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Amazon cuts Whole Foods prices for Prime members in new grocery showdown




By Lisa Baertlein and Jeffrey Dastin

(Reuters) – Inc <AMZN.O> and Whole Foods Market are making a surgical strike in the already brutal grocery price war.


On Wednesday, Whole Foods debuted a much-anticipated loyalty program that offers special discounts to Prime customers, including 10 percent off hundreds of sale items and rotating weekly specials such as $10 per pound off wild-caught halibut steaks.

Those perks are available now in Florida and will roll out to all other stores starting this summer. Amazon previously announced free two-hour delivery from Whole Foods stores for members of Prime, its subscription club with fast shipping and video streaming.tagreuters.com2018binary_LYNXNPEE4F06Z-BASEIMAGE

The new loyalty strategy will test whether Amazon’s $13.7 billion deal for Whole Foods brings much-feared disruption and an intensified price war to the $800 billion U.S. grocery industry dominated by Walmart Inc <WMT.N> and Kroger Co <KR.N>.

Whole Foods, with 463 U.S. stores and roughly 1 percent share of the fragmented U.S. grocery market, has gained momentum since the Amazon merger last summer, Whole Foods co-founder and Chief Executive John Mackey told Reuters.

Closely watched basket size – the number of items purchased per transaction – has grown since the merger, said Mackey. He declined to offer specifics.

Mackey is betting on Prime to convince shoppers wary of its “Whole Paycheck” reputation that it is an affordable option for more of their purchases.

The new perks could make Whole Foods cheaper than conventional grocers for about 8 million of its customers who already subscribe to Amazon Prime, according to Morgan Stanley analysts.

Prime members scan an app or input their phone numbers at checkout to receive the discounts.

Still, Philadelphia-area Whole Foods shopper and Prime member Heather Kincade, 46, is going to need convincing.

While Whole Foods’ prices on staples like rotisserie chicken, bananas and avocados have come down, she still thinks some every day items are prohibitively expensive. “If I start buying dish soap and other things there, I will have hit the big time,” she said.



In Amazon, Whole Foods has found an owner that is famously comfortable spending away profits on new businesses or on lower prices.

“Given how important it is for Amazon to provide value for their customers, and customers value lower prices, I would think they’d be comfortable operating Whole Foods at a lower margin while experimenting with the operating model,” said Tom Furphy, former vice president of consumables and tagreuters.com2018binary_LYNXNPEE4F11U-BASEIMAGEAmazonFresh, and now chief executive of Consumer Equity Partners.

Mackey said more rounds of cuts are in the cards.

“Whole Foods is going to become more and more and more competitive,” said Mackey, who declined to detail how much of a haircut its suppliers will take.

Hain Celestial Group, one of Whole Foods’ biggest suppliers, says a lower profit margin may be worth it.

“I never mind giving up margin for growth,” Hain CEO Irwin Simon told Reuters.

Small grocers, who still control a hefty portion of U.S. sales, typically have razor-thin margins. They are under increasing pressure as German discounters Aldi and Lidl lower prices, too.

Walmart said it will keep offering everyday low prices to all shoppers at its more than 5,000 U.S. stores.

Kroger Co, the largest U.S. supermarket operator with roughly 2,800 stores, uses shopper data to personalize loyalty discounts.

CEO Rodney McMullen told Reuters earlier this month that the chain’s prices will “absolutely” be lower than Whole Foods on the typical shopper’s basket of about 50 items per week.

“It’s easy to beat somebody on four or five items,” said McMullen.

Kroger tested an annual grocery delivery subscription but tabled it due to insufficient demand, he added.


(Reporting by Lisa Baertlein in Los Angeles and Jeffrey Dastin in San Francisco; Editing by Greg Mitchell)






The artist as an algorithm: robot-made Rembrandt for sale




By Michaela Cabrera


PARIS (Reuters) – Robots can do many of the jobs previously performed by humans, but could they ever replace artists?

A team of French entrepreneurs who believe so have written a computer algorithm that can create original paintings with some resemblance to works by Old Masters such as Rembrandt.

The pictures of an imagined “Baron of Belamy” and his aristocratic relations have a smudgy, blurred finish that would not have impressed Rembrandt’s clients, but are good enough for the auction house Christie’s to put one of them on sale in New York in October with a price estimate of $7,000 to $10,000.

