TikTok wants Amazon's pie

TikTok wants Amazon's pie

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Today we're talking about:

  • 🇸🇦 Big companies move to Saudi Arabia
  • 📱 TikTok wants Amazon's pie
  • 🇸🇪 Linklaters and Goodwin lead on Swedish deal

MEMO

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  • 🇹🇼 Taiwan's Vice-President and presidential frontrunner, Lai Ching-te, accuses China of severe election interference, citing propaganda, military threats, and disinformation. Ahead of Taiwan's January 13th elections, Lai's Democratic Progressive Party aims to bolster ties with the West, contrasting the China-aligned Kuomintang party's agenda.
  • 🇵🇰 Pakistan's Supreme Court has ruled that individuals with criminal records can run for election, paving the way for Nawaz Sharif's potential fourth term as Prime Minister. Sharif, ousted in 2017 for dishonest practices, will likely face Imran Khan, a popular ex-PM currently imprisoned on corruption charges, which he denies.

Big companies move to Saudi Arabia

In short: Global tech giants Amazon, Google, and Microsoft are setting up regional headquarters in Riyadh, Saudi Arabia, ahead of a government deadline that ties state contracts to local presence.

What’s going on?
Amazon, Google, and Microsoft, along with other multinational corporations like Airbus and Oracle, have received licenses to establish regional headquarters in Riyadh, Saudi Arabia. These companies are racing to comply with a new Saudi policy implemented in early 2021, which requires firms without a substantial local presence won't be eligible for state contracts. This move aims to curb 'economic leakage' – government spending benefiting companies not significantly invested in the country.

  • Why pivot? This pivot to Riyadh is part of Saudi Arabia's broader plan, driven by Crown Prince Mohammed bin Salman (MBS), to transform the country into a thriving economic and commercial hub. While the kingdom has taken steps to attract foreign talent, including relaxing social restrictions, challenges remain, such as the ban on alcohol and limited lifestyle options, causing hesitation among some foreign executives.

Why does it matter?
Saudi Arabia's initiative is more than just a policy change; it's a bold step to reposition itself as a major player in the global economy, rivaling Dubai's longstanding dominance as the Middle East's business hub. For companies like Microsoft, Google, and others, this isn't just about setting up another office; it's a strategic decision impacting their entire Middle East operations. This move could signify a significant shift in the region's economic landscape.

However, the transition has not been smooth for all. Confusion reigns over the implementation of these rules, especially regarding their applicability to different business models and contracts with entities like Saudi Arabia's sovereign wealth fund. Amidst this uncertainty, the Saudi government has offered incentives like tax breaks and a 30-year tax holiday to sweeten the deal.

As more than 200 firms, including giants like Bechtel and PepsiCo, announce Riyadh as their new regional hub, the business world watches closely. This shift could have far-reaching implications for the Middle East's economic dynamics and the global strategies of multinational corporations.

⚖️ How does this impact Law Firms?

International Business Law:

  • Negotiation and Drafting of International Contracts: Lawyers will engage with multinational corporations, particularly those in the technology, pharmaceutical, and aerospace sectors (like Microsoft, Oracle, and Airbus), seeking to establish their regional headquarters in Riyadh. These companies will be concerned with ensuring that their contracts adhere to Saudi laws, safeguard their interests, and are flexible enough to accommodate the dynamic Saudi business environment.
  • Advisory on Regulatory Compliance: The clientele will primarily consist of foreign companies entering the Saudi market for the first time or expanding their existing operations. They will require legal guidance on Saudi Arabia's complex regulatory framework, including new policies for obtaining state contracts and navigating the Saudi investment environment.

Corporate Tax Law:

  • Structuring and Tax Planning: The primary clients will be multinational corporations planning to take advantage of Saudi Arabia's tax incentives. Their main concerns will involve optimising tax efficiency while mitigating risks associated with non-compliance. Companies like Pfizer and PwC, with significant investments and operations in the region, will require sophisticated tax planning advice.
  • Tax Dispute Resolution: These services will be sought by companies facing audits or disputes with Saudi tax authorities. Clients will be concerned about maintaining their favourable tax positions and resolving disputes efficiently to avoid significant financial and reputational damage.

Employment Law:

  • Drafting Employment Contracts and Policies: The client base will include multinational corporations establishing or expanding their workforce in Saudi Arabia. These companies will be particularly concerned about adhering to local employment laws while also maintaining global HR standards. Clients like Bechtel and PepsiCo will seek advice on contracts and policies that comply with Saudi laws on expatriate employment, gender mixing, and other local employment practices.
  • Advisory on Labour Disputes: Clients in this category will include both multinational and local companies facing employment-related legal challenges. Their concerns will revolve around resolving disputes efficiently to maintain workforce stability and company reputation, while also ensuring compliance with Saudi labour laws and international human rights standards.

