TIME Technology & Media

This Small Cable Operator May Help Unravel the Pay TV Industry

Obama Appears On Daily Show With Jon Stewart
President Barack Obama chats with Daily Show host Jon Stewart during a commercial break in taping on October 27, 2010 in Washington, D.C. Pool—Getty Images

Suddenlink has dropped Viacom channels from its lineup, perhaps permanently. That's a cardinal sin in the world of pay-TV.

A cable company and a TV network have been in a dispute over how much the network’s content is really worth. This may sound like a familiar tale, but there’s an unusual ending this time. Suddenlink, a St. Louis-based operator with more than 1.1 million subscribers, dropped Viacom’s collection of well-known TV channels from its lineup Wednesday, and they’re probably not coming back anytime soon.

Negotiations over carriage fees, the amount that pay-TV operators pay network owners to carry their channels, often turn into very public spats. Time Warner Cable kicked CBS-owned networks off its channel lineup for a month in 2013, and The Weather Channel went so far as to lobby Congress to force DirecTV to keep the channel on its airwaves earlier this year. In both instances, the two sides eventually reached a truce.

That doesn’t appear to be in the cards this time. Because Suddenlink couldn’t come to an agreement with Viacom on appropriate carriage fees, the cable company has replaced mainstays on the channel dial like MTV and Comedy Central with new additions such as FXX and the Hallmark Channel. Suddenlink thinks its customers won’t miss Viacom’s offerings much. “It’s unfortunate we could not reach agreement,” spokesman Pete Abel said in an email. “But we have moved on and are excited about the new channels we’re adding and our customers have told us they would like to have.”

In the traditional pay-TV model, a cable company dumping Viacom’s channels could be viewed as a cardinal sin. Historically, network owners and cable operators have worked in lockstep to keep their highly lucrative system intact. Operators agree to buy up channels from media conglomerates like Viacom in unwieldy bundles, which means a 26-year-old bachelor is stuck paying for Nickelodeon. Network owners in turn make sure that having a pricey cable subscription is pretty much the only legal way for viewers to see TV shows as they’re airing. Content creators also charge new entrants to the pay-TV space a higher carriage fee for their channels, according to Erik Brannon, a TV industry analyst at IHS Screen Digest. Intel had been planning a pay-TV service that would deliver live television content over the Internet, but the costs of acquiring programming were prohibitively high.

Suddenlink tried to upend this long-standing formula by asking Viacom to sell just a few of the channels that are popular with its customers, like TV Land and Comedy Central. Suddenlink says that Viacom responded by increasing its price demands even more. On a website about the dispute, Viacom says that Suddenlink abruptly stopped negotiating and reneged on a last-minute proposal that met the cable operator’s demands. “We remain committed to reaching a deal so that our viewers will be able to watch their favorite shows,” Viacom wrote on the site. Viacom did not respond to an email from TIME seeking further comment.

The Suddenlink decision could inspire other small and mid-size operators, already being squeezed by subscriber declines, refuse carriage fee increases from media giants. Sixty smaller cable companies, including one with half a million subscribers, lost Viacom’s channels in the spring and haven’t yet restored them. “Mid-tier operators and small operators are going to have to look at the profitability of carrying networks vs. their viewership,” Brannon says. “When you’re in the position of Suddenlink . . . you absolutely do not have the buying power that Comcast or DirecTV have.”

At the same time, channel owners are becoming more receptive to the Internet-based TV services of which they were once wary. Viacom has agreed to offer 22 of its channels on a new, Internet-based TV service that Sony is launching later this year, the first such deal the media giant has made public. The revenue generated from that deal, which Brannon says probably included a guarantee by Sony of a minimum number of subscribers, might make Viacom less concerned about the activities of the smaller traditional cable companies.

Whether these strategic shifts will benefit consumers, networks or cable operators remains to be seen. Suddenlink is hoping that losing Viacom won’t hurt its subscriber numbers, but Cable One, the largest of the sixty cable companies to dump Viacom in the spring, doubled its subscriber loss the quarter it removed Viacom’s channels. And while Internet-based pay-TV services like Sony’s promise an improved user experience, no one has yet broached the topic of offering channels “a la carte” and allowing customers to pick exactly what content they’d like to buy.

