The Saturday - 6/12/21 Edition
Volume 2, Issue 22
Morning!
I need to start with a mea culpa. When you’re younger, everything feels bigger and faster. Every house is a mansion and, apparently, every supersonic jet is an übersonic jet.
Last week, I claimed that the Concorde could fly from New York to London in 53 minutes. Turns out that I forgot to add 2 hours. It was a 2 hour and 53 minute flight.
That was only off by 200%… close enough right? I guess the Concorde wasn’t as cool - or fast - as I remembered it to be.
Thanks to the near-dozen readers who flagged the discrepancy. Keeping me honest!
It’s Saturday June 12, 2021.
Break Ups
According to a Wall Street Journal report published on Friday morning, the House of Representatives is expected to announce a bipartisan bill that would seek to break-up big tech platforms:
Called the “Ending Platform Monopolies Act,” a draft of the proposed structural separation bill reviewed by the Journal says: “It shall be unlawful for a covered platform operator to own or control a line of business, other than the covered platform, when the covered platform’s ownership or control of that line of business gives rise to an irreconcilable conflict of interest.” That language could change in the bill’s final draft.
In case the targets aren’t clear and obvious, here’s CNBC:
This bill would make it unlawful for a platform with at least 500,000 monthly active U.S. users and a market cap over $600 billion to own or operate a business that presents a clear conflict of interest.
As of Thursday evening, only seven US-listed companies had a market cap greater than $600B: Apple, Microsoft, Google, Amazon, Facebook, Tencent, and Berkshire Hathaway.
While final copies of the bill have yet to be circulated and there are no guarantees that it will pass in its current form (if at all), the reported bipartisan support and narrow scope suggest that it has a fighting chance to make it into law.
The activities targeted have long been controversial; in addition to Congressional criticism, marketplace conflicts of interest were at the heart of the EU’s charges against Amazon, which we discussed last November. Regardless of one’s thoughts on government intervention in free markets, most will agree that defending Amazon’s right to rip-off smaller vendors’ products is not a political winner.
With that being said, mom and pops wouldn’t be the only winners. Other large companies, such as Spotify, would also stand to benefit, as Apple’s ability to favor Apple Music over rival streaming services could be impacted.
Before getting too worried about Big Tech’s outlook, it’s worth noting that after Standard Oil’s forced break-up in 1911, John D. Rockefeller’s wealth increased significantly, even prompting Teddy Roosevelt to quip: "No wonder that Wall Street's prayer now is: 'Oh Merciful Providence, give us another dissolution.'" Big Tech shareholders might be harmed by break-ups, but that’s not a certainty.
This bill is one of five purportedly aimed at Big Tech, with others revolving mostly around data and privacy concerns. Much like the EU shared concerns about platforms’ conflicts of interest, it also shares privacy concerns; on Thursday, reports circulated that Luxembourg’s data-protection commission would fine Amazon $425M for violations of the EU’s General Data Protection Regulation (“GDPR”).
Amazon shareholders didn’t seem to care; the stock finished the week up 4%.
Bitcoin Stuff
It’s been a tough few months for the OG cryptocurrency. Since April 13 - and barring a sudden swing in the hours between when this post was completed and when it mails out - Bitcoin is down 41%. That’s worse than pretty much every other non-crypto asset over the same period.
As a still relatively nascent asset class, crypto remains fairly speculative and narrative-driven. I won’t pretend to know the reason behind its every move, but the narratives have been overwhelmingly negative as of late: environmental concerns, the end of Tesla’s “buy with Bitcoin” program, and the currency use by the Colonial hackers and other cybercriminals.
Although its price continues to hover around yearly lows, this week finally brought some more positive news for Bitcoin:
Institutional Services: efforts to bring Bitcoin into the mainstream remain underway and have taken an important step forward, with State Street launching a new division focused on digital finance.
State Street is one of the world’s largest investment services and management firms, with $40T in assets under custody or administration and $3.6T in assets under management. State Street Digital, which will initially consist of 425 professionals, will provide a variety of the custodial and administrative services that large institutional clients and asset managers need to invest in a given asset class.
