Telegram App in Trouble with CEO’s Arrest & Largest Grocery Merger On Trial
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Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, should Kroger be able to merge with Albertsons? A grocery store mega deal is Harris teetering on the edge. Then NASA decided to finally bring home Boeing's troubled Starliner capsule, except the astronauts it delivered to the ISS won't be in it. It's Monday, August 26th. Let's ride. ♪

Welcome back to the week. Happy Monday. So something really bizarre and unprecedented is happening in Major League Baseball today. For the first time ever, a baseball player will appear in the same game for both teams.

Here's how this happened. On June 26th, a game between the Boston Red Sox and Toronto Blue Jays was suspended due to weather, and it was rescheduled for today, August 26th. When that game was called off, catcher Danny Jansen was at bat for the Blue Jays. But in the meantime, Jansen was traded from the Blue Jays to the Red Sox, so today he'll take the field unnoticed.

against the team he had played for when the game began. Whoever ends up winning, this guy will always have the best fun fact at any icebreaker. Truly. I do just want to give a shout out to Alex Cora, to the Red Sox manager, for leaning into it. He was well aware of the situation, so he told reporters, like, heck,

Let's make history. This also gets me thinking about how we need to bring trades to the corporate world. Can you imagine? Morning Brew and Unwell Networks have made a change to swap Neil Fryman and Alex Cooper on a three-year deal. Fryman will step in as host of Call Her Daddy, while Cooper will take over Morning Brew Daily. If you want to host this with Alex Cooper, that's fine with me. It would be electric.

And now a word from our sponsor, MassMutual. Neil, I've got a confession to make. Uh-oh. Is it that thing you've told me about in private? What? No, not that thing. It's that I only got five hours of sleep last night. Oof, that is not enough sleep. What's keeping you up at night? If I'm honest...

It's my finances. Financial planning is pretty dang stressful. Toby, you aren't the only one. According to the State of Personal Finance Ramsey Solutions, 41% of people lose sleep over their finances. And given how high inflation is these days, financial planning is even harder.

There's got to be a better way. There is. MassMutual can help you break down financial planning into simple steps for a path to success. So you can establish your goals, assess your situation, identify gaps where you can be smarter with your money, map it all out, and then maintain and optimize. Sounds like a clear path to protect and grow my financial future. Now my head can rest a little bit easier at night. For more tools that can help you achieve your financial goals, visit MassMutual.com.

Pavel Durov, the billionaire co-founder of the secure messaging app Telegram, was arrested over the weekend in France on charges related to the spread of illicit material on the service he co-founded. It was a shocking, if not totally unexpected, development that the Russian-born Durov would run into issues with the law in France. The EU has been tightening its rules around online extremism and disinformation, things which the lightly moderated Telegram app attracts in bulk.

boatloads. Given its secure nature and lax content policies, critics have come to describe the messaging app as a haven for terrorist organizations, drugs and weapons dealers, and political extremist groups. Despite its reputation, though, the app is huge. It has over 900 million monthly active users and

and was mulling over plans for an IPO in the future. But now Durov has been taken into custody as part of a preliminary police investigation, potentially jeopardizing that future. Neil, this guy is worth $9 billion. It's not often you see billionaire tech founders

picked up by the police like this. No, this is definitely a sign of the EU's major crackdown on social media companies. And it is a very important development in figuring out who is liable for illicit criminal activity on these social media platforms. This seems to indicate we are still in the very preliminary stages that the EU Europe is wants to hold actual evidence

executives liable for criminal activity on their platforms. Let's just do a quick bio of who this guy is. So he was born in Russia. He started this other social media company called VK in 2007. He was considered the Mark Zuckerberg of Russia, you know, a billionaire mathematician, wonder kid engineer who started this very, very popular social media company.

Then he said he was pressured by the Kremlin to police content on the platform and censor opponents of the Russian government. So he left Russia to Dubai, started this other app called Telegram. And the same thing happened where this app completely blew up. It is now just in the pantheon of the biggest social media apps ever.

Right.

