Hong Kong Stock Exchange Drops Nearly $37 Billion Bid for London Rival

The Hong Kong Stock Exchange (“HKEX”) recently pulled out of its $36.6 billion bid to acquire the London Stock Exchange (“LSE”). The merger would have created the largest trading entity with a combined value of over $70 billion.

Prior to HKEX’s failed LSE acquisition bid, LSE publicly questioned “the sustainability of HKEX’s position as a strategic gateway in the longer term.” This statement is likely in response to the widespread protests in Hong Kong surrounding its political relationship with mainland China. Thus, LSE’s statement highlights a lack of investor confidence in the Asian giant amidst rising political instability.

As for M&A trends more broadly, external factors, such as politics, often play a role in deal making, and HKEX’s dropped bid is just one example. Earlier this year, the U.S. Treasury Department proposed an amendment under the Foreign Investment Risk Review Modernization Act that would give the Committee on Foreign Investment in the United States (“CFIUS”) greater authority to halt or scrutinize Chinese and other foreign investments. Under the proposed amendment, this authority would extend to investments the U.S. deems to be “protected.” Similarly, with respect to the bid made by HKEX, officials from the Bank of England had previously advised the U.K. Treasury that the LSE-operated clearing house constituted “critical market plumbing.” Therefore, the deal, if materialized, would have been subject to U.K. scrutiny. Accordingly, M&A lawyers advising clients with cross-border deals need to factor in this increased regulatory scrutiny, especially when dealing with acquirers from politically unstable regions.

With HKEX’s bid out of the picture, LSE may now proceed with its deal to acquire Refinitiv Holdings Limited, a portfolio company of the Blackstone Group. LSE claims that the deal would put it at the forefront of the financial data sales industry. In addition, earlier this year, LSE mentioned that it would like to proceed with the deal since it made more “strategic sense” than the proposed merger with HKEX. Thus, while the political instability in Hong Kong likely attributed to HKEX’s change of heart, LSE is now able to move forward with its strategic business goals unhindered by HKEX. It remains to be seen whether HKEX will be successful with future acquisitions if the political climate does not dramatically shift soon.

Hong Kong Stock Exchange Drops Nearly $37 Billion Bid for London Rival





Siri, Google Assistant, and Amazon Alexa can be Hijacked with Light

Researchers have recently found that voice assistant technology is vulnerable to hijacking by cheap lasers.

Researchers from Tokyo’s University of Electro-Communications and the University of Michigan have almost bested inbuilt security mechanism in voice-controlled devices, including popular smartphones. A mere shining of a bright laser at the devices’ microphone is interpreted as a sound by their system.

Researchers have concluded that by producing electrical signals in the light beam on microphones hijackers may control a device because the system will interpret it as a genuine command. For this test, the cheap laser pointers used was around $13.99 to $17.99. This was coupled with a sound amplifier to direct speakers with a specific instruction cost of $27.99. A laser device was also connected to control the Lasers intensity. This was the most expensive tool of all, costing $339.

The team ran a test on voice control speakers and smartphones of renowned major tech firms, such as Google’s Assistant, Amazon’s Alexa, and Apple’s Siri. The list is not exhaustive, but includes Google Home, various Amazon Echo models, the Apple Home Pod, and Facebook’s Portal speaker, which runs Alexa. They also tested an iPhone XR, a Samsung Galaxy S9, and a Google Pixel 2.

Relying on inbuilt security layers in the gadgets is now in question. The varying degree of vulnerability in tablets, phones, and speakers is another issue discovered by the researchers after shining the laser from some distance, including through windows. Out of all devices tested, Google Home was hijacked from 110 meters away.

But it may relieve anxieties to consumers using iPhone, iPad, and a few Android smartphones that these devices require extra layers of authentication or a “Wake Word” to activate a device before the hijackers trick the system. This additional authentication of preventing a system against an invasion requires a system hacker to use a wake-up a command such as “Hey Siri” or “OK Google. Unfortunately, these additional security measures are missing in the smart speakers.

