a disbelief paradox
The rivalry between Mark Zuckerberg and Elon Musk escalated this week when Meta launched Threads, a Twitter rival that became the fastest downloaded app ever on its first day.
In an era of tighter antitrust scrutiny of Big Tech in the United States, Europe and elsewhere, what questions do Meta’s efforts to expand its social media reach raise about the industry’s ability to expand into new areas — even when players Create new services yourself, instead of buying a smaller enemy?
Size matters, but it’s just one factor. Tim Wu, the architect of the Biden administration’s antitrust policy and now a professor at Columbia Law School, told DealBook, the threads “set two antitrust trends against each other.”
Challenging Twitter’s dominance is positive. “Generally, we would like the big companies to beat each other out, not just sit in their own little bubbles collecting cash,” Mr. Wu said. In contrast, Meta already dominates the social media landscape through Instagram, Facebook, and WhatsApp. Expanding that empire and enabling him to accumulate more data, he said, “is hard to be so happy about.”
Regulators would like to know how Meta is gaining market share: By offering a better product, or by using the benefits of scale to unfairly crush Twitter? Threads has been integrated into Instagram, giving it potential access to nearly two billion monthly active users. Another tricky issue: Users have to delete their Instagram account in order to cancel their Threads account. (It’s unclear how the Federal Trade Commission, which has vowed to crack down on companies that make it too difficult to opt out of a service, might view the arrangement.)
Data concerns loom large. Threads is not available in the European Union, where privacy watchdogs have long been concerned about how Meta handles users’ information. On Tuesday, the top court of the block supported a meta antitrust investigation On violation of data privacy, it concluded that data is a decisive factor in establishing market power.
Growing up is not a violation of antitrust law. Organic growth is not a problem, Nancy Rose, professor at the Massachusetts Institute of Technology and former economist in the Justice Department’s Antitrust Division, told DealBook. He is “sympathetic” to the notion that it would be better for a new player to challenge Twitter rather than a tech giant, but believes Meta is “a credible competitor.” The company has made a “bumpy start”, Ms Rose said, but smaller options like Mastodon are having trouble taking off because they haven’t been doing it.
“The main thing is the network effect,” said Doug Melamed, a Stanford Law School professor and former Justice Department antitrust official. As more users sign up, the usefulness of Meta’s products to consumers increases. Mr. Melamed said that using them to enhance the quality of threads would not in itself violate antitrust laws.
“There’s a saying that everything a tech company does is bad,” said Daniel Francis, who teaches law at New York University and is a former deputy director of the FTC’s Bureau of Competition. He argues that consumer unhappiness with Twitter’s changes prompted people to seek alternatives. “The Threads example shows that even big tech companies can be valuable entrants, bringing new competitive pressures,” Mr Francis said. , afrat livni
In Case You Missed It
Elon Musk sued Wachtel for $90 million in fees from his Twitter acquisition. X Corp, the entity that owns the social network, filed a complaint in California this week accusing the specific law firm of receiving improper bonus payments for representing Twitter during negotiations “for its actions as a litigation attorney.” He was accused of trying to “change the tariff regime”. Buy it Mr. Musk.
Jobs growth has cooled. Employers added 209,000 jobs last month, less than economists expected. But it was the 30th consecutive month of payroll gains, which lowered the unemployment rate to 3.6 percent. Investors anticipate that the labor market is still too tight for the Federal Reserve’s liking, and that policymakers will raise interest rates at their next meeting this month.
The Biden administration has been ordered to limit communications with social media companies. A judge in Louisiana ruled that many government agencies cannot communicate with platforms about the removal of “material that is protected free speech.” The decision may undermine efforts to combat false and misleading stories about the coronavirus pandemic and other issues. Department of Justice has appealed,
hell on earth. The global average temperature hit a record high this week, as forecasters warned the planet could be entering a several-year period of extraordinary heat. On Tuesday, the global average temperature reached 62.6 degrees Fahrenheit, or 17 Celsius, making it the hottest day on Earth since records began in 1940.
Hollywood’s New China Challenge. The Defense Department Will No Longer Support Movie Studios If They Comply Demand for censorship from China to distribute his films there, according to Politico. Last year’s “Top Gun: Maverick” courted controversy when the Taiwanese flag was removed from the film’s trailer. This was restored in the final version.
An ex-insider look at what’s really going on in China
Desmond Shum was one of the most well-connected businessmen in China. He and his ex-wife, Duan Weihong, used their connections with top government officials to build the company into a multi-billion dollar asset during the mid-1990s, a golden age for entrepreneurs.
