How the Suez Canal attacks could disrupt global trade


Iran-backed Houthi rebels in Yemen have continued Attacking ships in the Suez Canal and the Red Sea, prompting shipping and energy giants to halt or divert cargo and tanker ships.

The disruption has driven up prices for oil, natural gas and shipping.

The United States and others are taking steps to defend maritime traffic. Secretary of Defense Lloyd Austin III Announced on Monday the formation of a multinational naval force to escort merchant ships and oil tankers through the vital sea route, which accounts for about 12 percent of world trade.

Houthi violence, Austin said, “threatens the free flow of commerce, endangers innocent sailors and violates international law.”

The intervention appeared to reduce oil prices on Tuesday. But companies are not taking risks. Maersk saying Tuesday that it would reroute its ships around Africa, a detour that could add at least a week to the trip. It comes a day after BP said it had stopped all tanker traffic in the region.

And shipping companies OOCL and Evergreen Line have stopped shipping container ships to Israel.

Exporters are bracing for shipping bottlenecks in much of the world. “You're going to see massive delays in your cargo,” Lars Jensen, CEO of Vespucci Maritime, a Copenhagen-based consulting firm, told DealBook. According to Reuters, the price of freight from several Chinese ports to Israel has increased spiked at over $300 to over $2,300 for a 40 foot container.

Jensen said rates were unlikely to rise “to the disastrous levels we saw two and a half years ago.” But he does see the potential for a global disruption, which would first affect trade in the eastern Mediterranean before potentially reaching U.S. ports.

That would compound delays related to the drought-stricken Panama Canal. Shipping companies have been forced to redirect shipments from Asia, from Panama and through the Suez Canal to the ports of the east coast of the United States. If the Suez problems persist, Jensen said, they could lead to congestion problems across North America.

“If you try to look at this from the Houthi perspective, it seems to have been a resounding success so far,” Jensen said.

Tennessee sues BlackRock over ESG policies. The state attorney general accused the firm of violate consumer protection laws by not making clear whether it prioritizes environmental, social and governance concerns over investment returns. BlackRock rejected the allegation, but faces widespread ESG opposition from other Republican-led states.

A union could complicate Nippon Steel's $14 billion deal for US Steel. He United Steelworkers, which represents most of the U.S. company's workforce, urged regulators to review the deal for labor and national security reasons. The union has favored an agreement with a national producer, Cleveland-Cliffs.

Trevor Milton is sentenced to four years in prison. Milton, founder and former CEO of electric car maker Nikola, was found guilty last year of defraud investors. Her trial, and that of Theranos' Elizabeth Holmes, were seen as tests to determine whether startup founders could be held liable for making exaggerated claims to promote their company's prospects.

Immigrants entering Texas face arrest. Greg Abbott, the state's Republican governor, signed the controversial measure It became law on Monday, setting up a showdown with the Biden administration over border security. Immigrant rights groups and Hispanic organizations argue that the measure is unconstitutional and encourages racial discrimination.

Among the several deals that have recently fallen apart, Adobe's acquisition of Figma for $20 billiona new design software maker, is among the most instructive.

The companies had promised it was a way to “usher in a new era of collaborative creativity,” but regulators in three jurisdictions saw it as an unacceptable effort by a software giant to buy a promising future rival. For Dylan Field, CEO of Figma, that contrast underscored a fundamental divide between how companies and regulators think about competition.

“It's frustrating and sad that we can't complete this,” Field, in his first interview since the announcement, told DealBook's Michael de la Merced.

The demise of the deal is another achievement for antitrust authorities. Both the European Commission and Britain's Competition and Markets Authority were preparing to formally challenge the transaction. (Just hours before the companies announced the deal was done, the CMA said Adobe had refused to offer solutions to address the concerns.) The Department of Justice, which met with representatives from Adobe and Figma Last week, he had been weighing whether to oppose it as well.

