—— EU to Probe 3 Big Tech Firms; Boeing CEO to Step Down; China to Limit Use of Intel AMD Chips; US New-Home Sales Eased; MLB Superstar Involved in Betting Scandal; Lucid Receives $1 Billion Lifeline; Trump’s Social Media Company to Go IPO
1. EU to Probe 3 Big Tech Firms
The European Union has launched a comprehensive investigation into Apple Inc., Alphabet Inc.’s Google, and Meta Platforms Inc. (formerly Facebook) regarding their compliance with new regulations aimed at curbing the power of Big Tech companies.
The investigation will focus on various aspects, including Apple and Google’s app store policies, potential unfair preferences in Google search results, and obstacles to users selecting alternatives to Apple’s Safari browser. Additionally, the probe will examine new subscription fees for Meta’s Instagram and Facebook platforms.
If found guilty of breaching regulations, these companies could face substantial fines of up to 10% of their global revenue, or up to 20% for repeated violations.
Margrethe Vestager, the EU’s antitrust chief, expressed skepticism about the proposed solutions offered by Apple, Google, and Meta Platforms Inc.
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2. Boeing CEO to Step Down
Boeing Co. has announced significant changes to its leadership structure in response to a safety crisis that has intensified in recent months. CEO Dave Calhoun is set to depart at the end of 2024, while Chairman Larry Kellner will not seek re-election. Additionally, Stan Deal, who currently heads Boeing’s commercial airplanes division, will retire immediately. Stephanie Pope, the company’s Chief Operating Officer, will assume Deal’s responsibilities.
These changes come amidst mounting frustration from customers regarding Boeing’s handling of the crisis, which revolves around manufacturing quality and safety concerns.
The departures of Kellner, Calhoun, and Deal are the most prominent in a series of changes following a near-catastrophic incident involving a 737 Max jetliner in January, which has plunged Boeing into deeper turmoil.
Concerns over their leadership escalated significantly last week when chief executives from major airlines attempted to circumvent Calhoun and directly engage with Boeing’s board of directors.
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3. China to Limit Use of Intel AMD Chips
Shares of Intel Corp. and Advanced Micro Devices Inc. experienced declines on Monday following a report indicating that China has implemented new guidelines to restrict the use of US-manufactured microprocessors and servers in government computers. Intel’s stock fell by 2.9%, while AMD’s slipped by less than 1% in New York trading.
According to the Financial Times, the new regulations entail gradually replacing chips produced by these American companies with domestic alternatives.
The guidelines, unveiled by China’s finance ministry and the Ministry of Industry and Information Technology on December 26, also suggest replacing software from US firms such as Microsoft Corp. However, there is still some leeway for government agencies and state-owned enterprises to purchase computers powered by foreign processors and servers, as reported by the FT, citing two unnamed procurement officials.
Over the past few years, China has been actively working to eliminate critical foreign technology from its most sensitive sectors.
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4. US New-Home Sales Eased
In February, new-home sales in the United States experienced an unexpected decline, marking the first drop in three months and indicating an uneven recovery for the housing market. Government data released on Monday showed that purchases of new single-family homes decreased by 0.3% to a yearly pace of 662,000. This figure fell short of economists’ expectations, with a median forecast of 677,000 in a Bloomberg survey.
Despite the February downturn, the US housing market has demonstrated signs of a continued rebound, buoyed by stabilized mortgage rates around 7% and various incentives offered by builders. Additionally, the market has been influenced by limited listings of previously owned properties, contributing to the appeal of new home purchases.
Indeed, a robust job market has played a significant role in driving growth in orders for homebuilders like KB Home and Lennar Corp.
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5. MLB Superstar Involved in Betting Scandal
Major League Baseball has initiated an investigation into allegations of illegal gambling involving Shohei Ohtani, one of the sport’s prominent players.
It is alleged that Ohtani’s interpreter, Ippei Mizuhara, was dismissed by the Los Angeles Dodgers after purportedly placing bets with an illegal bookmaker. Reports suggest that Ohtani transferred significant amounts of money to Mizuhara to cover a debt.
The details surrounding the case, including Ohtani’s awareness and the nature of the wagers, remain unclear. It’s noted that while sports betting is legal in many US states, it is prohibited in California.
MLB stated that their Department of Investigations has initiated a formal process to investigate the matter further.
Source: Financial Times – Scandal involving baseball star Shohei Ohtani investigated by US league
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6. Lucid Receives $1 Billion Lifeline
Lucid Group Inc., an electric carmaker, is receiving a significant $1 billion cash infusion from its largest investor, an affiliate of Saudi Arabia’s Public Investment Fund, known as Ayar Third Investment Co.
This investment is structured as a private placement for convertible preferred stock. Lucid intends to utilize this funding for capital expenditure and working capital purposes, providing the company with a crucial financial lifeline.
In a client note, Morgan Stanley analysts, led by Adam Jonas, regarded the new investment from the Public Investment Fund (PIF) as a modestly positive development for Lucid Group Inc.
They had previously raised questions about the sustainability of support for Lucid amidst various other electric vehicle (EV) alternatives emerging in the market. The analysts noted that the latest announcement helps reaffirm PIF’s commitment to Lucid, providing some reassurance about the company’s future prospects.
Lucid stands out as one of the few US-based companies solely focused on electric vehicles (EVs), yet it has encountered significant challenges in scaling up its production output.
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7. Trump’s Social Media Company to Go IPO
Former President Donald Trump’s social media venture is poised to commence trading on Tuesday following the completion of a blank-check deal, potentially resulting in a significant financial gain for him. Trump Media & Technology Group is expected to trade on the Nasdaq under the symbol DJT after finalizing an agreement with Digital World Acquisition Corp. The merger comes after more than two years of challenges and delays.
The deal has the potential to provide Trump with nearly $4 billion worth of shares, although they will be subject to lock-up agreements and performance requirements. These conditions may temporarily restrict his ability to sell the stock and alleviate his current financial pressures.
As part of the merger, Eric Swider, the CEO of Digital World, will join the merged company’s board of directors. Additionally, the company will be led by Devin Nunes, a former Representative from California who resigned from Congress to serve as the CEO of Trump Media, according to the statement.
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The content of this article comes from various financial news media such as The Wall Street Journal, Financial Times, and Bloomberg.