By Carson Schatzman, Senior Copywriter
Each Monday, Athena employees receive a recap of important news stories from the past week. On Thursdays, our morning meeting is dedicated to a quiz testing our ability to retain the information. A free lunch is the reward for the winning team. We’re a competitive group, and the quizzes bring out that spirit. Over time a number of our clients have requested our weekly review as well, so we’ve begun to share it weekly now. See below for what we’re paying attention to and why.
Introducing Facebook Subscriptions
Meta’s Facebook is debating offering a paid tier to their platform, a turning point for the social network that swore to always be free of charge, The Economist reports.
Writing on the Walls: Meta has yet to announce whether or not they will offer a monthly subscription for Facebook, but its sister company Instagram has already introduced a paid plan that includes additional features like a verified account and more widely distributed posts. Snapchat and Twitter followed suit, both adding paid monthly upgrades.
- Social networks are looking for ways to increase revenue
- Users, mainly businesses and influencer pages, are looking for ways to distribute ads more effectively
- Anti-tracking rules enforced by Apple have made it harder for apps to target ads and generate sales
Pay to Play: Elon Musk is taking a different approach through Twitter Blue, with the new owner looking for widespread purchase of the new subscription as opposed to Meta who hopes to appeal to more niche users. Meta is targeting the creators on their platforms, offering people greater validity through the verification process, and foresees the upgraded plans decreasing impersonation on the platform.
Google & Apple
- Google, which runs Android, and Apple, which runs IOS, will make money from customers purchasing reoccurring subscriptions on the apps as they take a cut of any in-app purchases.
- Both Meta and Twitter are making the subscription more expensive on the apps, and cheaper on the website to deter people from in app purchases that would benefit Apple and Google.
- Consumers stand to save money by staying outside of the Apple and Google ecosystems.
The Bottom Line: Social media users should expect to see this trend more widespread in the coming months, with Facebook likely announcing an upgraded plan soon.
China and Russia Strengthen Ties
The U.S. is citing new concerns regarding a Russian Chinese alliance as China takes steps towards providing weapons and military support for Russia’s war against Ukraine, according to Reuters.
Escalation: This move to provide Russia with additional weapons would further increase tensions between Russia/China and the U.S./ NATO military alliance. Chinese diplomat Wang Yi visited Russia last Wednesday on the eve of the war’s one-year anniversary, pledging to take a more active role in resolving the conflict in Ukraine.
U.S. Response: Ned Price, U.S. State Department spokesperson stated, “We are concerned because these two countries share a vision of an era in which big countries could bully small countries, borders could be redrawn by force, an era which might could make right.”
- Wang expressed that the relations between China and Russia would not succumb to pressure from any third parties, clearly referring to the United States.
- China has plans to “support multi-polarity and democratization in international relations.”
- China has denied any intention to provide lethal support for Russia’s invasion.
China’s Position: Chinese diplomats have urged European allies and the U.S. to ease sanctions on Russia in order to prevent the situation from escalating further. The 12-point proposal presented by the Chinese Foreign Ministry warned third parties to stop using the economy as a weapon for military purposes, The Washington Post reports.
Big Picture: Since the beginning of the Russian-Ukraine war, China has stood by Putin’s side economically, offering trade and assistance, while rhetorically emphasizing the value of sovereign borders. Trade between the countries has dramatically increased, and China is Russia’s largest buyer of oil. It’s unclear how the alliance will play out, but the closer relationship could further intensify the situation rather than resolve it.
Big Pharma Acquisition in the Works
Pfizer is in early-stage talks to acquire biotech company Seagen in a deal that would likely be worth upwards of $30 billion, The Wall Street Journal reports.
Hot Commodity: Seagen Inc. has a market value of around $30 billion, and any acquisition would likely come at a premium. Last year, Merck sought to acquire Seagen for around $40 billion, but the two sides could not come to an agreement. After the Merck-Seagen deal fell through, Seagen named David Epstein as CEO, and he is working to build a leading cancer company by reaching a larger patient population.
- Pfizer, which had $100 billion in sales last year, wants to expand its cancer treatment options with promising immunotherapies.