This is in addition to the crypto ETF that State Street hopes to launch and is still pending SEC approvalRetirement Accounts: for the first time, workers will now be able to allocate a portion of their retirement accounts to cryptocurrencies. ForUsAll Inc. is a 401(k) provider that recently announced the launch of a new partnership with Coinbase that will “allow workers in plans it administers to invest up to 5% of their 401(k) contributions in bitcoin, ether, litecoin, and others.”
As a standalone event, this isn’t a huge deal - ForUsAll accounts for only $1.7B of the $22T retirement account market - but it does signal another important step in adoption of cryptocurrencies among more traditional investment circles.PSEUDO-anonymity: Last month, we covered the now infamous hack of the Colonial Pipeline, which led to gasoline shortages across the Northeast. As some will recall, Colonial ended up paying a 75 Bitcoin ransom (~$5M). On Monday, the FBI announced that it had recovered 63.7 Bitcoins.
Hackers tend to like using cryptocurrency for two reasons: (i) as a digital good, it’s much easier to take possession, handle, and move around, and (ii) cryptowallets are anonymous. After receiving a ransom, hackers can supply these coins to pools to effectively launder them; they put in X number of coins and take X back out, but they aren’t the same coins.
With this announcement, the FBI sends a clear signal that it has the ability to filter millions of transactions, to trace anonymous wallets’ activities, and seize ill-gotten proceeds.
To those who value cryptocurrencies’ anonymity and view it as an asset outside of government’s reach, that’s not great news.
With ransomware becoming a larger issue however - last week JBS SA, the world’s largest meat processing company, was effectively shut down by hackers and had to pay an $11M ransom (in Bitcoin) - the ability to partially curtail crime will be welcome news for most.
Unfortunately for Colonial, the price of Bitcoin has collapsed since the hack, so despite recovering 85% of the Bitcoin, they will recover less than half the value paid.
Cheat Sheet
I'm always confusing the names of various ominous organizations so I made a handy chart to keep track
Alzheimer’s
This week was - arguably - a big week for Alzheimer’s research.
On Monday, for the first time in nearly 20 years, the FDA (conditionally) approved a new treatment for the disease that currently plagues over 6 million Americans - a figure that is expected to more than double, to 13 million, by 2050.
To state the obvious, of all the reasons why anyone should care about an Alzheimer’s treatment, financial windfalls don’t register anywhere near the top 100. Because The Saturday is in the business of writing about this stuff, however, let’s take a deeper look.
The new medicine, Aduhelm, was developed by Biogen. While the treatment isn’t expected to cure Alzheimer’s or to reverse its progression, it is expected* to slow cognitive decline at an annual cost of $56,000. This, of course, means billions of dollars of revenues for Biogen.
When the news was announced on Tuesday, Biogen stock rose as much as 60%. While that kind of jump is never negligible, it is all the more impressive when we are talking about a company that already had a $43B market cap. That’s a $25B jump in value!
*Unfortunately, it appears that scientists aren’t fully settled on Aduhelm’s effectiveness. Since the announcement, three experts from the FDA’s advisory panel resigned, with one calling the approval “probably the worst drug approval decision in recent U.S. history.”
In their opinion - which is infinitely more qualified than mine - there is no evidence whatsoever that the drug can achieve its stated goals. Although I can’t opine on the question, it is interesting to note that Aduhelm was deemed a failure by Biogen itself, only two short years ago.
Still, I think this is mostly good news? While I’m sure that degenerative diseases and viruses have nothing in common, the coronavirus pandemic proved that we could turn new medicine in short order, so I choose to be optimistic. Perhaps scientific progress is accelerating.
If anyone cares, the resignations didn’t chill Wall Street’s enthusiasm for Biogen. The company finished the week up 34%.
Have a great weekend!
The Saturday - 6/5/21 Edition
Volume 2, Issue 21
Good morning!
Last week, a House committee launched an investigation into a few online lenders who (allegedly) processed hundreds of PPP loans to fake, single-person businesses.
There are few more odious crimes than financial fraud; these bad acts breed distrust in capitalism and robs innocent victims of their hard earned money. It’s awful.
