Faraday Future, the electric vehicle startup hyped as a rival to Tesla, has been eyeing a public listing through a deal with a special purpose acquisition company (SPACs). The startup’s CEO says that the company is working on a deal that will be announced: “hopefully quite soon.” Faraday’s action falls into the pool of 166 SPAC IPOs up to October 29, 2020. In fact, 2020 has been a record year for the formation of SPACs given that initial public offerings (IPOs) of SPACs have raised nearly $59.4 billion in gross proceeds, which is far higher than $13.6 billion in gross proceeds raised by SPACs in 2019 or the $10.8 billion in 2018.

SPACs originated from the development and emergence of “blank check companies” in the 1980s. Like blank check companies, SPACs are vehicles with no operating history, assets, revenue, or operations that are formed to raise capital in a public offering, will be used to acquire an existing company.

After a SPAC is established, its business model is simple: use the SPAC as a shell company to raise money from investors in an IPO, and then target and merge with a company seeking to go public. Unlike a reverse triangular merger, in which an acquiring company creates a subsidiary, merges its subsidiary into a target company, and then becomes the parent company of the target, here, the company itself is targeted by the SPAC vehicle, which will absorb it and take it public.

SPAC deals are appealing for companies that want to go public with less regulatory hurdles than a traditional flotation. For example, with a SPAC a company can announce the merger after the price and the size of the deal have been settled. In contrast, a company seeking to conduct a conventional IPO must file a detailed registration statement, respond to SEC inquiries concerning, and conform all communications to a complicated set of speech regulations (i.e., the “gun jumping rules”) before it can begin the process of pricing the IPO. Given these regulatory differences, SPAC deals are much faster and more certain than the traditional option. The Covid-19 pandemic and the resulting national shutdown have also complicated the issuers’ ability in an IPO to meet with investors for purposes of pricing a conventional IPO. SPACs offer a potential alternative.

The question now is whether a SPAC will become a mainstream option for companies that seek a public listing. While the rapid growth in these vehicles in recent years points in that direction, the potential disadvantages outweigh this conclusion.

First, the top advantage of SPACs for a company seeking to go public is its speed and certainty. However, a merger between a SPAC and a target company could fail if the SPAC’s shareholders vote against the merger. In the past, around 10% of mergers by SPACs have failed for this reason. For instance, in April 2020, TGI Fridays, a highly-recognized American brand, terminated its merger with Allegro Merger, a SPAC. According to the deal’s form 8-K file with the SEC, the reason was “extraordinary market conditions and the failure to meet necessary closing condit ions” during the COVID-19 pandemic. Another example of a SPAC that failed after the merger related to Akazoo S.A. Akazoo S.A. was the product of a September 2019 merger between a SPAC called Modern Media Acquisition Corp. (MMAC) and Akazoo. Ltd., an AI music streaming company. The merger was completed prior to the September 17, 2019 deadline for MMAC, otherwise it would have had to return all of the funds from its trust account and wind up the SPAC. However, after the merger, news came out that Akazoo Ltd. was a massive accounting fraud, making their proclaimed 5.5 million subscribers a moot point. On June 1, 2020, Nasdaq Stock Market announced that it would delist the ordinary shares and warrants of Akazoo S.A. As such, the sponsors suffered significant losses and filed a lawsuit on misrepresentation. Rencently, on September 30, 2020, the Securities and Exchange Commission (“SEC”) also filed a lawsuit against Akazoo S.A. and its original management team (not including MMAC and its directors and officers), alleging that it “grossly misrepresented the nature and success of its music streaming business.” To sum up, the uncertainty of a successful merger may come from either a SPAC or a target. Nevertheless, when the parties cannot benefit from the certainty of a successful listing, both of them will leave the market.

Second, the target company’s founders are more vulnerable to losing control of the company during a SPAC transaction than in a conventional IPO. In an IPO, the new shareholders of the company are typically individual investors and long-term institutional investors. Thus, the incumbent management typically retains a degree of autonomy. However, in a SPAC transaction, the SPAC sponsor typically expects to obtain representation on the surviving company’s board of directors, allowing the sponsor to participate in the company’s decision-making process. Therefore, a founder who intends to preserve his decision-making power may be unwilling to go public through a SPAC.