- The pharmaceutical giant is also looking ahead to offset some $17 billion in sales that will likely diminish as patents for a blood thinner and a breast cancer therapy, among others, expire by 2030.
- Last year, Pfizer acquired Global Blood Therapeutics for $5 billion and the rest of Biohaven Pharmaceutical Holdings for $10 billion.
About Seagen: Based out of Washington, Seagen helped pioneer antibody drug conjugates, a type of cancer therapy that has been approved for Hodgkin’s and other lymphomas and has shown promise attacking other tumors, including breast cancer. The company had $2 billion in sales last year and scaling up is a high priority.
What’s Next: A massive deal like this will take time to develop, and a strict antitrust review is sure to come, but the move is a clear indication of Pfizer’s business development strategy for this decade.
Best of the Rest
Following President Biden’s policy to reduce chip production in China, $52 billion will be invested in semiconductor manufacturing in Arizona in an effort to expand domestic production. [NYT]
Penn State’s annual 46-hour dance marathon, THON, has raised over $15 million for pediatric cancer research. Read here for more about the touching stories leading up to the event. [Philadelphia Inquirer]
The Russian-Ukraine conflict has had an immense global influence; here are eight ways that the war has changed the world over the past year. [WSJ]
In a new wave of advertising, companies like Candy Crush are taking to the sky with drone advertising. Catching people’s attention like never before, this marketing tactic may have larger implications for the future of the industry. [Marketing Brew]
The Tragedy in Turkey and Syria
After an earthquake in southern Turkey, which killed more than 33,000 civilians, experts are saying that poor construction may have worsened the destruction, according to The New York Times.
More Aftershocks: Following the fatal earthquake on February 6th, the Turkish government arrested building contractors who had worked on some of the collapsed buildings. Earthquake-related crimes are also piling up throughout the country.
Fallout and Blame:
- In 2019, Turkish President Erdogan pushed legislation that allowed property owners to have construction violation forgiven without bringing their buildings up to code.
- Construction experts are claiming their projects received approval from a range of officials, who have been quiet throughout the past week.
- Over 143 people have been investigated in legal processing over ties to the many collapsed buildings.
- Former president of the Chamber of Construction Engineers, Taner Yuzgez, said upon visiting the site that he saw many indications of poor construction and technical problems related to materials used.
- Yuzgez states, “The true culprits are the current government and the previous governments that kept the system as it is.”
Last Sunday, two contractors that were responsible for the majority of the collapsed buildings were arrested at the Istanbul airport attempting to flee the country. Both contractors saw over 10-story complexes collapse, resulting in numerous deaths.
- The earthquake had a 7.8 magnitude and affected 10 provinces in southern Turkey and northern Syria
- Death toll in Turkey is around 29,000 and 3,500 in Syria
- This earthquake is one of the century’s deadliest natural disasters
- One million people are homeless due to the destruction
The Bottom Line: Both the government and contractors had obligations to ensure the buildings could withstand the earthquakes that Turkey is prone to, but both organizations failed to do so, and the results have been catastrophic.
About Those Spy Balloons…
This month, the U.S. shot down several unidentified objects from the sky, describing one as a Chinese spy balloon, The Wall Street Journal reports.
History of Spy Balloons
Surveillance balloons have been around for centuries, dating back to the Civil War according to this WSJ video. It was one of the first displays of aerial aid, used primarily for scouting camps and gaining insight into enemy size.
In WWI, both sides utilized air balloons to gain advantage on the battlefield in terms of logistical planning. Then, in WWII, the balloons were mainly used as a precautionary measure, alerting the navy of incoming enemy ships. Today, the U.S. uses balloons to monitor the southern border of our country. These balloons include many benefits for military usage, including longer loiter times and lower fuel usage than aircrafts.
- The suspected spy balloon was shot down off the coast of South Carolina, and the other unidentified airborne objects were shot down over Alaska, Canada, and Michigan
- U.S. Airforce jets used short range missiles to shoot down the objects
- The suspected Chinese balloon was 200 feet tall and carried “an array of equipment the size of a small airplane.”
Missing Debris: Out of the four objects, only one was suspected to be a Chinese spy balloon due to its antennas and sensors which could be used for collecting intelligence and communications. The U.S. hasn’t been able to collect debris from the other three objects, so they are unable to confirm what they are or where they came from.
