SPAC-ed Out! — The Rise and Fall of SPACs

Special purpose acquisition companies, or SPACs, had very short-lived fame. These publicly traded “blank cheque companies” with a two-year life span and unspecified acquisition targets boomed during the 2020-21 period. Unlike an Initial Public Offering (IPO), SPACs introduced a faster and easier way for companies to go public. IPOs take years to complete, whereas SPAC mergers can occur within months.

A SPAC starts as a private company and goes public through an IPO to raise money to buy a company or its majority stake. This merger process is called a de-SPAC transaction. If a SPAC is unable to reach a de-SPAC transaction, it must liquidate and distribute all its assets back to the company’s shareholders. That being said, the cost of carrying out a SPAC transaction is notably lower than going public through an IPO. The shareholders can also benefit from experienced financial investors and private equity or hedge fund industry professionals.

Additionally, because an acquisition target is not required for a SPAC to be formed, a SPAC has the flexibility to negotiate terms that are good for its investors. By 2020, the COVID-19 pandemic created volatile market conditions which made private companies wary about investing large capital, thereby turning investors to low-risk SPACs. Further, lenient government regulations imposed relaxed monetary policies and encouraged investments, thereby pushing SPACs to stardom.

The IPO market took a backward march in 2022, with 1145 IPOs filed compared to 2436 IPOs in 2021. However, this trend seemed to be catching up with the SPACs too. Market instability forced companies to stay private longer. The decline was further accelerated by new SEC regulations requiring more disclosure regarding de-SPAC transactions and target companies. These regulations, per the SEC Chair Gary Gensler, fall under three categories—disclosure, marketing practice standards, and gatekeeper issuer obligations. The new disclosure regulations require that SPACs disseminate documents related to the SPAC process to investors to ensure fairness and help them make informed decisions. Additionally, the SEC proposed to amend the definition of “blank cheque company” to encompass SPACs so that they cannot turn to the Private Securities Litigation Reform Act (PSLRA) for safe harbor. The proposal also imposed liabilities on third parties such as auditors, lawyers, and underwriters to ensure disclosures’ accuracy and adequacy. Nonetheless, these regulations are yet to be passed.

In conclusion, several factors could be attributed to the rise and fall of SPACs. Even though SPACs are a quick, affordable, and easy way for businesses to go public, their appeal was ephemeral. It remains to see whether SPACs can adjust to new regulations and market changes and once again regain their popularity.

VIE in the Evolving Capital Market Landscape: A Risk Analysis

The Variable Interest Entity (VIE) model has long been a key strategy employed by Chinese companies seeking to access international capital markets, mainly the U.S. Trillions of USD worth of Chinese companies publicly traded abroad were listed through this strategy, which circumvents China’s stringent restrictions on foreign investment in sectors such as technology and education. Since Sina’s first adoption of VIE in the U.S. stock market in 2000, the model has enabled the IPOs of various companies such as, and Alibaba Group—the largest IPO in U.S. history and the second largest globally. Despite many tech stocks having generated substantial profits for foreign investors in the past decade, critics often express concerns regarding VIE’s inherent validity and legal risks, particularly amidst evolving regulations. This article elaborates on some of the risks associated with VIE.

VIE is a structure via which a Chinese company creates an offshore entity to be listed abroad. Under this system, the U.S.-listed company from which investors buy stocks is often a holding company incorporated neither in the U.S. nor China but in the Cayman Islands or the British Virgin Islands. According to the SEC, such an offshore entity is incorporated to “enter into contractual arrangements with the China-based operating entity,” rendering the latter a wholly foreign-owned enterprise. Although the listed company frequently does not own stock or any equity in the actual operating entity, it purports to “exercise power over” and “obtain economic rights from” it based on contractual arrangements, which often include powers of attorney, equity pledge agreements, and exclusive services or business cooperation agreements.

Although the Chinese government has never formally approved or outlawed VIE, the China Securities Regulatory Commission (CSRC) published the “New Rules” on February 17, 2023, which became effective on March 31. Before the “New Rules” came into effect, amidst rumors of an outright ban, seven Chinese firms rushed to launch U.S. IPOs in March, compared with four in the previous two months. According to Dentons, however, the CSRC “eased” the concern of a ban by suggesting that China “w[ould] not shut down this financing loophole,” which the CSRC considers “a viable channel for its companies to access foreign capital,” despite potentially harsher scrutiny as well as more detailed filing requirements. Recently, the CSRC approved CheChe Technology Inc.’s U.S. listing, bringing it closer to becoming “the first Chinese company using VIE to issue shares in the U.S.” under the “New Rules.”

