While the US was delving deeper into the possible violation of anti-competition laws, the European Commission was building its antitrust case against Amazon over the course of two years. In April 2020, the Wall Street Journal (Journal) launched an investigation into Amazon’s employee conduct. And now, in November 2020, the online retailer accountable for 39% of American online shopping was finally formally charged by the European Union (EU) with violating antitrust laws “by distorting competition in online retail markets.”

The Commission objected to two specific forms of conduct Amazon allegedly engaged in: 1) the use of non-public data from sellers on Amazon’s platform to increase sales of in-house comparable, competing products; and 2) the preference towards products from Amazon and sellers using “Amazon’s logistics and delivery services” on its platform versus those from other brands. With regard to the first objection, the Journal found, through several interviews with former and current Amazon employees, that rules implemented to prevent the use of private seller data were not “uniformly enforced.” Employees were able to use third-party seller data to work with manufacturers and create a similar competing product with higher margins for Amazon. Additionally, executives were under strict pressure to ensure Amazon brands “make up more than 10% of retail sales by 2022.” Amazon’s reputation of private-label copying was well-known amongst various brands, such that they refused to sell their products via the platform. With regard to the second objection, the Commission intends to investigate whether Amazon is biased in how it approaches the featured offer of “Buy Box” and seller products available on the Prime platform. “Buy Box” is a program that allows multiple sellers of similar products to compete to be the single offer, which can provide them “80% of sales for some products.” The Commission alleges Amazon prioritizes their private-label products or “sellers that use Amazon’s logistic and delivery services” on programs such as “Buy Box” or Prime, where the number of users is increasing.

Are these allegations true?

Legally, the Commission argues that if these allegations are true, they may breach Article 102 of the Treaty on the Functioning of the European Union (TFEU), preventing a dominant player from monopolizing the market. The EU is concerned by the ease in which Amazon is able to “avoid the normal risks of retail competition,” particularly with a business model centered on two platforms.

But, is mitigating risk via innovative strategy to achieve higher profit margins illegal?

Some legal experts argue that Amazon’s business practices in question are commonplace within the retail industry and have arguably propagated competition rather than stifled it. Moreover, given Amazon’s share of the online retail market, attorney Alfonso Lamadrid, of Garrigues, argues that the EU will need to highlight the role of Amazon’s platform for online sellers and the role of its alleged conduct in suffocating the market by driving away sellers to make its case. Lamadrid also argues that Amazon’s dominance of the market does not subject it to a “duty of neutrality” under EU law.

Though, is there a difference between neutrality and just, transparent business practices?

In the Journal’s earlier investigation, it noted that research firm eMarketer found “many brands feel they can’t afford not to sell on [Amazon].” Amazon’s dominance and prominence within the online retail marketplace arguably biases sellers in where and how to market their products, despite the risk of private data being used for Amazon’s competitive goods.

So, how much is too much?

In the aviation industry, arguably the car industry, and now, in the ‘big tech’ industry many argue a few companies make up an industry oligopoly. Is this simply the nature of these industries due to high cost, limited resources, and concentrated know-how? Or are handfuls of dominant companies distorting the market and maintaining their disproportionate share by preventing competition through illegal maneuvers? These charges against Amazon tackle a broader, abstract question that plagues the American economy, and arguably the American political system. But for the sake of this piece, it is safe to say these charges are contentious and further investigation may be necessary to ensure transparency and legality in the online retail industry, and perhaps broader ‘big tech’ space.

After 26 years of existence, one of the longstanding National Football League (“NFL”) broadcasting agreements faces uncertainty. The unsettled future between the NFL and AT&T Inc’s DirecTV (“DirecTV”) faces an even greater dilemma following the Supreme Court’s decision on November 2^nd  to allow a proposed class-action antitrust lawsuit against the NFL and DirecTV to move forward. Pending the litigation results, the decision could significantly impact the NFL’s revenue and future broadcasting deals, and most importantly, the NFL consumer.

