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Netflix Hit With Shareholder Lawsuit Amid Plummeting Stock Price
Christian Hetrick
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
The fallout from Netflix’s disastrous first-quarter earnings continues with a new shareholder lawsuit that claims the streaming giant misled investors about its ability to sign up more subscribers.
According to Reuters, a Texas-based investment trust has accused Netflix and its leaders of failing to disclose its slowing growth and that it was shedding subscribers as it amid heightened streaming competition. The lawsuit, filed Tuesday in federal court in San Francisco, is seeking monetary damages for the sharp drop in Netflix's share price after the company missed its subscriber projections.
Netflix shares cratered last month after investors learned that the streaming platform had lost subscribers for the first time in more than a decade in the first quarter, and expects to lose 2 million more in the current second quarter. The company’s stock price plummeted more than 35% on April 20, the day after Netflix disclosed its first quarter financial results. Netflix shares closed at $204.01 on Wednesday, a mighty fall from their nearly $700 stock price in November.
During Netflix’s most recent earnings call, company leaders blamed increased competition, password sharing and Russia’s invasion of Ukraine, among other factors, for the sharp subscriber slowdown. Executives claimed that COVID-19 had initially clouded the company’s outlook for future growth.
The lawsuit names Netflix co-CEOs Reed Hastings and Ted Sarandos and Chief Financial Officer Spencer Neumann as defendants, according to Reuters. The suit, which is seeking class-action status, was filed on behalf of investors who traded Netflix shares between Oct. 19, 2021 and April 19, 2022.
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Christian Hetrick
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
TikTok Timeline Update: The Rise and Pause of a Social Video Giant
03:07 PM | July 08, 2022
TikTok | Solen Feyissa | Flickr
See our timeline below for key developments TikTok's story over the last 10 years, starting with the founding of ByteDance and moving through the app's rise to popularity and the mounting concerns about data privacy and security.
March 2012: Internet entrepreneur Zhang Yiming founds ByteDance in Beijing.
August 2012: ByteDance launches its first product, Toutiao, an AI-powered news aggregator.
July 2014: Alex Zhu launches Musical.ly, an app that enables users to create short-form lipsync music videos; Musical.ly is headquartered in Shanghai with an office in Santa Monica.
July 2015: Musical.ly hits #1 in Apple app store.
September 2016: ByteDance launches Douyin, an app with similar functionality as Musical.ly; within a year, the Chinese app achieves 100 million users and 1 billion views per day.
September 2017: ByteDance brings Douyin outside of China's Great Firewall under the name of TikTok; the app does well in numerous Asian markets.
November 2017: ByteDance acquires Musical.ly for $1 billion; the company starts operating Musical.ly in the US, Douyin in China and TikTok in other markets.
August 2018: ByteDance merges Musical.ly with TikTok and migrates all user profiles to TikTok; Alex Zhu becomes TikTok senior vice president, saying, "Combining Musical.ly and TikTok is a natural fit given the shared mission of both experiences – to create a community where everyone can be a creator."
October 2018: ByteDance achieves a record $75 billion valuation, making it the world's biggest privately backed startup.
February 2019: Lil Nas X releases "Old Town Road" on TikTok, catalyzing a viral sensation that ultimately reaches #1 on Billboard's charts.
February 2019: TikTok is fined $5.7 million for child data privacy violations.
September 2019:Washington Post reports that TikTok may be censoring protests in Hong Kong.
September 2019: Leaked documents show TikTok instructs its moderators to censor videos that mention various subjects deemed offensive by the Chinese government and Communist Party, The Guardian reports.
October 2019: U.S. Senator Marco Rubio calls on the U.S. government to investigate the national security implications of ByteDance's acquisition of Musical.ly, citing concerns over the Chinese government and Communist Party's use of TikTok to censor content and silence open discussion.
October 2019: U.S. Senators Chuck Schumer and Tom Cotton ask U.S. Acting Director of National Intelligence to assess the national security risks from TikTok and other Chinese-owned apps, and request a congressional briefing on the findings.
October 2019: Alex Zhu begins reporting directly to ByteDance head Zhang Yiming; he had previously reported to the head of Douyin.