Yet, risks associated with VIE, notably regulatory risks and agency problems, have long existed and may persist. Under VIE, a listed entity has economic rights and power to direct the activities of the operating company without actual equity ownership. The SEC does not “assess the merits or appropriateness” of the listed entity’s VIE structure but “oversees a disclosure-based system” that provides relevant information. Hence, the SEC has warned that “if the parties to [the VIE] contracts. . . do not meet their obligations as intended or there are effects on the enforceability . . . from changes in Chinese law, the U.S.-listed company may lose control over the China-based company, and investments in its securities may suffer significant economic losses.” In cases with a void or breach of contract, there may be “little or no recourse available” to effectively remedy the losses borne by U.S. investors. This is because the listed entities are often incorporated offshore with different governance regarding disclosure and reporting from the U.S. requirements. Additionally, Chinese law and jurisdiction often govern such disputes, but ambiguity persists concerning the legality of VIEs and the enforceability of such contracts.

More specifically, regulatory issues would occur when Chinese authorities outlaw the underlying contractual agreements on which the listed entity’s control of the operation is based. The consequent invalidation of such contracts could lead to “a mandatory reorganization to expel foreign control” or “a withdrawal of the business license of the Chinese operating entity.” For instance, in July 2021, China halted for-profit educational tutoring, banning foreign investments in this industry via VIE. Similarly, Alibaba shares also dropped significantly when the Chinese regulators “ordered to break up Ant’s Alipay.” Yet, Chen has noted it is unlikely that Chinese authorities would grant reasonable compensation in such cases. In addition, agency problems exist because the VIE structure’s success hinges on “the integrity of the shareholder of the operating entity as a key person.” Yet, if the shareholders prioritize personal interests over the entity’s best agenda, this could result in significant economic harm. One of the most notorious VIE digression issues was the Alibaba group incident over a decade ago, where its founder separated Alipay from Alibaba to be an independent company under his name without informing the latter’s shareholders. This resulted in a sharp 9.8 percent drop in Alibaba’s stock price when disclosed.

In response, the SEC has taken measures to enhance investor protection and tighten its control over VIE listings. It mandated further disclosure of listed companies’ VIE status and required the companies to release their dialogues with the CSRC concerning their VIE structures’ legality. It investigated the appropriate consolidation of financial results and suspended trading of certain companies’ stocks after alleged fraud. Yet, with President Biden’s Executive Order addressing the country’s investments in “National Security Technologies and Products in Countries of Concern” expected to be implemented next year, uncertainties remain regarding the future of VIE entities. Despite potential economic gains, investors should continue to exercise their due diligence in measuring the costs, benefits, and appropriateness of their investments, particularly in ventures that contain higher risks.


A Breakdown of the California Accountability Package as Compared to the Rules Proposed by the SEC

On October 7, 2023, California Governor Gavin Newsom signed into law the Climate Accountability Package, comprising the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). The Climate Accountability Package imposes disclosure requirements on entities that are active in the state with a total annual revenue above $1 billion (“Reporting Entities”). For the listed entities, these new laws are broader than the Enhancement and Standardization of Climate-Related Disclosures for Investors rules (“SEC Proposed Rules”)  proposed by the U.S. Securities and Exchange Commission (“SEC”) in March 2022. However, the SEC Proposed Rules have not yet been finalized and are still under discussion. Below, the Climate Accountability Package is discussed in contrast with the SEC Proposed Rules in relation to (i) the annual disclosure requirements and (ii) the regular assessment of climate-related financial risk.

The Climate Accountability Package requires the Reporting Entities to, starting in 2026, disclose all direct greenhouse gas (“GHG”) emissions that stem from the Reporting Entities themselves, including, but not limited to, fuel combustion activities (Scope 1), and GHG emissions from purchased or acquired electricity, steam, and heating by the Reporting Entities (Scope 2). Further, it requires Reporting Entities to, starting in 2027, disclose all GHG emissions from entities that form a part of the supply chain that may not be owned or controlled by the Reporting Entities (Scope 3). The Reporting Entities are required to follow the Greenhouse Gas Protocol, an accounting and reporting standard formulated by the World Resources Institute and the World Business Council for Sustainable Development set to take effect in 2024.

The SEC Proposed Rules, which apply to only publicly listed companies, proposed that the Scope 3 disclosure be made by listed companies only if they consider them material or if combating Scope 3 GHG emissions is a target or goal of the listed company. Further, although the goal is to provide consistent and comparable data, the SEC Proposed Rules do not link the compliance standards to any framework any global standards. On the contrary, the California laws not only mandate both public and private entities to disclose Scope 3 emissions but also link the requirement to the Greenhouse Gas Protocol.

