TikTok told the media this week that US federal officers are demanding that the Chinese Owners of the app sell their stake in the social media app, or they risk facing a US ban of the app due to security concerns.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at eric.mastrota@thenationaldigest.com.
The United States Department of Justice has filed a lawsuit to halt JetBlue’s $3.8 billion bid to acquire Spirit Airlines. It has been over 20 years since the government last intervened to prevent a merger between US airlines.
Attorney General Merrick Garland announced the lawsuit on Tuesday. President Joe Biden’s administration has long advocated for increased competition among businesses, particularly in the airline industry, to protect consumers and reduce prices
Spirit Airlines is well-known for providing customers with affordable flight options and is the country’s largest ultra-low-cost competitor to major carriers. Garland is concerned that the merger will negatively impact customers who rely on the company’s affordable fares.
“If not blocked, the merger of JetBlue and Spirit would result in higher fares and fewer choices for tens of millions of travelers across the country. The Justice Department is suing to prevent that from happening. Companies in every industry should understand by now that this Justice Department will not hesitate to enforce antitrust laws and protect American consumers.”
Within the last 22 years, five airline mergers have been allowed by the Justice Department, resulting in the consolidation of nine major airlines into four national carriers in the United States (American Airlines, Delta Airlines, United Airlines and Southwest Airlines). Currently, around 80% of all domestic flights in the U.S. are serviced by just four airlines.
JetBlue argues that the new merger would create a stronger competitor to those four major airlines, causing fares to fall rather than rise. According to JetBlue, due to the four airlines dominating the U.S. market, JetBlue and Spirit can only compete with each other rather than larger carriers.
However, according to the lawsuit, average fares on routes have fallen by 17% once Spirit began to serve them.
To foster healthy competition, the company has proposed forfeiting landing and takeoff slots and gates at overcrowded airports to other low-cost airlines.
“The combination of JetBlue and Spirit plus the rapid growth of ultra-low-cost carriers will assure increased competition and low fares,” JetBlue said in a statement.
“JetBlue’s combination with Spirit allows it to create a compelling national challenger to these dominant airlines while also ensuring ultra-low-cost carrier options remain available in overlap markets. While JetBlue, with its highly unique combination of low fares and great service, will be able to expand with new national breadth as a result of the transaction, it will remain a significantly smaller player than each of the Big Four airlines. According to the data, a combined JetBlue and Spirit will have only about 9% market share, compared to about 16-24% for each of the four largest airlines, but the added scale and ability to further grow will result in meaningful competition on more routes to more destinations and greater opportunities for Crewmembers and Team Members of both airlines.”
JetBlue plans to close its deal with Spirit by the year’s end and hopes to get the lawsuit dismissed by then. The merger would form the fifth-largest airline in the U.S.. JetBlue has also spent the past 18 months defending itself against a separate lawsuit brought forward by the Justice Department alleging its Northeast alliance with American Airlines is predatory.
The Justice Department claims that the two airlines conspired to increase prices and limit options for travelers flying to and from major Northeastern cities in the United States. The companies traded information on flight schedules, pilot rosters, and aircraft sizes to use for each flight. They also shared revenues earned at these airports and pooled their gates and takeoff/landing authorizations.
“Approximately 75% of JetBlue’s total capacity is tied up in the Northeast Alliance,” the Justice Department stated in the recent lawsuit.
“That means JetBlue today coordinates its capacity decisions and shares its revenues with American Airlines on the vast majority of its flights. In other words, JetBlue no longer competes with American Airlines on those flights — and if this acquisition happens, Spirit won’t either.”
Initially, Spirit Airlines was opposed to the merger with JetBlue on the grounds that it would increase fares and therefore present too many obstacles for regulatory approval. Instead, it planned to merge with Frontier Airlines—another ultra-low-cost airline carrier. However, it has now abandoned that plan since JetBlue outbid Frontier Airlines.