November 2019: The U.S. government launches an investigation into ByteDance's acquisition of Musical.ly on the grounds that ByteDance did not seek clearance when it acquired Musical.ly.
TikTok reportedly has 26.5 million monthly active users in the U.S. at this time.
December 2019: The U.S. Defense Department's Defense Information Systems Agency issues a recommendation that military personnel delete TikTok from all smartphones.
Q4 2019: TikTok becomes the most downloaded app in the world and second in the U.S.
January 2020: Several U.S. military branches ban TikTok on government-issued smartphones.
March 2020: U.S. officials reach out to TikTok to discuss political disinformation.
April 2020: TikTok surpasses 2 billion downloads and sets the record for quarterly downloads.
May 2020: Various child privacy groups file a complaint with the U.S. Federal Trade Commission that TikTok is violating the Children's Online Privacy Protection Act (COPPA) and flouting terms agreed to following its February 2019 settlement.
A TikTok spokesperson says the company "takes the issue of safety seriously for all our users, and we continue to further strengthen our safeguards and introduce new measures to protect young people on the app."
May 2020: ByteDance hires former Disney executive Kevin Mayer as chief operating officer and TikTok chief executive officer.
June 2020: Teens organize on TikTok to fool Trump administration into anticipating high attendance for the President's Tulsa, Oklahoma campaign rally.
June 2020: India bans 59 Chinese apps including TikTok, citing national security and data privacy concerns; the move comes amid ongoing skirmishes between the two countries on the China-India border.
July 2020: Australia Prime Minister Scott Morrison launches an investigation into TikTok surrounding data concerns.
July 2020: U.S. Secretary of State Mike Pompeo confirms the U.S. is looking into banning TikTok over concerns the app is sharing data with China; the next day, President Trump says he is considering a ban, framing it as a potential retaliation tactic against China for its handling of the coronavirus pandemic.
Aug. 2, 2020: Microsoft issues a blog post citing a conversation between chief executive Satya Nadella and President Trump around the company's potential acquisition of TikTok.
Aug. 4, 2020: Australia Prime Minister Scott Morrisson says there is not sufficient evidence to suggest a TikTok ban is necessary.
Aug. 6, 2020: President Trump issues an executive order banning American companies from transacting with ByteDance or its subsidiaries, namely TikTok; the U.S. Secretary of Commerce is to identify specific prohibited "transactions" 45 days after the order is issued.
Aug. 14, 2020: Trump issues another executive order demanding ByteDance "divest all interests and rights" in its assets and property that enable TikTok's U.S. operations, and data collected via TikTok in the U.S., within 90 days. The order says the U.S. investigation into ByteDance's acquisition of Musical.ly presented "credible evidence" that ByteDance "might take action that threatens to impair the national security of the United States."
Aug. 17, 2020: Oracle enters the discussion as a reported TikTok suitor.
Aug. 18, 2020: President Trump says he would support Oracle buying TikTok. Oracle's cofounder and CTO Larry Ellison had previously said he supports Trump and had fundraised for him in February 2020.
Aug. 24, 2020: TikTok announces it is suing the Trump administration over the ban for failure to protect due process. Separately, a U.S.-based TikTok employee also sues the administration, stating, "I am a patriot"
Aug. 26, 2020:Kevin Mayer steps down from ByteDance and TikTok, citing a diminished role in a letter to colleagues. Rumors swirl that he was left out of ByteDance's negotiations with potential acquirers
Aug. 27, 2020: Walmart issues a statement that it is interested in partnering with Microsoft to acquire TikTok.
Aug. 28, 2020: L.A.-based Triller, a TikTok upstart competitor, is reported to have issued a bid for TikTok along with investment firm Centricus.
Aug. 29, 2020:The Chinese government issues new export rules that complicate the exportation of TikTok's underlying technology – namely its "For You" algorithm – to any foreign buyer.
Aug. 31, 2020:CNBC reports TikTok has chosen a buyer, with an expected sale price of $20 billion - $30 billion.
Sept. 3, 2020: With uncertainty over whether a buyer will be able to acquire TikTok's algorithm, and debate mounting over how that affects the value of the company, numerous outlets negotiations are likely to slow as the Chinese government increases its involvement.
