Amazon’s iRobot deal faces renewed scrutiny from Dems

A new letter penned by Senate and House Democrats accuses Amazon of “anticompetitive” practices in its bid to purchase Roomba-maker, iRobot, for $1.7 billion. Massachusetts Senator Elizabeth Warren is leading the charge to convince the Federal Trade Commission to reject the deal, according to a report from Axios.

“Rather than compete in a fair marketplace on its own merits, Amazon is following a familiar anticompetitive playbook: leveraging its massive market share and access to capital to buy or suppress popular products,” notes the letter cosigned by fellow congressional Democrats, Mondaire Jones, Mark Pocan Jesus G. “Chuy” Garcia, Pramila Jayapal and Katie Porter.

The report arrives during a moment of increased regulatory scrutiny for the online retail giant. Both the planned iRobot and One Medical deals have raised antitrust concerns among lawmakers. The FTC has notable already been investigating both. Amazon has seemingly been more aggressively pursuing acquisitions under new CEO Andy Jassy, at a time when the regulatory body has pushed to block similar deals by big tech. Most notably, FTC chairwoman Lina Khan recently sued to block Meta/Facebook’s acquisition of VR firm, Within Unlimited, citing anticompetitive concerns.

The deal is at the center of Amazon’s plans to aggressively push into the home robotics category, in much the same way its 2012 acquisition of Kiva Systems helped it become a dominant force in industrial robotics. Amazon’s offering in the category is currently limited to the home robot Astro, but folding iRobot into the department would find the firm dominating the space overnight. iRobot’s Roomba is the rare home robot that has managed to break into mainstream use.

Given Amazon’s history and iRobot’s home mapping, the deal has also raised concern among privacy advocates.

TechCrunch has reached out to both Amazon and Senator Warren’s office for comment.

Amazon’s iRobot deal faces renewed scrutiny from Dems by Brian Heater originally published on TechCrunch

Lawmakers ask Facebook and Instagram to explain why they removed abortion posts

In a letter to Head of Instagram Adam Mosseri and Meta CEO Mark Zuckerberg, Senators Amy Klobuchar and Elizabeth Warren expressed alarm that abortion-related content is receiving strange treatment on Meta’s platforms.

Just after the Supreme Court ruled to overturn Roe v. Wade, Motherboard found that posts offering to provide abortion pills were being removed from Facebook within seconds of being posted. The Associated Press observed similar posts about abortion pills vanishing from Instagram “within moments.” Instagram also hid some abortion-related content behind warning screens, behavior that the company described as a “bug” but didn’t explain further.

The senators went into some detail about the abortion-related posts and accounts Meta removed:

“Reports indicate that multiple posts providing accurate information about how to legally access abortion services were removed, often within minutes after the information was posted. Others reported that posts mentioning abortion were taken down or were tagged with “sensitivity screens” and warnings, including a post promoting an abortion documentary, a posting entitled “Abortion in America How You Can Help,” and a post from a healthcare worker describing how people were already being harmed by laws banning abortion. One organization dedicated to informing people in the United States about their abortion rights temporarily had its account suspended. Users reported similar issues last fall when Texas’s law banning abortions after six weeks went into effect.”

In a Twitter reply, Meta Policy Communications Director Andy Stone noted that the company’s policies do not allow transactions of prescription drugs, but did not explain the enforcement discrepancy between the abortion pill posts and posts offering to provide other prescription drugs.

Klobuchar and Warren are requesting “additional information about what Meta is doing to address problems applying company policies” — information that could explain Meta’s conspicuously aggressive handling of the abortion-related content.

The senators are asking Meta for answers to a number of questions that the company hasn’t been transparent about on the topic, including how many abortion-related posts it has removed since June 24, how many of those posts have been reinstated and what training materials about abortion the company provides to its content moderators. The requests have a deadline of July 15.

Senators call for US to adopt common charger

A little over a week ago, the European Union reached an agreement that will require hardware manufactures to adopt a common charger — specifically the USB-C standard — by 2024. Yesterday, a trio of Democratic senators sent an open letter to Commerce Secretary Gina Raimondo urging that the United States follow suit.

