This week was characterised by a slew of legal and regulatory actions against a few of the globe’s largest media and digital platforms, namely Facebook and Google. This is on the back of recent fines against Amazon, as well as the State of California’s decision against Tesla in May, which prevented the manufacturing plant from re-opening during the pandemic.
On the African continent, South African listed MTN Group’s share price has slid by 14% since Monday, following the halting by a Nigerian Commission of a significant portion of the company’s business activities in that country.
“Progress is precisely that which rules and regulations did not foresee.”
– Ludwig von Mises, an Austrian economist, historian, logician, and sociologist
“Markets are imperfect. So you do need regulation, knowing that the regulators are also human.”
– George Soros, a Hungarian-born American billionaire, investor, and philanthropist
- America’s competition regulator has filed an antitrust lawsuit against Facebook, accusing the company of suppressing competition through purchasing two social-media rivals, WhatsApp and Instagram. Additionally, a coalition of 46 American states launched a similar lawsuit against Facebook. The Federal Trade Commission wants to have Zuckerberg’s social-media empire broken up. Losing the two platforms would threaten to erase much of Facebook’s long-term value. The company has responded by arguing that the legal actions seek to revise history, as the deals with Instagram and WhatsApp were scrutinized and approved by regulators at the time.
- France’s data privacy regulator has submitted its largest fine of 100 million euros to Google for breaching the country’s rules on online advertising trackers. Amazon was fined 35 million euros for the same offence. Google and Amazon did not seek consent from visitors to their sites before advertising trackers were saved onto users’ electronic devices. Meanwhile, Amazon has hired 1400 staff per day over the past ten months, equating to a total of 427 300 new employees!
- The Nigerian Communications Commission has ordered that all MTN and Airtel SIM card sales, registration, and activation must halt until it completes a review of their compliance with registration guidelines. The Commission did not mention how long this review process would take to complete.
- In a snub to regulatory and bureaucratic measures, SpaceX and Tesla CEO Elon Musk said on Tuesday that he has moved to Texas, confirming months of speculation that the billionaire would leave California, a state of which he has become increasingly critical. Musk confirmed the move during an interview at the Wall Street Journal’s CEO Council annual summit.
- In other news in the US, a Food and Drug Administration (FDA) panel voted 17 to 4, with one abstention, that the benefits of a vaccine developed by Germany-based BioNTech and US-based Pfizer outweigh any risks. The FDA is not obliged to follow such recommendations, though it often does. This could be mean that a Covid-19 vaccine could be rolled out in the US as soon as this weekend. The UK started administering this vaccine on Tuesday this week.
- After some hype, Brexit trade negotiations have had little movement. The European Commission published a “no deal” contingency plan, aimed to prevent chaos from erupting on the 1st of January.
- Local news was dominated by a second wave of Covid-19 infections, with the exponential increase in new cases being driven by the Eastern Cape, Western Cape, KwaZulu Natal and Gauteng provinces. The country reported 8166 new cases for Thursday alone!
- On the economic front, South Africa has come out of recession following stronger than expected growth in the third quarter of 2020. After most lockdown restrictions were lifted, the economy expanded by 13.5% from the previous quarter. That is the strongest growth since at least 1990 and the first positive number after four quarters of contraction. This, of course, does not mean that the economy is out of the woods yet, as the improved numbers have come off a very low base. Furthermore, projected GDP of approximately 3.5% for 2021 would not even restore the economy to 2019 levels!
- The rand hit a 42-week high following the upbeat economic data announced earlier this week. Other emerging market currencies also performed well in anticipation of an additional US stimulus package and positive Covid-19 vaccine results. Our currency model shows however, that at today’s rate of R15.11/USD, the rand is not pricing in sufficient SA-specific risk.
- Anthony Butler has written an article on the National Treasury’s current position and how it needs the support of President Ramaphosa. He argues that Treasury is facing two converging trends that threaten to destroy its capacity: The first is that the number and depth of capable officials is depleting and the second is that there is growing pressure on Treasury as the fiscal crisis deepens. For the full article, follow this link.
- In political developments this week, Former President Zuma has missed the deadline to notify the Constitutional Court that he will oppose the Zondo Commission’s last legal bid to force him onto the witness stand to respond to the allegations of state capture made against him.
- After last weekend’s NEC meeting, Ace Magashule will be required to “present himself” to the party’s Integrity Commission. This could go two different ways: Either there will be a major shift in the Party in holding leaders accountable for corruption, or it could be the start of a long, protracted legal battle against those intent on reforming the ANC and ridding the organisation of corruption.
Sources: Dynasty, Reuters, Bloomberg Markets, The New York Times, Daily Maverick, and Moneyweb, etc