Still, the once-sacred marriage between cable operators and network owners is under obvious strain. That leaves room for new entrants to claim a piece of the market—hopefully for many, with business models that are more in line with customer preferences. “Carriage fee negotiations are going to become increasingly contentious,” warns Brannon. “Not only at Viacom but other channel groups.”

TIME Startups

Reddit Gets $50 Million in Venture Funding

A big step for a major Internet hub

The popular online message board Reddit has secured $50 million in new venture capital funding, the company announced Tuesday. The website known as the “front page of the Internet” is getting a cash infusion from a long list of investors that includes Y Combinator president Sam Altman, Marc Andreessen of Andreessen Horowitz and the rapper Snoop Dogg.

Reddit is well-known for its primitive website design and laissez-faire attitude toward moderating its users. The company is a former subsidiary of Conde Nast that was later spun off into an independent company. CEO Yishan Wong said the new funding will help Reddit grow its relatively small staff of 60 and improve its app and ad products. “An investment like this doesn’t mean we’re rich or successful,” Wong said in a blog post. “Money can become worthless very quickly, value is something that is built over time through hard work.”

Reddit faced criticism earlier this month for allowing users to link to a vast number of stolen nude photos of celebrities. The startup defended the right of its users to post controversial content but ended up banning the page with the nude photos because some of the images were of minors.

With more money may come more pressure for Reddit to both generate profits and conform to the standards of traditional media companies. For now, though, Reddit is still playing by its own rules. The startup, which acknowledged it was still unprofitable earlier this year, has agreed to give 10% of its 2014 ad revenue to charity. The company promised Tuesday that investors involved in the latest funding round will give 10% of their shares back to the Reddit community (details on the practicality and legality of this are still to come, Wong said).

Reddit is no longer a scrappy startup underdog. It’s a company with a valuation pegged as high as a half-a-billion dollars that has hosted a conversation with the President, among other leaders. But Wong remains confident that backers will let the newly-rich Reddit keep being weird.

“We have been entrusted with capital by patient, long-term investors who support our views on difficult issues,” he said. “We believe in free speech, self-governing communities, and the power of voting. We find that this freedom yields more good than bad, and we have chosen investors based on this belief.”

TIME Smartphones

Apple’s iPhone 6 Is Headed to China

CHINA-APPLE-US-TELECOMMUNICATION
A young boy uses an iPhone to take photos in Tiananmen Square in Beijing on September 30, 2014. Greg Baker—AFP/Getty Images

New device faced security concerns from Chinese regulators

Apple’s iPhone 6 will soon arrive on China’s shores. The company’s latest flagship device, along with its bigger cousin the iPhone 6 Plus, will go on sale in China on Oct. 17, while pre-orders will begin on Oct. 10.

For Apple, China has become a critical market that now comprises 16% of the company’s overall sales. The iPhone 6 launch had reportedly been delayed there because China’s Ministry of Industry and Information Technology was slow to approve the new device. Regulators said as much in a statement on Tuesday, noting that Apple had to address security concerns related to third party access to user data before the device could be sold in China.

Apple has previously been forced to deal with concerns over iPhone security in China. Over the summer, a Chinese state-backed TV station issued a news report calling the iPhone a “national security concern” because of its location-tracking features. Apple issued a swift response pointing out that it doesn’t have access to that location data. CEO Tim Cook has since stressed Apple’s commitment to security in another statement, saying that the company had never allowed a government agency access to its servers. U.S. tech companies have been facing a chilly reception from foreign regulators since Edward Snowden’s revelations of mass government surveillance by the National Security Agency.

Even with security concerns assuaged, Apple faces challenges in China. A new crop of domestic phone manufacturers like Xiaomi now offer smartphones with robust feature sets at a fraction of the iPhone’s cost. Indeed, Apple is not even one of the top five phone makers in the country — but analysts say the jumbo-sized iPhone 6 Plus will appeal to Chinese users’ tastes and could be a big hit there.

