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In today’s issue:
  • Books collide
  • France’s tech tax
  • SPAC + Jay Z + weed = ?
  • DoorDash’s deception

The Big Bookquisition
ViacomCBS is selling publishing giant Simon & Schuster to even bigger publishing giant Penguin Random House for $2.2 billion, it announced Wednesday.
When books collide… the monster merger will turn Penguin into a megapublisher, accounting for one third of all books in the US.
Simon & Schuster is pretty pumped, too. Like the rest of us, S&S stumbled its way through 2020. It’s dealt with the death of a CEO, national lockdowns cleaving its bookstore revenue and a stream of lawsuits from Trump (don’t ask).
Despite the odds, S&S has emerged from the rubble with a profit in one hand and a new book BFF in the other.
But… the expansive merger leaves only 4 big publishing houses left, meaning:
  • Authors will have fewer bidders competing for manuscripts.
  • The publishing’s middle class is being decimated. Publishers will pursue bestselling authors, while new writers and niche titles struggle to make it onto the bookshelf.
  • Penguin might be too powerful. The size of the deal has dredged up antitrust concerns, with the Authors Guild urging the Justice Department to slam the breaks on the merger. 
Penguin is less Madagascar-cute, more Batman-villain. Although the merger follows a wave of consolidation in the book industry, S&S could push Penguin over the antitrust line - the jury’s out on whether regulators will bless the union next year.
Another angle. Publishers are huddling together to survive Amazon’s reign over the book industry:
  • Optimists are hoping the new biblio-behemoth will turn the page on Amazon’s dominance and make way for a Borders comeback.
  • Realists point out Penguin has never tried to challenge Amazon before and probs won’t after the merger, either.
Will They? Won’t They?
Turns out they will. After years of back and forth, France is going ahead with its plan to tax tech companies, it announced Thursday.
Quel dommage. Big tech and Donald Trump approach tax the same way: they don’t. As Tech Crunch says, tech companies tend to generate revenue in one country, but report to tax authorities in other (more tax-friendly) places.
And France has had enough. After trying (and failing) to work out a multilateral tax framework with Washington this year, it’s ploughing ahead with its plan to reign in tech’s shenanigans by itself. Under the new rules, if a company:
  • Generates more than €750 million in revenue globally and €25 million in France;
  • And is operating a marketplace (Amazon, Airbnb) or an advertising business (Facebook, Google).
It will have to pay 3% of its French revenue in taxes.
America is… less than happy. Capitol Hill is (a) labelling the tax unfair trade practice for hitting mostly American companies; (b) planning to retaliate with tariffs on $1.3b worth of French handbags and make-up.
Tough love. Digital companies have been outrunning governments for years. And, with Big Tech flaunting huge profits during the pandemic, it’s starting to get on everyone’s nerves.
France’s policy is just the beginning of the global hunt to find new ways to tax tech.
Guess Who’s SPAC
Image: Giphy
Image: Giphy
Totally normal business news: the biggest blank check company in cannabis just created a marijuana powerhouse valued at $1.2 billion with Jay Z as the Chief Visionary Officer.
“Huh?” – is what I said when I first read this headline. Here’s what’s happening. Subversive Capital Acquisition Corp, a SPAC company, recently acquired two huge cannabis brands – Caliva and Left Coast Ventures – to form The Parent Company.
The SPAC is already rolling in $575 million, making The Parent Company one of the best-funded weed companies in the US.
And Jay Z, ever the budding ganjapreneur, wants in on the hype. He’s joining the company as its Chief Visionary Officer (it’s a real job), with Rihanna, Yo Gotti and Meek Mill also joining as investors.
This isn’t just a biz move for Jay. As part of the transaction, Jay Z will run a venture capital fund investing $10 million into minority-owned cannabis businesses and criminal justice reform. 
High times. Using SPACs to invest in weed companies has been a major trend lately, with several cannabis SPACs ballooning to multimillion-dollar entities in the past year.  
  • But some think The Parent Company is the product of an overly bullish market. The FT was pretty blunt (last pun) in its skepticism: “these are not the sort of deals you hear about when markets are thinking straight.”
Zoom out. Investors might feel iffy about cannabis being illegal on a federal level in the US and a class B drug in the UK. But the legal marijuana market size is expected to reach $73.6 billion by 2027.
On Tuesday, DoorDash settled a $2.5m lawsuit over alleged “misused” tips.
Ah yes, misuse… the polite word for wage theft. In 2019, the AG of Washington sued DoorDash for its “deceptive” tipping model. Instead of going directly into workers’ pockets, tips were reallocated towards the base pay of drivers – something most DoorDash customers didn’t know when they were doling out tips via the app. This Door-ception violated Washington’s Consumer Protection Act.
Now, DoorDash has opted to make nice and settle the lawsuit. As part of the settlement, it will pay:
  • $1.5 million to workers who made deliveries in D.C. when the tipping policy was in place.
  • $750,000 to Washington to cover the cost of the investigation.
  • $250,000 to support restaurant workers affected by the pandemic.
But… DoorDash wants you to know it’s not guilty, despite settling the suit and overhauling its payment model for delivery workers last year.
Tip of the iceberg. Rather than fight in court, DoorDash has opted to mop up the reputational mess before its highly anticipated IPO. But the entire gig economy is now feeling the heat, with similar lawsuits being filed against Instacart and Uber‘s tipping policies.
In other food news. A big civil rights attorney just joined the discrimination case against McDonalds.
  • Elizabeth Holmes‘ upcoming Theranos trial is getting weirder.
  • Two men are charged with a scheme to sell 50 million nonexistent N95 masks.
  • New York is sued over homeless shelters’ Internet gap for remote school.
  • UK immigration officials are accused of using coercive tactics to enter homes.
  • China is charging 12 people who tried to flee Hong Kong by boat.
  • ByteDance is given one more week to sell off TikTok’s US business.
  • European Parliament says the Polish government influenced a controversial abortion ruling.
  • 23 must-read books for lawyers, according to Business Insider.
Bloomberg‘s new survey says key legal tech is going unused.
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Legit. | Legal News @anniamirza

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