Packages move along a conveyor belt at an Amazon Fulfillment center on Cyber Monday in Robbinsville, New Jersey, on Nov. 28, 2022.
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Jamaal Sanford received a disturbing email in May of last year. The message, whose sender claimed to be part of a “Russian shadow team,” contained Sanford’s home address, social security number and his daughter’s college. It came with a very specific threat.
The sender said Sanford, who lives in Springfield, Missouri, would only only be safe if he removed a negative online review.
“Do not play tough guy,” the email said. “You have nothing to gain by keeping the reviews and EVERYTHING to lose by not cooperating.”
Months earlier, Sanford had left a scathing review for an e-commerce “automation” company called Ascend Ecom on the rating site Trustpilot. Ascend’s purported business was the launching and managing of Amazon storefronts on behalf of clients, who would pay money for the service and the promise of earning thousands of dollars in “passive income.”
Sanford had invested $35,000 in such a scheme. He never recouped the money and is now in debt, according to a Federal Trade Commission lawsuit unsealed on Friday.
His experience is a key piece of the FTC’s suit, which accuses Ascend of breaking federal laws by making false claims related to earnings and business performance, and threatening or penalizing customers for posting honest reviews, among other violations. The FTC is seeking monetary relief for Ascend customers and to prevent Ascend from doing business permanently.
It’s the latest sign of the FTC’s crackdown on e-commerce money-making schemes on top of some of the internet’s leading marketplaces, like Amazon and Airbnb. Since mid-2023, the agency has sued at least four automationcompanies, alleging deceptive marketing practices and falsely telling customers that they could generate passive income.
The FTC isn’t just focused on e-commerce automation businesses. On Wednesday, the agency said it’s stepping up enforcement against companies that use artificial intelligence “as a way to supercharge deceptive or unfair conduct that harms consumers.” The agency pointed to Ascend as a company that it took action against in part because of its claims that it used AI “to maximize clients’ business success.”
The FTC has also pledged to go after companies that try to suppress negative reviews online as part of new rules issued this year targeting fake reviews.
Automation businesses like Ascend promote their easy money opportunities on Instagram, TikTok and YouTube. But their promises go mostly unfulfilled, and often the storefronts get shut down for violating policies around dropshipping — the selling of products to customers without ever stocking inventory — or counterfeits.
The FTC’s complaint against Ascend accused co-founders Will Basta and Jeremy Leung of defrauding consumers of at least $25 million through their scheme. Formed in 2021, Ascend has done business under several entity names with operations registered in states including Texas, Wyoming and California.
Lina Khan, Chair of the Federal Trade Commission (FTC), testifies before the House Appropriations Subcommittee at the Rayburn House Office Building on May 15, 2024 in Washington, DC.
Kevin Dietsch | Getty Images News | Getty Images
The filing shows that the threats against Sanford grew more menacing. Two days after the initial email, Sanford’s wife’s phone lit up with a text message containing an image of a severed head that again urged the removal of the unflattering review.
“Your husband has angered some people with his ignorance,” the text message said. “The type he does not wish to anger.”
Sanford soon purchased a security system for his home.
Sanford said in an interview that Ascend had promised his Amazon storefront would generate enough revenue to cover the cost of inventory the company bought each month on his behalf. Months went by and his store amassed a “smorgasbord” of items, from LED lights to vitamins, which Ascend purchased from other retailers like Macy’s and Home Depot and then sold on Amazon, Sanford said. The company used the dropshipping model, Sanford said, which often led to the stores getting suspended on Amazon.
Amazon prohibits merchants from dropshipping unless they identify themselves as the seller of record, meaning their name is listed on the invoice, packing slip and other materials.
‘Depleted bank accounts’
As Sanford’s sales sputtered and his debts swelled, he made a series of complaints to Basta and Leung. When they went unanswered, he left the negative reviews. Sanford saidAscend eventually offered to refund him $20,000 if he would take down the review, but he declined.
“I think I’m resigned to the fact that I won’t be getting my money back and now I just want accountability,” he said.
Karl Kronenberger, a lawyer for Ascend, said in a statement that the company denies ever threatening customers and it attempted to resolve any disputes “in good faith.”
“We are investigating whether a competitor of Ascend may be the driving force behind some of the allegations in the case,” Kronenberger said.
Ascend’s marketing pitch claimed customers could quickly earn thousands of dollars from sales generated on Amazon, Walmart and other platforms. The company said it had developed proprietary artificial intelligence tools that it used to identify top-selling products.