TikTok wants Amazon's pie

In Short: TikTok is setting its sights on a massive expansion in the US e-commerce market, aiming to rival giants like Amazon with a whopping $17.5 billion target.

What’s going on?

TikTok, primarily known for its short-video entertainment, is leaping into the e-commerce realm in the US. The goal? To balloon its e-commerce business to a staggering $17.5 billion this year. This ambition isn't just about numbers; it's a direct challenge to e-commerce titans like Amazon and emerging Chinese players like Temu and Shein.

The plan involves blending TikTok's colossal social media presence with the spontaneity of impulse buying. Imagine scrolling through viral videos and, with a tap, snagging that trendy jacket you just saw. That's the kind of seamless shopping experience TikTok is banking on to captivate the American market.

And business is already booming. Last year, TikTok's global gross merchandise value hit around $20 billion, with Southeast Asia leading the charge. Now, the company's eyes are on the US and Latin America, planning to introduce their e-commerce operations in these regions soon.

⚖️ How does this impact Law Firms?

Commercial and Contract Law:

  • E-commerce Agreements: Lawyers will advise clients such as online retailers, suppliers, and vendors partnering with TikTok, as well as influencers engaged in promoting products. These clients will be concerned about ensuring their contracts protect their interests, particularly regarding liability, payment terms, and dispute resolution mechanisms in a dynamic e-commerce environment.
  • Consumer Protection Compliance: This service will be crucial for e-commerce businesses operating on TikTok, including startups and established brands venturing into online sales. Clients will be particularly concerned about adhering to various national and international consumer protection laws, addressing issues like warranty obligations, product safety, and fair advertising practices to avoid legal pitfalls and consumer litigation.

Intellectual Property (IP) Law:

  • Trademark Filings and Protection: Clients ranging from tech startups to established corporations entering into partnerships with TikTok or launching new product lines on the platform will seek advice. Their primary concerns include securing their brand identity through trademark registration and protecting it against infringement in a highly visible and competitive online marketplace.
  • Copyright and Content Licensing: Content creators, marketing agencies, and brands utilising TikTok for advertising will require legal guidance. They'll need to navigate the complexities of copyright law, especially regarding the use of music, videos, and other copyrighted materials in their content. Clients will be concerned about ensuring proper licensing to avoid copyright infringement claims and understanding the nuances of user-generated content featuring their products.

International Trade and Regulatory Compliance:

  • Cross-border E-commerce Regulations: This service will attract clients such as multinational corporations, e-commerce platforms, and logistic companies. They will be concerned about navigating the complexities of cross-border transactions, including customs regulations, international shipping laws, and compliance with various trade agreements.
  • Data Transfer and Privacy Regulations: Tech companies, particularly those dealing with user data on a global scale, will seek advice. Their primary concerns will involve complying with international data protection laws like GDPR and ensuring secure and legal cross-border data transfers (e.g. with the e use of international data transfer agreements). This is crucial for maintaining consumer trust and avoiding hefty fines associated with data breaches or non-compliance.

Corporate Leap

In Short: A consortium comprising Macquarie Capital, Stirling Square Capital Partners, and TA Associates has proposed to acquire Byggfakta, a Swedish construction-linked software and data company, for 3.2 billion Swedish kronor. The offer values Byggfakta at 10.1 billion kronor, representing a significant premium over its recent share price.

What is the deal? The consortium, already holding a 67% interest in Byggfakta, aims to take full control by purchasing the remaining shares for 46 kronor each, a 31% increase over the previous day's closing price. This move is strategic, as it intends to privatise Byggfakta by delisting it from the Nasdaq Stockholm. Australian financial group Macquarie is the new member in this consortium.

Key Legal Points to discuss:

  1. Privatisation Strategy and Delisting: The consortium's plan to privatize Byggfakta by delisting it from the stock exchange is a significant legal manoeuvre. This move could offer more flexibility in business operations but requires careful navigation of securities laws and regulations.
  2. Premium Offer and Shareholder Approval: Offering a 31% premium on the current share price to acquire the remaining shares highlights the strategic value the consortium sees in Byggfakta. The legal aspect involves ensuring fair treatment of minority shareholders and adhering to market regulations in tender offers.
  3. Regulatory and Competition Approvals: Given the scale of the acquisition, securing regulatory and competition clearances is crucial. This point underscores the importance of antitrust laws and the role of legal advisors in facilitating smooth regulatory approvals for such transactions.

Who is advising on this?

  • Stirling Square and TA: Goodwin Procter and Gernandt & Danielsson.
  • Macquarie: Linklaters.

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