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The Week's Top Stories: TikTok on the Verge; Facebook vs. Apple

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This Feb. 19, 2014, file photo shows the Facebook app icon on an iPhone in New York. Facebook is pushing back on Apple’s new privacy rules for iOS users — and putting app developers in the middle. The social network said Wednesday, Aug. 26, 2020 that anew policy by Apple that requires apps to ask users for permission to collect data on what devices they are using — and let ads follow them around on the internet — could lower the amount of money apps will make advertising through Facebook's audience network. (AP Photo/Karly Domb Sadof, File)
From Wall Street to Silicon Valley, these are the top stories that moved markets and had investors, business leaders, and entrepreneurs talking this week on Cheddar.

MARKETS & MONETARY POLICY

U.S. stocks rose to end the week, with the Dow turning positive for the year and the S&P 500 about to close out its best August since 1986. The driver was, once again, the tech sector, which is now more valuable on a market capitalization basis than the entire European stock market, according to Bank of America. But another macro driver was at play, too: The Federal Reserve made public that it has changed its view on a central conceit of monetary policy that effectively boils down to prioritizing employment over inflation. The central bank is acknowledging that maximum employment is more important to the economy than any rising inflation that may result from it. For consumers, that means that borrowing rates for car, home, and other loans are likely to remain low for a long time.

MICRO-MART-TOK?

Between losing its high-profile CEO of three months and suing the Trump administration, TikTok is also on the precipice of being forced to sell itself to an American company — which one, though, is anyone’s guess. Walmart joined as a surprise suitor for the Chinese-owned social media app this week, allying with Microsoft on a joint bid to acquire the hugely popular platform. That puts Microsoft-Walmart and Oracle as the two bidders most likely to end up owning TikTok’s U.S. assets by this time next month. While Walmart and Microsoft seem like an odd couple, analysts say it makes sense: the tie-up would give both companies an immediate edge in competition with Amazon on e-commerce. (Imagine a TikTok influencer promoting a product by sending viewers directly to buy it on Walmart.com, all using Microsoft technology).

PROMISING COVID DEVELOPMENTS

The White House announced that the federal government would spend $750 million to acquire 150 million rapid antigen tests made by Abbott Labs — basically all of them for the rest of the year. The purchase came just after the FDA granted approval for that 15-minute test, which sent Abbott shares up 10 percent. The Abbott test has a lot of experts excited because of how easy and fast it is. The company is scaling up production with plans to produce 50 million of the BinaxNOW tests a month starting in October. Because the test does not require other equipment, it means multiple tests can be run simultaneously and virtually anywhere — a potential milestone if the goal is regular, mass testing. On the vaccine front, Moderna announced more promising early results from its vaccine trials. The biotech company says elderly patients are seeing similar immune responses to the younger patients also being tested in the clinical trials. Shares of Moderna rallied on that progress, but then fell after company executives disclosed that the vaccine requires specific refrigeration standards, which could make it more difficult to distribute at scale.

CRISIS IN THE SKIES

The airline industry has seen an uptick in travel over the past few weeks, but it is not out of the woods yet — by a long shot. American Airlines is planning to cut up to 19,000 jobs in October, following announcements of impending cuts from United and Delta. The majority of those cuts would be to frontline positions like pilots and flight attendants. October is when federal aid that kept carriers from laying off workers is set to expire. American says the only way it can stave off the cuts is if the government extends the payroll support program. United and Delta warned that they will have to furlough nearly 3,000 and 2,000 pilots, respectively if October comes without federal help.

FACEBOOK V. APPLE

The upcoming version of Apple’s iOS will require apps to make users opt-in to data-tracking permissions, a major change to how we interface with our phones, and a potentially existential crisis for the lifeblood of the mobile advertising industry. Many app developers and advertisers are worried the prompt will seriously harm their ability to serve targeted ads on mobile since the consensus is that most people will decline to be tracked. Facebook is warning that the new iOS will cripple its ability to serve the micro-targeted ads that are so valuable to brands (and a critical part of Facebook’s bottom line.) Facebook is also joining the list of developers who have criticized Apple’s fee structure for the App Store as being unfair to developers and anti-competitive. 
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