E-commerce automation companies are increasingly exploiting Amazon’s third-party marketplace, which now hosts millions of merchants and accounts for more than half of all goods sold on the site.
Amazon didn’t provide a comment for this story.
Ascend promoted the scheme as “risk free,” the FTC said, because of its buyback guarantee, which effectively committed to make clients whole if they didn’t recoup their investment within 36 months.
“After consumers invest, the promised gains never materialize, and consumers are left with depleted bank accounts and hefty credit card bills,” the regulator wrote in its complaint.
To add an air of legitimacy, Ascend falsely claimed it had been featured in media outlets like Forbes, Yahoo! Finance and Business Insider, the FTC said. It primarily advertised its business on social media platforms TikTok, X, YouTube and Instagram.
Ascend faces two lawsuits in California that allege breach of contract and other claims, according to the FTC. In January, an arbitration action was filed against Ascend in Florida on behalf of 30 customers. Nima Tahmassebi, an attorney representing the Ascend customers, told CNBC that the clients chose to withdraw the claim once they learned of the FTC case.
Tahmassebi said he has been contacted by hundreds of individuals who “all but begged for legal assistance” because they lost money after paying for Ascend’s automation services.
“I’m talking to people who said I can’t get Christmas gifts this year because of my situation with them,” Tahmassebi said. “People took money they could have applied to their kid’s college tuition. Now it’s gone, and they’re left bewildered.”
CEO of Nvidia, Jensen Huang, speaks during the launch of the supercomputer Gefion, where the new AI supercomputer has been established in collaboration with EIFO and NVIDIA at Vilhelm Lauritzen Terminal in Kastrup, Denmark October 23, 2024.
Ritzau Scanpix | Mads Claus Rasmussen | Via Reuters
Nvidia is replacing rival chipmaker Intel in the Dow Jones Industrial Average, a shakeup to the blue-chip index that reflects the boom in artificial intelligence and a major shift in the semiconductor industry.
Intel shares were down 1% in extended trading on Friday. Nvidia shares rose 1%.
Nvidia shares have climbed over 170% so far in 2024 after jumping roughly 240% last year, as investors have rushed to get a piece of the AI chipmaker. Nvidia’s market cap has swelled to $3.3 trillion, second only to Apple among publicly traded companies.
Companies including Microsoft,Meta, Google and Amazon are purchasing Nvidia’s graphics processing units (GPUs), such as the H100, in massive quantities to build clusters of computers for their AI work. Nvidia’s revenue has more than doubled in each of the past five quarters, and has at least tripled in three of them. The company has sginaled that demand for its next-generation AI GPU called Blackwell is “insane.”
With the addition of Nvidia, four of the six trillion-dollar tech companies are now in the index. The two not in the Dow are Alphabet and Meta.
While Nvidia has been soaring, Intel has been slumping. Long the dominant maker of PC chips, Intel has lost market share to Advanced Micro Devices and has made very little headway in AI. Intel shares have fallen by more than half this year as the company struggles with manufacturing challenges and new competition for its central processors.
Intel said in a filing this week that the board’s audit and finance committee approved cost and capital reduction activities, including lowering head count by 16,500 employees and reducing its real estate footprint. The job cuts were originally announced in August.
The Dow contains 30 components and is weighted by the share price of the individual stocks instead of total market value. Nvidia put itself in better position to join the index in May, when the company announced a 10-for-1 stock split. While doing nothing to its market cap, the move slashed the price of each share by 90%, allowing the company to become a part of the Dow without having too heavy a weighting.
The switch is the first change to the index since February, when Amazon replaced Walgreens Boots Alliance. Over the years, the Dow has been playing catchup in gaining exposure to the largest technology companies. The stocks in the index are chosen by a committee from S&P Dow Jones Indices.
Charles Liang, chief executive officer of Super Micro Computer Inc., during the Computex conference in Taipei, Taiwan, on Wednesday, June 5, 2024. The trade show runs through June 7.
Annabelle Chih | Bloomberg | Getty Images
Super Micro investors continued to rush the exits on Friday, pushing the stock down another 9% and bringing this week’s selloff to 44%, after the data center company lost its second auditor in less than two years.