The letter, signed by Bernie Sanders of Vermont and Elizabeth Warren and Ed Markey of Massachusetts, notes consumer frustration, costs and an uptick in e-waste, owing to the proliferation of different charging cables. The letter specifically cites a figure from the EU, noting that chargers alone account for around 11,000 tons of e-waste a year.

“This policy has the potential to significantly reduce e-waste and help consumers who are tired of having to rummage through junk drawers full of tangled chargers to find a compatible one, or buy a new one,” the lawmakers note. “The EU has wisely acted in the public interest by taking on powerful technology companies over this consumer and environmental issue. The United States should do the same.”

USB-C has, of course, been widely adopted by a number of manufacturers across the industry. There are, however, some holdouts, which either continue to employ older standards like micro-USB or rely on their own proprietary ports. Apple’s iPhone is the most notable example of the latter. While the company has adopted USB-C for MacBooks and iPads, its phones continue to sport the first-party Lightning cable.

Such legislation would require the company move to USB-C. The upcoming iPhone 14 is rumored to sport Lightning, while rumors point to the arrival of USB-C for next year’s Pro models.

The death knell for SPACs?

It’s a tough day for special purpose acquisition companies, or SPACs, which had already fallen out of favor after roughly 18 months in the limelight.

Senator Elizabeth Warren is planning a bill that targets the SPAC industry, her office announced today. Called the “SPAC Accountability Act of 2022,” the bill would expand the legal liability of parties involved in SPAC transactions, close loopholes that SPACs have “long exploited to make overblown projections,” and lock in longer the investors sponsoring a deal.

Even if the bill never passes, the SEC is today concluding a 60-day public comment period on a number of its own proposed guidelines for SPACs, specifically around disclosures, marketing practices and third-party oversight.

As TechCrunch noted in a weekend look at the astonishing number of electric vehicle SPACs to flounder, assuming the SEC’s rules are approved, the barrier of entry to going public via a SPAC will rise to the same level as companies choosing the more traditional IPO listing process, including to hold liable banks associated with SPACs for misstatements related to the merger. (To protect itself, Goldman Sachs has already said it’s no longer working with most SPACs that it took public and pausing work with new SPAC issuance.)

It’s not as if either initiative will abruptly stop SPACs in their tracks. They’d already begun losing momentum last year, when the SEC warned in March 2021 that SPACs weren’t accounting correctly for investor incentives called warrants. Indeed, while 247 SPACs were closed in 2020, most of the SPACs raised last year (613!) came together in the first half of the year, before the SEC made it quite so plain that it planned to do more on the regulatory front.

Now those many blank-check companies need to find suitable targets in a market turned bearish, and the clock is ticking. Given that blank-check companies are typically expected to find and merge with a target company within 24 months of investors funding the SPAC, if those hundreds of companies can’t complete mergers with candidate companies within the first half of next year, they’ll either have to wind down (which can means millions of lost dollars for SPAC sponsors) or else seek out shareholder approval for extensions.

It’s even worse than it sounds. With the time between when a deal is announced to when the SEC has time to review it taking up to five months, according to SPACInsider founder Kristi Marvin, even SPACs that strike a deal tomorrow couldn’t ask their shareholders to vote on it until roughly November.

In fact, while lawmakers and regulators seem late to the party, they will undoubtedly be watching for unnatural acts as SPAC sponsors do everything in their power to cross the finish line.

Already, a number of SPAC sponsors has already begun to ask their shareholders for more time to get a deal done, some of them apparently hoping investors might warm again to the once-obscure financial vehicles. Magnum Opus, the SPAC that planned to take Forbes to take it public, filed two deadline extensions this year after announcing the merger last August. It would have needed to obtain its shareholders’ approval for an extension yet again to keep the deal alive; instead, reports the New York Times, Forbes just scrubbed the deal.

Also bound to happen more: SPACs that announce target companies outside of their area of expertise, and more redemptions that leave SPACs with far less cash on hand for their mergers.

