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Alibaba Invests Big In Magic Leap, A Move Beyond Virtual Reality

The current art of virtual reality looks like a kid’s toy compared to technology by Magic Leap, which has just received nearly $800 million in a funding round led by Alibaba ( BABA ). The Florida-based company has not revealed the technology used to create its stunning video images, such as a whale leaping out of nowhere and splash landing on a high-school auditorium floor. “Absolutely not VR,” said a Magic Leap spokesman in an email exchange with IBD. “We are developing Mixed Reality.” In an interview with the  Financial Times , Magic Leap co-founder and CEO Rony Abovitz, described the technology as a new kind of “hyper-personal computing” that seamlessly mixes rich digital graphics with the physical world. In the newest funding round, totaling $793.5 million, investors besides Alibaba include the venture capital arm of Qualcomm ( QCOM ) and Alphabet ( GOOGL ), through its Google unit, as well as Warner Bros. and Fidelity Management, among others. “We invest in forward-thinking innovative companies like Magic Leap that are developing leading products and technologies,” Joe Tsai, executive vice chairman at Alibaba, said in a statement announcing the funding round. “We believe Alibaba can both provide support and learn from such a partner.” Google, before it became a unit of Alphabet, was a prior investor in Magic Leap. It led a $542 million funding round in Magic Leap in October 2014. Qualcomm was also an investor. The latest investment by Alibaba, Google and others comes as Facebook ( FB ) is betting big on its Oculus Rift virtual reality headset. Facebook priced the headset at $600 and is expected to begin shipping next month. In an interview with The Wall Street Journal in 2014, Abovitz said he sees Magic Leap as a new interface that could replace the PC monitors and smartphone screens that define the modern era of computing. The article said the first product in development by Magic Leaps “is a mobile and wearable device for the eyes, with the hardware and software designed by Magic Leap.” At its core, said the article, Magic Leap’s technology can project images onto the eyes, making it possible to see virtual 3-D objects as if they were part of the real world. Abovitz told the WSJ that it tricks the mind into believing that virtual objects are actually part of the physical space. In announcing the new funding round, Abovitz said “we are creating a new world where digital and physical realities seamlessly blend together to enable amazing new experience.”

European Union Deal Lifts Amazon, Google, Facebook From Legal Limbo

Tech giants Amazon ( AMZN ), Alphabet ( GOOGL ) and Facebook ( FB ) were lifted from legal limbo Tuesday when the U.S. and European Union agreed to a key deal to continue allowing data transfers across the Atlantic. The 11th-hour deal, creating the EU-US Privacy Shield, replaces the Safe Harbor accord, which came under scrutiny in 2013 after former National Security Agency contractor Edward Snowden alleged mass surveillance by the U.S. government. But even as companies lauded the deal, European privacy advocates deemed the proposed framework too flimsy, with one calling for U.S. legislation limiting European surveillance in place of a mere “scout’s honor.” U.S. Mass Surveillance Limited In October, the European Court of Justice struck down the 15-year-old Safe Harbor agreement. The court said it inadequately protected the region’s 500 million citizens from U.S. surveillance. Privacy laws are more stringent in Europe, where privacy is considered a basic human right and the “right to be forgotten” has been codified. Austrian graduate student Max Schrems brought the original suit that struck down Safe Harbor, arguing Facebook misused Europeans’ data in cooperation with the NSA’s Prism program. Facebook has denied that allegation. Facebook, Alphabet and Amazon.com didn’t respond to requests for comment about the EU-U.S. pact. Central to the new accord is  “written assurances” by the U.S. that access to European data by public authorities and law enforcement “will be subject to clear limitations, safeguards and oversight mechanisms,” according to the EU press release. An ombudsman will be established to examine European complaints of data misuse, and companies operating under the new Privacy Shield will be obliged to “commit to robust obligations on how personal data is processed.” The regulations apply to tech firms shuffling data across the ocean, as well as companies with international human resources. Per the agreement, companies must publish their commitments and will be subject to deadlines for handling European complaints. The Department of Commerce and Federal Trade Commission will oversee enforcement. The U.S. and EU will jointly review operations under the Privacy Shield on an annual basis. Andrus Ansip, vice president of the EU’s executive body, the European Commission, and Commissioner Vera Jourova have been charged with taking steps to put the pending framework in place. Both praised the agreement, which came a day after a deadline set by European protection authorities . “Our people can be sure that their data is fully protected,” Ansip said in the press release issued by the E.C. “Our businesses, especially the smallest ones, have the legal certainty they need to develop their activities across the Atlantic.” ‘Scout’s Honor’ Isn’t Enough On Tuesday, Schrems mocked the agreement as “ an exchange of letters ” from the U.S., assuring the government wouldn’t spy on European citizens, and tweeted a series of fake postcards purportedly between government officials. “With all due respect, but a couple of letters by the outgoing Obama administration is by no means a legal basis to guarantee the fundamental rights of 500 million European users in the long run, when there is explicit law allowing U.S. mass surveillance,” he said in a statement. He added: “I doubt a European can walk into a U.S. court and claim his fundamental rights based on a letter by someone.” Sophia In’t Veld, vice chairwoman of the group Alliance of Liberals and Democrats for Europe, agreed, likening the letters to a mere “ scout’s honor ” by the U.S. government. “We urgently need a thorough legal appraisal of the safeguards offered by the U.S.,” she said in a statement. “The legal status of these safeguards is very unclear.” Veld doubted the U.S. safeguards would pass muster with the Court of Justice and called it “highly implausible” that the ombudsman would have “sufficient power to oversee U.S. intelligence services.” Joe McNamee, executive director of European Digital Rights — a civil rights advocacy association — accused the E.U. of backing down from the Court of Justice’s ruling “to accept a new, badly flawed arrangement.” Still Policy Work To Do Daniel Castro, vice president of the Washington, D.C.-based Information Technology and Innovation Foundation (ITIF), said the group understood the E.U.’s concern following Snowden’s disclosures. “Abruptly revoking the Safe Harbor agreement was the wrong way the address those concerns,” he said in a statement. “We are pleased that U.S. and European policymakers have resolved this issue and support the free flow of data between these two markets.” From a policy perspective, however, there’s still work to be done, Castro said. The  Judicial Redress Act , a law proposed in the U.S. House of Representatives and favored by the ITIF, would allow a foreign citizen to sue the U.S. if the government released that person’s records without his or her consent. And also from a policy perspective, “in Europe, this means rejecting protectionist measures, such as a European Cloud, and fully embracing the spirit of a digital single market, not just in Europe, but globally,” Castro said.

