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Amazon is getting fresh with the purchasing of Whole Foods

(BUSINESS NEWS) Amazon recently acquired Whole Foods for a cool $13.7B. Is the grocery industry going digital?

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What Amazon buying Whole Foods could mean for small businesses

It’s taken down bookstores and shopping malls, but it’s hungry for more. Amazon’s latest conquest? Supermarkets. How will this seismic shift in the grocery industry affect independent and regional grocers?

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The online retail giant announced Friday that it is purchasing Whole Foods for $13.4 billion. Amazon’s entry into the $800 billion grocery business could mean a total transformation of the industry.

In hot water

Whole Foods, under fire from investors due to low stock prices, has been taking strides to liberate itself from a leadership team CEO John Mackey irreverently referred to as “greedy bastards.”

In the last month, the upscale grocery chain has replaced several board members and implemented plans to cut costs and improve operations.

Under Amazon’s ownership, Whole Foods has a shot not only at recovery, but at industry dominance.

Mutually beneficial

Whole Foods is known for its organic, fresh foods (and high prices). Amazon, known for its technological expertise and convenience is already killing it in the grocery biz. Snapping up Whole Foods will make both companies stronger–Amazon gets that whole locally grown vibe, Whole Foods gets that money and tech power.

Not to mention this deal expands Amazon’s brick-and-mortar presence.

Amazon’s grocery delivery service has been limited by its scarce number of physical stores–it currently has only a few AmazonFresh locations in Seattle.

Access to freshness

With Whole Foods, Amazon will own more than 460 stores in the U.S., Canada and Britain, bringing them within 90 minutes of as many people as possible. This enables a new era of fresh grocery shopping, where shoppers everywhere can order ahead and pick up at a nearby store, or have their fresh groceries delivered to them within the hour.

Shipping fresh groceries to the home has been proven successful by companies like Blue Apron and HelloFresh.

Amazon has the resources and experience to do what these meal-kit delivery services do on a much larger scale, much more efficiently. Can they pull it off? The general consensus seems to be yes: after Amazon announced the deal, their shares soared while competing retailers like Target, Walmart and Costco experienced substantial drops.

Why it could be bad news

Independent grocers already have to compete with large chains like Walmart, Target and Costco, and recent mergers like Albertsons-Safeway and Ahold-Delhaize joined more than 4000 grocery stores, giving these small stores even more giants to battle. With the Amazon-Whole Foods monster, these traditional grocers now join the many brick-and-mortar retailers who have been struggling to compete with Amazon for years.

Another potential threat is Instacart, the grocery delivery startup that Whole Foods currently owns a small percentage of.

According to an insider, Instacart intends to buy back the small percentage Whole Foods owns, making the startup a target for acquisition, possibly from Walmart, Target or Costco. This could lead to more consolidation within the grocery industry, pushing smaller names out and increasing barrier to entry.

Why it could be good news

With 52 million Americans currently grocery shopping online, other grocery chains will likely up their digital transformation efforts in order to compete. Who will they turn to for help? How about Amazon’s top digital rival?

Back in 2013, Google made a move against Amazon with Google Shopping Express, partnering with several grocers including Costco, Target, and none other than Whole Foods.

With Amazon ownership, it’s likely Whole Foods will remove itself from Google deliveries. This will leave Google in search of more foods store partnerships, spelling opportunity for smaller grocers with little online presence.

Should Whole Foods transfer its delivery services, Google may turn to smaller grocery stores to make up for that lost inventory.

With Amazon commanding all the mega grocery chains, Google could snag the niche market of local businesses.

When it comes to fresh produce, these little guys often do it best, and when it comes to digital, well, Google knows a thing or two.

Amazon foods

While the exact future of the grocery industry remains uncertain, one thing is for sure: eventually, long checkout lines with overflowing carts will be as obsolete as horse-drawn carriages.