Third, a SPAC transaction causes more dilution for the company than an IPO. As we discussed above, the SPAC investors invest at greater risk than in a traditional offering. Thus, in addition to a formal discount, most SPACs compensate sponsors by giving them 20% of the entire share capital of a SPAC upon its IPO, which translates into an often-substantial ownership claim in the target following the SPAC merger. Additionally, during a SPAC’s initial public offering, investors in a SPAC are given warrants in addition to common shares, which can convert into shares of the target’s common stock following the merger, further diluting the existing shareholders of the target company.

In conclusion, SPACs are more likely a flash in the pan. This new option for companies has a long way to go before it replaces the traditional IPO, and with growth in the space, regulation will likely follow.

A decade-long legal battle between Google and Oracle reached the U.S. Supreme Court in October, 2020. This case attracts unusual interest because it could significantly impact innovation in the software industry. Two major issues in the case include whether Oracle can claim a copyright on Java APIs (Application Programming Interfaces) and whether Google’s use of the APIs constituted “fair use,” a defense for a copyright infringement claim.

When Google developed the Android operating system for mobile phones, it decided to make the platform interoperable with Java, a popular programming language in the developer community. In order to do so, Google reimplemented several Java APIs, which are interfaces that grant access to particular functions in a program. With the APIs, developers who write applications for Android can utilize the existing functions of the underlying platform and avoid having to start from scratch.

Oracle, who bought the company that owned the Java platform, sued Google for copying the Java APIs in 2010. In May 2012, Judge William Alsup of the Northern District of California ruled that APIs are not copyrightable. Distinct from patent law, the Copyright Act protects expressions but does not protect any “idea, procedure, process, system, or method of operation.” If the expressions, in this case the API codes, are too closely related to their functions so that developers have to write them in only one way to perform a particular task, they are inseparable from the task and do not quality for protection.

On one hand, re-implementing or copying APIs has been a widespread practice in the industry. Providing copyright protection to the APIs could forbid a vast number of applications that currently use the codes from operating. On the other hand, some people argue that providing copyright protection to the APIs would encourage innovation by rewarding the developers who write the codes.

In 2014, the U.S. Court of Appeals for the Federal Circuit reversed the district court’s decision. The Federal Circuit held that APIs are copyrightable and left open the possibility that Google might have a fair use defense. Google filed a petition asking the U.S. Supreme Court to review the Federal Circuit’s decision, but the Supreme Court denied certiorari. The case then went back to the district court for a trial on the fair use defense. In 2016, a jury found fair use and delivered a verdict in favor of Google. In 2018, the Federal Circuit set aside the jury’s verdict as a matter of law. In 2019, Google filed another petition asking the U.S. Supreme Court to review both decisions by the Federal Circuit. The Supreme Court granted the petition, and oral arguments were heard via telephone on October 7, 2020.

During the oral arguments, the Supreme Court justices seemed to be skeptical about Google’s argument that the codes are not subject to copyright protection but showed more sympathy with the fair use defense. Justice Roberts mentioned that “the only reason it was necessary” for Google to use the API code was that it had been “very successful” and “it seems a bit much to penalize (Oracle) for that.” Justice Neil Gorsuch pointed out that both Apple and Microsoft had created mobile operating systems without copying the Java interfaces and questioned Google’s belief that it had no choice.

According to a software developer who worked on the Java interface, if Google loses the copyright argument but wins on the fair use defense, it would be a “weak win” for the rest of the software industry because fair use turns on the merits of a particular case. The defense does not necessarily apply to other API users, but the implications of the holding on the copyright claim could be devastating. The Supreme Court has not issued its opinion yet, but this case will surely impact the software industry in the future.

The four-year trade war between the United States and China has resulted in many companies bifurcating their manufacturing and product design pipelines into one for China and another for the rest of the world. This bifurcation has been done not only to avoid costly tariffs and trade restrictions, but also out of fear of heightened security risks of doing business with China. And while these supply chain transformations may outwardly seem like a byproduct of President Trump’s nationalism, they are actually the product of a decade of increasing divergence over civil liberties and growing economic competition between the United States and China, and would likely continue in some form under a potential Biden administration.

