☎️ Google’s $4B anti-fine

Thursday, September 15, 2022 by Robinhood Snacks |
Preinstalled problems (Pier Marco Tacca/Getty Images)

Preinstalled problems (Pier Marco Tacca/Getty Images)

Preinstalled problems (Pier Marco Tacca/Getty Images)

Preinstalled problems (Pier Marco Tacca/Getty Images)

Yesterday’s Market Moves
Dow Jones
31,135 (+0.10%)
S&P 500
3,946 (+0.34%)
Nasdaq
11,720 (+0.74%)
Bitcoin
$20,163 (-0.05%)

Hey Snackers,

“Touching base” with your coworkers is getting literal: as MLB attendance declines, the Seattle Mariners hosted a “Work from the Ballpark” day featuring WiFi access, lunch, and in-park café seating. All 150 of the $50 WFB passes sold out.

Stocks inched up yesterday after Tuesday’s wipeout, with the Nasdaq gaining 0.7% after its worst day in two years.

Crackdown

Googling "how to delete apps"… Yesterday the European Union ordered Google to pay a massive $4B after the tech titan lost an appeal challenging an antitrust ruling. Back in 2018, the search giant was fined $5B over accusations it forced manufacturers to preinstall Google apps (think: Chrome, Search) on Android phones. FYI: about 70% of smartphones in Europe run on Google’s Android.

  • Google vs. the EU: Over the past decade, Google's faced $8B+ in EU antitrust fines, including $2.4B last year for biased results on its Google Shopping platform.
  • Double whammy: Yesterday, South Korea’s privacy committee fined Google $50M and Meta $22M for collecting user data for targeted ads.
  • FYI: Google has a $125B cash pile, so a $4B fine won’t make a huge dent — but the regulatory aftermath could force Google to change its profitable biz model.

The EU’s antitrust arsenal… is stacked. Earlier this year, EU policymakers approved laws aimed at regulating tech juggernauts. Under the Digital Markets Act, companies can be fined up to 10% of their global revenue for breaking the rules — and up to 20% for repeat offenses. It could all add up for techies caught in the crosshairs:

  • Apple’s faced several EU antitrust charges, including over its refusal to let competitors like PayPal use its contactless payment tech.
  • Amazon’s been stuck in a three-year investigation over how it collects data from rival retailers and uses Prime to force sellers into its logistics biz.
THE TAKEAWAY

“Hot Antitrust Summer” may be over… but a chilly antitrust fall may be dawning. Antitrust crackdowns abroad could push policymakers to increase pressure in the US, where tech regulation has largely stalled. It’s already starting: yesterday California regulators sued Amazon, alleging it prevents merchants from offering lower prices through competitors’ sites.

ByeBack

It’s BB szn… Big businesses are buying back shares by the boatload. This past week, Comcast, Johnson & Johnson, T-Mobile, UBS, and Starbucks all announced plans to buy back billions worth of their own shares. Refresher: Some companies regularly buy back shares to boost prices and reward investors (think: fewer available shares + similar earnings = higher earnings per share). Two reasons for the buyback bonanza:

  • Bargain prices: Because stocks have plunged this year, it’s (relatively) cheaper for companies to splurge on their stock.
  • Extra fees incoming: President Biden’s Inflation Reduction Act will impose a 1% tax on buybacks from large corporations beginning next year.

Buyback brouhaha… Buybacks have boomed in recent years. In the first quarter of this year, S&P 500 buybacks hit a record $281B (though the index itself had its worst performance in years). Biden’s 1% tax is projected to raise $74B in the next decade, but critics say the tax will reduce investment and innovation and hurt investors. Over the past 20 years, big buybackers have outperformed others by 60%.

THE TAKEAWAY

The big buyback era probably isn’t ending… because the benefits still outweigh the costs. Experts say buybacks are unlikely to disappear, since a tax would have to be 10% to persuade companies to ditch buybacks altogether. Apple, Alphabet, Meta, Microsoft, and Bank of America — the “buyback monsters” — accounted for 25% of all buybacks in the past year, and they’re likely to keep splurging on themselves.

What else we’re Snackin’

  • Walbank: This month America’s #1 retailer, Walmart, plans to launch checking accounts for employees and shoppers. Through its fintech venture, One, Walmart’s reportedly hoping to expand to loans and investing.
  • Warm: In a rare move, Patagonia founder Yvon Chouinard has given away his jacket company, transferring its ownership to a nonprofit. All of Patagonia’s profits will now be used to fight the climate crisis.
  • Forked: Ethereum miners said they'd launch a proof-of-work ethereum fork within 24 hours of the Merge. As ETH moves to proof of stake, miners hope this splinter chain will keep them in business.
  • ETA: Unprofitable cloud company Twilio, which helps corporates like Uber and DoorDash chat with customers, is laying off 11% of employees after growing at “an astonishing rate” mid-pandemic.
  • Adflix: Netflix estimates that an ad-supported tier (set to launch this year) will reach 40M viewers by the end of 2023. The Flix is hunting for fresh $$ after losing ~1M subscribers last quarter.

Snack Fact of the Day

Starbucks’ cold coffee drinks now account for 60% of all orders year-round

Thursday

  • Hispanic Heritage Month begins
  • Jobless claims
  • Earnings expected from Adobe

Authors of this Snacks own: ethereum and shares of Google, Apple, Microsoft, Walmart, Amazon, Starbucks, Uber, and Netflix

ID: 2426382