Technically UFOs: President Biden has claimed that the most recent objects don’t pose a military threat and are likely tied to private companies or related to scientific research. There has been speculation over extraterrestrial activity related to these objects, and Air Force Aerospace Defense Commander Glen Vanheck stated “I haven’t ruled anything out.”
White House Re-Nominates Sohn for FCC
Gigi Sohn, first nominated to fill the empty FCC chair in October 2021, returned to the Senate Commerce Committee for her third confirmation hearing last week, The Verge reports.
Overview: The Federal Communications Commission is currently split evenly along party lines, 2-2. With the fifth FCC chair remaining empty, the Commission is deadlocked. The White House has been unable to advance some of its stated central initiatives, such as net-neutrality and broadband expansion.
Making Her Case: During the hearing, Sohn outlined four reasons she has not given up on the position, according to Fierce Wireless:
- She believes in the FCC’s mission to provide equitable communications networks
- She claims she is uniquely motivated by public interest
- She has worked on the FCC before and is extremely qualified
- She believes “regulated entities should not choose their regulator”
What’s Next: While the Senate Commerce Committee went ahead with Sohn’s nomination last March, they couldn’t force a vote on the floor. Now that Democrats have an outright majority in the Senate, a general vote is more likely, but the outcome is not certain. A Wall Street Journal Op-Ed claims some Democratic Senators, Catherine Cortez Masto and Joe Manchin are named among others, are uneasy with Sohn’s activist positions.
The Bottom Line: The White House remains committed to Sohn, but the FCC cannot advance some of the administration’s key initiatives until the deadlock is broken.
Best of the Rest
Seemingly following in the footsteps of Twitter 2.0, Meta is testing a paid verification service, Meta Verified, that will provide subscribers with a blue verified badge for $12/month. [Reuters]
First-term Pennsylvanian senator John Fetterman checked himself into Walter Reed National Military Medical Center last Wednesday, seeking treatment for clinical depression. [NYTimes]
As the war in Ukraine enters its second year, President Biden made a surprise visit to Ukrainian capital Kyiv this Monday to meet with Ukrainian President Volodymyr Zelensky and express continued support. [NPR]
Gonzalez v. Google, the landmark content liability case covered in the October 10 Week in Review, heads to the Supreme Court this week where they will adjudicate Section 230, a law giving internet platforms legal separation from the third-party content they host. [WSJ]
The Race to Implement AI
The battle over the future of artificial intelligence is heating up with Microsoft and Google each vying for the next big thing in the tech sector, The Verge reports.
A New Online Era: Microsoft is expected to announce a plan to bring OpenAI’s ChatGPT to its Bing search engine. Google beat them to it with a similar idea, introducing Bard, a rival to ChatGPT, to their search engine.
- Both Microsoft and Google ultimately want to make their platforms more user friendly, providing clear answers to questions instead of various links.
- They want to take out that extra step, no longer will you have to search through websites to find your answer, it’ll be at your fingertips within seconds.
Google has dominated the search engine space for years, but this new addition to Bing may give the tech giant a run for its money. In response, Google has invested $300 million in Anthropic, an AI firm founded by former OpenAI researchers. But Microsoft has invested a whopping $10 billion in transformative technology, claiming it will change “almost everything.”
Familiar Competition: In 2015, after years of back and forth, the companies formed a truce to avoid legal battles and issues with regulators. It didn’t last long and in April of 2021 Google publicly criticized Microsoft for trying to break internet laws.
What’s Next? NPR reports a large setback for Google, with its parent company Alphabet losing almost $100 billion in market value following an AI error. This could prove a common theme for the two rivals as with the new technology comes with potential pitfalls as both compete to integrate the chatbots so quickly.
Go Deeper: Forbes breaks down how Google has fallen behind in the AI-arms-race despite a significant head start.
Ads as Market Indicators
The nation’s most watched sporting event goes far beyond the game of football, presenting unique moments for brands to connect with consumers that may also serve as market indicators, according to The Wall Street Journal.