TIME iPhone 6

Apple Defends Against Allegations of Bending iPhone 6 Plus

Only nine customers have formally complained, Apple said

Following days of silence, Apple is defending the new iPhone 6 Plus against allegations that it bends easily. The company told The Wall Street Journal that only nine customers have contacted Apple to complain about a bent iPhone 6 Plus. Both the iPhone 6 and iPhone 6 Plus passed requisite stress tests that mimicked normal use, Apple said.

In videos and on social media, some iPhone 6 Plus owners have claimed they can bend the device in their pockets or even in their hands. The issue, now known as “Bendgate” or “Bendgazi” online, is just one headache Apple is dealing with this week. Wednesday the company pulled an update to iOS 8 after customers complained that the new software was causing problems with cellular service and Touch ID. Apple later apologized for the faulty update and issued directions for users to revert to the original iOS 8 software.

The mix of bad news has put a beating on Apple’s stock, which fell more than 3% in trading Thursday, dipping well below $100 per share, though other tech companies have also had rough days on the market.

Apple did not immediately respond to TIME’s request for comment.

[WSJ]

 

TIME iPhone 6

Apple’s $649 iPhone 6 Reportedly Costs $200 to Make

Consumer With Apple's iPhone 6
24-year-old Dani Winters lined up since Wednesday at 6pm to get his 128GB iPhone 6. Colin McConnell—Toronto Star/Getty Images

Apple is renowned for its innovative products, its sleek hardware design, and, of course, its fat profit margins. That last point is as true as ever with its new iPhone 6, for which Apple is charging more than three times the cost of components and manufacturing.

According to a teardown report from research firm IHS, the components and manufacturing cost of a 16GB iPhone 6 cost Apple $200.10. The device is selling for $649 in the U.S. without a contract with a wireless carrier. That gives the device a profit margin of about 69%. The iPhone 6 Plus, which costs $100 more than its smaller cousin, costs just $15.50 more for components and manufacutring, according to IHS. That’s a 71% margin.

The biggest expense for both devices is the touchscreen, which costs $45 on the 4.7-inch iPhone 6 and $52.50 on the 5.5-inch iPhone 6 Plus. The iPhone 6 Plus’s other main selling point besides size is its fancier camera featuring optical image stabilization. That costs $12.50, compared to $11 for the iPhone 6’s camera.

An Apple spokeswoman did not respond to an email seeking comment.

The figures don’t give a complete picture of the costs that go into the iPhone. Apple also spends money on research and development, software, shipping, marketing, licensing and other costs. But even with all expenses included, Apple’s margins are huge. The company had gross margins of 39.4% in the most recent fiscal quarter, an improvement from 36.9% the year prior.

Many customers aren’t aware of the iPhones’ true retail cost. In the U.S., most customers buy smartphones at a steep discount in exchange for signing two-year contracts with wireless carriers. The iPhone 6 costs $199 with a contract and can currently be had for free from many of the carriers if customers trade in an old iPhone toward its purchase. In markets where pricing is more transparent, like in China, Apple has faced stiffer competition.

TIME energy

How College Kids Helped Divest $50 Billion From Fossil Fuels

Stephen Heintz, President of the Rockefeller Brothers Fund, Valerie Rockefeller Wayne, the chair of the fund, and Steven Rockefeller.
From left: Stephen Heintz, President of the Rockefeller Brothers Fund, Valerie Rockefeller Wayne, the chair of the fund, and Steven Rockefeller, a son of Nelson Rockefeller and a trustee of the fund, in New York, Sept. 16, 2014. Hiroko Masuike—The New York Times/Redux

The groundwork for an announcement by heirs to the Rockefeller fortune was years in the making

Environmentalists hope Monday will come to be viewed as an “economic tipping point” in the battle against climate change.

More than 700 investors pledged to divest their holdings from fossil fuel companies, just a day after an estimated 400,000 demonstrators marched through the streets of New York to demand that world leaders take action to stop climate change at a United Nations summit this week.

