This summer, telecommunications juggernaut AT&T announced the close of an $85.4 billion acquisition of Time Warner. A federal judge approved the merger, spurning government attempts to prevent the transaction on the grounds that such a deal would constrain consumer choices and lead to greater prices for television and internet services. The merger solidifies AT&T as a powerhouse in the telecommunications and media industries, granting the company an expanded media and entertainment portfolio.

This increasingly forms the future landscape for media, whereupon media executives oft claim “content creation and distribution must be married” in order to compete against large technology companies such as Amazon and Netflix. These are but two entities that pour billions into producing their own original shows that users can easily stream, placing constricting pressure on traditional media providers. As a counter against this, the AT&T and Time Warner merger grants AT&T new revenue streams to tap into, as AT&T can now combine its subscriber data to Time Warner’s networks and sell targeted advertising at a higher price.

In the wake of the merger announcement, a series of other mergers have been prompted in the media industry. Other goliaths in the industry closely followed the case. Comcast, for one, held off on bidding against Walt Disney Company for 21^st Century Fox’s assets, until after the trial decision was handed down. Afterwards, they slammed down an all-cash offer worth $65 billion. This illustrates the heightened burden felt by traditional providers, in needing to expand, in order to survive against Silicon Valley technology companies.

This story is far from over, however. Though the Justice Department did not seek an injunction to prevent the transaction, they have appealed the decision handed down by the federal court judge. The government maintains that the federal judge who presided over the case failed to account for “mainstream economics,” ignoring considerations about how companies negotiate and seek to maximize profits. Until the case is resolved, AT&T has reported it will manage Time Warner’s networks as a separate business subsidiary. The initial defeat of the government’s antitrust claim leaves questions as to how effectively the Justice Department may prevent large corporate consolidation in the future and whether this will prompt more big business acquisitions.

Implications of Potential AT&T Acquisition of Time Warner

With the recent boost in technological advances, it is no surprise automated vehicles (AVs) are slowly but surely making their way to the forefront. The National Highway Traffic Safety Administration(NHSA) is reconsidering the necessity and appropriateness of some 75 current safety standards amidst the call for exemptions of requirements purportedly only relevant when humans are driving, such as steering wheels and mirrors.

AVs will certainly impact the approximate 15.5 million U.S. workers currently using cars or involved in the production of cars for occupational purposes. For certain types of industries, including truck drivers and taxi cabs, AVs may ultimately eliminate jobs and diminish income capacity. Still, some analysts predict that in the near future AVs will create the innovation needed to shift the workforce and workforce demands in a positive light, so that substantial changes in these industries result in new types of output activity. By creating new needs and new skillsets, the introduction of these vehicles might create unique opportunities for human drivers to work alongside them.

But the mark of AVs also ventures into uncharted legal territory, as important differences in humans and machines could change how we think about accountability in the law. Where humans use judgement to make decisions that effectively break laws, such as swerving into the next lane to avoid a car door opening, automated vehicle technology may not have such luxury. And if given such capacity to disobey the law in emergencies, who will be held liable when accidents occur at the hands of the machine? While our laws are rooted in morality, reasonableness, and prohibitions, such principles do not squarely apply where a machine does not have equivalent capability. Therefore, both foreseeable and unforeseen consequences of integrating automated technology will consistently affect our societal, legal, economic, and political landscapes.

Whether we are prepared or not, automated vehicles are coming and bringing both the potential for great benefits and unintended effects that will change our understanding of the world around us. What does all of this mean for human drivers? We have yet to know. It does, however, present an opportunity to get ahead of all the issues sure to surface from the use of the technology.

The Inevitability of Automated Vehicles Brings Hope, Uncertainty, and Many Questions

Last June, Senior District Court Judge Richard Leon delivered a blistering decision on the AT&T-Time Warner case. Judge Leon concluded that the Justice Department failed to show that the merger of the two behemoths would violate antitrust law by raising prices and hurting competition.

Judge Leon specifically criticized the Department’s top expert witness, U.C. Berkeley economist Carl Shapiro. Judge Leon rejected Shapiro’s argument that a post-merger AT&T would have leverage over rivals on the ground that such an argument was based on thin evidence at best. Judge Leon’s opinion helped the merger move forward — or at least pushed the case to the D.C. Court of Appeals and possibly into the fateful hands of liberal judges.

Typically, liberals and progressives oppose mega mergers like that of AT&T-Time Warner. For example, Senators Bernie Sanders and Elizabeth Warren moved to shut down the merger prior to Judge Leon’s opinion. They claimed that a massive content creator, comprised of phone, internet, and TV services, would hurt consumers. However, political lines were blurred early on when the conservative Department’s division chief, Makan Delrahim, opted to take on the case. Now, the merger could be in the hands of three liberal judges who have the power to aid the Department’s case in the D.C. Court of Appeals.