The company’s shares fell as low as $26.23, wiping out all of the gains for 2024. Shares had peaked at $118.81 in March, at which point they were up more than fourfold for the year. Earlier that month, S&P Dow Jones added the stock to the S&P 500, and Wall Street was rallying around the company’s growth, driven by sales of servers packed with Nvidia’sartificial intelligence processors.
Super Micro’s spectacular collapse since March has wiped out roughly $55 billion in market cap and left the company at risk of being delisted from the Nasdaq. On Wednesday, as the stock was in the midst of its second-worst day ever, Super Micro said it will provide a “business update” regarding its latest quarter on Tuesday, which is Election Day in the U.S.
The company’s recent challenges date back to August, when Super Micro said it would not file its annual report on time with the SEC. Noted short seller Hindenburg Research then disclosed a short position in the company and wrote in a report that it identified “fresh evidence of accounting manipulation.” The Wall Street Journal later reported that the Department of Justice was in the early stages of a probe into the company.
Super Micro disclosed on Wednesday that Ernst & Young had resigned as its accounting firm just 17 months after taking over from Deloitte & Touche. The auditor said it was “unwilling to be associated with the financial statements prepared by management.”
A Super Micro spokesperson told CNBC that the company “disagrees with E&Y’s decision to resign, and we are working diligently to select new auditors.” Super Micro does not expect matters raised by Ernst & Young to “result in any restatements of its quarterly financial results for the fiscal year ended June 30, 2024, or for prior fiscal years,” the representative said.
Analysts at Argus Research on Thursday downgraded the stock in the intermediate term to a hold, citing the Hindenburg note, reports of the Justice Department investigation and the departure of Super Micro’s accounting firm, which the analysts called a “serious matter.” Argus’ fears go beyond accounting irregularities, with the firm suggesting that the company may be doing business with problematic entities.
“The DoJ’s concerns, in our view, may be mainly about related-party transactions and about SMCI products ending up in the hands of sanctioned Russian companies,” the analysts wrote.
In September, the month after announcing its filing delay, Super Micro said it had received a notification from the Nasdaq indicating that its late status meant the company wasn’t in compliance with the exchange’s listing rules. Super Micro said the Nasdaq’s rules allowed the company 60 days to file its report or submit a plan to regain compliance. Based on that timeframe, the deadline would be mid-November.
Though Super Micro hasn’t filed financials with the SEC since May, the company said in an August earnings presentation that revenue more than doubled for a third straight quarter. Analysts expect that, for the fiscal first quarter ended September, revenue jumped more than 200% to $6.45 billion, according to LSEG. That’s up from $2.1 billion a year earlier and $1.9 billion in the same fiscal quarter of 2023.
Peopl walk outside Steve Jobs Theater at the Apple Park campus before Apple’s “It’s Glowtime” event in Cupertino, California, on Sept. 9, 2024.
Nic Coury | AFP | Getty Images
Apple will buy Pixelmator, the creator of image editing apps for Apple’s iPhone and Mac platforms, Pixelmator announced Friday in a blog post.
Pixelmator, a Lithuanian company, was founded in 2007, and in recent years has been best known for Pixelmator and Pixelmator Pro, which compete with Adobe Photoshop. It also makes Photomator, a photo editing app.
Apple has highlighted Pixelmator apps over the years in its keynote product launches. In 2018, Apple named Pixelmator Pro its Mac App of the year, citing the company’s enthusiastic embrace of Apple’s machine learning and artificial intelligence capabilities, such as removing distracting objects from photos or making automated color adjustments.
“We’ve been inspired by Apple since day one, crafting our products with the same razor-sharp focus on design, ease of use, and performance,” Pixelmator said in its blog post.
Apple does not acquire as many large companies as its Silicon Valley rivals. It prefers to make smaller acquisitions of companies with products or people that it can use to create Apple features. Neither Pixelmator nor Apple provided a price for the transaction.
Pixelmator said in its blog post that there “will be no material changes to the Pixelmator Pro, Pixelmator for iOS, and Photomator apps at this time.”
Earlier this week, Apple released the first version of Apple Intelligence, a suite of features that includes photo editing abilities such as Clean Up, which can remove people or objects from photos using AI.
Apple has acquired other popular apps that received accolades at the company’s product launches and awards ceremonies.
In 2020, Apple bought Dark Sky, a weather app that eventually became integrated into Apple’s default weather app. In 2017, it bought Workflow, an automation and macro app that eventually became Shortcuts, the iPhone’s scripting app, as well as the groundwork for a more capable Siri assistant.