Industry Trends
Google Wins Copyright Battle
The Supreme Court ruled in favor of Google over its copyright battle with Oracle, stemming from how Google built its operating systems for their smartphones. The heart of the lawsuit was Google’s use of Java API code to make their Android smartphones. Oracle acquired Sun Microsystems who created Java in 2010. The Supreme Court ruled the use of partial code did not violate the copyright laws. This court case has been watched closely in the tech industry as it has implications for businesses that rely heavily on copyright protections. The Supreme Court did not decide whether API code is eligible for copyright protection.1
Facebook Reaches Agreement to License News Content
Traditionally, tech giants Alphabet, Inc. and Facebook, Inc. have not paid news publishers for content posted on their platforms. In February, Australian legislators proposed a law that would require such companies to negotiate licensing agreements with publishers, paving the way for other countries to do the same. The proposed law prompted Facebook to announce a plan to license over $1 billion in content from publishing companies, such as News Corp., the Guardian, and the Financial Times over the next three years.2
IonQ To Go Public through SPAC Merger
In a deal valued at more than $2 billion, IonQ, a quantum computing startup, plans to merge with special-purpose acquisition company dMY Technology Group Inc. III. The merger makes IonQ the first publicly traded quantum-computing hardware and software company explicitly focused on commercialization. Quantum computing seeks to significantly increase computing speeds with various finance applications, drug development, and artificial intelligence, among others. Gartner predicts that by 2023, 20% of global organizations will budget for quantum computing projects, an increase from 1% in 2018.3
FCC’s Sale of C-Band Spectrum Rights Reaches Record High
In January, the Federal Communications Commission finalized the auction of U.S. government airwaves for a record $81 billion. The sale comes as telecom leaders like AT&T, Inc. and Verizon Communications, Inc. strive to extend 5G capabilities. The frequencies are expected to serve mobile devices primarily and should be fully cleared for service by 2023.4
Global Chip Supply Shortage Rattles Supply Chains
Global demand for semiconductors remains high as technology across multiple industries continues to advance. Car manufacturers are being hit especially hard, as chips are becoming more ingrained in core car components. Estimates for demand were significantly lower than actual demand, and a fire at one of the largest auto chip maker’s manufacturing sites is further exacerbating supply shortages. The shortage is expected to decrease production in the industry by 700,000 vehicles this quarter.5 6
Satellite Internet Capabilities Expand
Satellite internet is expanding its capabilities due to increased investment from SpaceX, Amazon, Inc., and Telesat. These companies can provide high-speed internet through low orbit satellites without the need for cable and fiber-optic internet connections. The technology will potentially help lower the connectivity gap between rural and urban areas and could pull customers and revenues away from traditional telecom companies.7
Pandemic Shifts Advertising to Large Tech
Changes to advertising intensified during the pandemic. Reports indicate that 50.0% of all advertising dollars are now directed to Facebook, Inc., Alphabet, Inc.’s Google, and Amazon, Inc. The shift in ad delivery is predicted to remain throughout 2021 and presents revenue growth opportunities for tech and digital media companies. 8
Intel to Invest in Greater Chip Making Capabilities
Intel Corp. announced it would invest $20 billion in the turnaround in its semiconductor manufacturing business. The U.S. currently accounts for 12% of all semiconductor manufacturing, down from 37% in 1990. The investment will create two new U.S. based manufacturing sites. Intel also announced it would increase production through greater outsourcing for advanced semiconductor manufacturing. The announcement comes at a time when semiconductors are in very high demand. If executed properly, Intel will continue its growth and remain on top of the U.S. semiconductor industry.9
Largest Transactions Closed
- Target
- Buyer
- Value($mm)
-
- ZeniMax Media, Inc.
- Microsoft Corporation
- $7,500.00
- Acacia Communications, Inc.
- Cisco Systems, Inc.
- $5,062.84
- OSIsoft, LLC
- AVEVA US 1 Corp; AVEVA US 2 Corp.
- $5,019.60
- Endurance International Group Holdings, Inc.
- Clearlake Capital Group, L.P.
- $3,245.63
- ION Media Networks, Inc.
- Scripps Media, Inc.
- $2,650.00
- Virtusa Corporation
- Baring Private Equity Asia
- $2,464.48
- Fitbit, Inc.
- Google, LLC
- $2,265.32
- Nuvia, Inc.
- Qualcomm Technologies, Inc.
- $1,400.00
- Zayo Colocation, Inc.
- DataBank Holdings, Ltd.
- $1,400.00
- Sparta Systems, inc.
- Honeywell International, Inc.
- $1,300.00
Source S&P Capital IQ as of 4/12/2021 and PCE Proprietary Data
Contacts
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Data Assumptions This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only. Glossary EBIT - Earnings Before Interest and Taxes Sources:
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