Sept. 13, 2020: Microsoft says in a blog post that "ByteDance let us know today they would not be selling TikTok's US operations to Microsoft." The company says it would have made "significant changes" to ensure security, privacy, online safety and combatting disinformation.
Sept. 14, 2020: Oracle confirms that it has been selected by ByteDance to become a "trusted technology provider" with TikTok. The company says the proposal was submitted by ByteDance to the Treasury Department over the weekend. Treasury Secretary Steven Mnuchin says on CNBC that the proposal includes making TikTok-global a U.S. headquartered company with 20,000 new jobs.
Mnuchin adds that the Committee on Foreign Investment in the United States is reviewing the proposal this week for national security implications, and will make a recommendation to the president, who will then review the proposal.
Sept. 19, 2020: President Trump tells reporters he approved the deal in concept between Oracle and TikTok's parent company ByteDance, in which Oracle and Walmart would partner with the app in the U.S. The U.S. government postpones a planned ban on TikTok for one week.
Sept. 27, 2020: A federal judge in Washington temporarily blocks President Trump’s order banning TikTok, granting the social media firm a reprieve just hours before it was to be removed from mobile app stores. The judge says Trump’s order was “largely a unilateral decision with very little opportunity for plaintiffs to be heard,” according to the Washington Post.
Oct. 30, 2020: TikTok averts a U.S. ban again after a federal judge in Pennsylvania temporarily blocks restrictions set to take place on Nov. 12—the Trump administration's deadline for ByteDance to close a deal in the U.S.
Nov. 7, 2020: Democrat Joe Biden defeats President Trump in the presidential election, the Associated Press and other media outlets confirm. A few days later, an advisor to President-elect Biden says it is “too early to say” Biden’s thoughts on TikTok.
Nov. 11, 2020: TikTok asks a judge to extend the deadline for its sale by 30 days. The company says it hasn’t heard an update from the administration in weeks.
Nov. 12, 2020: The U.S. Commerce Department says it won’t enforce the sale deadline imposed by Trump’s order "pending further legal developments." The department cites the Pennsylvania ruling from October that found the TikTok crackdown exceeded the government’s power.
Nov. 13, 2020: The U.S. government extends its deadline by 15 days, giving TikTok until Nov. 27 to strike a deal that allays the government’s national security concerns.
Nov. 26, 2020: ByteDance gets another week to sell off TikTok’s U.S. business. A spokesperson for the Treasury Department tells CNBC that the government granted the extension until Dec. 4 “to allow time to review a revised submission” that it recently received.
Dec. 4, 2020: The latest deadline passes without an approved deal to sell TikTok. The Treasury Department says it won’t extend the deadline again, but there are “no plans to enforce anything,” a source tells The Washington Post.
Dec. 14, 2020: The Federal Trade Commission orders TikTok—along with Snap, YouTube, Twitter and other social media and streaming sites—to turn over information about how they collect and use information about users.
Feb. 10, 2021: Newly-inaugurated President Joe Biden slams the brakes on forcing a TikTok sale. In court papers, Biden administration lawyers file a motion to postpone the cases related to a potential ban of the popular social media app.
June 9, 2021: President Biden revokes Trump’s executive order that sought to ban TikTok and replaces it with one that calls for a broader review of foreign-controlled apps that may pose national security risks.
June 25, 2021: CNBC reports TikTok is tightly controlled by Chinese parent company ByteDance. Insiders tell the news outlet that ByteDance has access to TikTok’s American user data and is closely involved in the Culver City company’s decision-making.
July 20, 2021: Pakistan bans TikTok for the fourth time, citing “inappropriate content.” The country lifts the latest ban a few months later.
Sept 27, 2021: TikTok announces that it has surpassed 1 billion monthly active users as the app continues to rapidly rise in popularity.
Oct. 26, 2021: During a public hearing, U.S. lawmakers press Michael Beckerman, TikTok’s head of public policy for the Americas, on whether TikTok’s Chinese ownership could expose consumer data to Beijing. Beckerman says “access controls for our data is done by our U.S. teams,” adding that the data that TikTok collects is “not of a national security importance,” according to the New York Times.
Dec. 17 2021: A Wall Street Journal investigation shows that TikTok’s recommendation algorithm is flooding teens’ video feeds with eating disorder content.