Surf Air Mobility is a perfect example of both. A nearly 11-year-old electric aviation and air travel company in Los Angeles that operates via a membership model, it recently announced it would be going public via a merger with the SPAC Tuscan Holdings Corporation II, which came together in 2019.

Given that Tuscan was a little long in the tooth as SPACs go, it had to ask shareholders to approve an extension. It received their approval, though many backers redeemed their shares, shrinking the size of the capital pool Tuscan had to work with. With less capital to work with, Surf Air essentially lined up additional financing for itself.

Tuscan was originally targeting — but not limited to — a company in the cannabis industry to acquire, not a travel company. There’s nothing legally wrong with that, underscores Marvin, who also observes that it isn’t the first SPAC to shop far outside its preferred sector of interest.

Still, it could be another reason to give investors pause when SPAC sponsors need them to believe.

Consider an earlier SPAC, Hunter Maritime, which came together in 2016 with the help of Morgan Stanley to acquire one or more operating businesses in the international maritime shipping industry, per its original prospectus. Three years later, it acquired a China-based wealth manager instead and rebranded.

Today that combined company, NCF Wealth Holdings, is no longer a company.

“A lot of SPACs will liquidate over the next two years,” says Matthew Kennedy, a senior IPO strategist at Renaissance Capital. “I think shareholders are just looking at [the performance of companies taken public via SPACs] and saying, ‘Why would I hold this if I have a four out of five chance of losing money?'”

White House issues its Executive Order on cryptocurrencies

The Biden White House showed off a new Executive Order on Wednesday regarding the regulation of cryptocurrencies. The order essentially lays out a broad strategy for how the government plans to balance consumer protection while ensuring that the United States continues to be a space for innovation in the sector.

For those in the crypto sector concerned about aggressive government intervention, the order’s language seems to signal that the Biden White House is uninterested in sweeping near-term reforms and is instead merely focused on ensuring that agencies are on the same page in researching and observing the national security implications of the crypto industry.

“The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security, and climate risk,” a fact sheet issued by the White House reads.

The press release lays out seven major goals of the executive order with added detail.

  • Protect U.S. Consumers, Investors, and Businesses
  • Protect U.S. and Global Financial Stability and Mitigate Systemic Risk
  • Mitigate the Illicit Finance and National Security Risks Posed by the Illicit Use of Digital Assets
  • Promote U.S. Leadership in Technology and Economic Competitiveness to Reinforce U.S. Leadership in the Global Financial System
  • Promote Equitable Access to Safe and Affordable Financial Services
  • Support Technological Advances and Ensure Responsible Development and Use of Digital Assets
  • Explore a U.S. Central Bank Digital Currency (CBDC)

While crypto investors may generally breathe a sigh of relief, fellow lawmakers like Elizabeth Warren who have been highly critical of the crypto space may be less satisfied. In recent months, Warren has criticized the industry, drawing particular attention to the environmental impacts or cryptocurrencies and the investor risks associated with lax regulation of so-called stablecoin issuers and other players in the DeFi ecosystem.

The White House’s communications regarding the EO largely seems to avoid calling out any particular coins or projects with the exception of noting the price volatility of Bitcoin specifically. There was no mention of particular verticals like DeFi or NFTs either.

A particular concern among some in the crypto industry was that the potential use of cryptocurrencies by wealthy Russian elite to evade sanctions would prompt a crackdown, but one unnamed senior official on a background press call seemed to downplay this possibility, “I will say, on Russia, in particular, the use of cryptocurrency we do not think is a viable workaround to the set of financial sanctions we’ve imposed across the entire Russian economy and, in particular, to its central bank.”

A major focus of the order is formally directing several government agencies to begin researching the development of a state-backed cryptocurrency — a U.S. Central Bank Digital Currency (CBDC). “This research, along with the framework we will develop for international engagement and competitiveness, will help ensure we preserve the critical role of the United States in the global financial system,” a senior White House official said.

