Posts with «business» label

Coinbase wants its SEC lawsuit dismissed, arguing it doesn't deal in securities

Coinbase has filed a motion to dismiss a Securities and Exchange Commission lawsuit in which the agency accused the company of illegally running an unregistered national securities exchange, broker and clearing agency. Coinbase claims that, because it doesn't deal in securities, the SEC has no authority over its operations.

"Our core argument is simple — we do not offer 'investment contracts' as that term has been construed by decades of Supreme Court and other binding precedent," Coinbase's chief legal officer Paul Grewal wrote in a series of tweets. "By ignoring that precedent, the SEC has violated due process, abused its discretion and abandoned its own earlier interpretations of the securities laws. By ignoring that precedent, the SEC has trampled the strict boundaries on its basic authority set by Congress."

Today, @coinbase filed our brief asking the Court to dismiss the SEC’s case against us. Our core argument is simple — we do not offer "investment contracts" as that term has been construed by decades of Supreme Court and other binding precedent. 1/3 https://t.co/r2EkDgkEuc

— paulgrewal.eth (@iampaulgrewal) August 4, 2023

The SEC filed its lawsuit in June. It said Coinbase raked in billions of dollars since at least 2019 by "unlawfully facilitating the buying and selling of crypto asset securities."

In its motion to dismiss, Coinbase cited a separate SEC case. A judge ruled in July that Ripple Labs’ XRP was not considered a security when sold on exchanges (though institutional sales of XRP fell under securities regulations, the judge determined).

However, that particular point may not work in Coinbase's favor. This week, a different judge disagreed with the Ripple ruling and said the SEC could proceed with a case against Terraform Labs and its CEO Do Kwon. That includes claims involving sales made on exchanges and allegations of a multi-billion dollar fraud. As Bloomberg notes, neither the Ripple nor the Terraform suit is a controlling precedent in the Coinbase case.

Intriguingly, Coinbase has argued the cryptocurrencies that are sold on its platform are more like baseball cards than securities. It makes the case that baseball cards are commodities that people buy and sell in the hope they will grow in value.

This article originally appeared on Engadget at https://www.engadget.com/coinbase-wants-its-sec-lawsuit-dismissed-arguing-it-doesnt-deal-in-securities-170056685.html?src=rss

Tesla sued for false advertising after allegedly exaggerating EV ranges

Tesla is already facing the fallout from a report that it exaggerated EV ranges and tried to muffle complaints. Three owners in California have launched a proposed class action lawsuit accusing Tesla of false advertising. The trio claims their cars fell well short of their estimated ranges, and that they've had no success lodging complaints. The customers either wouldn't have bought their cars or would have paid considerably less for them, according to the suit.

The owners allege Tesla committed fraud, violated warranties and conducted unfair competition. If the lawsuit gets class action status, it would cover all people in California who bought a Tesla Model 3, Model S, Model X or Model Y. The plaintiffs are hoping for unspecified damages. Tesla has disbanded its communications team and isn't available for comment.

The lawsuit follows a Reuters report that Tesla began modifying EV ranges about a decade ago. Its cars would supposedly show inflated figures when fully charged, and would only start showing accurate numbers under a 50 percent charge. To head off complaints, the automaker is said to have created a "Diversion Team" that would persuade users to drop range-related support calls.

It's not certain that Tesla still uses these purported exaggerations. The Environmental Protection Agency did ask the company to trim its range estimates from the 2020 model year forward, and South Korea recently issued a $2.2 million fine over an alleged failure to adequately inform customers that EV ranges would drop in cold weather.

Tesla isn't alone in boasting EV range estimates that don't hold up in real conditions. An SAE International study found that electric cars tend to fall about 12.5 percent short of their advertised ranges. The report and lawsuit suggest Tesla's figures are less accurate than for other brands, however, and that the company may have tried to silence unhappy customers.

This article originally appeared on Engadget at https://www.engadget.com/tesla-sued-for-false-advertising-after-allegedly-exaggerating-ev-ranges-151034923.html?src=rss

MrBeast sues his fast food chain for selling 'inedible' burgers

YouTube star MrBeast (aka Jimmy Donaldson) may be as well known for his collaborations as he is his videos, but one of those partnerships is souring quickly. Bloombergreports the creator is suing Virtual Dining Concepts, the "ghost kitchen" (a food service that operates from other restaurants) that runs his delivery-only MrBeast Burger fast food chain, for allegedly tarnishing his brand. VDC was supposedly more interested in rapid expansion than maintaining quality, leading to subpar food that reflected badly on its namesake. He wants a judge to terminate the licensing agreement and shut down the business.