However, the California laws have underestimated the cost of compliance to businesses in general. They fail to consider that the small-scale entities forming a part of the supply chain of the Reporting Entities may also have to comply with the exhaustive accounting and reporting standards of the Greenhouse Gas Protocol. If these small-scale entities fail to provide the information, they may lose business and see a negative impact on their revenues and financial position. While the Climate Accountability Package does provide a safe harbor from any penalty for failing to assess and calculate Scope 3 emissions from 2027 to 2030, it mandates an annual filing and does not provide a good faith carve out, contrary to the SEC Proposed Rules. To avoid penalties as high as $500,000 annually under the Climate Accountability Packages, the Reporting Entities and those forming their supply chain will have to engage carbon accounting professionals and streamline internal processes to comply with the prescribed standards, possibly incurring huge capital expenses.

The SEC Enhancement and Standardization of Climate-Related Disclosures for Investors rules remain under discussion and have not been finalized. If the finalized rules continue to provide companies the discretion to disclose Scope 3 emissions only if they consider them material, it will be hard for a Reporting Entity to argue that the Scope 3 emissions are immaterial in its registration statements or periodic SEC filings. Further, to be consistent with the California laws, the SEC may also consider linking GHG emissions disclosures to global standards like the Greenhouse Gas Protocol in its finalized rules. However, it is still to be seen if the California laws actually “change the baseline”  on which the SEC formulates its emissions disclosure policies.

Another aspect of the Climate Accountability Package is the requirement to assess climate-related financial risks, a layer missing in the SEC Proposed Rules. The Climate-Related Financial Risk Act requires that all entities doing business in California with total annual revenues above $500 million in the previous fiscal year (except insurance companies) to evaluate their climate-related financial risks following the standards set by the Task Force on Climate-Related Financial Disclosures (“TCFD”). The entities are required to submit a report every two years disclosing the risks that they have identified and outlining the measures they have already adopted or propose to adopt to reduce these risks. To comply, the boards of these entities would need to take measures and establish independent committees with outside carbon accounting professionals and set costly internal processes in place.

While the disclosure of Scopes 1, 2, and 3 emissions may not be a matrix for solving climate change, the assessment of climate-related financial risks may be a step in the right direction. Understanding and disclosing the impact of their business operations may force businesses to make more sustainable choices in the future. In the meantime, however, compliance costs could heavily burden the businesses. While California Governor Gavin Newsom showed his concerns by instructing the California Air Resources Board to monitor the cost impact, the bulk of the finances these disclosures may sit on will have to be seen in practice.

Mandatory Disclosures of Climate-Related Information: The Investment Impact of California Senate Bills 253 and 261

California Governor, Gavin Newsom, recently signed California Senate Bill 253, known as the Climate Corporate Data Accountability Act, and California Senate Bill 261, referred to as the Climate-Related Financial Risk Act, into law. Both bills were part of the Climate Accountability Package, a collection of bills aiming to enhance corporate climate action by improving transparency, standardizing disclosures, and aligning public investments with climate goals.


The Climate Accountability Package is a part of the broader global movement in which policymakers are increasingly regulating how the private sector addresses climate risks intrinsic to its businesses. This shift is driven, in part, by investors’ pressure and demands for climate-related information concerning their investments. Several major institutional investors have begun incorporating climate risk considerations into their portfolio selection process. They are demanding more disclosure from companies and from regulators in order to stop or prevent unavailable, incomplete, and misleading information regarding climate-related risks.

Europe and the UK have introduced some of the most recent and innovative mandatory disclosure requirements. In the United States, the Securities and Exchange Commission (SEC) proposed rules that enhance and standardize climate-related disclosures for investors, but these measures have not yet been approved.

Senate Bills 253 and 261 emerged in this context and represent significant steps forward in regulating carbon footprint and climate risk disclosures.

Climate Corporate Data Accountability Act (Senate Bill 253):

Senate Bill 253 requires all large corporations conducting business in California to publicly disclose their carbon footprint according to the Greenhouse Gas Protocol (“GHG Protocol”). GHG Protocol is a global initiative that establishes standardized frameworks to measure and manage greenhouse gas emissions from private and public business. The GHG Protocol classifies greenhouse gas emissions into three scopes: direct emissions (Scope 1), indirect emissions from consumed electricity (Scope 2), and indirect upstream and downstream emissions such as purchased goods and services, business travel, employee commutes, and processing and use of sold products (Scope 3). Companies will have until 2026 to start annually disclosing their Scope 1 and 2 emissions and until 2027 to disclose their Scope 3 emissions.