President Biden will sign the Executive Order today, the White House says.

A new US bill would force companies to disclose ransomware payments

A new proposed law would compel businesses in the U.S. to disclose any ransomware payments within 48 hours of the transaction.

The bicameral Ransom Disclosure Act, drafted by Sen. Elizabeth Warren and Rep. Deborah Ross, would mandate companies and organizations — though not individuals — to provide the U.S. Department of Homeland Security data on ransomware payments, including the amount and type of cryptocurrency demanded and the sum that was paid.

The bill aims to bolster the U.S. government’s understanding of how cybercriminal enterprises operate and help officials develop a fuller picture of the ransomware threat. While ransom payments are typically made in bitcoin, security experts say threat actors are increasingly moving towards “privacy coins,” such as Monero, which make it harder for investigators to trace where the money goes.

Read more on TechCrunch

The Ransom Disclosure Act would also require Homeland Security to set up a website for organizations to voluntarily report payment of ransoms, as well as to share information disclosed during the previous year, excluding identifying information about the entities that paid up. Similar efforts by security researchers already exist.

Warren says these measures are needed due to the “skyrocketing” number of ransomware attacks; attacks rose by 158% in North America last year, and victims worldwide paid nearly $350 million in ransom  – a more than 300% increase over 2019, data shows. What’s more, recent research found that ransom payments account for just 20% of the total cost of a ransomware attack, with businesses suffering the majority of their losses through lost productivity and post-attack recovery.

“We lack critical data to go after cybercriminals,” said Warren. “My bill with [Representative] Ross would set disclosure requirements when ransoms are paid and allow us to learn how much money cybercriminals are siphoning from American entities to finance criminal enterprises — and help us go after them.”

It’s not the only tactic the U.S. is employing in a bid to crackdown on ransomware.

Last month, for example, the Treasury Department issued first of its kind sanctions against cryptocurrency exchange Suex for its role in facilitating ransom payments after finding that over 40% of its total transactions were associated with bad activity. The Treasury also recently warned American companies that they are prohibited from paying threat actors based in countries subject to U.S. sanctions.

Blackstone’s growth investors lead a $200 million investment into Oatly, the oat milk juggernaut

Investors’ love affair with new, plant-based alternatives to animal products continues as Blackstone Growth, a (newish) investment vehicle from one of the world’s largest financial services firms, said it led a $200 million into the colossus of oat-milk brands, Oatly.

The Malmö based company also attracted some of the biggest names in entertainment, consumer business, and international finance as Oprah Winfrey, Roc Nation, Natalie Portman, former Starbucks Chairman and chief executive Howard Schultz, Orkila Capital, and Rabo Corporate Investments, the investment arm of Rabobank, joined in to finance the company’s latest round.

For Blackstone’s newly minted head of growth investments, Jon Korngold, the deal for Oatly is representative of the types of commitments his firm will make into growth companies. It’s a company that has proven to be a leader in its category, there’s very little technology risk left in the business, but Oatly can benefit from the network of logistics, supply chain, and consumer companies that the investment firm owns.

It’s also a company whose mass adoption can potentially help move the needle on reducing greenhouse gas emissions. “Oatly is one of those companies that does well by doing good,” said Korngold in an interview.

While the same can’t be said for all of Blackstone’s investments (Blackstone was criticized by former Presidential candidate, Senator Elizabeth Warren, for its stake in Hidrovias do Brasil, an infrastructure company reportedly linked to deforestation in the rainforest), Oatly does have significant environmental benefits. The company’s product makes for a more environmentally friendly milk substitute than almond milk (almonds are a hugely water intensive crop) and aren’t processed like the genetically modified milk replacements coming to market. Oats also require less fertilizer which has ancillary benefits for the water table and other forms of pollution.

With the Oatly investment, Blackstone Growth is riding a wave of investor support for the creation of an alternative, more sustainable food system driven by increasing consumer demand for these more sustainable goods. One investor has called the coming tidal wave of innovation around changing food production the biggest entrepreneurial opportunity in a generation.


