Googling Antitrust

Plus: Turns out war is good for Lockheed Martin ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

January 25, 2023

Read in Browser

TOGETHER WITH

Good morning.

Someone unplug the calendar, wait one full minute, and then plug it back in for a reboot because 2023 is coming in real glitchy.

Just weeks after an FAA mishap shut down all air traffic in the US, the New York Stock Exchange fumbled the opening bell on Tuesday morning when a system that critically sets the prices of stocks as trading begins failed. At least a dozen names had their trading halted after wild price fluctuations, creating chaos as brokers were still chewing their first antacids of the day, making it both the earliest and most widespread malfunction to hit a US exchange in years. So whether you’re in the air or on your mobile trading app, 2023 is off to a rocky start.

Morning Brief

•

Google is facing an antitrust case 15 years in the making.

•

Lockheed Martin is at a cruising altitude.

•

Talk about a rough night’s sleep.

Antitrust

Google Gets Slapped with DOJ Case Over Alleged Digital Ad Monopoly

Somewhere in Silicon Valley, a harried Google executive spent Tuesday morning Googling “what’s a monopoly?”

The US Department of Justice already knows… and probably used Bing. After what feels like years of contemplation and prep work, the DOJ has finally and formally accused the search giant of operating an “anticompetitive, exclusionary, and unlawful” monopoly in the digital advertising space. The lawsuit comes roughly six months after the DOJ rejected Google’s offer to split off parts of its ad-tech business in a last-ditch effort to score a Get Out Of Jail Free card.

Do Not Pass Go

Google’s potential knee-jerk defense is pretty simple: in a world shared with Meta, Amazon, TikTok, and other big players, how could it possibly operate a monopoly? Indeed, the company did control “only” some 29% of the US digital ad market last year, according to Insider Intelligence data. But the DOJ is suing on grounds that go beyond the “hey, we’re just one player in a multi-pronged oligopoly” defense. The DOJ is arguing that Google’s prominent role in multiple parts of the digital ad ecosystem — from tools for publishers to sell ad space, tools for advertisers to buy ad space, and an exchange that links bidders and sellers in the blink of an eye — allows it to flex its anticompetitive muscles in sundry other ways.

The roughly 150-page lawsuit, filed in Virginia’s Eastern District federal court, traces Google’s overreach all the way back to its 2008 acquisition of ad-serving company DoubleClick. From there, the DOJ sketches out a pattern of allegedly calculated, anti-competitive behavior — creating a central pillar of Google’s business while rocking the digital publishing economy:

•

“Google keeps at least thirty cents—and sometimes far more—of each advertising dollar flowing from advertisers to website publishers through Google’s ad tech tools,” the DOJ alleges. “Google’s own internal documents concede that Google would earn far less in a competitive market.”

•

Overall, digital advertising accounted for roughly 80% of Google’s business, with 12% — or roughly $32 billion — coming from the ad-brokering activity that the DOJ is honing in on. Clearly, the government’s call for the divestiture of Google’s ad exchange would significantly alter the company.

From the Gmail Archives: Included in the suit is an illustrative quote from one of Google’s own executives in internal communications explaining the company’s hands-in-every-cookie-jar approach to the digital ad space: “Is there a deeper issue with us owning the platform, the exchange, and a huge network? The analogy would be if Goldman or Citibank owned the NYSE.” The search giant is no doubt doing some soul-searching about how its executives talk to one another.

– Brian Boyle

Military

Lockheed Martin Predicts a Slow Year Despite Recent Ukraine Deals

War is hell, but it’s also a business.

Lockheed Martin has seen deals with the US Department of Defense accelerate as Washington sends vast amounts of weapons to Ukraine, but supply chain bottlenecks and labor shortages have caused the military contractor’s annual forecast to dip just below Wall Street’s expectations.

Still on Top

Lockheed is the world’s largest defense company by sales, so even if 2023 looks like a plateau year for the F-35 fighter jet maker, it’s still at the top of the game and expects to see growth again in 2024. Lockheed had a better-than-expected fourth quarter of 2022 with $19 billion in sales, about 3% above the company’s prediction, but for the whole year, it delivered roughly $66 billion in sales, a small dip compared to $67 billion in 2021.

Despite growing reservations in some quarters, the US shows no indication of reducing the military hardware going to Ukraine. Nor is there any indication of that conflagration coming to an end:

•

Ever since the conflict ignited in February of last year, the US has provided Ukraine with just over $24 billion in security assistance including anti-tank missiles, armored cars, night vision goggles, rifles, and plenty of Howitzer rounds.

•

Lockheed may face even more issues than just the supply chain in 2023. Kevin McCarthy – who was elected US House Speaker in the time it took you to buy a house, start a family, and grow old with your sweetheart – could push for cuts in military spending especially now that the US has hit its $31.4 trillion debt ceiling. That’s not the best news for a company that has 71% of its revenue coming from US government deals.