Notably, Senate Bill 253 is significant for two key reasons, especially when compared to the SEC’s climate proposal. First, Senate Bill 253 applies to both public and private U.S. companies doing business in California with total annual revenues that exceed $1 billion, whereas the SEC’s regulatory authority is limited to public companies. Second, Senate Bill 253 mandates the disclosure of Scope 3 emissions, whereas under the SEC’s proposal, businesses would only report on Scope 3 emissions if they have set Scope 3 reduction targets or if the emissions are material. Having to disclose Scope 3 emissions is significant because they often constitute more than 90% of a corporation’s total emissions. This requirement presents a considerable challenge for companies to assess and report this information.

Climate-Related Financial Risk Act (Senate Bill 261):

Senate Bill 261, on the other hand, requires large corporations to prepare and report (i) their climate-related financial risks based on the recommendations of the internationally recognized Task Force on Climate-Related Financial Disclosures, which provides guidance on governance, metrics and targets, strategy, and risk management. The Bill also mandates large corporations to publish the measures they adopted to mitigate these risks. Senate Bill 261 applies to both public and private U.S. companies doing business in California with a yearly revenue of $500 million. The reporting must be done on a biannual basis starting in 2026.

Why These Laws Matter:

California has the largest economy in the United States in terms of GDPs, and these new rules are expected to impact nearly 10,000 companies. Some global corporations such as Apple, Google, Microsoft, Salesforce, and IKEA publicly supported these laws during the legislative approval process. On the other hand, companies with fossil fuel interests, notably Chevron, Marathon Petroleum, and Western States Petroleum, expressed significant opposition.

Both bills aim to not only promote accountability but also address the lack of standardized disclosure requirements and transparency around climate risks and impact. The private sector is one of the major emitters of greenhouse gases, and promoting accountability is key to reducing its carbon footprint. By making companies undertake self-examination and gather information about how they affect the environment, companies can create more resilient, efficient, and sustainable businesses. In addition, investors, regulators, and stakeholders will be able to properly identify and assess which companies are making progress toward their climate commitments.

These new regulations mark a significant milestone toward a cleaner global economy. Many stakeholders view them favorably, and they are expected to exert a substantial influence on the future of carbon accounting and reporting worldwide.

JP Morgan Acquisition of Frank: Why the Startup Industry is Vulnerable to Fraud

In 2021, JP Morgan acquired Frank, a college financial planning company, for $175 million. Charlie Javice founded Frank in 2017 to help students apply for and negotiate financial aid, enroll in online courses, and find scholarships. JP Morgan hired Javice and a few other Frank executives with the acquisition.

Initially, Frank was seen as a way for JP Morgan to reach younger customers. But the deal quickly turned sour, and JP Morgan sued Javice and another former Frank executive, Olivier Amar. JP Morgan alleged Javice and Amar inflated the company’s user database with nearly 4 million fabricated customers created by an unnamed data scientist who generated false personal information–including birthdays and schools.

The Frank scandal drew comparisons to the Theranos controversy, although on a much smaller scale. In 2015, Theranos, a blood-testing startup, was found to have provided false information to investors in the medical industry regarding the accuracy and reliability of its technology to secure funding.

These examples highlight how fraudulent practices can pervade the startup industry. Given their innovative and disruptive nature, start-up companies have a high probability of failure, with almost 80% failing to reach projected rates of return or profitability and 40% failing altogether. To compete with more established businesses and attract investment, start-ups may have more significant incentives to deceive investors or fabricate facts about their core business.

Founders often face substantial challenges securing funding and forming partnerships with suppliers and customers. Unlike conventional firms, startups develop innovative technologies and strategies and often have negative cash flows, making it difficult to determine their value using traditional methods. 

Obtaining funding and business partnerships requires time, effort, and resources, especially for early-stage startups. And their competitors often have more experience and sophistication in the industry. To compensate and convince investors of their legitimacy, founders may effectuate a fake it till you make it strategy.

A rush to launch products and attract media attention and the pressure to compete against other startups may also contribute to fraudulent practices. To survive, start-ups must demonstrate rapid growth and stand out among a crowded field of competitors. Media coverage often operates as a positive feedback loop, building upon initial stories of success or significant investment by venture capital firms. 

Start-up founders develop skills to persuade the public and investors that their business model will succeed. Despite the necessity for creative pitching, start-up executives should refrain from resorting to bad faith exaggeration or bending the truth.

Returning to the Frank controversy, Javice is accused of falsifying Frank’s consumer database and exaggerating the company’s achievements. In a 2018 interview with Forbes, Javice claimed that Frank had helped 300,000 students to get $7 billion in financial aid. However, after the JP Morgan acquisition, Javice posted on LinkedIn that the number had risen significantly to 5 million students, almost twenty times the original figure in just three years.

Javice also exaggerated her achievements to attract attention from investors and the media. She claims she struggled to secure financial aid while studying at Wharton, but the school did  not confirm this. Additionally, she falsely claimed to have turned down a Thiel Fellowship while studying at Wharton.