With pandemic-era acquisitions, big tech is back in the antitrust crosshairs

With many major sectors totally frozen and reeling from losses, tech’s biggest players are proving themselves to be the exception to the rule yet again. On Friday, Facebook confirmed its plans to buy Giphy, a popular gif search engine, in a deal believed to be worth $400 million.

Facebook has indicated it wants to forge new developer and content relationships for Giphy, but what the world’s largest social network really wants with the popular gif platform might be more than meets the eye. As Bloomberg and other outlets have suggested, it’s possible that Facebook really wants the company as a lens into how users engage with its competitors’ social platforms. Giphy’s gif search tools are currently integrated into a number of messaging platforms, including TikTok, Twitter and Apple’s iMessage.

In 2018, Facebook famously got into hot water over its use of a mobile app called Onavo, which gave the company a peek into mobile usage beyond Facebook’s own suite of apps—and violated Apple’s policies around data collection in the process. After that loophole closed, Facebook was so desperate for this kind of insight on the competition that it paid people—including teens—to sideload an app granting the company root access and allowing Facebook to view all of their mobile activity, as TechCrunch revealed last year.

For lawmakers and other regulatory powers, the Giphy buy could ring two separate sets of alarm bells: one for the further evidence of anti-competitive behavior stacking the deck in the tech industry and another for the deal’s potential consumer privacy implications.

“The Department of Justice or the Federal Trade Commission must investigate this proposed deal,” Minnesota Senator Amy Klobuchar said in a statement provided to TechCrunch. “Many companies, including some of Facebook’s rivals, rely on Giphy’s library of sharable content and other services, so I am very concerned about this proposed acquisition.”

In proposed legislation late last month, Sen. Elizabeth Warren (D-MA) and Rep. Alexandria Ocasio-Cortez (D-NY) called for a freeze on big mergers, warning that huge companies might view the pandemic as a chance to consolidate power by buying smaller businesses at fire sale rates.

In a statement, a spokesperson for Sen. Warren called the Facebook news “yet another example of a giant company using the pandemic to further consolidate power,” noting the company’s “history of privacy violations.”

“We need Senator Warren’s plan for a moratorium on large mergers during this crisis, and we need enforcers who will break up Big Tech,” the spokesperson said.

News of Facebook’s latest moves come just days after a Wall Street Journal report revealed that Uber is looking at buying Grubhub, the food delivery service it competes with directly through Uber Eats.

That news also raised eyebrows among pro-regulation lawmakers who’ve been looking to break up big tech. Rep. David Cicilline (D-RI), who chairs the House’s antitrust subcommittee, called that deal “a new low in pandemic profiteering.”

“This deal underscores the urgency for a merger moratorium, which I and several of my colleagues have been urging our caucus to support,” Cicilline said in a statement on the Grubhub acquisition.

The early days of the pandemic may have taken some of the antitrust attention off of tech’s biggest companies, but as the government and the American people fall into a rhythm during the coronavirus crisis, that’s unlikely to last. On Friday, the Wall Street Journal reported that the Department of Justice and a collection of state attorneys general are in the process of filing antitrust lawsuits against Google, with the case expected to hit in the summer months.

Nine senators — including Warren and Sanders — pen open letter to Amazon about worker firings

A group of nine Senators led by Massachusetts Democrat Elizabeth Warren penned an open letter to Amazon CEO Jeff Bezos this week, seeking more information about recent employee firings. The statement cites the terminations of four employees who were vocally critical of the company’s policies pertaining to both COVID-19 and climate change.

Cosigned by Bernie Sanders, Cory Booker, Kamala Harris, Sherrod Brown, Kirsten Gillibrand, Ed Markey, Richard Blumenthal and Tammy Baldwin, the letter notes:

Given the clear public history of these four workers’ advocacy on behalf of health and safety conditions for workers in Amazon warehouses preceding their terminations, and Amazon’s vague public statements regarding violations of “internal policies,” we are seeking additional information to understand exactly what those internal policies are.

