Amazon’s Annual Meeting Focuses on Deals and Antitrust

Deals, votes and lawsuits loom over its annual shareholder meeting.

Advertisement

Continue reading the main story

Supported by

Continue reading the main story

Image

Image

The final shareholder meeting for Jeff Bezos as Amazon’s C.E.O. could be eventful.Credit…Michael Nelson/EPA, via Shutterstock

Lots to talk about

Amazon’s investors are gathering virtually for the company’s annual shareholder meeting today. There is much to discuss: good, bad and ugly (from the perspective of Amazon’s management).

The e-commerce giant’s bumper profits are likely to be overshadowed by three major developments: Reports that the company is about to make an expensive bet on the Hollywood studio MGM; a series of shareholder proposals that company directors don’t want to pass; and an antitrust suit filed against the company which landed yesterday.

Bezos buys Bond? Amazon is said to be considering spending $9 billion to acquire MGM, which would buy classic films like “Rocky” and “Singin’ in the Rain,” as well as the James Bond franchise. If a deal is reached, approval from regulators would rest on Amazon’s argument that it’s a small player in entertainment. (Lina Khan, a nominee for the F.T.C. who is awaiting Senate confirmation, made her name with a paper about Amazon’s alleged antitrust abuses.)

The rights to the James Bond franchise are controlled by the Broccoli family, who can veto any 007 decision they disagree with. That could be a problem if Amazon wants to spin off lots of Bond products, but Peter Kafka in Recode says that Amazon’s production ambitions aren’t that expansive: “It just wants you to watch some video and spend some money,” he wrote.

Shareholders speak. The backers of several proposals, all opposed by Amazon’s management, say their aim is to make the company a better corporate citizen, reacting to accusations of labor and environmental abuses. New York State’s pension fund is calling on Amazon to conduct an independent racial equity audit of its practices related to civil rights, equity, diversity and inclusion. Another proposal would bar Jeff Bezos from chairing Amazon’s board after he steps down as C.E.O. this year.

Calls for racial audits have been a feature at many shareholder meetings recently, falling short of majorities but attracting enough support — nearly 40 percent at both Citigroup and JPMorgan Chase — to put pressure on directors to act.

D.C. calling. The District of Columbia sued Amazon yesterday, alleging that the company effectively prohibited sellers on its site from charging lower prices for the same products elsewhere, which raised prices on Amazon and beyond. “Amazon has used its dominant position in the online retail market to win at all costs,” said Karl Racine, D.C.’s attorney general. It is believed to be the first antitrust suit against Amazon by an American government authority, but because it is based on local rather than federal law, its effect could be limited even if successful.

Racine’s argument “is both old-school and novel, and it might become a blueprint for crimping Big Tech power,” wrote Shira Ovide, The Times’s On Tech columnist.

Image

HERE’S WHAT’S HAPPENING

Tech companies clash with India’s government. The antiterrorism police visited Twitter’s offices in New Delhi, a sign that the authorities are unhappy with criticism on the platform about its pandemic response. Separately, WhatsApp sued the Indian government over new rules that would require it to make messages “traceable” to outside parties.

The U.S. passes a vaccination milestone. Half of American adults are now fully inoculated, according to C.D.C. data. But the agency warned unvaccinated people to remain cautious, particularly at social gatherings over the Memorial Day holiday weekend.

Brussels takes aim at Facebook. The E.U. is set to open a formal inquiry into the social media giant’s classified ad business, accusing it of anticompetitive practices, The Financial Times reports. Until now, Facebook was the only American tech giant not under an antitrust investigation by the bloc.

Criticism of the Tokyo Olympics grows. Public health officials wrote in The New England Journal of Medicine that the International Olympic Committee’s safety plans were seriously flawed. The Asahi Shimbun, a Japanese daily and an official partner of the Games, called for the event to be canceled in an editorial today.

A Morgan Stanley executive is set to win a top U.S. ambassadorial post. Tom Nides, a vice chairman at the Wall Street firm and a longtime Democratic donor, is reportedly President Biden’s pick to become U.S. ambassador to Israel, according to Bloomberg. Which other prominent Biden supporters will get plum diplomatic jobs?

Image

Exxon prepares for a showdown with activists

At Exxon Mobil’s annual meeting today, shareholders will vote on whether to back an effort by the climate-focused activist investor Engine No. 1 to win four seats on the oil giant’s board. So far, things aren’t looking good for Exxon, which has urged investors to reject the proposal.

BlackRock will vote for three of four dissident directors, according to Reuters and The Wall Street Journal. With a nearly 7 percent stake, the investment firm is one of Exxon’s biggest shareholders.

Other major investors, including the public pension fund Calpers, have publicly supported Engine No. 1’s campaign. And two influential shareholder advisory firms, I.S.S. and Glass Lewis, have recommended that investors back at least two of the hedge fund’s candidates.

Exxon made a last-ditch effort to change investors’ minds. On Monday, it promised to add two new directors, including a climate expert. That’s after adding two additional directors, including the environmentally minded financier Jeff Ubben, in March.