MrBeast points to numerous reviews that call the burgers "inedible," "revolting" and similarly less-than-flattering descriptions. "Thousands" of customers have reportedly complained about raw meat, cold fries, missing ingredients and items that never showed. Some locations couldn't get the branding right, delivering orders in generic containers or even 7-11 bags.

The YouTuber's lawyers claim VDC either refused or was incapable of fixing quality issues when he got in touch. He adds that he hasn't received "a dime" from MrBeast Burger despite being owed royalties, and that the virtual chain frequently uses branding and registers trademarks without consent. VDC has allegedly been reluctant to support fledgling brick-and-mortar restaurants as they'd cut into its profits. It's using the MrBeast name to attract other celebrities, according to the lawsuit.

We've asked VDC for comment. MrBeast formed the partnership in 2020, when the COVID-19 pandemic forced many people to switch to delivery food. It was a way to help (and capitalize on) fans while giving restaurants more business at a time when in-person dining wasn't an option. MrBeast Burger would share its revenues with hosts, rather than competing directly with those brands.

Ghost kitchens will carry on regardless of the lawsuit's outcome. They let entrepreneurs launch restaurants with only a small physical footprint, and lean on services like DoorDash and Uber Eats for delivery. However, the legal action illustrates what can go wrong with these outlets — without a retail presence, they aren't always subject to the same scrutiny as their conventional counterparts.

This article originally appeared on Engadget at https://www.engadget.com/mrbeast-sues-his-fast-food-chain-for-selling-inedible-burgers-203055288.html?src=rss

Elon Musk's X Corp sues anti-hate group over its research

After threatening to do so, X Corp (aka Twitter) has filed a lawsuit against The Center for Countering Digital Hate (CCDH), Bloomberg has reported. It claimed that the anti-hate group is illegally "scraping" its servers and cherry picking hateful posts as part of "a scare campaign to drive away advertisers," according to documents filed in San Francisco federal court. X Corp. is asking for unspecified monetary damages and an injunction barring the CCDH from accessing its data.

The Center published a research article in June asserting that X allowed explicitly racist and homophobic posts despite policies to the contrary, even after they'd been reported. However, X responded that the CCDH used poor methodology, and failed to study all 500 million posts on the service each day. It also maintained that the Center was taking funding from competitors or foreign governments as part of an "ulterior agenda," according to The New York Times

In a new blog post called "Protecting the public’s right to free expression," Twitter/X explained its reasoning for filing a legal claim against CCDH. "X is a free public service funded largely by advertisers. Through the CCDH's scare campaign and its ongoing pressure on brands to prevent the public’s access to free expression, the CCDH is actively working to prevent public dialogue," the post states.

It went on to note that the CCDH scraped its data, accessing it without authorization from Brandwatch, a Twitter partner that provides "consumer & market insights," "brand monitoring" and more. It added that CCDH's "'research' cited in aBloomberg article 'contained metrics used out of context to make unsubstantiated assertions about X (formerly Twitter).'"

"That’s why X has filed a legal claim against the CCDH and its backers," it stated. It also accused the CCDH of "targeting people on all platforms who speak about issues the CCDH doesn’t agree with," "attempting to coerce the deplatforming of users whose views do not conform to the CCDH's ideological agenda" and more. 

In a letter published earlier today, the CCDH countered Twitter's earlier allegations. It noted that it never claimed to be conducting a comprehensive study, and documented the methodology it did use. It wrote that X didn't provide any specific examples, and said it doesn't accept funding from companies or governments. It further stated that it "will not be bullied," will continue publishing its research and that a lawsuit with "frivolous" claims could prove risky.

"The public has the right to know if and how @ElonMusk’s leadership has led to more hate speech on Twitter,” the nonprofit tweeted earlier. "By threatening us, Musk is trying to hide the truth about his own failures. Platforms must be held accountable for spreading hate & lies."

This article originally appeared on Engadget at https://www.engadget.com/elon-musks-x-corp-sues-anti-hate-group-over-its-research-060156126.html?src=rss

Twitter’s rebrand to X could worsen its legal and financial problems

Twitter’s rebrand to X is well underway. The name and iconic bird logo have been (mostly) stripped from the company’s San Francisco headquarters, and an “X” has replaced the blue bird atop twitter.com. Elon Musk has said the change is about more than just the name. He wants to turn the service formerly known as Twitter into an “everything app” that also encompasses banking and financial services.

