Daily Update: December 18, 2020

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“Don’t be evil.” Those were the memorable words suggested by Google employee Paul Buchheit at a company meeting about corporate values in early 2000. For most of its history, Google has been the beneficiary of the perception that it was committed, however passively, to doing the right thing. When the company struggled with the ethics of its actions, as it notably has in the China market over the years, there was at least the perception that at Google, ethics were something worth struggling with.

Events in the past few weeks have challenged that perception.

A group of 38 U.S. attorneys general filed a lawsuit on Dec. 17 against Alphabet Inc.'s Google, alleging the company engaged in anticompetitive conduct to maintain monopoly power in specific search and advertising markets. The suit claims that the search giant used revenue-sharing agreements with device makers like Apple and mobile providers like T-Mobile to maintain a virtual monopoly on search in the U.S.

"Google monetizes its search results by selling to advertisers the ability to reach consumers who have entered general search terms," the suit alleges. "As a result of its significant power in the general search-services market, Google also has built durable monopolies in general search text advertising and in the larger market for general search advertising."

A smaller group—made up of 10 Republican state attorneys general in the U.S.—have filed a separate suit alleging that Google conspired with Facebook to harm competition in the digital advertising market. Texas Attorney General Ken Paxton alleged that Google "effectively eliminated its competition and crowned itself the head of online advertising."

Google has denied all of these accusations and has committed itself to “strongly defend ourselves from his baseless claims in court," according to a company statement.

Google has also struggled to contain the fallout from its decision to dismiss a high-profile artificial intelligence researcher, Timnit Gebru. Ms. Gebru contends she was fired after she objected to the company’s decision to not publish a piece of research she co-authored that talked about potential bias in large-scale language models. Such models are critically important to a range of Google products and services. While Google has indicated that Ms. Gebru elected to leave after being told her paper didn’t meet their standards for publication, critics inside and outside of the company have questioned that narrative.

Alphabet and Google CEO Sundar Pichai wrote in an email to employees on Dec. 9 that those at the company “need to accept responsibility for the fact that a prominent Black, female leader with immense talent left Google unhappily. This loss has had a ripple effect through some of our least represented communities, who saw themselves and some of their experiences reflected in Dr. Gebru’s.”

Today is Friday, December 18, 2020, and here is today’s essential intelligence.

Uncertainty in the Global Economy

Emerging Markets Monthly Highlights: A Brighter 2021, From Afar

Recovery prospects look brighter for 2021, but the sequence of the recovery matters. The recent endorsement of the COVID-19 vaccine in the U.S. and other countries supports a potentially faster economic recovery in 2021.

—Read the full report from S&P Global Ratings

Infrastructure Finance Outlook 2020 Issue 2

In this second edition of the Infrastructure Finance Outlook, we zoom in on the energy transition and ESG, and how the COVID-19 pandemic has accelerated both.

—Read the full report from S&P Global Ratings

Dining Out: November U.S. Restaurant Sales Stung By Cold, Pandemic

Sales at U.S. bars and restaurants in November fell from the previous month as rising cases of COVID-19 spurred tighter dining restrictions and temperatures dropped around the country.

—Read the full article from S&P Global Market Intelligence

UK Food and Drink Sector in Crosshairs Should Brexit Free Trade Talks Fail

A collapse of free-trade talks between the EU and the U.K. would significantly damage Britain's large food and drink industry, a sector already reeling from the impact of the COVID-19 pandemic, including a jump in shipping costs and delays at key ports, industry experts say.

—Read the full article from S&P Global Market Intelligence

The Future of Credit

Default, Transition, and Recovery: Weakest Links Fall Amid Improved Funding Conditions

The number of weakest links (issuers rated 'B-' or lower by S&P Global Ratings with negative outlooks or ratings on CreditWatch with negative implications) has been on the decline over the past two quarters as financing conditions continue to improve, even for the lowest-rated issuers.

—Read the full report from S&P Global Ratings

Uncertainties Impact Credit Risk in the European Union and the UK

Companies within the European Union (EU) have experienced significant turbulence over the past year with the COVID-19 pandemic and are braced for more with the finalization of the UK’s exit from the EU.

—Read the full article from S&P Global Market Intelligence

China's Recent State-Linked Bond Defaults Pose Limited Systemic Risk – Analysts

Although bond defaults by Chinese state-linked companies may continue into 2021, experts say systemic risk will likely remain limited as the government appears to be reducing implicit guarantees only for highly leveraged and ill-managed issuers.