“We are artists with a different type of paintbrush. Our paintbrush is an algorithm developed on a computer,” said Hugo Caselles-Dupre, a computer engineer who founded the group with childhood friends Gauthier Vernier and Pierre Fautrel, who both have a business background.

The artworks are created by the Generative Adversarial Network (GAN), an algorithm that learns to generate new images by being fed a database of existing paintings – 15,000 portraits in the case of the “Belamy” pictures.

“The visual is not the only thing that comprises the final portrait,” said Fautrel.

“All of the message, and the artistic process to get to the visual, are also important, even more than the final product,” he said, admitting that GAN’s pictures — printed onto canvas and then framed — are fuzzy.

“The fact that it’s not yet perfect, I think is logical because it’s a technology that is still very new, and to have very good results, we need significant calculating power, that for now we don’t have in this small apartment.”

The trio sold “The Count of Belamy” for around $10,000 to Paris-based collector Nicolas Laugero-Lasserre.

“What was astonishing was that they knew nothing about art, nothing at all,” Laugero-Lasserre said.

“In the beginning, I took them for crazy people. And finally, are they crazy, are they genius? We’ll see,”

Some artists are unconvinced that a machine can make real art.

“If there was no anger from Picasso, ‘Guernica’ would never have existed. If Modigliani were not in love with his models, his nudes would be dull and uninteresting,” said painter Robert Prestigiacomo.

“There’s always a feeling behind a painting, always – whether it’s anger, yearning, desire. And artificial intelligence is – well, you have the word ‘artificial’ in it – there you have it!”

(Editing by Robin Pomeroy)





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Chinese police arrest 21 over data theft at Alibaba’s delivery arm: Xinhua




HONG KONG (Reuters) – Chinese police on Friday arrested 21 suspects in connection with the theft of customer information from Alibaba Group Holding’s logistics affiliate Cainiao Network, state news agency Xinhua reported.


More than 10 million pieces of client data – including user names, phone numbers and parcel tracking numbers – were stolen from Cainiao, which provides logistics support to Alibaba’s Taobao e-commerce platform, the report said.

The agency said that police in Hangzhou, Zhejiang province, had been told by the logistics company in June that barcode scanners used in its distribution stations had been infected with malware.

The security breach had now been fixed, Cainiao told Xinhua.

In a statement, Cainiao said it had detected a suspicious malware infection in some of the parcel scanners used by its logistics partners earlier this year and immediately reported the findings to the police and upgraded its systems.

It said a police investigation determined that none of the illegally obtained data had been shared with any third parties.

“Cainiao views protection of customer data as its highest priority and will continue its robust efforts to keep its platform secure,” it added.

(Reporting by Meg Shen; Editing by David Goodman)


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Google CEO Sundar Pichai denies efforts to tweak search results: Axios




(Reuters) – Google’s Chief Executive Sundar Pichai denied reports of efforts to politically bias the company’s internet search results, Axios reported on Friday citing a memo.

The Wall Street Journal citing internal emails reported on Thursday that the company’s staff discussed ways to alter search functions to counter the Trump administration’s 2017 travel ban.


The Journal’s report said Google did not go through with the ideas that were brainstormed.

According to Axios, Pichai wrote an email to “Googlers” saying an internal email to suggest the company would compromise the integrity of its search results for a political end were “absolutely false”.

“It’s important to me that our internal culture continues to reinforce our mission to organize the world’s information and make it universally accessible and useful. Recent news stories reference an internal email to suggest that we would compromise the integrity of our search results for a political end,” Pichai was quoted as saying by Axios.

Google was not immediately available for comment.

(Reporting by Philip George in Bengaluru)



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FCC chairman ramps up defense of net neutrality repeal




By David Shepardson

WASHINGTON (Reuters) – With a federal appeals court preparing to consider the Trump administration’s reversal of Obama-era U.S. net neutrality regulations, the chairman of the Federal Communications Commission is ramping up his defense of the decision.


FCC Chairman Ajit Pai has this month also criticized California’s legislature for approving a state measure to guarantee open internet access and said “bad behavior” on the part of internet service providers (ISPs) could be prevented by the FCC’s new transparency requirements.

