🤫 Telegram CEO Surrenders Users' Data

MARKET UPDATE

Good Morning Investor! Warner Bros. Discovery ($WBD) is teaming up with Google ($GOOG) for AI-generated captions on Max streaming service, Longtime Apple designer, Jony Ive has confirmed that he is collaborating with OpenAI CEO Sam Altman on a new AI hardware project, and deal count for AI agent startups is up 81.4% year-over-year, according to Pitchbook.

TODAY’S BIG HEADLINES

DoJ Prepares to Sue Payments Giant Visa

Biggest Threat to Supply Chains Could Spike Inflation

Telegram Will Now Share User Data With Authorities

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FINTECH & ANTITRUST

DoJ Prepares to Sue Payments Giant Visa💳

Courtroom Massacre: The beleaguered payments giant Visa ($V) hasn't been having the best of times recently, with its share price only up a measly 7% year-to-date. It's as if the company's stock is moving slower than a sloth on tranquilizers. This lackluster performance is largely due to a recent uptick in regulatory action being taken against the company, including a $5.5 billion settlement related to swipe fees and a $30 billion settlement that's been rejected by a US judge, leaving Visa in legal limbo.

• This week, the heat has been dialed up higher than a habanero pepper. According to the Financial Times, the Department of Justice (DoJ) reportedly preparing to file an antitrust lawsuit against Visa, accusing the payments company of anti-competitive behaviour. Shares of the company fell 4% on the emergence of this development.

Under the Microscope: Federal prosecutors are set to file a lawsuit this week, which follows a years-long review by the DoJ into Visa's business practices. It was reported way back in 2021 that the DoJ's antitrust unit had requested information on potential violations of antitrust law provisions that outlaw anti-competitive agreements and monopolistic conduct. Visa, in true corporate fashion, stated that "US debit practices are in compliance with applicable laws." But when you put a business under a microscope for this long, you're bound to find a few skeletons in the closet.

The Matador's Cape: The focus of the DoJ's probe was Visa's debit card business in the US, as well as competition in other networks and payment methods. Antitrust agencies have also been scrutinizing Visa's competitors, like a lion eyeing up a herd of gazelles. Mastercard, for instance, last year reached an agreement with the US Federal Trade Commission to settle charges that the company illegally forced merchants to direct debit card payments via its payment network.

• Under the leadership of Jonathan Kanter, the DoJ's antitrust division has really stepped up its game, eyeing up all of the tech giants like a hungry vulture circling its prey. The division has already won a separate case against Google, branding the company a monopolist in online search.

LOGISTICS & INTERNATIONAL TRADE

Biggest Threat to Supply Chains Could Spike Inflation🏗️

A Logistical Nightmare Before Christmas: Perhaps the biggest threat to supply chains since the pandemic is on the precipice of unfolding — right before the most wonderful time of the year. In less than a week, the International Longshoremen's Association (ILA), North America's largest maritime workers' union, is set to strike if a new contract can't be reached with the United States Maritime Alliance (USMX).

• Industry groups are warning that supply chains could be thrown into complete disarray, with ports up and down the US — responsible for billions in daily trade — at a standstill. It's enough to make even the most jolly of elves shed a single, sparkly tear.

The Dreaded “I” Word: The ILA and USMX last met in May, but negotiations broke down in June and haven't (formally) resumed since. Unsurprisingly, the clock has ticked closer and closer to the strike day, and we are yet to see even a glimmer of hope about this being resolved, leaving market observers with increasingly feverish nightmares. "A strike at this point in time would have a devastating impact on the economy, especially as inflation is on the downward trend," said one economist, who's probably already started stockpiling canned goods.

The Age-Old Battle of Workers vs. Bosses: As is often the case, the central sticking point in negotiations is wages. ILA said in a statement, noting its rank-and-file members won't sign contracts with sub-dollar wage increases after 30 years of 2% average hikes — even 0% in some years. If the ILA and USMX can't agree on a new contract, a staggering amount of economic activity will be in immediate jeopardy, like a house of cards collapsing in a hurricane.

The Domino Effect of Port Pandemonium: The contract up for renewal covers all ports from Maine to Texas, including Houston, Miami, New York, and New Orleans — East and Gulf Coast ports account for over 68% of America’s containerized exports and over 56% of containerized imports, representing $2.1 billion in trade value every day. Global supply chains would feel an immediate sting.

• A last-minute intervention, such as when the Biden administration moved to stop a freight rail strike in 2022, is highly unlikely. The White House said last week that it plans to stay out of this one, probably hoping to avoid another logistical headache on their already-full plate, like a sleigh piled high with fruitcake.

SOCIAL MEDIA & PRIVACY

Telegram Will Now Share User Data With Authorities 🤫

Telegram's Privacy Pirouette: In a big blow to online privacy, Telegram's CEO Pavel Durov has announced that the once privacy-focused messaging platform will now be sharing users' data with authorities. This comes just a month after the billionaire founder was arrested in Paris under the flimsy guise of "terrorism" - apparently, failing to act against criminals using his app is now considered a crime. In reality, he was promoting free speech, which, as we all know, is about as welcome in some circles as a porcupine at a balloon party.

• Telegram will be sharing users' internet IP addresses and phone numbers with authorities brandishing "valid legal requests" such as search warrants. So it's not all doom and gloom - your average user will likely retain much of their privacy, provided they aren't running an undercover drug cartel or planning to overthrow a small nation on their lunch break.

Spoiling the Bunch Since Forever: Durov, presumably while nervously eyeing the exits, stated: “While 99.999 per cent of Telegram users have nothing to do with crime, the 0.001 per cent involved in illicit activities create a bad image for the entire platform, putting the interests of our almost billion users at risk,” He also mentioned that the messaging platform had removed its more “problematic content”. One can only imagine what that purge entailed.

• Apparently, Telegram's search feature has been abused by people violating the platform's terms of service to sell illegal goods. Over the past few weeks, staff had combed through Telegram using artificial intelligence to ensure that all the problematic content identified in search is no longer accessible.

Warfare Implications: This apparent freedom of information has geopolitical significance that would make even James Bond raise an eyebrow. The platform is wildly popular in Russia, Ukraine, and the Middle East, both for private communication and as a source of uncensored news. It's also utilized by both Ukrainian and Russian military, especially the Russian army – for battlefield communications. Because nothing says "top secret" like sending your battle plans via an app. This has already resulted in Ukraine outright banning the app this week for state-issued devices.

MORE NEWS

Additional market-moving events🌎

Toyota Expands Buyback: Toyota ($TM) increased its share buyback to $8.31 billion, up from $6.92 billion. It will target up to 410 million shares, or 3.04% of its outstanding shares, as part of efforts to support the stock. (Reuters)

GitHub Data Storage: Microsoft-owned ($MSFT) GitHub is offering enterprise customers the ability to store sensitive software code solely within E.U. data centers, addressing stricter E.U. data protection rules. (CNBC)

Ive Collaboration: Longtime Apple designer, Jony Ive has confirmed that he is collaborating with OpenAI CEO Sam Altman on a new AI hardware project. The Times reports it could raise $1 billion in funding by the end of the year. (The Verge)

More CHIPS Funding: Polar Semiconductor, owned by Sanken Electric and Allegro MicroSystems ($ALGM), will receive $123M in funding under the CHIPS Act to expand its Minnesota facility. (Reuters)

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Our selections performance👾

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