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Generation Alpha is poised to redefine industries, reshape digital culture, and drive innovation like never before.
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A whistleblower is suing Alphabet, claiming that Verily, its health tech subsidiary, breached proper protocol for handling the sensitive health data of 25,000 patients. Ryan Sloan, a former executive with Verily, claims the company retaliated against him and that he was fired after discovering and reporting to senior management violations of the Health Insurance Portability and Accountability Act (HIPAA). This legislation provides protections for patients health information, including limiting how the data is accessed and used. Sloan worked for Verilys subsidiary, Onduo, prior to taking a role with Verily. He alleges that in early 2022, he and Julia Feldman, the general counsel for Onduo, discovered that the company had improperly used patients protected health information for marketing and research purposes. The violations affected patients in Onduos diabetes program, according to reporting by CNBC. Sloan and Feldman informed senior leadership of their findings in January 2022, according to the filing, and an internal investigation confirmed that several HIPAA violations had occurred. Between January and March of 2022, internal investigators at Verily confirmed multiple breaches of fourteen (14) separate HIPAA Business Associate Agreements with large, covered entity clients of Onduo between 2017 and 2021, the filing said. Companies are required to notify impacted parties within 60 days of discovering a HIPAA breachbut the company did not, according to the suit. Rather, it decided to delay the decision of notifying the covered entities and went on to negotiate contracts with companies that included Walgreens Boots Alliance, Highmark Health, Quest Diagnostics, and Delta Air Lines. CLAIMS OF COVER-UP The filing alleges that when Sloan raised his concerns, the companys actions were defended by a senior manager because disclosing the HIPAA violations would negatively affect public relations. Whats more, the company allegedly suppressed a press release out of concern it would draw attention to previous marketing studies that violated its HIPAA business associate agreements, and instructed employees not to mention it again. Sloan was terminated from Verily in January 2023 while on protected leave to care for his mother, who was critically ill, according to the filing. Feldman and another employee who were aware of the HIPAA violations were also terminated. Although Sloan’s allegations against the tech giant are part of a lawsuit that was filed last year, it had not been previously reported, according to CNBC. JUDGE DISMISSES VERILY MOTION On Monday, the federal judge overseeing this case struck a blow to Verily. The judge denied the companys request to dismiss Sloans civil complaint or send the dispute to arbitration. In the dismissal filing, the judge noted that Sloan has stated a claim for breach of contract and that Verily does not dispute that if there were a contractual term for non-retaliation, whether express or implied, [Sloan] has pled sufficient facts to show that Verily retaliated against him in violation of that term. That dismissal means that Sloans claims can move forward with legal proceedings. In a statement to CNBC, a Verily spokesperson said: Verily believes the allegations and contentions alleged in this employment matter that was commenced in 2023 are completely without merit. Verily will defend itself to the full extent of the law. VERILY BACKSTORY Verily started in 2015 as an independent life sciences company within Alphabets innovation lab X. The moonshot company is meant to tackle the biggest challenges in health sciences with the use of tools, services, and software. The company originally developed devices like continuous glucose monitors before transitioning to pandemic response during the COVID-19 outbreak. Its accomplishments include WastewaterSCAN, an initiative led by Stanford University, along with Emory University and Verily, to develop and scale a national wastewater sentinel system that can be used to inform public health measures to mitigate the spread of infectious diseases. (SCAN stands for “Sewer Coronavirus Alert Network.”) But Verily has failed to achieve the types of successes that might be warranted, given the $1 billion-plus thats poured in from investors. And now the company plans to restructure in anticipation of a fresh round of investment. According to Business Insider, Verily is reportedly planning to transition from a limited liability company (LLC) to a C corporation, which is a business structure generally considered to be more investor-friendly. Last month, Verily slashed an unspecified number of jobs and shut down its medical devices program. As part of these changes, the company will focus more on artificial intelligence and data.
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E-Commerce
Even if you only pay a little attention to the business world, its been hard to miss Oracles phenomenal week. The companys shares jumped nearly 40% on Wednesday, and CEO Larry Ellison briefly overtook Elon Musk as the worlds richest person (hes now essentially tied). Oracle also signed a staggering $300 billion deal with OpenAI for computing power over the next five years. Even in the fast-moving world of AI, thats a lot in a short time. Investors cheered, but some Wall Street bulls are wondering if this is further inflating the AI bubbleand making a potential collapse all the more alarming. Oracle’s rocket ride Oracle shares spiked after the company reported fiscal first-quarter earnings Tuesday afternoon. It missed analyst expectations on earnings per share and revenue, but investors looked past that shortfall, thanks to booming cloud demand. Oracle said it has $455 billion in remaining performance obligations (that is, contracted revenue that has not yet been recognized), up 359% from a year ago. Wall Street was expecting that number to be closer to $180 billion. By Wednesday, The Wall Street Journal reported the OpenAI deal, one of the largest cloud contracts ever signed. (It will require about as much power as 4 million homes.) The one-two punch gave Ellison the largest single-day jump in net worth ever recorded by Bloomberg, which tracks billionaire holdings. Oracle’s rocket ride is not unlike the one Nvidia found itself on beginning in 2023 (a ride that is still going strong). But the high level of the stock is giving some observersand some insiderspause. Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes,” said Open AI founder Sam Altman last month. “Is AI the most important thing to happen in a very long time? My opinion is also yes. Oracle shares were trading at nearly 50 times the companys 12-month forward earnings on Wednesday. (The stock was down 5% in midday trading Thursday, to $311, but remains well above pre-earnings levels.) Thats the highest multiple since the dot-com crash (when the forward projected earnings hit 120). Still, Oracle has some solid footing. Its expected cloud revenue and the OpenAI deal do give those stock escalations some footing. Investors are betting on informed company forecasts rather than blind hope. Nvidia, meanwhile, has seen share prices jump 390% in the past two years and double since April. It has a market cap of $4.3 trillion, but is heavily reliant on two unknown customers who made up 39% of its Q2 revenuea red flag for the bulls. An AI bubble? Talk of an AI bubble didnt start this week, of course. Some analysts have been sounding alarms for months. In July, Torsten Slok, chief economist at Apollo Global Management, warned that AI stocks are even more overvalued than dot-com stocks were in 1999, putting the market at serious risk. The difference between the IT bubble in the 1990s and the AI bubble today is that the top 10 companies in the S&P 500 today are more overvalued than they were in the 1990s, he wrote in a note to investors. Put another way: Investors are betting so heavily on AI that the stock price of companies like Nvidia, Microsoft, Apple, and others has become detached from their earnings. Slok isnt alone. Alibaba Group chair Joe Tsai has warned that U.S. AI stocks are in a bubble; longtime tech executive (and former C3.ai CEO) Tom Siebel did too. Part of what has them so nervous is the fact that the top five companies in the S&P 500 now hold 30% of the indexs wealth. Thats a higher share than during the dot-com era and well above the Nifty Fifty that dominated markets in the 1970s. That concentration doesn’t clearly identify a bubble, but it does underline how dependent the market is on just a few companies that are all part of the same industry. If something goes wrong in AI, the ripple effects could be disastrous for the market.
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