EU Takes Aim at Big Tech's Power With Landmark Digital Act; How Two Best Friends Beat Amazon; Trump's Truth Social in trouble as financial, technical woes mount; Teen Sets Sights on Oligarchs' Yachts After Tracking Musk's Jet

1) If I end up being wrong about two of my favorite stock ideas, Twitter (TWTR) and Meta Platforms (FB) – which I discussed in Monday's and yesterday's e-mails, respectively – there are two general reasons why...

First is if the businesses' fundamentals deteriorate – as in Facebook and Instagram continue to lose users to alternatives like TikTok, Meta's huge investment in the metaverse is a bust, Twitter continues to do a dismal job monetizing its users, etc.

A second reason is a regulatory crackdown that impairs the big tech companies' business models and profitability. There has been a lot of talk about this for many years, but little action... which I expect will continue to be the case. But this latest development bears watching: EU Takes Aim at Big Tech's Power With Landmark Digital Act. Excerpt:

The European Union agreed on Thursday to one of the world's most far-reaching laws to address the power of the biggest tech companies, potentially reshaping app stores, online advertising, e-commerce, messaging services and other everyday digital tools.

The law, called the Digital Markets Act, is the most sweeping piece of digital policy since the bloc put the world's toughest rules to protect people's online data into effect in 2018. The legislation is aimed at stopping the largest tech platforms from using their interlocking services and considerable resources to box in users and squash emerging rivals, creating room for new entrants and fostering more competition.

What that means practically is that companies like Google will no longer be able to collect data from different services to offer targeted ads without users' consent and that Apple (AAPL) may have to allow alternatives to its App Store on iPhones and iPads. Violators of the law, which will take effect as early as later this year, could face penalties of up to 20 percent of their global revenue – which could reach into the tens of billions of dollars – for repeat offenses.

The Digital Markets Act is part of a one-two punch by European regulators. As early as next month, the European Union is expected to reach an agreement on a law that would force social media companies such as Meta, the owner of Facebook and Instagram, to police their platforms more aggressively.

With these actions, Europe is cementing its leadership as the most assertive regulator of tech companies such as Apple, Google, Amazon (AMZN), Meta and Microsoft (MSFT). European standards are often adopted worldwide, and the latest legislation further raises the bar by potentially bringing the companies under a new era of oversight – just like health care, transportation and banking industries.

"Faced with big online platforms behaving like they were 'too big to care,' Europe has put its foot down," said Thierry Breton, one of the top digital officials in the European Commission. "We are putting an end to the so-called Wild West dominating our information space. A new framework that can become a reference for democracies worldwide."

Taking off my investing hat, I'm glad the EU is doing this. As I've written in dozens of e-mails, I think the big tech companies have abused their power and behaved very badly in numerous instances.

I'm most troubled by the idea of a totally untrustworthy, amoral, and weird guy like Meta CEO Mark Zuckerberg being the most powerful person on earth – and I truly think he is...

That said, I think you should hold your nose and buy his stock!

2) Speaking of tech companies behaving badly, I loved this David-and-Goliath story of how two average guys took on one of the largest companies in the world, overcame its sleazy, thuggish tactics, and won a huge victory: How Two Best Friends Beat Amazon. Excerpt:

In the first dark days of the pandemic, as an Amazon worker named Christian Smalls planned a small, panicked walkout over safety conditions at the retailer's only fulfillment center in New York City, the company quietly mobilized.

Amazon formed a reaction team involving 10 departments, including its Global Intelligence Program, a security group staffed by many military veterans. The company named an "incident commander" and relied on a "Protest Response Playbook" and "Labor Activity Playbook" to ward off "business disruptions," according to newly released court documents.

In the end, there were more executives – including 11 vice presidents – who were alerted about the protest than workers who attended it. Amazon's chief counsel, describing Mr. Smalls as "not smart, or articulate," in an email mistakenly sent to more than 1,000 people, recommended making him "the face" of efforts to organize workers. The company fired Mr. Smalls, saying he had violated quarantine rules by attending the walkout.