Why it Matters: Peter Atwater, an economics professor states, “The Super Bowl is one of those moments when you get to see what resonates with the crowds immediately—and, as importantly, what doesn’t.”
- Today, the cost of the Super Bowl commercial is $7 million for a 30-second ad, three times more than what it was 15 years ago.
- With the rise of social media and streaming platforms, very rarely are Americans tuned into the same channel for long and the Super Bowl provides an opportunity for advertisers to cast a wide net.
What to Watch for: In the past, the market’s response was more acute, with search activity and share prices showing a clear reaction the Monday following Super Bowl. Now, ads are often released or discussed before they’re shown during the game, making the results less extreme.
The 2023 Super Bowl will be an interesting one for investors and advertisers alike as brands try to secure positive cultural responses and financial returns on ad spend.
Inflation and Expectations
Inflation is falling and a much sought after “soft landing” for the economy may be in sight, The Wall Street Journal reports.
Overview: Prices rose 6.5% in December, down from 2022’s high of 9.1% in June, and core inflation (calculated by removing food and energy prices) was at 5.7%. Three main sectors will determine the economic outlook of 2023: goods, shelter, and services.
Goods: Manufacturing prices drove inflation in 2021 as consumers had extra money and supply chains were backed up. Supply chains are now mostly healed, and core goods were only up 2.1% in December, compared with the 12.3% increase in February. Some see goods prices to rise only 1.6% over the rest of this year.
Shelter: Low interest rates, remote work, and surging demand drove up the cost of housing for both renters and buyers. The Federal Reserve has made housing disinflation a priority, and most economists agree that shelter inflation should fall from 8.1% in March to around 5.3% in December of 2023.
Services: After food, energy, goods, and shelter have been removed, what remains are core service prices, called “supercore inflation.” Wages drive a lot of this metric, and a shortage of workers leads The Federal Reserve to believe there is still a lot of work to do in this category as hourly pay in the private sector rose 4.6% in the last quarter of 2022. However, that is down from 9.7% in October of 2021.
The Bottom Line: While prices are moving in the right direction and inflation is slowing, it remains to be seen whether the Fed’s higher interest rates will reduce costs without inducing a recession. Many are feeling optimistic about those prospects.
Best of the Rest
Jeffery Lurie’s career extends far beyond his role as owner of the Philadelphia Eagles, one of the NFL’s most valuable teams. Businessman turned college professor turned Oscar-willing film producer…read how Lurie’s journey has earned him a billion-dollar sports empire. [Forbes]
Following a large-scale train crash in Ohio, surrounding residents are concerned about lingering toxic substances. 50 cars, carrying 10 various hazardous materials, were involved in the wreck, releasing a toxic chemical called vinyl chloride. [AP News]
Another week, another entertainment giant cutting jobs. Disney announced 7,000 layoffs in an effort to rein in expenses and in response to streaming subscription decline as CEO Bob Iger begins to enact his vision for the company’s future. [WaPost]
Burt Bacharach, the legendary composer who helped define the sound of the 60’s with “sophisticated hedonism,” passed at age 94 in his Los Angeles home this past week. [NYTimes]
The future is upon us as Light Field Lab has created a digital hologram. Don’t be fooled, while these holograms look strikingly life-like, they’re created solely from light. Named in Time’s Best Inventions of 2022, Light Field Lab is revolutionizing the digital landscape. [Forbes]
U.S. and India Strengthen their Strategic Partnership
In global news, America and India are strengthening their ties by working towards new defense technology, advanced telecom, and semiconductors, The New York Times reports.
Strategic Partnership: Last Tuesday, Prime Minister Narendra Modi of India and President Biden announced a joint effort to counter China’s dominance of cutting-edge technology manufacturing. The Biden administration cited concern over U.S. reliance on Chinese technology, specifically advanced semiconductors which can be used for military weaponry. The U.S. wants to shift production of these semiconductors and other critical technologies to reliable countries, a process termed “friendshoring.”
- Military technology would include jet engines, artillery systems, and armored infantry vehicles
- In addition to semiconductor production, another facet of the agreement includes cooperation on AI and wireless technology
Potential Hurdles: Producing these technologies presents multiple barriers. The U.S. needs to reconfigure restrictions around transferring defense-related technology out of the country. And other international companies that have factories in India often cite problems regarding Indian regulations and inadequate infrastructure, so reform to attract investors is necessary.
