• Guess who is suing Apple and Google…
  • No, China is not beating the U.S. in the race to self-driving cars
  • You won’t believe who wants to buy TikTok

Dear Reader,

Sunday brought some exciting news about therapeutic options for treating COVID-19.

The Food and Drug Administration (FDA) issued an emergency use authorization for convalescent plasma to treat COVID-19 patients.

Convalescent plasma comes from the blood of those who have already had COVID-19 and thus have the antibodies capable of fighting the virus. The plasma can be extracted from blood and purified to maximize the antibodies for the therapy.

A study out of the world-famous Mayo Clinic has already demonstrated success with convalescent plasma, which was also supported by the National Institutes of Health.

Needless to say, the stock markets loved the news. With Gilead’s remdesivir already approved for emergency use, the success seen with dexamethasone, and now convalescent plasma, physicians have a range of therapeutic approaches to treat severe cases of COVID-19.

With every week that passes, the arguments to lock down the U.S. economy again and close all the schools become more and more absurd.

Yet Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, was among the officials who argued for the FDA to delay its approval of convalescent plasma for emergency use. That’s crazy given that the use of the plasma is considered safe.

But it gets better…

It has been a while since I last wrote about hydroxychloroquine. The media has done a relentless hit job on the anti-malarial drug. There is so much fear, uncertainty, and doubt that many physicians won’t prescribe it and even pharmacists refuse to fill prescriptions.

But there are now 53 studies that show positive results of hydroxychloroquine in COVID-19 infections. 53!

And experts in the field have been speaking out about these results.

Dr. Harvey Risch, a professor of epidemiology at the Yale School of Medicine, is one of them. His comments are remarkable.

When referring to hydroxychloroquine, he says, “The evidence is overwhelming, there is no question, the people that need to be treated and are treated early, it has a very substantial benefit in reducing hospitalization or mortality.”

Dr. Risch explains further, “There has been a massive disinformation campaign that stretches from the government to the media, that are either suppressing this message or countering it with a false message.”

Better yet, he says, “The evidence in favor of hydroxychloroquine benefit in high-risk patients treated early as outpatients is stronger than anything else I have ever studied. So scientifically there is no question whatsoever.”

And with regard to hydroxychloroquine’s safety, he reports, “In general, this is a very safe medication. It is very, very, very low risk.”

And the evidence continues to mount.

Countries like Turkey, Morocco, Algeria, Indonesia, India, and Malaysia have all had success with the early use of hydroxychloroquine to help minimize the impact of COVID-19, especially with the higher risk part of their populations.

And other countries that use the drug regularly for anti-malarial purposes haven’t seen the proportionate amount of deaths that we have here in the U.S.

It is absolutely heartbreaking that Fauci and factions within the FDA have been restricting the use of hydroxychloroquine as a therapy for COVID-19 despite all the supporting studies.

We can imagine how different the outcome would have been with one simple therapy, a drug that has been used safely for more than half a century.

Now let’s turn to our insights for today…

One of our early stage watchlist companies is going toe to toe with Apple and Google…

We talked about Epic Games’ big $1.78 billion venture capital (VC) round last week. We said that this put the company on track to go public soon, potentially in the coming months.

Well, this story just took an incredible turn.

Epic just threw down the gauntlet. It’s taking both Apple and Google to court.

Here’s the scoop…

As regular readers know, Epic Games created Fortnite, which is one of the most successful games on the market today. We talked about why Fortnite has done so well back in May.

Gamers who want to play Fortnite on their smartphone or tablet can download it through Apple’s App Store and Google’s Play Store.

Fortnite is free to download, but it offers in-game purchases. Players can spend real money to buy items and in-game currency inside of Fortnite’s digital world. These purchases flow through Apple and Google’s payment network, and the tech giants take a 30% commission on each transaction.

To bypass this commission, Epic Games recently added an option for Fortnite players to buy in-game currency directly – without going through Apple or Google. In response, the tech giants yanked Fortnite from their app stores.

Epic Games then immediately filed a lawsuit against both Apple and Google for “anti-competitive behavior and monopolistic practices.”

And the fact that this happened so quickly – that Epic Games already had the attorneys in place and the papers ready to file – tells us that this was a premeditated move. Epic Games knew it was in for a fight as soon as it moved to bypass Apple and Google’s payment networks. Talk about guts.

We might think this is a crazy move. Getting into a court battle with two of the most powerful technology companies on the planet? What is Epic thinking here?

Well, Epic Games is in a stronger position than most realize…

The company just raised nearly $2 billion in VC money, and Fortnite is on pace to bring in nearly $5 billion this year.

Plus, Epic Games is still a private company. That means it doesn’t have to make public filings with regard to its legal battle, and it doesn’t have to worry about any impact to its share price.

If successful, Epic Games will disrupt the entire industry.

It will change the way consumers download and access software. And even if it doesn’t win the case, Epic Games may be able to get Apple and Google to implement changes that are beneficial for game developers.

Epic likely won’t win, but it really has nothing to lose. And in some ways, I see this very much as a marketing stunt. The gaming culture revels in revered brands like Epic tilting against the “overlords” like Google and Apple.

And from a business perspective, only a small amount of revenue generated from Fortnite flows through Google’s and Apple’s app stores. Most gamers play Fortnite with direct downloads to their computers. Using a PC and keyboard offers better gameplay and performance.

And as it turns out, Epic actually asked for a special deal from Apple a few weeks back, well before the lawsuits.

Apple had to decline Epic’s request. The way Apple and Google stay out of trouble with regulators is by offering the same fair, reasonable, and nondiscriminatory terms to all app developers. The moment either company starts to offer special deals for certain developers is when it gets into trouble.