But the rebrand could pose significant legal and financial challenges to the company, which has struggled since an advertiser exodus cut the company’s ad revenue by more than 50 percent. To start, there are hundreds of companies, including Microsoft and Meta, that own trademarks for variations of “X.” That could open the door to lawsuits and other legal headaches for Musk.

Shubha Ghosh, a law professor at Syracuse University, says that lawsuits are “quite common” when major companies rebrand and change their names and logos. “I'm kind of surprised he picked X because it's not that distinctive,” he says. “It's problematic in the sense that it's not something you can just suddenly do without anybody noticing and possibly suing.”

Trademark attorney Josh Gerben told Reuters that he counted almost 900 other companies with trademarks on “X.” And while not all of them will be able to credibly claim that the company formerly known as Twitter is interfering with their brand, it makes X an easy target.

“There is about a 100% probability that Twitter/X will be sued by both opportunistic and legitimate plaintiffs over the new name,” Gerben tweeted. “The company could easily spend tens of millions (if not $100+ million) in legal fees and settlement costs attempting to acquire trademark registrations for ‘X’ and in dealing with the litigation that is likely to result from the rebrand.”

For the same reasons, Twitter’s new X branding could also prove difficult to defend, especially internationally. “The chance that @elonmusk will be able to successfully register a trademark for ‘X’ for all the services he intends to provide, in every country he wants to provide them in, is very low,” Gerben wrote.

Even if Twitter is able to fend off legal challenges, there are serious business risks to doing away with a brand as globally recognizable as Twitter’s. Bloombergreported that some analysts have estimated the name change could wipe out billions of dollars in value from a brand that’s already been damaged by Musk.

Ari Lightman, a professor of digital media marketing at Carnegie Mellon University, says Twitter’s problems go far beyond potential legal headaches brought on by its rebrand. “There's a lot going on that is diminishing the value, the utility, the uniqueness, that Twitter, now X, has in the space,” he says pointing to the rise of Threads and other Twitter competitors. “Tweets are synonymous with this idea of blogging, or microblogging, it's going to be very difficult to resocialize a concept with the global population.”

This article originally appeared on Engadget at https://www.engadget.com/twitters-rebrand-to-x-could-worsen-its-legal-and-financial-problems-233914973.html?src=rss

Netflix lists $900,000 AI job as actors and writers continue to strike

Will this pair of Hollywood strikes ever end? It looks like the big corporations are digging in for a long battle, illustrated by Netflix’s recent job posting for a machine learning platform product manager. The position pays an annual salary of $300,000 to $900,000 at a time when many actors make around $200 a day, according to this SAG-AFTRA contract. The role AI will play in creating future entertainment is a key item of debate for both striking parties.

The job listing indicates that the AI will be used to “create great content” and not just develop new algorithms to recommend shows and movies. The posting also alludes to a far-reaching effort by the streaming giant to integrate artificial intelligence in “all areas of the business.” A separate section on the company’s website goes on to say that Netflix uses AI “to optimize the production of original movies and TV shows.”

That’s not the company’s only AI-heavy job posting promising a giant payday. Netflix is also hiring a technical director for generative AI at its burgeoning gaming studio that pays an annual salary of up to $650,000, as reported by The Intercept. These efforts are already bearing fruit, as Netflix currently airs a Spanish reality dating series called Deep Fake Love that scans contestant’s faces to create AI-generated “deepfakes” and its gaming studio employs generative AI to compose narratives and dialogue.

This all comes after striking actors rejected a proposal from the Alliance of Motion Picture and Television Producers (AMPTP) that generously offered workers a one-time $200 day rate for performers to get scanned for future use as AI-enhanced CGI simulacrums forever, until the end of time. SAG-AFTRA says the company would “own that scan, their image, their likeness, and be able to use it for the rest of eternity in any project they want with no consent and no compensation.”

This article originally appeared on Engadget at https://www.engadget.com/netflix-lists-900000-ai-job-as-actors-and-writers-continue-to-strike-190037630.html?src=rss

FTC puts internal trial over Microsoft-Activision deal on hold

The Federal Trade Commission has formally put its administrative trial over Microsoft's pending acquisition of Activision Blizzard on hold. The move, which was first reported by Bloomberg, allows the agency and companies to hold talks over a settlement for the eye-popping $68.7 billion merger.