Fraud in the startup industry is a complex and multifaceted issue. Start-up companies face significant challenges in securing funding and competing with more established businesses. This incentivizes founders to do whatever is necessary to generate buzz around their company, including, in some cases, gross exaggeration. Frank is another reminder of the importance of due diligence in the investment and business partnership process. It is essential for investors, partners, and customers to carefully scrutinize the information provided by start-up companies and carefully vet their founders and executives.

The Semiconductor Rivalry between the U.S. and China

In the aftermath of the pandemic and the invasion of Ukraine, energy supplies have become more expensive and unreliable. Because of unstable energy supplies and tumultuous global politics, many countries are accelerating their transition to green energy and are reviving investment in crucial industries such as semiconductors and rare earth metals. For example, the Biden administration has been offering general incentives from bills such as the Chips Act and the Inflation Reduction Act to encourage reshoring these vital industries and transitioning to green and sustainable energy.

Congress enacted the $53 billion Chips Act to strengthen the domestic semiconductor industry. Roughly $ 39 billion is dedicated to manufacturing incentives for chip plans, material, and equipment factories and over $13.2 billion to research and workforce training. The U.S. share in global semiconductor production has fallen from 37% in 1990 to 10% in 2023. In addition to the decline in general semiconductor production, the U.S. does not mass produce the most advanced semiconductor chips — those smaller than 5 nanometers. In fact, the U.S. relies on one company in Taiwan, Taiwan Semiconductor Manufacturing Company (TSMC), for 92% of these sophisticated chips.

However, given the rise of the political and military tension between China and Taiwan in recent years, the U.S. wants to move away from reliance on foreign semiconductor suppliers. Instead, the Pentagon will receive semiconductors manufactured from facilities covered by Chips Act funding, allowing the U.S. military to develop increasingly modern weapons.

The Chips Act has already spurred investment. Top U.S. manufacturers including Intel Corp., Micron Technology Inc. and Texas Instruments Inc. have plans to expand their capacities, including investment in manufacturing facilities and plants. In fact, TSMC has a $40 billion project underway in Arizona, with plans to upgrade the factory with more advanced chip-making technology and begin producing microchips by 2024.

Two of South Korea’s biggest chip makers, Samsung Electronics Co. and SK Hynix Inc., find some of the requirements under the Chips Act to be controversial, making them hesitant to apply for the U.S. federal funding. The Chips Act requires subsidized companies to profit share with the U.S. government if their business exceeds initial projections. This raises concerns for South Korean investors. Companies are suspicious that the profit-sharing clause takes away any subsidies chip manufacturers are given. Companies are also worried about allowing the U.S. government access to their trade secrets through disclosure of profit projections and factory productions.

Furthermore, firms that receive chip subsidies are banned from engaging in joint research or expanding their semiconductor manufacturing capacity in China for 10 years. Because Samsung and SK Hynix also invested in production bases in China, accepting the Chips Act subsidies would limit their business opportunities in China, which is another important concern. The hesitancy and pushback from South Korean companies against the Chips Act highlights the challenges the U.S faces in attracting semiconductor investments while nudging its allies, such as South Korea, to isolate China.

Responding to the U.S. Chips Act, China is drafting similar proposals to boost China’s semiconductor self-sufficiency. One proposal asks the National People’s Congress, the country’s top legislature, to enact a law similar to the U.S. Chips Act to further chip technology research and production. This proposal would legally require industry stakeholders to focus on the development of advanced process nodes and software which are U.S. technologies and currently inaccessible to Chinese firms due to trade restrictions.

The semiconductor rivalry between the U.S. and China will force chip manufacturers around the world to balance business interests and potential sanctions. Along with the Chips Act, the U.S. has significantly ramped up export restrictions targeting China’s access to advanced semiconductors, chip-making tools and software. In response to export controls, ASML, the world’s leading semiconductor lithography equipment maker, directed its U.S. staff to stop serving Chinese customers while it assesses the new U.S. sanctions. With the progressive implementation of the Chips Act, we will continue to observe how leading semiconductor manufactures and their governments walk a tightrope balancing their market interests in both China and the U.S.

Bring Work to Your Kid Day: A Conversation About Working Parents in 2023

With the influx of remote work opportunities, and a surge of businesses opting for permanent remote platforms, the work-from-home model (WFH) has resolved what many once saw as a mutually exclusive inquiry: the “work or kids” dilemma. However, it has also prompted a conversation surrounding the potential consequences and broader implications of this unprecedented shift out of the office.