But if you’re going to commit fraud… make it pun-y? From ProPublica:
All of these loans to nonexistent businesses came through Kabbage, an online lending platform that processed nearly 300,000 PPP loans before the first round of funds ran out in August 2020, second only to Bank of America. […]
The overwhelming majority of [fake businesses were] categorized as farms.
That was intentional, right?
Did the criminals find a flaw in Kabbage’s system and then decide that farms would make funny fake businesses?
Personally, I prefer the alternative theory: the criminals first settled on creating fake farms and then found the lender with the most farm-adjacent name to defraud.
These are the existential questions I ponder in my spare time. High IQ stuff.
It’s a miracle I can tie my own shoes.
It’s Saturday June 5, 2021.
Words Matter
On Thursday, the Federal Reserve announced that it would begin selling off the $14.2B in corporate bonds and short-term debt ETF holdings that it amassed in the Secondary Market Corporate Credit Facility set up in March 2020.
Overall, that’s small potatoes; the SMCCF facility is separate from the Fed’s main debt and mortgage-backed securities holding, which now exceed $7.3T. To this day, the Fed continues to purchase $120B per month in these debt instruments, so offloading a $14B position is hardly a blip on the radar.
Here’s a fun fact though: the SMCCF and its fellow program, the Primary Market Corporate Credit Facility (PMCCF), were setup around the same time to provide bond market liquidity at the height of the pandemic. Together, the SMCCF and PMCCF were to purchase $750B worth of debt. In the end, they deployed a combined… $14.2B.
Despite less than two percent of their funds being put to work - $0 were drawn from the PMCCF - the facilities’ mere existence helped buoy debt markets.
Words occasionally speak just as loudly as actions.
So, You’re Saying There’s A Chance?
In 2003, Concordes - the Anglo-French supersonic commercial turbojets that could fly from New York to London in 2 hours and 53 minutes - were retired due to their high maintenance costs and to safety and noise concerns. Since then, air travel has been… slower.
I, for one, am surprised that supersonic travel hasn’t made a comeback yet. Flying isn’t a particularly pleasant experience, so you would figure that some people would pay a pretty penny to cut down their flight times by 80%. Apparently, it’s difficult to build supersonic aircraft that are safe, quiet, and inexpensive.
In fact, just last month, Boeing-backed Aerion Corp. shut down after being unable to continue raising money to produce a supersonic jet. But not all hope is lost!
On Thursday, United Airlines announced that it had pre-ordered 15 supersonic jets that are currently being developed by Boom Technology Inc.
While the full-size 88 passenger version isn’t expected to be delivered until the end of this decade, Boom does intend to deliver a smaller, prototype version by early next year and, in keeping with industry practice, United’s deposit is non-refundable. That’s real progress and commitment!
From the WSJ:
Boom said its Overture jet would be capable of flying at Mach 1.7, or 1.7 times the speed of sound. That could allow the planned jet to reduce the flight time between London and United’s hub in Newark, N.J., to 3½ hours from over six hours, and cut the journey from San Francisco to Tokyo to six hours from over 10 hours.
Not quite the Concorde, but still… that’s some jaw-breaking speed for United!
Double Whammy
Another week, another SoftBank story: on Tuesday, reports revealed that proptech unicorn Katerra had imploded and would be shutting down.
This is a big failure, even by SoftBank standards.
Katerra aimed to revolutionize the construction industry by leveraging technology to make off-site, modular building the norm. In short, the company would build multi-family residences in their factory and deliver them (nearly) turn-key to their forever-lot.
“Lennar meets DoorDash” is how I imagine SoftBank thinking about it.
Despite other construction unicorns finding great success recently - such as Procore Technologies, who’s IPO we touched on a few weeks ago - Katerra wasn’t as fortunate.
Unlike Procore - that is a true technology company providing cloud-based construction-management software - Katerra looked more like a traditional pre-fab builder with a bit of tech. Case in point, the defunct company blamed rising materials and labor costs as the reason of its demise. Those are hardly tech problems.
