🎶 Apple’s $2B musical fine
Hey Snackers,
Move over, Wall Street. “Sesame Street” has thoughts on profit-boosting moves in corporate America. The Cookie Monster has taken a position on shrinkflation, validating what consumers have long feared: they’re paying the same price for fewer cookies.
Stocks dipped after six of the Magnificent 7 lost steam. This week, investors have eyes on congressional testimony from Fed Chair Powell and fresh US jobs data.
Apple gets slapped with a $2B music-streaming antitrust fine in a big win for Spotify
Facin’ the music… European regulators ordered Apple to pay a $2B fine yesterday, saying the Apple Music owner suppressed competition in the music-streaming industry. After a multiyear investigation, the European Commission said it found that Apple had imposed illegal restrictions on app developers by blocking them from steering iOS users to subscription offerings outside the apps. The probe stemmed from a 2019 complaint filed by music-streaming leader Spotify. The Swedish company argued that Apple’s rules “muzzled” it from sharing discounts and promos through its iOS app.
Regulators say: From now on, Apple’ll have to allow all music-streaming services to communicate freely with their users — or risk a bigger fine worth as much as 10% of its turnover.
Apple said it’ll appeal the decision, which it said will primarily benefit Spotify, which wants “to access Apple's tools without paying anything.” Apple said it doesn’t get $$ from Spotify.
Apple’s gated App Store garden… is finally opening. Apple has touted its App Store ecosystem as a way for developers to reach its massive iPhone user base and generate trillions in sales. But many iOS developers still have to pay Apple a 15-to-30% fee on app purchases, which has become a sore spot. In January, Apple’s US App Store began allowing developers to link out to non-Apple payment platforms after a years-long courtroom battle royale against “Fortnite” maker Epic Games. The Epic ruling said that Apple can’t bar developers from steering users to off-app purchasing pages.
Consequences could be bigger than costs… This is Apple’s first fine for breaking EU rules, and the third largest dished out to a tech company by European regulators. While some critics say the $2B charge is just a “parking ticket” for a company worth $2T+, Apple’s appeal could take several years to be decided. Until then, it’ll have to pay up and make the changes to its biz model.
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CBD loses its “it” ingredient status as scattered regulation hinders biz growth
Struggling to remain calm… In the past decade, CBD’s time as the wellness industry’s buzzy ingredient saw it infused into products like water, gummies, skin cream, and even toilet paper. CBD products reached $4.2B in US sales in 2022. But the hype cycle giveth, and the hype cycle taketh away: regulation limbo has left the market subject to a patchwork of state laws and led several companies to hit the brakes on CBD plans.
Red light: Without federal regulation, big companies have been unwilling to vibe with CBD. Molson Coors and Ben & Jerry’s have paused or scrapped CBD-infused lines, and national retailers like Target and Walmart have avoided most CBD products.
Highly skeptical: Consumer health doubts (and confusion around CBD’s general purpose) haven’t helped its sales. The FDA has issued dozens of warnings over unproven health claims.
CBDon’t... In recent years, Canadian cannabis cos like Canopy Growth invested in “beyond the leaf” products like CBD drinks to expand into the US, where weed is federally illegal. Now even CBD’s meeting hurdles: California allows for widespread CBD sales, but other states’ rules are more complicated. Some restrict the products it can be in (think: yes to seltzer, no to chocolate), the amount of CBD that can be included in products, and where the hemp can be grown — making for a sales headache. The global CBD market was also hurt by Hong Kong’s ban last year, which followed mainland China’s in 2022.
Sometimes you need to pivot the pivot… Weed giants leaned into CBD as a hedge against cannabis regs, but now that the ingredient’s facing similar issues, they’re pivoting (again): cannabiz Tilray has snatched up several beer brands from Molson Coors and AB InBev, including Shock Top and Montauk Brewing. Bev brand Recess, which launched with CBD sparkling water, has diversified to CBD-free products. Now CBD drinks make up less than 10% of its revenue.
What else we’re Snackin’
BigWorms: “Dune: Part Two” is proving to be the 2024 box office’s messiah. The sandy sci-fi epic’s opening weekend was the biggest of the year so far, grossing ~$82M, and 23% of that came from Imax tickets.
BlueIt: JetBlue and Spirit said they’d stop fighting a court ruling that blocked their planned $3.8B merger. The US Justice Department argued that the deal would hurt competition and lead to higher airfares.
Pharma: CVS and Walgreens will soon start filling prescriptions for the abortion pill mifepristone in states where it’s legal. Last year, pharmacies’ decisions around distributing the pill stirred political debates.
Bye: Nigeria, a crypto hub, fined Binance ~$10B after arresting two of the exchange’s execs. The gov’t, which recently banned several crypto platforms, says Binance manipulated foreign-exchange rates, plunging Nigeria’s currency.
AltSzn: Memecoins including dogecoin, shiba inu, and bonk rallied as bitcoin flirted with its record $69K high. The altcoin surge (aka: alt season) comes on the heels of an ETF-fueled BTC boom.
Tuesday
Earnings expected from Nio, Target, CrowdStrike, Ross Stores, Nordstrom, Oddity, and Box
Authors of this Snacks own bitcoin, dogecoin, shiba inu, and shares of: Apple, CVS, and Walmart
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