In his statement, Garland referenced the Spirit Airlines board’s statement back when they opposed the merger with JetBlue.
“A court will be very concerned that a JetBlue-Spirit combination will result in a higher cost, higher fare airline that would eliminate a lower cost, lower fare airline and eliminate about half of lower cost capacity in the United States.”
“We agree,” Garland added after reading the quote.
Principal Deputy Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division stated, “This transaction occurs against the backdrop of years of airline consolidation in the United States.”
“JetBlue’s proposed acquisition of Spirit eliminates a disruptive, low-cost option for millions of Americans. Whether they fly Spirit or not, travelers throughout the United States benefit from an independent Spirit because where Spirit competes, other airlines – including JetBlue – are forced to compete more vigorously by lowering fares, offering greater innovations and delivering more consumer choice.”
The Justice Department and two other federal agencies—the Department of Transportation and the Federal Communications Commission—will need to approve the deal before it can be finalized. However, the decision ultimately rests with the federal courts that will hear the case.
Moumita Basuroychowdhury is a Contributing Reporter at The National Digest. After earning an economics degree at Cornell University, she moved to NYC to pursue her MFA in creative writing. She enjoys reporting on science, business and culture news. You can reach her at moumita.b@thenationaldigest.com.
Neal Mohan was recently announced to become the new CEO of YouTube, and has stated that the implementation of NFTs into the platform could enable “creators to build deeper relationships with their fans.”
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at eric.mastrota@thenationaldigest.com.
While inflation has begun to ease throughout the nation, car insurance prices are continuing to rise, as premiums are projected to go up throughout the year.
According to Bankrate’s annual True Cost of Auto Insurance Report, released this Monday, the average cost of full coverage auto insurance is about $2,014 a year in America.
Cat Deventer, Bankrate’s insurance analyst, told CNN that “car insurance rates are reactionary,” and currently feeling the lasting impact of high inflation rates from throughout the last two years; which also led to labor and auto part shortages.
These shortages, as a result, caused the cost of insurance claims on car repairs to increase, along with other related auto costs.
“If inflation keeps cooling we could see insurers file for rate decreases in future years.”
If you get into an accident, receive a speeding ticket, have a teenager as a driver under your policy, and credit score decreases are all factors that could lead to one having to pay an increased premium.
Where you live can also have a major impact on how much you pay for auto insurance. According to Deventer: “Each geographic area has different risks and costs of living, so the cost for car insurance varies across the nation.”
Bankrate reported that Orlando, Florida saw the biggest rise in premium costs throughout 2023 so far, with an increase of 23% to average a $3,078 annual cost.
Phoenix, Arizona experienced the second highest rise in cost with a 17% increase to $2,164. Philadelphia and New York City both experienced the biggest decrease in rates. Philadelphia costs decreased around 22% to a $1,872 average, while NYC had a 14% decrease to a $2,649 average.
“While you can’t control the effects of inflation or location on your premium, there are other things you can do to keep your costs to a minimum,” Deventer explained.
She recommended looking for as many discounts as your insurer offers and taking advantage of them. For instance, taking a defensive driving course can decrease one’s premiums in many areas.
“Or if the teenager on your policy goes away to boarding school or college and can’t drive your car, your insurer may offer a “student away” discount. And if they aren’t away, but attend school full-time and get good grades through age 24, that may save you a few bucks, too,” Deventer said.
“Every company uses a different algorithm to determine rates,” Deventor continued, so take the time to shop around for different providers in your area to receive the best possible coverage at the lowest price.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at eric.mastrota@thenationaldigest.com.
Netflix will stop subscribers from sharing passwords with members living outside their homes as early as March this year. The streaming giant claims that the widespread sharing of passwords affects its ability to evolve the platform.
In a letter to shareholders late last week, the company said it would “roll out paid sharing more broadly” late in the first quarter of 2023.