In 2017 and 2018, the Trump administration announced a series of new tariffs on Chinese manufacturing that dramatically increased costs and barriers for trade between the two countries. The policies were designed with the aim of decreasing Western dependence on Chinese imports and increasing domestic manufacturing. These series of executive actions eventually drove Taiwanese manufacturers like Foxconn and Wistron, which manufacture consumer electronics for major US companies like Apple, to bifurcate their supply chains. They spun off parts of their businesses to manufacture products solely for the growing and lucrative Chinese market, while rapidly moving their global-oriented manufacturing plants to new sites in Southeast Asia, India, and Latin America.

However, these changes have not just been limited to supply chains. In recent years, the United States has begun to clamp down on software and telecommunications equipment of Chinese origin running on American networks. Federal officials including members of Congress have cited fears that building networks using equipment made by Chinese manufacturers like Huawei or ZTE would give Beijing an unacceptable backdoor into US internet services and pose a heightened national security risk. A key example of this was the 2019 ban on Huawei’s 5G equipment and consumer electronics in the United States. This move eventually resulted in Google severing key mobile services like Maps and Gmail from Huawei’s Android devices. The United Kingdom replicated the United States months later by opting to stop use of Huawei equipment in its nationwide 5G network.

However, while the Trump administration may have accelerated this transition, a divide between US and Chinese product and manufacturing lines was always in the cards. The United States and China have long been at odds over digital rights and trade hegemony. In the 2000s, strict Chinese censorship laws prevented Google and Facebook from entering the Chinese market and paved the way for China-specific search engines and social networks like Baidu and WeChat to run in a self-contained bubble. And China was noticeably absent from the ultimately failed negotiations on the Trans-Pacific Partnership trade agreement, whose goal from the perspective of the Obama administration was to re-center supply chains and trade rules in East Asia around the United States and its allies. Given this history of difference over civil liberties and the continued economic competition between China and the United States, it is very unlikely that a President Joe Biden would change this ongoing supply chain bifurcation.

The long overdue split between global and Chinese product chains, driven by a continued US-China impasse over digital rights and trade dominance, could continue to decrease interdependence between the two countries. Should it succeed, this bifurcation will echo for decades to come in the global economy.

Over the last twenty years one of the most notable trends in the asset management industry has been the rise of electronically traded funds (ETFs). An ETF is a fund that passively tracks a basket of securities, typically stocks or bonds. Since the first ETF tracking the S&P 500 was created in 1993, ETFs have steadily become the preferred investment instrument for millions of people and institutions seeking exposure to broad market indices. According to the research firm ETFGI, US-based ETFs have over $4 trillion in assets under management, with $326.3 billion flowing into US-listed ETFs in 2019. Within the last decade, the number of ETFs that track stock market indices has more than doubled, from 901 funds in 2010 to over 2,100 today.

Simultaneously, another less mainstream and risky trend has shaken up retail investing: the rise of digital currencies. Bitcoin, a blockchain-based peer-to-peer cryptocurrency pseudonymously invented in 2008, remains the most popular and widely held digital currency. Often referred to as “digital gold” due to its limited supply and ability to function as a hedge against inflation (like gold ETFs), Bitcoin now has a market capitalization of nearly $200 billion. According to a survey by Blockchain Capital, 30 % of those in the 18-to-34 age range would rather own $1,000 worth of Bitcoin than $1,000 of stocks or bonds. As interest has grown, established financial institutions have taken notice. Just last week, PayPal announced that it would allow US users to buy, hold, and sell cryptocurrencies. In the company’s press release PayPal CEO Dan Schulman said that the shift to digital currencies “is inevitable.”