Right. Telegram's whole draw is that there's a lot less moderation than other social media platforms. They've been put in a very tough spot now, though, because French authorities are going to ask Telegram, force Telegram to share information with them on these telegrams.

criminal activity they think is happening on these channels, but Telegram's entire thing is that it safeguards its user information. So either they have to kind of forsake their promise to their user base or face criminal charges from European authorities. People also love Telegram too because while...

WhatsApp and other messaging platforms have been cutting down on like the maximum group size you can have because it leads to fraud. It leads to disinformation. Telegram went the opposite way and says, no, you can have huge chat groups up to 200,000 people, which makes it more of a social media platform, less of an actual peer to peer chat platform. So Telegram's,

whole identity is wrapped up in something that is now under attack by the French authorities. Well, and critics say the reason that it has such lightly, you know, light content moderation has led to the proliferation of so much criminal activity on the platform. Meanwhile, free speech advocates like Elon Musk and others

bash the French authorities and they say, you know, this is just part of the wider crackdown on free speech by European officials. Musk posted it's 2030 in Europe and you're being executed for liking a meme. So you're seeing those kind of vibes from that, from

from that camp over there. Meanwhile, the other side is saying we can't just let criminal activity proliferate on social media. We have to crack down here. They cite the recent riots in in the UK for being spread by disinformation on social media platforms. So definitely inflamed existing tensions between Russia, the West, free speech advocates and those who think we should moderate those who think social media companies need to moderate their platforms better.

Attention, customers. There's an antitrust trial in aisle four. Today marks the start of a trial that'll determine whether the largest grocery store merger in U.S. history can be completed. Back in 2022, Kroger and Albertsons announced plans to combine forces and

in a $25 billion deal. Together, these grocers operate 5,000 stores across the country and employ 710,000 people. They control around 13% of the U.S. grocery store market, have over $200 billion in revenue, and own more than 40,000 private label brands.

But like many of you, this merger got stymied at self-checkout. The FTC sued to block the deal over concerns that an Albertsons-Kroger tie-up would create a company so huge that it'd lead to higher prices for consumers and lower wages and even job losses for employees.

Kroger and Albertsons have tried to make concessions to appease the FTC. Kroger said it'd invest $1 billion if the merger closes to lower prices for consumers. And both companies said they'd sell over 500 stores to a competitor in regions where they are the only grocery store game in town. Now a judge will decide whether the FTC can notch another win in its antitrust crusade or Albertsons and Kroger's can put the super in supermarket.

Let's talk about some of those concessions that they are trying to make to get this deal across the line. They say they're going to sell almost 580 stores to this company called CS Wholesale Grocers. This is an attempt to kind of cut off the arm to save the body. They're saying, hey, look, we're divesting some of these stores. We're giving it to competitors. It would make CS the eighth largest grocery company. It's kind of right on par with Trader Joe's. The

The issue for the FTC is, though, that they've been through this song and dance before. If you go back to 2015, the FTC did give Albertsons almost $10 billion acquisition of Safeway, the go-ahead, and on the condition that Albertsons would sell almost 200 stores to another smaller competitor, Hagen. That...

ended up going bankrupt and then Albertson just bought the stores back at pennies on the dollar. So the FTC is like, no, no, no, no, not this time. I know what happened last time we gave the blessing like this. So CS is this little known player that could be a very big deal in this mega market.

merger. Yeah, I mean, people are saying that this the CNS company just doesn't really do a good job of operating its stores. So it could really hinge on whether the judge considers CNS to be a serious competitor if it were to absorb 500 stores. It really revolves around, you know, this trial would revolve around whether this company can sort of hold its weight in the grocery store market. But this deal does remind me a little bit of the JetBlue and Spirit tie up that

was blocked just a few months ago last year because what Kroger and Albertsons are saying is there are a few giants in this space. There's Walmart, which owns almost 25% of the grocery store market. There's Costco. And we are just these middle players. And if we tie up, we could be a better challenge to the big players in this industry. And that competition would lead to lower prices, very similar to what JetBlue and Spirit were arguing to go against the Delta and Americans of the world. But again,

you know, the regulators did not approve that merger and they're seeking to also block this one because food prices, grocery prices are some of the most sensitive political issues that we have right now, given inflation over the past two years and any sense that, you know, these these bigger companies combined. I mean, this would be a very, very big company if combined would have

more pricing power over consumers and raise prices is definitely going to get a lot of side eye. Kroger is definitely getting a little desperate, too. Last week, they filed a different lawsuit in Ohio saying that the FTC is unconstitutional. Critics are saying mostly for irrelevant reasons having to do with the merger challenge process in general. They're...