Researchers went to great lengths to explain in their paper the prospective chance that lasers could also be used to unlock smartphones and devices connected with it. This could expose consumers credit card information and even result in the ability to unlock tech-driven cars which are connected to a victim’s Google account

Since the paper’s publication, it is clear that tech giants such as Amazon need to update their gadgets security software to protect against any foreign invasion. Unfortunately, the research has already shaken consumers trust.

Siri, Google Assistant, and Amazon Alexa can be Hijacked with Light

US and China Avert Tariff Hikes in Partial Trade Agreement

After negotiations, Washington is geared towards reaching a subsequent agreement with Beijing ahead of re-escalating tariffs on Chinese products.

The Trump administration and Chinese officials have reinitiated talks to resolve a long-standing feud. With the recent development, the tech giants discussed reaching a limited trade agreement to hold off raising tariffs as high as 30% against the Chinese products in the US. Meanwhile, China has pledged to increase purchases of American agriculture products in the subsequent agreement, contrary to its currency standards.

Since news of the prospective agreement surfaced, the stock market has surged and prompted the International Monetary Fund (IMF) to persuade both countries to revise up the forecast for next year.

Bilateral talks have eased tensions, helping Washington to demand China to increase efforts to protect American intellectual property and technology. However, it is still unclear whether the communist government would change its tech practices and reform its economic policies with the provisions enumerated in Section 301 of U.S Trade Act of 1974.

Aligning with U.S trade policies is a focal point of an apparent truce between the two giants. For more than a year and a half, the trade war has agitated the world’s largest economies in retaliation to each other’s punitive measures. Hikes in duties imposed have affected millions of American consumers, who rely on products imported from China. Additionally, the backlash American agriculture received has disrupted its supply chains and manufacturing. The Trump administration’s pursuit of protecting intellectual property theft and illicit technology transfer has rationalized its continued sanctions on China and would give the U.S. an edge to win this trade war.

President Trump’s tweets have reiterated his commitment to building a strong economy. His consistent efforts cannot be undermined in the wake of his recently initiated impeachment inquiry over complaints of using his office for political gains with foreign assistance.

US and China Avert Tariff Hikes in Partial Trade Agreement

Inside Social Commerce – the New Breed of Influencer Marketing in China

What would Kim Kardashian have to do with mahjong on the most active e-commerce platforms in China?

Some theorize that the celebrity’s selling-power, with 150M followers on Instagram, boded well on a livestream channel run by popular Chinese celebrity, Viya, on Taobao, China’s e-commerce platform.

Indeed, Viya’s influence on China’s consumer is well-studied – at her peak in October, she sold nearly $50 million worth of goods in a single day. So after a quick product demo, Kardashian sold 150,000 bottles of perfume in mere seconds.

Kardashian’s appearance on the channel – and appeal to mahjong, a popular Chinese boardgame — is part of the larger effort to ramp up sales of her signature line of fragrances, KKW, for “Single’s Day,” China’s largest shopping day of the year. Last year, Single’s Day generated more than $30 billion in revenues for Alibaba’s two online platforms, which includes Taobao. This year, that number has crossed a record high of $38 billion – more than five times the online sales for Black Friday last year, in the United States.

Tellingly, despite China’s slowing economy, and fears of repercussions from the US-China trade war, sales through China’s ‘social commerce’ – a fusion of social media and online shopping – is more robust than ever. Through this ecosystem, e-payments, livestreaming, and e-commerce are integrated, allowing influencers to drive consumption.

Kardashian is one of Alibaba’s 500 recruits from ten countries. And soon, she’ll be one of many more. The retailer has announced plans to recruit and train 2,000 influencers to sell international goods to Chinese consumers, and celebrities are buying-in. Taylor Swift headlined the countdown for Single’s Day this year, on Nov 11, while Rihanna is marketing her brand, Fenty Beauty, through another one of Alibaba’s platforms.