The divesting organization garnering all the headlines is the Rockefeller Brothers Fund, a respected charity that is run by the heirs of John D. Rockefeller, who built his fortune refining oil at Standard Oil Company. The Rockefeller Brothers Fund and about 50 other foundations have a combined $4.2 billion in assets total, which will no longer be invested in fossil fuel companies. Combined with individual investors and other institutions, such as colleges and faith groups, a total of $50 billion assets has been pledged to not be invested in fossil fuel companies. “It’s not huge, but its a very important signal to the market,” says Stephen Heintz, President of Rockefeller Brothers Fund.

For recent University of California, Berkeley graduate Katie Hoffman, the idea that the heirs of an oil tycoon would reroute billions of dollars away from fossil fuel companies was laughable when she began advocating that her school divest from those businesses in 2011. But it was she and other college activists who actually gave the divestment movement legs in its nascent days. “We’ve been integral in the process, and that’s been seen by folks who are actually driving and funding the movement,” Hoffman said at the event in New York where the Rockefellers announced their intentions Monday. “We have a stake in this. This is our future.”

The divestment movement began at Swarthmore College, a small Pennsylvania liberal arts school, in 2011. Students there, who could visibly see the impact that coal mining was having on the nearby Appalachian Mountains, began advocating that their school divest its billion-dollar endowment out of the largest companies that profit from drilling for and distributing fossil fuels. “In asking for divestment, we are implicitly stating that investment is a choice,” Mountain Justice, Swarthmore’s student-led divestment advocacy group, says on its website. “ It is a political choice with global consequences. Choosing to invest in an industry means financially endorsing that industry’s practices.”

Students at other schools, like Hoffman at UC Berkeley, quickly picked up the fight. Overall, 400 college campuses now have active divestment movements. The campaigns mirror previous efforts to deal with moral and political issues via economic means. In the 1980s, it was college students that first pushed their administrators to divest holdings from companies doing business in South Africa, where the racist regime of apartheid still reigned. More recently, prominent schools such as Harvard and Brown divested from companies operating in Sudan because of atrocities occurring in Darfur.

The calls for fossil fuel divestment had, until this point, been met with a more muted response. Despite birthing the movement, Swarthmore has continually maintained that divesting would hurt the school’s endowment, which it says it not meant to be used to advocate for social purposes. The UC system shot down a student-led divestment proposal last week. Other schools with large endowments, like Harvard and Brown, argue that divestment is a symbolic move that won’t affect energy companies’ bottom lines, or that more positive change can be made through shareholder activism.

Still, there has been some progress for advocates. A total of 15 colleges have divested from fossil fuels, according to Arabella Advisors, a consultancy firm for philanthropies. The most notable is Stanford University, which agreed in May to divert its $18.7 billion endowment away from coal companies. Activists hope that the big names associated with Monday’s divestment announcement, including the actor Mark Ruffalo, will encourage more schools and other organizations to divest. “This movement has gone beyond higher education,” says Jess Grady-Benson, a recent graduate of Pitzer College, which agreed to divest from fossil fuels in April.

Despite the movement’s growth, young people continue to play a central role. Divestment activism is likely to spread to many more campuses as the school year gets underway. “Youth have always gone to the conferences or the parties, but we’re always outside,” Hoffman says. “Divestment gets us in the board room, which is really exciting.”

TIME Companies

China’s Alibaba Finds Riches on Wall Street

Alibaba founder Jack Ma and CFO Maggie Wu react as the company's IPO begins trading at the NYSE in New York
Alibaba Group Holding Ltd founder Jack Ma and Chief Financial Officer Maggie Wu react as the company's initial public offering, under the ticker "BABA", begins trading at the New York Stock Exchange in New York, Sept. 19, 2014. Brendan McDermid—Reuters

A big payday for the company and Jack Ma

In one of the many tales of Arabian Nights, a poor woodcutter named Ali Baba discovers untold treasure in a thieves’ den. On Friday, Jack Ma and his similarly named company did the same thing on the New York Stock Exchange.

