Oct 13, 2021 • 10M

🗞️ Is Big Tobacco scrutiny headed for Facebook?

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This week: Facebook’s problems are not getting any smaller and China takes a major antitrust action. Plus, Epic and Apple have a new chapter in their court battle.

🚧 The long path waiting for the lawmakers who want Facebook reform

To experts viewing Facebook’s response to its latest crises, a certain comparison comes to mind, and it’s not a pretty one.

“Facebook and Big Tech are facing a Big Tobacco moment,” Sen. Richard Blumenthal said, according to the NYT.

  • People think it’s an apt comparison for many reasons: As The Verge points out, Facebook has tried discrediting whistleblower Frances Haugen, who released documents leading to much of the new info on Facebook, without refuting her key points. Tobacco company Brown and Williamson did the same thing to a whistleblower in the early days of the crusade against tobacco. 

  • Zuckerberg has also disappeared: As his company reels, he has made few attempts at correcting the record.  

What a Big Tobacco path means for reform 

When politicians quickly jumped on Big Tobacco decades ago, change didn’t happen all at once. It took 10 years before any meaningful regulations took hold. 

  • Similarly, new rules and regulations may come for Facebook but they will likely be piece by piece and unlikely to satisfy all the company’s many critics.     

The Verdict

The most likely changes for Facebook or other Big Tech companies include proposals from lawmakers to regulate advertising more closely, strengthen child privacy laws and to rethink antitrust laws to make tech companies more vulnerable. Again, don’t expect anything soon.

The next chapter of Epic v. Apple 

Apple is appealing the judge’s decision in its recent case against Epic, the well-known video game maker.

  • Wait, didn’t Apple kind of win this lawsuit?: Yes. To some extent. The judge ruled Apple was not a monopoly. The company even said the September verdict was a “resounding victory.” But now it’s going for what CNBC describes as “total victory.”  

  • Apple wasn’t happy with the ruling on “steering”: The judge ordered Apple to stop prohibiting app developers from steering users to other forms of payment outside the app store. Apple was supposed to end this prohibition ASAP and as part of the appeal is seeking a stay.

Epic will probably appeal, too

It really did come out on the losing end in this lawsuit and has said it plans an appeal. And you know what means…this lawsuit could go on forever, if the appeals are granted.

The Verdict

The longer the lawsuit continues, the longer Apple can hang onto the status quo for its app store.

🇨🇳 China files new antitrust action against a top food delivery company

Say this for Chinese antitrust officials: They are staying even busier than those in America.  

  • The latest action is against Meituan: Meituan is a giant food delivery company, similar to if you combined Instacart and DoorDash and just about every other delivery company out there, not to mention Groupon and Trip Advisor. Its valuation when it filed for an IPO was $60 billion, and it has more than half a billion users. Companies this large have had major trouble lately from the Chinese government. 

  • China announced a fine of $530 million against Meituan: It’s the second massive antitrust fine against a tech company this year, following the $2.8 billion fine against Alibaba. China punished another tech company, Didi, by pulling it from app stores. 

China sees the same problems in major tech companies as the U.S.

But unlike the U.S., as the NYT points out, it can act swiftly. There’s no need for lawmakers to pass legislation or for something like the DOJ to win a lawsuit. Its centralized government can operate with greater authority. 

  • Companies and analysts in China believe that the government isn’t just looking out for consumers either. They say China may not want to risk having private entities gain too much power and wants to reel them in closer to the government.  

The Verdict

Further government actions seem likely against Chinese tech companies.

💌 What else we're forwarding

What it's like behind the scenes inside the Elizabeth Holmes trial: Sure, it seems the Holmes trial would be fascinating, but almost everyone there has been getting bored by all the technical details.  

Are lawyers going back to business travel yet?: About one-third of law firm partners have resumed business travel, according to Above The Law. The share of GCs doing the same is much smaller, at about 18%.

🎧 Music we’re working to

Today we’re listening to Metro Area, a house music duo hailing from Brooklyn. In the early aughts, the duo released a string of EPs that received heavy rotation in NY clubs. 2002 saw the release of their self-titled debut LP. There’s also some great live instrumentation that’s sampled and looped deftly across the tracks and the album received numerous accolades upon its release, including being named as one of the best albums of the decade by Resident Advisor.

Metro Area - Metro Area (70m)
Spotify / Apple Music / YouTube Music / Amazon Music

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✌🏽 Raad