The NFL and DirecTV’s broadcasting agreement dates back to the 1990s. Through their arrangement, DirecTV created a popular subscription sports package, known as the NFL Sunday Ticket, which retains the exclusive broadcasting rights for NFL regular-season games outside of their local market. The NFL’s collaboration with its media broadcasters ABC, CBS, ESPN, FOX, NBC, and the NFL Network, determine local market games. Any games falling outside of the local market—excluding nationally televised games such as Sunday Night Football—can only be watched through the NFL Sunday Ticket. As a result, if a Las Vegas Raiders fan living in Atlanta wants to see a live broadcast of their team’s game during an ordinary Sunday, their only option to watch the game at home would require them to purchase the NFL Sunday Ticket package. The same is true for any NFL fan wanting to watch a team outside of their local market.

For over two decades, fans have endured the consequences of the pricey agreement between the NFL and DirecTV. Currently, the NFL Sunday Ticket subscription costs households a minimum of $294 for the 2020 NFL regular season, with the premium package costing upwards of $400. These high prices are likely the result of the monstrous deal signed back in 2014. The eight-year agreement—set to expire in 2022—requires DirecTV to pay an average annual rights fee of $1.5 billion to the NFL for its exclusive out-of-market broadcasting rights. Under the current deal, the average yearly rights fees increase by roughly 50%. This steep increase further exacerbates DirectTV’s deficit from the NFL Sunday Ticket package, which reportedly loses more than $500 million annually. In an effort to mitigate their losses, DirecTV has raised the cost of the NFL Sunday Ticket package drastically, infuriating NFL fans in the process.

The Supreme Court’s decision to deny the NFL attorney’s petition for certiorari may be a step in the right direction for outraged NFL consumers. The issue reached the nation’s highest court after NFL attorneys sought a review of the 2019 ruling by the Ninth Circuit. In that case, a divided three-judge panel reversed the trial court’s previous decision to dismiss an antitrust complaint against the NFL and DirecTV. In doing so, the Ninth Circuit found that the plaintiffs’ claims plausibly alleged that the NFL Sunday Ticket agreement could be a violation of the Sherman Antitrust Act. NFL Sunday Ticket subscribers believe that the agreement financially constrains NFL consumers because it eliminates competition in the marketplace for live broadcasts, and the Ninth Circuit found some merit to that argument.

Amidst this lawsuit the future for the NFL consumer remains unclear. Even if the subscriber-plaintiffs are successful in their antitrust suit, it is not certain that prices for the NFL Sunday Ticket package—or competing packages—will drastically lower. What it would do is open the door for competing entities, like Amazon or Apple, to help drive the market price, likely creating a fairer and more equitable environment. However, history and precedent do not favor the plaintiff-subscribers’ chances of succeeding. Justice Kavanaugh’s statement eluded to such, after making it explicitly clear that the Supreme Court’s decision “should not necessarily be viewed as agreement with the legal analysis of the Court of Appeals.” Further, he added that the breadth of the plaintiff-subscribers’ argument “appears to be in substantial tension with antitrust principles and precedents” and that they may not even have “antitrust standing to sue the NFL and the individual teams.” Despite these statements, the subscribers and NFL consumers live to fight another day, and perhaps, could be paving the way for how the NFL enters future broadcasting agreements.

Five years after the Volkswagen emissions scandal, also known as Dieselgate, a court-appointed monitor from the Justice Department has found that Volkswagen has met the conditions of its 2017 plea bargain. As part of the plea bargain, Germany-based automaker Volkswagen agreed to reform its internal culture and compliance systems to avoid similar wrongdoing in the future.

The scandal began in September 2015, when the Environmental Protection Agency issued Volkswagen a notice of violation of the Clear Air Act. The EPA found that Volkswagen had used illegal software to skirt around emissions regulations — diesel engines were programmed to activate emissions controls only during laboratory testing, allowing their cars’ NOx output to meet US standards. However, these cars emitted up to 40 times more NOx when driven in the real world.

Since 1998, researchers from Sweden and the United States had shown that emissions tests could allow for large emissions differences during testing and in real-world conditions. In 2014, scientists at West Virginia University showed that three diesel cars — including a Volkswagen Passat and a Volkswagen Jetta — exceeded US emissions limits “by a factor of 5 to 20” and “by a factor of 15 to 35,” respectively. By the time that the EPA issued the 2015 report, Volkswagen had implemented this illegal software in approximately 11 million cars, including 500,000 in the United States.

At the outbreak of the scandal in September 2015, the response from Volkswagen’s corporate leaders were swift, albeit sometimes contradictory. According to the EPA, Volkswagen had lied to the regulators for a year that technical glitches were responsible, but executives soon acknowledged that there had been intentional deception.

