Wednesday 11/11/20

1. In REGULATION NEWS, China draws up antitrust rules, the EU accuses Amazon and UK takeover rules tighten
2. In VACCINE NEWS, we look at who’s in the race as well as Pfizer and potential logistical challenges
3. In TECH NEWS, the sector gets sold but it can still win and Apple announces a new chip
4. In INDIVIDUAL COMPANY NEWS, Spotify continues to invest in podcasts and Premier Foods benefits from more home-cooking
5. AND FINALLY, I bring you an apologetic tooth fairy and Bake-Off outrage…

So China, the EU and the UK get feisty…

China draws up first antitrust rules to curb power of tech companies (Financial Times, Ryan McMorrow, Nian Liu and Mercedes Ruehl) shows that China’s market regulator, fresh from taking Jack Ma down a peg or two, is now moving towards putting together antitrust rules that have sent shares in China’s Big Tech companies – including Alibaba, Tencent and food delivery specialist Meituan – down between 4% and 11% in trading yesterday. The State Administration for Market Regulation will define, for the first time, what antitrust behaviour is. This constitutes a considerable departure from its previous light-touch approach but will address issues concerning function portability (e.g. users can’t use WeChat Pay to shop in Alibaba’s Taobao store). * SO WHAT? * The new rules are likely to hit exclusivity clauses and the bundling of products, which will presumably hit margins and potential revenues. To give you an idea of scale, Alibaba sells almost 20% of all Chinese consumer goods versus 5% market share of Amazon in the US. Draft regulations targeted the likes of Tencent, Alibaba, Meituan and JD.com specifically. The regulator is currently awaiting public feedback before the deadline of November 30th. It is going to be fascinating to see how far it is willing to go to get its own Big Tech under control.

Amazon charged with abusing EU competition rules (The Guardian, Daniel Boffey) shows that Margrethe Vestager is at it again as Amazon has now been formally charged by the European Commission with using sales data from third party sellers on its website to gain advantage in the European marketplace. EC vice-president Vestager says that Amazon used “big data” to skew competition in France and Germany. There will also be a second investigation looking into Amazon’s alleged prioritisation of its own

offers and independent retailers who use its logistics and delivery services. * SO WHAT? * I really hope that Vestager manages to win this time around. Her bruising encounter with Apple – which she lost – was a major blow to the credibility of the EC and she needs to win this otherwise, in my opinion, she might as well resign and not bother because no-one will take her, or the EC, seriously.

No 10 toughens takeover laws to lock out ‘back door’ security risks (Financial Times, Jim Pickard, Helen Warrell and Daniel Thomas) shows that Boris Johnson will today announce the biggest overhaul of British takeover law in twenty years in order to prevent foreign companies taking over key assets in the form of the National Security and Investment Bill. Potential foreign buyers of UK companies, large shareholdings or intellectual property in 17 specific industries will have to alert a new government body or face personal fines of up to £10m or corporate fines of up to 5% of annual turnover. The screening process should be completed within 30 working days. Sectors covered by the new bill include defence, transport, energy, AI, computing hardware etc. The powers will be active from when the Bill is introduced today in order to head-off a deluge of deal-making before a deadline. * SO WHAT? * The proposals had been drawn up three years ago under Theresa May but implementation had been on the backburner in the meantime. This will bring the UK in line with similar practices adopted in other Five Eyes partners including the US and Australia and reflects growing concerns about takeovers via the backdoor from China and sovereign wealth funds eager to take advantage of covid-induced vulnerability. While this sounds reasonable in theory, in of itself it won’t really help companies that need the funding. By cutting out potential partners, unless other measures are introduced to help these sectors, I would expect a number of companies to fall by the wayside in the name of “national security”.

