Hey Snackers,
From Hard Mtn Dew to Topo Chico seltzer, we’ve seen our share of unexpected drinks. It’s only getting weirder: this new hard seltzer is brewed with leftover hot-dog water.
Stocks ticked up after the Fed indicated it’ll need to speed up the pace of interest-rate hikes as the inflation outlook worsens. The Fed’s inflation-fighting moves could tip the US into a recession — but so could inflation itself, if left untamed.
The EU passed strict antitrust rules that threaten Big Tech’s status quo — including Apple's App Store dominance
Joining le chat… Big Tech’s power is being reeled in over in Europe. On Tuesday, European Union lawmakers passed regulation aiming to stop tech giants from playing favorites with their own products (think: Apple apps on the App Store, Basics on Amazon). The Digital Markets Act (DMA) covers a lot of ground, including banning Amazon from using third-party seller data to inform its own products. Most notably, it could break Apple’s App Store monopoly.
- Apple’s core: The DMA could force Apple to let Euro customers download apps directly from developers, instead of only through the App Store.
- Profit pit: Apple raked in about $86B through its App Store last year, since it takes a 15 to 30% cut of paid downloads, subscriptions, and in-app purchases.
- Sliced and diced: Companies that violate the DMA could be hit with fines totaling 10% of annual global sales.
iOStressed… The DMA could disrupt more than just app downloads. The regulation says consumers must be allowed to choose their own digital assistant (sorry, Siri) and mandates that messaging platforms like iMessage and Meta’s WhatsApp be able to communicate with each other (read: group-chat chaos). European lawmakers aren't playing around.
Regulation matters, but enforcement is key… Huge fines mean tech behemoths will be forced to pay attention. But attention isn't the same as compliance, and regulation is sure to be followed by litigation. The EU's task force will have 80 officials, but pro-regulation lawmakers say more heads are needed to fight Big Tech's lawyers — so don't count the App Store’s dominance out just yet.
Amazon sweetens Prime perks with free Grubhub subscriptions to combat shopping slowdowns — and keep members loyal
Same-day TP delivery… with a side of mozz sticks. Amazon’s taking a bigger bite out of the food-delivery biz after announcing a 2% stake in Grubhub yesterday. Refresher: Grubhub was scooped up by European delivery giant Just Eat in 2020, but Just Eat is trying to sell the US-based biz as the delivery race heats up. Now:
- Prime rib: Amazon’s 200M+ Prime members can access a free year of Grubhub+ (valued at $10/month), including free delivery and members-only discounts.
- Zero loyalty: Shares of DoorDash sank 7% and Uber dropped 5% on fears that Prime members could ditch those food-delivery services for Grubhub.
- Perk’d up: UK delivery staple Deliveroo said memberships quadrupled in February after Amazon rolled out a similar Prime perk last year.
Strolling to the bookstore... Amazon’s sales have slumped as shoppers cut back on online spending. Last quarter, the Zon posted its slowest quarterly growth in decades. Grubhub delivery perks could help justify its recent 17% Prime price hike while boosting subs. It’s easier to lean on partnerships than create perks from scratch: in 2019 the Zon ditched its Amazon Restaurants delivery biz as hot competition bit into profits.
The "subscription-squared" model is here... First we had credit-card companies offering Lyft Pink and DashPass subs as perks. Now we have paid subscriptions like Prime offering other paid subs as perks. Think: Hulu offering subscribers free Uber Eats Passes for six months. These partnerships let consumers enjoy several perks at a lower price — and help subscription partners keep customers loyal longer.
What else we’re Snackin’
- Pod: The FDA paused its (only weeks-old) ban on Juul sales to review “scientific issues.” Juul, which once controlled 75% of the $4B US e-cig market, has been accused of contributing to a rise in underage vaping.
- Charge: Toyota sold its 200,000th plug-in EV last quarter, a milestone that triggers a phaseout of the $7.5K tax credit for electric-Toyota buyers. Last month, automakers asked Congress to raise the tax-credit cap.
- Street: Middle-class neighborhoods are dying out. Just half of US families live in areas where the local income level is in the middle-income bracket. One cause: home prices have nearly doubled since 2018.
- Broke: Crypto brokerage Voyager filed for bankruptcy. Users aren’t expected to be able to withdraw all their assets, but will reportedly be repaid in a mix of crypto, Voyager tokens, stock in the restructured company, and cash.
- Downbeat: Shares of French music streamer Deezer plunged during its first trading day — another example of the tough landscape for unprofitable tech startups looking to go public.
Thursday
- Weekly jobless claims
- Earnings expected from Levi Strauss, Helen of Troy, and WD-40
Authors of this Snacks own: shares of Apple, Amazon, and Uber
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