A Win-Win: Partnerships between the two countries’ private sectors are the core of this strategy. The Biden administration is also hoping that this alliance will push India away from its current relations with Russia. U.S. national security advisor, Jake Sullivan, claimed this partnership is “the next big milestone” in US-Indian relations.
NFL Postseason Ratings Remain Strong Ahead of Super Bowl
The NFL finished its 12-postseason games, holding its place as the most watched program on television, according to Forbes.
An American Tradition: As we know, our Philadelphia Eagles advanced to Super Bowl LVII, facing off against the Kansas City Chiefs on February 12 in Glendale, Arizona. In 2022, all 12 of the postseason games were ranked in the top 35 most watch programs of the year, and this year was no exception.
- The opening weekend of the postseason included six wild card games, averaging 28.4 million viewers.
- The New York Giants vs. Minnesota Vikings game was the biggest attraction with 33.2 million viewers.
Compared to last year, ratings overall varied. The Jaguars vs. Chargers game saw a 20% decline from last year’s post season Saturday night game and was the lowest-rated NFL post-season game of all time. But the NFL saw surprisingly high numbers as the playoffs progressed.
- The Cowboys vs 49ers Sunday night game averaged 46 million viewers, making it the most watched divisional playoff game in six years.
- Joe Burrow of the Cincinnati Bengals and Josh Allen of the Buffalo Bills attracted a huge audience, coming in as the most watched Sunday afternoon divisional round game in eight years at nearly 40 million viewers.
- The Chiefs vs Jaguars game was the most-watched Saturday afternoon divisional game in ten years with over 34 million viewers.
One More to Go: Typically, the two conference championships are the most watched programs of the year – behind the Super Bowl, of course. The conference championship games averaged of over 50 million viewers, the most watched games in over ten years. With the addition of out-of-home TV viewing to audience metrics, the NFL has seen its numbers skyrocket. There’s a good chance this year’s Super Bowl will be one of the most watched in the league’s history.
Live-Streaming Sports Merchandise
Fanatics Inc., a sports merchandise company founded by Michael Rubin, is making a push in the world of live-streamed shopping, The Wall Street Journal reports.
The Medium: Live-streamed shopping, where content creators promote products to viewers, has taken off in China already but not in the U.S. yet, though companies like Walmart and TikTok are investing in the space.
- Nick Bell, recently named CEO of the Fanatics Live unit in charge of the live-streamed shopping push, says “We want the commerce aspect of this to be the byproduct of entertainment.”
The Product: Fanatics acquired Topps Co., a baseball card company, in 2022, and it plans to produce cards for the MLB, NBA, and NFL. Fanatics Live will first focus on “breaking” card packs – the ritual of opening a fresh pack and finding out what cards you’ve purchased. Creators will reveal new boxes of cards on their live stream, and viewers can purchase those cards through the Fanatics’ app.
More to Come: The Fanatics Live division will eventually expand into other areas of sports memorabilia, and Fanatics Inc. itself marked a $31 billion valuation in December after a fresh round of funding.
Best of the Rest
January was surprisingly successful in the labor market, with employers adding 517,000 jobs last month alone. The unemployment rate fell to 3.4 percent, the lowest since 1969. [NYT]
Here’s a video about how David Tran, a Vietnamese refugee and the founder of Huy Fong Foods, made Sriracha into a cult product through organic, word-of-mouth growth and the third largest U.S. hot sauce company, following only Tabasco and Frank’s Red Hot. [Forbes]
A 7.8 magnitude earthquake in Turkey, followed by a 7.5 magnitude aftershock, has killed and injured thousands across southern Turkey and northern Syria as countries across the Eurozone and Middle East rush to send aid and support rescue efforts. [WaPost]
This piece in Harvard Business Review makes the case that the national ban on noncompete agreements proposed by The Federal Trade Commission will ultimately be good for innovation, individuals, and the economy as a whole. [HBR]
February is Black History Month! In celebration, here’s a list of 12 book recommendations for this month. [WSJ]