Senators Amy Klobuchar (D-MN) and Mike Lee (R-UT), of the Senate Judiciary’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, recently launched a bipartisan probe into potential antitrust abuses by 5 members of Big Tech (Facebook, Microsoft, Apple, Google, and Amazon). (Victoria Graham, Bloomberg Law). These companies have exhibited a penchant for buying startup companies whose technology could potentially compete against their own or using “platform privilege” to crush competitors who refuse to be bought. This article identifies examples of the anti-competitive behavior in question, discusses the current legislative efforts being pursued to regulate Big Tech and explores economic arguments that support stronger regulation.
Read MoreOn November 5, 2019, the Securities and Exchange Commission (“SEC”) proposed amendments to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which governs the shareholder proposal process. The proposed amendments, which the SEC has said are meant to modernize the rules that have not been significantly updated since 1954 (SEC Press Release, SEC Proposes Amendments to Modernize Shareholder Proposal Rule), have the potential to limit activism by smaller shareholders.
Read MoreThe United States Justice Department (the“DOJ”) is doing everything it can to prevent the proposed acquisition of Farelogix Inc. (“Farelogix”) by Sabre Corporation (“Sabre”). However, on November 14, 2018, Sabre announced it had entered into a $360 million agreement to acquire Farelogix. (Sabre). Both companies provide information technology systems that allow airlines to sell tickets. (David McLaughlin, Bloomberg). Sabre believes this acquisition will allow it to accelerate its plans to deliver “future-ready retailing, distribution and fulfillment solutions” that will unlock additional value in the airline industry. (Sabre). The DOJ, however, believes Sabre is attempting to eliminate a disruptive competitor, and, the acquisition, if approved, will lead to higher prices and reduced quality in airlines. (David Shepardson, Reuters).
Read MoreFacebook’s newest startup acquisition, CTRL-Labs, hopes its technology will allow users to control augmented reality (“AR”) technology with nothing more than a thought. (Kurt Wagner, Bloomberg Law). The startup, CTRL-Labs (pronounced “Control”), is developing a non-invasive neural interface that would convert user’s electrical muscle impulses into digital signals. (Polina Marinova, Fortune). This would allow users to move a mouse, or video game character, without having to move a muscle. Although the financial details of the acquisition are being kept private, according to people familiar with the deal, Facebook offered between $500 million and $1 billion for the startup. (Kurt Wagner, Bloomberg Law). The acquisition of CTRL-Labs comes at a time when technology companies, especially Facebook, are facing a bipartisan political attack on anti-competitive behavior within the industry. (David McLaughlin et al., Fortune). This post will also briefly address Facebook’s entry into and aspirations of the AR hardware market, and recent governmental oversight concerning Facebook's history of absorbing potential competitors.
Read MoreStarting in December, large companies will be able to gauge investor interest in their potential initial public offering (“IPO”) in the same way smaller companies already do. (Ramonas, Bloomberg Law). The U.S. Securities and Exchange Commission (“SEC”) recently voted 5-0 to adopt new regulations under Rule 163B of the Securities Act of 1933 (“Securities Act”), which extend the rule’s “test-the-waters” provisions from emerging growth companies to all companies considering an IPO. (Id.) The ability to gauge institutional investor interest in a potential IPO will help companies better tailor the size and terms of their offerings to the demand of the market and allow companies to avoid the costs of pursuing an IPO if the interest is simply not there.
Read MoreAccording to Paul Schulte, former global head of financial strategy for China Construction bank, China’s Central Bank will launch a state-backed cryptocurrency and issue it to seven institutions in the coming months. (Michael del Castillo, Forbes). Mu Changchun, deputy director of the Paying Division of the People’s Bank of China and the new head of China’s cryptocurrency research lab, described this as a “two-tiered” system wherein the central bank would create the cryptocurrency and a small group of trusted commercial businesses would “pay the central bank 100% in full” to be allowed to distribute it. (Id.) The cryptocurrency will initially be dispersed to the 1.3 billion people and entities doing business with renminbi, China’s fiat currency, but the Central Bank hopes the currency will eventually be made available to spenders in the United States and elsewhere through relationships with correspondent banks in the west. (Id.)
Read More