Inside Social Commerce – the New Breed of Influencer Marketing in China

The Big Tech Way of Dealing with Harassment

David Drummond is the chief legal officer and senior vice president of corporate development for Google’s parent company, Alphabet. But rather than being known for these powerful titles, Drummond has been in the news for cheating on his wife with a former Google employee, Jennifer Blakely.

Blakely published a post on Medium in which she wrote about her relationship with Drummond, accusing him of emotional abuse directed at her and their son. In the aftermath of their relationship, she quit her job at Google and was abandoned by Drummond.

Google is notorious for its policies that regulate what is happening inside the company, even at the interpersonal level. Blakely worked initially as a paralegal in Drummond’s legal department. But given that interpersonal relationships among teams were disallowed by HR policy, Blakey was removed from the legal team and placed in sales, even though she had zero sales experience. Meanwhile, Drummond still works as one of Alphabet’s highest paid executives. He married another Googler two months ago and recently cashed out roughly $35 million in Google stock.

Blakely’s allegations are not the only insight into how Google treats workplace affairs. In 2018, thousands of Googlers protested the way the company deals with sexual harassment. The Andy Rubin scandal is still fresh; Google gave Rubin $90 million when he was leaving the company for his alleged sexual harassment, even though he could have been fired without compensation.

Blakely stated Google’s policy and culture protects elite executive men while oppressing women. On November 6, Alphabet’s board decided to initiate an investigation on sexual harassment allegations concerning Google. In addition to this, Google began to amend some of its policies. But Google still declines to publicly comment about workplace affairs that have become public. Thus, it seems like the real change may not be in policy, but rather in the mindset of decision makers of Google.

The Big Tech Way of Dealing with Harassment


Apple Commits $2.5 Billion to California Housing Initiatives

Apple recently declared its intent to contribute $2.5 billon towards housing initiatives in Northern California, a region heavily scrutinized for its unaffordability and homelessness. This move by the largest public U.S. company follows the roadmap put forth by Microsoft, Facebook, and Google. Earlier this year, these tech giants pledged grant and loan packages focused on similar initiatives. Tim Cook, Apple’s CEO, stated that the contribution was a part of Apple’s “civic responsibility to ensure that [Silicon Valley] remains a vibrant place where people can live, have a family, and contribute to the community.”

The projected breakdown of Apple’s $2.5 billion commitment includes:

  • $1 billion for a statewide affordable housing fund
  • $1 billion for first-time homebuyer mortgage assistance
  • $300 million for conversion of existing Apple property to affordable housing
  • $150 million to a Bay Area nonprofit focused on reducing and preventing homelessness
  • $50 million to address homelessness

While the move is sure to generate some positive media publicity, it has already generated some criticism. Apple, as one of the most cash-rich public companies, holds over $200 billion of excess cash and bought back more than $18 billion worth of its own stock in the last 3 months. Thus, their $2.5 billion commitment, while commendable, represents less than 1.5% of their outstanding cash and should be placed in context with other corporate initiatives.

Questions also arise as to the feasibility of the proposed initiatives. San Francisco and other Bay Area cities have reached the capacity of outward expansion, meaning that the only way to expand housing is to modify existing structures. However, as it stands, current zoning laws severely restrict high-density housing construction. Earlier this year, the California state legislature tabled a bill proposing to loosen some of these regulations. Certainly, the California state government will need to supplement large tech company contributions with laws encouraging affordable housing solutions.

Regardless of the criticism and feasibility, any Bay Area affordable housing aid is desperately needed. A 2016 McKinsey Global Institute report projected that California needs 3.5 million new housing units to address its current shortage. San Francisco maintains the highest cost of living in the country, contributing to increases in homelessness and demographic inequality. Unquestionably, large companies can help offset some of these costs, and California Governor Newsom hopes that more companies follow suit. In the meantime, historically low interest and unemployment rates, coupled with legislative inaction, suggests no end in sight for the Bay Area housing crunch.

Apple Commits $2.5 Billion to California Housing Initiatives

Board Diversity: How Much Progress Have We Really Made?