“We signaled way ahead of time that 2023 was going to be kind of a steady state year from a revenue perspective,” CEO Jim Taiclet told Reuters.

Outta Ammo: Recent conflicts in the Middle East haven’t called for tanks and artillery as much as earlier wars of the hot and cold variety, so many countries sat on their heavy land equipment stockpiles for decades. Late Tuesday, reports surfaced that the White House will announce its intention to send 30 to 50 Abrams tanks to Ukraine, providing Germany and other nations political cover to send their own artillery vehicles and keep the Ukrainians armed. When it comes to artillery rounds fired, defense expert Camille Grand told The New York Times, “A day in Ukraine is a month or more in Afghanistan.”

– Griffin Kelly

SPONSORED BY DIVVY

The Perfect Power Couple: Business Finances + Free Software

If you’re not head over heels for your expense management software, Divvy will help you find that spark again.

With their all-in-one expense management platform, you’ll get:

•

Fully automated expense reports

•

Flexible and enforceable budgets

•

Scalable finances

View out-of-pocket expenses, card spend, and reimbursements in one crystal clear platform. Divvy’s built-in integrations make it easy to preserve your accounting process.

Plus, they’ll spoil you with a $100 gift card to 1-800-FLOWERS to spend on a bouquet, chocolates, or other Valentine’s Day goodies when you take a demo of their software.

Get on-the-spot visibility into your business, close your books in record time, and spend a little extra on that special someone. Take a demo of Divvy today.

Retail

Mattress Maker Serta Simmons Files for Bankruptcy

(Photo Credit: Adam Winger/Unsplash)

For all the talk about stashing money inside them, there is not a lot of money in mattresses.

Just ask Serta Simmons, which has filed for Chapter 11 bankruptcy, heralding a hard period for the once-comfortable mattress sector.

Sleeping Not So Sound

Serta controls one-fifth of the US bedding market and did $2.4 billion in sales in 2022, but its troubles go back to a 2020 restructuring that added $200 million in new capital to withstand raw material costs and supply chain delays. With that deal, Serta pushed some lenders to the front of the line for repayments and pushed others back, which prompted litigation.

Through the bankruptcy filing, Serta has obtained $125 million to continue operating and paying its 3,600 employees. The filing also looks to restructure the company and cut its debt from $1.9 billion to just $300 million.

The demand for new bedding increased at the start of the pandemic but like many other Covid boomlets has turned out to be impermanent — especially since mattresses are supposed to last about a decade:

•

In November, Casper — one of those trendy bed-in-a-box companies — went private at less than half of its initial IPO asking price. Private equity firm Durational Capital Management acquired Casper and valued it at less than $300 million. Also, its competitor Purple has seen its stock drop nearly 85% since February 2021.

•

The International Sleep Products Association says the mattress industry will see modest gains this year in dollars and units sold – roughly a 1.5% increase in both compared to 2022.

Bed It All: In other bed-related news, Mattress Mack lost $2 million after the San Francisco 49s beat the Dallas Cowboys on Sunday. Jim McIngvale, the owner of the Gallery Retail furniture chain, made headlines in November when he took home a $75 million payout, the largest in World Series history after the Houston Astros stopped the Phillies in game 5. McIngvale had a little postgame advice to Cowboys quarterback Dak Prescott: “Get rid of that Sleep Number mattress and get a Tempurpedic.”

– Griffin Kelly

Extra Upside

•

Cats Can’t Zoom: Chewy’s telehealth business for pets is raising regulatory eyebrows.

•

Cold Shoulder from Blizzard: China is in tears after losing access to World of Warcraft.

•

Dreading tax season? Who isn’t? Building wealth is significantly easier when Uncle Sam doesn’t dip both hands into your pocket come tax time. That’s why it’s so important to structure your assets investments in a tax savvy way. Learn how you could potentially lower your tax liability and increase your hard-earned retirement income with these 3 strategies to avoid capital gains taxes. Pro tip: Get matched with a no-commitment call with a wealth professional to optimize your tax strategy.

Just For Fun

16-wheel drive.

If at first you fail…

ADVERTISE // CAREERS

No longer want to receive these emails? Unsubscribe here.

//campaignmonitornewsletter.everestengagement.com/ea/BntD2QJCyg/?e=postie@btcnews.com.au’ width=’1′ height=’1′ style=”margin-top:0 !important;margin-bottom:0 !important;margin-right:0 !important;margin-left:0 !important;padding-top:0 !important;padding-bottom:0 !important;padding-right:0 !important;padding-left:0 !important;border-width:0 !important;height:1px !important;width:1px !important;-ms-interpolation-mode:bicubic;” />