Still, SoftBank were believers: Masayoshi Son’s firm sunk $2.2B into the company, including $200M as recently as December 2020. This is only part of SoftBank’s problems, however.
Beyond the mutli-billion venture investments, Katerra had also taken out over $400M in trade finance loans from another SoftBank fallen angel: Greensill Capital. As we discussed in March, Greensill is currently accused of running a massive, multi-billion dollar scheme where it made and sold loans backed by non-existent contracts.
In this particular case, SoftBank-controlled Greensill lent $440M to SoftBank-controlled Katerra and then sold the entire loan to Credit Suisse. By most accounts, both Greensill and Katerra were on the verge of insolvency when these deals were made, but SoftBank made capital infusions in the companies to prop them up.
On Tuesday, shortly after Katerra announced it was shutting down, FT reported that Credit Suisse is preparing for litigation against SoftBank.
Some problems just won’t go away…
Bill Ackman and the SPAC That Isn’t
Last year, Bill Ackman’s Pershing Square Tontine Holdings (PSTH) became the biggest SPAC ever when it raised $4B.
Since then, PSTH has been the subject of endless speculation, as Wall Streeters, Redditors, and everyone in between tried to guess its target. The size of the SPAC and disclosures in its S-1 suggested that Ackman would target a large, mature unicorn, but that’s about all we knew.
Airbnb was an early rumored target, but the company ended up doing a traditional IPO. Stripe was Reddit’s most popular guess, but as we discussed in March, the payments provider raised $600M in a private round instead. Bloomberg and Fidelity were other popular guesses, but neither materialized.
On Thursday, we (sort of) got the answer: PSTH announced that it was in advanced talks to acquire a 10% stake in Universal Music Group, in a deal that would value UMG at $42B.
Focusing first on the target, this is a big deal. UMG, a subsidiary of the French publicly-traded conglomerate Vivendi, is the world’s largest music business. Its stable includes Taylor Swift and Billie Eilish and the company also owns the Beatles’ recordings and Bob Dylan’s entire publishing catalog. Big stuff.
Still, $42B seems rich.
Streaming currently accounts for over 80% of the music industry’s revenues, so it’s in musicians’ best interests to be on as many platforms as possible. And unlike film actors and directors - whose product is extremely resource intensive - musicians have a greater ability to produce and distribute their own content and are less reliant on big production houses and their exclusivity deals.
That’s my take at least.
I know nothing about either industry, but I don’t think music streaming is as susceptible to fragmentation as video streaming, which I think makes it a more resilient business model. And the more powerful the music streaming companies, the less powerful the music production and distribution companies.
No one can take UMG’s catalog away, but will it outgrow Spotify? In my unqualified opinion - which is absolutely not investment advice - the answer is no. Yet this deal values UMG ($42B) almost the same as Spotify ($44B market cap). Take that as you will…
To The Saturday readers in the music and film industries: I welcome your feedback. Ackman’s exponentially richer than I am and the Chinese conglomerate Tencent also recently bought a 20% stake in UMG, so I’m probably wrong.
Anyways, the bigger story here lies in the structure of the transaction.
As is now well documented, SPACs are shell entities that raise money from the public with a mandate to identify a promising private company and merge with it, thereby making it publicly-traded overnight. And if the SPAC can’t close a deal within two years, it has to give investors their money back.
PSTH’s launch, at the height of #HotSPACSummer, captured the imagination of investors small and large, and for good reason: a celebrity sponsor, armed with the largest blank-check ever, was on the prowl for the deal of the century. Bill Ackman’s SPAC was going to set the new standard for SPACs.
In the end, however, PSTH effectively stopped being a SPAC.
For starters, PSTH isn’t helping any company go public. Vivendi, UMG’s parent company, was already planning to spin-off the music group into its own publicly-traded company. This plan remains in effect and PSTH is only securing a stake in the to-be-listed company before it officially hits the public markets.
So while shares of SPACs essentially “convert” into shares of the target once the deal closes, PSTH shares aren’t converting into anything. Once Vivendi completes UMG’s spin-off, PSTH shareholders will simply receive an “in-kind dividend.” I.E. shares of UMG, to go along with their surviving shares of PSTH.