These two trends – ETFs and cryptocurrencies – are now set to collide. At a conference held by the Chamber of Digital Commerce on October 2^nd, Securities and Exchange Commission (SEC) Chairman Jay Clayton stated that the SEC is actively developing a regulatory framework that will permit ETFs that track crypto assets. The SEC is collaborating with the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC) on an approach to oversee cryptocurrencies, which continue to exist in a regulatory grey area. Clayton’s comments came as a response to specific interest in the prospect of cryptocurrency ETFs. A recent study by Bitwise Asset Management found that 76% of surveyed financial advisors reported that they had received a question from a client about crypto in the past twelve months. In addition, a top concern of financial advisors in the survey was that cryptocurrencies lack “easily accessible investment vehicles like ETFs or mutual funds.”

While Clayton’s statement indicates that a cryptocurrency ETF could be on the horizon, proponents shouldn’t get their hopes up just yet. Historically, the SEC has been skeptical of cryptocurrencies and reluctant to grant regulatory approval to experimental ETFs. In 2018 the SEC rejected the Winklevoss Bitcoin Trust, a bitcoin ETF launched by Cameron and Tyler Winklevoss (the twins made famous for their early involvement with Facebook and subsequent depiction in The Social Network film). The SEC cited issues related to fraud and investor protection. Last March, the SEC similarly rejected Wilshire Phoenix’s proposal for a bitcoin-based ETF.

The appeal of a digital currency ETF – for both ETF issuers and retail investors – is that it would allow new investors to gain exposure to a diversified basket of cryptocurrencies. Further, crypto ETFs could offer outsized returns that are uncorrelated with the stock market. According to a recent paper by Sandip Mukherji of Howard University, over the last 60 months Bitcoin has provided higher returns (with higher volatility) than ETFs containing bonds, stocks, commodities, and other alternative assets.

Though still years away, an SEC-approved ETF tracking digital assets would accelerate capital flowing into ETFs as well as the adoption of digital currencies. As regulators better understand the cryptocurrency ecosystem and interest from investors continues to climb, a crypto ETF could happen sooner rather than later.

As vast swathes of the economy continue to suffer the effects of the global pandemic, at least one corner of the retail market is winning: home improvement. Consumers, stuck at home more than ever before, are spending big on home offices, storage solutions, and décor. Both Lowes and Home Depot reported strong sales growth over the spring and summer, while Wayfair’s stock gained 1,356% in just five months.

Not all companies have profited equally, though. As was the case for many brick and mortar stores, global lockdowns hit Ikea hard. Over springtime, 75% of its stores were forced to close for periods of up to 12 weeks, resulting in the furloughing of thousands of staff. Eager to buy, consumers turned to Ikea’s online store. But the notoriously clunky and unreliable website couldn’t keep up with demand, and there were soon horror stories of unfulfilled orders and poor customer service. The Swedish retailer recently reported that in the 12 months to August its sales dropped 4% .

It’s not all bad news for Ikea, though. Despite a parade of difficulties with its online store, sales through the website grew substantially. In September, a noticeably relieved Jesper Brodin, CEO of INGKA Holdings – the primary Ikea franchisee – revealed online sales were up 60% during the pandemic and now make up 18% of the company’s total business. Without these gains, Ikea’s losses would undoubtedly have amounted to much more than 4%. Moreover, since stores began reopening over the summer, demand from in-person consumers has been consistently strong. Outdoor furniture and office furniture are powering recovery. Demand for desks – especially Ikea’s popular customizable desks – has outstripped supply. In August, parking lots were filled with customers desperately trying to secure desks, lamps, and shelves before their children started distance learning.

Buoyed by these positive signs, Ikea is putting its struggles in the rearview mirror and turning an eye to our post-pandemic future. The company intends to pursue a “total market approach” – a strategic marketing and business approach that recognizes and prioritizes a diverse customer base without necessarily segmenting the market. In September, the company announced that it will open 50 new stores worldwide, bringing the total to 445. In a dramatic departure from its traditional retail strategy, some of these new Ikeas will be small, city-center stores, rather than big-box suburban builds. According to Brodin, Ikea sees these new, smaller stores as important touchpoints, a way to “become more accessible to people where they are.” In a move that suggests Ikea is finally willing to take online shopping more seriously, it has expanded into three new e-commerce markets, including China. This month Ikea also announced that it will proceed with its Buy Back scheme. The program is part of Ikea’s efforts to be carbon neutral by 2030, and is also designed to take advantage of a strong furniture resale market powered by millennials who are increasingly eschewing brand new furniture. The program will launch in 27 countries, including the UK and Ireland (but not the U.S.) this November. It gives customers the opportunity to sell their used Ikea furniture back to the store in return for a voucher of up to 50% of the original purchase price. In turn, Ikea will open its first second-hand store, selling only used Ikea furniture, in Eskilstuna, Sweden, this Fall.

