__Hold music…__ not the tune you were expecting on your relaxing getaway. After __[Southwest](https://robinhood.com/stocks/LUV/)__'s holiday meltdown, which saw the airline cancel 16K flights, the White House wants to keep companies accountable for passengers' troubles. Yesterday, President Biden joined Transportation Secretary Buttigieg to propose new regulations. For the first time, airlines would need to compensate customers *beyond* just ticket refunds.  

- __Fly bad, my bad:__ Airlines would be required to compensate passengers *and* cover their meals, hotels, and taxis if they get stranded for reasons that are the airline’s fault.
They’d also be required to comp rebooking fees for delays/cancellations.

- __Flight status quo:__ Right now airlines are required to refund customers only for canceled flights (not delayed ones). Biden said no major airlines provide cash compensation for preventable disruptions — though nine promised to cover hotels, meals, and rebooking. 

__Dude, where’s my plane…__ Weather is the top cause of flight delays, but avoidable issues like staffing shortages and technical problems caused by outdated systems led to abnormally high disruptions last year, even when skies were clear. A technical error at Southwest last month caused it to temporarily halt all US departures. Meanwhile, the Transportation Department is investigating whether Southwest set unrealistic flight schedules despite known staffing shortages.

Refund requested (Seth Herald/Getty Images)

Standby

__A nudge in the wings could be overdue…__ If airlines have to compensate passengers more for disruptions, they might try harder to avoid delays. Southwest says it lost $1.1B because of the holiday meltdown, but it would’ve lost even more with these proposed regulations. It’s not just Southwest: last year 2.7% of all US flights were canceled, the highest rate in a decade (apart from 2020). The TSA’s expecting a record-breaking travel year on booming summer demand, but staffing shortages and delays of __[Boeing](https://robinhood.com/stocks/BA/)__ jet deliveries could mean more headaches.

Ahead of summer, Biden proposes rules to compensate passengers for airline disruptions

__Got beef?...__ __[Tyson](https://robinhood.com/stocks/TSN/)__ shares had their worst drop in a decade yesterday after the poultry powerhouse badly [missed](https://www.wsj.com/articles/tyson-tsn-q2-earnings-report-2023-c824e501) earnings expectations and chopped its annual sales forecast. It produces one of every five pounds of chicken, beef, and pork eaten in the US. But last quarter the nugget giant lost nearly $100M, down from an $829M profit last year. 

- __Bad meat:__ Tyson's beef unit makes up nearly 40% of its annual revenue, but sales fell 8% last quarter as cash-strapped consumers cut back on the pricey protein.

- __Cold wings:__ Tyson's chicken biz also saw its profit margins shrink as the cost of animal feed rose $145M.

__Farming snafus…__ The meat industry has gotten grilled as recent droughts and pricey farming costs (think: fertilizer, feed, fuel) make it harder to maintain livestock. Tyson said its live cattle costs are up $305M from last year. Now some farmers are selling their animals for slaughter at premium prices because keeping them is too expensive. Meanwhile, falling demand for beef is making it harder for producers like Tyson to pass on higher costs to consumers.

Beef

__Dry spells can change appetites…__ US cattle inventory has already dropped more than 3% from last year, and over 90% of cows are in poor-to-fair grazing conditions. The USDA predicts this year will mark the first decline in beef production since 2015, and the per-person supply is expected to drop by 5.6% this year, which would be the greatest decline since 1987. Supply challenges could accelerate the trend of declining demand for red meat in the US, the world’s largest beef consumer.

Tyson posts a meaty loss as rising costs and cattle shortages take a bite out of profits

🙄 *Like rolling your eyes instead of engaging…*  

“FUD” is a catchall term used to dismiss crypto criticisms (substantive or not) by saying they're intended to spread “fear, uncertainty, and doubt.” Over the weekend, __Binance__ twice paused __[bitcoin](https://robinhood.com/crypto/BTC/)__ withdrawals, blaming high network fees. When observers saw that other exchanges hadn't paused withdrawals, which to some suggested there could’ve been a problem at the world's largest exchange, Binance CEO Changpeng “CZ” Zhao called the concerns “[FUD](https://fortune.com/crypto/2023/05/08/binance-pauses-bitcoin-withdrawals-fee-spikes-cz-fears-fud/).”

DEFI(NE)

Heard on the Block: "FUD"

Dow Jones

S&P 500

Nasdaq

Bitcoin

King Charles’ coronation is estimated to have cost as much as $125M

✈️ Airline delay payday

__Bots on the hill…__ VP Kamala Harris [met](https://www.reuters.com/technology/white-house-meet-microsoft-google-ceos-ai-dangers-2023-05-04/) last week with the bosses of __[Alphabet](https://robinhood.com/stocks/GOOGL/)__, __[Microsoft](https://robinhood.com/stocks/MSFT/)__, __OpenAI__, and __Anthropic__ as AI innovation draws greater scrutiny in DC. The White House said AI developers are expected to have their products reviewed at August’s Defcon cybersecurity conference, and debuted a $140M plan to build AI-research hubs. As large language models (LLMs) like ChatGPT go mainstream, Washington says companies have an “ethical, moral, and legal” responsibility to ensure their tech is safe. A few concerns:

- __Data privacy:__ There are worries LLMs could leak sensitive user data they collect. Last week __Samsung__ barred its staff from using ChatGPT after a leak.

- __Misinfo:__ LLMs are known for spewing false or biased info. Governments are concerned bad actors could use LLMs to spread propaganda.

- __Copyright:__ Legal issues have emerged over AI-related infringement, from cover art to fake Drake songs. It’s also an element of the recent WGA strike: writers worry that studios could use their scripts to churn out AI-generated stories without them.

- __Plagiarism:__ Teachers are concerned, too, as students lean on LLMs for homework. Last week __[Chegg](https://robinhood.com/stocks/CHGG/)__ shares fell 40%+ after the edu-tech company noted a spike in students flocking to ChatGPT.

__Workin’ 9-to-AI…__ Another trigger of AI-anxiety: job security. Last week __[IBM](https://robinhood.com/stocks/IBM/)__ froze hiring for nearly 8K roles that it said could be replaced by AI, and said the tech could replace almost a third of its non-customer-facing roles. By some estimates, 300M jobs could be affected by AI, while __[Goldman Sachs](https://robinhood.com/stocks/GS/)__ estimates it could boost global GDP by 7%.

Regulation loading… (Lionel Bonaventure/Getty Images)

Learning

__With great tech comes great responsibility…__ From fake Drake to fake news and AI-fueled propaganda campaigns, the risks of unregulated AI are clear. As major companies start to integrate the tech into products that billions of people use (like: search engines), we can expect governments to get involved in regulating it. But the rapid innovation means it could be harder to move responsibly.