People are seeing it as a go-for-broke moment for them to try to make this merger happen. And it makes sense, too, because companies have spent a lot of money just on costs, $864 million on costs related to the merger, which is almost 5% of the entire deal already. The CEO of Kroger would make $43 million upon completion of the deal. So clearly there's a lot of money incentivizing them to try to make it happen, but it's looking a little dicey.

If astronauts Suni Williams and Butch Wilmore haven't run out of things to make small talk about, they probably will soon. The duo that were delivered to the International Space Station by the Boeing Starliner nearly three months ago will be up there for at least six more months.

after NASA and Boeing made the call this weekend to bring back the Starliner capsule without the astronauts in it. It's the culmination of a long and winding saga that first saw Williams and Wilmore's original eight-day stay stretch into weeks, then months, and now into 2025.

The main issue that has left them stranded for longer than anticipated is a problem with Starliner's propulsion system. Multiple thrusters failed as it was originally docking, and officials from both Boeing and NASA made the call that it would be best to wait for a planned SpaceX mission to take the two home rather than risk it on Boeing's craft. Neil Williams and Wilmore are seasoned vets who have both stayed on the ISS for months before, but still, it's wild that an eight-day trip is now stretching into eight months.

Yeah, and extremely embarrassing for Boeing that a competitor, SpaceX, has to go rescue the astronauts that they delivered because they couldn't get the job done. Let's go back 10 years. So NASA didn't have the space shuttle anymore, and they were using Russian spacecraft to deliver American astronauts to the ISS.

They go, OK, let's get some American companies involved. We're going to hand out some contracts to American private companies that can deliver that can shuttle American astronauts to the ISS. So they hand out four point two billion dollars to Boeing and they hand out two point six billion dollars to SpaceX, which is nearly half of that and say, OK, you build spacecraft that can take our astronauts to the ISS.

In the meantime, in the 10 years since, SpaceX has done eight of these crewed missions and Boeing has done 0.7, 0.6. I don't know. But it is a huge blow to Boeing's space ambitions. They were considered the big player in the space. They have been around for decades. SpaceX was the upstart. And SpaceX has completely lapped them at every single point in this journey. Boeing has taken a 1.6%

billion hit for this space program. So it's actually an existential question now of whether Boeing should even pursue this anymore based on what happened. The ISS is supposed to be decommissioned in just four or five years from now. So it's like, what is the point of even fulfilling this contract that they were paid for? Because the costs are just sort of overrunning any revenue they could make, and it's not seeming like a good business for them.

Right. NASA was so close to having its plan pay out perfectly because obviously SpaceX has done really well, but having two competitors would have just been... It was their plan from the beginning. Starliner was going to be this very key asset for NASA. So yes, egg on the face for Boeing, egg on the face a little bit for NASA for giving Boeing the larger contract to begin with. One thing...

though, that we have to be clear about. The astronauts are okay up there. I mean, as okay as you can be, given the fact that your stay was increased by much more than you expected. They both are veteran astronauts. They've been on the space station for long periods before. They supported the decision that NASA made. They will not lack for food, water, basic supplies. A cargo spacecraft

recently arrived this month. Another one scheduled for October. So even though it can be very anxiety inducing to think about what it would feel like to have your trip extended that much, I think that they'll be okay. They've been in this situation before and they're not lacking any of the essential supplies. Up next, hope you had a great weekend because our winners of the weekend sure did and they are coming up next.

Calling all HR pros. I want to tell you about Indeed FutureWorks, the event you don't want to miss if you're a talent leader. It's all happening on September 26th, and this year they've got comedian Trevor Noah headlining it. Trevor Noah? I love that guy. Yeah, he'll be providing a fresh take on equity in hiring and how better work leads to better lives. Looks like they also have Indra Nooyi speaking. She was the CEO of PepsiCo.