It poses nine questions, asking Bezos and Amazon to respond by May 20. The senators single out the firings of Christian Smalls, Bashir Mohamed, Maren Costa and Emily Cunningham, all of whom have been publicly critical of the company’s handling of COVID-19. A number of the above have stated publicly that they believe their terminations were directly linked to the whistleblowing — something Amazon has strongly denied.

“We support every employee’s right to criticize their employer’s working conditions,” the company said in a statement offered to TechCrunch at the time, “but that does not come with blanket immunity against any and all internal policies. We terminated these employees for repeatedly violating internal policies.”

Amazon lost another employee when VP Tim Bray publicly left the company on May 1, and workers across the country were striking over working conditions.

“[R]emaining an Amazon VP would have meant, in effect, signing off on actions I despised,” Bray wrote. “So I resigned. The victims weren’t abstract entities but real people; here are some of their names: Courtney Bowden, Gerald Bryson, Maren Costa, Emily Cunningham, Bashir Mohammed, and Chris Smalls. I’m sure it’s a coincidence that every one of them is a person of color, a woman, or both. Right?”

The letter echoes Bray’s concerns about inequality at the company, asking, “Do Amazon tech workers, Amazon warehouse workers, and Amazon executives have the same discipline and termination policies?”

This isn’t the first time the senators have pushed back against Amazon. Sanders helped lead the push for a $15 minimum wage at the company, while Warren noted her desire to break up the company (along with Google and Facebook) during her 2020 presidential bid.

For its part, Amazon has been very conscious of the messaging around its coronavirus response in recent weeks. It played a prominent role in both Bezos’s annual shareholder letter and the company’s earnings report. Earlier this week, another warehouse employee died after testing positive for the virus. As of mid-April, workers in at least 74 Amazon warehouses had tested positive.

We’ve reached out to the company for comment on the letter.

AOC and Elizabeth Warren call for a freeze on big mergers as the coronavirus crisis unfolds

The coronavirus pandemic has paralyzed the global economy, but large tech companies remain relatively well-positioned to reach into their deep pockets to make big moves.

In an effort to call attention to the plight of smaller businesses—and the disproportionate power and resources of larger ones—Sen. Elizabeth Warren (D-MA) and Rep. Alexandria Ocasio-Cortez (D-NY) will propose new legislation to freeze large mergers and acquisitions during the coronavirus crisis. Their new proposal calls out “big tech” by name.

The Pandemic Anti-Monopoly Act, set to be introduced after Congress is back in session, would enact a moratorium on mergers and acquisitions from companies with more than $100 million in revenue, financial institutions with a market capitalization of more than $100 million, private equity companies, hedge funds, and companies that private equity companies or hedge funds have a majority-ownership stake in. The bill would also hit pause on mergers and acquisitions by companies with “an exclusive patent that impacts the crisis.”

Last week, House Antitrust Subcommittee Chairman David Cicilline (D-RI) called for similar measures, warning against “mega-mergers” like those that took place in the wake of the 2008 financial crisis.

“The LEAST we should do is halt big mergers during COVID to slow the consolidation of sectors,” Ocasio-Cortez said in a tweet.

The proposal, which would also pause any waiting periods and deadlines for antitrust oversight agencies, would freeze these actions “until the Federal Trade Commission (FTC) determines that small businesses, workers, and consumers are no longer under severe financial distress.”

According to a summary, the proposal would seek to “[ensure] that small businesses have viable alternatives other than accepting acquisition offers that may lead to job losses, price increases, and further entrenchment of giant corporate power.”

As two of the most prominent voices in progressive politics, Warren and Ocasio-Cortez are leveraging their combined political power to shape the conversation around the virus as the U.S. plunges into a deeply uncertain election year.

While unlikely to attract bipartisan support, reminding voters that tech companies with vast accumulated cash could swoop in and clean up during the crisis is a message that meshes with the Democratic party’s recent critiques of the tech industry. Those concerns are mostly on the backburner now, but a major reshuffling of capital and power could boost tech’s incumbents—and devastate some of its already-struggling upstarts.