Riding this wave of pandemic-related growth, Ikea is betting big that it can predict life post-Covid. Is “nesting” really here to stay? Will young people return from the suburbs to the big cities? Can the company finally embrace our digital future? And how interested is China in buying Ikea’s products? The company’s future as a global, multi-platform retailer will depend on the answers.

The Department of Justice filed an appeal with the Ninth Circuit challenging a preliminary injunction won by WeChat users, which stalls President Trump’s executive order effectively banning WeChat from U.S. app stores. Magistrate Judge Laura Beeler of the U.S. District Court for the Northern District of California temporarily blocked the executive order days before it was to take effect.

WeChat, a subsidiary of Chinese tech giant Tencent Holdings Ltd., is a messaging service with sprawling features. The app allows users to video chat, transfer money, make in-store payments, share photos, and access third-party services, such as ride-hailing and food delivery. WeChat is one of the few tech bridges between the U.S. and China, and it allows the Chinese diaspora to communicate with friends and family in China. Like other Chinese internet services, however, WeChat is subject to censorship and can serve as a vehicle for propaganda.

The executive order banning WeChat stems from a 2019 national emergency declared by President Trump with respect to the “information and communications technology and services supply chain.”  The President announced that foreign adversaries were creating and exploiting vulnerabilities in communications technology, constituting an unusual and extraordinary threat to national security.  President Trump’s August 2020 executive order targeting WeChat stated that the app’s data collection and censorship pose such a threat. The President cited his authority under the International Economic Emergency Powers Act (IEEPA) and the National Emergencies Act to implement the ban.

Judge Beeler granted the preliminary injunction halting WeChat’s ban because the plaintiffs raised significant First Amendment claims. The opinion reasoned that banning “an entire medium of public expression” could amount to restraint of free speech and is not “narrowly tailored to address the government’s significant interest in national security.”

TikTok, the Chinese-owned video-sharing app, won a preliminary injunction challenging its own ban from U.S. app stores on different grounds. TikTok successfully argued that the President likely exceeded his authority under the IEEPA in banning the app, which does not grant the authority to restrict “exchanges of information materials.”

While WeChat’s challenge to the executive order continues, WeChat will likely remain essential to many Chinese speakers in the U.S. In an interview with the New York Times, one WeChat user stated that if the app were banned, she would use a virtual private network (VPN) to access WeChat from the U.S. Chinese emigres are often familiar with VPNs, as they are commonly used to access websites like Google, Instagram, and Wikipedia from China.

Nearly one year later, the backlash from a tweet by the former Houston Rockets (“Rockets”) General Manager, Daryl Morey, seems to have finally subsided. In October 2019, one tweet caught Chinese and National Basketball Association (“NBA”) executives completely off-guard. At the time, Hong Kong’s pro-democracy protests were fueling anarchy and revolts, causing the government, backed by Beijing, to use emergency power measures for the first time in approximately fifty years. In an effort to support the protests, Morey tweeted “Fight for Freedom. Stand With Hong Kong.” Those seven words resulted in a massive economic downfall for the NBA and damaged the long-standing relationship between the league and China.

The NBA’s expansion efforts into China date back to 1979 when the Washington Bullets became the first team to play a game in China. Shortly after that, the NBA capitalized on the untapped market by airing games on China’s state-run CCTV, opening an office in Hong Kong, and playing over 20 NBA Preseason games in China. The NBA furthered its devotion to the Chinese fan-base in 2008 by creating NBA China, which is now estimated to be worth $5 billion. As a result, basketball continues to remain the most popular sport in China.