The Department is appealing Judge Leon’s lengthy decision on the ground that he, along with the district court majority, ignored the government’s main argument — namely, that Time Warner would have added bargaining power over rival distributors that pay for its programming. The decision will undoubtedly determine the future of mergers between media and telecommunication companies for years to come.

Liberal Judges May Lend a Hand to Justice Department in AT&T Case

Bird, a dockless scooter-sharing company, was founded in 2017 in Santa Monica, CA. Since then, Bird has placed more than 1,000 scooters in 22 U.S. cities and the company announced that customers had taken more than 1 million rides in the past year. This past June, Bird announced that it raised more than $400 million in funding and is valued at around $2 billion.

While Bird has seen astounding growth in such a short period of time, they also have faced issues in regard to safety. In September, over 20 scooter accidents, including pedestrian injuries and vehicle collisions, were reported in Indiana alone. While many riders understandably feel unsafe on the street next to cars, pedestrians feel similarly unsafe with Bird riders sharing the sidewalk with them. Bird is weighing their unprecedented growth with the fact that many major cities continue to decide if the public safety concerns will allow for the service to continue. Already, San Francisco, Denver, and parts of Los Angeles, have opted to ban the scooter-sharing service until new city regulations have been passed to ensure the safety of its citizens.

Despite these concerns, Bird has continued its expansion to international markets. Bird already has scooters in Paris, Brussels, Tel Aviv, and Vienna, and recently announced that it will soon enter Mexico City and Brazil as well. Latin America could be a major frontier for Bird. Company officials stated that the region has much less regulatory hurdles for scooter companies as opposed to car ride shares, such as Uber. Further, while it does not have specific permission from local government, the company claims to adhere to local regulations and cites that the cities already have other scooter-sharing services available.

While companies like Bird continue to receive major funding and chances for further growth in new regions, they also face increased competition and regulatory issues. These obstacles could prevent Bird from living up to the lofty expectations created by their evaluations. Excitement regarding convenience and low pricing may continue to fuel Bird’s growth, however, a communal waning of interest and an oversaturated U.S. market could prove detrimental to the company’s long-term sustainability. Expansion into international cities and territories may help to boost revenue and growth as the U.S. market becomes more accustomed to the ever-present scooter found parked on the sidewalk.

Scooter Company, Bird, Enters Latin American Market

Offsetting its recent loss in a bidding war against the Walt Disney Company for control of 21st Century Fox, Comcast successfully won its September 22 bid to acquire Sky—a British media and telecommunications broadcaster. The takeover comes shortly after Disney outbid Comcast in July in the fight over the acquisition of Fox. With its $40 billion winning bid ($22.57 a share) for Sky, Comcast is giving Fox and Disney a taste of their own medicine.

Comcast’s victory presents a devastating blow to Fox. Fox holds 39 percent of Sky and Fox’s Executive Chairman Rupert Murdoch had always hoped to take over the rest of Sky. In the growing landscape of video streaming, players like Netflix and Amazon are pushing viewers to abandon traditional cable television. As a result, traditional media companies like Comcast are strengthening their efforts to stay afloat. With its acquisition of Sky, Comcast will not only gain a stake in the streaming business through Sky’s streaming option Now TV, but will also be able to diversify its business across international borders. Sky boasts an impressive and crucial twenty-three million paying subscribers across five European countries. Its strong portfolio in those markets includes original programming, a news channel, exclusive partnerships with HBO, Showtime, and Warner Bros. Studio, and an invaluable deal with the English Premier League of soccer. As a traditional broadcaster, Comcast will greatly benefit from both Sky’s subscriber base and its creative content portfolio.

Comcast is not the only media company making bold moves to gain market share. The age of video streaming is marked by two distinct features: a subscription-based model of membership and the creation of original content. Since beginning to develop its own content in 2012, Netflix has proven to be a formidable player in successfully harmonizing the two features, creating a $142 billion empire. With Netflix’s success, competitors will undoubtedly have to intensify efforts to focus on building competitive advantages across both features while still remaining profitable. From Amazon Video’s distribution of its own original content for Prime subscribers to Apple’s upcoming slate of original television shows, new players are targeting Netflix’s market dominance. And for older companies like Comcast that are not built on subscription-based models of streaming original content, expensive mergers and acquisitions may be a necessary strategy for remaining competitive.

Comcast Fights Back

After losing roughly $7 billion in value in late September, Tesla’s stock surged recently in response to Elon Musk’s settlement with the U.S. Securities and Exchange Commission as well as promising Model 3 production numbers. However, many remain worried about Tesla’s ability to pay its debts. Despite Musk’s ability to sell equity investors on the future of Tesla, the company’s serious debt problem has plummeted Tesla’s bond price to a record low.