Which brings us to another nuance.
SPACs typically invest all their funds into the target company, but not PSTH. If and when the UMG deal closes, Ackman’s SPAC will still have $1.5B on hand and it intends to use this cash towards a second deal. Maybe that one will look more like a traditional SPAC merger? Who knows?
What we do know, however, is that Ackman won’t be in a rush: despite not being a true SPAC merger, the UMG deal qualifies as an “initial business combination”, which stops the 2-year SPAC clock from ticking. PSTH now has infinity years to close deal #2.
Finally, Ackman added an additional sweetener: current PSTH shareholders will also receive rights to invest in a new Pershing Square SPARC. Yes, Ackman is launching a SPAC-variant called a “Special Acquisition Rights Company,” which aims to raise $10.5B for a third deal.
So there you have it.
One way to look at this deal’s complexity is as a bullish signal that the SPAC market is maturing. Another way to look at it, however, is as a bearish indicator that appetite for SPACs is waning.
For those who have nothing better to do today and would like more in-depth details, here’s the press release filed with the SEC.
For those who prefer watching to reading, here’s Andrew Ross Sorkin doing a better job at explaining the deal:
. @BillAckman's blank check company $PSTH confirms it is in talks to buy 10% of Universal Music Group
-Deal would value Universal Music Group at $42.4B
@andrewrsorkin @BeckyQuick & @JoeSquawk discuss the unique structure of this potential deal:
Alright. Enough. We are way past our weekend SPAC quota.
I’ll shut up.
Have a great weekend!
The Saturday - 5/29/2021 Edition
Volume 2, Issue 20
Good morning!
After an abridged version last week, we’re back with a full edition. Let’s get right into it.
It’s Saturday May 29, 2021.
Chutzpah
When we first discussed Amazon’s antitrust woes in November, the company had been accused of anti-competitive behavior by the European Commission, but its woes in America were (mostly) limited to an unflattering report from the House Judiciary Subcommittee on Antitrust.
On Tuesday, Amazon’s luck ran out, when Washington D.C.’s attorney general filed an antitrust suit against the Seattle giant.
(For those interested, the actual complaint is available here. Only thirty pages, interesting stuff.)
In short, DC’s AG took aim at the Most Favored Nations provisions that sellers must agree to in order to sell their goods on Amazon’s marketplace. Under these clauses, sellers are prohibited from selling their items cheaper anywhere - including on their own websites - than they do on Amazon.
While sellers are technically free not to transact through Bezos’ platform, the DC AG argues that this “choice” is somewhat illusory; Amazon controls 70% of all online retail sales in the US. It’s closest competitor - Walmart - has 5.3% market share.
Beyond the charge that Amazon uses its dominance to prevent sellers and other marketplaces to compete on price, however, the DC AG makes an additional, more interesting claim: that Amazon’s business practices result in higher prices to consumers.
While Jeff Bezos has long referred to his company as the “most customer-centric company in the world” and has certainly reduced shipping costs and time, the complaint argues that Amazon’s fees (ranging from 15%-40%), combined with the Most Favored Nations provisions, result in inflated prices to consumers. Sellers can avoid Amazon’s fees by selling on other websites, but they can’t lower prices and pass those savings on to consumers…
So that’s DC’s side of the story. We’ll hear counter-arguments some day, but the point of this story isn’t the antitrust suit. It’s about how Amazon responded…
The very next day after being sued for anticompetitive behavior, Amazon made an announcement:
Amazon will acquire MGM Studios for $8.45B, its second-largest acquisition since it paid $13.7B for Whole Foods in 2017 (@annierpalmer / CNBC)
cnbc.com/2021/05/26/ama…
LOL.
Rolling up MGM’s 4,000 films and 17,000 TV shows into Amazon Video is one way to respond to an antitrust suit! You have to respect it.