The FTC's decision to pause its case is another major victory for Microsoft and Activision as they attempt to get the deal over the line. The agency sued to block the deal in December and an evidentiary hearing in the case was set for August 2nd. Last week, it lost a legal bid to prevent the companies from merging before the administrative trial was set to begin in early August. The FTC has appealed its court loss.

“The FTC has not shown it is likely to succeed on its assertion the combined firm will probably pull Call of Duty from Sony PlayStation, or that its ownership of Activision content will substantially lessen competition in the video game library subscription and cloud gaming markets,” Jacqueline Scott Corley wrote in a ruling last week. Microsoft has since signed a deal with Sony to keep Call of Duty on PlayStation for 10 years if the merger goes through.

In a motion filed on Tuesday, Microsoft and Activision urged the FTC to withdraw its case. FTC rules stipulate that the agency has to withdraw its case after the companies made the request, since it was denied a preliminary injunction to stop them from merging. Per Bloomberg, Microsoft and Activision can now try to convince the FTC to accept remedies that will resolve the agency's concerns about the deal's impact on competition in the gaming industry. Alternatively, they could persuade the FTC to completely abandon its opposition to the merger.

The FTC still has the option of holding its administrative trial after the merger closes. However, it's rare for the agency to proceed with an in-house case after it loses a federal court battle.

The initial deadline for the acquisition to close was Tuesday, though Microsoft and Activision extended their merger agreement until October 18th to give them "additional time to resolve remaining regulatory concerns." They agreed that Microsoft will be on the hook for a breakup fee of as much as $4.5 billion if the deal falls apart, though both sides are determined to wrap things up. 

Microsoft and Activision still have to gain approval from a UK regulator to close the deal without having to resort to workarounds to continue doing business in the country. The Competition and Markets Authority initially blocked the merger in April, but over the last week or so, it has signaled a willingness to amicably resolve its concerns over the potential impact of the deal on the cloud gaming market. 

Microsoft is poised to submit an updated merger proposal to the CMA. The regulator will make a decision by August 29th, though it aims to do so as soon as possible. In a hearing this week, a CMA lawyer said that both the regulator and Microsoft are confident that the company will be able to resolve its concerns. That's yet another sign that the biggest merger in gaming history is very likely to close in the coming weeks.

This article originally appeared on Engadget at https://www.engadget.com/ftc-puts-internal-trial-over-microsoft-activision-deal-on-hold-230513417.html?src=rss

Spain fines Amazon and Apple for alleged price-fixing

Spain has fined Amazon and Apple a total of 194.1 million euros (over $218 million) for antitrust violations. According toReuters, the penalties relate to a deal the companies made in 2018 that made Amazon an authorized Apple dealer but also included alleged anti-competitive clauses. “The two companies restricted without justification the number of sellers of Apple products on the Amazon website in Spain,” Spain’s antitrust regulator, Comisión Nacional de los Mercados y la Competencia (CNMC), said today.

The CNMC fined Apple 143.6 million euros and Amazon 50.5 million euros for their role in the alleged price-fixing conspiracy, based on contracts signed on October 31st, 2018. The agency said over 90 percent of existing vendors selling Apple products on Amazon were blocked from the storefront after the deal. In addition, Amazon allegedly restricted non-Spanish retailers in the European Union from reaching Spanish customers. The online retailer also supposedly diminished the allowed advertising from Apple’s competitors in consumer search results for Apple devices.

According to the CNMC, the result was higher online prices for Apple devices listed and sold in Spain.

Amazon and Apple denied that the deal hurt consumers in separate statements to Reuters. “We reject the suggestion made by CNMC that Amazon benefits from excluding sellers from its market place, as our business model hinges precisely on the success of the companies selling through Amazon,” an Amazon representative told the news outlet today. Similarly, Apple said the deal was about limiting counterfeit sales, adding that it had previously spent lots of money on hundreds of thousands of take-down notices for fake products.

The companies have two months to appeal the antitrust watchdog’s decision. Spokespeople for both firms told Reuters they plan to do just that.

This article originally appeared on Engadget at https://www.engadget.com/spain-fines-amazon-and-apple-for-alleged-price-fixing-160021453.html?src=rss

Tesla directors agree to return $735 million following claims they were massively overpaid

Elon Musk, Larry Ellison and other current and former members of Tesla's board of directors will return $735 million to settle claims that they massively overpaid themselves, Reuters has reported. The deal wraps up a saga that started in 2020 stemming from a lawsuit filed by a police and firefighter retirement fund challenging stock options granted to Tesla's board starting in 2017. Directors also agreed not to receive compensation for 2021, 2022 and 2023, and change the way compensation is calculated. 

