted platooning demonstrations. Just this week, the US Department of Transportation gave out $1.5 million in grants to universities studying the tech. And Peloton has tested in a bunch of US states: Arizona, California, Michigan, Florida, and Texas, where Peloton has immediate plans to run the majority of its routes.

Right now, the company says it does have paying customers, though it won’t reveal their names until later this year. According to Josh Switkes, the company’s CEO, some pair of US truck drivers are running a route while platooning on a Peloton-enabled truck every day.

And testing continues, on the software in its office, on its test track, and on actual highways, where it confirms the technology’s reliability. “The highway or field is not for testing,” Switkes says. “The goal of testing is to find failures, and you don’t want those failures to be on public roads.” In a report released today, the company lays out this approach to safety for regulators and interested industry parties alike. It borrows more from automotive processes than Silicon Valley–style software ones, amounting to something like easy does it.

It turns out, the linking-up move Perkins and Gregory just performed on the 5 is one of the most safety-critical parts of truck platooning, Switkes says. The moment when the following truck has to move faster than the one in front of it is the most dangerous part.

To make sure drivers like Perkins and Gregory don’t crash into each other, or anyone else, Peloton needs to make sure that the platooning drivers know how the tech works. (Right now, the company’s driver training process takes about half a day.) It also needs to understand exactly how heavy the trucks are when they start platooning, how their brakes are working, and how their tires function. For this reason, the company says, it has carved out partnerships with its suppliers, which means its trucks are built from the ground up with platooning in mind.

This is also why Peloton doesn’t platoon in the rain right now, or in the snow: The company can’t yet gauge exactly how tires deteriorate over time, which means it can’t quite predict how they’ll react in a hard-braking situation. Worn tires might slide in the moisture, leading to a domino chain of truck crashes. So no platooning in the Midwest in the winter, or anywhere during a rainy spring. “On certain routes, it’s a significant limitation,” says Switkes. “But we’re erring on the side of safety.”

And if that seems a little dull, Switkes would tell you that’s the point. His favorite word is “pragmatic,” and he doesn’t believe driverless trucks will prowl the highways any time soon. The technology is too complicated, he argues, and developers will have to go through years of safety testing before they’re ready for the roads—and before the public feels safe riding in their own bitty cars around 50,000-pound robot trucks. So Peloton is going all in on making human-based driving both safer and more efficient. With a bit of tech boost.

Not all manufacturers agree: In January, Daimler announced it would stop its platooning development to focus on autonomous trucking. Tests showed that “fuel savings, even in perfect platooning conditions, are less than expected,” the German company wrote in a press release. “At least for U.S. long-distance applications, analysis currently shows no business case for customers driving platoons with new, highly aerodynamic trucks.”

Platooning advocates disagree, but even the most supportive believe finding a market for this trucker assistance isn’t simple. Steven Shladover is researcher with the California Partners for Advanced Transportation Technology program at UC Berkeley. He has studied platooning for two decades, and points out that the truck industry would need to execute a fair bit of choreography to pull off platooning. Fleet operators would have to coordinate deliveries, matching up trucks heading in the same direction at the same time. “Does the truck industry see enough of a benefit in platooning to fit it into their operational strategies?” he says.

While everyone in trucking waits to find out, Perkins and Gregory head back to Peloton’s test track and proceed to show off a few, freakier moves: some hard braking, some driving side-by-side to prove that the trucks can still “talk” to each other in that position. At one point, another company employee in a white Toyota Tundra cuts into the 55-foot space between the two trucks, and they smoothly part to make room for him. Maybe platooning will improve life for truckers—too bad it can’t fix the problem of everyday reckless drivers, too.


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Google to prompt Android users to choose preferred browsers to allay EU concerns

FILE PHOTO: A 3D printed Android mascot Bugdroid is seen in front of a Google logo in this illustration taken July 9, 2017. REUTERS/Dado Ruvic/Illustration

BRUSSELS (Reuters) – Alphabet’s Google will prompt Android users to choose their preferred browsers and search apps, a senior Google executive said on Tuesday, as the company seeks to allay EU antitrust concerns and ward off fresh sanctions.

The European Commission last year handed Google a record 4.34 billion euro ($4.9 billion) fine for using the market power of its mobile software to block rivals in areas such as internet browsing.

By pre-installing its Chrome browser and Google search app on Android devices, Google had an unfair advantage over its rivals, EU enforcers said.

Google will now try to ensure that Android users are aware of browsers and search engines other than its own services, Kent Walker, senior vice-president of global affairs, said in a blog.

“In the coming months, via the Play Store, we’ll start asking users of existing and new Android devices in Europe which browser and search apps they would like to use,” he wrote without providing details.

The company, which introduced a licensing fee for device makers to access its app marketplace after the EU sanction, does not plan to scrap the charge.

Google could be fined up to 5 percent of Alphabet’s average daily worldwide turnover if it fails to comply with the EU order to stop anti-competitive practices.

Reporting by Foo Yun Chee; Editing by David Goodman