April 12, 2024

Regulators force Microsoft to separate Teams from Office

Microsoft is separating Teams, the popular video and chat app, from its Office software suite in markets around the world, widening a rift that began in the European Union last fall.

It appears to be the software giant’s latest attempt to avoid investigations by global antitrust enforcers as regulators investigate the power of Big Tech.

Rivals have been complaining about the Teams Office bundle for years. Microsoft first added the video and document collaboration program to its business software suite in 2017 and saw Teams’ popularity soar after the coronavirus pandemic unleashed a boom in hybrid and remote work.

At the height of the 2020 lockdown, Slack filed a complaint with the European Commission accusing Microsoft of anticompetitive behavior by bundling Teams with Office. (Three months later, Slack agreed to sell itself to Salesforce for $27.7 billion.) And last summer, Zoom CEO Eric Yuan called on the FTC to follow the EU in investigating the relationship between Teams and Office.

It is unclear whether Microsoft’s decision will help the company avoid an EU fine. which could cost the company up to 10 percent of global sales. The company told Reuters that the move “responds to feedback from the European Commission by offering multinational companies more flexibility as they look to standardize their purchasing across different regions.”

It comes as tech giants face investigations from regulators around the world. Last month, the Justice Department sued Apple over its tight control over the iOS operating system, while Google awaits a judge’s ruling in a U.S. lawsuit over its search monopoly.

And Microsoft has been scrutinizing its investments in AI startups like OpenAI and French company Mistral.

This move is reminiscent of Microsoft’s unbundling of Windows in the 2000s. after a bruising antitrust battle with the Justice Department over the tech company’s efforts to ban rivals from its platform.

But it is unclear what consequences this break will have. Shares of Microsoft rose Monday despite the news, as analysts questioned whether the move would do much for the tech giant’s bottom line. Data from research firm Sensor Tower showed that Teams usage remained relatively stable even after the program was retired in the EU

That suggests rivals may not experience a wave of new customers. (Shares in Zoom fell almost 1 percent on Monday.) “Teams are so embedded in workflows that I don’t think it has the same impact,” Rishi Jaluria, an analyst at RBC Capital Markets, told Reuters.

Donald Trump posts $175 million bond to prevent seizure of his assets. By securing bond for his civil fraud case, the former president avoided paying a $454 million fine while he appealed the verdict. Separately, shares of Trump Media & Technology Group fell 21 percent on Monday after the parent company of online platform Truth Social reported just $4 million in revenue last year.

Disney would win its proxy battle against financier Nelson Peltz. The entertainment giant’s list of nominees has received support from major shareholders, including BlackRock and T. Rowe Price, ahead of the company’s annual meeting on Wednesday. More than half of Disney’s voting shares have already been processed, but a big question is how the company’s unusually high percentage of individual shareholders will vote.

A regulator is reportedly investigating Vanguard, BlackRock and State Street’s investments in US banks. The FDIC is investigating whether major money managers continue to play a sufficiently passive role in managing their interests, according to The Wall Street Journal. Such companies are exempt from current rules that require regulatory approval to own more than 10 percent of a bank – if they do not influence management or boards.

One of the biggest players in the booming sports sector just got bigger: private equity firm Arctos Partners has raised another $4.1 billion to close more deals.

The fundraising shows that investor interest in sports deals is increasing as competition between private equity firms and Gulf states such as Saudi Arabia and Qatar increases.

Arctos is one of the busiest sports deal makers. Since its founding in 2019, the company has invested in Formula 1, basketball, baseball and football clubs. They include the Utah Jazz and Fenway Sports Group.

Sports deals are flourishing thanks to the skyrocketing value of media rights. John Malone’s Liberty Media, owner of F1, said on Monday it had bought MotoGP, the motorcycle racing championship, for 4.2 billion euros.

The deal follows a record year for sports mergers and acquisitions, with transaction values ​​rising 27 percent to around $25 billion by 2023, according to Bloomberg calculations. That included major investments by Arctos in French football club Paris Saint-Germain, owned by Qatar, and the Aston Martin F1 team.