“Our company was dishonest with the EPA, and the California Air Resources Board and with all of you,” said Michael Horn, Volkswagen Group of America’s CEO. However, executives continued to disagree over whether only engineers knew, or if senior management had either ignored warnings or participated in the deception. Volkswagen announced plans to refit the diesel engines of all 11 million affected vehicles, with some countries like Germany ordering full recalls.

A July 2020 report by the Federal Trade Commission also found that Volkswagen has paid out over $9.5 billion in settlement funds. In total, the emissions scandal has likely cost Volkswagen over $30 billion.

Ultimately, the 2017 plea bargain required Volkswagen to allow Larry Thompson, a former US prosecutor, to monitor Volkswagen over three years and enforce changes that make it easier for employees to report wrongdoing. Despite meeting some resistance, Thompson pressured Volkswagen into dismissing high-ranking managers who were under criminal investigation. Volkswagen has also implemented an employee whistle-blower system and tried to modify its hierarchical culture by giving lower-level managers more responsibility.

With Thompson’s role ending with the satisfactory conclusions of his final report, Volkswagen managers, who are struggling to meet sales targets and resolve supply chain disruptions amid the pandemic, are no longer operating under strict oversight. However, the company continues to field civil suits in Britain and other countries. Trials are also in progress or scheduled for former managers and engineers, including former CEO Martin Winterkorn, in Germany.

Volkswagen’s current CEO Herbert Diess told The New York Times that the report is just a starting point and the company needs to remain vigilant.

“We have to be ambitious. We have to be competitive. We have to push for results. But we have to find a balance,” Diess said, acknowledging the importance of ethics in Volkswagen’s operations.

On November 3rd, over 58% of California voters passed one of the most expensive ballot measures in California’s history. Giants like Uber, Lyft, and Doordash spent over $200 million defending Proposition 22, which exempts gig economy companies from Assembly Bill 5 (AB 5). The bill, which the companies unsuccessfully challenged in court, would require gig economy companies to reclassify their workers as employees.

With the passage of Prop 22, however, drivers will continue to be classified as independent contractors, which prevents them from access to the protections and benefits AB 5 mandates, such as overtime pay, unemployment insurance, family leave, sick leave, personal protective equipment (PPE) during the COVID-19 pandemic, and unionization. A UC Santa Cruz study found that 37% of survey respondents had lost 100% of their income due to COVID-19, and 57% of workers completely rely on gig work for their monthly income.

The ballot measure does guarantee some limited benefits and protections that drivers were not previously entitled to: a wage floor, reimbursement, and benefit standards. Drivers who work over 15 hours per week of engaged driving time, for example, will receive a health care stipend, and companies will offer occupational accident insurance for medical expenses. The initiative also stated that drivers will receive a guaranteed pay equal to 120% of the minimum wage (in 2021, this would be $15.60). A recent UC Berkeley Labor Center study disputed this claim, and stated that this guaranteed pay for Uber and Lyft drivers will be the equivalent of $5.64 after accounting for various costs, such as unpaid waiting time.

Prop 22’s passing has produced mixed responses. Uber CEO Dara Khosrowshahi said, “Going forward, you will see us more loudly advocate for new laws like Prop 22, which we believe strike the balance between preserving the flexibility that drivers value so much, while adding protections that all gig workers deserve.” Lyft co-founder and president, John Zimmer, echoed a similar sentiment about taking its ballot win beyond California stating, “We look forward to continuing our conversations with policymakers across the country.” Uber and Lyft gained $13 billion in combined market value after the ballet measure was approved, with Uber shares soaring to as much as 18% and Lyft shares up 22%. While companies are satisfied with their pricey win, Human Rights Watch and Amnesty International released a joint statement affirming their deep concern for the initiative and how its passage “will undermine the rights of workers for app-based companies in the state and set a dangerous precedent across the United States and globally.”

Prop 22 has now become one of the most difficult statutes for the legislature to alter because of its 7/8ths provision. Amending the proposition would require 87.5% vote in each chamber of the California State Legislature and the government’s signature. With Joe Biden and Kamala Harris set to take office soon, it is unclear what the future holds for gig companies, as both stood against Prop 22. For now, Uber, Lyft, and others celebrate a major ballot measure victory that could have longstanding ramifications for workers.