As AI anxiety spreads, Washington pressures Big Tech CEOs to ensure their products are safe

__On to the next one…__ __[JPMorgan Chase](https://robinhood.com/stocks/JPM/)__ CEO Jamie Dimon said last week that "this part" of the banking crisis is over after America’s largest bank took over __First Republic__ (the second-largest US bank failure ever). Later, regional-bank shares plunged on concerns over __[PacWest](https://robinhood.com/stocks/PACW/)__: like other recently flopped banks, it has lots of uninsured deposits (aka: accounts over $250K). Last week the FDIC [proposed](https://www.nytimes.com/2023/05/01/business/fdic-bank-insurance-proposals.html) broadening deposit insurance for businesses, which could prevent more SVB-style bank runs. If you know your deposit is safe, you’re less likely to panic. 

__Mining your business…__ The White House pitched a 30% tax on crypto miners' electricity usage in a stated bid to blunt the industry's environmental impact. (FYI: Last year US miners used as much energy as TVs). But according to crypto cos like __[Riot](https://robinhood.com/stocks/RIOT/)__ and __[Marathon Digital](https://robinhood.com/stocks/MARA/)__, the tax could drive business overseas. The proposal follows a brutal year for miners (picture: plunging crypto prices, soaring energy bills) that saw several file for bankruptcy, and comes just as __[bitcoin](https://robinhood.com/crypto/BTC/)__ regains steam. The OG blockchain saw record transactions just last week.

Zoom Out

Stories we’re watching

__Hyrule hype…__ __[Nintendo](https://robinhood.com/stocks/NTDOY/)__ is (finally) dropping its newest Zelda game, “Tears of the Kingdom,” this Friday. The much-hyped title is expected to boost sales of the popular Switch console, which paraglided past the newest __Microsoft__ Xbox and __[Sony](https://robinhood.com/stocks/SONY/)__ PlayStation to become the third-best-selling console ever. Nintendo’s said to be ramping up Switch production to meet Zelda fans’ desire to cook Salmon Risotto in the Gerudo Desert. The industry’s growth slowed when players went IRL after quarantine, but gaming demand’s still hot.

__PSA: Mother’s Day is *this* Sunday…__ But working moms still face a “motherhood penalty.” After millions of women left jobs during the pandemic to shoulder childcare duties, 1M mothers have reentered the workforce since the end of 2021, and last year’s labor-force participation rate for mothers *surpassed* the prepandemic rate. But biases around job productivity and commitment contribute to an $18K/year pay gap between US mothers and fathers. Studies say the lifetime earnings loss that moms experience is the most significant factor driving the gender pay gap.

Events

Coming up this week

- __[Gargle](https://sherwoodmedia.com/snacks/newsletters/numAk0mhDTcZBec3v72RW/articles/4q7zgE3uzZB7GqEDUE0jXk/):__ __[J&J](https://robinhood.com/stocks/JNJ/)__'s consumer spinoff, __[Kenvue](https://robinhood.com/stocks/KVUE/)__ (think: Tylenol, Neutrogena), had the largest US IPO since 2021. The $3.8B raise stands out in a dry IPO market: before Kenvue, US-listed companies raised $4B this year versus $155B in 2021.

- __[Cord](https://sherwoodmedia.com/snacks/newsletters/38nZhlyyAE4Ped90y3nNQD/articles/D8FC2cOb7KIuN4na6XWf1/):__ __[Disney](https://robinhood.com/stocks/DIS/)__'s __ESPN__ may get the final say on cable’s lifespan. The network said it’ll eventually move its full TV offerings over to its streamer ESPN+. But it’s having trouble cutting the cord since TV earns more $$.

- __[Haul-ted](https://sherwoodmedia.com/snacks/newsletters/38nZhlyyAE4Ped90y3nNQD/articles/3VA8cWnVodXacHUQZWNPoK/):__ Fast-fashion hit __Shein__ wants to IPO this year, but US lawmakers are urging the SEC to halt that plan until Shein’s labor practices are audited to show its clothes aren’t made using forced labor.

ICYMI

Last week's highlights

60% of workers are employed in professions that didn’t exist in 1940

🤖 AI meets DC

__Medical milestone…__ 60+ years after it was discovered, respiratory syncytial virus, or RSV, finally has a vaccine. The FDA [approved](https://www.bloomberg.com/news/articles/2023-05-03/first-vaccine-caps-60-year-search-to-stem-pervasive-lung-virus) __[GlaxoSmithKline](https://robinhood.com/stocks/GSK/)__'s Arexvy (named to sound like “RSV”) vaccine on Wednesday, and the shot could go on sale within weeks.

- __Life-saver:__ RSV is a potentially life-threatening respiratory infection that affects mostly young kids and older adults. It’s the leading reason young children are hospitalized in the US, and 160K+ people die from RSV globally each year.

__Pharma frenzy…__ Four other RSV vaccines are on track to land on pharmacy shelves this year. Analysts predict that the shot’s market could be worth $10B by 2032, and GSK expects to earn as much as $3.7B in Arexvy sales. The London-based company may’ve crossed the RSV finish line first, but other Big Pharma titans are close behind. 

- __Jabbing competition:__ __[Pfizer](https://robinhood.com/stocks/PFE/)__'s RSV vaccine is up next, with FDA approval expected this month. And __[AstraZeneca](https://robinhood.com/stocks/AZN/)__, __[Sanofi](https://robinhood.com/stocks/SNY/)__, and __[Moderna](https://robinhood.com/stocks/MRNA/)__ all have shots in the works.

- __Audience overlap:__ Pfizer’s first RSV vax and GSK’s are both tailored to people over 60, as is Moderna’s (whenever it’s ready), which could lead to a marketing showdown.

New vaccine alert (Pavlo Gonchar/Getty Images)

__Covid accelerated the vax race…__ Pharma companies are racing to be first to the next big vaccine. Since no one was “Team GSK” for Covid (it made a booster only late last year), GSK has ground to cover. But since it already makes a leading shingles vaccine, nabbing the RSV market could give it greater vax dominance. Meanwhile, Moderna and Pfizer are exploring new products to offset slipping demand for Covid vaccines. Moderna reported its first quarterly profit yesterday, but its sales were down by more than $4B, since the Covid vax is the only product it sells.

The first RSV vaccine gets approved as pharma bigshots race into the $10B market

__And the biggest IPO of the year is…__ Tylenol? This week, __[Johnson & Johnson](https://robinhood.com/stocks/JNJ/)__'s spun-off consumer arm, __[Kenvue](https://robinhood.com/stocks/KVUE/)__, became the largest IPO in the US in nearly 18 months. Kenvue, which makes bathroom-cabinet staples like Listerine, Neutrogena, and Benadryl, was [valued](https://www.ft.com/content/c04534a2-8227-4f6d-966e-0e7140645ea0) at $41B on Wednesday. Shares surged 20% yesterday after it started trading on the NYSE, suggesting there’s an appetite for the already profitable, dividend-paying biz (aka: not your typical IPO). 