On October 4, 2019, the seemingly positive relationship between China and the NBA came to a screeching halt because of the words of one man. Immediately following Morey’s tweet (which he quickly deleted) the Rockets’ coverage on CCTV and Tencent Holding’s (“Tencent”) streaming platform ceased. Shops and online stores removed their merchandise and the existence of arguably the most popular team in China disappeared in a matter of days. The consequences of Morey’s actions continued on October 8, 2019 when CCTV suspended all NBA broadcasts. Additionally, tech giant Tencent—which had reached a $1.5 billion deal with the NBA in 2019—halted coverage of all NBA games. However, it quickly resumed live broadcasts by mid-October. Tencent’s decision to resume delivering limited coverage to approximately 500 million Chinese NBA fans may have mitigated some financial losses. But CCTV’s censorship of a large portion of the NBA’s viewership continued to pose major economic downfalls, though the extent was not initially clear.

The standoff between China’s CCTV and the NBA continued until Game 5 of the NBA Finals on October 9, 2020, between the Miami Heat and the Los Angeles Lakers. For the first time in a year, the state-run television channel finally resumed its NBA coverage and the tension between the NBA and China seems to have eased. The final damage caused by the rift has yet to be determined. However, NBA Commissioner Adam Silver estimated that the loss would be in the hundreds of millions, even as much as $400 million—not a small figure compared to the league’s annual global revenue estimated at around $10 billion. 

With the emergence of COVID-19, the league faced even greater financial uncertainty. Before the NBA implemented the ‘bubble’ in Orlando, NBA Commissioner Silver advised players that roughly 40% of the NBA’s revenues come from arena sponsorships and ticket sales. The NBA’s restart on July 30 increased approximately 80% more prime-time viewership than before the lockdowns interrupted the season. Even though these numbers in the ‘bubble’ experience satisfied the league’s television contracts and provided revenue-sharing payouts to each team, the pandemic still crippled many teams financially. According to a confidential ESPN report, 14 of 30 NBA teams lost money this past season before the television payouts, and nine of those teams suffered losses even with the profit sharing. Amidst the unpredictability caused by COVID-19, the revenue loss that resulted from Morey’s tweet becomes even more prevalent. However, CCTV’s recent decision to resume coverage of the league certainly provides the NBA with an assurance that they may be able to salvage their relationship with China after all.

Under the Trump administration, our nation is experiencing a controversially populist policy approach towards foreign relations, inciting fear and aggression en masse with regards to the manufacturing sector abroad and international trade writ large. We have most recently seen the administration implement these outdated public policy ideologies via the, arguably illegal, imposition of tariffs on all goods imported from China under Section 301 of the Trade Act of 1974.

Recently, approximately 3,500 American companies filed lawsuits against the US Government in relation to these tariffs. First, with regard to domestic law, the Executive branch has discretion, as authorized by Congress, “to modify tariffs under certain circumstances.” The companies filed in the U.S. Court of International Trade, specifically claiming “the unlawful escalation of the US trade war with China through the imposition of a third and fourth round of tariffs,” that have drastically increased costs of goods imported from China into the US by American firms. The legal arguments encompassed the failure to “comply with administrative procedures,” specifically “timeliness of action”, as well as the broadening of the tariffs “for reasons untethered to” the intellectual property conflict with China.

Second, with regard to international trade law, the World Trade Organization (WTO) ruled the imposition of these tariffs violated their “most-favored nation principle.” The tariffs, which ultimately measured upwards of “$350 billion worth of Chinese goods,” were not uniformly applied to all members as per the WTO principle. Although the ruling may carry less weight than the WTO originally intended, due to China’s counter-tariffs and the various subsequent negotiations, the US administration is using this question of international law as support for its ill-advised attempt to revive exceptionalism.

The administration’s public policy arguments advocating for the tariffs center around protectionism, trade agreement renegotiation and national security concerns, most notably the risks surrounding China’s theft of American intellectual property. These motivations may seem illustrative, on their face, of forward-thinking policy and decision-making on the part of the Government. But their consequences on the American public are more reminiscent of an outdated political ideology and a superficial understanding of domestic and international relations, most notably international trade law.

