TOP STORY
🎮️ Google Vs. Epic Games: Google Found Guilty of Illegal Monopoly

🏆️ Epic Games, the creators of "Fortnite," just scored a major legal victory after a US jury found Google guilty of running an illegal monopoly via its Google Play Store.

The ruling is potentially a game-changer for the app world and threatens the $200B app store duopoly held by Apple and Google.

👊 3 Years of Legal Battles

The fight between Google and Epic started back in 2020 when Google removed Fortnite from the Google Play Store after Epic rolled out a feature that bypassed Google’s 15%+ fee for in-app transactions.

Epic sued Google, claiming Google's rules for app developers give it an unfair advantage over competitors.

After 18 months, Epic eventually caved and brought Fornite back to Google Play, claiming Google put third-party app stores at a disadvantage by using "scary, repetitive security pop-ups" to warn users about third-party software.

Even though Fortnite was back on the Play Store, the legal battle raged on.

🍎 Apple vs Google

Both Apple and Google charge up to 30% transaction fees (which Elon famously called a ‘30% tax on the internet’), but Apple won a similar legal case against Epic in 2021, so what was different this time?

• The Apple ruling was made by a single judge, whereas the Google case let real consumers weigh in

• Google was making revenue-share deals on the side with top app developers (via the very suss-sounding ‘Project Hug’), whereas Apple applies its 30% fee evenly.

• Google was using many tactics to directly suppress competition, including paying billions to developers and device manufacturers to limit alternative app stores.

🛡️ Google’s Defense

Google defended its model, claiming the Android and Google Play systems offer more choice than other major mobile platforms. Google argued its fees are industry-standard and offer benefits like broad reach, security, and malware protection.

Google claims the lawsuit makes Android ‘less safe’ and plans to appeal the verdict.

💡 So What?

Epic’s victory is already being heralded as a turning point in the app economy, with implications for the broader tech world.

Shockingly, this is the first time Big Tech has lost an anti-trust case in the US, but despite Epic’s CEO stating that “the dominoes are going to start falling,” others believe Apple and Google’s foundations are strong enough to withstand.

Investors seem to agree, with Google’s stock ending the week up 0.23% and Apple ending the week up 2.34%.

As an app ourselves, Blossom will be cheering on from the sidelines in hopes that one day we’ll no longer have to pay Google/Apple 15-30% of every dollar we make on Blossom PRO 😅

BLOSSOM UPDATE
🥳 Blossom Wrapped is Here! 🎁

In case you’ve been sleeping the last 3 days, on Thursday we released the epic Blossom Wrapped 🎁 update, giving you a sharable holiday-themed recap of your year in the markets!

Over the last few days, the Blossom feed has been buzzing with hundreds of Wrapped posts including from Brandon Beavis, Canadian in a T-Shirt, Joyee Yang, and hundreds more!

Make sure to update Blossom to the latest version on the App Store or Google Play to see your own Wrapped 🎁 and join the fun by sharing yours in the feed with the hashtag #blossomwrapped 🤗

RETAIL
🛍️ Macy’s Stock Surges 21% after $5.8 Billion Buyout Bid

Macy’s, the 165-year-old American department store, shares surged 21% on Monday to $20.77 after receiving a $5.8B leveraged buyout offer for $21/share. The share price settled down to $19.71 at the end of trading Friday, ~13% above last week’s price.

🤝 The Offer

The offer comes from the private equity firms Arkhouse Management and Brigade Capital Management, who say they would be willing to offer even more pending due diligence.

The takeover bid of 32% above Macy’s stock price on Friday shows investors believe that Macy’s was undervalued, with analysts saying Macy’s real estate are coveted assets.

🤔 How Likely Is the Deal?

It isn’t clear at this point how Macy’s executives and board members view the proposal.

The company has struggled in recent years, with the stock falling 73% since highs in 2015. Macy’s has been slow to adapt to online shopping, allowing online upstarts to cut into its bottom line.

Despite this, some investors believe the deal undervalues Macy’s, with activist investor Starboard estimating that the real estate alone is worth $21B, including $4 billion alone for its flagship Herald Square store in New York City.

Performance aside, the most important factor for the deal to go through is the financing - as in a leveraged buy out the acquirer needs to secure debt to complete the deal. Retail buyouts have been rough in recent years and Carla Casella, an analyst from JP Morgan, puts the Macy deal at a 50-50 chance:

🌊 Retail Challenges

This buyout bid comes after a string of rough retail leveraged buyouts (’LBOs’), with many leading to bank bankruptcies for many well-known companies, such as Lord & Taylor, Toys R Us, Payless, Sears, and others.

Retailers overall have lagged slightly behind the broader U.S. market this year as investors worry higher interest rates will damp spending.

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MACRO-ECONOMICS

 🇺🇸 The FED Holds Interest Rate Steady, Plans Three Cuts in 2024

The US Federal Reserve announced Wednesday that it will be keeping its key interest rate steady in a targeted range between 5.25%-5.5%, marking the third consecutive time without a rate change.

🥳 Rate cuts coming soon

Despite no rate drop this time around, the Fed signaled plans to implement three 0.25% rate cuts in 2024. While this is less than what the market had hoped, it is more than what the FED has previously indicated.

These potential cuts may not start until the second half of 2024, implying that the Fed believes sustained high borrowing rates are necessary to further curb spending and inflation for most of next year.

😮‍💨 Inflation easing up

The changes come amid a brightening picture for inflation that hit a 40-year high in mid-2022. Fed officials see core inflation falling to 3.2% in 2023, 2.4% in 2024, and 2.2% in 2025, before finally getting back to the 2% target in 2026.

Despite this, Powell remains cautious about signaling rate cuts soon due to persistently high inflation in some sectors and stressed that if inflation flares, they will hike rates again.

👏 The market cheers

The market reacted positively to the Fed's announcement, with the S&P 500, Dow, and Nasdaq all showing gains.

FROM THE BLOSSOM COMMUNITY
🎙️ Top Discussions This Week

🗞️ What else you might’ve missed:

• Rogers Communications Inc. (RCI) sold its $600 million stake in Cogeco to Caisse de Depot et Placement du Quebec

• Gildan Activewear Inc. (GIL) plunged 14% after the abrupt departure of CEO Glenn Chamandy.

• Apple (AAPL) is set to face an EU antitrust order banning its alleged anti-competitive App Store rules for music-streaming rivals, potentially resulting in a substantial fine.

• Scotiabank (BNS) plans to shift capital from underperforming Latin American operations and focus on North America.