Monthly Archives: March 2021

Technology stocks were pushing the broader market solidly higher on Thursday, as investors welcomed another reprieve from the volatility in the bond market that has dominated the conversation on Wall Street for the last several weeks.

The S&P 500 index rose 1.2% as of 10:55 a.m. Eastern. The Dow Jones Industrial Average rose 1% and the technology-heavy Nasdaq Composite was up 2.1%.

Big Tech stocks, which have been hurt this year by rising bond rates, were among the biggest gainers. Apple was up 1.5%, Microsoft rose 1.7% and Googles parent company Alphabet was up more than 2%.

The recent return of stability to the bond market has been reassuring investors after a sudden spike in long-term interest rates over the past month prompted traders to dump tech shares, which started to look expensive after months of gigantic gains.

Up until this week, bond yields have been steadily climbing higher as investors made big bets that trillions of dollars of coming government stimulus will result in strong economic growth later this year and potentially some amount of inflation. As of Thursday morning, the yield on the 10-year Treasury note was 1.53%, roughly where it has been all week. That yield struck the psychologically important 1.60% mark late last week.

The House approved thesweeping pandemic relief packageover Republican opposition on Wednesday, sending it to President Joe Biden to be signed into law. The package would provide $1,400 checks for most Americans and direct billions of dollars to schools, state and local governments, and businesses.

General Electric fell 7%, after falling sharply the day before. The industrial titan announced it would wind down its GE Capital business and merge its jet leasing business with Irelands AerCap. GE is in the midst of a multi-year turnaround plan, but investors have been concerned GE has been selling off too many of its more profitable assets.

The biggest IPO in years is rolling out Thursday on the New York Stock Exchange where Coupang, the South Korean equivalent of Amazon in the U.S., or Alibaba in China, will begin trading under the ticker CPNG. Its actually the largest initial public offering from an Asian company since Alibaba went public about seven years ago. And its the biggest in the U.S. since Uber raised more than $8 billion in 2019.

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US stocks move higher with help from Big Tech companies - WBRZ

Jackie Niam | Getty Images

Last week, Arizona's House of Representatives approved legislation to prohibit platform owners like Apple and Google from locking app makers into their own payment systems. The bill passed only narrowly, and it must be approved by the Arizona Senate and Gov. Doug Ducey before it can become law. But regardless of the bill's ultimate fate, the vote is the latest sign of a dramatic shift in public attitudes toward Silicon Valley's most powerful companies.

For the first two decades of the Internet era, there was a broad consensus that politicians shouldn't tie Silicon Valley companies down with burdensome rules and regulations. Companies like Apple, Amazon, Google, and Uber were widely admired. In 2007, presidential candidates from both parties made pilgrimages to associate themselves with Google. In 2015, Jeb Bush, Ted Cruz, and other Republican hopefuls tripped over each other to position themselves as the most Uber-friendly candidate.

But all that is changing. Products like YouTube, the iPhone, and ride-hailing apps have become banal parts of modern life. The companies behind them are widely considered entrenched incumbents. And so the public and their elected representatives increasingly treat them like other big, powerful companies. Politicians score points by railing against them. Proposals to rein them in sometimes poll well.

The next few years are going to be particularly challenging for companies like Apple, Google, Facebook, and Uber because they are global companies. They not only have to worry about antitrust lawsuits by the US federal government, they also face heavy scrutiny from US states and from foreign governments around the world. For the tech giants, there's a danger that a policy experiment in one jurisdiction could become a precedent that's copied around the world.

Back in 2016, the city of Austin, Texas, wanted Uber and Lyft to fingerprint driversa rule that already applied to regular taxi drivers in the city. The idea was approved by 56 percent of the city's voters. Uber and Lyft responded by going nuclearshutting down their Austin operations until the city changed its rules.

Austin officials argued they were simply requiring Uber and Lyft to play by the same rules as other taxi providers. But many members of the public, especially customers of the services, bought into a different narrative: that Austin officials were out of touch and hostile to modern technology. Having a significant part of the public behind them gave Uber and Lyft a lot of powerpower Uber and Lyft ultimately used to get the state legislature to override Austin's rules.

This wasn't a one-off victory. It's a playbook the companies used over and over again in their early years. Uber and Lyft would frequently swoop into a new metropolitan area without worrying too much about local taxi regulations. Spending millions in venture capital, they'd try to build up a customer base as quickly as possible. City officials feared a backlash from these customers, and they didn't want to be seen as standing in the way of progress. So they almost always relented.

This strategy has become less effective in recent years. Partly that's because activists have generated more negative press for these firms. Once the gusher of venture-funded subsidies dried up, driving for Uber or Lyft proved to be a low-paying and precarious gig. Critics have also highlighted the problem of sexual assaults occurring in Uber and Lyft vehiclesalthough it's not clear if Uber and Lyft have a bigger problem here than traditional taxis.

But perhaps the most important shift is that Uber and Lyft are no longer seen as underdogs. In the early 2010s, these companies' survival still seemed like an open question. Customers worried that incumbent taxi companies would use antiquated regulations to smother them in the cradle. So when Uber and Lyft argued that a particular regulation could force them to leave a city or state, customers believed them, and some lobbied their elected officials to back off.