Alibaba, the Chinese Internet giant best known for its massive online marketplaces, saw its shares jump 38% in its first day of trading as a public company in the United States. The company raised $21.8 billion when it priced its IPO shares at $68 Thursday night, making it the largest public offering ever globally. But investor demand for a piece of the Chinese firm far outstripped expectations, pushing shares to rise to $92.70 when they finally began trading around noon Friday. Following a brief spike above $99 right when they hit the trading floor, shares mostly floated near the opening price during the day. Alibaba closed at $93.89, giving it a market capitalization of $230 billion. A company started by Ma and his friends in his Hengzhou apartment in 1999 is now more valuable than every U.S. tech company except Apple, Google and Microsoft.

“I feel excited and honored and I also feel very humbled,” Ma told Fox Business News in an interview from the trading floor. “It’s a great blessing from the world and we are so excited by the trust we got today.”

Alibaba has often been referred to as the “Amazon of China,” but it has more in common with eBay and Google. The company doesn’t sell products directly but instead acts as a kind of online bazaar where vendors small and large can hawk their wares to potential customers. It makes most if its cash by selling ads tied to keyword search results, like Google, and sometimes charges a commission on transactions, like eBay. It’s a simple business model that has proven wildly successful. The company estimates that it processes about 80% of all online sales in China and racked up $248 billion in retail transactions last year. Alibaba generated $2 billion in profit in the most recent quarter, more than eBay and Amazon combined.

So it’s no wonder that U.S. investors have been salivating over Alibaba for years. The company has become the face of the fast-growing tech scene in China, where 800 million residents are expected to be online by next year. Prior to the IPO, Wall Street used Yahoo, which has a large stake in Alibaba, as a proxy investment to benefit from these Chinese giant’s huge earnings. Now investors can tap into those profits directly. “You combine access to a rapidly growing middle income Chinese consumer to an unusual story in e-commerce,” says R.J. Hottovy, an equity analyst at Morningstar. “It adds up to one very compelling story.”

There are some caveats to Alibaba’s growth story. The company has an unusual governance structure that gives outsize power to Ma and the other founders. Ma has used this power in the past to make huge financial decisions unilaterally, such as when he sold off the mobile payments system Alipay without informing Yahoo. And the company is subject to the regulations of the Chinese government, which exerts strict control on business operations in the country. For now, U.S. investors seem comfortable with these risks.

More broadly, the blockbuster IPO marks another big success both for Chinese business and the tech sector as a whole. Eleven other Chinese companies have gone public in the U.S. this year, including Alibaba competitor JD.com. They’ve gained 40% on average from their IPO price, according to Renaissance Capital, a firm that manages IPO and ETF investment funds. Meanwhile, a cadre of startups waiting in the wings are expected to flood the IPO market before the year is up. Kathleen Smith, chairman of Renaissance Capital, says about 100 additional companies will raise $20 billion total in IPOs through the rest of the year. She projects that the total haul for the year will be $80 billion raised in public offerings, the most since the tech bubble peaked in 2000. Twenty-five percent of those funds go to Alibaba alone.

Now flush with cash, Jack Ma says his company will begin focusing its attention on foreign shores. The company launched an Etsy-like site for boutique retailers called 11 Main in the U.S. over the summer, for example. But it will be harder for Alibaba to take on giants like Amazon and eBay on their own turf. “You’re going to be going against people who have built networks in other regions,” Hottovy says. “It’s going to be difficult to become much more than a niche player in North America.”

But with less than 300 million active users in China, Alibaba still has plenty of room left to run in its own country. Whether it will live up all its hype as a publicly traded company remains to be seen. For now, though, Alibaba is basking in riches.

