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By Legit. | Legal News

The metaverse, Off-White & break-ups

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Legit. | Legal News
Legit. | Legal News
Happy Tuesday! Apologies for this week’s newsletter going out one day later than usual. On the agenda this evening:
  • My thoughts on the metaverse.
  • Luxury M&A.
  • Boring M&A (but with fun consequences).
p.s. you guys liked the non-legal links I posted, so I’ll include one at the end of every newsletter.

M&A part 1
Stakes SPACs Suits
Image: GQ
Image: GQ
Two deals in the luxury biz happening this week:
  • Ermenegildo Zegna, the 111-year-old fashion house, is listing in New York via a $3.2bn SPAC deal.
  • LVMH said it would buy a 60% stake in Off-White, Virgil Abloh’s label, on Tuesday.
Both deals are simultaneously good and questionable for different reasons.
Off-White
The good Virgil Abloh has helped turbocharge Louis Vuitton, shifting the brand’s image towards something more youthful, open, inclusive, and diverse. LVMH sees the halo effect Abloh carries, and is effectively handing him a stake in the conglomerate’s identity to, presumably, lead the transition from ‘luxury’ to ‘progressive luxury’ for LVMH as a whole.
The questionable This is a pretty low risk deal, but it is alarmingly reminiscent of 1997, when LVMH bought a majority stake in Marc Jacob while MJ was Louis Vuitton’s creative director. Not long after, the brand became decidedly less cool.
Zegna
The good Going public via SPAC boosts Zegna’s visibility in the US, gives it $880 million in fresh cash, and allows its founding family to retain a roughly 62 percent stake.
The questionable There’s a little more risk inherent with Zegna, with extensive lockdowns accelerating the shift away from men’s suits - Zegna’s staple offering. (Although Zegna has pivoted to focus on “upscale leisure” recently).
THE TAKEAWAY
Off-White and Zegna’s deal announcements are markers of a wider trend: the luxury goods industry thrived during the pandemic, with consumers opting to splurge accumulated savings on iconic products with brand value.
In other words: people prefer quality over quantity right now.
The aftermath is a huge wave of consolidation for luxury houses looking to bolster power, reach new markets, and reposition themselves as empires.
The Metaverse
Real world laws, virtual world problems
Image: Matrise
Image: Matrise
Every couple of months, I get absorbed by tech twitter. Sometimes it’s a waste of time (annoying threads, weird tweetstorms, too many VCs) - but other times, it makes me think a lot about the intersection between law and tech.
Not in the ‘FAANG keeps getting sued’ kind of way, but in a ‘wow, we aren’t thinking enough about how law applies to Web 3.0’ kind of way.
Most recently, I’ve been doing some reading around the metaverse and wanted to jot down a few ideas on how it could challenge the legal status quo.
What is the metaverse? This paragraph by Digiday is a nice primer for newbies:
The Metaverse is a “successor state” to the modern internet, with all the same content but fewer limitations as to where and how that content can be accessed. Current online platforms allow users to move about somewhat freely within the confines of specific services, but limit interoperability between platforms: you can build anything in “Minecraft,” but you can’t transfer your creations into a “Fortnite” map. The Metaverse will allow users to generate their own content and distribute it freely throughout a widely accessible digital world.
Although games like Fornite often take the limelight during these types of discussions, the metaverse extends way beyond gaming.
Think of it as a persistent bridge between digital environments and the physical world that you can travel back and forth on - a bridge that will let you, for example, step into a virtual Apple store to buy digital mock-ups of products that are then delivered to your physical home, in real life.
Although we’re pretty far from a bona fide Metaverse, the possibility of a synthetic reality opens a Pandora’s box of provocative legal questions. A few that come to mind:
  • Which privacy rules apply in the metaverse? For example, I live in the UK. How is the Data Protection Act, which applies to UK residents, supposed to work if I’m an avatar in a virtual environment? Applying data protection laws - which already struggle to operate effectively within a plain Jane vanilla internet - to a live, digital, interoperable experience is unspeakably difficult.
  • Trademarks. With the blurring of virtual and real worlds, how far can we go in using real-world trademarks in digital environments that simulate the real world? How viable would it even be to catch every trademark infringement?
  • Interoperability. Each company e.g. Facebook and Twitter set out their IP provisions in their terms and services. But the increased interactivity across services in the metaverse will probably blur the lines between where one service begins and another ends - making untangling IP ownership a tricky process.
THE TAKEAWAY
There’s a lot more to say about this, and perhaps I’ll write out a special issue on the metaverse sometime soon to flesh out these thoughts, but it’s a brave new world. One that may prove a stretch too far for current legal frameworks.
M&A part 2
No insurance for you
Image: FT
Image: FT
Insurance brokers Aon and Willis Towers Watson called time on their $34 billion merger yesterday, only five weeks after the US Department of Justice sued to block the deal.
Details. The DOJ’s complaint cited an unidentified Aon executive who said the merger would create an “oligopoly” in reinsurance broking, retirement and pension planning, per Axios.
  • Aon will now pay a hefty $1bn termination fee to Willis Trowers Watson.
THE TAKEAWAY
I like writing about insurance as much as you like reading about it, but this story is important for the wider implications it has.
As the Biden administration’s first major antitrust action, the win signals a decisive shift in narrative - rather than picking up slack as an inconvenient speed bump that adds a few months onto the corporate M&A process, regulators have show antitrust scrutiny is capable of torching unfair deals.
Next up: Silicon Valley.
  • With Big Tech critics Lina Khan and Jonathan Kanter running the FTC and the DOJ’s antitrust division, tech conglomerates are probably feeling a little nervous right now.
Legit one liners
  • A tragic murder more people should know about.
  • Europe’s proposed A.I. law could cost its economy $36 billion.
  • Samoa high court confirms first female prime minister.
  • Amazon reportedly has a ‘key’ to thousands of apartment buildings in US.
  • Tunisia president accused of ‘coup’ after releasing PM and freezing parliament.
Non legal link
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Legit. | Legal News
Legit. | Legal News @anniamirza

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