On November 9th, the Federal Trade Commission (FTC) announced a settlement agreement with Zoom Video Communications, Inc. regarding the video communication platform’s privacy issues. After over a year of investigations, the FTC concluded that Zoom had misled the public about the strength of the app’s privacy protections since at least 2016. The FTC ordered, among other measures, that Zoom is prohibited from misrepresenting its privacy practices and that it must receive an independent third-party assessment of its security program every other year. This order is to stand for 20 years.

Zoom came under increased scrutiny when the COVID-19 pandemic forced huge swaths of the population to work from home and go to school online. Zoom offered a user-friendly interface that took little practice to get the hang of. On top of that, it offered free, 40-minute meetings that could host up to 100 attendants at once, making it a no-brainer for schools and businesses to give it a test run. The nine-year-old video conferencing platform saw its usership explode from 10 million users in December 2019 to 300 million by April 2020.

This increased usership did not come without its risks. The simplicity of the service led to “Zoom bombing,” where unauthorized strangers would join meetings to play pornographic videos or spew hate speech. As the FBI got involved in the matter, Zoom implemented new features to increase its privacy and security measures.

“Zoom bombing,” however, is not why the FTC started the investigation. It’s not even mentioned in the press release of the settlement.

Before Zoom was a publicly traded company, it had major security issues. For the past four years, Zoom claimed to utilize end-to-end encryption (E2EE) for its meetings, one of the most secure methods of internet communication. End-to-end encryption works by encrypting the data from a sender’s device until it reaches its intended recipient, the only device able to decrypt the message. This is why it is referred to as “end-to-end”—as only the parties on each end of the shared data are able to decrypt the messages. With end-to-end encryption, any third-party, including service providers, hackers, and even the app developers that facilitate the communications, are unable to decrypt the messages.

But this is not the type of encryption that Zoom actually provided. A spokesperson for Zoom admitted that the communications technology company, in fact, used a weaker level of security—a Transport Layer Security (TLS) encryption. This is the same type of encryption used to secure a typical HTTPS website. The key difference between this and end-to-end encryption is that Zoom could still access the video and audio of its users’ meetings. However, the FTC complaint showed that for years Zoom represented in its HIPAA Compliance Guide that it offered end-to-end encryption. Zoom videos even displayed a green icon that stated “Zoom is using an end-to-end encrypted connection” when a user dragged their mouse over it.

In July 2018, Zoom secretly installed a ZoomOpener software on Apple devices that bypassed the security protocols of Safari, Apple’s web browser. This created a one-click feature that opened the Zoom application, enabling a user’s webcam, without triggering Safari’s dialogue box that asked users if they wanted to launch a third-party app. A year later, Apple rolled out an update that removed the ZoomOpener after discovering a vulnerability that left Zoom and Mac users susceptible to an attack. The FTC alleged that this action, in conjunction with the fact that Zoom failed to notify its users of this feature, violated the FTC Act.

More recently, in the spring of 2020, a class-action lawsuit was filed against Zoom, alleging that it shared user data from its iOS app with Facebook and other third-parties. While sending user data to Facebook is far from unheard of, the concerns lie with the fact that Zoom, again, failed to notify users about what it was actually doing. Soon after the suit was filed, Zoom updated its iOS app to stop sending data to Facebook.

In October 2020, Zoom announced that it will be rolling out an update to offer end-to-end encryption (for real this time) to all of its free and paid users. But Zoom has ruffled feathers at almost every step of its nearly decade-long journey to becoming a tech giant, and with a slap on the wrist from the FTC, it’s hard to imagine that it will be abandoning its playbook of deceptive security practices anytime soon.

The Department of Justice accused Google of illegally monopolizing Internet searches in an antitrust lawsuit filed in October, alleging that its conduct was harming consumers and competitors.

The lawsuit alleged that Google, owned by Alphabet Inc, crafted deals with Internet companies like Apple to make itself the default option for users and to dominate the market share in up to 88 percent of searches. In response to these allegations, Google has contended that its actions were legal. Rather, Google argues that people use its platform because they prefer to.

