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.

TIME Gadgets

Amazon Just Unveiled Its Most Advanced Kindle Yet

The Kindle Voyage is Amazon's thinnest Kindle yet Amazon

The Kindle Voyage is designed to offer a more tactile experience

Correction appended Sept. 18

Amazon is updating its Kindle line with its slimmest e-reader to date. On Wednesday, the company announced the $199 Kindle Voyage, which is 7.6 mm thick and weighs less than 6.4 oz. It will feature a higher-resolution Paperwhite display that boasts 300 pixels per inch.

The specially designed glass on the device makes the display readable in even the most glaring of sunlight and features an etching pattern so that it feels more like paper to the touch. The lighting of this high-end Kindle has also been improved, with a new adaptive front light that lowers the display’s brightness over time in a dark room, to match how the human eye adjusts to dark environments.

The Kindle Voyage will also feature a pressure-sensitive bezel that functions as a page-turning button. When pressing the outer edges of the Kindle, users will feel a small vibration as the page turns to offer a more tactile experience. Amazon says the feature will help people read for longer periods of time compared with swiping the touch screen to turn pages. Like previous fancy Kindle models, the new Voyage will also come with free 3G connectivity.

In addition to the new device, Amazon is updating its Kindle mainstays. The basic Kindle will double its storage capacity to 4 GB and feature a touch interface for the first time, at a cost of $79. The Paperwhite, Amazon’s best-selling Kindle, will also get double the storage and cost $119.

All the Kindles will come with updated software that features tighter integration with Goodreads, the book-club website that Amazon bought last year, and an expanded vocabulary-teaching functionality, among other tweaks.

The Kindles are available for preorder now and begin shipping in October.

Correction: The original version of this article misstated the day the Kindle Voyage was announced.

TIME Media

Netflix Has a Plan to Take Over the World

ABC's "Good Morning America" - 2014
Kevin Spacey talks about the new season of "House of Cards" on Good Morning America, 2/18/14, airing on the ABC Television Network. Ida Mae Astute—ABC via Getty Images

But it'll likely lose money abroad long before it ever makes it there

Like the conniving Frank Underwood, Netflix’s ambitions only continue to grow.

The streaming service is rolling out in six new European countries this week, including France and Germany, two of the region’s largest markets. The expansion, Netflix’s biggest ever, will expose the company to hundreds of millions of potential new customers who have high-speed Internet access. But the challenges and costs of adapting a U.S.-based service for six different cultures won’t be easy—or profitable—for quite a while.

At home, Netflix is still growing at a healthy clip. The company added 2.82 million streaming subscribers in the first half of 2014, up from 2.66 million additions during the same period last year. But the growth rate abroad is even faster as Netflix continues to come online in more regions. The company added 2.87 million international customers in the first half of the year, compared to 1.63 million last year. It’s projecting that it will add 2.36 million international subscribers in the third quarter alone thanks to the new markets where the service is launching.

While opening in new markets will certainly boost Netflix’s subscriber base, there’s no guarantee the service will perform as well as it has in the United States or the United Kingdom. In Germany, TV is less popular than in other Western nations. Germans watch 230 minutes of TV and video content per person per day, compared to 286 minutes per person in the U.S., according to research firm IHS. And the TV they do watch isn’t necessarily the same as what succeeds elsewhere. Seinfeld was famously a bust in Germany because it was “too American.” More worryingly for Netflix, its own high-budget original show House of Cards failed to net even a million viewers when it debuted on the German network Sat. 1, according to Bloomberg. Episodes from season two averaged less than 100,000 viewers.

“The Germans notoriously have different tastes from the rest of the West,” says Michael Pachter, an equity analyst for Wedbush Secutiries. “All of us . . . make the mistake of thinking that ‘international’ is a place. International is 180 independent, different nations.”

While there are similar cultural concerns in France, there Netflix must also deal with entrenched competitors who want to squash the streaming service before it can gain traction. Canal Plus, France’s largest pay-TV provider, actually owns the broadcast rights to House of Cards and recently announced a deal to stream HBO shows through its own Netflix-like service, Canalplay. Another provider, Numbericable, launched an online service with access to 3,000 episodes of TV shows on the same day Netflix launched in France. Meanwhile, content creators and regulators worry Netflix will try to further Americanize French culture while avoiding paying large taxes because it’s headquartered outside the country.

“People are concerned the emergence of Netflix will damage the local content industry,” says Richard Broughton, an IHS analyst. “They really have to make some partnerships in order to make better headway into the French market.”

