Welcome to the Weekly Scan. Here’s what we’re following for the week of July 6, 2021.
Au Revoir Amazon. Jeff Bezos, the founder and chief executive officer of Amazon, officially stepped down from his role as chief executive officer on Monday, July 5. Andy Jassy, who previously led Amazon’s cloud business known as Amazon Web Services (AWS), will take over as Amazon’s CEO, handling day-to-day activities. Bezos will stay on as the executive chairman of the board, and will reportedly shift his focus to new products and existing projects, such as the Blue Origin spaceship venture, as well as philanthropic pursuits.
- The takeaway. Bezos, who founded Amazon in his garage in 1994, transformed it from an online bookseller into the largest digital retailer in the world. The company has also branched out into groceries with its 2017 acquisition of Whole Foods, electronic devices, and it has a leading presence in cloud computing infrastructure. Amazon has grown to a market capitalization of more than $1.6 trillion, hitting the $1 trillion mark in January, 2020. Amazon also made Bezos the wealthiest person on the planet, with an estimated net worth of $194 billion.
The piper will pay. E-cigarette company Juul will reportedly pay the state of North Carolina $40 million in the first settlement over how the company aggressively marketed its products to young people. Thirteen other states and Washington, D.C. have also sued the company for misleading advertising, and underplaying the health risks related to “vaping.” Following the settlement, Juul will not be permitted to advertise outdoors near schools, or sponsor sporting events or concerts in North Carolina. Additionally, Juul will be limited in how it advertises on social media. Juul also will not be allowed to sell sweet and fruity e-cigarette flavors in North Carolina unless the Food and Drug Administration (FDA) approves it. The settlement money, which will reportedly go to youth affected by e-cigarettes, will be paid out over six years.
- The takeaway: Juul was once the leader in the booming e-cigarette industry, reportedly controlling 70% of the market. In 2018, Altria, the producer of Marlboro and other tobacco products, invested $12.8 billion in Juul for an approximately 35% stake. Beginning in 2017, however, critics began speaking out against Juul’s marketing practices. Criticism of the company ramped up in 2019, following a series of deaths and illnesses reportedly related to e-cigarettes. And in 2020, the FDA sent Juul a warning letter, saying it may have violated the law by advertising its products as a safer alternative to cigarettes, without approval from the FDA.
Blocked. A federal judge threw out antitrust lawsuits against Facebook last week for, among other things, lacking sufficient legal standing. The suits were filed by the Federal Trade Commission (FTC) and the attorneys general of 46 states. In the suit, the FTC claimed that Facebook participated in monopolization by buying up social media rivals Whatsapp and Instagram. The federal judge dismissed the suits on the basis that they didn’t provide enough evidence that Facebook had built a monopoly. However, the judge gave the suing parties 30 days to file an amended lawsuit.
- The takeaway: The decision to throw out the suits is a win for Facebook, which has become the target of bipartisan government efforts to curb Facebook’s growing influence. Although the FTC approved Facebook’s acquisitions of Instagram in 2012 and Whatsapp in 2014, the agency argued in its suit that the deals have proven to be anticompetitive. The ruling is expected to prompt calls for Congress to pass more aggressive antitrust laws. Just weeks ago, the House Judiciary Committee approved various antitrust measures designed to control some of the biggest tech companies.
Hertz’s latest chapter. Car rental company Hertz emerged from bankruptcy last week, about a year after it entered Chapter 11. Hertz filed for bankruptcy in May 2020, when the Covid-19 pandemic hit the car rental business and others in the travel industry. Hertz, a 100-year-old company, brought on Knighthead Capital Management and Certares Management, which invested $5.9 billion in the business. The investment will reportedly allow Hertz to resolve $5 billion in debt, including all of Hertz Europe’s corporate debt. The deal will also give Hertz access to $10 billion in loans, credit lines, and other debt.
- The takeaway: Hertz’s recovery comes as it and other car rental companies are reportedly seeing an increase in bookings. Consumers are eager to travel following more than a year of lockdowns and travel restrictions. Rental company Kayak reported that over the past two weeks, searches for car rentals have doubled compared to the same period in 2019. Car rental prices have also surged recently as demand outweighs the supply. Some cities have reportedly seen car rental prices increase to more than $300 per day.
Find out what we covered in last week’s Scan.