—Read the full article from S&P Global Market Intelligence

North America Posts 45 Upstream Bankruptcies in 2020: Report

A total 45 bankruptcies in the North American E&P patch were filed in 2020, the second-highest number since oil prices abruptly plummeted to the $50/b level six years ago, Haynes & Boone said in a Dec. 17 report.

—Read the full article from S&P Global Platts

Banking Sector Under Pressure

Nordic Banks Face 'Significant Impact' From ECB's New Dividend Policy

Nordic regulators are likely to follow the European Central Bank's new dividend policy, which will have a "significant impact" on large Nordic banks' distributions in 2021, according to an analysis by Nordic Credit Rating.

—Read the full article from S&P Global Market Intelligence

Technology & Innovation

UK Digital Services Tax in Limbo Amid U.S. Investigation, Global Talks – Experts

The fate of the U.K.'s tax on large tech firms mainly depends on conciliation with the incoming U.S. administration and progress on a multilateral agreement at the Organization for Economic Co-operation and Development, experts said.

—Read the full article from S&P Global Market Intelligence

APAC Propels Fiber To Reach 51.3% of 1 Billion Global Fixed Broadband Households

Kagan's survey of over 80 major fixed broadband markets worldwide indicates the global market is forecast to reach the 1 billion subscriber milestone by the end of 2020.

—Read the full article from S&P Global Market Intelligence

ESG in the Time of COVID-19

FERC Examines California Blackouts But Lacks Votes to Launch Probe Into Market Rules

Following the presentation of a staff report on the mid-August heat wave and rolling blackouts in California, members of the Federal Energy Regulatory Commission agreed Dec. 17 that urgent work is needed to prevent a similar situation next summer but voted against the chairman to block a formal probe into the matter that would have restricted FERC's dialogue with the grid operator and stakeholders.

—Read the full article from S&P Global Platts

Eight Energy Majors Agree Energy Transition Principles, Action on Emissions

BP, Shell, Eni, Equinor, Galp, Repsol, Shell, Total, and Occidental have jointly developed and agreed on six principles as part of a "collaborative platform" to support the energy transition, according to a statement Dec. 17.

—Read the full article from S&P Global Platts

Biden to Select Native American Lawmaker to Lead U.S. Interior – Reports

President-elect Joe Biden will tap U.S. Rep. Deb Haaland, D-N.M., to head the U.S. Department of the Interior, in a move that could place a Native American at the helm of the agency that oversees tribal coordination for the first time in its history, according to national media reports.

—Read the full article from S&P Global Market Intelligence

Biden Pick For U.S. Interior Post Seen Potentially Curbing Fossil Fuel Development

President-elect Joe Biden will tap US Representative Deb Haaland, Democrat-New Mexico, to head the US Department of the Interior, in a move that could potentially curb fossil fuel development on federal lands, according to various media reports Dec. 17.

—Read the full article from S&P Global Platts

The Future of Energy & Commodities

Watch: Five Commodity Themes For 2021

This year has been unlike any other in recent history. The coronavirus pandemic has left the commodities industry reeling, disrupting supply chains and slashing demand. S&P Global Platts President Martin Fraenkel lays out his five themes to focus on in commodity markets in 2021.

—Watch and share this Platts Insight video from S&P Global Platts

Feature: Politically Fractured Iraq's Fiscal Struggles Strain its OPEC Commitment

Iraq may be the birthplace of OPEC and its second largest oil producer, but the bonds of its membership to the exporters group are likely to be tested again in 2021 as the volatile country faces its deepest economic crisis in decades, with fractious parliamentary elections looming in June.

—Read the full article from S&P Global Platts

Front-Month WTI Settles Above $48/B For First Time Since February

Front-month NYMEX WTI settled above $48/b on Dec. 17 for the first time since February amid a bevy of bullish news on the new vaccine rollout, a potential deal on a US coronavirus stimulus package and optimism on a post-Brexit trade agreement finally being reached between the United Kingdom and the European Union.

—Read the full article from S&P Global Platts

Listen: 2020 in Review: The Year That Changed Everything

As 2020 finally draws to a close, Oil Markets Podcast hosts from around the world – Mriganka Jaipuriyar, Joel Hanley and Richard Swann – gather to discuss the year in detail, and try to chart a path to recovery in 2021.

—Listen and subscribe to Oil Markets, a podcast from S&P Global Platts

Written and compiled by Molly Mintz.