🗞️ Amazon's Expedited Settlement, Spirit's Dealmaking, & The Union Boom
This Week: Amazon tries to get ahead of regulations, the Spirit Airlines deal shifts once again, and yes, there really is an uptick in unions. Plus, Russia's war games, regulators get interested in loot boxes, and Subway's tuna tales.
Just as we told you Google did last week, Amazon is now trying to settle a case with third-party vendors on its site in what appears to be an attempt to diffuse bigger antitrust cases down the road. According to The Verge, the EU opened an antitrust investigation into the e-commerce titan back in 2019 for “abusing its dual-position as both marketplace operator and retailer; using the sales data it collects from smaller vendors to outmaneuver them.” Now, Amazon is offering concessions both to the EU and third-party sellers that includes “refraining” from using non-public data from these independent sellers and adding a second “Buy Box” to product listings.
The EU has stated that Amazon's buy box feature “unduly favor[s] Amazon’s own retail business, as well as marketplace sellers that use Amazon’s logistics and delivery services,” notes TechCrunch, adding that the feature “may harm other marketplace sellers, their independent carriers, other marketplaces, as well as consumers that may not get to view the best deals.”
As The Verge explained, the second buy box will “apply equal treatment to all sellers when ranking their offers for the purposes of the selection of the winner of the Buy Box” rather than preferring the Amazon version of the product, and will add a second Buy Box for products that are “sufficiently differentiated from the first one on price and/or delivery.”
If these concessions are accepted, they will take effect throughout the EU (except in Italy) and will last for 5 years, helping the online retailer avoid billions in fines. So why not in Italy? Well, the country is pursuing its own case against Amazon around these same issues.
The EU recently passed the Digital Markets Act (or DMA for short) — which is due to go into effect in 2024 — and will require Amazon (and other Big Tech firms) to change their data behaviors, including the changes it is implementing now. However, Amazon has expressed concerns over the DMA, stating that it is “unfairly targeting Amazon and a few other U.S. companies,” but that “we have engaged constructively with the Commission to address their concerns and preserve our ability to serve European customers and the more than 185,000 European small and medium-sized businesses selling through our stores.”
The optics are great here for Amazon: start preparing for future EU regulations today, then claim you're making concessions for independent sellers, all while (potentially) avoiding hefty fines. It's yet to be seen what other data tricks Amazon has up its sleeve to maximize profits.
🎧 What We’re Listening To
This week we’re listening to a very special episode of our podcast. In our debut episode, we’re kicking things off with someone who many refer to as the “legal meme lord” himself, Alex Su, Head of Community Development at Ironclad. Our Head of Community, Matt Margolis chats over cringe posting, meme-making, and any and all things going viral with him.
Going Viral with Alex Su - EP. 1, Not Billable
It's been a tale of will-they-or-wont-they for months as rival budget airlines Frontier and JetBlue bid for the purchase of a third budget airline: Spirit. The bidding war has meant delayed shareholder votes and shifting timelines, but now, an end could be in sight. Institutional Shareholder Services (or ISS), a shareholder advisory firm, recently changed its recommendation in favor of the JetBlue bid rather than the Frontier bid. Prior, ISS believed that JetBlue's bid, though larger, would be rejected by federal regulators, and thus supported the Frontier bid.
Now, however, The New York Times says that “after taking into account the potential effect of a regulatory delay, ISS estimated that JetBlue’s offer was still worth 11.5 percent to 19 percent more than Frontier’s.”
“We remain confident that Spirit shareholders continue to overwhelmingly recognize the clear superiority of our proposal,” JetBlue said in a statement last week, notes CNBC.
Spirit shareholders will vote on the bid on July 27.
A Slow Recovery
This battle over discount airlines plays against a backdrop of an industry still very much recovering from two years of a pandemic, high fuel prices, and a worker shortage. “Come the fall, the impact of cost inflation on consumers’ and corporate travelers’ discretionary income and budgets could lead to softening aggregate demand for air travel,” a Moody's analyst said in June, reports CNBC. “However, the current capacity constraints would protect the airlines from having too much capacity, should this occur.” Meanwhile, this year's July 4th weekend, one of the busiest travel periods of the year, saw pilot and steward shortages, and a slew of increased flight cancelations. “While we have over 95% of the employees needed to fully restore capacity, we have thousands in some phase of hiring and training process,” Delta's CEO recently said on a quarterly earnings call.
It seems like ISS is telling Spirit shareholders two interesting things here: first, to not worry about the DOJ and antitrust regulations. The second is that the whole industry is in a slow recovery, so maybe the wait isn't such a terrible thing after all.
🤓 We’re (Officially!) Not Billable
In case you haven’t noticed, we’ve got a new name. We’ve morphed Forward GC into something even better. It's your hub for all things legal: weekly news updates, event replays, podcast episodes, and curated content, created specifically for you. That is our community of 3600+ general counsels, attorneys, legal ops pros, paralegals, contract managers, legal influencers, and anyone who loves great legal content.
So, stop the clock. Put the timesheet down. And get ready, because this is Not Billable.
Oh, and while you’re at it … why not share with a friend?
You're not imagining things: unionizing efforts across the country are indeed increasing. For the first nine months of the fiscal year, union petition filings have increased 56% over the number of filings for the entirety of FY2021 — hitting 1,935 petitions, already 695 more than last year's total. And it's not just unionizing efforts on the rise, notes the National Labor Relations Board, but charges of unfair labor practices as well. For FY2022 so far, “unfair labor practice charges have increased 14.5% — from 11,451 to 13,106,” the NLRB's statement reads.
But the board is struggling to keep up with this influx, following budget cuts to the agency resulting in the lowest staffing levels since the 1960s. “Our dedicated staff, especially in our 48 field offices, are handling unsustainable caseloads. The Agency urgently needs more resources to process petitions and conduct elections, investigate unfair labor practice charges, and obtain full remedies for workers whose labor rights have been violated,” said NLRB General Counsel Jennifer Abruzzo. “We need Congress to help us restore the capacity that we have lost after years of underfunding.”
As The Hill notes, even with this unionizing uptick, union membership among the American workforce is just about half of what it was back in the early 1980s— 10.3% of the workforce in 2021, versus 20% in 1983.
The Starbucks Count
“Some of what’s in this count is a large number of relatively small workplaces,” Rebecca Givan, professor of labor studies at Rutgers University, explained to Marketplace. “A Starbucks coffee shop with maybe 20 workers and an Amazon warehouse with 6,000 workers. Each of those is just one election.” Of this year's nearly 2,000 union petition filings so far this year, the ones from Starbucks account for about 16%. And with each Starbucks union win, more and more of their employees are thinking of joining in.
It's wild to note how much Starbucks employees account for the uptick in unionizing efforts, but it’s a great trend to see that workers around the country are fighting to take back some control and power.
📤 What Else We're Forwarding
War Games: Russian disinformation campaigns have evolved online over the past few months, but social media platforms like YouTube and Twitter have failed to keep up, writes the Washington Post. As Ukrainian officials continue to flag Russian propaganda and anti-Ukrainian hate speech, Big Tech has been slower and slower to respond.
Loot Gamble: Do loot boxes (elusive prize giveaways inside video games) promote gambling among minors? TechCrunch reports that government regulators in the US and Europe are increasingly concerned with these “surprise mechanics” within games.
Looney Tuna: Subway's tuna troubles continue to make headlines as a federal judge recently ruled that the company can be sued for misleading claims about its sandwich ingredients. US District Judge Jon Tigar said “these allegations refer to ingredients that a reasonable consumer would not reasonably expect to find in a tuna product,” according to Reuters.
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See ya next week!