We look at what’s going on elsewhere in vaccines and some of the challenges…

Leaders in race to develop jab (The Times) is an excellent infographic which shows you where other players are in the race to bring out a vaccine. Specifically, it shows you where the likes of Moderna, AstraZeneca/Oxford University and Sanofi/GSK are in relation to BioNTech and Pfizer. It’s certainly good to have options! Vaccines/Pfizer: calling the shots (Financial Times, Lex) shows that Pfizer and BioNTech will be benefitting from a vaccine because they have used their own money (not government) for

development. Some estimate potential sales of $13bn next year – way more than their current bestseller, a pneumonia vaccine that made $5.8bn last year. There are some potential logistical problems with Pfizer/BioNTech’s vaccine as it has to be kept at -70ºC – and Fears dry-ice shortage could delay Pfizer vaccine rollout (Daily Telegraph, Lizzy Burden) shows that dry-ice weight restrictions on aeroplanes are prompting fears that distribution may be restricted – but then Moderna’s candidate only needs to be stored at -20ºC.  * SO WHAT? * While it’s clearly brilliant to hear about Pfizer/BioNTech, it’s also fantastic to see that others are not far behind. Hopefully, sufferers – and those exposed to the virus regularly – will have options.

Tech gets sold, but it can still win and Apple announces a new chip…

Tech sell-off continues after Covid vaccine breakthrough (Financial Times) highlights the fact that the sell-off of tech stocks continued yesterday as investors crystallised their gains after a prolonged rally but then Tech stocks: tails they win, too (Financial Times, Lex) shows that this is not likely to be permanent given that we are still going to be working from home for some time yet. What lockdown has done is to accelerate Big Tech’s profitability and an uptick in memberships tying users to services is unlikely to drop off a cliff. * SO WHAT? * Of course the likes of Zoom and Peloton have experienced massive gains during the pandemic, but given that that some form of lockdown has

been prolonged, people have become accustomed to new services and new ways of doing things. OK, so the growth rate is probably going to slow down but there will still be growth to be had IMO. It is also way too early to get excited about aviation and travel agents, for instance.

Meanwhile, Apple Mac line, once dubbed ‘dinosaur’, gets new life in pandemic, in-house chips (Wall Street Journal, Tim Higgins) shows that Apple has unveiled a new in-house designed chip called that M1 that will make its Macs faster and more energy efficient (and possibly more profitable). The MacBook Air, MacBook Pro and Mac Mini will be the first to get the chip. * SO WHAT? * This development brings its Mac line-up more in-line with its other products and also heralds the end of a 15-year relationship with Intel. This is all part of CEO Tim Cook’s efforts to manufacture more of its own components.

Spotify continues to invest in podcasts and Premier Foods benefits from home cooking…

Spotify continues podcast push with Megaphone deal (Financial Times, Anna Nicolaou) shows that the music-streaming giant is continuing to beef-up its podcast capabilities by buying Megaphone for about $235m. This is the latest acquisition following those of Gimlet Media, Anchor, The Ringer, Parcast and individual deals with stars such as Joe Rogan and Michelle Obama. Megaphone does ad technology for podcasting, which will be useful to podcasters and perhaps attract more of them to the Spotify platform as they continue to aim to monetise

content. * SO WHAT? * There seems to be a lot of action in the podcast world at the moment – Amazon added podcasts to its music services in September, Apple recently bought Scout FM, which curates podcasts and SiriusXM agreed to buy the Stitcher platform this year. It certainly seems like podcasts are the way to go content-wise at the moment!

Then in Home cooking boom is all gravy for Premier Foods (Daily Telegraph, Hannah Uttley) shows a continuation of the theme for consumers buying familiar brands as the owner of Bisto Gravy and Mr Kipling, among others, announced rising profits and sales as more people are eating at home under lockdown. No doubt this will continue for at least the next quarter as we all have a homely Christmas!

…in other news…

I thought I’d leave you this week with the quick-thinking mum in Mum forgets tooth fairy visit but saves the day with clever note (The Mirror, Paige Holland) and something that I also noticed last night when I watched TV in Bake Off fans outraged by Paul Hollywood’s snub to Hermine after ‘stunning’ jelly cake (The Mirror, Rose Hill). It was an INCREDIBLE cake if you haven’t seen it…