“Today’s widespread account sharing (100 million + households) undermines our long-term ability to invest in and improve Netflix and build our business. While our terms of use limit the use of Netflix to a household, we recognize this is a change for members who share their accounts more broadly. So we’ve worked hard to build additional new features that improve the Netflix experience.”
Members will still “have the option to pay extra if they want to share Netflix with people they don’t live with.” Otherwise, subscribers can transfer an existing user profile to a new account, allowing viewing history, recommendations, the “my list” feature and other data to be copied over.
Netflix previously hinted at discontinuing its password-sharing feature back in July 2022. The company described last year as “tough.” In the first quarter, it suffered its first subscriber loss in over a decade, losing 200,000 users.
The company has not disclosed the fee it will charge for password sharing nor stated how they plan to enforce the new pricing structure. Currently, Netflix can tell when users log in outside their primary household based on their IP address, device IDs, and other information.
In March 2022, Netflix rolled out paid sharing in Costa Rica, Chile, and Peru, charging users a fee to add two “subaccounts” to a primary account. Users found the policy confusing, and many could still share their passwords without repercussions.
An anonymous Netflix customer service representative told Rest of World that “she was instructed that if a subscriber called arguing that someone from their household was just using the account from another location, she should inquire further and tell the subscriber that they could use their account without extra charge via a verification code.” Many of the representatives still needed more clarification about the policy.
Other users in those countries canceled their subscriptions after receiving news of the oncoming fee. The shareholder letter stated that Netflix expects engagement to fall in the short term but will pick back up soon after.
“As we work through this transition – and as some borrowers stop watching either because they don’t convert to extra members or full paying accounts – near-term engagement, as measured by third parties like Nielsen’s The Gauge, could be negatively impacted. However, we believe the pattern will be similar to what we’ve seen in Latin America, with engagement growing over time as we continue to deliver a great slate of programming and borrowers sign-up for their own accounts.”
The anticipated sharing fee comes on the heels of a new subscription tier that Netflix started offering in November, which provides customers with a cheaper “Basic With Ads” subscription option. In exchange for $3 off a monthly subscription, viewers are served up to five ads an hour. Netflix claims that rolling out the new option led to member growth.
“Engagement, which is consistent with members on comparable ad-free plans, is better than what we had expected, and we believe the lower price point is driving incremental membership growth. Also, as expected, we’ve seen very little switching from other plans. Overall the reaction to this launch from both consumers and advertisers has confirmed our belief that our ad-supported plan has strong unit economics (at minimum, in-line with or better than the comparable ad-free plan) and will generate incremental revenue and profit, though the impact on 2023 will be modest given that this will build slowly over time.”
Moumita Basuroychowdhury is a Contributing Reporter at The National Digest. After earning an economics degree at Cornell University, she moved to NYC to pursue her MFA in creative writing. She enjoys reporting on science, business and culture news. You can reach her at moumita.b@thenationaldigest.com.
Elon Musk is among the expected witnesses to appear this week in the ongoing federal trial accusing him of deceptively driving up the price of Tesla stock by tweeting about taking the company private, which never happened.
The August 2018 tweet in question stated that Musk had “secured” funding to take Tesla private at $420 per share. The company’s stock was slumping at the time due to production problems.
Tesla shareholders filed a class-action lawsuit suing Musk for billions of dollars in damages for money investors say they lost after the tweet inflated share price. The trial, taking place in San Francisco, is expected to last for three weeks.
Investor Glen Littleton from Kansas City, Missouri, is seeking damages on behalf of shareholders who traded the company’s stock in the days after Musk’s tweet.
Littleton had purchased Tesla investments with hopes that the automaker’s stock would eventually be worth far more than $420. Upon seeing Musk’s tweet, he felt compelled to sell his Tesla stock options since he knew the completed deal would have rendered them worthless.
He stated he sold off most of his Tesla positions to try and limit his losses, but even after doing so, the value of his Tesla portfolio plunged by 75%.
