Disney Lays Of 28,000 After Months Of Closure - Weekly Market Update Oct 2, 2020
After months of keeping thousands of employees furloughed with full benefits, Disney finally gave in and had to let go 28,000 employees. Disney felt the pressure from months of their parks being closed. Disney has been hit particularly hard by the virus as the majority of their revenue streams have been cut off:
● Disney parks - Closed
● New Disney movies - Postponed
● Disney cruises - Closed
● Disney+ and streaming - Thriving
One of the key decisions in Disney’s decision was that there is no concrete ending date in sight for when they will be back to full operations. Disney Parks are currently open but at a limited capacity.
Let’s take a look at some of the biggest business updates from this week.
The power of owning the marketplace
This week, Google announced that they will enforce their billing system on all play store apps to make sure that Google gets their 30% cut on all sales. There are a few companies that are under scrutiny for “owning the marketplace” and we thought it was interesting to take a look:
● Amazon - Amazon obviously is the marketplace. They encourage third-party sellers to use their platform and collect a percentage of each product that sells. Of course, sellers don’t need to use their platform but if they don’t then they will be forced to compete with Amazon.
● Apple - Apple owns the app store. This means that every successful app (Uber, Spotify, Instacart, etc.) relies on Apple’s marketplace to sell their apps.
● Google Play - Google is in the same position as Apple.
Lots of people are saying that these companies’ ability to influence the marketplace stifles the “free market”. For instance, Apple could choose to bump their own Apple Music up to #1 in the app store and push Spotify down to #9 or #10. Amazon has also been accused of creating their own knockoffs of popular products and ranking their own Amazon Lable products higher.
Google’s announcement comes as somewhat of a surprise considering that Apple is currently in a lawsuit for announcing the same rule.
The power of controlling the news
On the bright side, Google also announced Thursday that they will pay publishers more than $1 billion over the next 3 years. This is part of a program for licensing news. Google signed licensing deals with over 200 publications and plans to add more.
● Google (and Facebook) control a large share of advertising dollars that used to be spent on newspapers and other print publications.
● This initiative from Google is a way of showing that they’re committed to helping a struggling industry and paying for high-end journalism.
American and United will be putting 32,000 workers on furlough as time is running out on another relief package. American Airlines CEO Doug Parker has said that if Congress can come up with another $25 billion over “the next few days” that it can reverse the furloughs.
Considering the fact that the last relief package was months ago, “a few days” seems like an unrealistic timeline. However, talks are in the works.
A few other updates:
➢ Facebook announces that they want to integrate their FB Messenger and Instagram DM chats.
➢ Jessica Alba’s Honest Co. eyes an IPO.
➢ Aurora Cannabis (one of the biggest players in the marijuana industry) lost $2.6 billion last year and now one of their top execs is leaving.
➢ Retail apocalypse continues as H&M closes 250 stores.
➢ Most recent coronavirus relief package news.
That’s it for this week -- Join us next week for another market update.
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All the views expressed are those of Chris Simpson and not those of Sierra Ridge Wealth Management or NEXT Financial Group Inc.
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