Apple vs. Spotify

MARKETS

  • Brexit: So...about that "no-deal" Brexit that economists warned would unleash chaos on the private sector...probably not gonna happen. Parliament ruled out that option in a vote yesterday, and the pound jumped about 2% against the dollar. Today, lawmakers are scheduled to decide whether to request a deadline extension.
  • U.S. markets: The S&P is on a three-day winning streak, closed above the key 2,800-point level, and hit a new high for 2019.

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TECH

Spotify Doesn't Care How Good Apple Looks in AirPods

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Spotify (-1.25%) has filed an antitrust complaint against Apple (+0.44%) with the regulation-forward European Commission. Its beef: Apple is using its App Store to sabotage companies that compete with its services (like Spotify does with its main rival, Apple Music). Is there a Genres & Moods playlist for when you're feeling vengeful?

The details

Apple's drawn criticism from app makers because it charges a fee of up to 30% on anything sold through its App Store--and takes a cut of sales.

  • Developers have begrudgingly accepted that setup in order to reach Apple's millions of iPhone and iPad users, but
  • Spotify is arguing that Apple's policies are more than just a cost of doing business--they're a "tax" that stifles competition.

Apple's take: The fees are like charging cover for access to a huge nightclub of potential customers. You wanna dance? We're going to stamp your hand so hard it's going to take like five showers to come off.

FYI, the app economy is expected to grow from $82 billion last year to $157 billion in 2022, per App Annie's forecasts. And App Store sales have become a crucial part of Apple's revenue model now that everyone and their pet goldfish has an iPhone.

Where matters

In the U.S., the Supreme Court is already weighing a suit brought by consumers claiming Apple's control of the App Store creates a monopoly and thrusts higher prices on customers than they might pay in a more competitive market.

But this isn't happening in the U.S. Spotify's decision to bring a complaint to the European Commission is meaningful--it's the first the App Store has publicly faced at the EU level.

And like Sen. Elizabeth Warren, the European Commission doesn't play around when it comes to tech platforms potentially abusing power. Remember, the Commission fined Google $5.1 billion last year for antitrust abuses on its Android platform.

AVIATION

The U.S. Grounds One of Its Own

The U.S. joined dozens of other countries in suspending flights of the Boeing 737 Max, the plane involved in two fatal crashes in less than five months. It's the second time regulators have grounded a Boeing plane in six years.

The timeline:

  • As countries from China to Canada suspended the model following Sunday's Ethiopian Airlines tragedy, U.S. regulators had determined the 737 Max was safe to fly.
  • But then yesterday the FAA said it was temporarily grounding the plane based on "new evidence collected at the site" and "newly refined satellite data."

The airlines affected: Southwest (which has the largest 737 Max fleet in the U.S.), United, and American.

Boeing shares eked out a small gain for the day, but the company has still lost more than $20 billion in market value on concerns that the recent crash might somehow be linked to the Lion Air crash in October 2018.

+ We asked our Insiders whether they would fly in a 737 Max plane. 60% said they would.

STOCKS

2 Ways to Boost Your Stock Price

1. Have Cristiano Ronaldo score a hat trick
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Tuesday night, the futbol megastar scored three goals to lift his team, Juventus, to the quarterfinals of Europe's premier soccer tournament, the Champions League. That sent the club's shares climbing as much as 30% before flopping to a 17% gain on the day.

  • Remember, Juventus looked to international bond markets to raise money after writing a $110 million check to sign Ronaldo last year.
  • It's already paying off: Teams qualifying for the Champions League quarterfinals can expect to receive nearly $12 million in additional revenue.

2. Get an endorsement from Nelson Peltz
Aurora Cannabis appointed the famous activist investor as a "strategic advisor," cracked open a CBD seltzer, and watched its stock price jump a non-psychoactive 14% following the news.

The bottom line: This is a huge endorsement for the nascent industry, but as Reuters notes, "celebrities don't come for free." Peltz has the option to purchase just under 20 million common Aurora shares with no cash outlay. If he does, he'll become the firm's second largest shareholder.

E-CIG

Will You Remember Scott Gottlieb When He's Gone?

After yesterday, probably. The soon-to-be-leaving FDA commissioner is hoping to put his stamp on the youth vaping epidemic by moving forward with restrictions on the sale of e-cigarettes--constraints first announced last November.

A few of the guidelines: Brick-and-mortar stores won't be able to sell some flavored e-cigs unless they a) prohibit minors from entering or b) have a separate room where adults can do adult things like buy flavored e-cigs and drink decaf coffee.

Two things to note:

  • Mint, tobacco, and menthol flavors are not covered in the rules.
  • Industry leader Juul has already shifted most flavored e-cig sales online.

Not everyone is on board. The National Association of Convenience Stores claims the agency is choosing to "discriminate against a specific channel of distribution" in a potential legal overreach. And others have criticized the action as too weak to make a difference.

Looking ahead...there will be a 30-day comment period before the rules are finalized. By then, Gottlieb will be chipping in for birdie on a Connecticut golf course, and his successor, Ned Sharpless, will be serving as acting commissioner.

SPACE

NASA's Private Parts

NASA told lawmakers yesterday that it's considering using commercial rockets instead of its own Space Launch System (SLS) for the Orion lunar crew capsule launch next year.

  • The multibillion-dollar SLS--aka the most powerful rocket NASA's ever developed--keeps running into delays. If it's not going to be ready by the slated June 2020 Orion launch, NASA will instead tap private sector rockets to carry out the three-week mission around the moon.

The decision could hit Boeing where it hurts (tbh that's anywhere this week), since the company is one of the main contractors for the SLS.

But on the other hand, a pivot to commercial rockets could offer a boost to whichever private firm NASA chooses, like SpaceX or Jeff Bezos's Blue Origin.

More good news for private space companies: While just a blueprint, the 2020 budget President Trump released Monday offered $21 billion to NASA--and used the word "commercial" almost twice as much as last year's budget. Also in the proposal? A $375 million cut to SLS funding.

WHAT ELSE IS BREWING

  • Fiat Chrysler (-0.93%) will recall about 965,000 gas-powered vehicles in the U.S. and Canada that don't meet emissions standards.
  • A SoftBank-led consortium is reportedly in "late-stage talks" to invest at least $1 billion in Uber's self-driving vehicle unit, per the WSJ.
  • Facebook (+0.84%) and Instagram were down for some users yesterday. If you were like us, you freaked over Instagram but didn't really notice the Facebook outage.
  • Energy Secretary Rick Perry said he would "absolutely" be open to discussing a Green New Deal--in "a thoughtful and a polite and a respectful way" no less.
  • Jumia, a pan-African e-commerce firm considered the continent's first tech unicorn, has filed for an IPO on the NYSE.

BREAKROOM

Studying Abroad
Two mayors in Iceland are campaigning to have Google Maps change its satellite images of their towns. What are they objecting to?

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Breakroom Answers


Studying Abroad
They are shown covered in snow.

Comments (1)

Mar 14, 2019