The Brookings Institution elaborates on the various downfalls of each policy rationale. Most notably, the Institution addresses the concept of protectionism and the suggested beneficial economic impact. And for the purposes of this piece, it is also crucial to point to the further relationship between big business and both domestic and international law following the imposition of these tariffs. American firms importing Chinese goods realistically bear the brunt of the cost, which is in turn transferred to American households. Moreover, the promise of protecting and creating jobs within the manufacturing sector has only increased to a certain extent, given the negative impact of more expensive goods used as inputs in production lines. One could even argue that should the tariffs create more jobs than they destroy, this would likely remain a short-term alteration as the nature of America’s economy favors outsourcing of the production sector and internal investment in the services sector.

So, where does this leave us?

Most significantly, it leaves us with several questions surrounding the precedents related to a multitude of lawsuits brought by the private sector against the US Government. Specifically, how does the private sector pushback against the illegality of an international trade policy imposed by the US impact our global soft diplomacy positioning? Or the authority and credibility of the WTO and international trade law more broadly? Or the tendency of firms to flood the courts when financial and economic policies are imposed abroad that impact prices at home? Arguably, the escalation of the US trade war with China was an exponential and unnecessary “show of force” with a costly economic outcome for American businesses, and a contentious domestic and international legal discussion with outlying questions and answers. This brings us to experts who have thought-provokingly questioned the administration’s true motivations for imposing tariffs, namely, to encourage withdrawal from the WTO, and expressed concern for the national economic impact of that action. Ultimately, it seems likely the WTO’s ruling, and perhaps the American firms’ lawsuits, will negatively impact US diplomacy abroad as well as trust in international trade law and institutions by other countries.

On October 7th, in the United States District Court for the Northern District of California, Judge Yvonne Gonzalez Rogers ruled that Apple may continue its ban on the popular battle royale game, Fortnite, from the App Store. Judge Rogers claimed that the tech giant was well within its rights to do so after the gaming company violated their contract agreement. The jury trial between Epic Games, the developer of Fortnite, and Apple is slated for May 2021. In order to win the antitrust suit, the gaming developer must “prove [that] Apple has monopoly power in the relevant market and that it willfully acquire[d] or maintain[ed] that power.” Fortnite has reportedly brought over 133 million downloads on Apple products and generated $1.2 billion in revenue, with $360 million of that going to Apple. Meanwhile, the Apple App Store brings in about $15 billion in revenue from its $50 billion in annual sales, which would place the App Store at 64th on the Fortune 500 list if it were an independent company.

The lawsuit began when tech giants Apple and Google removed Fortnite from their app stores back in August of 2020. Both Apple and Google take a 30% commission on all digital app purchases. This includes all purchases of Fortnite’s in-game currency, “V-bucks.” Fortnite is a free-to-play game, meaning that it makes nearly all of its revenue from players purchasing “V-bucks” in order to access certain in-game content. To avoid paying the 30% commission, Epic Games enabled an unapproved feature that encouraged mobile players to make payments directly to the Epic Games Store, which offered a 20% discount. In response, both Apple and Google banned Fortnite from their app stores for intentionally violating their policies. Almost immediately after the ban, Fortnite filed antitrust lawsuits against the two tech giants in federal court.

But Epic isn’t the first developer to challenge Apple’s App Store policies. Just last year, Spotify, the largest music streaming service in the U.S., filed an antitrust complaint with European Union regulators against Apple. Spotify has to pay Apple 30% of all in-app purchases while also competing against Apple Music, its number one music streaming rival. The CLO of Spotify contends that Apple acts as a gatekeeper to companies seeking to reach consumers and violates competition laws because it “tilts the playing field in favor of its own services.” Spotify’s complaint resulted in an official antitrust investigation by the European Commission that is currently ongoing.

Apple defends its policies stating that the App Store’s commission is similar to other marketplaces. Apple also claims that the commission is necessary to maintain its security and safeguard user privacy, an argument that Google, who has dealt with its own antitrust scrutiny, makes as well.