According to the Wall Street Journal, Google’s partnership with Apple is at the center of the suit, and could detrimentally impact both tech companies. Although the terms of the deal between Apple and Google have never been made public, the Justice Department estimates that Google’s payments make between 15% and 20% of Apple’s annual profits. According to the lawsuit, Google pays Apple approximately $8 billion to $12 billion a year to remain the default search option on its products. In 2019, Apple devices made up almost 50 percent of its search traffic. Although it is uncertain right now how the suit will affect Apple, the company’s centrality in the case highlights a potentially sizable threat to one of Apple’s major revenue streams.

The government’s lawsuit has been over a year in the making, in the midst of the Justice Department’s broader investigation into technology companies that assume huge roles in the U.S. economy and society. Questions regarding what measures and steps should be taken to control the power of tech giants have been at the center of many policy and political concerns, especially regarding the influence tech companies have over consumers and the detrimental impact their business practices hold on new competitors. This also comes in the midst of President Trump’s promise to hold Big Tech accountable, in light of allegations against anticonservative bias on social media.

In Europe, Google has already faced various antitrust violations fines, including a $5 billion fine for unfairly favoring its own services in internet searches. In the United States, however, the case comes years after the last government antitrust suit against tech giant Microsoft in the late 1990s. The suit against Microsoft lasted over a decade and ultimately ended in Microsoft’s loss.

It seems to be the right time for the U.S. to bring this suit, although some have argued that it is overdue and even a little too late. Regardless, if prior suits have indicated anything, it is that regulated cases like these are often long, drawn out, and unpredictable. Although it may take years to pan out, it is likely that the lawsuit will have a notable and significant impact on the future of Google and big tech companies as a whole, marking the beginning to a long trial ahead.

In 2009, former Prime Minister of Malaysia, Najib Razak, formed 1 Malaysia Development Bhd, or 1MBD, a sovereign investment fund intended to boost the Malaysian economy. Facially, the fund was created to transform Kuala Lumpur into the investment hub of Southeast Asia. Prime Minister Najib’s stepson, Riza Aziz, managed the fund along with now-notorious Malaysian businessman Jho Low.

Mr. Low, a friend of Aziz with strong ties to the Saudi royal family, engaged the Southeast Asian branch of international investment firm Goldman Sachs to finance 1MBD’s operations. The branch’s chairman, Timothy Leissner, and its managing director, Roger Ng, took the lead on the deal. Together with Mr. Low, Goldman raised $6.5 billion for 1MDB through the issuance of three sets of bonds.

Despite receiving approval from such senior officials at Goldman, the loan agreements provided very little information with respect to the purpose of the funds and who would be overseeing their management, disclosures that are generally considered a prerequisite for loans of this size. In exchange for waiving such requirements, which analysts presume was in part motivated by Goldman’s intense need to rebound after the 2008 financial crisis, the firm appears to have charged 1MDB a sort of “premium” on the transaction. This premium came in the form of fees twenty times the value of those usually charged for loans of this nature, or $600 million for the bank.

It soon became clear that 1MDB was not using these loans for any legitimate public purpose, but rather to indirectly enrich, primarily, Mr. Low himself, and, secondarily, Prime Minister Najib. Between 2009 and 2013, Mr. Low diverted billions of dollars in funds allocated to 1MDB to his own personal bank accounts across the globe. Mr. Low used these stolen funds to finance a lifestyle of extreme luxury, replete with multimillion dollar yachts, real estate properties in the most expensive markets in the world, and even the financing of the renowned film “The Wolf of Wall Street,” a project which itself required an expenditure of over $100 million. Low also used his relationship with the Saudi royal family to arrange a loan of several billion dollars to a Saudi shell company, which then “donated” $700 million to Prime Minister Najib for his private use. Najib later claimed in a criminal proceeding to have had no knowledge of the donation’s origin.

In 2018, Najib was voted out of office in response to his alleged participation in this elaborate defrauding of the Malaysian people. Around the same time, regulators in fourteen countries – including the Malaysian government, Hong Kong’s markets watchdog, and the United States Department of Justice – began investigating Goldman Sachs for its involvement in brokering the bond sales that made the entire scheme possible.

These investigations have resulted in global settlements totaling roughly $6 billion against Goldman and its Southeast Asian branches and subsidiaries. In addition to various other fines, the bank recently agreed to pay $3.9 billion to Malaysia in exchange for the Malaysian government dropping all criminal charges, $2.3 billion to the U.S. Justice Department, and $600 million in disgorgement fees.