Regulators' biggest concern: Would allowing Adobe to buy Figma eliminate a future competitor? For some, the deal was analogous to Facebook's purchase of Instagram in 2012. That concern has also underpinned other law enforcement efforts, including those against Microsoft's acquisition of gaming company Activision Blizzard and the Meta's acquisition of virtual reality startup Within. (Both deals were closed).

Field repeatedly argued that the deal would have allowed his company to create more offerings, but said Monday that “ultimately, there is a gap between how regulators understand our business and how we understand our business.”

Over the weekend it became clear that the deal could not succeed. In recent weeks, “we've both seen the path narrow,” Field said, and abandoning the transaction would provide more clarity and certainty to employees and customers.

Whats Next? Regulators' opposition to the Adobe deal means Figma probably won't be able to find another buyer, Field acknowledged, and the company will likely remain independent. He added that Figma had continued to expand over the past 15 months, more than doubling its workforce to 1,300 and acquiring Diagram, an artificial intelligence-based startup.

Apple's announcement on Monday that stop US sales of its newest smartwatchesone of its most popular devices, threatens to put a dent in its Christmas sales.

The move, arising from a patent dispute with medical technology company Masimo, further reveals a fight between Silicon Valley giants and smaller rivals.

The backstory: Masimo, which makes health monitoring devices, accused Apple of poaching top executives and others involved with its technology to detect users' pulse, later including a similar feature in Apple Watches. He took his fight to the International Trade Commission, which ruled that the iPhone maker had infringed Masimo's patents.

Apple has denied the claims. Instead of pursuing a licensing deal with Masimo, it has called on the Biden administration to overturn the ITC's decision. He is also reportedly trying find a software solution or other possible solutions.

The stakes are high. Apple Watch sales account for $20 billion of the tech giant's annual revenue. If the company can't find a solution soon (the presidential review period ends on Christmas Day), it could face an import ban.

It is not Apple's only patent fight. Last year, the ITC ruled that the company breached EKG technology of AliveCor, another medical device maker, a decision the Biden administration has refused to reverse.

Apple said the ruling is not yet effective because a separate agency ruled that AliveCor's technology is not patentable, a decision that AliveCor is appealing.

Apple critics say the cases show how Big Tech is threatening innovation. Vinod Khosla, the venture capital mogul who is an investor in AliveCor, applauded Apple's decision to halt sales, arguing that startups are the backbone of the American technology industry. “If this intellectual property is not backed by laws, there is very little incentive for venture capitalists to fund innovative technologies,” he told DealBook.

“If America's innovative companies are crushed by competitors who have infinitely large cash balances and can bully small businesses into oblivion with relentless litigation, undue political influence, and a media blitz,” Khosla added, “we will become a country governed by a few monopolies”. and zero innovation.”

Google's announcement on Monday that it will allow developers to offer direct payment options to your Play Store users It's the latest sign that the fight against Big Tech is taking its toll.

The news, revealed as part of a $700 million antitrust settlement with all 50 states reached in September, further erodes Google's trade defenses. The question is whether next year there will be more successes.

Google's app store has been in the legal spotlight for some time. Along with the Apple platform, it is one of the two main markets for mobile applications. Google charges developers between 15 and 30 percent for in-app purchases and subscriptions, a practice that smaller companies have called unfairly onerous.

Play Store was in the news last week after a San Francisco jury found that Google violated antitrust laws with its strict control of the market, in a lawsuit filed by Epic Games.

What's in the agreement: Developers' fees to Google will be reduced by four percentage points when they handle their own transactions. (Users won't necessarily pay lower prices, however, as companies can pocket the difference.) Google will also pay $630 million to create a consumer settlement fund and will pay $70 million to a fund for states.

The tech giant hopes the deal can serve as a model for other resolutions, including with Epic. A judge is expected to rule on remedies in that case early next year; Google says it will appeal Epic's ruling.

Google faces other legal challenges. A judge will rule on the Justice Department's antitrust lawsuit over the company's monopoly on search as another case looms over its dominance in advertising.

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