Good morning readers. To say Reddit’s stock did well in it’s debut yesterday might be an understatement. The company that made meme stocks a thing saw it’s shares jump 48% in its debut, marking the first IPO for a major social media company since Pinterest went public in 2019. With a starting price of $34 a share, the stock reached a high of $57.80 before closing at $50.44 by the end of the day. Despite rumors that it’s loyal fan base want to see the stock “absolutely plummet” on opening day, some might be rethinking their strategy after witnessing the company’s strong (and unexpected) opening act.

Let’s jump into today’s storylines.

In today’s digest:

• DOJ sues Apple over iPhone monopoly

• Headline Hustle: Speaker Mike Johnson plans on inviting Israeli President Netanyahu to address Congress, New York Attorney General wants to seize Trump’s assets, Swiss National Bank becomes first major back to cut rates

• Corporate mergers are no longer tax-free

• Pulse Points: What’s Trending

TECH

The Justice Department sues Apple in landmark antitrust case

Hey Siri, play “what do you do when you get sued by the US Justice Department and multiple states too.”

The DOJ and more than a dozen states on Thursday dropped an antitrust lawsuit on Apple’s doorstep claiming the iPhone maker’s ecosystem is a monopoly that drove its "astronomical valuation" at the expense of consumers, developers, and competitors.

Breaking down the walled garden

The lawsuit suggests that Apple's anti-competitive practices extend beyond just iPhones and Apple Watches, including areas such as advertising, browser, FaceTime, and news offerings. The government is even considering structural relief, including the possibility of breaking up Apple, if successful. The company’s shares fell by 4% following the news.

The long-anticipated lawsuit comes after years of allegations by critics who have suggested that Apple has harmed competition with its restrictive app store, high fees and its “walled garden” approach.

• The complaint specifically mentions issues like iMessage limitations, where Apple allows iPhone users to send high-quality photos and videos seamlessly to one another.

• But multimedia messages from Android to iPhone are of a significantly lesser quality, send slower and still show up with the infamous green bubble, creating a “divide” amongst users.

To drive the point home, prosecutors pointed to a specific incident in the lawsuit between Tim Cook and a consumer at a media event in 2022: “Not to make it personal but I can’t send my mom certain videos.” Cook’s response? “Buy your mom an iPhone.”

Well played, Timmy. Well played.

Apple’s response

The company has contested the lawsuit, arguing that it would curb its ability to innovate and set a dangerous precedent for government interference in technology design. The lawsuit follows years of investigations into Apple's practices and previous DOJ cases, including one regarding e-book prices and another over alleged collusion with other tech companies.

Zoom out: Big tech companies like Apple and Google have been under the government's microscope for a while now. In 2020, the Department of Justice (DOJ) took legal action against Google for its dominant position in internet searches and advertising. This isn't new territory for the DOJ; they previously went after Microsoft in the 1990s, leading to changes like allowing users to separate Internet Explorer from Windows.

IN THE KNOW

Headline Hustle

🇺🇸 🇮🇱 Speaker Mike Johnson is open to inviting Benjamin Netanyahu to address Congress. In a notable move, House Speaker Mike Johnson plans to invite Israeli Prime Minister Benjamin Netanyahu to address Congress, amid disagreements with Senate Majority Leader Chuck Schumer over Netanyahu's approach to the Gaza conflict. Schumer, despite being critical of Netanyahu's leadership and suggesting Israel's need for new elections, expressed openness to Netanyahu's Congressional address, emphasizing the unshakeable US-Israel bond. Johnson criticized Schumer's remarks as inappropriate, highlighting the gravity of Israel's situation.

🏚️ New York Attorney General wants to seize Trump’s assets. The New York Attorney General's office is taking concrete steps to seize Donald Trump's Seven Springs estate, filing judgments in Westchester County. This move follows a $464 million decision against Trump, his sons, and the Trump Organization. Trump's struggle to secure a bond for appeal could affect his image and financial standing. Legal experts warn of complications due to Trump's intricate business structure. Meanwhile, Trump's attorneys are contesting bond suggestions, prolonging the legal battle's impact on Trump's business ventures.

🇨🇭 Swiss National Bank is the first major bank to cut rates. The Swiss National Bank (SNB) surprised markets with an interest rate cut, a move unseen among major central banks since the pandemic onset. Lowering borrowing costs by a quarter percentage point, SNB revised down inflation forecasts, citing effectiveness in combating inflation. Pressure mounts for the European Central Bank (ECB) to follow suit amid Eurozone economic challenges. While the US economy thrives, the ECB grapples with stagnation, potentially signaling a shift in global economic dynamics.

FINANCE

The push to end tax-free deals

Just when you thought Congress couldn't agree on the color of the sky, two senators have joined forces in a bipartisan blitz against big mergers, challenging the century-old tradition of tax-free corporate courtships.

Senators Sheldon Whitehouse and J.D. Vance are stirring the pot in Congress, suggesting that maybe, just maybe, it's time to rethink how big business does...well, business.

Reshaping dealmaking

The duo have introduced bipartisan legislation aimed at curbing big mergers by eliminating tax-free mergers, a common practice in corporate dealmaking. Under their proposal, shareholders receiving stock through mergers would owe capital gains taxes immediately rather than deferring them until they sell their shares.

Tax-free mergers, a century-old practice, allow companies to merge without incurring immediate tax liabilities for themselves or their shareholders. Whitehouse and Vance argue that eliminating tax breaks for mergers will prevent corporate consolidation, which they claim drives up consumer costs and leaves workers and families behind. They frame their bill as closing unfair loopholes and ensuring fairness in the tax system, although critics argue it introduces new taxes and could complicate dealmaking decisions even further.

The proposed legislation would affect deals like the pending Capital One-Discover merger, as well as high-profile mergers such as AT&T's acquisition of Time Warner and Canadian Pacific's purchase of Kansas City Southern.

Big picture: While executives may need to consider shareholders' tax implications more closely under the proposed law, it's unlikely to halt mergers altogether. Many deals are already taxable, and shareholder tax considerations may be secondary to other factors driving corporate transactions.

SNIPPETS

Pulse Points

• The Los Angeles Dodgers' interpreter for Shohei Ohtani was dismissed due to allegations of significant theft linked to gambling, according to Ohtani's lawyers and the Los Angeles Times.

• Microsoft is launching its initial Surface PCs with a dedicated Copilot button for easy chatbot access, fulfilling a January promise.

• M. Emmet Walsh, a renowned character actor known for roles in "Blade Runner," "Blood Simple," and "Knives Out," has passed away at 88 after a cardiac arrest in Vermont.

• Nestlé USA is recalling over 440,000 Starbucks-branded holiday mugs due to risks of overheating or breaking when exposed to microwave heat or extremely hot liquids.

• DoorDash begins piloting drone deliveries in the US.

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