Uber, Postmates, Boeing’s and EU Tech Reform

Uber buys Postmates, Boeing’s 737 MAX nears its return to the skies and the European Union proposes a slew of big tech reforms.
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July 6, 2020 — Uber buys Postmates, Boeing’s 737 MAX nears its return to the skies and the European Union proposes a slew of big tech reforms.

Today’s word count: 1,097 words (6 minutes)

Uber to Buy Postmates for $2.65 Billion

Uber finally got its prize. Weeks after whiffing on a potential merger with Grubhub, the ride-sharing company has agreed to purchase Postmates for $2.65 billion in an all-stock deal. An official announcement is expected today.

Why It Matters

Food delivery apps have trended up for years. The pandemic only heightened demand. But the elusive nature of profits created a natural path to consolidation by the big players in the space, which is why Uber first went after Grubhub and ultimately lost out to Just Eat Takeaway.

The move is a growth opportunity for Uber. More people are staying home because of the pandemic, and the ride-sharing business is suffering. Uber Eats, on the other hand, has watched its revenue tick up in 2020, and now its parent company is trying to double-down on that momentum.

Numbers to Consider

  • 37 Percent – Uber Eats and Postmates combined market share of food delivery sales in the United States, second only to DoorDash, according to Edison Trends.
  • $2.9 Billion – The loss Uber posted in the first three months of 2020, resulting in a layoff of 14 percent of its workforce.
  • 53 Percent – The rise in Uber Eats’ revenue this year.

Read More: (New York Times)

Next Boeing 737 MAX Government Test Flight Scheduled for Coming Days

Boeing’s 737 MAX jets could face a crucial test as early this week in its quest to return to the skies. The plane model is set to undergo an operational readiness review, a series of government test flights to assess the safety of software changes to the fleet’s flight-control system.

Why It Matters

The 737 MAX has been grounded for over a year since two of its planes experienced automated flight-control system malfunctions, subverting pilots’ efforts to avoid crashes and killing 346 people. The questionable future of the MAX fleet “prompted a financial and reputational crisis for the Chicago plane maker,” The Wall Street Journal writes.

Redemption is on the horizon, though. If the MAX continues to pass its tests, the FAA order grounding the planes could be lifted as early as September. The timeline could slip. Already in this process, there’s been multiple month delays, and additional ones are possible. But by the end of this year, we could see passengers flying 737 MAX jets once again.

Numbers to Consider

  • $18.6 Billion – The financial impact of grounding the 737 MAX, according to FlightGlobal.com.
  • $636 Million – Boeing’s full-year net loss from 2019, a fall from its $10.5 billion net profit one year prior.
  • $180.81 – Boeing’s share price Monday morning, according to Google.

Read More: (WALL STREET JOURNAL)

Tech Giants to Face EU Legal Push on Content, Competition, Taxes

A series of proposed European regulations could have a drastic impact on how big tech companies such as Alphabet, Amazon and Facebook operate. The changes are aimed at curbing anti-competitive behavior, raising the taxes on big tech and forcing them to shoulder more responsibility for illegal content on their platforms.

Why It Matters

Tech policy has long needed an upgrade. Decades-old laws have shielded companies in the U.S. and Europe, limiting their liability for what their users do on their platforms. Increased digital regulation in Europe could spill out into the world, especially since the U.S. Justice Department is already considering altering the rules governing tech companies.

Some of the changes we could see include requirements for tech platforms to establish themselves as business entities in Europe, a redress mechanism for appealing to when posts and ads are taken down, a digital tax and enhanced investigative powers to compel companies to change their behavior and prevent “new gatekeepers from arising.” The EU has also proposed opening a dedicated technology-and-trade dialogue channel with the U.S. to iron out any issues as bigger picture talks between the Trump Administration and European countries stall.

Numbers to Consider

  • $14.5 Billion – The amount of allegedly unpaid taxes Apple was forced to pay Ireland.
  • $9 Billion – The combined fines Google is facing between three antitrust cases.

Read More: (WALL STREET JOURNAL)

A Quick Look

Behind Oil’s Rise Is a Historic Drop in U.S. Crude Output

  1. U.S. crude supply continues to fall at its quickest pace ever. But even oil’s push back above $40 a barrel isn’t enough for “beleaguered shale producers.”
  2. Weekly U.S. output fell to 10.5 million barrels a day, a drop from a near-record of 13 million in late-March. The slide marks the most significant 11-week reduction since 1983. It’s the biggest decline in percentage since the 2008 financial crisis.

Source: (WALL STREET JOURNAL)

Worth Your Time

An Apple A Day: Coronavirus is slowing the production on farms in Yakima Valley, Washington, an area that produces $1 billion in apples, sweet cherries and other crops each year. Keeping workers healthy in Yakima illustrates how hard it is becoming to protect agricultural workers and prevent outbreaks in labor-intensive workplaces. (WALL STREET JOURNAL)

Stiff Competition: The race to develop an effective Covid-19 vaccine just added a new layer of competition. Researchers are now locked in an unprecedented battle to recruit tens of thousands of healthy volunteers needed to test vaccine candidates in the late stages of development. It’s already a challenge to enroll enough patients in different parts of the country and overseas to study a sufficient sample size population. That’s only more difficult with a crowded field of companies pursuing the same goal. (WALL STREET JOURNAL)

Wishing On A Star: The U.K. government is buying distressed satellite constellation operator OneWeb in a group venture that includes India’s Bharti Global. OneWeb had plans of building out a “plans of building out a broadband internets satellite network, while the UK would also like to potentially use the constellation for Positioning, Navigation and Timing (PNT) services to replace the EU’s sat-nav resource, which the UK lost access to in January as a result of Brexit,” Tech Crunch writes. Both Bharti Global and the U.K. government are spending around $500 million each in the deal. (TECH CRUNCH)

Tidbits

In a move that puts U.S. technology on a collision course with Beijing, The Wall Street Journal reports that Facebook’s WhatsApp has stopped processing Hong Requests for user data citing human rights concerns.

After years of delays, The Wall Street Journal reports the builders of the Atlantic Coast Pipeline are pulling the plug on the project as mountain environmental opposition exerts pressure.

A Couple Cents Content

Read the highlights from last week and a roundup of institutional research in last week’s “A Couple More Cents.” (POST)

Check out Justin Oh’s live market update from last Thursday. (YOUTUBE)

Also, I now have a dedicated twitter for investing, finance and all things A Couple Cents. Follow me! (TWITTER)

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Thanks for reading!

— Justin Birnbaum

Image:uber” (CC BY 2.0) by stockcatalog

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