In Brief: CLO Edition

2018 Jul 18
 
Today's Top Story
Google Fined Record US$5 Billion by EU in Android Antitrust Case

In a landmark antitrust decision, the European Union has fined Google €4.3 billion (US$5.06 billion) for antitrust violations related to Android, its popular mobile operating system. The penalty represents the largest ever antitrust fine levied by Europe's competition authorities against a single company, and marks a significant step by Margrethe Vestager, the EU's antitrust chief, in her ongoing stand-off with the U.S. search giant. The EU's antitrust regulator found that Google had abused the dominance of its Android operating system to "promote and entrench" its own mobile apps and services. Rivals have long charged that Android's dominance gives Google an unfair advantage in attracting users to those apps and then using data from them to target advertising. Google has repeatedly denied that Android hinders its rivals, saying that any company has the ability to use the open-source software however they choose. The fine accounts for about 40 percent of Google's 2017 net profit of US$12.62 billion. The EU has ordered Google to cease requirements that push phone makers to pre-install Google's web browser Chrome and to make Google the default search engine on their phones, and offer payments for exclusively pre-installing Search, reports the Wall Street Journal (18 July, Norman, Schechner).

From "Google Fined Record US$5 Billion by EU in Android Antitrust Case"
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Legal Actions
IBM Wants US$167 Million From Groupon in Dispute Over Early Internet Patents

IBM Corp. has asked a U.S. jury to award it US$167 million in a lawsuit accusing Groupon of using patented technology without authorization. On 16 July, IBM's lead attorney John Desmarais told a jury in federal court in Delaware that the e-commerce marketplace operator infringed patents describing foundational e-commerce technology that had already been licensed to Amazon, Facebook, and Google for between US$20 million and US$50 million per company. "Most big companies have taken licenses to these patents," contended Desmarais. "Groupon has not. The new kid on the block refuses to take responsibility for using these inventions." Groupon lawyer J. David Hadden countered that IBM was overreading the scope of its patents and claiming ownership of building blocks of the World Wide Web, reports VentureBeat (17 July).

From "IBM Wants US$167 Million From Groupon in Dispute Over Early Internet Patents"
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MGM Files Lawsuits Denying Liability Over 2017 Las Vegas Shooting

MGM Resorts International has asked federal courts to declare that it is not liable in the October 2017 mass shooting carried out by a gunman staying at its Mandalay Bay Resort and Casino property in Las Vegas. Stephen Paddock stayed at the resort for several days prior to opening fire on the Route 91 Harvest music festival from the windows of his 32nd-floor hotel room. He murdered 58 people and injured hundreds of others, many of whom have since filed lawsuits in state court. MGM Resorts insists a security company at the concert provided services designed to prevent mass violence, and that those services were certified by the Department of Homeland Security as appropriate. Therefore, the company says it should not be held liable, reports NPR (17 July, Domonoske).

From "MGM Files Lawsuits Denying Liability Over 2017 Las Vegas Shooting"
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Board/Management Relations
Nest CEO Marwan Fawaz Steps Down After Employees Pushed for His Exit

Five months after Nest rejoined Google, the search giant told employees on 17 July that Marwan Fawaz will no longer be Nest's CEO. Nest, which will be merged with Google's home devices unit, had previously been housed more broadly under Google's hardware division. The move is designed to make it easier for Google's smart home devices to work with each other and tap into artificial intelligence and machine learning advances. The combined team will report directly to Rishi Chandra, vice president of product management for Google's home and living room products, reports CNet (17 July, Nieva). Fawaz's exit comes after employees reportedly pushed for a leadership change, saying he is more of an operations manager than a leader.

From "Nest CEO Marwan Fawaz Steps Down After Employees Pushed for His Exit"
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Papa John's Founder Says Resignation Was a Mistake

Papa John's International Inc. founder John Schnatter now says "it was a mistake" to step down as chairman and is questioning how the company's board of directors investigated his use of a racial slur. Schnatter last week resigned as chair, but not from the company's board, after apologizing for using a racial slur during media training with a marketing agency. Days later, in a letter to the board, Schnatter claimed that Papa John's directors failed to do due diligence on the matter. Olivia Kirtley, the board's lead independent director, reportedly sent Schnatter a letter saying the board wished to discuss his full board resignation at a meeting on 15 July, reports the Wall Street Journal (17 July, Jargon).

From "Papa John's Founder Says Resignation Was a Mistake"
Abstract News © 2018 Information, Inc.

Swiss Raiffeisen CEO to Resign

Raiffeisen Switzerland Chief Executive Officer Patrik Gisel announced he will leave at the end of this year to protect the cooperative lender's reputation as it deals with the fallout from a criminal probe against former CEO Pierin Vincenz. Gisel replaced Vincenz as CEO in 2015. Switzerland's financial regulator Finma started an enforcement procedure against the bank, finding shortcomings in the way it handled conflicts of interest. "In a number of its shareholdings, Raiffeisen Switzerland was simultaneously a shareholder, business partner, and creditor of companies or their executive bodies, as well as being represented on the board of directors," the regulator said. In a statement, Raiffeisen said that Gisel did not breach his duties and that Finma's enforcement procedure and another independent investigation into the "era of Pierin Vincenz" do not raise any questions about the CEO's integrity, reports Bloomberg (18 July, Foerster).