As a result, the companies are finding it more and more difficult to beat back efforts to regulate their business practices. In 2019, California passed legislation requiring Uber and Lyft to treat their drivers as employees. As they've done in the past, Uber and Lyft threatened to shut down their services if voters didn't overturn the law. Voters ultimately approved a ballot measure sponsored by Uber and Lyft. But Uber and Lyft were forced to make some tactical concessions; the voter-approved measures offered gig-economy drivers some added protections.

And things are going even worse for Uber outside the United States. Last month the Supreme Court of the United Kingdom ruled that Uber can't treat its drivers like independent contractors. Courts in France and Spain have reached similar conclusionsthough Uber seems to still be resisting a switch to an employee model in France.

Last year, Massachusetts filed a lawsuit against Uber and Lyft arguing that their drivers are employees under state law. A class-action lawsuit in Ontario makes a similar claim.

In each of these jurisdictions, a key Uber argument is that enforcing traditional labor law will break Uber's on-demand business model. That argument is hard to evaluate, since Uber has mostly been successful in defeating these efforts. But Uber will very likely need to change how it does business in the UK, France, Spain, and probably other jurisdictions in the coming years.

If Uber manages to come up with a viable model that treats drivers as employees, it will face pressure to adopt the same model in other cities. Though, of course, the opposite is also possible: maybe a switch to an employee-based model will make Uber's service dramatically worse in places like France and Spain, strengthening Uber's case in future battles.

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Why Big Tech is facing regulatory threats from Australia to Arizona - Ars Technica

Mark my words: Change is coming. Laws are coming. That was the warning David Cicilline (D-RI) the House Judiciary Antitrust, Commercial, and Administrative Law Subcommittee Chairman gave on February 25th at the first in a series of hearings following the Subcommittees 16-month probe into Big Techs gatekeeping power. This one, titled Reviving Competition, Part 1: Proposals to Address Gatekeeper Power and Lower Barriers to Entry Online, focused on three proposed reforms: interoperability and data portability requirements, nondiscrimination rules, and structural separation. The majority of the hearing witnesses, ranging from the CEO of Mapbox to the Director the Competition Advocacy Program at the Global Antitrust Institute, were clear supporters for these proposed reforms. While none are new ideas, each, if passed, would be a significant sea change in competition law.

Interoperability and Data Portability

Imposing interoperability and data portability is not a new idea. It already permeates our technological world. For example, telecommunications would not be possible without one users carrier networks interconnecting with other carrier networks. The Subcommittees proposal is to impose interoperability and data portability requirements. Applied to Big Tech, interoperability and data portability would require dominant platforms to make their services compatible with other networks, and make content and information portable between them. Snap Inc.s 2019 Annual Report illustrates this concern: [T]he vast majority of our computing [runs] on Google Cloud and AWS, and our systems are not fully redundant on the two platforms. Any transition of the cloud services currently provided by either Google Cloud or AWS to the other platform or to another cloud provider would be difficult to implement and will cause us to incur significant time and expense. Witnesses testified that interoperability requirements should be tailored, requiring technical detail and frequent updates to address changing technology. There was also some support from witnesses for Congress to give an agency rulemaking authority to oversee interoperability for gatekeeping platforms. Congress may like the idea of interoperability, but implementation is another question. What will count as a gatekeeping platform? How much interoperability will be required? How will any such requirements balance a need for access without deflating the incentive to create market-changing platforms in the first place?

Nondiscrimination Requirements

The nondiscrimination requirements proposed by the Subcommittee are two-fold. First, dominant platforms would be prohibited from engaging in self-dealing. Second, dominant platforms would be required to offer equal terms for products and services that are equal. Apple, for example, can give preference to its owns apps in an app store that it also runs, to the detriment of third-party offerings. Nondiscrimination requirements is not a new idea either. They play important roles in facilitating transportation and communications. For example, the Federal Communications Commissions Open Internet Order implemented nondiscrimination principles in prohibiting internet service providers from blocking or discriminating between lawful content on the internet. Advocates of a nondiscrimination regime also support a tribunal to police discrimination, which could require a recidivist discriminator to sell off a content arm of its business, and a private right of action to victims discriminated against by dominate platforms.

Structural Separation

Structural separation would prohibit certain dominant platforms from operating in an adjacent line of business. In other words, one could not be both a platform and own the content on the platform. By mandating separation, the idea is to remove perceived conflicts of interest between platforms competing with those that depend on them for access to customers. The Subcommittee also discussed using structural separation to introduce competition where a dominate platforms could both lock in users and keep competition out by tying products and service. Structural separation has also been imposed to restore competition in the past, namely in the railroad industry, under the Bank Holding Company Act of 1956, and with the breakup of AT&Ts Bell System.

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As one witness pointed out, [t]his is not the first time that Americans have heard proposals to apply the existing antitrust laws or extend them to limit or reduce perceived excessive concentrations of economic power. Political realities are in play just as much as legal ones. Without harnessing some bipartisan support, antitrust reform is unlikely as long as the legislative filibuster remains. Interest in antitrust reform is undoubtedly on the rise, but only time will tell if we are at the dawn of a new era, or just at high noon in the constant cycle of antitrust enforcement.

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The House Judiciary Committee Takes on Big Tech - JD Supra