Sounds like a pretty stacked speaker list. So if you're ready to discover the latest AI tools and tech solutions that help you find better candidates faster, sign up for Indeed FutureWorks on September 26th. Best of all, if you join virtually, it's absolutely free. Sign up today at indeedfutureworks.com slash brew. That's indeedfutureworks.com slash brew.

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Welcome to our winners of the weekend, the segment where Toby and I pick two things for which the Sunday scaries don't apply. I won the pre-show personal essay contest. It was a real tearjerker, so I get to go first. And my winner is the Jersey Babe Ruth war when he called his shot during the 1932 World Cup.

Sure, it's an inanimate object, but it just became the most expensive piece of sports memorabilia ever when it was sold for over $24 million at auction on Sunday. That smashes the previous record of $12.6 million for Mickey Mantle's 1952 rookie card set two years ago. And in third place sits Michael Jordan's Bulls uniform from the 1998 NBA Finals, which went for just over $10 million.

But none of those could compare to an item immortalizing perhaps the most dramatic moment in sports ever. It was Game 3 of the World Series in 1932, and Ruth's Yankees were facing the Chicago Cubs in a heated game. Up steps Ruth to the plate, and he points his bat to center field as if to say, this is where I'm going to hit this ball. And then he hit a home run, solidifying his legend, not just in sports, but in broader American culture today.

That's why collectibles experts talk about this Babe Ruth jersey as the Mona Lisa of sports memorabilia. By the way, the winner wanted to remain anonymous. Toby, any thoughts on who would pay $24 million for a 100-year-old baseball jersey?

No, that is beyond my scope of imagination. The funniest thing about researching this story, though, is that historians debate on whether he was actually pointing or not. There's a lot of different opinions about if he was actually pointing or if he was just

gesturing to the Cubs' duck out, who had apparently been kind of smack-talking him the entire game. Ruth himself has kind of, in the past, has given an account that supports both sides of the story, which kind of just only feeds into the myth, into the legend.

My thinking, whenever I see a game-worn jersey like this go for a lot, I'm not a fan of the game-worn jerseys. Baseball, of all sports, you're probably not sweating the most in, but the Michael Jordan jersey, I don't know if I'd want to spend millions of dollars on essentially a sweaty jersey, but I can see why this one is the Mona Lisa because...

Back in Babe Ruth's day, they didn't wear that many jerseys. These days, the players wear almost a new jersey every single game. Back then, you had to re-wear jerseys, so they're exceedingly rare. Baseball is the exception in the sense that you're not really sweating it that much, so that makes my germaphobe...

mind comprehend why someone paid this much for it. But yeah, the called shot, definitely a big cultural moment for people and something that a lot of kids have emulated at one point in their day.

My winner of the weekend is Crayola. While you might be getting some out-of-office emails from colleagues as the majority of the corporate world eases into the dog days of summer, the opposite is true if you work at Crayola. The weeks between July 4th and Labor Day represent the busy season if you're in the crayon-making business. How busy? Well, the company's flagship factory in Pennsylvania cranks out at least $1,000

13 million crayons every day to meet demand from back-to-school shoppers. And demand is high. Last year, Americans spent a total of $41.5 billion on back-to-school shopping, and about half of Crayola's annual sales come in just these nine weeks.

Neil, I bet the Crayola factory would be amazing to visit. Just think of the smell of 13 million fresh crayons coming off the assembly line every day. Well, speaking of the smell, in July, Crayola filed for a trademark for the smell of its crayons. They kind of want to do what Subway has done and permeate that territory.

Waxy smell across retail outlets and in aisles where they're sold. So you're drawn in to that nostalgia and buy some more crayons. They actually called it in the filing. Tell me if you think this is accurate. A slightly earthy soap with pungent leather-like clay undertones. That's how they described their crayon smell. But I never thought of crayons as a seasonal business. But to find out that they're cranking out 13 million crayons every single day, half their sales come weekly.

in just nine weeks of the year, speaks to the fact of how seasonal a business this is, how tied they are to the school cycle. But you said their factory, like this is a very great American success story. They've kept most of their manufacturing in the United States, really just that one factory in Eastern Pennsylvania. That is sort of a pilgrimage process.

for Crayola fans. If you want to go see, they employed 1200 jobs there. So it is just a really cool American success story for manufacturing started in 1885, just selling pigments for tires and paint. And then they realized that they can make crayons if they combine that with wax as well. So just a very cool company. And I would love to go visit, uh,

that factory and see how they make some crayons. I hope they roll out a Crayola candle. I'm sure they probably do. I mean, they make wax crayons every day, but a Crayola candle, that would bring back some childhood memories. All right, to wrap up things, here is our Monday rundown of the major happenings you need to know about for the week ahead.