In its early years, Tesla took on a substantial amount of debt to achieve a sizeable advantage in the electric car space. Tesla was able to successfully seize control of the electric car market and became the most valuable car company in America. Nevertheless, Tesla has yet to turn a profit. Tesla’s newest car, the Model 3, was intended to boost profitability as a result of mass production and relative affordability in comparison to the Model S.

Unfortunately, Tesla has failed to meet Model 3 delivery expectations. Meanwhile, more than $9 billion of Tesla’s debt is scheduled to mature before 2025, $2.7 billion of which will mature over the next two years. Still, Tesla’s cash is rapidly depleting. Tesla has about $2.7 billion on hand and a burn rate of about $6,500 a minute as the company attempts to ramp up production and delivery of the Model 3. Moreover, Tesla is particularly susceptible to financial distress because the electric car business is highly competitive and capital-intensive.

What should the company do? It’s unlikely that Model 3 profits will be substantial enough to simultaneously pay off the company’s debts, maintain market share, and finance Elon Musk’s vision for the future. Given Tesla’s current credit rating, leveraging the company would be extremely expensive as a result of hefty interest payments. Instead, Tesla should capitalize on the recent surge in stock price and renewed sense of optimism among equity investors by selling a sizable chunk of the company to pay the company’s debts, finance its future, and stave off bankruptcy.

Tesla Forced to Make Tough Choices as Debt Comes Due

Thomson Reuters (NYSE: TRI) recently announced it would return $10 billion to shareholders after selling the majority position of its Financial & Risk (F&R) unit to private equity firm Blackstone (NYSE: BX). Of that $10 billion, representing the majority of the $17 billion sale price, Thomas Reuters announced it would use $9 billion to buy back shares, largely in connection with a substantial issuer bid (SIB). While some stockholders might be rejoicing, their exuberance may be misplaced.

Thomson Reuters is not alone in its desire to give back to its investors. Corporate tax cuts and steady earnings have prompted record stock repurchases with no indication of slowing down. By repurchasing shares, companies increase net earnings per share by decreasing the total number of outstanding shares. For instance, Apple (NASDAQ: AAPL) repurchased $112.8 million shares in the second quarter, adding five cents to its earnings. As a result, companies may hope to make their stock more attractive to potential buyers, though the extent to which higher earnings per share are driving stock prices is not without contention.

Not everyone agrees buybacks are a good idea. Critics of stock repurchases argue that buybacks are ineffective and irresponsible. By paying out surplus capital to shareholders, companies may miss out on critical investment opportunities they need to stay competitive. Moreover, stock repurchases that place a premium on the purchased stock, as with an SIB, may be hugely inefficient, overvaluing the company stock. Buybacks may also present a moral dilemma regarding the duties a corporation has towards its shareholders and the duties it owes its employees or society as a whole.

Granted, there are good reasons to like buybacks. Proponents argue they reward investors who carry the risk associated with holding the stock. In addition, stockholders may have a strong sense of how the company’s money should be spent and should only want management to invest that capital if it can produce a higher return with it than they can do with it themselves.

Still, even for those who subscribe to the notion that a corporation’s first priority is its shareholders, it is worth pondering what effect, if any, repurchases of this size and on this scale may have on how directors are expected to manage their money in future markets.

Thomson Reuters’ Blackstone Deal Raises Questions for Shareholders in an Age of Buybacks

A U.S. International Trade Commission judge recently determined that Apple infringed Qualcomm’s microchip patent. Nevertheless, the judge declined to grant Qualcomm’s request to ban the importation of iPhones into the United States. The two tech giants have multiple lawsuits spanning multiple continents, and the aggregate claims amount to billions of dollars.

If Apple did infringe Qualcomm’s patent, does it make sense to allow the infringement to continue? On the surface, it appears that public demand for iPhone has upended the rule of law — the principle that laws should be applied and enforced equally. Whether one agrees with the concept of intellectual property, it is currently the law of the land. The judge’s ruling, however, gives the impression that rules do not apply to Apple products. What happened here?

The details of the ruling have not yet been made available. However, an administrative law judge at the International Trade Commission reasoned that “public interest factors” weighed against banning the importation of iPhones. It is unclear what the judge meant by “public interest factors.” But, one obvious public interest factor is consumer choice. Intellectual property law is about balancing the rights of intellectual property holders with the public interest in better goods and services. It appears the latter was more important in the judge’s mind.