Criminal charges have also been brought individually against the bankers involved, Mr. Leissner and Mr. Ng. While Mr. Leissner pled guilty to and was indicted on charges of conspiracy to launder money and violate antibribery laws (the FCPA), Mr. Ng still awaits his trial in the U.S., has pled not guilty to charges of bribery and money-laundering, and is expected to face separate charges in Malaysian courts. Though Prime Minister Najib continuously pled his innocence throughout his own trial, he was ultimately found guilty on charges of abuse of power, breach of trust, and money laundering, and sentenced to up to twelve years in prison and $50 million in fines. Low’s fate, however, along with his whereabouts, remain unknown, making him a true “international man of mystery.”

The Department of Justice filed an antitrust lawsuit that seeks to block Visa Inc.’s $5.3 billion deal to acquire Plaid Inc. Visa agreed to buy the financial technology company in a deal designed to increase Visa’s access to the booming financial technology sector. The Justice Department argued that the acquisition would allow Visa to unlawfully maintain a monopoly in online debit services, which in turn would lead to “higher prices, less innovation and higher entry barriers for online debit services.”

Plaid is a privately held software startup that powers financial technology apps like Venmo, Acorns and Betterment by linking the financial data from people’s bank accounts to the apps.  Plaid’s technology allows “access into consumers’ various financial accounts, with consumer permission, to aggregate spending data, look up balances, and verify other personal financial information.” Accordingly, Plaid has access to financial data from over 11,000 U.S. banks. This access, the government argues, better positions Plaid to overcome entry barriers others face in attempting to provide online debit services.

The lawsuit suggests that Visa is a “monopolist in online debit transactions,” responsible for some 70% of the market for online debit services. Mastercard, Visa’s next closest rival at around one-third of the size, has not constrained Visa’s monopoly power. This leaves merchants with little choice but to accept Visa debit payments, despite complaints about the cost of Visa’s service.

Visa earns a small fee from every transaction run on its network, varying depending on the card, but debit transactions tend to be cheaper to run on Visa’s network than credit card transactions. Those transactions ultimately bring in billions of dollars in revenue for Visa every quarter.

A new service in development by Plaid would bypass traditional debit card networks, and would be a substitute for Visa’s online debit services. According to the lawsuit, this presented a competitive threat to Visa, and the proposed acquisition therefore “would eliminate a nascent competitive threat” to Visa’s monopoly.

As evidence, the Justice Department cited the CEO of Visa’s own description of the deal as an “insurance policy” to neutralize a “threat to our important US debit business.” Further, the Department cited the $5.3 billion sale price, “an unprecedented revenue multiple of over 50x” as evidence of the deal being strategic instead of financial.

Visa, on the other hand, said it “strongly disagrees” with the lawsuit, arguing that it “reflects a lack of understanding of Plaid’s business and the highly competitive payments landscape in which Visa operates.” Further, Visa argued that Plaid is not a payment network like Visa, but a payment infrastructure company. Visa said the Department of Justice’s arguments were “legally flawed,” and it “intends to defend the transaction vigorously.”

The case represents the increased scrutiny the Department of Justice plans on taking in antitrust matters in the financial sector. Specifically, the department is focused on protecting future competition, even in cases where two companies aren’t currently rivals.

The EU, through the European Commission (EC), plans to revise its legal framework for digital services by way of a new legislative package: the Digital Services Act (DSA). The announced goal of the DSA is to modernize its regulation of digital services, which has remained unchanged since its adoption in 2000. The underlying purpose is to protect strategic EU industries.

According to the Executive Vice President of the EC, Margrethe Vestager, the DSA aims to “create a more trustworthy digital world,” by holding digital services to a higher standard of transparency. The new regulations would “level the playing field” for smaller businesses, allowing entrants to the market the opportunity to grow; the DSA would prevent large online platforms from acting as gatekeepers by placing constraints on the business models of tech giants. A draft of the legislative package is expected to be available by the beginning of December.

The push for heightened regulation in the digital market has not been well-received by the major online platforms. According to Google, the proposed laws under the DSA will “curb the power of big tech.” In response to the initiative, Google allegedly plans to push back on the proposal by targeting European politicians. Google’s strategy was revealed in an internal presentation that was leaked to the French publication Le Point, and picked up by the Financial Times. The document cited an objective to “reset the political narrative” around the proposed legislation. In essence, Google hopes to weaken support for the proposal.