The U S open in tennis starts today in Flushing Meadows, New York. And there are plenty of juicy storylines for an event that seems to only get more popular every year. Can American Coco golf defend her women's title from last year? Will Carlos act,

Alcaraz and Novak Djokovic meet in another major final. How many honey deuces can I consume? Or better question, can I afford? The signature Grey Goose drink of the tournament got another price bump to $23 this year. Last year, this tournament was absolutely massive. They had almost a million people come over the three-week run. They're projecting over one million attendance for this year. Last year,

if we want to go to the honey deuce, uh, stats as well, more than 450,000 honey deuces were sold at around $22 a pop. So they made $10 million of justice. One drink alone. You tried it. I tried it last year. It is. Oh, it is absolutely delicious. There's a, you know, there's some controversy going in, but not too much. The world. Number one, uh,

Yannick sinner of Italy, uh, tested positive for two on two doping tests, but that he has been cleared saying that his physio gave it to him. So that is a little, uh, that was sort of the talk of the tennis world going in, but it seems like there is momentum building around tennis. We had that challengers movie come out, which we both saw, which was excellent. Uh, ESPN's ratings for Wimbledon earlier this summer rose 9%. So this event is only getting bigger and, uh,

Unfortunately for anyone who wants to go pricier because of that demand. Over on Wall Street, everyone is counting down the hours until Wednesday afternoon when NVIDIA will report earnings. The chipmaker is considered a proxy for the AI boom. So as NVIDIA's performance goes, so goes the stock market. In fact, NVIDIA's 150% rise this year accounts for one quarter of the S&P 500's total gain. Toby, are you expecting another blowout quarter from NVIDIA?

It's tough to continually blow out quarters because eventually expectations start to rise. And you can just look at it. A lot of analysts have recently revised their estimates for Nvidia's second quarter earnings significantly upward. So I don't think they're going to blow it out of the water, but it still will be quite impressive. And then that SpaceX mission that will feature the first commercial spacewalk and a very risky one at that is slated to launch early tomorrow around 4 a.m. Eastern.

Remember, these astronauts will go higher than any since the Apollo missions of the 1970s, traveling more than 700 miles above the Earth. And you can watch it. I mean, if you wake up at an ungodly hour, the SpaceX Twitter or X account will live stream it three and a half hours prior to launch. So if you can't sleep or you're up early along with us, tune into that and you can see a firsthand account of this spacewalk happening.

Yep, and if you're missing the Olympics, good news, there's more sporting action from Paris. The Paralympics start in Paris on Wednesday, featuring 4,400 athletes with impairments and disabilities from more than 165 countries. Yeah, one big thing about the Paralympics is sometimes you hear it described as participating in the Paralympics, but they are competing. They are competitors who train just as hard as the athletes in the Olympics. So, yeah, if you've been feeling that unwell,

Olympic-sized hole in your entertainment diet, give the Paralympics a shot. I remember watching it back in Tokyo three years ago, and it was so intense. Great competition. So definitely check it out starting on Wednesday. All right, let's wrap it up there. Thanks so much for starting your morning with us. Have a wonderful Monday and start to the week. To get in touch, send an email to morningbrewdaily at morningbrew.com, and please share the podcast with your network. Help them keep active.

as up to date with current events as you are. Toby, how about some inspiration for who listeners should recommend MBD to today? I want you to share Morning Brew Daily with your mom and dad. This could be a tough one depending on how tech savvy you are, but drop it in the family group chat and just see how they do. If they respond in a funny way, send us a screenshot to our email as well. But yeah, share it with mom and dad.

All right, let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer. Olivia Graham is our associate producer. Uchenna Waogu is our technical director. Billy Menino is on audio. Hair and Makeup is calling its shot. Devin Emery is our chief content officer. And our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.