AT&T May Have to Break Out Its Dancing Shoes

It will keep prices at their current low level. It will hire more people, lots more. It will sell a significant chunk of T-Mobile’s stock. If it has to, it will go to court. AT&T, in short, appears ready to jump over whatever hurdles the Department of Justice places before it to win its prize — the acquisition of T-Mobile.

The company was apparently caught completely off guard by the blow DoJ dealt to its proposed US$39 billion merger with T-Mobile this week. The department filed a lawsuit to block AT&T from acquiring T-Mobile, claiming that such a merger would violate antitrust regulations.

It noted, for instance, that AT&T and T-Mobile currently compete head-to-head in 97 of the nation’s largest 100 cellular market areas. Were the merger to proceed, there would only be three providers owning 90 percent of the market. Competition in price, quality and innovation would be diminished.

This is not the end of the matter, of course, as even the Justice Department has made clear.

“We apprised them of our serious concerns and, as any party can do, our door is open,” Sharis Pozen, acting assistant attorney general for the Anti Trust Division, said at the agency’s news conference.

“If they want to resolve those concerns, we can certainly do that,” Pozen continued. “Here we filed a lawsuit and we’re going to proceed in Court. We’ll see what happens next.”

Taking Stock

AT&T is apparently not willing to let the merger die and is taking inventory of its options. It did not respond to the E-Commerce Times’ request to comment for this story, but according to news accounts, it plans to come back to the Justice Department with a proposal.

Unfortunately for the company, few of those options are palatable, and some are downright ugly. One of the more benign, no doubt, from AT&T’s perspective: It could promise to keep T-Mobile’s inexpensive price plans on the market.

It could divest T-Mobile assets in specific markets, or it could sell a significant portion of T-Mobile’s stock — 25 percent is one number being bandied about.

However, the latter proposal probably wouldn’t be effective in the long term, according to N. Venkatraman, a business professor at Boston University, told the E-Commerce Times.

Of course, the final option for AT&T could be battling it out in court.

FCC or Justice?

The situation looks dark for AT&amolT now, said Ryan Radia, an analyst with the Competitive Enterprise Institute, but it could be worse.

The Federal Communications Commission could have wound up being the point agency to derail the merger, he told the E-Commerce Times.

“Oftentimes with these deals, the antitrust agencies stay out of it, while the FCC takes the lead role,” noted Radia. “Given that the DoJ has taken the lead, I would assume it will play the primary role of ascertaining the merits of the conditions that AT&T will offer.”

What that means is that these conditions will be scrutinized through the lens of antitrust law rather than the public interest standard employed by the FCC, he explained. “Therefore, we are less likely to see completely arbitrary conditions placed on this deal.”

The FCC did not respond to the E-Commerce Times’ request for comment.

AT&T would rather reach a settlement than engage in a protracted court fight, according to multiple reports citing unnamed sources familiar with the company’s thinking on the issue.

The bad news for AT&T is that the merger would molder, perhaps for years, before all the legal issues were settled in court, Radia said.

The good news, in his view, is that AT&T’s chances of winning are pretty fair. “The matter will be heard before a federal judge who will apply antitrust doctrine. Many antitrust legal scholars who have examined this deal believe that AT&T has a very strong case.”

It has the potential to set an important precedent, said Radia. “You have to realize that the Department of Justice loses in court as much as it wins — at least in antitrust suits.”

Before it gets to this option, however, there is one other route AT&T could go.

A Public Argument

One step AT&T hasn’t taken — at least not with much fervor — is to make a broad appeal to the public.

“AT&T should come out clean and show how it benefits consumers and how the prices will be lower, as USA is still one of the high-tariff countries in the world for mobile data,” Boston University’s Venkatraman said.

“Till it convincingly demonstrate that winning value proposition, the merger may be seen as helping shareholders and managers, but not necessarily consumers,” he reasoned.

“If I were in AT&T’s shoes, I would go straight to the consumers now,” agreed Michael Hussey, CEO of PeekYou. “Fight these charges in the public arena.”

One argument that might win people over, he told the E-Commerce Times, is a promise to invest heavily in improving its network and capacity.

“There are other countries with better cellphone services that have far fewer mobile options than the U.S.,” he said. “A promise to invest more money in the network, as opposed to marketing,” would resonate.”

Job creation is another argument, although AT&T has already tried that route. Before the Justice Department filed its suit, AT&T had said the merger would allow it to bring 5,000 outsourced jobs back into the U.S.

“AT&T can offer job creation as one overture as it seeks to build out the 4G (LTE) network on a country-wide basis,” Venkatraman said. “It is timely, as everyone is focused on jobs, but one that may not be truthfully valid, as T-Mobile could potentially create those jobs.”

Go for It

Whatever it takes, AT&T should try, Venkatraman said.

The T-Mobile acquisition would be a great coup for AT&T to get a lead over Verizon now that Apple’s iPhone is no longer a differentiator, he said, adding, “AT&T needs this to happen.”

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Intuit’s $12B Mailchimp Purchase Breathes New Life Into Email Marketing

Intuit on Monday announced an agreement to acquire Mailchimp, a global customer engagement and marketing platform for small and mid-market businesses, for $12 billion in cash and stock advances. The purchase could be the linchpin that thrusts the mostly financial software company into solving more fertile mid-market business challenges for its customers.

The planned acquisition is part of Intuit’s mission to become an AI-driven expert platform. With the acquisition of Mailchimp, Intuit will accelerate two of its previously-shared strategic big bets: to become the center of small business growth and to disrupt the small business mid-market, said the company in its announcement.

Intuit’s acquisition of Mailchimp sends a great message to all entrepreneurs around the globe that venture capital is not always necessary, observed Michael Kawula, co-founder of CBA, a marketing agency for YouTube monetization. Mailchimp is a bootstrapped success story that has not raised any outside venture capital.