- __New name, same boss:__ Initially, J&J will own more than 90% of Kenvue shares, with plans to reduce its stake.

- __Old problems:__ J&J’s consumer biz has faced ~40K lawsuits alleging its talc products contained cancer-causing substances. Last month J&J offered $9B to settle. 

__Like swallowing Tylenol without water…__ The IPO market is *dry*. Kenvue's blockbuster listing stands out in an otherwise anemic environment, as rising rates and recession fears spook companies from entering US markets. So far this year, US-listed companies have raised only $4.1B (*not* including Kenvue). That's a far cry from the IPO-palooza of 2021, which saw companies raise $155B. Elsewhere, Asian listings have picked up recently.

Lotion

__Smaller can be stronger…__ J&J is just the latest biz to hop on the #simplify trend. Last year, cereal star __[Kellogg](https://robinhood.com/stocks/K/)__ said it [planned](https://sherwoodmedia.com/snacks/newsletters/1Qt2T96PxTPi4D1SE8Gee4/articles/5MZFe6N5PC1XczpsPaEX9z/) to break into *three* pure-play companies (Snap, Crackle, and Pop?) and __[GE](https://robinhood.com/stocks/GE/)__ announced a similar move in 2021. Splitting up massive conglomerates allows the newly formed businesses to focus on narrower priorities and streamline operations, with the goal of boosting profits.

J&J’s consumer spinoff was the biggest IPO since 2021, showing the value of a breakup

🤖 __Techy…__ The __[bitcoin](https://robinhood.com/crypto/BTC/)__ blockchain saw a [record](https://markets.businessinsider.com/news/currencies/bitcoin-record-daily-transactions-network-ordinals-protocol-cryptocurrency-btc-crypto-2023-5) 682K+ transactions on Monday, and over half of those were [ordinals](https://sherwoodmedia.com/snacks/newsletters/hVxJ5P0UXNj7GiarHRYHR/articles/6h6QfaEiiWIYYTVHHiqAf/). Since their introduction earlier this year, the bitcoin NFTs have surged in popularity. 

📜 __Policy…__ The Biden admin [proposed](https://news.yahoo.com/biden-proposes-30-climate-change-tax-on-cryptocurrency-mining-120033242.html) a tax on crypto miners equal to 30% of their electricity costs. Mining giant __[Riot](https://robinhood.com/stocks/RIOT/)__ suggested the tax could drive companies overseas, and have *negative* environmental effects. 

🪙 __Coins…__ __Pepecoin__, a crypto inspired by a controversial frog cartoon, saw $250M in 24-hour trading volume this week, [passing](https://www.coindesk.com/markets/2023/05/03/pepecoin-overtakes-dogecoin-shiba-inu-trading-volumes-as-early-buyers-take-profits/) fellow memecoins __[doge](https://robinhood.com/crypto/DOGE/)__ and __[shiba inu](https://robinhood.com/crypto/SHIB/)__. Meanwhile, pepe [whales](https://sherwoodmedia.com/snacks/newsletters/5Bc8UtrBrzT79KtNoIOah7/articles/5L3CPfHWE8wkemrresjRY5/) sold off huge amounts of the token.

WHALES

The Crypto Catch-Up…

Nearly half of YouTube viewership in the US is on TVs

💉 The new vaccine race

__Loading up the F-150…__ __[Ford](https://robinhood.com/stocks/F/)__'s famous truck has been the best-selling vehicle in America for nearly a half century, and it didn’t disappoint last quarter either. The auto OG just [unloaded](https://www.cnbc.com/2023/05/02/ford-motor-f-earnings-q1-2023.html) expectation-smashing results, led by its old-school passenger cars and commercial-fleet vehicles like delivery vans. While Ford’s EV biz racked up hefty losses, strong earnings from the legacy divisions let the Michigan automaker drive home a $1.8B profit. 

- __Ford Model E:__ Its electric division lost more than $700M, and the company expects it’ll lose $3B this year. FYI: this is the first quarter Ford started breaking out EV results.

__“Take my [Ford] to the Old Town Road”…__ and make it electric. While gas trucks are Ford’s profit poodles, it isn’t skimping on its e-aspirations. It said it would boost spending on EVs to $50B through 2026, with plans to churn out 2M+ EVs/year by then. Last year Ford sold 61K+ EVs in the US, making it America’s #2 best-selling EV maker after __[Tesla](https://robinhood.com/stocks/TSLA/)__. But it sold only 12K EVs last quarter, and sales of its electric Mustang were down 20%. This week it also slashed the Mach-E’s price for the second time this year.

Who’s a good Ford? (Bill Pugliano/Getty Images)

Juicy

__Being boring can help you be buzzy…__ Ford’s “boring” legacy cars are bankrolling its money-losing EV ambitions. CEO Jim Farley said Ford is “boringly predictable when it comes to execution and delivering financials, but extremely ambitious in… creating the Ford of the future.” Its gas-car biz could sustain the company until the EV side is profitable, giving it an advantage over pure-play EV rivals. This week, e-truck startup __[Lordstown Motors](https://robinhood.com/stocks/RIDE/)__ warned it could go bankrupt, while the likes of __[Rivian](https://robinhood.com/stocks/RIVN/)__ and __[Lucid](https://robinhood.com/stocks/LCID/)__ are struggling.

Ford crushes earnings expectations as trusty trucks offset major EV losses

__$200 rental, $100 cleaning fee…__ Yesterday __[Airbnb](https://robinhood.com/stocks/ABNB/)__ [rolled](https://www.bloomberg.com/news/articles/2023-05-03/airbnb-revamps-site-to-ease-tensions-between-guests-hosts) out dozens of new features and upgrades to keep travelers checking in this summer. The rental rockstar has 4M+ hosts worldwide and expects 300M guests this year. But complaints have piled up as hidden fees and high prices make booking frustrating. Now:

- __Price check:__ Airbnb rentals will display the cost per night, fees, *and* taxes all at once. Plus, guests in the US and Canada can start using __Klarna__ to buy now, pay later for stays over $500.

- __Couchsurf:__ A "Rooms" option lets budget-conscious travelers stay with hosts at an average rate of $67/night. “Host Passports” will display fun facts (see: WFH cat mom).

- __King-size:__ Airbnb dropped record earnings in February, notching its first profitable year, and is forecasting even stronger results this year. 

__Check-in and chores…__ Airbnb booking surged during the pandemic as it benefited from the remote “work from anywhere” trend. But a flood of users on social media and forums like __Reddit__ complain about pesky chores (see: vacuuming, dishes) coupled with sometimes staggering cleaning fees. Now, as travel recovers and guests get pickier about perks, good ol’ hotel chains are starting to catch up.

- __Continental breakfast:__ Last quarter, __[Marriott](https://robinhood.com/stocks/MAR/)__'s revenue surged 34% as occupancy jumped at all its North American properties. __[Hilton](https://robinhood.com/stocks/HLT/)__ also topped estimates, with its revpar (aka: revenue per available room) topping prepandemic levels for the first time.