December 2021: TikTok overtakes Google as the most-visited website on the internet.
Feb. 8, 2022: Facing criticism over hosting harmful content, TikTok announces new rules aimed at preventing viral hoaxes, shielding the LGBTQ community from harassment and removing videos promoting unhealthy eating.
February 2022: As Russia invades Ukraine, TikTok is awash in raw footage from the battlefield and false and misleading clips. The war raises fresh concerns about TikTok’s handling of misinformation on its platform.
March 2, 2022: A bipartisan group of state attorneys general launch an investigation into TikTok, examining whether the social media giant is harming children and young adults through the content on its platform.
March 11, 2022:Reuters reports that TikTok is close to a deal to store all of the video-sharing app’s U.S. user data with American software giant Oracle. The partnership is aimed at resolving the U.S. government’s national security concerns.
March 15, 2022: California lawmakers unveil a first-of-its-kind bill to let parents sue social media platforms like TikTok for allegedly addicting children to their apps.
March 31, 2022: Attorneys general from 44 U.S. states and territories urge TikTok and Santa Monica-based Snap to strengthen parental controls on their platforms, telling the social media giants that they must do more to protect kids online.
April 3, 2022: “The Unofficial Bridgerton Musical” wins a Grammy for Best Musical Theater Album. It’s the first Grammy-winning album to originate on TikTok, solidifying the app’s growing influence over the music industry.
April 15, 2022: The Department of Homeland Security and the Department of Justice launch probes into TikTok’s moderation of content depicting child sexual abuse, according to the Financial Times.
April 2022: TikTok is the most-downloaded app in the world during the first quarter of 2022, according to a study from digital analytics firm Sensor Tower.
May 12, 2022: The mother of a 10-year-old girl who died after allegedly trying a dangerous “Blackout Challenge” sues TikTok. The case is one of several to claim the app’s algorithm showed kids and teens videos of people choking themselves until they pass out.
June 17, 2022: BuzzFeed News publishes a bombshell report that TikTok’s data on U.S. users was repeatedly accessed in China by employees of parent company ByteDance. The report raises fresh privacy and security concerns about the Chinese-owned social media app.
The same day, TikTok announces that it migrated all of its U.S. user traffic to servers operated by American software giant Oracle, an effort to assuage concerns that American data could fall into the hands of the Chinese government.
June 28, 2022: In the wake of the BuzzFeed report, Federal Communications Commissioner Brendan Carr urges Apple and Google to remove TikTok from its app stores. Nine Republican U.S. senators send a letter to TikTok with questions about the company’s handling of American data.
June 30, 2022: TikTok responds to Republican lawmakers by detailing its plans on keeping U.S. data out of the hands of Chinese parent company ByteDance. The company’s letter confirms that ByteDance employees in China can access TikTok data, but only when “subject to a series of robust cybersecurity controls” and approvals overseen by its U.S.-based security team.
July 5, 2022: Leaders of the U.S. Senate Intelligence Committee ask the Federal Trade Commission to investigate whether TikTok deceived the public about whether people in China could access American user data.July 29, 2022: Bloomberg reports the Chinese government requested TikTok host stealth, propaganda accounts—a move that TikTok executives denied due to their growing efforts to distance the platform from its Chinese origins.
August 5, 2022: The flood of information coming from within the organization leads TikTok to hire roles meant to prevent internal leaks.
August 11, 2022: A Forbes review of TikTok and ByteDance employees’ LinkedIn profiles reveals that 300 current employees previously worked for Chinese state media publications. Fifteen employees apparently were employed by both at the same time.
August 16, 2022: Oracle begins its audit of TikTok’s algorithm and content moderation process to determine if the Chinese government has interfered with the platform.
August 18, 2022: Developer Felix Krause finds that the app monitors all keyboard inputs and tags, which could record private data like passwords and credit card information. TikTok denies these claims.
September 14, 2022: TikTok Chief Operating Officer Vanessa Pappas appears before the Senate Homeland Security Committee and says its ongoing negotiations with the U.S. government “will satisfy all national security concerns.” Notably, Pappas would not fully commit to cutting off U.S. data flow to China.
