Apple shows it’s serious about online video
The tech giant is known for orchestrating its product announcements around coordinated surprise, but a genuine stunner came Tuesday when it revealed the price for its new Apple TV Plus streaming service: $5 a month, our colleague Ed Lee reports for us.
It surely grabbed the attention of Netflix and Disney, since the price undercuts their offerings, and their investors. Shares in both companies fell more than 2 percent after the announcement.
Many had speculated that Apple wasn’t serious about media, and that the billions it was spending on content was really just marketing. The thinking was that the streaming service would be made free to anyone with an Apple device, as a way to stoke iPhone sales. (As it turns out, you’ll get one free year if you buy a new laptop or iPhone.)
But a $5 price tag means Apple is serious about making streaming a real business. (Perhaps the enticement of a year’s worth of free access with the purchase of a new device shows that Apple wants it both ways.)
Other streaming services look like the cable guys now:
• Netflix, which became the king of streaming because of its low-cost plans, now charges $13 a month for its standard offering.
• Hulu’s commercial-free product costs $12 a month, while its ad-supported one costs $6.
• AT&T is in a bind when it comes to pricing its HBO Max service, because of existing pricing agreements with pay-TV providers.
• Disney’s offering will cost $7 a month, or slightly less if you buy a year’s worth in advance.
Here’s what else Apple introduced yesterday:
• Three new iPhones, including two “Pro” models with three upgraded cameras
• A new Apple Watch with an always-on screen
• A new iPad that will cost $329
• A new gaming streaming service that will cost $5 a month
Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Lindsey Underwood in London.
Europe’s top antitrust cop is getting a bigger job
As the E.U.’s competition commissioner for the past five years, Margrethe Vestager was a major scourge of Silicon Valley. Now she is poised to gain even more power by essentially becoming Europe’s digital czar, Matina Stevis-Gridneff of the NYT writes.
Ms. Vestager’s new role combines digital regulation and antitrust enforcement. Analysts say that she will have “unmatched regulatory reach” at a time when Big Tech’s power is under scrutiny, Ms. Stevis-Gridneff writes.
She made her mark in her current job by imposing huge fines on tech companies. (Her office hit Google alone with $9 billion worth.) That made her and her lawyers heroes to critics of Big Tech, and villains to some executives and the White House.
Her new position reflects the E.U.’s regulatory ambitions. The bloc wants to become “the most activist tech regulator in the world, creating a far-reaching role for itself in the global economy,” Ms. Stevis-Gridneff writes.
How California’s gig-economy rules could change things for Uber
State lawmakers approved a bill that requires companies to treat contract workers as employees. It’s a huge move that could reshape the modern work force — and will affect gig-economy companies in particular, according to Kate Conger and Noam Scheiber of the NYT.
Treating them as employees could raise costs by up to 30 percent over all, companies have estimated.
Uber and Lyft have warned that they will have to start scheduling drivers if they’re employees. That would reduce drivers’ ability to work when and where they want — though experts say that nothing in California’s bill requires set shifts.
In practice, the companies might limit how many drivers can work during slow periods or in less-busy markets. That could mean needing fewer drivers.
But they might be better off continuing to rely on incentives like bonus pay to ensure that enough drivers are on the road to meet customer demand more nimbly than if they relied on scheduled shifts, according to Veena Dubal, a professor at the University of California Hastings College of the Law.
And the fight against the new rules isn’t over. Uber, Lyft and DoorDash have pledged to spend $90 million on a ballot initiative that would basically exempt them from the legislation.
WeWork may change its structure to save its I.P.O.
The co-working company is reportedly considering changes to its corporate governance to make itself more attractive to potential investors in its I.P.O., after it faced a cool reception to the stock sale, Bloomberg reports, citing unnamed sources.
It isn’t clear what those might be. Many investors worry about the huge amount of control that Adam Neumann, WeWork’s co-founder, wields: He’s chairman and C.E.O., and he controls the company by owning special classes of stock. (The company has already added a woman to its board and made Mr. Neumann refund the company a payment for a trademark.)
And it isn’t certain that such changes would be enough to prop up the deal. Investor response has been largely cool to the proposed I.P.O. because of concerns about valuation and corporate governance, forcing WeWork’s bankers to suggest cutting the company’s valuation to as low as $15 billion, from $47 billion in January.
That uncertainty has shown up in WeWork’s bonds, whose prices dropped as much as 3 cents on the dollar yesterday after reports that a major investor in the company, SoftBank, has been urging a delay for the I.P.O.
WeWork may proceed with a road show for investors as early as next week, with an aim to have its shares trading on a public stock market by Sept. 27, before Rosh Hashana. (Mr. Neumann reportedly wants to observe the holiday in compliance with Jewish orthodoxy, according to Bloomberg.)
More: WeWork’s latest potential headache is that landlords are trying to copy its business.
Lending practices in New York’s taxi industry are under scrutiny
Federal prosecutors have opened an investigation into possible lending fraud in the New York City taxi industry, Brian Rosenthal of the NYT writes, citing unnamed sources.
• “In the past month, agents have interviewed cabdrivers who said they were encouraged to take on massive debt under exploitative terms in order to buy a taxi medallion, the city permit that allowed them to own their own cab.”