How WFH Has Advantaged Working Parents:


It is not a coincidence that alongside the rising number of WFH opportunities, two other trends have followed suit: labor-force participation amongst college-educated women and fertility rates. Looking to labor-force data from 2019 to 2022, the numbers for college-educated women have remained steady for the first time following two decades of decline. Harvard economist Claudia Goldin reported that over 78% of female college graduates aged 25-34 with children were employed by the fall of 2021. During this time, the National Bureau of Economic Research also found a 6.2% increase in the U.S. fertility rate.


Time author and working parent Alana Semuels notes that the correlation between these trends is explained by the newfound flexibility of WFH and the resulting options that were previously unavailable to parents. Access to childcare is no longer a barrier for many, and eliminating the need to commute affords working parents huge savings, especially given increasing housing prices and limited availability of family homes in metropolitan areas. For aspiring parents, Forbes author Christine Michel Carter adds that WFH aids in fertility and family-forming, given the unpredictable and time-consuming nature of having a child.


Furthermore, this virtual wave has begun to chip away at the stigmas that historically surrounded remote work. The idea that WFH is any less legitimate or prestigious is, in the words of Semuels, “a false dichotomy leftover from the pre-pandemic world.” Semuels interviewed several ambitious professionals raising children, all of whom found remote work to be a catalyst for efficiency, productivity, and balance. From this lens, being a passionate parent and a dedicated professional are no longer at odds with one another.


Weighing Criticism & Concerns Surrounding WFH:


The WFH movement for working parents has generated a variety of responses, many of which are largely positive. Others, however, have taken a more critical lens, insofar as they point to potential implications and reasons for concern. Some experts have warned, for instance, that the growing tendency to opt out of returning to the office could actually exacerbate past stigmas. Specifically, WFH “could be stigmatized as an accommodation for mothers” due to the unequal utilization of remote work policies demonstrated by the aforementioned data. In turn, this stigmatization could have “professional consequences,” including curbed growth and underdeveloped connections.


In addition, several studies point to remote work as a hindrance to mental health, with working parents being one of the most impacted groups. Evidently, there is a lack of work-life balance stemming from integrating the home and office. A McKinsey survey indicated a commonality amongst WFH parents, in which many shared the feeling of “failing to live up to their own expectations across their multiple social roles.” Such a sentiment seems to contradict the alleged “flexibility” that is considered the primary benefit of WFH.


For many parents, WFH provides relief and balance, but given varied circumstances across households, this is not the case for all. Social trends surrounding parenting styles and roles show minimal uniformity, and per the CDC and Bureau of Labor Statistics, there are significant racial and ethnic disparities across WFH participants. It is also important to recognize that many parents face systemic challenges, leaving them with limited access to resources and support to maintain flexibility in a WFH environment.


Supporting Parents Amidst the WFH Movement:


The conversation around working parents must abandon this narrow, “one-size-fits-all” perspective and instead promote more inclusive, support-focused progress. While recent legislative changes have placed detrimental restrictions on reproductive rights and care, laws enacted prior to this regress can serve as models for support going forward.


In 2021, for example, SB-1383 revised the California Family Rights Act, which significantly increased the rights of almost all working parents in California by expanding eligibility, pregnancy disability leave, and full leave for both qualifying parents. The U.S. Department of Labor justified expansion as being “more inclusive of all parents.” Legislation backed by this kind of inclusive ideology is the foundation for positive change, which is more urgent now than ever.


Additionally, several businesses have taken steps to enhance support and accessibility for pregnant persons and parents. One notable example is a startup called Oula. With $22.3 million in venture capital, Oula is dedicated to restructuring the traditional maternity care model. In acknowledging the disparities in resources and preferences, Oula approaches each pregnancy with customized individual plans intended to “offset the pressures of becoming a parent.”


Moreover, employers themselves have begun to adopt support initiatives for working parents. According to the Society for Human Resource Management, this support comes from destigmatizing mental health care in the workplace and, importantly, “prioritizing inclusivity and access to culturally appropriate mental health care.” Further, many employers have introduced hybrid platforms, affording employees increased agency in scheduling. An article from the Harvard Business Review emphasizes normalizing “detours from traditional full-time employment,” including parental leave and sabbaticals.


Collectively, these developments represent a fraction of the evolving support methods for working parents. President of the Integrated Benefits Institute, Kelly McDevitt, highlights that “a single-model approach . . . may never satisfy the needs of all.” Thus, proper support must be adaptable and expansive. Inclusivity, in this way, requires recognizing a full range of experiences rather than placing all parents under one narrow lens.

“Respect our Authoritah!” says Warner Bros. in New Lawsuit Against Paramount Global.

