Axios Pro Rata
June 04, 2019
Top of the Morning
It's been nearly two years since this space began writing about possible antitrust actions against big tech, which was mostly greeted by two different types of reader replies:
- Textual eye-rolls, usually with a subtext about how politicians don't have enough bipartisan spine.
- Anger, suggesting Axios has latent hostility toward big tech and was creating controversy for the sake of clicks.
Since then, we've had the AT&T/Time Warner fight, lots of new data revelations about companies like Facebook, White House potshots at Amazon, and Democratic presidential candidates who've realized that corporate economic inequality is a good political stand-in for personal economic inequality.
Now we have legislative and regulatory inquiries into big tech platforms, including yesterday's House Judiciary Committee announcement that it will investigate possible monopolistic practices.
Three big-picture items:
- Does this stay limited to one industry? There's been some talk of a tech-specific Glass-Steagall Act, but consensus is forming that American antitrust law needs a much more inclusive refresh. Consumer-focused tech is hardly the only U.S. industry with just a few dominant players.
- Does this become an opportunity for startups? Even if big platforms like Amazon and Google aren't broken up, a big antitrust fight could prove unavoidably distracting — just like it once was for Microsoft.
- Does this become a new risk factor for "unicorns" seeking to IPO? These companies aren't really startups anymore, often being valued by public markets in the tens of billions of dollars, and it's possible that new lines could be drawn through their existing "big tech" businesses.
The bottom line: Two years feels like forever ago, but chances are that these issues still won't be fully resolved in two years from now.
Also...
The BFD
FTD (Nasdaq: FTD), the Illinois-based flower delivery network, yesterday filed for Chapter 11 bankruptcy protection and agreed to sell its North America and Latin America businesses (including ProFlowers) to Nexus Capital Management for $95 million. It also will sell its UK-based Interflora unit to The Wonderful Co. for $59.5 million and signed letters of intent to sell its Personal Creations and Shari’s Berries businesses to undisclosed buyers.
- Why it's the BFD: Because this is really about an earlier, much-hyped deal gone bad. FTD in 2014 paid $430 million to buy ProFlowers, so it could move big into non-floral gifting and increase its share of the e-commerce consumer flowers business from 8% to 18%. But it struggled to service the merger's $120 million in debt, ultimately unable to make payments due this past weekend.
- Bottom line: "The deep-rooted middleman for the florist industry traces its lineage to 1910, when it started as a network of U.S. florists who used telegraph communication to trade out-of-town orders, according to the court declaration.It operated as a not-for-profit until 1994, when it was acquired by Perry Capital." — Jeremy Hill, Bloomberg
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Final Numbers
More from EY:
- Europe's foreign direct investment decline in 2018 came against a backdrop of global FDI growth (4%).
- Intra-European FDI was down 2%, while non-European FDI was off by 8%.
- The biggest losers for European FDI were Germany and the UK.
- 38% of EY survey respondents called Brexit the most significant risk to Europe's investment attractiveness over the next three years, up from 30% a year ago.
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