TIME Companies

Alibaba Founder Jack Ma Loves Forrest Gump

Alibaba Group Holding Ltd. Executives Attend IPO Ceremony At The NYSE
Billionaire Jack Ma, chairman of Alibaba Group Holding Ltd., smiles while touring the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Sept. 19, 2014. Bloomberg—Bloomberg via Getty Images

Ma made the rounds before his company set off on what's set to be the biggest IPO in U.S. history

When Alibaba founder Jack Ma is feeling down, he looks to Forrest Gump for inspiration. The Chinese billionaire, whose online retail giant is going public Friday in what’s primed to be the biggest IPO in U.S. history, told CNBC that he’s watched the Tom Hanks movie at least 10 times.

“Every time I’m frustrated, I watch the movie,” he said from the New York Stock Exchange floor, where Alibaba is set to begin trading Friday morning, potentially at up to $90 a share. “I watched the movie again before I came here. It’s telling me, ‘no matter whatever changes, you are you.’”

Ma started Alibaba out of his Hengzhou apartment in 1999. Today, the company has its hands in a sprawling assortment of online retail marketplaces, cloud computing services, messaging apps, and video websites, and it generates $2 billion in profit per quarter. Ma said that the central focus of his company remains helping small businesses and that the company will use the $21.8 billion it’s raising in its IPO to further this goal.

“We want to make sure our ecosystem helps the small guys,” Ma told Bloomberg TV. “Anything that can help small business grow, we will consider.”

The Alibaba chairman also discussed his controversial decision to spin off Alipay, a fast-growing mobile payments platform similar to PayPal, from Alibaba’s main business in 2011. The move was performed without consulting major shareholders, such as Yahoo, which voiced anger over the decision. In SEC filings, Alibaba has argued the move was necessary to comply with Chinese government regulations, but Ma today alluded to there being more to the story. “The decision for Alipay was one of the most painful decisions I have ever made in my past 15-year business career, but this is the decision I feel most proud of,” he told CNBC.

He also discussed wrangling with the Chinese government, which imposes strict regulations on domestic businesses.

“Being a global company dealing with any government is difficult,” Ma said. “There’s an opportunity for communication. That’s how we survived the past 15 years. We always try to say, ‘We’re in love with the government, but we don’t marry them.'”

TIME Companies

Everything You Need to Know About Alibaba and its Mega-IPO

Chinese online retail giant Alibaba CEO Jack Ma (center) waves as he arrives at the New York Stock Exchange in New York City on Sept. 19, 2014.
Chinese online retail giant Alibaba's executive chairman and founder Jack Ma (center) waves as he arrives at the New York Stock Exchange in New York City on Sept. 19, 2014. Jewel Samad—AFP/Getty Images

What you need to know about the Chinese Internet firm's massive U.S. IPO

The Wall Street hype machine is in full swing for the Chinese online retail giant Alibaba’s initial public offering. The company, which operates a series of vast online marketplaces in China, raised $21.8 billion when it priced its IPO at $68 per share Thursday night, making it the largest offering in U.S. history. But that was just the beginning of the investor craze—shares began trading just before noon on the New York Stock Exchange Friday at $92.70, a 36% jump from the IPO price. That opening price puts Alibaba’s overall valuation at almost $230 billion, more than Amazon and eBay’s valuations combined.

Alibaba has already been called so many things–the Amazon of China, the biggest IPO of all time, the harbinger of a new Internet era—that it can be hard to pin down exactly what Alibaba does and how it makes money. TIME has assembled this helpful primer for the uninitiated to understand the hottest public offering of the year. Here’s what you need to know about Alibaba:

What is Alibaba?

Alibaba Group is a Chinese Internet corporation involved in a variety of Web businesses. Its most important elements are its online retail sites: Taobao Marketplace, a large eBay-like commerce site; Tmall, an online marketplace for name-brand retailers like Apple; and Juhuasuan, a daily deals site similar to Groupon.

The company is also affiliated with a PayPal-like mobile payments service called AliPay, and it has investments in online video, mobile messaging and cloud computing, among other businesses.

So is Alibaba the “Amazon of China” or not?

Not exactly. Unlike Amazon, Alibaba itself does not sell and ship items to customers. Instead, it acts as a kind of online bazaar where merchants as small as local vendors and as large as Nike can hawk their wares. Alibaba makes money mainly by convincing these sellers to place search ads on its website to reach more potential customers through keywords (like Google) or by charging a commission on some transactions (like eBay).