Now all that’s left is for Amazon to buy America’s second favorite meme stock - movie theater chain AMC - to complete the vertical and dominate entertainment in the same way that it dominates online retail…
Meme Stocks
OK, that last sentence was just an excuse to post this:
Divorce Finalized
Recent regulatory filings revealed the specific terms of the WeWork-Adam Neumann divorce. In exchange for walking away, Neumann received this pretty sweet package:
$200M cash payment;
$245M stock award;
Refinanced a $432M personal loan on “favorable” (i.e. presumably non-market) terms; and
Allowed to sell $578M in stock back to the company.
Not bad! You’d almost think that the guy had a stellar track record.
Alas…
Adam Neumann might not have taken WeWork to the promised land, but he managed to get himself there.
Good for him, I guess?
Green Pivot
During the first half of the 2010s, Exxon Mobil and Apple competed fiercely for the coveted title of “Most Valuable Company In The World.” The two traded the top spot a few times through 2014, when Exxon’s market cap topped out at $446B.
Things have changed.
While Apple is now worth over $2T, Exxon’s market value has dropped down to less than $250B. And while oil traded at over $100 per barrel last decade, its price is now suppressed and the push towards green energy is stronger than ever.
Exxon, however, has a different outlook.
Despite its competitors’ increasing commitments to green energy and efforts to achieve carbon neutrality, Exxon remains bullish on oil and gas. In anticipation of a rise in global demand, the company is still seeking to increase its investments in oil fields.
Although this strategy isn’t unreasonable coming from an oil company, it certainly isn’t the more popular approach and one activist investor group decided to take matters into their own hands.
Engine No 1 is an activist investor that was formed in 2020 and immediately took aim at Exxon, by buying a modest $54M stake in the company, but spending an additional $30M on efforts to gain four board seats. Their strategy was simple: get the word out, get board seats, and force management to cut emissions. Exxon, on the other hand, spent $35M to oppose the activists.
(For those into the backstory, I recommend this ~15 minute podcast.)
On Wednesday, Engine No 1’s efforts were rewarded, with two of their nominees selected to join Exxon’s board.
In isolation, Engine No 1’s victory has been overblown.
While most news outlets portrayed this battle in David vs Goliath terms - where masses of small retail investors were attempting to overthrow a big bad company’s board - it’s Wall Street who made the difference: Blackrock and Vanguard both voted for the two new directors. These are hardly underdogs - Blackrock and Vanguard manage a combined $15T and collectively own 14% of Exxon - and both had already committed to net zero initiatives. No surprises here.
In addition to this, Engine No 1 still has an uphill battle to achieve its ultimate goal: they only control two out of twelve board seats.
Still, two other events also took place on Wednesday, affecting the industry:
In the Netherlands, a court ruled that Royal Dutch Shell was partially responsible for global warming and ordered the company to halve its emissions by 2030; and
In America, shareholders of Chevron - the country’s second largest oil company, after Exxon - voted in favor of a proposal to force the company to cut carbon emissions.
Green energy activists joining America’s largest oil company’s board would have been unthinkable a decade ago. For this to happen on the same day that Europe’s largest oil company and America’s second largest oil company were ordered to cut emissions is… not nothing.
Somewhere in Ohio, John D. Rockefeller is turning in his grave. Perhaps that’s a good thing.
You Should’ve Seen Their Face!
Speaking of energy, this might be my favorite story ever.
One of the oldest tricks used by law enforcement to identify illegal cannabis grow-houses is to scour energy usage records. All those vents and heat lamps use a lot of power, so if a property consumes excessively large amounts of electricity...
It’s a tried and true method.
So it is that, earlier this week, drug warrant-wielding police officers raided a warehouse in Birmingham, UK and found… 100 bitcoin-mining computers.
Bitcoin mining’s massive energy consumption has recently gone from anecdotal to a growing issue. Two weeks ago, Elon Musk announced that Tesla would stop accepting Bitcoin over energy concerns. Then, on Wednesday (busy day for energy stories!):
Iran […] banned crypto mining for four months after a series of unplanned blackouts in cities. President Hassan Rouhani told a cabinet meeting that crypto mining was draining 2 gigawatts of electricity from Iran’s power grid each day, according to the BBC.
For those wondering, 2 gigawatts is equivalent to the power of 2.6 million horses, according to the US Department of Energy. Whatever that means.