Women now hold more than 25% of S&P 500 board seats. This represents a modest increase from a mere 16% recorded in 2009, with notable improvements occurring over the last two years as gender diversity continues to garner attention. In the past year alone, 46% of new directors appointed to S&P 500 boards were women and 23% self-identified as racial or ethnic minorities. Strikingly, July 2019 marked the first time each member company of the S&P 500 had at least one woman on its board of directors. With increased public pressures, many stakeholders are choosing to play an active role in ensuring board diversity rather than remaining passive and adhering to the status quo.

Lawmakers, in addition to shareholders and other C-Level executives, have decided to tackle gender diversity head-on. Last year, California passed SB 826, mandating public companies with executive offices in the state to appoint at least one female director by 2019. Illinois followed suit with a law requiring that corporations based in the state report their female and minority board membership on an annual basis. Other bills subsequently surfaced in New Jersey and Washington, but have yet to crystallize. Despite multiple states expressing interest in pursuing board diversity through legislation, critics are skeptical of whether this is the right avenue to achieve meaningful diversity and inclusion at the board level. A recently filed lawsuit claims SB 826 is unconstitutional, while other critics see SB 826’s quota approach as tokenistic and reductionist.

Overall this advancement is certainly a welcomed change, but much remains to be accomplished if women are to have real representation at the highest executive levels. Among 31 CEOs appointed to S&P 500 companies during the first half of 2019, only four were women. And while women now make up a quarter of S&P 500 board seats, there are only six companies where they constitute a majority of the board. The same can be said about racial diversity at the board and executive levels which lags behind any progress made in gender diversity. According to a study of the Fortune 500 companies conducted by Deloitte in 2018, only 12% of board directors identified as minority men and only 5% as minority women.

With so much work left to be done to achieve gender and racial parity at the board level, the challenge might unfortunately become even more difficult. According to Harvard Business Review’s 2018 Annual Corporate Directors Survey, 48% of polled directors believed that “shareholders are too preoccupied with diversity,” a phenomenon HBR called “diversity fatigue.” Desensitization to such matters reflects a poor understanding of the importance of achieving diversity beyond meaningless check-the-box-criteria. Without continued prioritization and buy-in from all stakeholders, any near-term progress will likely face challenges. We can remain hopeful, however, that the progress made to date – however slight – is worthwhile.

Board Diversity- How Much Progress Have We Really Made?

A New Decade and a New Age of Privacy

The California Consumer Privacy Act (CCPA) takes effect on New Year’s Day, 2020. It will impact everyone from the most established businesses to startup app developers. Under the CCPA, consumers have a right to know and a right to delete their information, and the companies need to make this possible. It applies to for-profit companies that meet business and size criteria. Many companies across the country fulfill the first part, and even small startups will eventually scale up to the minimum criteria.

The legislation has sent companies scrambling to understand what data they have, even driving ad-tech, like LiveRamp, to help companies organize what they have and streamline consumer consent agreements. While big business may now be facing the task of organizing mountains of data, it’s the new startups that will have to comply with the regulation as they scale, even at an early stage before the criteria are met. This becomes incredibly significant in the world of mental health apps.

There is a CCPA exemption drafted around the Health Insurance Portability and Accountability Act (HIPAA) which would protect certain kinds of health-related information and companies.

Venture-backed companies, like Talkspace and BetterHelp, deal with highly personal information regarding users’ mental health to provide online therapy. Wellness apps like Calm and Headspace collect less information, and it is unclear whether their purpose will be protected through HIPAA or whether CCPA will apply.

Regardless of the confusion surrounding exemptions, technology companies are emerging and expanding to address the worsening mental health crisis. Consequently, insurers are increasingly looking to partner with and invest in startups, recognizing that new technologies can radically improve the healthcare experience. Insurance company Dissinger Reed recently partnered with Talkspace, the online subscription therapy app, to offer the service to student athletes. With an insurance partnership will come rapid growth and also consumer data, triggering CCPA compliance.

California’s law is the first of its kind, but it is likely that other states and the federal government will follow with their own versions. As the applicable law changes, these for-profit venture-backed mental health apps will need to stay flexible. If it becomes a significant barrier to a company’s ability to scale and comply with changing regulations, then these apps will be less able to drive positive change in mental health.

