Tesla was ordered by the Chinese government to shut down its Shanghai factory over concerns about the coronavirus, a closure that will delay Model 3 production and ultimately put slight downward pressure on profits in the first quarter, the automaker’s finance chief Zach Kirkhorn said during an earnings call Wednesday.
Prior to the call, Tesla reported Wednesday $105 million in net income, or 56 cents a diluted share, compared with $140 million, or 78 cents a share, in the same year-ago period. Tesla earned $386 million, or $2.14 a share, in the fourth quarter when adjusted for one-time items. Tesla generated revenue of $7.38 billion in fourth quarter, just 1% higher than the $7.2 billion generated in the same period in 2018.
Model 3 production will be delayed by a week and a half, Kirkhorn said. Novel coronavirus, a new form of the family of viruses known as coronavirus first cropped up in Wuhan in late December 2019. Since then, thousands of people have contracted the virus, causing the government to take measures such as shutting down transit and factories.
“We are in the early stages of understanding if, and to what extent, we may be temporarily impacted by the coronavirus,” Kirkhorn said. “At this point we’re expecting a one, to one and a half week-delay in the ramp of the Shanghai build Model 3 due to a government required factory shutdown. This may slightly impact profitability for the quarter, but is limited as the profit contribution from Model 3 Shanghai remains in the early stages.”
Tesla is also closely monitoring if the coronavirus will cause interruptions in the supply chain for cars built in Fremont. “So far we’re not aware of anything material, but it’s important to caveat, this was an unfolding story,” Kirkhorn added.
The first deliveries of Tesla Model 3 sedans produced at the Shanghai plant began in early January, one year after the U.S. automaker began construction on its first factory outside the United States.
The deliveries to customers was a milestone for Tesla and a critical step for the company in its aim to carve out market share in the world’s biggest auto market, as well as lessen the financial pain caused by tariffs.
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Facebook will pay over half a billion dollars to settle a class action lawsuit that alleged systematic violation of an Illinois consumer privacy law. The settlement amount is large indeed, but a small fraction of the $35 billion maximum the company could have faced.
Class members — basically Illinois Facebook users from mid-2011 to mid-2015 — may expect as much as $200 each, but that depends on several factors. If you’re one of them you should receive some notification once the settlement is approved by the court and the formalities are worked out.
The proposed settlement would require Facebook to obtain consent in the future from Illinois users for such purposes as face analysis for automatic tagging.
This is the second major settlement from Facebook in six months; an seemingly enormous $5 billion settlement of FTC violations was announced over the summer, but it’s actually a bit of a joke.
The Illinois suit was filed in 2015, alleging that Facebook collected facial recognition data on images of users in the state without disclosure, in contravention of the state’s 2008 Biometric Information Privacy Act (BIPA). Similar suits were filed against Shutterfly, Snapchat, and Google.
Facebook pushed back in 2016, saying that facial recognition processing didn’t count as biometric data, and that anyway Illinois law didn’t apply to it, a California company. The judge rejected these arguments with flair, saying the definition of biometric was “cramped” and the assertion of Facebook’s immunity would be “a complete negation” of Illinois law in this context.
Facebook was also suspected at the time of heavy lobbying efforts towards defanging BIPA. One state senator proposed an amendment after the lawsuit was filed that would exclude digital images from BIPA coverage, which would of course have completely destroyed the case. It’s hard to imagine such a ridiculous proposal was the suggestion of anyone but the industry, which tends to regard the strong protections of the law in Illinois as quite superfluous.
As I noted in 2018, the Illinois Chamber of Commerce proposed the amendment, and a tech council there was chaired by Facebook’s own Manager of State Policy at the time. Facebook told me then that it had not taken any position on the amendment or spoken to any legislators about it.
2019 took the case to the 9th U.S. Circuit Court of Appeals, where Facebook was again rebuffed; the court concluded that “the development of face template using facial-recognition technology without consent (as alleged here) invades an individual’s private affairs and concrete interests. Similar conduct is actionable at common law.”
Facebook’s request for a rehearing en banc, which is to say with the full complement of judges there present, was unanimously denied two months later.
At last, after some 5 years of this, Facebook decided to settle, a representative told TechCrunch, “as it was in the best interest of our community and our shareholders to move past this matter.” Obviously it admits to no wrongdoing.
The $550 million amount negotiated is “the largest all-cash privacy class action settlement to date,” according to law firm Edelson PC, one of three that represented the plaintiffs in the suit.
“Biometrics is one of the two primary battlegrounds, along with geolocation, that will define our privacy rights for the next generation,” said Edelson PC founder and CEO Jay Edelson in a press release. “We are proud of the strong team we had in place that had the resolve to fight this critically important case over the last five years. We hope and expect that other companies will follow Facebook’s lead and pay significant attention to the importance of our biometric information.”
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Bloomberg:
California court orders Apple to pay $838M and Broadcom to pay $270M for infringing California Institute of Technology patents on Wi-Fi transmissions — Apple Inc. and Broadcom Inc. must pay $1.1 billion in damages for infringing California Institute of Technology patents on Wi-Fi transmissions, a jury in California ordered.
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New York Times:
Facebook agrees to pay $550M to settle a class action over Illinois biometric law violations while tagging users in photos, after SCOTUS rejected its appeal — It was another black mark on the privacy record of the social network, which also reported its quarterly earnings.
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