#WholeAmazon

Helen Irias is a Staff Writer at The American Genius with a degree in English Literature from University of California, Santa Barbara. She works in marketing in Silicon Valley and hopes to one day publish a comically self-deprecating memoir that people bring up at dinner parties to make themselves sound interesting.

Business News

Too connected: FTC eyes Facebook antitrust lawsuit

(BUSINESS NEWS) Following other antitrust hearings, we’re expecting to hear more about the FTC’s antitrust lawsuit against Facebook, soon.

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Facebook being crossed out by a stylus on a mobile device.

Facebook might be wishing it had kept the “dislike” button.

On September 15, the Wall Street Journal announced that the Federal Trade Commission was preparing a possible antitrust lawsuit against the social media titan. Although the FTC has not made an official decision on whether to pursue the case, sources familiar with the situation expect a determination will be made on the matter sometime before the end of 2020. Facebook and the FTC both declined to comment when asked about the story.

The news comes following a year-long investigation by the FTC that has looked into anti-competitive practices by the Menlo Park-based company. This past July, the United States House of Representatives held hearings in which they grilled the CEOs of Amazon, Apple, Google, and Facebook regarding their business practices. In August, Facebook CEO Mark Zuckerberg also testified in front of the FTC as part of the department’s antitrust probe into the organization.

The FTC seems to be especially interested in Facebook’s past acquisitions of WhatsApp and Instagram, which they believe may have been done to stifle competition. In internal emails sent between Zuckerberg and Facebook’s former CFO David Ebersman back in 2012, the 36-year-old seemed worried that the apps could eventually pose a threat to the social media conglomerate.

“These businesses are nascent but the networks established, the brands are already meaningful, and if they grow to a large scale the could be very disruptive to us,” Zuckerberg wrote to Ebersman, “Given that we think our own valuation is fairly aggressive and that we’re vulnerable in mobile, I’m curious if we should consider going after one or two of them.”

When Ebersman asked him to clarify the benefits of the acquisitions, Zuckerberg stated the purchases would neutralize a competitor while improving Facebook.

“One way of looking at this is that what we’re really buying is time. Even if some new competitors springs up, buying Instagram, Path, Foursquare, etc. now will give us a year or more to integrate their dynamics before anyone can get close to their scale again.” Zuckerberg said.

This isn’t the first time the FTC has investigated Facebook either. Last year the agency fined the company $5 billion for the mishandling of user’s personal information, the biggest penalty imposed by the federal government against a technology company. As a part of the settlement with the FTC in that case, Facebook also promised more comprehensive oversight of user data.

If the FTC does pursue an antitrust suit against Facebook, it could end up forcing the social media giant to spin off some of the companies it has acquired or place restrictions on how it does business. Considering how long it will take to file the litigation and prove the case in a courtroom, however, it seems that Zuckerberg will once again be “buying time.”

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Business News

What you need to know about the historic TikTok deal (for now)

(BUSINESS NEWS) No one really knows what’s happening, but the TikTok deal’s impact on business, US-China relations, and the open internet could be huge.

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Male black hands holding app opening TikTok app.

So, maybe you’ve heard that Oracle and Walmart are buying TikTok for national security!

Um, not exactly.

Also, Trump banned TikTok!

Sort of? Maybe?

But then he said he approved the Oracle-Walmart-TikTok deal!

We guess?

The terms of the proposal seem to shift daily, if not hourly. The sheer number of contradictory statements from every player suggests no one really knows what’s going on.

Just one example: Trump said the deal included a $5 billion donation to a fund for education for American youth. TikTok parent ByteDance, said, “Say what now?”

Here’s what we think we know (as of this writing):

Oracle and Walmart would get a combined 20 percent stake in a new U.S.-based company called TikTok Global. Combine that with current US investors in China’s ByteDance, TikTok’s parent, that would give American interests 53 percent. European and other investors would have 11 percent. China would retain 36 percent. (On Saturday Trump said China would have no interests at all. But that does not jibe with the reporting on the deal.)