Very few animated shows have made a bigger name for themselves in the field of satirical comedy than South Park. South Park, created by Matt Stone and Trey Parker, is an animated comedy show that airs on Comedy Central, a cable network owned by mass media conglomerate Paramount Global.

South Park is no stranger to controversy. From being investigated by the Church of Scientology, to its criticisms of organized religion, South Park is well-known for its forthright social critiques. The show’s latest controversy stems not from its jokes, but from the streaming service that hosts it.

Rival media company, Warner Bros. Discovery, is suing Paramount Global for violating their agreement with Warner Bros. Warner Bros paid Paramount Global for the exclusive right to stream new episodes of South Park on its platform, HBO Max. According to the complaint, Paramount Global breached this agreement by putting new episodes on its own streaming platform, Paramount+.

Exclusive licensing agreements are powerful tools in the ever-growing streaming market, where giants like Netflix and Hulu are facing new competition against an increasingly diverse set of streaming services. Exclusive licensing agreements allow streaming services to secure the rights to stream tv shows and movies straight from producers, while preventing rival streaming platforms from streaming the same shows. Such agreements enhance a platform’s ability to stand out and compete in the marketplace by curating the best selection of shows and movies.

However, some media producers have taken this a step further, and chosen to pull the rights to stream their shows from other platforms—making these shows accessible only on their own platforms. For example, Comcast, which owns NBCUniversal, pulled its popular comedy show ‘The Office’ from Netflix and now hosts it on Peacock, their own streaming service. This move reduces transaction costs for Comcast and integrates their different stages of media production into one enterprise.

From production to streaming, and cable to satellite, one corporation can control every step of this process. Vertical integration, or the process by which corporations acquire other parts of the distribution chain, is a long-practiced business strategy in cable television. It has now expanded to the online streaming industry, incentivizing media companies to keep their media in-house.

The strategy is clear: media companies create their own streaming platforms to increase profits. These companies reap benefits from this strategy, cutting down on transaction costs and more efficiently transmit content that they produce. Streaming services like Netflix can attract subscribers by creating original shows which become popular via marketing and word of mouth, like BoJack Horseman. For shows like Game of Thrones or South Park, with an already widely recognized IP, media companies can pull content from other platforms to attract new subscribers to their own streaming services. As this creates value, shareholders benefit from greater profits, and regulators benefit by collecting greater tax revenue. In theory, consumers should benefit too, because prices will likely decrease as market efficiencies get passed down to consumers.

This is not the case. Previously, consumers could access a greater library of shows and movies by only paying for one streaming service. Now, the spread of exclusive licensing agreements and vertical integration means that consumers will pay for more streaming services to access the same library they used to. However, this may be a return to cable television, where subscribers to the largest streaming platforms will pay an equivalent amount to a cable subscription.

As the dispute over South Park demonstrates, the streaming industry is a competitive field and media companies are right to be protective over their shows and movies. While this is likely to increase economic value for companies who navigate this new competitive field successfully, the effect it has on consumers remains to be seen.

ChatGPT: Regulating Disinformation in the Age of Artificial Intelligence

Disinformation on social media has been a significant concern in recent years–becoming increasingly influential on the public discourse. Disinformation is especially prevalent in political campaigns, where false or inaccurate information is often used to sway voters.

Disinformation has also affected public-health matters contributing to a “stigma” around COVID-19 vaccination. There has been an ongoing debate about how we should regulate disinformation and misinformation on social media platforms like Twitter, YouTube, and Facebook.

In the past several years, many tech companies have established internal regulatory policies to address fake news and conspiracy theorists. However, these efforts, which include hiring policy experts and investing in technology to limit disinformation spreaders, have waned during the ongoing wave of layoffs in the tech industry. YouTube, for example, reduced its misinformation policy team to only one employee.

Another regulatory avenue is state policy. However, the government has largely taken a “hands-off legal position” toward speech regulation on social media platforms, but recent Supreme Court may alter the landscape of future regulation. Previously, the Supreme Court denied certiorari of a case holding social media giants liable for taking down disinformation on their platforms. The Supreme Court may reconsider the rules governing online speech in upcoming hearings concerning state laws in Texas and Florida that bar social media platforms from removing certain political posts or banning political candidates.

While the future of disinformation regulation on social media remains uncertain, there are concerns about AI tools like ChatGPT, which is an AI chatbot trained on a vast amount of data which it uses to produce its answers. These responses are limited to the information contained in the training data. However, ChatGPT may generate false answers that seem “authoritative,” causing difficulty in identifying the correct answer unless already known by the user. When asked to disclose its reference of sources, ChatGPT often cites to seemingly plausible but fake articles and scientific studies.