Alphabet Q4 Makes It Biggest Stock Of All; Yahoo Reports Next

Loading the player… That’s Alphabet ( GOOGL ) with a capital A — a   lot of capital. Going into Tuesday trading, the owner of Google ranked as the biggest stock of all, a title wrested from Apple ( AAPL ) Monday. Will it hang onto the crown or hand it back? In afternoon trading Tuesday, Alphabet was in the lead with a market cap around $540 billion and its stock up nearly 2%, near 785. Apple was down about 2%, near 94.50, with a market cap around $524 billion. Alphabet climbed to a $555 billion market cap in extended trading after the close of the stock market Monday, as investors cheered its estimate-trouncing fourth-quarter earnings report, out Monday afternoon. That was vs. Apple at a $533 billion market value, the Associated Press reported Monday night. (During the trading day Monday Alphabet had passed Apple, but by Monday’s closing bell Apple was in the lead.) Alphabet’s was the first big tech earnings report of the week. Tuesday after the closing bell, embattled Yahoo ( YHOO ) is set to deliver its fourth-quarter results amid a big strategy shift that could see 15% of the workforce cut , and LinkedIn ( LNKD ) its own quarterly results on Thursday afternoon. Yahoo stock was down more than 4.5% Tuesday afternoon, near 28, while LinkedIn was down more than 2%, near 201. Alphabet: First Look Beyond Google YouTube video, mobile search and programmatic ads helped drive Alphabet revenue up 18% from a year earlier to $21.32 billion in its Q4 report, whereas analysts expected $20.76 billion. Earnings ex items lifted 26% to $8.67 a share, rocketing past the average estimate of analysts polled by Thomson Reuters for $8.09. Alphabet stock lifted more than 4% after hours Monday on the news to above 803. This was the first time that Alphabet — which Google created last year to be its parent company — has laid out details of its Other Bets businesses , beyond the core Google search business. It includes everything from Google Fiber and the Nest smart-thermostat division to GV (formerly Google Ventures) and Google Capital X, the garage for Google’s self-driving car initiative. Revenue for Other Bets rose 42% to $151 million while an operating loss of $1.24 billion came in deeper than the $634 million loss of a year earlier. Alphabet gets a best-possible Composite Rating of 99 from IBD. In a Monday-night research note, Pacific Crest analyst Evan Wilson raised his Alphabet price target to 910 from 850. “At the beginning of 2015, Alphabet began to provide commentary on more rational spending and increased disclosure. In Q3 we got the announcement of a share repurchase, and in Q4 we received increased disclosure around core-Google and Other Bets,” he wrote in a research note. “Many GOOGL investors came for these things, but they should stick around for the improvement in fundamentals, which should re-rate the company in the minds of investors.” Yahoo Q4 Report Ahead As for the next big tech earnings report of the week, Tuesday after the close, investors will be watching for any strategy news out of Yahoo. The Web portal operator has proposed spinning off its Internet business but keeping a 15% stake in China online shopping giant Alibaba ( BABA ). Yahoo gets only a 42 Composite Rating by IBD.