The FCC voted 3-2 in December to reverse the Obama era rules that barred internet service providers from blocking or throttling traffic or offering paid fast lanes, also known as paid prioritization. FCC repeal of the 2015 net neutrality rules was a win for ISPs Comcast Corp, AT&T Inc and Verizon Communications Inc, whose practices faced significant government oversight.

In August, 22 states and a coalition of trade groups representing companies including Alphabet Inc, Facebook Inc and Inc urged a federal appeals court to reinstate the rules.

The court has not yet scheduled oral arguments.

The U.S. Senate voted in May to reinstate the net neutrality rules, but the measure is unlikely to be approved by the House of Representatives and the White House also opposes it.

Under President Donald Trump, the FCC handed ISPs sweeping new powers to recast how Americans use the internet, as long as they disclose changes. The new rules took effect in June but providers have made no changes in access.

Pai said Thursday “if an ISP starts blocking lawful content, everyone will know. If an ISP starts throttling services based on the nature of the content, everyone will know. This is a powerful disincentive for bad behavior.”

Last December, the FCC’s net neutrality repeal sought to preempt state internet rules. Pai criticized California’s state legislature for approving net neutrality but Governor Jerry Brown, a Democrat, has not yet disclosed a position on the measure and has until Sept. 30 to decide whether to sign it.

Pai called California’s legislation “a radical, anti-consumer Internet regulation bill that would impose restrictions even more burdensome than those adopted by the FCC in 2015.”

California State Senator Scott Wiener, one of the bill’s sponsors, responded that Pai “abdicated his responsibility to ensure an open internet … Unlike Pai’s FCC, California isn’t run by the big telecom and cable companies.”

On Thursday, Pai criticized big tech companies including Twitter and Google, as “completely unregulated, which is fine, except that they’ve also been badgering the FCC and the federal government to heavily regulate their rivals.”

(Reporting by David Shepardson; Editing by Dave Gregorio)



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As new iPhones go on sale, studies reveal chips from Intel and Toshiba




By Stephen Nellis


SAN FRANCISCO (Reuters) – Apple Inc’s <AAPL.O> latest iPhones hit stores around the world on Friday, featuring components made by Intel Corp <INTC.O> and Toshiba <6502.T> among others, according to two firms that cracked open the iPhone Xs and Xs Max models.

The studies by repair firm iFixit and chip analysis firm TechInsights, published this week, are among the first detailed teardowns of the phones, which reviews suggested were a subtle upgrade from the tenth anniversary iPhone X.

Supplying parts for Apple’s iPhones is considered a coup for chipmakers and other manufacturers. While Apple publishes a broad list of suppliers each year, it does not disclose which companies make which components and insists its suppliers keep quiet.

That makes teardowns the only way of establishing the breakdown of parts in the phones, although analysts also recommend caution in drawing conclusions because Apple sometimes uses more than one supplier for a part. What is found in one iPhone may not be found in others.

Apple could not immediately be reached for comment.

The breakdowns listed no parts from Samsung <005930.KS> and no chips from Qualcomm Inc <QCOM.O>.

Samsung in the past has supplied memory chips for Apple’s iPhones and was believed by analysts to be the sole supplier of the costly displays for last year’s iPhone X.

Qualcomm has been a supplier of components to Apple for years, but the two have been locked in a wide-ranging legal dispute in which Apple has accused Qualcomm of unfair patent licensing practices.

U.S.-based Qualcomm, the world’s largest mobile phone chipmaker, has in turn accused Apple of patent infringement.

Qualcomm said in July that Apple intended to solely use “competitor’s modems” in its next iPhone release.

The iFixit teardown showed iPhone Xs and Xs Max used Intel’s modem and communication chips instead of Qualcomm’s hardware.

The latest iPhones also had DRAM and NAND memory chips from Micron Technology <MU.O> and Toshiba, according to iFixit’s study. Previous teardowns of the iPhone 7 had shown DRAM chips made by Samsung in some models.

TechInsights’ dissection of a 256-gigabyte storage capacity iPhone Xs Max, on the other hand, revealed DRAM from Micron but NAND memory from SanDisk, which is owned by Western Digital Corp <WDC.O> and works with Toshiba for its supply of NAND chips.

Toshiba’s chip unit Toshiba Memory was purchased by a private equity-led consortium earlier this year that Apple joined.