The powerful nature of ChatGPT, its potential to increase disinformation, and its impact on national security and education, raise questions related to how these tools should be regulated. So far, Congress has been “slow to react when it comes to technological issues,” including AI regulation. However, as the “fastest-growing consumer application in history,” the regulation of ChatGPT has garnered attention among the lawmakers recently. For example, Representative Ted Lieu from California urged Congress to establish a nonpartisan commission to recommend regulations for AI like ChatGPT. He warned that the risk of “unchecked, unregulated AI” is pushing us “toward a more dystopian future” and he emphasized the urgent need of a dedicated agency to regulate AI.

Surprisingly, ChatGPT itself has suggested a few potential strategies and areas of focus to regulate disinformation. First, it recommends regulating the work of the data providers to ensure that the data used to train the chatbot is based on diverse and representative information that is less likely to produce inaccuracies. Second, it suggests we establish algorithms to help identify potential sources of error and allow for corrections. Finally, it proposes the establishment of regulatory agencies and organizations to provide guidance and oversight of ChatGPT’s use and practices.

Though it is unlikely that any major regulations will be passed immediately, lawmakers agree that ChatGPT should be regulated at least on some level – either internally, by the state, or both.

Taxing Multinationals Across Borders?

On Nov. 8th, 2022 the European Court of Justice, EU’s highest court, overturned a tax ruling against Fiat Chrysler from 2015. The decision annuls the EU commission’s 2015 finding that Luxembourg granted selective tax advantages to Fiat through a transfer pricing ruling. The commission said the deal in 2015 amounted to a state subsidy and thus ordered the Luxembourg government to recover the equivalent of about $30 million from the company. This decision follows similar reversals in tax cases in the past few years, cases involving Starbucks Corp and Inc. In 2019, EU’s second-highest court ruled that Starbucks did not benefit from illegal state aid in the Netherlands. In 2021, the same court made a decision in favor of Amazon, stating that EU regulators failed to show that Amazon gained illegal advantages from tax dealings in Luxembourg. The European Commission has appealed the Amazon ruling to the European Court of Justice. 

As emphasized in the above-mentioned cases, the European Commission is committed to ensuring that fair competition is not distorted in the bloc through illegal tax breaks to multinational corporations. As the European Commission monitors and decides if state aid complies with EU rules, the above cases in particular concern Article 107 (1) of The Treaty on the Functioning of the European Union (TFEU), which prohibits companies from gaining unfair advantages over their competitors through government support. The Treaty generally prohibits state aid unless it is justified by reasons of overall economic development. 

In response to the Fiar Chrysler decision, the European Commission released a statement demonstrating its continued commitment to tax legislation amendments among member states. The Commission works with member states to address tax loopholes and ensure tax fairness and will continue to monitor the EU state aid rules. The Commission’s ongoing efforts to ensure that multinational corporations do not gain unfair tax advantages spurn the recent global concern of loose tax rules for international technology giants. Notably, last year in 2021, the G-7 — Canada, Germany, Italy, France, Japan, the U.K. and the U.S. — agreed that businesses should pay a minimum tax rate of at least 15% in each of the countries in which they operate. While almost 140 countries agreed to the 15% minimum tax rate, the implementation of this policy has faced several challenges.  

Many governments are waiting to see how G-7 nations would implement the policy, especially in the U.S. with a divided Congress. 2023 was set as a target for implementation, though many tax experts believe to be too ambitious. While the global minimum corporate tax may continue if smaller countries fail to pass new laws, the failure of larger economies, such as the U.S., to implement legislation would greatly debilitate the agreement. There has been substantial political pressure against a global minimum corporate tax as businesses, with Cisco Systems Inc., Bank of America Corp. and Texas Instruments lobbying against the tax. The EU has also struggled to move forward with implementation. Unanimous support is required among 27 bloc members for the EU-wide implementation; however Hungarian parliament continues to affirm its opposition to global minimum tax on corporations. 

The ongoing friction between European countries and U.S. over taxing U.S. tech giants has further thwarted implementation of the policy. During ongoing talks on international tax rules, some European officials argued that U.S. tech giants should pay more tax in Europe and reallocate taxing rights to where the product is consumed. Specifically, some European countries proposed their own taxes on U.S. digital services and products. In response, the U.S. rejected such proposal and threatened to respond with tariffs on imports from Europe. 

Nonetheless despite ongoing challenges, there has been some progresses. The Organization for Economic Cooperation and Development (OECD) released details on central components of the agreement, including the “undertaxed profits rule.” The rule allows participating countries without a minimum corporate tax rate to increase the company’s rate to 15%, creating financial incentives for non-participating countries to join the agreement. 

While the future of taxing multinationals across borders remains uncertain, the European Commission continues to monitor how member countries utilize state aids and OECD proceeds with detailed plans for global corporate tax.