“The damage was done. I was in a state of shock.”
The case’s outcome may depend on whether Musk knowingly raised Tesla’s stock price by tweeting that he had secured money for a $72 billion takeover of the business. The stock plummeted in value when it became apparent that he lacked the funding to complete the deal a week later.
On Wednesday, Nicholas Porritt, lead attorney for the investors, told the trial’s jury of nine that “millions of dollars were lost when his lies were exposed.”
“Why are we here? We are here because Elon Musk, chairman and chief executive of Tesla, lied. His lies caused regular people like Glen Littleton to lose millions and millions of dollars.”
Porritt also pointed out that not only did Musk’s tweet cause investors to lose money, but it also affected pension funds and other organizations that owned Tesla stock.
The trial’s presiding judge, U.S. District Judge Edward Chen, has already ruled that Musk’s tweet was false and reckless.
Porritt took advantage of the judge’s verdict and told the jury they should presume Musk’s tweet was false, which the judge permitted.
“When the CEO of a public company like Tesla lies about his company and hurts investors, it’s critical that he is held accountable for that harm that he causes.”
In his opening statements, Musk’s attorney Alex Spiro insisted that Musk was “serious” about the buyout when he tweeted about securing funding.
“You will come to learn very soon that this was not fraud, not even close.”
Spiro argued that the rise in Tesla’s stock price after the tweet was due to investors’ faith in Musk’s capabilities and reputation as a visionary.
“Mr. Musk tries to do things that have never been done before. Everyone knows that.”
According to Spiro, Musk and representatives from the Public Investment Fund of Saudi Arabia had already discussed taking Tesla private.
“He didn’t plan to tweet this. It was a split-second decision.”
Spiro said Musk used the “wrong words” in a rush to be transparent about the potential deal with the Saudi fund.
Musk is on the witness list for both sides of the case. Porritt told The Associated Press that Musk is expected to take the stand when the trial resumes on Friday, if time permits, or on Monday.
Moumita Basuroychowdhury is a Contributing Reporter at The National Digest. After earning an economics degree at Cornell University, she moved to NYC to pursue her MFA in creative writing. She enjoys reporting on science, business and culture news. You can reach her at moumita.b@thenationaldigest.com.
Tesla has recently cut their prices on some of their top-selling models, including the Model Y SUV and Model 3, by up to 20% across the US and Europe. The changes were revealed on Tesla’s website last Thursday.
While the vehicles are still relatively expensive, the drop is significant when compared to its previous premium pricing. Many are speculating that these decreases are a sign of Tesla backing away from the months they spend gradually raising the prices of the electric vehicles.
Tesla has also experienced the impact of the economy in recent months, missing market estimates for sales last year, shifting its market capitalization from $1 trillion to less than $400 billion, according to reports from Business Insider.
Company owner Elon Musk has recently bought and taken over the popular social media platform Twitter, where he’s made it clear that rising interest rates in general have been taking a toll on the electric vehicle company.
“Fed needs to cut interest rates immediately, they are massively maplifting the probability of a severe recession,” Musk tweeted in November.
Interest rate increases have had a major impact on the costs of financing Tesla vehicles, making it even more difficult for consumers to become a Tesla owner.
Dan Ives, senior equity research analyst at Wedbush Securities, said “it’s no secret that demand for Tesla is starting to see some cracks as a global slowdown of the economy that started in 2022 continues into 2023.”
“A softening demand for the global EV market is a bigger driver of price cuts than interest rate hikes. When it comes to demand, backlog orders have come down significantly for Tesla, making price cuts is a good way to increase the immediate- and medium-term sales pipeline,” said Simon Moores, CEO of Benchmark Mineral Intelligence, a price reporting agency for the EV supply chain, to Insider.
Traditional automakers have also entered the electric vehicle market, providing cheaper alternatives to Tesla, which has dominated the EV market since its launch.