From "Swiss Raiffeisen CEO to Resign"
Abstract News © 2018 Information, Inc.

Texas Instruments CEO Brian Cruthcher Resigns Over 'Personal Behavior'

Brian Cruthcher, who took over the helm at Texas Instruments (TI) in June, has resigned. The company cited personal behavior that violated its code of conduct as the reason for the resignation, reports CNNMoney (17 July, Horowitz). Chairman Rich Templeton, who was CEO before Crutcher took over, will take on the roles of president and CEO indefinitely. TI said the board is "not searching for a replacement."

From "Texas Instruments CEO Brian Cruthcher Resigns Over 'Personal Behavior'"
Abstract News © 2018 Information, Inc.

 
Labor and Employment
'Unmanageable' Crowds Prompt a Eurostar Terminal Staff to Strike

Staff at Eurostar's London St Pancras terminal announced a 24-hour strike this week, saying they deal with an "unmanageable" amount of passengers. Twitter users have posted photos of crowded departure lounges and customers sleeping on the floor overnight after recent disruption to services. Staff members reported they deal with verbal abuse from customers, with one staff member noting those in customer-facing roles deal with "chaos." The staff voted to strike because of what their union called "appalling" working conditions. The strike will begin midnight on 28 July, reports the Financial Times (18 July, Spero).

From "'Unmanageable' Crowds Prompt a Eurostar Terminal Staff to Strike"
Abstract News © 2018 Information, Inc.

Amazon Prime Day Threatened by Strikes at European Warehouses Over Working Conditions

Amazon workers in Spain and Germany went on strike on 16 July to protest working conditions at the e-commerce giant's warehouses, just as the company's Prime Day sales began. A group called Amazon En Lucha organized the walk out, which will last until 18 July, at the company's fulfillment center just outside of Madrid, reports CNBC (16 July, Kharpal). The employees' grievances include an increase in working hours, the elimination of bonuses, and lack of protection against illnesses. The employees also called for Amazon workers in other parts of the continent to go on strike. Amazon has received criticism from workers in Europe and the United States over warehouse conditions.

From "Amazon Prime Day Threatened by Strikes at European Warehouses Over Working Conditions"
Abstract News © 2018 Information, Inc.

 
Energy
Carlyle Plans to Raise US$4 Billion Fund for Oil and Gas Assets

Private equity group Carlyle is seeking to raise a US$4 billion fund to invest in oil and gas assets outside of North America. The group, which wants to take advantage of a reduction in spending from some of the world's biggest energy companies, is looking at opportunities in Europe, Africa, Latin American, and Asia. The fund will buy companies active in the energy supply chain and will make acquisitions of assets—in exploration and production, refining and marketing as well as oilfield services—through them. The fundraising comes as international oil majors focus on cutting costs, paying down debt, and returning money to investors after a fall in oil prices, reports the Financial Times (17 July, Espinoza, Raval).

From "Carlyle Plans to Raise US$4 Billion Fund for Oil and Gas Assets"
Abstract News © 2018 Information, Inc.

 
Technology
Walmart Establishes Strategic Partnership With Microsoft

Walmart has established a strategic partnership with Microsoft to "further accelerate Walmart's digital transformation in retail, empower its associates worldwide, and make shopping faster and easier for millions of customers around the world." Walmart is embracing Microsoft's cloud services as part of an effort to better compete with Amazon, and will run its digital operations by taking full advantage of Microsoft Azure and Office 365. The five-year partnership begins with Walmart and Microsoft engineers working together to transition the former to the latter's ecosystem. Walmart has committed to building an entire Internet-of-Things operation running on Azure, which will cover everything from managing the refrigeration units in stores to using machine learning to improve its supply chain, reports Fox News (17 July).

From "Walmart Establishes Strategic Partnership With Microsoft"
Abstract News © 2018 Information, Inc.

 
Compensation
Goldman's Newly Anointed CEO-to-Be David Solomon Will Get a Pay Raise

David Solomon, who will become Goldman Sachs' CEO on 1 October, will be given an 8 percent increase in his base pay after beginning the role. In a securities filing on 17 July, the bank disclosed that Solomon's annual salary as CEO will be US$2 million, an increase from the US$1.85 million he got in 2017 as president and co-COO. Solomon's 2017 bonus included US$5.75 million in cash and US$13.41 million in stock units, for a total of US$21 million. Lloyd Blankfein, his CEO predecessor, received US$24 million in pay, bonus, and incentives for last year, reports CNBC (17 July, Moyer).

From "Goldman's Newly Anointed CEO-to-Be David Solomon Will Get a Pay Raise"
Abstract News © 2018 Information, Inc.

 
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