Booked

__Convenience isn’t always convenient…__ While Airbnb can offer more flexible prices and broader options than hotels, the fine print can make booking more trouble than it's worth. Meanwhile, traditional hotel chains offer the comfort of consistency (think: cleaning, room service) and rewards programs that incentivize loyalty. By addressing its users' qualms, Airbnb can avoid getting ditched for better options.

Airbnb revamps price displays to quell frustration as summer travel (and hotel competition) heats up

The McDonald’s app was downloaded more times last year than Uber, Tinder, or Starbucks

🛻 Ford = boring + buzzy?

__Initial public audit…__ __Shein__ may be preparing to go public this year, but the $64B fast-fashion phenom could be in a stitch as regulators [dig](https://www.reuters.com/business/sustainable-business/us-lawmakers-push-sec-order-audit-shein-ipo-over-uyghur-forced-labor-fears-2023-05-01/) into its production practices. Shein is America’s largest fast-fashion brand and could become one of the [biggest](https://deal.town/robinhood/sheins-ipo-runway-P36UE34N8) Chinese companies to ever list in the US. But recently a group of bipartisan lawmakers urged the SEC to pause Shein’s IPO until they can prove it doesn’t use forced labor in China to make its clothes.

- __Shein’s been accused__ of mistreating Uyghurs workers (a marginalized minority in China) and falsifying reports of forced or underpaid labor at its supplier factories.

- __Shein__ says it has a “zero tolerance for forced labor.” But lawmakers want the SEC to order an independent audit (read: without China’s influence) of Shein’s labor practices. 

__Not buying it…__ As Shein’s US popularity skyrockets, so has scrutiny over what it takes to churn out thousands of cheap new styles listed on its site each day. Last year a Bloomberg report said that some of Shein's clothing contained cotton from China’s Xinjiang region. Governments and human-rights groups have accused China of running detention camps and forcing people to work in Xinjiang. Beijing denies that.

Workers at a clothing factory that supplies Shein (Jade Gao/Getty Images)

Unstitch

__Fast commerce can breed fast solutions…__ and fast consequences. In addition to concerns over rights abuses, ultrafast-fashion brands like Shein have raised sustainability red flags. Shein alone contributes millions of tons of carbon emissions every year. But as consumers seek cheap convenience, fast-commerce competition is only growing: Shein’s China-based rival, __Temu__ (picture: Wish.com meets __[Amazon](https://robinhood.com/stocks/AMZN/)__), became the most-downloaded app in the US after its Super Bowl ad dropped back in February.

Shein's mega-IPO could come unstitched as US lawmakers flag forced-labor concerns

__Traveling overseas…__ but it’s not a summer vacay. Yesterday, __[Coinbase](https://robinhood.com/stocks/COIN/)__ [launched](https://www.bloomberg.com/news/articles/2023-05-02/coinbase-international-exchange-launches-as-tensions-with-us-regulators-grow) an international exchange in Bermuda while New York-based (and Winklevoss twin-founded) exchange __Gemini__ [announced](https://fortune.com/crypto/2023/05/02/gemini-launches-offshore-crypto-derivatives-platform/) a derivatives platform anchored in Singapore. The expanded footprints will give the two crypto companies access to more flexible regulatory environments and allow them to serve up new products to new customers:

- __Coin "big money" base:__ Coinbase International Exchange says it’ll offer perpetual futures (think: no expiration) to non-US institutional investors only.

- __Gemi-no Brits allowed:__ Gemini Foundation will sling crypto derivatives to both retail and institutional customers in 30 countries — excluding the EU and UK.

__When things get awkward at home…__ Coinbase has implied and Gemini has said outright that what they view as messy legal guidance from US regulators played a role in the decision to pack their business bags. Last week Coinbase sued the SEC to try to force the regulator to respond to its 2022 petition seeking crypto-specific rules. Meanwhile, the commission is considering [suing](https://sherwoodmedia.com/snacks/newsletters/XV2nKUGd5DMTWDzADnDXy/articles/29eKBjymymQ1oqSGNKt766/) Coinbase. It also accused Gemini of selling unregistered securities through its (now shuttered) lending program, Gemini Earn. SEC Chairman Gensler said his agency is just enforcing the existing securities rules.

Abroad

__The grass looks greener even when it's overgrown…__ Coinbase and Gemini are just the latest crypto cos to go international as US regulators crack down. Last month __Kraken__, another US-based exchange, secured a license to operate in Ireland (and __Bittrex__, which was once the largest US exchange, ditched America altogether). But wherever expanding US crypto companies settle, they risk finding the green grass thoroughly trampled on by already dominant international players like __Binance__.

Coinbase and Gemini expand offshore as crypto heads for the US exits and finds a crowd

__Not with a bang…__ but with a merger. __[Disney](https://robinhood.com/stocks/DIS/)__'s iconic cable network __ESPN__ will eventually go entirely online, [merging](https://www.bloomberg.com/news/articles/2023-05-01/espn-s-jimmy-pitaro-and-disney-s-bob-iger-often-chew-over-future-of-espn?srnd=premium) with its streaming counterpart ESPN+, say network chair Jimmy Pitaro and __Disney__ CEO Bob Iger. Live-sports broadcasting is seen as a lifeline for cable companies, which lost another 3.5M subscribers last year, and ESPN’s full-stream move would likely hasten cable’s demise.

- __Meeting in the middle:__ the ESPN network has 74M subscribers, a 25M drop from a decade ago. ESPN+ has 25M subscribers after launching five years ago, and viewership surged 53% last year.

- __On the horizon:__ ESPN+ began airing MLB games last year, and the network has already started contract-renewal talks with the NBA, looking to put games on ESPN+ by 2025. Last year the streamer aired 27K live events.

__Eating cable’s lunch…__ and dinner too. Live-sports deals are the hottest ticket in streaming, with __Apple__ nabbing MLB games and __[YouTube](https://robinhood.com/stocks/GOOGL/)__ winning the bidding war for NFL Sunday Ticket, in the industry’s effort to scoop up linear TV’s most successful content. Even channel surfing isn’t unique to cable anymore: in March, combined US viewership of __Pluto TV__ and __Tubi__ (which stream live channels) matched that of Disney+.

Cord

__Profit can take precedence over preference…__ Only half of US households pay for TV packages, down from 85% a decade ago. But despite the trend, Disney is having a hard time letting go, since linear TV generates more $$ than streaming (its streaming biz actually *loses* money). Discounted bundles mean Disney earns less on streaming subscribers.