Netflix has plans to address these issues. A new House of Cards-like drama called Marseille is set in the south of France and will be helmed by French directors. It should help cast Netflix as a collaborator in the country rather than an invader. The company will also try to buy up streaming rights to locally produced shows in the new countries where it launches, Broughton says. The strategy has been effective in the United Kingdom, where Netflix has the rights for many BBC shows. The company has 3 million customers there, according to one estimate.

But building a curated library for each individual market is expensive, and Netflix often has to negotiate individual rights agreements for each different country where it operates. “They have to replicate the wheel every place they go,” Pachter says.

That’s why Netflix’s international business has been unprofitable since it began. The division lost $15 million in the most recent quarter, and Netflix projects that loss will balloon to $42 million in the third quarter due to marketing and licensing costs in new territories. The price to compete will only grow, especially when other U.S. competitors show up in Europe (Amazon Prime Instant Video is already available in Germany).

Early impressions indicate that Netflix’s library of titles in France is not as robust as in the U.S. But analysts expect the company will eventually work out the kinks. IHS projects that Netflix will have 18 million subscribers across Europe by 2018, up from 5.8 million today. That would be a boon for the world’s most popular streaming service, but it’s hardly guaranteed.

“You’ve got to spend an awful lot up front,” Broughton says. “You’re gambling on, over the next few years, being able to accrue sufficient subscribers to offset those costs.”

TIME technology

Uber Is Now Legal in Germany Once Again

German Court Bans Uber Service Nationwide
In this photo illustration, a woman uses the Uber app on an Samsung smartphone on September 2, 2014 in Berlin, Germany. Adam Berry—Getty Images

Wunderbar

Updated 1:15 p.m.

Germany’s ban on Uber’s ride-sharing service has been lifted by a local court.

The Franklin Regional Court ruled Tuesday that UberPop, Uber’s cheaper alternative to its well-known black car service, could resume operating freely throughout the country. The ruling comes after Taxi Deutschland, a German taxi union, had successfully sought a nationwide injunction against Uber’s service last month.

The taxi union vowed that it would continue to fight Uber in Germany. “The taxi industry accepts competitors who comply with the law,” the organization said in a statement. “Uber doesn’t do that. Therefore we today announce that we will be appealing without delay.”

UberPop connects drivers and riders via a smartphone app. Critics say drivers are not subject to the same regulations and requirements as licensed German taxi drivers, a common complaint against Uber drivers around the world. The judge who lifted the injunction said that there was likely a legal basis to the taxi union’s complaint, but the organization could not have the issue tried as an expedited case. Therefore, the temporary inunction had to be lifted.

Uber, of course, is happy about the ruling. “We welcome today’s decision by the German court to lift the injunction placed on UberPOP by the incumbents,” Uber Germany spokesman Fabien Nestmann said in an emailed statement. “Demand is so great all across the country that we expect to double in size by the end of the year and plan to bring Uber to more and more cities across Germany.”

[WSJ]

 

TIME Apple

The iPhone 6 Will Make or Break Apple in China

Apple's iPhone 6 (left) and iPhone 6 Plus (right) Apple

The biggest test for the company's biggest phone

When Apple CEO Tim Cook took one of many regular trips to Beijing in January, he wasn’t surveying the company’s many Chinese factories or hobnobbing with government officials. He was at a China Mobile retail store to mark the launch of the iPhone on the world’s largest wireless carrier. The two companies were joining forces to “deliver the best experience in the world,” Cook said.

The iPhone 6 will test how interested Chinese consumers are in the Apple experience. The newly announced phone, along with its big brother the iPhone 6 Plus, has already crashed the servers of Apple’s online store and are on back order for multiple wireless carriers in the U.S. But the launch of the devices is being delayed in China, and it’s not yet clear how the new iPhones will compete with a cadre of homegrown competitors which have rapidly gained market share over the last year.

Apple, no doubt, is on the rise in China. Sales jumped 18% to over $15 billion in the first half of 2014, making China the tech giant’s fastest-growing region by far. With the China Mobile deal now in place, the iPhone is available from all of the country’s wireless carriers, giving Apple access to 1.3 billion potential customers. Cook expects it to eventually overtake the United States as Apple’s biggest market.

But Apple’s competitors are rising too, some at an even faster clip. Xiaomi, often called the “Apple of China,” shipped about 15 million smartphones in the second quarter to surpass Samsung as the country’s largest vendor, according to research firm Canalys. Other Chinese manufacturers, such as Lenovo and Huawei are also beating Apple. There are literally dozens of other phone companies vying for customers’ attention in the highly fractured market. While Apple and Samsung pull in about two-thirds of all smartphone sales in the U.S., the top two manufacturers in China account for just one-fourth of sales, according to research firm IDC. Apple resides outside the top five.