Now, tensions with the West dominate the discussion, with Treasury Secretary Janet Yellen sharply criticizing China’s treatment of American companies on a visit to Beijing this week.
Mr Shum left China in 2015 as the country’s leader, Xi Jinping, asserted greater state control over the country and its businesses. But Duane, also known as Whitney, disappeared two years later. (It is believed that Communist Party officials detained him After a high-ranking political aide was arrested on suspicion of corruption.)
Mr. Shum tells the story of his rise and fall — and the bleak reality of business in China — in his 2021 memoir. Many details cannot be independently verified but his role at the intersection of business and politics is certain. He now lives in the UK with the couple’s son (neither of whom has seen Duan since his disappearance) and says it is unsafe for him to travel to China.
Mr. Shum will testify next week Congress That comes days after Treasury Secretary Janet Yellen sharply criticized Beijing’s treatment of American companies, about challenges for American businesses operating in China. DealBook spoke to him ahead of his appearance in Washington. This conversation has been condensed and edited for clarity.
What has changed since your book was published?
First, the perception towards China has become more negative. Kovid has contributed a lot in this, especially the change in the thoughts of the general public. This has helped policymakers accelerate the way they deal with China – now they have the chance to move forward.
Second, the outside world underestimates how badly the Chinese economy is deteriorating. Several things have surprised me in my conversations with business people in China. A large dairy company is producing more milk powder because people are buying less milk. Usually it’s one of the last things you’ll cut.
Many executives also say that since the pandemic, employees have been openly looting and stealing from companies. Why? They have lost hope as the economic scenario is very bad.
What is its impact on governance and business?
This adds to the growing insecurity of the Chinese Communist Party, so the government is tightening controls using measures introduced during the pandemic. This is hurting business: Due diligence firms with western ties raided and access restricted AirA Chinese data provider, part of an effort to control foreigners.
How are international companies adjusting?
Companies are reducing their exposure in a big way. People talk about “globalization”, but the proper term is “re-globalization except China”. You won’t have a country to replace China, but operations are expanding to Vietnam, Indonesia, Sri Lanka, India and elsewhere. Look at how many Taiwanese manufacturers are moving to Mexico in a big way. And then you have friendshoring and nearshoring in Europe.
Is America’s messaging – talking tough while also saying it wants to keep talking – complicating matters?
After four years of Trump and three years of Biden, you see a general stability on China policy. A slight change or variation in tone will not affect China’s perception that the US view of it is set. They need some easing of tensions to revive business confidence and bring in more capital. If they can reduce or delay the US measures, they want to do so. -Ravi Mattoo
Taylor Swift reenters her way on the charts
Taylor Swift on Thursday released a re-recorded version of “Speak Now,” one of her earlier albums. calling This step is a “form of rebellion”.
The singer is on a mission to re-record the first six albums in her catalog (she’s produced three) after the rights to the original album were sold in 2019 to superagent Scooter Braun’s Ithaca Holdings in a controversial $300 million deal. Investment firm Shamrock Capital Advisors bought Masters a year later for about the same amount.
Ms. Swift Argument Re-recording them will enable him to be recognized as the rightful owner of his work. But while the effort has been lauded for artistic integrity, the other big question is whether it was good business. (Other artists have tried and failed to retrieve their masters.) DealBook traced the numbers.
The first two re-records were released in 2021: “Fearless” in April and “Red” in November. Data from Luminate, As first reported by Music Business Worldwide, Turns out that by the end of 2022, Swift’s re-releases were conquering audio streaming charts. (Streaming is the largest share of recorded music sales.)
“Red” (Swift’s version) was streamed 961 million times last year, while the original was streamed 254 million times — a 41 percent drop from the year before.
For “Fearless”, Swift’s re-release surpassed the original’s 401 million to 257 million.
The re-record took up the entire Swift catalogue. Streaming of his six records is set to increase by about 6.5 percent in 2021 to nearly 2.5 billion times. Importantly, however, a large portion of them – 736 million – were for the album “1989”, which Ms. Swift has yet to re-record.
Shamrock’s deal is “very weak” Larry Miller, director of the music business program at NYU, told DealBook. Nevertheless, since the firm acquired Ms. Swift’s catalog Afterwards He expressed his intention to re-record his masters, it is possible that Shamrock took into account the potential impact of dilution as part of the deal. (The firm did not respond to a request for comment.)
Ms. Swift has made an impact on the wider industry. Universal Music Group has begun pouring more Restrictive Re-recording Terms in their agreements with recording artists. And, in due diligence for deals, buyers are now “fairly universal” looking at contracts to see if there are any restrictions on re-records, said David Dunn, founder of investment bank Short Tower Capital. , Lauren Hirsch
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