ESPN may have the final say on when cable TV dies, but Disney is having trouble cutting the cord

Taylor Swift’s “Eras” tour helped drive Las Vegas tourism back to pre-pandemic levels

👗 Shein’s labor stitch

__May Day was yesterday…__ but worker momentum is just heating up. US labor unions have been making headlines as looming deadlines could lead to a power shift. Most pressing: the 11.5K film and TV writers represented by the Writers Guild of America are [set to strike](https://www.nytimes.com/2023/04/30/business/media/hollywood-writers-strike.html) against studios today, barring an 11th-hour agreement. It’s not just your fave shows that could come to a halt: workers in other key industries are engaged in tense negotiations. 

- __Taking off:__ yesterday 15K __[American Airlines](https://robinhood.com/stocks/AAL/)__ pilots voted overwhelmingly to authorize a strike, though federal laws make it harder for airline unions to join walkouts.

- __Gearing up:__ __[UPS](https://robinhood.com/stocks/UPS/)__ and 340K unionized delivery workers have kicked off contract negotiations for their July 31 deadline. Contracted __[Amazon](https://robinhood.com/stocks/AMZN/)__ drivers in California unionized last month, gaining a $30/hour wage.

- __Foaming:__ About 300 US __[Starbucks](https://robinhood.com/stocks/SBUX/)__ stores have voted to unionize so far. Last week, federal labor prosecutors alleged that the latte leader refused to negotiate fairly at 144 locations.

__Big stories, low numbers…__ Despite splashy organizing efforts, US union membership was just 10% last year, the lowest rate on record. Still, Americans’ support of unions is nearly at a 60-year high, with over half seeing the decline of organized labor as negative. Meanwhile, with historically low unemployment and still-high inflation, workers’ wage expectations are rising, reaching $76K/year in March.

The union train gains steam (Jason Redmond/Getty Images)

Organized

__The power dynamic’s in flux…__ While the pandemic saw the employee/employer dynamic tilt in favor of workers in areas like remote work and wage hikes, layoffs and RTO plans have shifted power back toward the boardroom. But even in defeat, labor movements can bring about change: public criticism of a blocked nationwide rail strike in December led major rail companies to grant workers paid sick leave.

While union membership is at a record low, US labor movements are gaining steam

__Inflation nation…__ As Argentina’s economic crisis [deepens](https://www.reuters.com/markets/rates-bonds/argentina-plans-huge-rate-hike-91-stem-peso-slide-inflation-source-2023-04-27/), its citizens are relying on the *dolar blue*, aka the US dollar. Inflation breached 100% last month for the first time in decades as prices doubled. To combat that, Argentina’s central bank jacked its interest rate by 10 percentage points, to 91%, last Thursday — tacking on to a massive 300-point lift the week before. 

- __For context:__ The Fed has cranked the US’s rate to about 5% from zilch over the past year, in response to inflation that hit 9%.

- __Not enough:__ For Argentina, 20 to 30% inflation is typical, but triple digits means time to hit the panic button. However, aggressive rate hikes, along with price freezes and other scattershot attempts to cool prices, aren’t working.

__*Dollarization* nation…__ Argentines trust the greenback to maintain its value more than the peso. The USD has become so prevalent in the country that some experts think its circulation there is second only to the US. Argentines trade pesos for American dollars at illegal swap hubs, where the exchange rate is often cranked to double the official rate.

- __Paging Washington:__ One of Argentina’s presidential candidates, Javier Milei, wants to fully swap the national currency out for the USD and dissolve the country’s central bank. FYI: 11 countries, including Ecuador and Zimbabwe, use the USD as their currency.

Greenback

__The buck still has Superman status…__ Concerns about the US dollar being dethroned as the world’s “[Superman Currency](https://sherwoodmedia.com/snacks/newsletters/4ogc6lVdR6XOMD2eU3NQcI/articles/4tXfBbA0fHrtQFfTkjI5ht/)” may be overblown. Despite its value slipping this year, the USD is still relied on as the world’s go-to currency for international purchases (think: oil trades), accounting for 58% of global forex reserves. Meanwhile, other countries’ preference for the dollar can make their own currencies weaker.

Argentina leans on the US dollar as the value of its national currency tanks

🐋 *When you're so big even your tiniest move makes a splash…*

A "crypto whale" is a person or entity that holds so much cryptocurrency that they have the power to affect its price. Picture: selling large amounts of a token at once. __Binance__-owned __CoinMarketCap__ said it'll [launch](https://www.coindesk.com/web3/2023/05/01/shark-tank-but-make-it-crypto-coinmarketcap-launching-new-competition-tv-show/) a reality-TV show, "Killer Whales," which will feature entrepreneurs pitching web3 biz ideas to a panel of whales and investors. Picture: “Shark Tank” for crypto.

Heard on the Block: "crypto whale"

“The Super Mario Bros. Movie” is the first film of the year to top $1B+ in sales

📣 US workers get loud

__Getting your posting permit…__ could soon be a new rite of passage. Last week federal lawmakers [introduced](https://www.cnn.com/2023/04/26/tech/senators-social-media-kids-wellness/index.html) a bipartisan bill that seeks to establish a national minimum age for posting on social. The “Protecting Kids on Social Media Act'' would bar platforms like __TikTok__, __[Snap](https://robinhood.com/stocks/SNAP/)__, and __Instagram__ from letting kids younger than 13 create accounts — *and* require platforms to get parental consent to open accounts for users under 18. Studies have linked social media use to anxiety and depression in teens.

- __Social-media security #?__ The bill aims to create a government-run age-verification system based on identity-validating documents (though companies could use in-house tech to perform the check).

- __*Not* recommended for you:__ Social platforms would be barred from surfacing targeted content to minors. Not included: tween-fave gaming services like __[Roblox](https://robinhood.com/stocks/RBLX/)__ and Fortnite.

- __Comments section:__ Supporters want to limit platforms’ ability to keep kids scrolling endlessly, but critics say enforcement would require massive data collection and could infringe on free-speech rights. 

__Sweet 16 FOMO…__ This year intensifying scrutiny of social media’s effect on kids has led to new legislation. The bipartisan “Kids’ Online Safety Act” is set to be reintroduced in the Senate, and another bill, proposed in February, would set a social age threshold of 16. Age-verification laws were passed in Arkansas and Utah recently, with Utah adding a 10:30 p.m. social curfew for kids. This year dozens of US school districts have sued platforms like TikTok, __Meta__, and __YouTube__, alleging they’re “knowingly creating this unprecedented mental-health crisis.”

Social-media curfew incoming (Matt Cardy/Getty Images)

Social

__Time (online) is money…__ Engagement = $$ in the form of ads served. Half of US teens say they’re online “almost constantly.” They’re the most engaged demographic, and the most susceptible to negative mental-health effects. Platforms might see their revenue threatened by rules for minors. The bill’s cosponsor Sen. Brian Schatz predicted an “army of lobbyists” would fight it from becoming law.