The main issues holding Apple back in China are screen size and price. The company solved at least one issue with the iPhone 6 Plus, which boasts a 5.5-inch screen. The jumbo-sized display will help the latest iPhones be Apple’s most successful yet in China, says Ramon Llamas, a mobile analyst at IDC. “In the Chinese market, this is almost like a status symbol,” Llamas says of large-screen phones, also known as “phablets.” “All of these vendors, they are clearly playing in that phablet space.” Indeed, nearly 40% of smartphones sold in the country now have screens five inches or larger, according to Canalys.

Price may remain a prohibiting factor, though. According to IDC, the average selling price for an iPhone in China in the first half of 2014 was $539. Lenovo’s Android-powered smartphones sold for just $98 and are currently beating the iPhone in sales. The 6 Plus, while appealing to phablet lovers, will cost $100 more than previous iPhone models in the U.S., an extra cost that will likely translate to China.

Chinese carriers are also planning to drastically cut phone subsidies on the orders of the nation’s government. That will likely make consumers more price-conscious just as domestic competitors are figuring out how to make devices with iPhone-like features at a fraction of the cost. “It becomes a little bit more difficult [for Apple] when the specifications are close but the price is not,” says Bill Kreher, an equity analyst at Edward Jones.

There’s also a third, thornier wrinkle: the Chinese government seems less accommodating of Apple than in the past. Following Edward Snowden’s revelations about global surveillance by the National Security Agency, China’s state-run media called the iPhone a “national security concern” over a location-tracking feature in iOS 7. (Apple disputed the report.) Now the iPhone 6’s launch has been delayed in China because it has not yet been approved by the country’s Ministry for Industry and Information Technology, according to the New York Times. It’s part of an overall cooling toward U.S. tech firms in China, which has also included ongoing antitrust investigations into Microsoft and Qualcomm. “U.S. conglomerates will continue to have a difficult time in China, given heightened regulatory concerns,” Kreher says. “But Apple has done a better job than most in respecting the Chinese influence.”

Apple spokeswoman Teresa Brewer wouldn’t comment on exactly when the iPhone 6 might arrive in China. “China is a key market for us and we will get there as soon as possible,” she wrote in an email.

There is at least one broad trend-line moving in Apple’s favor. China’s carriers are racing to expand their high-speed data networks, and the iPhone is one of just a few phones currently on the market that is compatible. China Mobile has racked up more than 20 million 4G subscribers since it launched the speedier network in December in conjunction with the iPhone rollout. Predictably, the vast majority of the first 4G customers were iPhone users. Xiaomi, on the other hand, only just got around to launching a 4G phone last month.

With a wide range of homebred competitiors and a government that may be actively working against it, Apple certainly faces headwinds in China. But the company’s business there is still growing, and devoted fans are still lining up for new iPhones. “From an end-user perspective, a lot of folks in China still want the iPhone,” Llamas says. “We’re still seeing strong demand.”

TIME Solutions for America

Disruptive Technology Is Changing How Kids Learn

Research show new tools can make kids more engaged and more creative

In a few weeks, the halls of a school in Nanuet, N.Y., will teem with mini race cars. The vehicles will sport custom-designed wheels, each set carefully tuned in diameter and thickness to achieve maximum speed.

But the cars’ makers aren’t college-level engineers; they’re middle-school students attempting to learn about physics and technology by using a device that combines both–the school’s 3-D printer. “It’s rewriting what’s possible” in education, says Vinny Garrison, the teacher who organizes the races.

It’s not the only innovation doing so. Nearly three-fourths of U.S. teachers use technology to motivate students to learn, according to a survey by PBS LearningMedia. And that tech is getting smarter: students can now virtually tour ancient worlds to learn history, take quizzes via smartphone and more.

Most of the changes are designed to better prepare U.S. students for careers in fast-growing fields like science and engineering. But they can come at a cost–and not just financially. A $500 million plan to supply Los Angeles students with iPads was recently suspended after students bypassed content filters and some parents complained that the initiative was pulling focus from much needed building repairs.

So far, however, research shows that using next-gen tech in the right ways can make students smarter, more engaged and more creative. Here is a look at six new technologies that are shaping the classrooms of the future.

TO SEE MORE SOLUTIONS, GO TO time.com/solutionsforamerica

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