From a consumer perspective, the app store model is incredibly convenient. Apple and Google test out each app before it goes live to make sure it is secure, works well, and does not do anything illegal. So when we go to download an app, we know it is safe.

More importantly, these app stores give consumers a single place to go to download every app they could possibly want. That provides immense value and simplicity for consumers.

Imagine if we had to go to a different website for every app we download on our phone. Not only is that tedious, but it also means giving our personal information and perhaps credit card details to many different third parties. That introduces all kinds of security risks and takes all sorts of additional time and frustration.

So while one could argue that 30% commission is too high, I don’t think we will see the app store model go away anytime soon.

And no matter what the outcome is, Epic is going to win either way… It is getting some incredible PR from this stunt… perhaps as a precursor to an IPO?

Self-driving tech is going global…

It is very easy to fall into the trap of thinking that the world we see every day is the same everywhere else on the planet. Of course, that’s not true at all.

In these pages, we have talked quite a bit about developments in self-driving technology in the United States. Several cities across the U.S. are currently hosting autonomous driving trails on public roads. And we shouldn’t forget about the billions of miles Teslas have already driven in Autopilot mode.

But it is natural for us to feel as if the technology isn’t “real” yet.

While we focus on technologies and developments that are investable in the U.S. markets, I’m always keeping an eye on bleeding-edge technology around the world. And when it comes to autonomous driving technology and artificial intelligence, the race is on with China.

Didi, China’s equivalent of Uber, launched a self-driving taxi service in Shanghai back in June. The company has about 100 autonomous-taxis on the road, shuttling consumers to-and-fro just like Uber drivers do here in the U.S.

And Chinese early stage company AutoX launched its own self-driving taxi service in Shanghai last week. The service is called RoboTaxi, and it also has about 100 cars on the road.

Here’s a look at one of the self-driving cars:

AutoX Self-Driving Vehicle

Source: AutoX

That gives Chinese consumers two self-driving services to choose from in Shanghai. And Baidu, WeRide, and Pony.ai each have their own self-driving taxi services in other Chinese cities.

So unlike here in the U.S., Chinese consumers are getting used to seeing self-driving cars on the road. What’s more, they are taking the plunge and riding in them.

And China’s corporate giants are investing heavily in self-driving technology. It is a natural fit for China, as it is investing heavily in artificial intelligence and is a major manufacturing hub for the automotive industry.

Recently, Didi announced that it plans to have one million self-driving cars on the road by 2030. Its competitors will surely try to keep pace.

That sounds like an ambitious goal. Perhaps some may think that the U.S. is way behind China in the race for autonomous taxis.

But consider this…

Tesla already has roughly 800,000 Autopilot-enabled cars on the road to date. And that number will almost certainly hit one million by the end of the year. That will be a million cars on the road in the U.S. capable of autonomous driving within the next four months… not in 10 years.

Remember, these cars have the necessary hardware for fully autonomous driving. They just need a software upgrade to be transformed into self-driving vehicles.

That means all Tesla needs to do is “turn on” its ride-hailing network, which I have been predicting, and it will have the equivalent of one million Uber-like autonomous taxis ready to go. This will be the beginning of SAVs – shared autonomous vehicle networks.

Didi wants to hit one million by 2030… But Tesla is already there. Amazing.

This is the story that Wall Street just doesn’t understand about Tesla. This company is about to activate its masterstroke, and nobody even knows it is coming – except us.

I can’t wait to watch the fireworks…

Checking back in on TikTok…

Earlier this month, we talked about how Microsoft and Twitter were vying to buy TikTok’s U.S. operations.

To bring new readers up to speed, TikTok is a social media platform owned by a China-based company with close ties to the Communist Party – ByteDance. The platform is especially attractive to teenagers and young adults because it hosts short self-produced videos of people doing funny, skilled, or stupid things.

But it was revealed that TikTok collects all kinds of sensitive usage and location data from our phones, and ByteDance was fined for violating child privacy laws in the United States last year.

TikTok did not stop its illegal data collection practices, so President Trump issued an executive order banning the app in the United States (the deadline was recently extended to 90 days).

That’s how Microsoft and Twitter got involved. They have until November 12 to get an acquisition done before the ban takes effect.

As we discussed, this would be a dumb move for Microsoft. And we speculated that Twitter just doesn’t have the money to pull this off.

Our assessment was correct on Twitter. It did make a move, but TikTok’s owners were skeptical about Twitter’s ability to finance the deal.

So Twitter is out of the ring. But a new contender has stepped up. Now Oracle is making a move for TikTok.

This sounds odd on the surface. Oracle is a database and enterprise resource planning (ERP) company. Why would it want to get into social media?

And the answer is that Oracle just wants to boost its cloud services business.

Think about it – TikTok hosts short videos. And those videos must be hosted in the cloud somewhere on someone’s data centers. If successful, Oracle would have TikTok move the hosting of its social media platform to Oracle’s cloud – where it would, of course, pay full price for the service.

While it is not the same as building its business in the market for cloud-based services, it’s probably a smart move. Oracle was late to the game in cloud services, just like Google, IBM, and Microsoft. And Microsoft has had success bolstering its own cloud revenue numbers by buying companies like LinkedIn and Minecraft and hosting them.

Oracle would be taking a page out of Microsoft’s playbook… a move that was received well by Wall Street. And if Oracle is smart, it wouldn’t touch anything at TikTok. It would allow it to stay an almost entirely separate operating business. After all, the name Oracle isn’t exactly a “cool” name in the social media space.

The deadline for a deal is now just a couple of months away.

And things just got even more entertaining… TikTok just announced that it is suing the Trump administration.

This has certainly been interesting to watch unfold…


Jeff Brown
Editor, The Bleeding Edge

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