From curfews to bans, US lawmakers set their sights on new social-media rules for kids

__Big Macs and barbacoa…__ Fast-food chains have posted tasty results as Americans splurge on affordable treats. Last week __[McDonald’s](https://robinhood.com/stocks/MCD/)__ delivered a 63% profit surge as more folks hit the Golden Arches despite pricier burgers and nuggets. __[Domino’s](https://robinhood.com/stocks/DPZ/)__ and __[Chipotle](https://robinhood.com/stocks/CMG/)__ also topped estimates as consumers stomached higher prices. Quick-serve joints have benefited as inflation curbs appetites for full-service restaurants. We’ll see whether the deep-fried frenzy is still sizzling when Taco Bell and KFC parent __[Yum Brands](https://robinhood.com/stocks/YUM/)__ reports along with __[Papa John’s](https://robinhood.com/stocks/PZZA/)__ and __[Shake Shack](https://robinhood.com/stocks/SHAK/)__.

__Wave szn buffet…__ Cruise companies __[Royal Caribbean](https://robinhood.com/stocks/RCL/)__ and __[Norwegian Cruise Line](https://robinhood.com/stocks/NCLH/)__ are on deck to report. If rival __[Carnival](https://robinhood.com/stocks/CCL/)__'s earnings are any indication, the industry’s January-through-March “wave season” was hot. Carnival said it achieved record quarterly booking volumes during a “phenomenal” season, with sales at 95% of 2019 levels. Still, its bottom line was sunk by a nearly $700M loss. While cruise demand has rebounded as Americans splurge on experiences, higher costs (think: fuel) could weigh down profits.

__Raise the roof…__ The debt-ceiling clock is ticking. The US hit its $31.4T debt limit in January, prompting Treasury Secretary Yellen to deploy “extraordinary measures” to keep the economy running. Last week the GOP-led House passed a bill to raise the ceiling. While the Biden admin said it has “no chance” of becoming law, it could spark negotiations as the default deadline looms. The stakes are high: if the US defaults on its debt (read: can’t pay its bills), one-tenth of all economic activity could grind to a halt, __[Goldman Sachs](https://robinhood.com/stocks/GS/)__ estimates.

__Jet not set…__ Summer vacays just got complicated. __[Boeing](https://robinhood.com/stocks/BA/)__ is pausing some jet deliveries after an eagle-eyed worker spotted a “gnarly” flaw in nearly three-quarters of its stored 737 Max jets. __[Southwest](https://robinhood.com/stocks/LUV/)__ now expects fewer of the popular jets than promised, and plans to cut hiring because of Boeing’s delays, even as the industry faces a labor shortage. It’s bad timing: airlines like __[Delta](https://robinhood.com/stocks/DAL/)__ are seeing record summer bookings as travel demand takes off. __[American Airlines](https://robinhood.com/stocks/AAL/)__ CEO said that delivery issues force it to cancel flights.

- __[Recap](https://sherwoodmedia.com/snacks/newsletters/53MKlMHoQHBnGkcCJEn2o5/articles/5DdDjfYTH1CTFVXeI1itWV/):__ Investors sighed after __[Amazon](https://robinhood.com/stocks/AMZN/)__, __Alphabet__, __Microsoft__, and __Meta__ delivered better-than-anticipated earnings last week, showing how low expectations have fallen. Also: tech execs could *not* stop saying “AI.”

- __[K-Flix](https://sherwoodmedia.com/snacks/newsletters/1LDr8wn4Ih9T8WYGyY3SZa/articles/4bDazogzJuEaEooYGo2eWj/):__ More “Squid Game” please. __[Netflix](https://robinhood.com/stocks/NFLX/)__ plans to splurge $2.5B to produce South Korean content, which was watched by *over half* of subscribers last year. From K-pop to K-drama, Korea has become an entertainment powerhouse.

- __[Cleanup](https://sherwoodmedia.com/snacks/newsletters/48bbCfnWRsuLXxDs0G1SaW/articles/6dlkE04VAl9EdkzbXIQqLX/):__ __[Norfolk Southern](https://robinhood.com/stocks/NSC/)__ said the derailment of one of its trains — which spilled toxic chemicals into an Ohio town — would cost it nearly $400M. The disaster has led to broader scrutiny of the rail industry’s safety practices.

This year EVs are expected to account for nearly one-fifth of global car sales

🔞 No kids allowed (to post)

__Scrollin’ with the homies…__ Investors sighed after __[Amazon](https://robinhood.com/stocks/AMZN/)__, __[Alphabet](https://robinhood.com/stocks/GOOGL/)__, __[Microsoft](https://robinhood.com/stocks/MSFT/)__, and __[Meta](https://robinhood.com/stocks/META/)__ delivered better-than-feared quarterly earnings this week. Those four make up about 15% of the S&P 500, and their results lifted the broader market. “AI” was a favorite in earnings calls, with Microsoft mentioning it *50 times*. Other highlights: 

- __Amazon__ unboxed expectation-beating revenue growth, helped by solid gains in its #ad biz. The Prime padre said AI investments have helped it surface more relevant sponsored listings.

- __Meta__ spiked 15% after it surprised investors with its first quarterly sales growth *in a year* and gave upbeat guidance as it served up more ads. Time spent on Instagram surged 24% thanks to AI recs and TikTok-esque Reels.

- __Alphabet__ popped after the Google parent beat expectations, though ad revenue and profit fell from last year as YouTube advertising sagged.

- __Microsoft__ also topped estimates, though quarterly sales grew just 7% after previous years of double-digit gains. AI-powered Bing had 100M+ daily users. 

__From Insta Stories to industry stories…__ Tech earnings paint a broader picture of consumer and corporate demand. Some trends: 

- __Ad-pocalypse not now?__ Google said it’s still suffering from an ad pullback, but Meta pleasantly surprised. Social-media ad growth is expected to accelerate this year.

- __AI on the prize:__ Meta CEO Zuck said AI recs were boosting social engagement, while Microsoft said bots would drive revenue growth in its productivity tools.

- __Cloud__ growth is slowing for Google, Amazon, and Microsoft as companies cool their spend, but it held up better than forecast (Google finally turned a cloud profit).

When copying TikTok pays off (Drew Angerer/Getty Images)

Recap

__Low bars are easier to clear…__ Earnings expectations were low, with S&P 500 companies forecast to report the worst profit decline since lockdown-era 2020. After years of double-digit revenue growth being the norm for Big Tech, now investors are cheering baby gains. Meta stock popped to a one-year high despite its profit plunging by nearly $2B.

Big Techies surge after surprising investors, showing how low expectations have fallen

__Plz fix…__ A sharp-eyed __[Boeing](https://robinhood.com/stocks/BA/)__ employee deserves a bonus after [detecting](https://www.bloomberg.com/news/articles/2023-04-26/boeing-says-170-stored-max-jets-need-repairs-for-gnarly-defect?srnd=premium) a “gnarly” but hard-to-spot flaw in nearly three-quarters of stored 737 Max jets. Boeing said the defect isn’t safety-related, but it is putting deliveries of the popular model on hold just as travel heats up. 