A New Decade and a New Age of Privacy

Trade Deficit Continues to Grow Under Trump’s Watch

The trade war initiated by President Trump is yet to yield positive results for the American economy. The United States’ trade deficit increased by about five percent through the first three quarters of 2019 as compared to the same period last year. This is despite promises from the Trump administration that hiking tariffs on Chinese imports would shrink the trade deficit, which is the gap between the value of the country’s imports and its exports.

With each new round of tariffs, the two largest economies are drifting further apart. Trade between the two countries has declined more than ever, and China has fallen from being United States’ largest trading partner to being its third, after Mexico and Canada. The trade war has not bolstered American manufacturing and exports either. In fact, businesses claim they have been hurt by the uncertainty it has created, and many American companies have shifted their production facilities to countries like Vietnam to avoid increasing tariffs.

In isolation, higher tariffs on Chinese imports have resulted in a decline in the trade deficit with China. However, this decline has been largely offset by imports from other countries such as Mexico, Taiwan and Vietnam. At the same time, retaliatory tariffs from China, along with the European Union, India and Turkey, have negatively impacted American exports. As a result, Trump’s tariffs have neither failed to reduce American demand for foreign goods, nor have they stimulated American exports. These factors combined have caused the country’s overall trade deficit to grow.

President Trump has long believed that the trade deficit hinders economic growth and is a sign of weakness for the American economy. On the contrary, some economists argue that the trade deficit is not an accurate a metric to measure the health of the economy. If anything, they believe the increase in trade deficit is largely because the American economy is growing fast, leading to greater import and consumption of foreign goods by Americans. The widening of the trade deficit, they add, is a product of a host of macroeconomic factors such as the relative growth rates of countries, their investment flows, and the value of their currencies.

The Trump administration is now considering rolling back tariffs on Chinese goods as part of a truce to end the trade war. However, any definitive agreement hinges on concessions from China, including large purchases of American agricultural products, rules to deter currency manipulation and provisions to protect intellectual property. While the economic pain appears to have softened President Trump’s resolve, it is doubtful when a conclusive deal will be reached and whether it will make up for the damage already done.

Trade Deficit Continues to Grow Under Trump’s Watch

Vitamin E Acetate Could be the Vaping Illness Culprit

The CDC has announced a potential link between the various vaping-related illnesses that have recently occurred and the additive vitamin E acetate. As of November 5, 2019, there have been 2,051 of these illnesses reported since the outbreak began in mid-August. Upon testing samples from the lungs of a group of infected people, the compound seems to be a possible link— the first traces were found in August but are reoccurring as a consistent thread in the lungs of sick patients. The compound was found in all 29 of the samples that researchers have tested.

Vaping related illnesses carry unknowns for researchers, akin to when the risks of cigarettes to human health were still obfuscated. While most patients who have reported illnesses report vaping THC or nicotine products, the concern about vaping and the illness that have occurred is not necessarily unique to THC or nicotine devices. Instead, the concern should reach all vape products. Of the 29 samples tested, 23 also showed THC in the samples and 16 showed nicotine.

The heart of the problem is, as these recent tests are illuminating, the various additives in the products. This issue is amplified by the fact that many of these products are being purchased on a black market and, thus, are entirely unregulated. Regulation would allow for the opportunity to monitor additives and ensure dangerous compounds stay out of legally purchased products.

Vitamin E acetate is described by the CDC’s Dr. James Pirkle as “enormously sticky.” This means it can stay in the lungs long after use and this is why its reappearance in the tests could mean it is a central cause in the vaping related lung illnesses. While vitamin E in its other forms like lotion and supplements is harmless and even beneficial, inhaling the “oily” substance is a different story.

Of the reported vaping related illnesses, 70% are male and 79% are under 35. Thankfully, there has been a significant decline in reported sicknesses, but this should not dwarf our concern or our search for a solution.

Vitamin E Acetate Could be the Vaping Illness Culprit