Oracle would host all user data on its cloud, where it is promising “security will be 100 percent” to keep data safe from China’s prying eyes. But reporting has differed on whether Oracle will get full access to TikTok’s code and AI algorithms. Without full control, skeptics say, Oracle could be little more than a hosting service, and potential security issues would remain unaddressed.

Walmart says they’re excited about their “potential investment and commercial agreements,” suggesting they may be exploring e-commerce opportunities in the app.

The US Committee on Foreign Investment in the United States, which is overseen by Treasury Secretary Steven Mnuchin, still has to approve any deal.

As for the TikTok “ban” – which isn’t really a ban because current users can keep it – the Commerce Department postponed the deadline for kicking TikTok off U.S. app stores to September 27, to give time for the deal to be hammered out. Never mind that it’s still not clear whether the U.S. government has authority to do that. Unsurprisingly, ByteDance says it doesn’t in a lawsuit filed September 18.

Whatever happens with the whiplash of the deal’s particulars, there are bigger issues in play.

According to business news site Quartz, moving data storage to Oracle mirrors what companies like Apple have done in China: Appease the Chinese government by allowing all data hosting to be inside China. A similar move could “mark the US, too, shifting from a more laissez-faire approach to user data, to a more sovereign one,” says China tech reporter Jane Li.

More obvious: Corporate sales and mergers are now part of the parrying between the U.S. and China, which adds a whole new playing field for negotiations among businesses.

In the meantime, TikTokkers keep TikTokking. White suburban moms continue to lip sync to rap songs in their kitchens. Gen Z continues to make fun of the president – and pretty much everything else.

And downloads of the app have skyrocketed.

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Business News

Hobby Lobby increases minimum wage, but how much is just to save face?

(BUSINESS NEWS) Are their efforts to raise their minimum wage to $17/hour sincere, or more about saving face after bungling pandemic concerns?

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Hobby Lobby storefront

The arts-and-crafts chain Hobby Lobby announced this week that they will be raising their minimum full-time wage to $17/hour starting October 1st. This decision makes them the latest big retailer to raise wages during the pandemic (Target raised their minimum wage to $15/hour about three months ago, and Walmart and Amazon have temporarily raised wages). The current minimum wage for Hobby Lobby employees is $15/hour, which was implemented in 2014.

While a $17 minimum wage is a big statement for the company (even a $15 minimum wage cannot be agreed upon on the federal level) – and it is no doubt a coveted wage for the majority of the working class – it’s difficult to not see this move as an attempt to regain public support of the company.

When the pandemic first began, Hobby Lobby – with more than 900 stores and 43,000 employees nationwide – refused to close their stores despite being deemed a nonessential business (subsequently, a Dallas judge accused the company of endangering public health).

In April, Hobby Lobby furloughed almost all store employees and the majority of corporate and distribution employees without notice. They also ended emergency leave pay and suspended the use of company-provided paid time off benefits for employees during the furloughs – a decision that was widely criticized by the public, although the company claims the reason for this was so that employees would be able to take full advantage of government handouts during their furlough.

However, the furloughs are not Hobby Lobby’s first moment under fire. The Oklahoma-based Christian company won a 2014 Supreme Court case – the same year they initially raised their minimum wage – that granted them the right to deny their female employees insurance coverage for contraceptives.

Also, Hobby Lobby settled a federal complaint in 2017 that accused them of purchasing upwards of 5,000 looted ancient Iraqi artifacts, smuggled through the United Arab Emirates and Israel – which is simultaneously strange, exploitative, and highly controversial.

Why does this all matter? While raising their minimum wage to $17 should be regarded as a step in the right direction regarding the overall treatment of employees (and, hopefully, $17 becomes the new standard), Hobby Lobby is not without reason to seek favorable public opinion, especially during a pandemic. Yes, we should be quick to condone the action of increasing minimum wage, but perhaps be a little skeptical when deeming a company “good” or “bad”.

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