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The Information’s 2021 Predictions

5 Mins read

AT&T sells CNN. Amazon cuts an antitrust deal. The SPAC boom deflates. These are our reporters’ tech predictions for 2021.

After a year that produced no end of surprises, it may seem like folly to forecast what will happen in 2021. We decided to do it anyway. Our reporters checked in with their sources to make more than 40 predictions on the most important companies and issues they cover. We forecast which hot financial technology and open-source startups will go public, AT&T’s plans for CNN, Alibaba’s future takeover target and the next “other bet” for Google.

It turns out that, despite the pandemic, we nailed many of our predictions from last year. In a separate story, we will say how we did and what that accuracy says about tech trends that are proving resilient in a global disaster.

THE TAKEAWAY
Our reporters give their predictions for 2021, from the software and fintech startups that will go public to Amazon’s next move.

Jessica Toonkel and Tom Dotan on media and entertainment

  • Apple will make a bigger push into movies for its Apple TV+ streaming service, hiring its own production head and buying more older shows.
  • AT&T will sell CNN as cable news ratings decline because of cord cutting and the end of the presidency of Donald Trump, whose tenure boosted cable viewership.
  • The battle between Roku and the media companies over carrying their apps will get messier. Roku, recognizing its market position, will play more hardball and start pulling down apps as a negotiating tactic.
  • A smaller media company such as Buzzfeed or Vice, buoyed by a still frothy public market, will go public via a special purpose acquisition company.

Kevin McLaughlin on cloud computing and software as a service

  • Google will announce a major upgrade to its cloud-based call center service, following a flurry of improvements that Amazon Web Services and Microsoft made to their call center services in late 2020.
  • A cloud-based software company will acquire Kong, a startup valued at more than $475 million that develops software for managing application programming interfaces, services that let different applications talk to each other and share data.
  • Confluent, which develops data-processing software based on Apache Kafka, will go public.
  • Either Databricks or Redis, both enterprise software companies that focus on data, will be acquired by a larger software company.

Kate Clark and Zoë Bernard on venture capital and startups

  • Fintech startups Chime and Klarna will go public, as will Robinhood, which has reportedly already hired bankers for an initial public offering.
  • As drug companies distribute coronavirus vaccines, venture capitalists will turn their attention away from sectors like remote work and virtual learning and back toward areas that were hot before the pandemic, like hospitality and real estate tech.
  • Median valuations for early-stage startups, already at records, will keep climbing. That’s largely because VC investors—which had $153 billion in dry powder at the end of March, according to PitchBook—have the money to compete for deals and offer founders favorable terms.
  • Expect to see the creation of even more early-stage funds started by a newly minted cohort of tech millionaires from blockbuster IPOs such as DoorDash and Airbnb.
  • Remote-only startup teams will become the norm. Investors will encourage companies to forgo leasing office space in their early days.
  • As geographic boundaries become increasingly less important, there will be a funding boom in startups located outside the San Francisco Bay Area in places such as Miami and Puerto Rico, in addition to known hubs like Austin, Tex.

Paris Martineau and Mark Di Stefano on Amazon

  • Flush with resources, Amazon Freight will begin catering to big corporate customers, putting it in competition with industry giants like C.H. Robinson and XPO Logistics. Amazon will also officially roll out a program to lease Amazon-branded tractors (the cab units at the front of semitrucks) to small trucking companies. The program is currently in beta, as we reported in November.
  • Amazon may strike a deal with the European Commission, which leveled antitrust charges against the company for its conduct in France and Germany.  A deal could involve Amazon agreeing to loosen its grip on the huge troves of aggregated data it controls. Such an agreement might even pave the way for the company to share more insights with third-party merchants on its Marketplace platform.
  • Fearful of a potential backlash, Amazon won’t mandate the vaccine for its hundreds of thousands of warehouse workers, many of whom are considered frontline workers. The company will instead likely offer the vaccine for free to employees. There will also be a scandal regarding black-market or fake vaccines on Amazon, which the company will move quickly to remove from the Marketplace.
  • Jeff Bezos’ personal fortune will pass $200 billion in 2021. He will increase the amount of money he gives to philanthropic foundations.

Ross Matican on capital markets

  • The crowded market for SPACs will bifurcate into winning and losing deals. There will be more  performers like Digital Media Solutions and EdTechX Holdings—stocks that have fallen since their SPAC mergers—in the latter category.
  • The lines between IPOs and direct listings will blur further. Companies issuing IPOs will loosen lockup restrictions to improve the outcome for employees. More of those opting for direct listings will introduce lockup restrictions and, helped by relaxed regulations, sell new shares to raise money, similar to what happens in an IPO.
  • Next year will likely see more than $50 billion in SPAC issuance, considerably less than this year’s bonanza of $72 billion, partly because many of the obvious candidates have already gone public.
  • There will be more tech IPOs in 2021 than in 2020 as firms that had planned to list before the pandemic and didn’t make it to the public markets last year sell shares.

Juro Osawa and Yunan Zhang on Chinese startups

  • Competitors will spend billions of dollars in the war for online grocery shoppers between incumbents AlibabaJD.com and Pinduoduo and more-recent entrants such as Didi ChuxingMeituan and startups Xingsheng Selected and Nice TuanAlibaba will acquire online grocer Nice Tuan, in which it is already an equity investor, in the third quarter.
  • The Biden administration will drop Trump’s threat to ban TikTok, but ByteDance will proceed with the creation of a U.S.-based joint venture with Oracle and Walmart, in order to leverage Walmart’s e-commerce expertise for its own retail efforts in China.
  • As part of its forceful push to contain the power of its big tech platforms, China will use its new antimonopoly law to force Ant Group to divest major parts of its business and will start scrutinizing Tencent’s social network, WeChat.

Nick Bastone on Google

  • Alphabet will announce a new “other bet” unit, potentially focused on quantum computing.
  • Google will launch its new operating system, Fuchsia, in its first public product, the Google Nest Hub. The release will raise the question of whether Fuchsia will one day replace Android as the operating system on mobile devices.
  • Google’s share of U.S. digital ad spending will continue to decline in 2021, while Facebook’s and Amazon’s shares continue to rise.

Alex Heath on Facebook and social media

  • The types of content that Facebook allows will become more restricted due to pressure from employees, governments and activists. While CEO Mark Zuckerberg has maintained that he doesn’t want Facebook to be an “arbiter of truth,” the social network took an unusually aggressive stance against coronavirus misinformation this year. Facebook will find it difficult to resist calls for tougher measures on other kinds of speech in 2021.
  • Tension between Facebook and Apple will grow. The two tech giants have never been friendly, but their feuding will escalate next year due to multiple factors. As Apple continues tightening its grip on what data developers can collect from its users, Facebook will flex its leverage as Apple’s largest developer. The two are also racing to release competing augmented reality headsets, technology that executives at both companies think could one day be as ubiquitous as mobile phones.
  • Twitter will keep struggling to find new users, though it will increase revenue through improving ad performance and begin testing paid features like subscriptions.

Wayne Ma on Apple…

Read The Full Article on The Information

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