According to data from an Experian report, from January to September 2022, Tesla accounted for 65.4% of new electric vehicle registrations in the US. This percentage marks a significant decrease from the two previous years: 68.2% in 2021 and 79.4% in 2020.
The cuts to Tesla pricing will likely welcome more consumers to purchase the vehicles. Ives stated that he estimated the price cuts could definitely increase demand by around 12-15% globally in 2023.
“This is a clear shot across the bow at European automakers and US stalwarts (GM and Ford) that Tesla is not going to play nice in the sandbox with an EV price war now underway,” he said.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at eric.mastrota@thenationaldigest.com.
According to reports from an individual involved in Goldman Sachs, the company will be laying off up to 3,200 employees this week as a means of saving on costs.
The source who spoke with CNN stated that more than a third of the projected layoffs will come from the firm’s trading and banking units. These cuts are a result of uncertain economic and market conditions, as Goldman Sachs has recently been feeling the impacts of a decrease in global dealmaking. Many companies are leaning away from mergers and raised capital with the firm.
As reported by Bloomberg, hiring for roles in other departments will continue into the new year, and a new class of analysts are also expected to start working for the firm later this year.
At the end of the third quarter Goldman Sachs reported having around 49,100 employees after adding thousands of positions during their recovery from the pandemic; which many financial markets have also done.
Overall, the Federal Reserve and other major banking firms have begun to raise their borrowing costs as a means of combating inflation rates throughout the nation.
Many companies are working on saving money by any means necessary to prepare for a possible recession that would occur as a result of rising interest rates. The rate of mergers and acquisitions have overall been on the decline as well.
Goldman Sachs is one of the most well known firms that’s involved in these mergers and acquisitions as well. So with the recent decline in transactional activity, the firm experienced a 12% drop in revenue in the third quarter of 2022 when compared to one year ago.
Investment banking revenue overall has decreased by 57% yearly, according to reports.
This past October Goldman Sachs announced part of its plan to streamline operations by combining their trading and investment banking divisions, as well as combining its digital consumer bank, known as Marcus, with its wealth management sector.
Reports indicate that shares of Goldman Sachs were up less than 1% in premarket trading as of this week.
Goldman Sachs isn’t the only massive company planning on implementing layoffs in their 2023 plans. Amazon stated earlier this month that they plan on laying off more than 18,000 employees while Morgan Stanely have already begun layoffs in the new year.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at eric.mastrota@thenationaldigest.com.
According to a recent report from The New York Times, Twitter CEO tech billionaire Elon Musk has been making drastic cuts within the company ever since he purchased the platform for $44 billion.
One of the most recent and seemingly random cuts from the company involved firing the entire janitorial staff, as well as forcing employees to bring their own toilet paper to work every day.
“Early on Christmas Eve, members of the billionaire’s staff flew to Sacramento — the site of one Twitter’s three main computing storage facilities — to disconnect servers that had kept the social network running smoothly,” the NYT reported.
“Some employees were worried that losing those servers could cause problems, but saving money was the priority, according to two people who were familiar with the move but not authorized to talk about it.”
“The data center shutdown was one of many drastic steps Mr. Musk has undertaken to stabilize Twitter’s finances,” said the report.
“Over the past few weeks, Twitter had stopped paying millions of dollars in rent and services, and Mr. Musk had told his subordinates to renegotiate those agreements or simply end them.
The company has stopped paying rent at its Seattle office, leading it to face eviction, two people familiar with the matter said. Janitorial and security services have been cut, and in some cases employees have resorted to bringing their own toilet paper to the office.”
Musk has also made numerous changes to the platform itself within the time he’s been active CEO, many of which have received backlash from users.
He’s banned several journalists from covering news regarding himself, including reporters who pointed out his hypocrisy in some of the policy decision making. Specifically his choice to ban a user from tracking the movements of his private jet and an account that covers issues at Musk’s company Tesla, which are public reports.