• The investigation “appears to be looking at possible crimes including bank, wire or mail fraud,” and could have far-reaching consequences for the city’s taxi industry, “which has been engulfed in a financial crisis and rocked by a string of suicides among cabdrivers.”
• “More than 950 drivers have filed for bankruptcy, and many more are still buried in overwhelming debt today.”
The federal investigation follows Mr. Rosenthal’s reporting on the taxi medallion industry.
Jamie Dimon is preparing for a world of 0% interest
As the Fed appears prepared to cut interest rates again, the C.E.O. of JPMorgan Chase is getting ready for something that was unthinkable only a few years ago: interest rates in the U.S. dropping to zero.
Mr. Dimon doesn’t think it’s necessarily likely, David Benoit of the WSJ writes. Although the Fed is expected to cut its benchmark rate by a quarter of a percentage point this month, that would take the rate down to 1.75 percent. It would take a lot to get to nil.
A rate of zero might mean that JPMorgan would introduce more fees and charges to make up for the lost interest on loans. Banks like his would also have to grapple with whether to charge customers for deposits, something the U.S. hasn’t had to deal with in recent memory.
European banks have already struggled with this problem, since rates in countries like Germany and France dropped below zero. C.E.O.s there have complained about that for some time: “The interest-rate policy is an enormous burden,” Christian Sewing of Deutsche Bank said last month.
Their woes may deepen. The European Central Bank begins two days of policy meetings today, and as it weighs more economic stimulus measures, it’s unlikely to raise its deposit rate above minus 0.4 percent.
Credit Suisse has hired Kinner Lakhani from Deutsche Bank as its head of group strategy and development.
Eric Vallat is stepping down as the head of fashion and accessories at Richemont, the Swiss luxury conglomerate, after a little more than a year in the role.
The research analysts Rich Greenfield, Walt Piecyk and Brandon Ross have left the brokerage BTIG to start their own research firm, LightShed Partners.
Charles Schwab reportedly plans to lay off about 600 people, mainly from its retail division, as early as next week.
Uber has cut 435 members of its product and engineering teams to eliminate costs and streamline its operations.
The speed read
• Elliott Management’s criticisms of AT&T raise questions about the telecom giant’s plan to become a media empire. Related: A Barclays research analyst suggests that AT&T should sell its Turner cable channels, including CNN, TNT and TBS. (WSJ, Business Insider)
• Saudi Arabia reportedly plans to list Saudi Aramco on its domestic stock exchange in two stages, starting this year. (WSJ)
• Peloton, the home fitness equipment company, said it aimed to raise as much as $1.16 billion in its I.P.O. (CNBC)
• G.E. plans to give up control of the oil field services company Baker Hughes by selling a big portion of its holdings — but will incur a $7 billion charge for doing so. (WSJ)
• A plan for the Chinese insurer Anbang to sell a group of its luxury hotels to a Korean buyer has been reportedly held up by the discovery of fake deeds for many of the properties. (WSJ)
Politics and policy
• President Trump fired John Bolton, his third national security adviser. But Mr. Bolton disputed the president’s version of events. (NYT)
• The number of Americans who have no health insurance rose last year, the first increase since the passage of the Affordable Care Act. (NYT)
• Michigan, a key battleground for next year’s elections, faces the highest risk of any state of suffering a recession, according to LendingTree. (Bloomberg)
• Michael Flynn could face prison time. (NYT)
• Bill Gates said he had met with the financier because Mr. Epstein knew “a lot of rich people,” but added that they had no business relationship or friendship. (WSJ)
• Les Wexner, the founder and C.E.O. of the company behind Victoria’s Secret, spoke publicly about his relationship with Mr. Epstein, his former financial adviser, for the first time. (NYT)
• China moved to exempt a range of American goods from tariffs that it has imposed as part of its trade war with the U.S. (Bloomberg)
• American companies are more worried about China’s economic slowdown than the trade battle, according to a new survey. (WSJ)
• South Korea has filed a complaint with the W.T.O. as part of its trade fight with Japan. (FT)
• Huawei’s founder and C.E.O., Ren Zhengfei, said he was willing to negotiate with the U.S. Justice Department to settle the Trump administration’s battle over his tech company. (NYT Opinion)
• Fake followers on Instagram could cost brands an estimated $1.3 billion this year alone. (Wired)
• The criminal case against Anthony Lewandowski, a former Uber executive accused of stealing plans from Google, comes down to this: What is a trade secret? (White Collar Watch)
• A venture capitalist learned the hard way what happens when someone in Silicon Valley criticizes a beloved start-up. (NYT)
Best of the rest
• The top 15 richest Americans would have seen their net worth fall by more than half, to $433.9 billion, had Senator Elizabeth Warren’s wealth tax plan been in place since 1982, according to two economists. (Bloomberg)
• Hedge funds and investors bet heavily last month that natural gas prices would decline, only to see prices jump 25 percent. (WSJ)
• Under pressure from the S.E.C., Starbucks will offer more disclosures about its accounting. (CNBC)
• California’s Senate passed a rent control bill that would limit increases to 5 percent per year plus cost of living adjustments. (NYT)
• The F.B.I. and two states are investigating a former “Fox and Friends Weekend” host’s real estate business. (NYT)
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