- __Jet not set:__ Boeing will deliver fewer planes than planned for the next several months as it addresses the problem.

- __Wing it:__ The company still expects to meet its annual targets by boosting 737 Max production later this year. __[Southwest](https://robinhood.com/stocks/LUV/)__ was set to receive 90 Max jets this year, but now expects 70.

- __FYI:__ In its quarterly earnings this week, Boeing said sales were up 28%, while its loss narrowed as aircraft demand was hot. 

__Bad timing…__ Everyone’s dreaming of a “White Lotus” summer (minus the drama). The TSA’s expecting a record-breaking year for flights, and some analysts say this could be the busiest spring ever. Meanwhile, airlines are seeing record summer bookings. __[Delta](https://robinhood.com/stocks/DAL/)__'s summer flights were 75% reserved as of mid-April, and __[United Airlines](https://robinhood.com/stocks/UAL/)__ added 24 global routes to meet eat-pray-lovers’ demand. __[Hilton](https://robinhood.com/stocks/HLT/)__ unpacked strong #s this week as hotel bookings quadrupled worldwide.

Delay

__A perfect storm could rain on travelers…__ Booming demand + aircraft delays + staffing shortages + airport congestion = summertime blues. Southwest plans to cut hiring as a result of Boeing’s delivery delays, even as the industry faces a labor shortage that has NYC airports so short-staffed that airlines are cutting scores of flights. American Airlines’ CEO said this about aircraft-delivery delays: “Guess what? We’re going out and having to cancel flights.”

Boeing halts some plane deliveries just as summer vacays get ready for takeoff

💰 __Costly…__ __Binance.US__ [backed out](https://www.coindesk.com/policy/2023/04/26/voyager-lawyers-surprised-binanceus-canceled-1b-deal/) of its $1B deal to buy the assets of bankrupt crypto lender __Voyager__ (a fund infusion that would’ve helped it make its customers whole), citing an "uncertain regulatory climate." 

🌶️ __Spicy…__ __[Coinbase](https://robinhood.com/stocks/COIN/)__ said the SEC is making up rules “on the fly” after [suing](https://www.coindesk.com/policy/2023/04/27/sec-is-alleging-legal-violations-on-the-fly-coinbase-says/) the regulator to force it to issue clearer guidelines. The commission is brewing up its own suit against the US’s largest crypto exchange. 

🤔 __Sus…__ The first NFT insider-trading case went to [trial](https://cointelegraph.com/news/opensea-insider-trading-trial-kicked-off-in-new-york-district-court) this week. The suit, which accuses an ex-__OpenSea__ employee of using confidential token-listing info for personal gain, could set a precedent for the unique asset class.

NFTrial

The Crypto Catch-Up….

US job postings fell 15% in the first quarter, with tech roles leading declines

🤖 Big Tech roundup

__Track record…__ Yesterday, __[Norfolk Southern](https://robinhood.com/stocks/NSC/)__ said that the February derailment of one of its trains — which spilled toxic chemicals into a small Ohio town — would likely [cost](https://www.washingtonpost.com/business/2023/04/26/earns-norfolk-southern/82658592-e42c-11ed-9696-8e874fd710b8_story.html) the company $387M, or about 12% of its profit last year. 

- __Cleaning up:__ The price tag includes $31M pledged to help local residents recover. So far, Norfolk said it’s spent $55M removing contaminated soil and water.

- __Lawyering up:__ That includes legal fees, because Norfolk faces lawsuits from the DOJ, Ohio, and shareholders, among others. 

__The issue runs deeper…__ than just one spill. The National Transportation Safety Board launched a special investigation into Norfolk’s general safety practices. The company’s workforce has shrunk by almost 40% since 2012, a steeper drop than that of rivals __[BNSF](https://robinhood.com/stocks/BRK.A)__, __[CSX](https://robinhood.com/stocks/CSX/)__, and __[Union Pacific](https://robinhood.com/stocks/UNP/)__. From 2013 to 2022, Norfolk’s accident rate spiked more than 80% — nearly 3X the industry average. The Ohio disaster has led to greater scrutiny of the rail industry’s safety practices. 

- __Accidents up:__ In the past decade, the seven major US freight railroad operators have had 27% more accidents. Lawmakers and safety officials point to an industry-wide strategy called Precision Scheduled Railroading, or PSR, as a reason for declining safety.

- __Profits up:__ PSR aims to boost profits by cutting costs and increasing efficiency through measures like lengthening trains (some up to 3 miles long), shrinking staff, and cutting inspection times.

Norfolk Southern’s derailed freight train in East Palestine, Ohio (NTSB/Xinhua/Getty Images)

Locomotion

__Financial efficiency can hurt operational efficiency…__ Since 2010, rail companies have paid shareholders almost $200B through dividends and stock buybacks. While PSR has helped rail corps haul in record profits, it’s also led to widespread safety problems and worker dissatisfaction. In December, President Biden blocked a nationwide rail strike that would’ve cost the US $2B/day.

Norfolk Southern puts a price on its Ohio derailment as rail safety practices come under greater scrutiny

__From Big Macs to Kraft mac…__ Americans aren’t giving up their comfort-food staples. Big food companies have crushed earnings expectations as consumers keep [paying up](https://www.wsj.com/articles/mcdonalds-pepsico-flex-their-pricing-power-dfe2e295?mod=business_lead_pos2) to eat up, despite significant price hikes. It’s a theme: 

- __[McDonald’s](https://robinhood.com/stocks/MCD/)__ beat estimates as US traffic grew for the third straight quarter, amid higher McMenu prices and inflated nuggets. Global same-store sales grew 13%.

- __[Chipotle](https://robinhood.com/stocks/CMG/)__ saw stronger-than-expected traffic and sales growth, while the burrito legend’s prices are up 10% from a year ago (guac = *extra* extra).

- __[Nestlé](https://robinhood.com/stocks/NSRGY/)__, the world's largest food company, also grew sales after hiking prices by about 10% as folks kept grabbing its Kit Kats, Hot Pockets, and "Nes" products (’presso, ’café, ’quik).

- __[Pepsi](https://robinhood.com/stocks/PEP/)__ lifted its annual sales forecast as demand for products like Gatorade, Cheetos, and Doritos stayed strong — after it raised prices by 13%.

- __[Coke](https://robinhood.com/stocks/COKE/)__ had bubbly results, too, as higher prices and rising demand fueled its bev sales. 

__I’ve got the (pricing) power…__ Pricing power = how much companies can raise prices *without* hurting demand. Food companies are flexing that power by showing that consumers are willing to pay more for their goodies, from brand-name sodas like Coke to affordable splurges like Egg McMuffins. Even during economic downturns, people tend to hold on to these little treats.

Bite

__Pricing power has its limits…__ because budgets can stretch only so far. McD’s said that diners in some markets have pushed back more than anticipated against higher prices, and customers are ordering fewer items. Coke noted signs of shifting buying habits, and said it plans to slow price hikes this year. As US retail spending dips, corporate price bumps could flatten.

