Stuck in neutral

Quote of the Day

I have tremendous confidence that they will continue to build a great company that will thrive well into the future.”

Market Snapshot

• Tech pushed U.S. indexes higher—the S&P hit a new record.
• Apple jumped 2% (or $16 billion) yesterday.
• European markets continued to rise despite the political uncertainty in Germany.
• The dollar fell before Yellen’s speech.

Stuck in Neutral

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That’s not per us, but the FCC, which plans to roll back net neutrality—an Obama-era ruling that ensures internet providers give equal access to all users.

Before we go further, let’s freshen up on net neutrality

• With net neutrality: Internet providers (like Comcast and Verizon) allow everyone to load their content at the same speed—that means you can watch an episode of Stranger Things just as quickly as you can pull up the latest Reddit thread.
• Without net neutrality: Providers could charge companies a premium for faster speeds—if you’re a small company that can’t foot the bill, you’re back to buffering.

And it’s not just small companies that could lose out—if Comcast wanted to, it could promote (subsidiary) NBC’s shows over competitors like CBS. And there’s precedent here: when Netflix’s streaming clogged up Comcast’s broadband in 2014, Comcast had it pay a “toll” before improving bandwidth.

But the FCC and ISPs see it a little differently

In short, FCC Commissioner Ajit Pai and large broadband providers say it stifles investment. And they’re not wrong. Total investment in broadband fell 5.6% between 2014 and 2016.

This is money that’s helped create trillions of dollars in economic value over the last two decades. Money that, moving forward, could make LTE look like you post-Thanksgiving dinner.

There’s no question Title II (a 1934 provision that allows the government to regulate telecom companies) is hurting economic growth in this sector. If you need proof, ask every media company that’s trying to merge right now (literally, all of them).

The real question is: if net neutrality is rolled back, will ISPs use this power for good? Or will they use it to block the Brew just because it’s a Wednesday and “we felt like it.”

Deal Detox

Politics, big tech, romance (okay, maybe not romance), the DOJ/AT&T-Time Warner lawsuit has it all. Before that stuffing takes its toll, let’s take a closer look at this mega-deal in limbo.

POV of the DOJ

It argues a marriage of AT&T (-0.89%) and Time Warner (+2.11%) would combine a content distributor and producer in ways that would stymie innovation, raise prices, and limit consumer choice. All excellent buzzwords, but what does that mean in practice?

Right now, Time Warner licenses its content (Turner Sports, HBO) to video distributors (Comcast, Charter, etc.), and the two agree on a price. But what happens when Time Warner teams up with AT&T, which owns DirecTV (a distributor itself)?

Well, Time Warner suddenly finds itself in the driver’s seat at the negotiating table—it can jack up the asking price, but also not worry about walking away. If a deal can’t get done, it knows that customers could switch providers to DirecTV to get their fix of John Oliver sarcasm.

The DOJ portrays AT&T as a world-beater

But CEO Randall Stephenson doesn’t buy it. AT&T doesn’t hold as much market power as the suit alleges—after all, Facebook and Google dwarf AT&T, and are both content distributors and providers in their own right. Or what about Netflix and its 110 million video subscribers? AT&T has 25 million.

Here’s Stephenson: “The idea that somehow we're going to take distribution and content and create something that's so powerful that we've disrupted Google, Amazon, Facebook, and Netflix. It borders on comical.”

But it’s not funny at all for Big Tech

While the companies Stephenson mentioned have ducked red tape for years, this lawsuit could mean more regulatory oversight for the Valley.

Per Axios’ Dan Primack: “DOJ may officially be suing a legacy telco, but its complaint is doubling as a Trojan Horse at the gates of Silicon Valley.”

You can bet Zuckerberg is thinking if AT&T’s lunch, he might be dinner.

57 Million Reasons to Apologize

Just when you thought things were turning around for Uber, it drops an absolute bomb: hackers stole the personal data of over 57 million customers and drivers...last year.

If you’re new CEO Dara Khosrowshahi, is it too late to turn down the job? Uber waited an entire year to disclose the hack and even paid the criminals $100,000 to keep things on the DL.

But not before they made off with:

• Names, email addresses, and phone numbers of 50 million riders.
• Personal information on seven million drivers.
• 600,000 driver's licenses.

This scandal doesn’t quite stack up against the Equifaxes (145 million) and Yahoos (3 billion) of the world, but it’s nonetheless a major setback. Ironically, when Uber initially learned of the hack, it was settling a completely separate lawsuit on data security disclosures.

Dara assured the public, “We are changing the way we do business,” while ex-CEO Travis Kalanick had this to say: “ .”

What Else Is Happening…

• CBS (+1.45%) and PBS fired veteran journalist and TV host Charlie Rose over sexual misconduct allegations.
• Apple ceded to more government censorship, removing Skype and other programs from its App Store in China.
• Prosecutors charged an Iranian national for the Game of Thrones leaks.
• Meg Whitman will step down as CEO of HPE (-6.16% after hours) early next year.

Economic Calendar

• Monday     Earnings: No Events

                    Economic Events: Leading Indicators (+)

• Tuesday    Earnings: HPE (+), HPQ, Salesforce.com (-)

                  Economic Events: Existing Home Sales

• Wednesday    Earnings: Deere

                        Economic Events: Jobless Claims

• Thursday   Earnings: Markets Closed

                   Economic Events: Markets Closed

• Friday       Earnings: No Events

                 Economic Events: PMI

Brewified History: Joint-Stock Company

As we get ready for food, family, and Wednesday night shenanigans, we decided to step back and appreciate what gave way to this tradition in the first place.

No, not the Puritans…let’s go back further to something called a “joint-stock company,” which dates back to the Song Dynasty (960-1279 AD) in China.

The idea was simple: sell shares of stock to raise money for a venture. Today, it’s to launch the next Facebook, but back then, it was to discover new lands filled with gold and other valuable resources (if you thought founding a social network was profitable, imagine stumbling on a new continent).

Enter The London Company in 1620—a group of private entrepreneurs who sold stock to British investors at $250 a share to fund Puritans fleeing from religious and political persecution to the New World. In return, they’d reap any profits from the voyage.

So long story short, when you dig into that turkey this Thursday, just remember to be thankful for joint-stock companies...or as they’re known today, corporations.

The Breakroom

Question of the Day

John is riding his bicycle along a circular track. It takes him 2 minutes and 13 seconds to complete one lap. Without any calculations and in less than 15 seconds, you should be able to find out how long it took John to complete 60 laps.

(Answer located at the bottom of newsletter)

Business Trivia

The NYSE is closed on Thanksgiving Day. Can you name the other eight holidays when the market shuts down?

(Answer located at the bottom of newsletter)

Stat of the Day

1.29 million —Copies sold of Taylor Swift’s new album “Reputation”...in the first week. Let’s just say, we’ve had it on repeat all day.

Breakroom Answers

Question of the Day: 2 hours 13 minutes

Business Trivia: Christmas, July 4th, Labor Day, President’s Day, Martin Luther King Jr. Day, Memorial Day, Good Friday, New Years Day