September 21, 2022: Former TikTok executives claim they were instructed to follow directions from ByteDance and had limited power to make internal decisions as people question TikTok CEO Shou Zi Chew’s influence.
September 24, 2022: British regulators from the Information Commissioner’s Office (ICO) send TikTok a warning over how the company handles children’s data—a warning that could lead to a $29 million fine.
September 26, 2022: The Justice Department reaches a “preliminary agreement” with TikTok over national security concerns, though details are still being negotiated.
October 12, 2022: A BBC report finds that TikTok profited from refugees collecting donations via the app’s live streaming feature, with some claiming the platform took up to 70% of the profits.
October 20, 2022: A Forbes report reveals that ByteDance intended to use TikTok to monitor the location of American citizens as a method of surveillance. TikTok denies these claims.
October 27, 2022: Even as the government places increasing pressure on TikTok, the Biden administration invites eight TikTok stars to the White House in an effort to reach Gen Z voters.
That same day, A Philadelphia judge rules that TikTok is immune in a lawsuit claiming the app was responsible for the death of a child participating in the “blackout challenge.”
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Billion-Dollar Milestones and Snapchat’s New Features
11:30 AM | October 25, 2024
🔦 Spotlight
Happy Friday Los Angeles!
This week’s spotlight showcases LA’s thriving tech scene, featuring Snapchat’s latest feature updates and two local startups Liquid Death and Altruist, making TechCrunch’s Unicorn List for 2024.
Image Source: Snap
Snapchat’s recent fall updates bring fresh features, including a new iPhone camera shortcut for instant snaps, Halloween-inspired AI-powered Lenses, and Bitmoji costumes inspired by Mean Girls and Yellowstone. Bitmoji stickers now reflect trending Gen-Z expressions like “slay” and heart symbols for added flair in chats. Plus, the “Footsteps” feature on Snap Map allows users to track their past adventures privately, adding a nostalgic touch.
Image Source: Liquid Death
ICYMI, two LA startups joined the Unicorn Club—achieving valuations over $1 billion. Liquid Death, based in Santa Monica, is a canned water company with edgy branding and a humorous sustainability focus. Known for viral marketing and brand partnerships, it redefines bottled water as a lifestyle brand and environmental statement. In March, Liquid Death closed $67 million in strategic financing, raising its total funding to over $267 million and valuing it at $1.4 billion.
Image Source: Altruist
Altruist, a Culver City-based fintech platform, offers financial advisors streamlined tools to better serve their clients. With a user-friendly investment and account management platform, Altruist has gained strong traction in the finance world. In May, it announced a $169 million Series E funding round, bringing its total funding to over $449 million and earning a valuation of $1.5 billion.
Together, Liquid Death and Altruist exemplify LA’s capacity for innovation across diverse sectors, from lifestyle branding to fintech. Whether reshaping financial tools or redefining sustainable branding, these companies showcase LA’s unique entrepreneurial spirit. Go LA!
Check out TechCrunch’s 2024 Unicorn List here. And don’t miss Snapchat’s latest features—perfect for adding some fun, connection and maybe a few selfies this weekend!
🤝 Venture Deals
LA Companies
- Carbon Ridge, a developer of carbon capture technology for the maritime industry to reduce ship emissions, has raised $9.5M in a funding round led by Crosscut Ventures and Western Technology Investment (WTI). This investment will help accelerate the decarbonization of maritime shipping. - learn more
- Freeform, a company bringing AI to metal 3D printing, raised $14M in funding from NVIDIA’s NVentures and AE Ventures to further develop its AI-powered 3D printing technology for industrial-scale production. - learn more
LA Venture Funds
- Anthos Capital participated in a $70M Series D round for Carbon Robotics, which develops AI-powered robotics for precision agriculture, and the funding will be used to accelerate the growth of its autonomous weeding technology. - learn more
- Anthos Capital participated in a $3.5M seed round for Plasma Network, aimed at expanding access to USDT stablecoins on the Bitcoin network, with the investment supporting the network’s growth and efforts to enhance stablecoin accessibility through the Lightning Network. - learn more
LA Exits
- Grandview, a literary management company representing top talent across various entertainment sectors, has been acquired by TPG’s newly formed entertainment venture, Initial Group, in partnership with Untitled Entertainment. - learn more
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