“This is a very clever growth strategy for Intuit, who wants to get in front of SMBs, which is difficult and expensive. Similar to HubSpot’s recent purchase of The Hustle newsletter, a much smaller acquisition, this also is brilliant,” he told the E-Commerce Times.

The acquisition marks a significant impact in industry, according to Osiris Parikh, sales marketing manager at Lilius. He also sees the deal as another reminder that email marketing is not dead — and data is power.

“Intuit has made a strong move to broaden its portfolio and become a leader in catering to the needs of SMBs. It is also a great story of success during Covid-19,” he told the E-Commerce Times.

Deal Basics

Intuit provides a global technology platform that makes TurboTax, QuickBooks, Mint, and Credit Karma. Intuit and Mailchimp will offer an innovative, end-to-end customer growth platform that allows customers to get their business online. It will also enable them to manage marketing, customer relationships, payment processes, and access insights and analytics, along with optimizing their cash flow and staying compliant with experts at their fingertips, according to Intuit.

Key to this process is Intuit’s ability to enable businesses to combine their customer data from Mailchimp and QuickBooks’ purchase data to get the actionable insights they need to grow and run their businesses with confidence.

“We’re focused on powering prosperity around the world for consumers and small businesses. Together, Mailchimp and QuickBooks will help solve small and mid-market businesses’ biggest barriers to growth, getting and retaining customers,” said Sasan Goodarzi, CEO of Intuit.

Mailchimp brings to Intuit technology at scale along with global customer reach.

Founded in Atlanta, in 2001, Mailchimp began by offering email marketing solutions. The company evolved into offering customer engagement and marketing automation processes fueled by an AI-driven technology stack. Mailchimp’s data and technology spans 70 billion contacts and more than 250 rich partner integrations. Its AI-powered automation at scale fuels 2.2 million daily predictions.

“Over the past two decades, we have vastly expanded and evolved Mailchimp’s platform to help millions of small businesses around the world start and grow,” said Ben Chestnut, CEO and co-founder of Mailchimp.

Why Mailchimp’s Worth It

While the email marketing sector is pretty crowded, Mailchimp stands out in terms of size and scope. The company reportedly has 13 million total global users, 2.4 million active monthly users, and 800,000 paid customers, noted Charles King, principal analyst at Pund-IT.

“Plus, half of its customers are outside of the U.S. Additionally, while people tend to focus on the mass/might of large enterprises, small businesses are really the heart and soul of most economies,” he told the E-Commerce Times.

The acquisition likely represents a lucrative opportunity for Intuit to integrate Mailchimp data with QuickBooks and provide greater analytical capabilities to customers. The synthesis of financial and marketing data in this case provides valuable and actionable insights about an organization’s clients, added Lilus’ Parikh.

“It’s also a great diversification of offerings to centralize SMB operations through one platform and benefit from Mailchimp’s established user base,” he said.

Another supporting factor for Intuit’s interest in Mailchimp is the renewed stature of email, according to Elice Max, co-owner of EMUCoupon and someone who has been involved in online marketing for eight years.

“Email marketing has made a comeback in recent years. With increased digitization caused by the pandemic, all digital mediums including email have gained a renewed importance,” she told the E-Commerce Times.

Email Marketing’s Resurgence

Technology giants are looking to build more integrated and holistic solutions. Microsoft recently bought Clipchamp, a video production tool. Both companies are looking to build platforms for the new tech-savvy SMBs, Max Suggested.

“More than anything, it means a renewed confidence in the field. Experts have been talking about the death of email marketing for a while now. But a $12 billion acquisition by a big player like Intuit means email promotion is alive and kicking,” she said.

Another factor is Intuit keeping its eye on the ball. It is important to remember the significance of Mailchimp as the pioneer in marketing automation and email marketing in particular.

“Intuit is looking to make a statement that it wants to become more than a financial software company,” Max observed.

QuickBooks Synergies

One of the motivations that lies behind Intuit’s purchase of Mailchimp is its desire to lead a revolution in the CRM capabilities of SMBs, according to Will Ward, CEO of Translation Equipment HQ . Think about the effect the pandemic has had on the popularity of remote work and the amount of remote SMBs being established.

“You would expect there to be a lot of growth potential here in the next few years. With Mailchimp and QuickBooks, Intuit is providing an end-to-end customer growth platform, and with around $20 billion invested already its belief in SMBs is evident,” Ward told the E-Commerce Times.

Like any other system that handles transactions such as orders and payments, you need to work closer to the actual customer channels. With the Intuit e-commerce product, launched about a year ago, this seems like a natural step by adding marketing automation and reaching out with its e-commerce offering to the MailChimp customer base, suggested Johan Liljeros, general manager and senior commerce advisor, North America for Avensia.

“The acquisition has added synergies between the platforms while still being able to operate as independent platforms. Looking at Intuit’s offerings, it appears they are moving towards expanding [into] digital transactional experience,” he told the E-Commerce Times.

Final Thoughts

Email marketers should be ready for disruption along with other business services providers. Intuit has been both savvy and aggressive in the way it built its business, effectively becoming the 800-pound gorilla of small business accounting and tax solutions, according to Pund-IT’s King.

“With that kind of ally behind Mailchimp, life is going to become a whole lot more ‘interesting’ for other email marketers,” he predicted.

The Intuit-Mailchimp deal should offer Intuit customers significant benefits, such as new solutions and services for bolstering their businesses. At the same time, the deal highlights the fact that old technologies can continue to be vital and dynamic.

“For years, many have claimed that email is dead or dying and quickly being replaced by whatever the tech du jour happens to be. Mailchimp — and now Intuit — beg to differ,” King quipped.

Jack M. Germain

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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