In the past, TechInsights found Apple used different DRAM and NAND suppliers in the same generation of phones.

“For memory – Apple obviously competes with Samsung and wants to reduce their reliance as much as possible – so totally consistent that we’d see Toshiba for NAND flash storage and Micron for DRAM,” Morningstar analyst Abhinav Davuluri said.

Jim Morrison, vice president of TechInsights, said in an interview that it appeared that one of Dialog Semiconductor’s <DLGS.DE> chips had been replaced in the iPhone Xs Max by one of Apple’s own chips, but it was not yet known whether that also applied to the iPhone Xs.

Dialog declined to comment. In May, the company said Apple had cut orders for its chips.

IFixit and TechInsights technicians also found components from companies including Skyworks Solutions <SWKS.O>, Broadcom <AVGO.O>, Murata <6981.T>, NXP Semiconductors <NXPI.O>, Cypress Semiconductor <CY.O>, Texas Instruments <TXN.O> and STMicroelectronics <STM.BN>.

(Reporting by Stephen Nellis in San Francisco, additional reporting by Arjun Panchadar, Sonam Rai and Munsif Vengattil in Bengaluru; editing by Rosalba O’Brien and Phil Berlowitz)


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Farfetch tops price range in IPO in boon to luxury market




By Sarah White and Melissa Fares


PARIS/NEW YORK (Reuters) – Farfetch <FTCH.N> priced its shares above its targeted range on Friday in a New York flotation that values the online luxury retailer at over $5.8 billion and underscores how big a bet web sales have become for high-end brands.

E-commerce is emerging as one of the biggest growth drivers for luxury labels initially fearful of diluting their image by selling online.

London-based Farfetch – a 10-year-old site that connects shoppers to hundreds of boutiques and fashion labels but carries no inventory – is one of a clutch of rapidly-expanding multi-brand platforms that got an early foothold in the market.

The company’s shares were trading as much as 39 percent above its initial public offering at $20 per share on the New York stock exchange on Friday – surpassing the range of $17 to $19 that already had been increased.

It will raise $885 million in the listing, with the company issuing 33.6 million new shares and existing shareholders, including early backers such as Advent Venture Partners and Vitrurian Partners, selling 10.6 million.

The IPO values Farfetch, founded by Portuguese entrepreneur Jose Neves, at $5.8 billion according to the share count available in its latest filings. When including employee share options this would rise to $6.3 billion, the company said.

Existing Farfetch investors include <JD.O>, China’s second largest e-commerce firm, which bought extra shares along the listing in a private placement.

The flotation comes at a time of growing competition among independent online fashion retailers and luxury groups rolling out their e-commerce operations, including cash-rich luxury heavyweights like Louis Vuitton owner LVMH <LVMH.PA>, which is experimenting with its own multi-brand site.

Richemont <CFR.S>, the Swiss conglomerate that owns jeweler Cartier, this year took control of now delisted Farfetch rival Yoox Net-A-Porter, in a deal that valued that platform at 5.3 billion euros ($6.2 billion).

Farfetch – which has never turned a profit, but posted a 59 percent jump in revenues last year to $386 million – drew investment from prominent industry players in its IPO, like the Pinault family that controls Kering <PRTP.PA>, the French group behind brands such as Italy’s Gucci.

To stand out from the crowd, the platform is investing heavily in technology, including for digital store services it is trialing with France’s Chanel, one of Farfetch’s big name tie-ups.

“It is an industry that, rightly so, chooses their path and their channels very carefully,” said Farfetch Chief Executive Jose Neves, adding that, for most luxury retailers, it is all about brand image, aesthetic and high-end customer service.

“But I think the industry has seen the potential of reaching key demographics like the new millennial customer that thinks digital first. These customers are online – they’re not offline.”

Online sales are set to make up a quarter of the luxury industry’s revenues by 2025 from just under 10 percent now, according to consultancy Bain, thanks in part to demand from young shoppers in tech-savvy markets like China.

($1 = 0.8493 euros)

“That is an incremental $100 billion opportunity just in online luxury fashion,” Neves said. “This is Chapter 2. We want to be a category leader and we want to continue to gain massive share in this space,” Neves said.

(Reporting by Sarah White in Paris and Melissa Fares in New York; editing by Keith Weir and Diane Craft)


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