Business Stories of the Week: June 23

by June 23, 2017
Wal-Mart could enter the bidding fray as a potential rival to Amazon over the purchase of Whole Foods, CNBC reported on Thursday.

Wal-Mart could enter the bidding fray as a potential rival to Amazon over the purchase of Whole Foods, CNBC reported on Thursday. (“Wal-Mart Tijuca Rio de Janeiro, projeto Core Arquitetos Associados” by Flickr user Fernando Stankuns CC BY 2.0)

Amazon may face bidding war

Amazon announced plans to buy Whole Foods last Friday, giving the online powerhouse control of more than 400 brick-and-mortar grocery stores. If the deal is approved by antitrust officials, Amazon also will benefit from Whole Foods’ extensive consumer data, delivery and supply chain system. Less than a week after the announcement, there were reports Wal-Mart could enter the bidding fray as a potential rival to Amazon. CNBC reported JPMorgan Chase and Co. analysts said Wal-Mart may be drawn to Whole Foods for its “relatively wealthier customers and strong brand” and the opportunity to halt Amazon’s ambitions. But there are serious doubts Wal-Mart would emerge the victor of a bidding war.

General Motors’ international retreat

The Economist’s Saturday edition will take a look at General Motors’ global retreat from Russia, Indonesia, Thailand, India, South Africa and Europe.  Despite record profits in 2015 and 2016, investors have been unimpressed, as the carmaker’s share price has barely moved since its IPO in 2010. In the face of its stagnant share price, the American carmaker has narrowed its focus to North America and China, where there is greater potential for “generous profits to be made.” An analyst told The Economist there also is potential for growth in Latin America, where GM has a big market share on which to build. So far, investors are still giving GM a hard time despite its new strategy. GM also is investing in future technological capabilities, including purchasing a stake in Lyft and Cruise Automation, a self-driving startup.

Small businesses struggle after foreign visa limits

The Pentagoet Inn’s restaurant in Castine, Maine is just one business that was unable to open this summer after the Trump administration made changes to a federal program that provides short-term visas to low-skilled foreign workers. The changes to the visa program, dubbed H-2B, have kept foreign workers home and threatened businesses like The Pentagoet Inn’s restaurant, reported Bloomberg Businessweek on Wednesday. While some conservative lawmakers have argued the visas take away American jobs, many economists counter that the temporary workers help support higher-paying positions for American citizens. An economist at the University of California said it’s unlikely most Americans will fill these low-skilled positions. For now, it’s not clear when or how many more visas will be released, according to the U.S. Department of Homeland Security.

Media companies sour on Facebook

On Monday, Bloomberg Businessweek dug into the media’s love-hate relationship with  Facebook. The social media giant has long had a cozy relationship with CNN, which was a partner when Facebook introduced its news-reading app, Paper, in 2014. When Paper was closed soon after, CNN stayed loyal. But it’s getting harder for companies like CNN to view Facebook as a postive for the industry, reported Bloomberg Businessweek. That’s especially true of Facebook’s latest pitch: providing Facebook with regular, edited, original videos to compete with YouTube. CNN said the compensation isn’t enough to convince the network that it’s worth the investment. At least six executives at media companies told Bloomberg Businessweek anonymously that the stories and video are expensive to create and limit publishers’ relationships with readers. At least several of the executives said they are likely to decrease their Facebook relationship going forward.

Fraudulent sober homes profit from opioid crisis

Addicts have long flocked to Palm Beach County, Florida for treatment for substance abuse. But in recent years, lax laws and minimal regulatory oversight have created a haven for troubled treatment centers, labs and sober living homes where addicts are exploited for insurance money, The New York Times reported on Tuesday. The state’s low taxes and warm weather have lured hundreds of sober home operators, but many are fraudulent businesses that profit from relapse, rather than recovery. It’s harder to get a license to cut hair than to supervise and treat young adults suffering from substance abuse, the Times reported. With its lax regulations and history with insurance fraud, Florida is a breeding ground for seedy sober homes.

Inside the resignation of Uber’s chief executive

The New York Times on Thursday offered a behind the scenes look at Travis Kalanick’s resignation as Uber’s CEO. Venture capitalists from Benchmark, which is one of Uber’s biggest shareholders, presented Kalanick with a list of demands at a private hotel in Chicago on Tuesday. The letter was from five of Uber’s biggest investors, including Benchmark and Fidelity. Among those demands: his resignation by the end of Tuesday. Uber and the investors opted not to comment for the article. By the end of the day, Kalanick had agreed to step aside. Once viewed as a tech visionary, the move was a blow to Kalanick, who helped transform Uber into a global ride-hailing service and helped push the company’s value to almost $70 billion.  Kalanick will remain on the board and retain voting rights.