The company also makes money by selling premium memberships, cloud computing services and access to analytics data — so there are some comparisons to be made to Amazon.

Why is Wall Street so obsessed with Alibaba?

Two big reasons.

First, Alibaba processes a lot of sales and makes a ton of money doing it. Alibaba generated $248 billion in transactions on its three biggest marketplaces last year. By comparison, eBay generated $83 billion.

More staggering is the profit the Chinese giant reaps from these sales: Alibaba made about $2 billion in profit in the most recent quarter, tripling its earnings from a year ago. EBay, on the other hand, made $676 million and Amazon lost $126 million. Alibaba keeps costs low by hiring fewer employees than its closest American competitors and, unlike Amazon, avoiding the costly expense of operating fulfillment centers to ship products to customers.

Investors are also excited because Alibaba offers the most direct way to own a piece of China’s booming tech scene. The Internet population in the country is expected to reach 800 million by next year, according to government estimates, making it the largest market of online users by far. Tencent, another Chinese tech giant, offers many services that compete with Alibaba’s, but it’s traded on Hong Kong’s stock exchange. With Alibaba on the New York Stock Exchange, it will be easier for U.S. residents to invest in the company.

Who’s the mastermind behind Alibaba?

That would be Jack Ma, a former English teacher who founded Alibaba out of his Hangzhou apartment in 1999. Ma is not your average tech executive. He didn’t start using the Internet until 1995 and still doesn’t know how to code. He’s an eccentric character who once donned a blonde wig and black lipstick to sing “Can You Feel the Love Tonight?” at a 10th anniversary celebration for his company.

But he’s also a ruthless businessman who effectively ran eBay out of China in the early 2000s and maintains significant influence over Alibaba’s activities even though he’s no longer the CEO.

Who are the other key players at the company?

Yahoo, which owns about one-fifth of Alibaba, stands to make a windfall when it sells more than 120 million of its shares during the IPO, reaping as much as $8.3 billion before taxes. Yahoo will still have a 16.3% stake in Alibaba after the IPO and its stock price will likely continue to be buoyed by Alibaba’s rapid growth. However, Softbank, the Japanese tech firm that owns Sprint, is Alibaba’s biggest shareholder. Softbank will have a 32.4% stake following the IPO.

Despite their large stakes, these companies have relatively little say in the operational activities of Alibaba. They have ceded much of their shareholder influence to a group of executives called the Alibaba Partnership.

What is the Alibaba Partnership?

It’s a group of longtime of Alibaba employees, including Ma and his right-hand man Joe Tsai, who exert incredible control over the company’s activities. Alibaba also has a board of directors, but the Alibaba partnership reserves the right to nominate the majority of the board members, meaning the Partnership essentially controls the activities of the company by proxy without the need for input from other shareholders.

Should investors be concerned about this structure?

Well, it is highly unusual. The Partnership structure was rejected by the Hong Kong Stock Exchange, which is how Alibaba ended up on Wall Street in the first place. Though members of the Partnership must have a “meaningful” equity stake in Alibaba, according to the company prospectus, it’s not spelled out how large the stake must be. As Harvard Law School professor Lucian Bebchuk points out, partners could choose to later pare down their stakes in Alibaba and attempt to influence the company in ways that are not beneficial to other shareholders (remember, Yahoo and Softbank have basically handed their votes to the Partnership).

The ability of Alibaba’s executives to act unilaterally has already caused concerns before. Jack Ma spun off the fast-growing payments platform Alipay to another company he owns in 2011, which angered Yahoo.

Forget the risks! How do I get in on this IPO?

You don’t, unless you’re really rich. The banks underwriting Alibaba’s IPO will sell shares to mutual funds, hedge funds, and large-scale individual investors. The Average Joe’s first chance to get a piece of the company will likely be Friday morning, once the stock is publicly trading. But those shares could come at a significantly higher price than the IPO price range of $66 to $68. Twitter, for instance, started trading above $45 back in November even though its IPO price was just $26, due to extremely high demand for its stock. Unless you’re well-connected, it would be almost impossible to game the IPO to turn a quick buck. You should either plan to buy in as a long-term investor after carefully studying Alibaba’s prospectus or just relax and watch the chaos unfold without worrying about making or losing money.