In dismissing and smearing him, the company relied on the hardball tactics that had driven its dominance of the market. But on Friday, he won the first successful unionization effort at any Amazon warehouse in the United States, one of the most significant labor victories in a generation. The company's response to his tiny initial protest may haunt it for years to come.

Mr. Smalls and his best friend from the warehouse, Derrick Palmer, had set their sights on unionizing after he was forced out. Along with a growing band of colleagues – and no affiliation with a national labor organization – the two men spent the past 11 months going up against Amazon, whose 1.1 million workers in the United States make it the country's second-largest private employer.

At the bus stop outside the warehouse, a site on Staten Island known as JFK8, they built bonfires to warm colleagues waiting before dawn to go home. They made TikTok videos to reach workers across the city. Mr. Palmer brought homemade baked ziti to the site; others toted empanadas and West African rice dishes to appeal to immigrant workers. They set up signs saying "Free Weed and Food."

The union spent $120,000 overall, raised through GoFundMe, according to Mr. Smalls. "We started this with nothing, with two tables, two chairs and a tent," he recalled. Amazon spent more than $4.3 million just on anti-union consultants nationwide last year, according to federal filings...

As Amazon moved to fire Mr. Smalls that March, two human resource employees at JFK8 doubted the wisdom of his dismissal. "Come on," one messaged. Mr. Smalls was outside, peaceful and social-distancing, she wrote. His firing, she predicted, would be "perceived as retaliation." But the termination proceeded.

After the firing, the chief counsel's smear against Mr. Smalls – a full apology came only later – and the dismissal of another protester, the two friends resolved to take action. Mr. Smalls was outspoken, Mr. Palmer deliberate. They were both Black men from New Jersey and the same age (31 then, 33 now). Both had dropped out of community college, prided themselves on high scores on Amazon's performance metrics and once hoped to rise within the company...

Amazon countered with the full force of its anti-union apparatus. It monitored organizers' social media, court filings show, pelted workers with text messages and blanketed the warehouse with signs saying "Vote NO" or claiming the union leaders were outsiders. The company often held more than 20 mandatory meetings with workers a day, The Times reported last month, in which managers and consultants cast doubt on the effort.

Again, as with Meta, don't confuse my criticism of the company with my view on the stock. Amazon is a buy!

3) Another day, another damning report about the debacle that is Truth Social, which is sending the stock of Digital World Acquisition (DWAC) tumbling another 8% this morning. From the Washington Post: Trump's Truth Social in trouble as financial, technical woes mount.

Trump is smart enough to recognize what an embarrassment this is, which is why he refuses to use the service and is considering "joining other platforms such as Gettr..." Excerpt:

Here's a truth former president Donald Trump doesn't want to hear: His social network, Truth Social, is falling apart.

The app – a Twitter look-alike where posts are called "truths" – has seen its downloads plunge so low that it has fallen off the App Store charts. The company is losing investors, executives and attention. And though his adult sons just joined, Trump himself hasn't posted there in weeks.

Devin Nunes, the former member of Congress from California who gave up the seat that he held for 19 years to run the company, had said the app would be "fully operational" by the end of March. But it has been hamstrung by technical issues, including a waiting list that has blocked hundreds of thousands of potential users during its crucial first weeks online.

Trump has privately fumed about the app's slow rollout and has mused about joining other platforms such as Gettr, one of its biggest competitors...

This company is worthless, yet DWAC still has a market cap exceeding $9 billion (based on a pro forma post-merger share count) – madness!

4) I love this kid! Teen Sets Sights on Oligarchs' Yachts After Tracking Musk's Jet. Excerpt:

The Florida teen who soared to fame tracking Elon Musk's private jet has turned his sights on the yachts of Russian billionaires.

Jack Sweeney, a freshman at the University of Central Florida, started tracking the aircraft of Russian oligarchs at the end of February. Now he's following their yachts as the tycoons come under increasing sanctions pressure following Russia's invasion of Ukraine...

Sweeney started tracking the private jets of Russia's superrich after receiving a number of requests. Using a list of planes being tracked by a blog called "Radar Spots," Sweeney set up a Twitter account that has garnered more than 390,000 followers in just days.

Best regards,

Whitney

P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.