Anyways…
The point is that the crypto industry will have to reckon with these energy issues eventually. With mining revenues exceeding $78M per day, the good news is that someone somewhere is incentivized to find a solution.
In fact, efforts are already underway.
On Tuesday, Michael Saylor - CEO of Microstrategy, the software company that is up nearly 300% in the last year after converting nearly all its cash into Bitcoin - announced the creation of the Bitcoin Mining Council, an organization committed to publishing energy usage data and addressing concerns relating to the industry’s carbon footprint.
We’ll see how that plays out.
As for our bitcoin miners in Birmingham:
“My understanding is that mining for cryptocurrency is not itself illegal, but clearly abstracting electricity from the mains supply to power it is,” Sgt. Jennifer Griffin said in a statement on Thursday.
Not quite the bust they were hoping for.
Have a great weekend!
The Saturday - 5/22/2021 Edition
Volume 2, Issue 19
Good morning,
I’m out celebrating an original subscriber’s wedding, so this will be a short one. Let’s dive right in.
It’s Saturday May 22, 2022.
Tim Cook Takes The Stand
We most recently discussed the App Store drama and the Epic Games v. Apple lawsuit at the beginning of this month.
On Friday, it was Apple CEO Tim Cook’s time to take the stand. You can read up on it here. Here’s my favorite excerpt:
During the trial, experts from Epic and Apple debated one of the odder contentious issues of the lawsuit: Who does Apple compete with on operating systems? Some argued Apple has no competitor, others said it competes with Google.
When one of Epic's lawyers asked Cook to settle the debate, and say who he believes Apple's competitors were, Cook said Apple competes against the devices Google's software enables. So he sees Samsung and others as competitors.
"So your testimony is that you do not compete against Google in operating systems?" Epic's lawyer asked.
Epic then played a video of Cook speaking at a meeting of Berkshire Hathaway shareholders in 2019, in which he gives his boiler plate speech about how Apple competes against Microsoft and Google "on the operating system side," and competes with Samsung and Huawei and other phone makers "in the hardware space."The lawyer then asked Cook if that video was him saying those words.
"Well, that certainly looked like me," Cook said. "And it sounded like me too."
Houston, We Have A Problem
Bitcoin is allegedly going to the moon, but it hit some turbulence as it exited the stratosphere.
As of noon on Friday, Bitcoin was down 28% on the week. The drop from its yearly highs started last week, when Elon Musk tweeted that Tesla would no longer accept Bitcoin as payment for its cars. On Wednesday, however, Musk also tweeted this:
Diamond hands, of course, is the term of art for “not selling.”
On Friday, China’s Vice Premier announced that the country would crackdown on Bitcoin mining and trading, which sent rebounding crypto prices back down to ~ $36,000 for Bitcoin and $2,400 for Ethereum.
It’s worth noting, however, that Bitcoin is still up 25% - and Ethereum more than 200% - since January 1st.
Gloves Off
Montreal and Toronto are currently facing off in the National Hockey League playoffs, but Canada’s biggest battle was fought off the ice this week.
Last March, Canadian Pacific Railway agreed to purchase Kansas City Southern for $25B. On Thursday, KCS terminated the agreement and, on Friday, it announced that it would merge with CP-rival Canadian National.
Although KCS is the smallest of the major US railway networks, the deal would create the first rail network with ports in all three of the US, Canada, and Mexico.
The new deal values Kansas City Southern at $33B. CN also agreed to cover the $700M breakup fee owed to CP and pledged an additional $1B in the event that regulators kill the transaction.
Snitches Get Millions
On Wednesday, the SEC awarded $28M to a whistleblower who exposed a bribery scheme involving a US subsidiary of Japanese company, Panasonic.
While the reward isn’t as large as the record $114M payout that we discussed last October, it is still one of the ten largest whistleblower awards ever.
Panasonic, who was charged with violations of the Foreign Corrupt Practices Act, settled with the SEC and DOJ in 2018. Whistleblowers typically receive 10%-30% of monetary penalties collected as a result of their efforts.
That’s it for this week.
Have a great weekend and cheers to the happy couple!
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