Though Google neither confirmed nor denied the existence of the leaked document, Google’s management has made it clear that they have concerns surrounding the proposed legislation. Amazon and Facebook have drafted complaints to the practices proposed under the DSA as well; Microsoft and Apple are also likely to be among the affected group.

Google’s leaked presentation uncovers a common response of big tech players to unfavorable regulatory proposals in the market: manipulation of public discourse and influencing lawmakers. In addition, the presentation cited strategic offensive tactics, such as highlighting the potential negative impacts of the DSA, and seeking out “allies” in its efforts to campaign against the proposal in Brussels.

Europe is not the only entity advancing new regulations of Big Tech players. The U.K. and Australia have recently recommended similar regulatory efforts. The U.S. is now seeking to catch up to its overseas counterparts: lawmakers released a proposed “massive overhaul” of U.S. legislation surrounding antitrust enforcement in the digital marketplace. There are many steps before these proposals could become law, but they are likely triggering a similar response to the one uncovered by Google’s leaked presentation.

The global pandemic that so dramatically forced the world economies to shut down, has led to a surprising number of mergers during the last quarter of 2020. This sudden influx of M&A has amounted to more than $1 trillion in transactions in sectors that might benefit from the coronavirus crisis, such as the technology sector. A high-ranking Citigroup executive, Alison Harding-Jones, urged CEOs and boards that “the way out of this crisis is through M&A” and strategic repositioning in a post-COVID era. Goldman Sachs’ head of M&A, Stephan Feldgoise, postulated that corporations are eager to explore this uncharted territory by expanding and diversifying their businesses. The accretive benefits of M&A, however, have often been argued to be circumstantial, while the legal pitfalls could be significant.

The v-shaped increase in M&A activity indicates that managers believe in the benefits of a potential acquisition. However, a study showed that a merger with no apparent synergies, driven mainly by the expansion and diversification cited by Feldgoise, would lead in consumer surplus and loss of revenue for the corporation. As such, a hedging position through M&A on horizontal or unrelated vertical products would not have a desirable effect, unless the goal is to also achieve synergistic value. On the contrary, the managers’ accretive expectation could be justified not only in absolute measures of efficiency or synergies, but also in the effective tax rate, which has been found to decrease on average by 6.7% for the acquirer. This could potentially be a strong liquidity injection for the corporation during tumultuous times. Another view suggests that rational managers might knowingly proceed in an unprofitable merger. Managers could be seeking an event-driven stock price support. As such, the M&A activity indicates that managers employ this move strategically for a variety of reasons and not just accretion or expansion and diversification.

Despite the strategic benefits that M&A pose, lawyers warn that there are legal implications that could render those benefits void. A critical step to correctly identifying a target company without encountering legal pitfalls is an in-depth due diligence process. Especially during a post-COVID era, vetting a target company to assess the transferability of liabilities should take a primary role in the acquirers’ priorities as it could substantially affect the purchase premium. Furthermore, during this time it would be salient to assess the third-party contractual consent requirements as they could act as a deterrent of a potential acquisition. This is also the case for substantial third-party business agreements, where Force Majeure clauses, during the pandemic, could lead to their dissolution and to a substantial loss of revenue for the acquirer. Moreover, in the current fast-changing environment target indemnification provisions and subsequent indemnity caps need to be very tightly drafted, as the indemnitee/acquirer is more likely to utilize these provisions. However, nowadays, the implementation of insurance schemes has substantially mitigated the risk of post-closing M&A indemnity risk.

Another, legal implication that managers need to consider is the stock to cash ratio as a means of acquisition. Acquiring companies through cash is a more straightforward process. Stock acquisitions, on the other hand, provide a portion of control to the target stakeholders, forming new board and stakeholder relationships, which need to be safeguarded for the success of the deal. Another major factor that managers should consider is the tax deferment incentives that stocks offer to target stockholders, as their tax obligations can be deferred unlike cash receivables. During a post-COVID era, acquirers seek to hoard cash as an insurance against uncertainty, leading them to seek stock offering deals. As Mr. Beck, the head of M&A of UBS said, it also means that “there is also a lower premium as target stakeholders will participate in the combined entity.” However, due to the uncertain environment, many factors need to be carefully provisioned such as whether the shares will be of fixed amount or fixed value, leading negotiating parties to follow a stricter approach clawing to their positions.