Welcome to the Weekly Scan. Here’s what we’re following for the week of October 26, 2020.
Purdue Pharma swallows $8 billion pill. In an $8 billion settlement with the Department of Justice, Purdue Pharma, the company that made the painkiller OxyContin, will plead guilty to three criminal charges for contributing to the creation of the opioid crisis in the U.S. The company will pay a $3.5 billion fine, surrender $2 billion in past profits, and pay $2.8 billion for civil liability. Purdue will shut down and turn into a company for public benefit, continuing to sell OxyContin and other drugs, with proceeds going toward its fines, to help victims of the opioid epidemic, and to combat opioid addiction. Opioid overdoses have killed approximately 450,000 Americans in the past ten years.
- The takeaway: Some state officials have said that this deal doesn’t go far enough. In a letter to the U.S. Attorney General, 25 state attorney generals have said that Purdue should be controlled by a private entity rather than the government, which they argue should not be in charge of selling Oxycontin. They also object to the lack of penalties for the Sackler family, former owners of Purdue Pharma. The Sacklers reportedly withdrew $10 billion from Purdue Pharma when the company started facing legal trouble.
Google does not pass go. The Department of Justice announced that it will sue Google for allegedly maintaining a monopoly over internet searches and search advertising. In the suit, the Justice Department said that Google had prevented competition by striking deals with other companies, such as Apple, to make Google the default search engine. Google reportedly pays Apple $8 billion to $12 billion annually to be the search engine of choice on its products, reportedly handing Google about 80%of the search market. Search advertising is a huge source of revenue for Google, bringing in $34.3 billion in 2019.
- The takeaway: Though the lawsuit is expected to take years to reach a resolution, it marks the most noteworthy attempt by the U.S. government to curb the power of big tech companies. The suit has the potential to reshape antitrust laws and the tech industry in the U.S. Both Republican and Democratic lawmakers have increasingly questioned the dominance and reach of big tech companies in business and consumers’ lives.
Quibi calls it quits. Short-form streaming platform Quibi will fold after six months of operations. The company was founded by entertainment mogul Jeffrey Katzenburg, and former Hewlett-Packard president and chief executive Meg Whitman. Quibi (short for “quick bites”) raised an impressive $1.75 billion, and launched in April, 2020 with content featuring big name celebrities. But the service reportedly lost 90% of subscribers after the trial period ended, which the founders attributed to the pandemic and a weak premise. Quibi will try to sell the content it currently hosts, as well as its technology, which reportedly allows content to be edited in both portrait and landscape formats, to aid mobile viewing.
- The takeaway:Quibi is perhaps the shortest-lived streaming service in recent years. Competition from other, free, short form content platforms such as TikTok and YouTube reportedly made it difficult for Quibi to make a splash. Quibi also launched in the middle of the Covid-19 pandemic, when many people were quarantining at home. The platform was designed for a mobile experience rather than at at-home experience on a TV.
Find out what we covered in last week’s Scan.