Tesla's current board includes Elon Musk, his brother Kimbal, Fox News mogul James Murdoch, Airbnb co-founder Joe Gebbia and former Tesla CTO JB Straubel. The case is separate from a lawsuit filed by shareholders against a $56 billion compensation package awarded to CEO Elon Musk.

The Police and Fire Retirement System of the City of Detroit accused Tesla's board of giving itself unfair and excessive compensation in the form of 11 million stock options between 2017 and 2020, saying it grossly exceeded norms for a corporate board. The $735 million settlement will be paid back to Tesla in what's called a "derivative lawsuit" — the largest ever awarded by Delaware's Court of Chancerty, according to Reuters

Tesla argued that stock options were used to ensure Director's incentives were aligned with investor goals. Tesla has yet to comment on the affair, but in court documents, said that it agreed to settle to eliminate the risk of future litigation. 

Tesla CEO Elon Musk is fighting a separate lawsuit to defend his $56 billion pay package. It was brought by shareholder Richard Tornette, who claimed that "the largest compensation grant in human history" was given to Musk, even though he didn't focus entirely on Tesla. In 2020, he received the first of 12 $700 million payments as part of that package. 

This article originally appeared on Engadget at https://www.engadget.com/tesla-directors-agree-to-return-735-million-following-claims-they-were-massively-overpaid-105506056.html?src=rss

Microsoft and a UK regulator have been granted more time to resolve Activision merger issues

Microsoft and the UK's antitrust regulator have conditionally been granted a two-month pause on their legal battle as the company looks to resolve the Competition and Markets Authority's (CMA) concerns over its proposed $68.7 billion acquisition of Activision Blizzard. Judge Marcus Smith of the Competition Appeal Tribunal (CAT), which hears appeals on the CMA's decisions, wants proof from the watchdog that this is the right course of action, but still paused the legal battle for now.

Smith wants the CMA to justify its adjournment application by providing evidence that shows a material change in circumstances or "special reasons" for delaying the litigation. He also wants the regulator to detail any new consultation process it plans to undertake "so that everybody is clear as to how it will work," according to Reuters. The judge asked the CMA to submit evidence on Thursday.

Microsoft appealed the CMA's decision in April to block the merger over cloud gaming concerns. The CAT was due to hear that case starting on July 28th. However, shortly after the Federal Trade Commission lost an attempt to stall the acquisition in the US last week, the CMA said it would consider a modified merger agreement from Microsoft. The CMA, Microsoft and Activision all asked the CAT for more time and the tribunal has granted the request.

CMA lawyer David Bailey told the CAT that the FTC's court loss "formed no part of the CMA's thinking" in terms of its willingness to review a new proposal from Microsoft. "Based upon the discussion to date, both sides — Microsoft and the CMA — have confidence that Microsoft notifying a restructured transaction is capable of addressing the concerns that the CMA has identified," he said.

It emerged during Monday's hearing that Microsoft has yet to submit an amended proposal to the CMA, even though the deadline for the merger is tomorrow, July 18th. It seems unlikely that everything will be resolved by then. If not, Microsoft and Activision will either have to agree to an extension of their current agreement (the most likely outcome given how eager they are to get the deal over the line) or renegotiate terms. Otherwise, Activision can walk away from the deal with a fat $3 billion breakup check from Microsoft in its pocket.

Reports have suggested Microsoft may sell some cloud gaming rights in the UK to satisfy the CMA's concerns. Microsoft has signed deals with third-party cloud gaming companies to offer its games on their platforms, which was enough for the European Union to approve the merger.

Meanwhile, the FTC is still slated to hold its own evidentiary hearing over the acquisition starting on August 2nd. The agency sued to block the merger and it sought a preliminary injunction to prevent Microsoft and Activision Blizzard from closing the deal until it could bring the case to trial, but it was unsuccessful.

As such, Microsoft and Activision will surely be eager to seal things up by the beginning of August. There were suggestions that they'd try to close the merger by the initial deadline despite the CMA dispute and find a workaround to keep doing business in the UK, but with all parties willing to find an amicable resolution, that seems unlikely at this point. The CMA has given itself an extra six weeks, until August 29th, to make a final decision on the case.

This article originally appeared on Engadget at https://www.engadget.com/microsoft-and-a-uk-regulator-have-been-granted-more-time-to-resolve-activision-merger-issues-191354797.html?src=rss