What’s next for Alibaba?

The company’s breakneck growth in China shows no signs of abating, and Alibaba also has plans to compete on U.S. shores. Over the summer, the company launched 11 Main, an Etsy-like platform that connects shoppers with boutiques and other small vendors. And during Alibaba’s road show pitching the IPO to potential investors, Ma made his most direct statements yet about his already-massive company’s global ambitions.

“After we go public in the U.S., we will expand strongly in Europe and America,” Ma said. “Because after all we’re not a company from China, we are an Internet company that happens to be in China.”

TIME Tablets

Amazon Unveils $99 Tablet, Refresh of Fire HDX Line

The kiddie Fire HD prohibits tots from making in-app purchases--a solution to an issue the company has run into in the past

A slew of new products and updates to Amazon’s Kindle reader and Fire tablet lines are on their way, the company announced Wednesday–the biggest announcement of all that they’ll offer a new Fire device for just $99.

The new Fire HD comes in six and seven-inch models, with the smaller version costing $99 and the larger one costing $139. The device features a quad-core, 1.5 Ghz processor that Amazon says can run graphically intensive games. Front and rear-facing cameras should make selfies a breeze, and all the new devices will have unlimited photo storage in Amazon’s cloud services. The company claims that its new tiny tablets are more resistant to falls than any other devices on the market, including the iPad Air.

Amazon is also rolling out a slightly more expensive but nearly identical product aimed at kids. The Fire HD Kids Edition will have all the same features as the regular edition, but will also include a kid-centric interface called FreeTime, which serves up videos, books and apps aimed at children. The FreeTime mode prohibits kids from making in-app purchases–an issue Amazon has been accused of negligence on by the Federal Trade Commission. (Amazon is challenging those allegations in court).

The kiddie Fire HD also comes with a colorful protective case and a free year of FreeTime Unlimited, which is an all-you-can-eat subscription-based service that gives kids access to a variety of entertainment content. The 6-inch kids’ tablet is $149 and the 7-inch version is $189.

On the other end of the audience spectrum, Amazon announced a new version of a high-end tablet, the Fire HDX, which features an 8.9-inch screen, has a faster processor that clocks in at 2.5 Ghz, and which, at 13.2 ounces, is 20% lighter than the iPad Air. The new Fire HDX will also feature faster Wi-Fi, improved Dolby audio and a new dynamic light control system that changes the display to accommodate ambient light, making it more similar to the paper-like screen of the Kindle.

Amazon will also include a suite of office software called WPS Office, to encourage using the Fire HDX (and the cheaper Fire HD) as a productivity device. A super-thin keyboard made specifically for the new tablet will sell separately for $59.99. The HDX will cost $379 for the basic version, while the 4G-enabled version will cost $479.

Tying all these products together will be a new version of Amazon’s mobile operating system, Fire OS 4 (also known as “Sangria”). The new OS is packed with a lot of new features, including a service called Family Library that allows family members to share games, videos and other content they’ve purchased across multiple devices. Family members will also be able to create individual profiles on a single device with different app and content lineups to allow for easier sharing.

Fire OS 4 also pulls in some of the most prominent features from Amazon’s two new product lines this year: the Fire TV and the Fire Phone. Firefly, which lets people scan real-world objects to find out more information about them, will now be available on all the tablets, as will a video pre-buffering feature from the Fire TV called Advanced Streaming and Prediction. The popular Mayday button, which provides 24/7 customer support, will also make a return.

The devices continue Amazon’s habit of undercutting competitors on price by selling fairly sophisticated products at relatively low cost. It’s a strategy that’s a boon for customers, if not for Amazon’s bottom line. The company lost $126 million in the most recent quarter.

All the devices are available for pre-order now on Amazon.com and will begin shipping in October.

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