Also, the use of the phrase “public interest” was appropriate because, even had the ban been granted, damage to Apple would have been minimal. Margins on iPhones, even for older models, are insanely high. A hiccup in the rollout of a new model would not hamper the business operations of Apple. Further, users of iPhone, as well as other Apple products, are notorious for their brand loyalty. A delay in the release of the newest iPhone would not damage the company’s goodwill. Therefore, the ruling is, or at least has the appearance of being, about Qualcomm’s interest versus the public interest.

The judge likely saw no reason to narrow consumer choice. Equitable relief in the form of a ban on the importation of a complete iPhone product, of which Qualcomm’s microchip technology is only a part, appears excessive in light of the availability of a legal remedy. Apple is certainly able to pay any monetary judgments to Qualcomm. The court must simply determine the right amount. On balance, the judge’s decision was judicially sound.

Did iPhone Upend the Rule of Law?

White males continue to dominate corporate boardrooms, reflecting a “boys club only” mentality at the top of corporations. When signing SB 826, Governor Brown stipulated it is the “high time” that corporate boards begin including women, who constitute more than half of the American population. To promote gender equality within the corporate boardroom, California’s bill requires that publicly traded companies with their principal executive office located in California engage in a two-step process. First, these companies must have at least one woman on their respective boards by the end of 2019. Second, by the end of 2021, these companies must have either two female board members if their board is comprised of five members or three female board members if their board is comprised of six or more members. Failure to comply with either requirement will result in fines.

SB 826 seeks to solve the issue of male-dominated boardrooms, but it does not properly address why they are lopsided in the first place. Because shareholders elect the board, could the reason for this unequal representation be that shareholders are biased against women? This rationale may possibly be the answer because the investing community happens to also be heavily male-dominated in both the financial industry and among individual investors. However, I wager that the real issue is that nominating committees, which are usually comprised of the chairman, deputy chairman, and the Chief Executive Officer, only present shareholders with male nominees.

Aside from the bill’s practicability and legal obstacles, including the internal affairs doctrine and equal protection clauses of the federal and California state constitutions, the bill’s larger problem is that it favors equality of outcome over equality of opportunity.

Equality of outcome would be a fifty-fifty distribution of women and men within corporate boardrooms. Many equality of outcome proponents insist that such a requirement would pave the way for a more equal opportunity, but they fail to recognize that such a requirement precludes equal opportunity. Under a typical nomination process, the nominating committee could nominate a pool of two women and twenty men. In the case of a five-person boardroom, the bill would necessitate that the two women be automatically chosen whether the shareholders elect them or not. This scenario circumvents the democratic role shareholders play in electing board members based on merit.

A better recommendation would utilize shareholder activism and ride the coattails of increasing awareness of gender inequalities. Nomination processes should be more transparent, and if quotas are to be used, they should be restricted to the board nominee pool, which would create more diverse selection pools for shareholders to freely elect whom they see fit. This preliminary framework would allow women a more equal opportunity to become elected based on their merit.

While the bill certainly has its drawbacks, it still represents an unprecedented move in the U.S., follows suit with other European countries, and brings more awareness to an ongoing social issue that has plagued our country for too long.

Will SB 826 Solve the Underlying Issue?

The Saudi Arabian government’s plan, spearheaded by Saudi Crown Prince Mohammed bin Salman (MbS), to reduce their dependency on oil and diversify their economy has upended the tech community with an influx of cash.

Over the past two years, the Public Investment Fund of the Kingdom of Saudi Arabia (PIF) has nurtured a relationship with Softbank Group Corp. Through this effort, PIF has dumping money into Softbank Vision Fund and successfully broke into the United States tech industry. Softbank founder and CEO Masayoshi Son has readily accepted the backing, using the gargantuan fund to aggressively transition the Japanese telecom company into investments.

In March, Son and MbS turned their attention towards Saudi soil, announcing at a New York press conference an agreement wherein SoftBank would build the words largest solar power project in Saudi Arabia. With a 200-gigawatt goal in mind at the price of $200 billion – the stage was set.

However, the Wall Street Journal reported last week that PIF tabled the deal and is instead “working up a broader, more practical strategy to boost renewable energy.” Softbank was quick to retort, stating that it remains “working closely with PIF…to deliver on the New Solar Energy.”

Both actors have an emergent notoriety in the tech industry for flashy deals and substandard diligence. And while most of us recoil in horror at the thought of a $200 billion agreement falling through, this recent “setback” hasn’t seemed to affect the parties relationship or reputation. In fact, MbS just announced that PIF would invest an additional $45 billion in Software Vision Fund.

With seemingly endless amount of oil money involved, it appears that PIF and Software Vision Fund’s relationship will continue to flourish.

Saudi and Softbank Solar Project Setback Ends With Separate Investment