Big foodies flaunt “pricing power” as consumers stomach higher costs (for now)

__Game changer…__ Yesterday, UK regulators [said](https://www.theverge.com/2023/4/26/23689252/microsoft-activision-blizzard-acquisition-blocked-uk-cma) they’d block __Microsoft__'s $69B acquisition of __[Activision Blizzard](https://robinhood.com/stocks/ATVI/)__, worsening the chances of the deal’s approval. Microsoft’s bid to buy the Call of Duty maker (which would be the largest tech deal *ever*) has been on ice as regulators worry the merger would hurt competition. The Xbox maker has [struck](https://sherwoodmedia.com/snacks/newsletters/3DpeGe1lyARbnRKJrQl0dF/articles/1NLpPKfmkzaijNqlW1eIyh/) deals with rivals like __[Nintendo](https://robinhood.com/stocks/NTDOY/)__ and __[Nvidia](https://robinhood.com/stocks/NVDA/)__ to share its gaming treasures to win support for the Activision-quisition.

- __Stiff odds:__ The FTC is still evaluating the merger after suing to block it in December, and the EU is set to make a formal decision next month.

- __High stakes:__ Microsoft’s already planning to appeal the UK’s decision, but if it fails (or if other regulators nix it) it’ll owe Activision $3B in break-up fees.

__Cloud cover…__ By some estimates, Microsoft already controls 60%+ of global cloud-gaming services, and its Xbox Game Pass has 25M+ subscribers. For reference: __[Sony](https://robinhood.com/stocks/SONY/)__'s PSNow cloud-gaming service had just 3M subs before it was replaced last year. Now regulators argue that Microsoft's ownership of Activision's billion-dollar franchises (like: Call of Duty, World of Warcraft) would make it tougher for others to compete.

__Buyers, beware…__ The UK’s decision is a rare win for supporters of Big Tech regulation, and it could prompt more crackdowns in the US, where major antitrust rulings have been scarce. As governments [get tougher](https://sherwoodmedia.com/snacks/newsletters/1UaryfLlNYafGqkVnZiU00/articles/4pzAi33V9xaok1Q7KIh3Rt/) on protecting competition, tech biggies may have to revisit their M&A strategies, or risk losing billions if they fail.

Microsoft’s $69B Activision takeover is in jeopardy after UK regulators blocked the potentially historic gaming deal

Netflix reportedly lost 1M users in Spain last quarter as it intro’d a password-sharing fee

🚂 Norfolk’s mess raises alarms

__Victory Royale…__ __[Apple](https://robinhood.com/stocks/AAPL/)__ described its day in court versus __Epic Games__ yesterday as “a resounding victory” after 9 out of 10 of the Fortnite maker’s claims [were decided](https://www.cnbc.com/2023/04/24/apple-declares-victory-after-decision-reached-in-epic-games-appeal-.html) in Apple’s favor. Refresher: in 2020, Fortnite was booted from Apple’s and Google’s stores after it directed players to its own discounted payment system to bypass the “app tax.” Epic retaliated by suing both tech titans and making a dramatic “1984” [parody video](https://www.youtube.com/watch?v=euiSHuaw6Q4). The legal saga appears to be over: 

- __Not a mobile-opoly:__ Judges ruled that App Store policies *don’t* break federal antitrust laws. Apple won’t need to allow third-party app stores on iOS devices or change its fees.

__The one claim that got away…__ is the core of Epic’s suit. The ruling says Apple [*can’t* bar](https://www.reuters.com/legal/us-appeals-court-upholds-lower-court-order-forcing-apple-allow-third-party-app-2023-04-24/) developers from steering users to off-app purchasing pages to skirt the 15 to 30% fee that Apple skims off in-app purchases (picture: Beef Boss skins). Read: Epic could allow players to set down their shockwave hammers and leave the Fortnite app to pay outside Apple’s ecosystem. Fortnite hasn’t been on the App Store since 2020, but it could return this year.

- __Giving up a slice:__ Last year, Apple started allowing “reading apps” — including __[Netflix](https://robinhood.com/stocks/NFLX/)__, Audible, and __[Spotify](https://robinhood.com/stocks/SPOT/)__ — to steer customers to alt payment options. Now it’ll have to extend the policy to games, too, if it fails to appeal this week’s ruling.

- __Prob-llama:__ As of 2021, gaming apps made up about 70% of all App Store revenue. If game developers start linking out to other payment options, Apple’s lucrative biz could take a hit.

Tim cooked up a legal victory (Jerod Harris/Getty Images)

Skins

__The walled garden could show cracks…__ Apple (mostly) won this round, but scrutiny of its app-store dominance isn’t over. Authorities in South Korea, the Netherlands, and Japan forced Apple to allow third-party payment systems to be added to apps, and an EU law could mean iOS 17 will open the door to app downloads from third-party app stores (aka: “sideloading”).

Apple declares victory in its App Store battle versus Fortnite, but there’s a banana peel in its path

__From K-pop to K-drama…__ Yesterday __Netflix__ said it plans to [spend](https://www.reuters.com/technology/netflix-invest-25-bln-south-korea-make-tv-shows-movies-2023-04-25/) $2.5B over the next four years to produce South Korean shows and movies, doubling its investment in the market. Over *half* of Netflix viewers watched Korean content last year, and 40% of its most-watched non-English-language shows are Korean, from revenge drama “The Glory” to reality hits like “Single’s Inferno.” As Netflix rolls out its largest-ever lineup of K-content, __[Disney](https://robinhood.com/stocks/DIS/)__, __Amazon__, and __Apple__ are investing in the streaming K-wave. With good reason:

- __Untapped potential:__ Last quarter, Netflix added 1.5M paid subscribers in Asia Pacific, making it the fastest-growing region by far.

- __Red-jumpsuit mania:__ “Squid Game” was a phenomenon, earning a half dozen Emmys and becoming Netflix’s most watched show or film *ever* — topping 110M viewers.

- __Ram-Don gold:__ Korean dark comedy “Parasite” made Oscars history in 2020 as the first foreign-language film to win Best Picture. 

__From “Beef” to Black Pink…__ Korea has become a pop-culture powerhouse and entertainment leader. Just a few examples: K-pop band BTS added $5B/year to the Korean economy (nearly 0.5% of the country's GDP) as the mega-stars took over charts worldwide. This month, the group Black Pink made history as the first Asian band to headline Coachella.

K-wave

__One wave can reach many shores…__ South Korea’s entertainment industry isn’t only boosting the Korean economy; it’s also fueling international engagement for streamers as its popularity spreads everywhere. While Hollywood has long been the main purveyor of entertainment, Korea’s solidified its place as an industry leader.

Netflix is splurging $2.5B on South Korean content as a K-wave goes global

Amazon, Alphabet, Microsoft, and Meta make up about 15% of the S&P 500’s market value