Google, however, has requested not to be included in the same lawsuit as Apple. Google’s Android phones allow users to download apps from other sources, whereas Apple users must use Apple’s App Store to download any apps, making Epic’s antitrust claim against Apple slightly different. In the 30 days leading up to the lawsuit filings, Fortnite players using Apple devices spent $43.4 million while Google Play only saw $3.3 million spent on the same game.

Fortnite has made it clear that things are much more personal with Apple and that the courtroom is only half the battle. On the same day Fortnite was banned from the mobile marketplaces, the game’s Twitter account tweeted a video parodying Apple’s famous “1984” ad. But this time, Apple was playing the role of “Big Brother.” The account also promoted the hashtag #FreeFortnite which topped the trending charts just hours after it was posted. Epic even drew attention from other tech behemoths who were quick to jump on the bandwagon of criticizing Apple’s App Store policies. Only a day after the Fortnite ban and subsequent lawsuit filings, Facebook announced that it had asked Apple to lower its commission fees, citing that its policies were hurting struggling businesses in the wake of Covid-19. Then, later that month, Microsoft filed a declaration in support of Epic Games requesting that Apple allow Epic to keep its Unreal Engine on the App Store. The engine is “a widely used set of technologies that provides a framework for the creation of three dimensional graphics” for third party game developers, including Microsoft. Judge Rogers eventually ruled in favor of keeping Unreal Engine in the App Store, due to the reliance on the software by gaming developers. Proving in federal court that Apple is a monopolist may be an uphill battle for the creator of Fortnite, but with momentum and PR on its side, Epic has shown that it may have just what it takes to force Apple to change its policies.

Last November, the French conglomerate LVMH, which owns Louis Vuitton and dozens of other fashion and lifestyle brands, struck a deal to acquire jewelry retailer Tiffany & Co. for $16.2 billion. Bernard Arnault, the CEO of LVMH, described Tiffany as an “American icon” that would “thrive for centuries to come” in the LVMH portfolio. If the deal had gone through, it would have been the biggest ever in the luxury sector. In an unfortunate turn of events, however, the deal went sour. Now, the French government is involved, and LVMH and Tiffany are planning to head to court.

So, what went wrong? Last month, LVMH announced that it received  an unsolicited letter signed by French Foreign Minister Jean-Yves Le Drian. The letter recommended that LVMH attempt to delay the acquisition until January 2021, as France and the U.S. were bickering over trade tariffs on luxury goods. Although the French government is not an LVMH stakeholder, a source from the French government described the letter as having “political value” and a goal to alert LVMH before the November 24^th closing date. The letter could have been intended to protect LVMH’s business interests— an unusual move from the French government. However, some speculate that the letter was an attempt to discourage the U.S. from imposing retaliatory tariffs in response to French taxes on American technology companies.

LVMH may have had other motivations for pulling out of the deal: the pandemic and subsequent global recession has hit luxury retailers hard. In fact, speculation began in April that LVMH might try to back out of the acquisition because of COVID-19 after a private equity player tried to abandon its deal to buy Victoria’s Secret. At that time, Tiffany shares were only down 6% year to date–$9 lower than the LVMH bid–even though its U.S. and Canada stores were closed. After LVMH announced its plan to back out, Tiffany stock plunged 10%.

Now, LVMH and Tiffany are gearing up for an acrimonious court battle, with the trial date set for January in Delaware’s Chancery Court. Both companies are asserting claims against the other: Tiffany is suing LVMH for breach of the merger deal and failure to secure regulatory clearance for the deal in Europe or Taiwan, while LVMH is countersuing for Tiffany’s alleged mismanagement during the pandemic. If LVMH can show that Tiffany had suffered a “material adverse effect” due to COVID-19, then it will be able to walk away from the contract without any obligations. Tiffany wants to force LVMH to move forward with the acquisitions in accordance with the originally agreed-upon terms.

While Tiffany originally sought to have the trial start next month — before the acquisition contract’s “drop-dead” deadline of November 24^th — the Delaware court agreed to fast-track legal proceedings in a four-day trial starting on January 4^th. In the meantime, Joseph Slights, a Vice Chancellor of the Delaware Court of Chancery, has urged both sides to engage in “productive discussions to avoid the need for litigation.”