State investors are the big new players. Saudi Arabia is investing billions in football and golf, and may also be looking at tennis. And Qatar last year bought a stake in the owner of Washington’s professional basketball and hockey teams.

Arctos sees itself as part of a new wave of long-term dealmakers who treat teams as an asset class. As sports leagues have relaxed their rules to allow institutional investors, companies like Blue Owl and Dynasty Equity say they are committed to long-term investments that aren’t tied to economic volatility.

“We are not a control buyer. And we are not a leveraged buyout fund.” Ian Charles, co-founder of Arctos, told DealBook.

Arctos downplayed the emerging competition. Charles told DealBook that sports leagues are placing heavy restrictions on allowing state-backed investments, if at all. He declined to say whether Arctos had raised money from sovereign wealth funds, although the company said in a statement that its latest fundraising round also included pension funds and “global wealth platforms.”

Ray Dalio left day-to-day management of Bridgewater Associates eighteen months ago. Since then, Nir Bar Dea, his successor at the helm of the giant hedge fund, has been under pressure to show that one of the world’s most successful investment firms can maintain its dominance.

The results for the first three months of 2024 show that Bridgewater is performing well. But can changes in the way the company is run ensure it performs at the top of its industry?

The flagship Pure Alpha fund is up 15.9 percent year to date, This is evident from a message sent to investors on Monday and which DealBook has reviewed. That is more than seven times as much as the Bloomberg Macro Hedge Fund Index, which tracks funds with a similar strategy.

Pure Alpha is now up 38.4 percent, net of fees, since the formation of Bridgewater’s investment committee in August 2020.

The hardest part is maintaining that performance. For much of 2022 and 2023, Pure Alpha performed well, only to plummet precipitously at the end of each of those years. Bridgewater as a whole lost $2.6 billion last year, one of only two top companies to lose money, according to research firm LCH Investments.

That continued a string of poor performances in the 2010s that tarnished Bridgewater’s reputation as a profit machine. (It also raised questions about Dalio’s famously idiosyncratic and brutally blunt management style, which included baseball cards with ratings of each employee based on the ratings of colleagues.)

Bar Dea has tried to make Bridgewater more flexible in the way it makes investment decisions, Bloomberg reports. That includes increasing the number of people reviewing these steps and pledging to embrace artificial intelligence.

Will that be enough to keep customers happy? Some unidentified investors told Bloomberg they were considering cutting ties if the company did not improve its performance.

That said, Bar Dea is reportedly planning to shrink Pure Alpha and return more money to clients – a move that could make the fund more nimble.

Ken Griffin. The Citadel founder used his annual letter to investors to warn of his growing debt concerns and share his view that the economy will grow only modestly this year as the Fed tries to bring inflation back to its target of 2 per cent.

Investor enthusiasm around artificial intelligence has added trillions in market value to a select number of technology companies. But its broader economic impact is harder to measure.

Economists are divided on the AI ​​productivity conundrum. As for earnings, company executives are eager to share with Wall Street how they plan to use the technology in their operations. But whether these tools will deliver widespread productivity gains to the economy is less clear.

“The enthusiasm about big language models and ChatGPT has gone a bit overboard,” economist Robert Gordon of Northwestern University told The Times. Others are more hopeful, including Erik Brynjolfsson of Stanford University, who has bet Gordon $400 that productivity will soar this decade.

While this bet is catching the attention of some in academia, a parade of companies are taking advantage of the technology:

  • Walmart has built a generative AI chatbot for internal use that answers common HR questions, including “Do I have dental insurance?”

  • Abercrombie & Fitch has turned to generative AI to brainstorm ideas for clothing designs and write short copy for its website and app.

Will such use cases impact employees? David Autor, a labor economist at MIT whose work has focused on how technology can erode earning potential, says this may not be all bad news. The technology could help people with less expertise do more valuable work, boosting the middle class. Critics are not convinced.

  • In other AI news: OpenAI introduced a new tool that mimics human voices with high accuracy, showing how the technology is rapidly expanding beyond text but could also pose a new disinformation threat.



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