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Message: <blockquote data-quote="Abstruser" data-source="post: 11075" data-attributes="member: 260">8th May 2019Hi everyone,The topics covered in this week’s update are:<ol> <li data-xf-list-type="ol">OYO’s acquisition of @Leisure (by [USER=260]@Abstruser[/USER])</li> <li data-xf-list-type="ol">Apple’s Recent Performance (by [USER=1160]@Alice G[/USER])</li> <li data-xf-list-type="ol">US Attorney General William Barr’s Senate Testimony (by [USER=1643]@Moni[/USER])</li> </ol>1. OYO’s acquisition of @Leisure (by [USER=260]@Abstruser[/USER])The story:Last week, Indian-based budget hotel startup OYO completed a €369.5 million acquisition of Dutch property management group, @Leisure. Having raised over $1.2 billion in funding from investors such as Airbnb and SoftBank last year, OYO paid for its 51% stake in @Leisure in cash. OYO is currently valued at around $5 billion, and is the sixth largest hotel brand in the world by room numbers.The @Leisure acquisition is OYO’s latest move in its international expansion strategy, with OYO hotels already present in Malaysia, Nepal, Indonesia and the Philippines. Notably, OYO is one of the top ten hotel brands in China, a market typically hostile to the expansion of foreign companies.Impact on businesses and law firms:Similar to Airbnb, none of the hotels or rooms under the OYO brand actually belong to OYO. Instead, OYO’s business model revolves around implementing renovations in existing properties, standardising services and pricing, and providing access to OYO’s own software to handle user bookings and monitor day-to-day housekeeping. This capital-light model, also adopted by ride-hailing companies like Uber, allows for much faster growth and expansion than building inventory from scratch. Last year, OYO added ten times as many rooms to its network than the Marriott group, a feat highly praised by SoftBank founder Masayoshi Son.However, some have expressed concern with OYO’s rapid expansion. Analysts from Morgan Stanley stated that OYO’s “dramatic” expansion could lead to difficulty in maintaining quality standards across all 630,000 hotel rooms across the OYO network. Further, analysts have suggested that OYO’s expansion could face difficulties in more developed markets like the United Kingdom, where budget hotel chains such as Holiday Inn and Travelodge already have a strong presence.Another significant feature of OYO’s business model is its dynamic pricing, which is similar to the approach taken by ride-hailing companies and airlines. Although Masayoshi Son has praised OYO’s ability to make “43 [million] micro-optimisations per day” through dynamic pricing, it has been a source of some legal complication for OYO. Earlier this year, the Federation of Hotel and Restaurant Associations of India (FHRAI) issued a warning to OYO for its “unfair and arbitrary revision of commission rates” and “stopping of minimum guarantee amounts”. The FHRAI further noted that these were issues which “pertain to breach of contracts between parties”. This suggests that OYO may have included contractual terms guaranteeing a minimum amount to hoteliers in return for listing their properties on the OYO network. Operating dynamic pricing may have led to property-owners receiving a cut of the final price which was less than the guaranteed amount. However, the exact details are unknown. 2. Apple’s recent performance (by [USER=1160]@Alice G[/USER])The story:It is no secret that Apple has been struggling of late, but its latest quarterly results have been better than Wall Street had anticipated. Projections had predicted a revenue of $57.37 billion but the company has reported their revenue as being $58 billion, resulting in a 5% stock increase in after-hours trading. Though iPhone sales are still dwindling and are reported as being down by 17% year-on-year, Apple’s Services segment - which includes the App Store, Apple Music, iCloud, Apple Care and Apple Pay – reported a 16% increase in sales. The company’s Wearable, Home and Accessories division has also jumped by 30%.Impact on businesses and law firms:The increase in stock value after these figures were reported demonstrates greater investor confidence in Apple as a business. It is likely that investors feel less worried about the company’s iPhone woes having been incited by the strength of the Services segment. With Apple TV+ on the cards, Apple’s tangible proof of its services strength and its current subscription model ventures will probably provide even more impetus to rival other streaming services. Netflix and Amazon will no doubt be increasingly weary of Apple’s potential in this space.Having been such a dominant force in the tech space, the case of Apple is an interesting one. It demonstrates the fallibility of companies regardless of their size and from a competition standpoint, it shows that there is always scope for new innovation and new players in the market. As the iPhone becomes less pre-eminent, there is space and scope for new emerging companies perhaps - which is no doubt an exciting prospect for IP departments. 3. US Attorney General William Barr’s Senate Testimony (by [USER=1643]@Moni[/USER])The story:On Wednesday May 1st, U.S Attorney General William Barr testified in front of the Senate  Judiciary Committee on Wednesday to answer questions on special counsel Robert Mueller’s report into Russian Interference in the 2016 election. Barr was asked to testify following concern with his handling of the Special Counsel report, including the redaction of many parts of the report as well as his summary letter of the report, which Mueller says “did not fully capture the context, nature, and substance” of the special counsel’s work and conclusions. Mueller goes on to state that AG Barr’s summary letter created “public confusion about critical aspects of the [the] investigation.” These allegations by special counsel Mueller are particularly concerning, given they were raised well before AG Barr released his summary report. However, Barr defended his, and President’s Trump’s, handling of the Mueller Report.  At his hearing, Barr was also questioned on his decision to clear President Trump on obstruction of justice, which he justified by saying that the government would not be able to establish “corrupt intent” beyond a reasonable doubt.Although Barr declined a second day of testimony, the fallout of the report is far from over. The AG has stated that he does not have any issues with Special Counsel Mueller testifying before Congress, and many expect that his testimony will be scheduled in the coming weeks.Impact on businesses and law firms:The Congressional reaction to Bill Barr’s testimony demonstrates the persistent divisions the US legislature. Since his testimony, House democrats have consistently called for his resignation and have scheduled a vote for the committee to hold the AG in contempt of Congress for failing to turn over the full unreacted report.  Bill Barr is the third Attorney General to serve under President Trump in less than six years, while it seems unlikely, a resignation by the AG would be seen as a significant blow to the administration.  In addition, the testimony also underscored the close relationship between the Executive Branch and the Justice Department, and the loyalty of AG Barr to the President, who he has defended on multiple occasions. This alignment is perhaps underscored by the fact that Attorney Barr declined to testify before the Democrat-controlled House Judiciary Committee.Overall the picture in Washington is somewhat unchanged, stark divisions between Democrats and Republicans that are unlikely to be overcome soon and thus make a productive congress very unlikely. Although Democrats are avoiding calls for impeachment, they continue to strongly criticize the Trump administration, accuse the president of wrongdoing and place pressure on those seen as loyal to him, especially within the Justice Department, to resign. This division and inability to cooperate will serve as the backdrop to a hotly contested democratic primary and the 2020 general election, which will undoubtedly have significant consequences for the US economy and the global economy.</blockquote>

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