All of the “bans” have been partially reversed, however, due to the intense backlash from users.
Reports are also stating that Musk is in the process of looking for a new CEO to run Twitter for him. He stated he would step down from the position once he finds someone “foolish enough” to take on the role.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at eric.mastrota@thenationaldigest.com.
Shortly after assuming control of Twitter, Elon Musk ordered managers to draft a list of employees to be laid off, according to four people who declined to be identified out of fear of retaliation. The company currently employs around 7,500 people.
Musk bought Twitter for $44 billion and took the company private on Thursday once the deal was completed. He informed investors that he planned to trim its workforce significantly, open the platform to more advertising, and implement lenient content moderation policies.
The layoffs will likely occur before Nov. 1. Employees designated for termination would have received stock grants as part of their compensation on that date. Typically, grants constitute a substantial portion of employee pay. If Musk terminates workers before that date, he may avoid paying out the awards, although the current merger deal requires him to pay the employees in cash in place of stock for “any equity that would have vested within three months from their last day at the company.”
Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management, reported that Jared Birchall, head of Musk’s family office, informed him that layoffs were imminent. His company contributed less than $1 million to help finance Musk’s takeover of Twitter.
“I was told to expect somewhere around 50 percent of people will be laid off.”
Musk arrived at the company’s San Francisco headquarters on Wednesday and assumed control on Thursday, immediately firing several Twitter executives. Chief executive officer Parag Agarwal, chief financial officer Ned Segal, former general counsel Sean Edgett, and former policy and legal executive Vijaya Gadde were among those let go.
It is improbable that Musk will pay the complete severance package of $20 million to $60 million planned for the executives. Musk fired the executives “for cause,” which could render the severance agreement invalid.
He also informed advertisers of his intention to transform Twitter into the “most respected advertising platform in the world.” Musk initially indicated that he wanted the platform to be a haven for “free speech.” However, he has revealed that he intends to organize a council to determine content moderation procedures and has yet to decide which previously banned high-profile accounts, such as former President Donald Trump’s account, will be reinstated.
He reassured advertisers with a tweet addressed to them that “Twitter obviously cannot become a free-for-all hellscape, where anything can be said with no consequences!”
“The reason I acquired Twitter is because it is important to the future of civilization to have a common digital town square, where a wide range of beliefs can be debated in a healthy manner, without resorting to violence. There is currently great danger that social media will splinter into far-right wing and far left-wing echo chambers that generate more hate and divide our society.”
The Verge reports that Musk is also considering charging users $20 per month to maintain their blue check mark and verified account status. Musk told some employees that they needed to prepare to implement the new feature by Nov. 7 or they would be fired from their position at Twitter. One employee said Musk utilizes “textbook dictator tactics: sowing fear and confusion.”
Twitter users are concerned that the lack of content moderation could lead to an increase in misinformation and hate speech. On Sunday, Musk himself tweeted a link to a website circulating a baseless conspiracy theory about the Oct. 28 attack on Nancy Pelosi’s husband, Paul Pelosi. He has since deleted the tweet. Many prominent users, such as New York Times columnist Charles Blow and actress Jameela Jamil, have stated that they will abandon the platform now that Musk owns it.
NBA star LeBron James tweeted about a report by the Network Contagion Research Institute, which showed that racial slurs on the platform increased by nearly 500 percent in the 12 hours after Musk’s Twitter acquisition was finalized.
“I don’t know Elon Musk and, tbh, I could care less who owns Twitter. But I will say that if this is true, I hope he and his people take this very seriously because this is scary. “
Moumita Basuroychowdhury is a Contributing Reporter at The National Digest. After earning an economics degree at Cornell University, she moved to NYC to pursue her MFA in creative writing. She enjoys reporting on science, business and culture news. You can reach her at moumita.b@thenationaldigest.com.