FCC Chair to Put AT&T/T-Mobile Merger on the Grill

The proposed AT&T/T-Mobile merger hit another obstacle Tuesday when the chairman of the FCC called the deal harmful to consumers.

AT&T will have to prove otherwise if FCC Chairman Julius Genachowski gets his way. He’s asked that the other commissioners approve an administrative hearing on the issue, expressing concern that the US$39 billion deal would create too much concentration in the wireless market, kill jobs and be overall detrimental to consumers. His appeal to the other commissioners is the first such request since 2002, when a potential deal between EchoStar and DirecTV was put under the microscope.

Since AT&T’s intention to buy smaller rival T-Mobile was announced in March, consumer groups and other wireless providers have warned the deal between the second- and fourth-largest U.S. carriers would create a duopoly and stifle competition in the industry.

A Department of Justice lawsuit to block the deal in August further deterred the plan, and more lawsuits from several states’ attorneys general followed.

Weighing the Options

Cutting its losses and abandoning the deal would be costly for AT&T. The carrier has agreed to pay Deutsche Telekom, the parent company of T-Mobile, $3 billion in fees and rights to acquire the company, an amount it promised even if the deal didn’t go through. AT&T is also on the hook to shell out $3 billion to $4 billion to T-Mobile in assets if the merger doesn’t work out.

If the FCC presses the issue, the carriers will have to face federal opposition from both the FCC and the DoJ. Each argument will address slightly different topics.

“The DoJ suit focuses on whether the merger as proposed by the parties is likely to have an adverse effect on competition among cellular service providers. FCC approval is required to transfer operating licenses, and its review focuses on whether individual license transfers are in the public interest,” Craig Bachman, parter at Lane Powell PC, told the E-Commerce Times.

Though AT&T would be granted the right to argue against claims that the license transfers aren’t in the public interest, the two hurdles — especially from the FCC, an organization that hasn’t made that kind of move in nine years — indicate the company will face an uphill battle.

Possible Defense

If the chairman’s request goes through and the deal is reviewed, it probably won’t start until after the DoJ trial against AT&T, scheduled to begin in February. If the company strikes a compromise with Justice to end that litigation, it would have to reevaluate the merger and present its case again before the FCC.

Since the intended merger was announced, the companies have maintained that with its multibillion dollar play to expand broadband coverage to rural areas, it would create thousands of domestic jobs. It’s a claim AT&T has highlighted more as opposition to the merger increases and unemployment problems in the U.S. persist.

Following the FCC chairman’s request, AT&T officials commented on missed opportunities to create jobs and spur innovation if the merger doesn’t go through. Critics, however, aren’t buying it.

“The record clearly shows that, in no uncertain terms, this merger would result in a massive loss of U.S. jobs and investment,” a senior FCC official told the E-Commerce Times in a statement provided by Neil Grace, press secretary in the office of the chairman at the FCC.

AT&T countered that since so much of the merger is focused on expanding coverage, especially with speedier 4G LTE wireless technology, the deal would not only create jobs in the implementation of that network, but would also increase coverage nationwide.

“Competition in the industry focuses on technology evolution, customer acquisition and customer retention. Revenue per user and average margin per user have been declining for both companies as users move to integrated devices such as smartphones and therefore use less voice and more data transmission,” said Bachman.

AT&T did not respond to the E-Commerce Times’ requests for comment.

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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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