A defeat would be humbling. Analysts who follow Exxon said that they could not recall an election in which board candidates nominated by the company had lost. While a few new directors may not meaningfully change how the company is governed, a victory for Engine No. 1 would put more pressure on the company to address climate change. Exxon’s C.E.O., Darren Woods, has proposed investing more in carbon-capture technology, but has resisted the sort of bigger moves put forward by oil rivals.

“People are calling it warehouse fatigue.”

— Dr. Christopher R. Amato, a member of the regional planning commission in the Lehigh Valley area in Pennsylvania. The region has seen explosive growth in e-commerce warehouses, a development that critics say alters towns and erases history.

Bank chiefs have questions to answer

The chief executives of the six biggest American lenders will testify before the Senate Banking Committee today, the first time the committee has summoned all the top bankers since the financial crisis of 2008. (They will also appear at the House Committee on Financial Services on Thursday, for the first time since 2019.)

At the Senate hearing, Sherrod Brown, the committee’s chairman, has promised to press the bank chiefs on a range of subjects, sending them a list of questions on topics including the riskiness of their assets, the diversity of their work forces, actions on climate change, pledges on racial equity and more. It could make for a disjointed hearing as senators veer from issue to issue, trying to catch the C.E.O.s off guard or unprepared.

The bankers submitted their homework. Their prepared testimonies address the committee’s questions in varying depth and detail, while all make the case that their institutions are healthier, safer and more law-abiding since 2008.

Jamie Dimon of JPMorgan Chase turned in a nine-page paper urging business, government and society to address inequities and “unleash the extraordinary vibrancy of the American economy.”

Jane Fraser of Citigroup prepared 11 pages (and a three-page addendum with data and tables) that note her bank’s approach to cryptocurrencies, saying that it is “focusing resources and efforts to understand changes in the digital asset space.”

James Gorman of Morgan Stanley assembled a 20-page report with few frills that includes a short introduction and responses to each question in order.

Charles Scharf of Wells Fargo and David Solomon of Goldman Sachs each submitted 15 pages heavy on environmental, social and governance issues.

Brian Moynihan of Bank of America had the most to say, with 32 pages that devote a lot of space to the bank’s “responsible growth” principles. “We embrace our dual responsibility to drive both profits and purpose,” he wrote.

Elsewhere on Capitol Hill, the S.E.C. chairman, Gary Gensler, will testify today before a House committee, where he is expected to address SPACs, cryptocurrency and other hot-button issues.

A senator’s laser-eyed focus on new rules for crypto

The Republican senator Cynthia Lummis of Wyoming owns some Bitcoin and is one of Congress’s most vocal crypto champions. (For a time, her Twitter profile picture showed laser beams shooting from her eyes, a meme adopted by crypto bulls.) Yesterday, she started the bipartisan Financial Innovation Caucus to help create legislation for the blockchain era. DealBook asked her about this moment in crypto and what’s ahead for regulation. The interview has been edited and condensed for clarity.

What does the recent market volatility mean for regulation?

Many market excesses, including certain leverage and lending practices, are currently being flushed out. This puts digital asset markets on a more sustainable path, at precisely the moment regulators are deciding that these assets and financial innovation are here to stay. Right-sized regulation has the potential to bring more certainty and consumer protection to digital asset markets, while increasing adoption.

What happens in the meantime? The crypto market keeps getting bigger.

Digital assets are already mainstream — all of the major Wall Street banks have teams working on fintech and digital asset product offerings that we’ll see over the next year. Market adoption is already here and the existing volatility in the market is simply growing pains. Digital assets are not meant for soft hands at the moment (that’s the one thing Elon Musk got right over the last couple weeks, with his “diamond hands” tweet).

Where will the caucus start?

With education. These are very complicated topics that deserve the attention of every senator and member of Congress. Moving beyond that, our first priority must be to provide legal clarity and to ensure financial technology is normalized within our financial system.

Is there a model to follow?

There is already a robust regulatory framework for digital assets and banking in the United States — it’s a 771-page manual, accompanied by all sorts of other digital asset-focused statutes and rules, in Wyoming. My state has done its homework. There is a solid knowledge base to build from — we just have to get everyone on the same page. I don’t think the beginnings of a federal regulatory framework are all that far away.

Image

THE SPEED READ

Deals

Forget Zoom: Investment bankers are rushing to meet clients in person again. (Reuters)

The head of Morgan Stanley’s prime brokerage is stepping down after the unit lost $911 million in the collapse of Archegos. (FT)

Politics and policy

Senate Republicans said they planned to nearly double their infrastructure proposal, to roughly $1 trillion. (Insider)

China is still significantly behind on its commitments to buying enough American goods to satisfy its “Phase 1” trade deal with the U.S. (CNBC)

Tech

Crypto companies are paying up to poach top executives from the likes of Goldman Sachs and Bridgewater Associates. (FT)

GameStop is getting into NFTs. (The Block)

Best of the rest

The latest indicators of the post-pandemic reopening include the return of fashion rentals and an uptick in airplane leisure fares. (NYT, CNBC)

Adoptions of Shiba Inu dogs are up, thanks to Dogecoin. (CNBC)

In case you missed it, watch the replay of our recent “Netting Zero” event about how to reduce emissions. (NYT Events)

Image

We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.

Leave a Reply