Advertisement

SKIP ADVERTISEMENT

DealBook Briefing: Big Tech Enters Antitrust Purgatory

Credit...Josh Edelson/Agence France-Presse — Getty Images

Good Tuesday. (Want this by email ? Sign up here.)

And then there were four. Yesterday, we learned that the federal government might be preparing antitrust inquiries into Apple and Facebook as well as into Google and Amazon, Cecilia Kang, David Streitfeld and Annie Karni of the NYT write.

• “The Justice Department has agreed to handle potential antitrust investigations related to Apple and Google, while the Federal Trade Commission will take on Facebook and Amazon.”

• House lawmakers are also planning 18 months of hearings and subpoenas for internal corporate documents into “major digital platforms,” which could “lead to the first overhaul of antitrust rules in many decades.”

“This is about how do we get competition back in this space,” said Representative David Cicilline, the chairman of the House Judiciary’s subcommittee on antitrust that will lead that investigation.

The agencies don’t appear to have opened official investigations yet. “But the scrutiny from Washington could lead to years of headaches for the companies, raising the prospect of lawsuits to break up companies, hefty fines or new laws limiting their reach,” Ms. Kang, Mr. Streitfeld and Ms. Karni write.

Tech stocks dropped on the news. Facebook fell more than 7 percent, Alphabet (Google’s parent) by over 6 percent and Amazon by 4 percent. Even Apple, which announced several new products yesterday, sank by 1 percent. The tech-heavy Nasdaq slid into correction territory.

What comes next is slow and difficult. Antitrust inquiries are time-consuming. And these companies, which didn’t exist when antitrust laws were written, raise challenges for investigators. It’s also unclear that regulators would break up the tech companies, as many people have recently called for.

More: Senator Elizabeth Warren’s presidential campaign put up a billboard calling for the breakup of Big Tech — in the heart of San Francisco.

President Trump’s plans for tariffs to curb immigration could be opposed by members of his party, according to the WaPo.

“Congressional Republicans have begun discussing whether they may have to vote to block President Trump’s planned new tariffs on Mexico,” the WaPo reports, citing unnamed sources. The plan: Override Mr. Trump’s declaration of a national emergency. Unlike in the spring, the resistance would probably command a veto-proof majority, the paper said.

Such a vote “would be the G.O.P.’s most dramatic act of defiance since Trump took office.”

The worry: The tariffs may amount to tax increases. Jim Tankersley of the NYT writes that the levies on Europe, China and Mexico “would more than wipe out any gains from his $1.5 trillion tax cut for low- and middle-income earners, leaving them with less money to spend into a consumer-driven economy.”

The tariffs would erase Mr. Trump’s biggest selling point for 2020: the strong economy. Bank of America has already cut its forecast for corporate profits in 2019, citing the trade war with China.

Mexico hopes to appease Mr. Trump by cracking down on migrants trying to enter the U.S. But Mexican officials also warned that they could slap tariffs on some U.S. goods in retaliation.

More: The next front in Mr. Trump’s trade war with China may be Chinese researchers at American universities. And analysts doubt that a trade deal with the U.S. would enable Britain to compensate for leaving Europe.

Image
James Bullard, the president of the St. Louis Fed.Credit...Edgar Su/Reuters

Bets that the Fed will lower interest rates soon have surged in recent days. But if those wagers are wrong, things could get ugly.

“The Fed funds futures market suggests a better than 50-50 chance that the central bank will announce a cut at its meeting in July,” Matt Phillips of the NYT writes. “In early May, those odds were below 20 percent.”

Strategists at JPMorgan Chase now predict two rate cuts this year, according to Alexandra Scaggs of Barron’s. They also cut year-end forecasts for Treasury yields.

Hopes have been buoyed by the head of the St. Louis Fed, James Bullard, who said yesterday that current economic conditions “suggest that the current policy rate setting is inappropriately high” and that rate cuts “may be warranted soon.”

But overheated expectations for rate cuts “could leave the market vulnerable to any sign that the Fed is wavering,” Mr. Phillips writes.

Expect some insight today when Jay Powell, the Fed’s chairman, delivers a speech on monetary policy at a conference in Chicago.

More: Australia’s central bank has cut rates to record lows.

Many of the world’s biggest companies are bracing for the prospect that climate change could whack their finances within the next five years, according to a new analysis of corporate disclosures, Brad Plumer of the NYT writes.

• CDP, an international nonprofit, has analyzed risk and opportunity reports of 215 of the world’s 500 biggest corporations, from Silicon Valley tech companies to big European banks.

• It found that “these companies potentially faced roughly $1 trillion in costs related to climate change in the decades ahead unless they took proactive steps to prepare.”

• “In all, the world’s largest companies estimated that at least $250 billion of assets may need to be written off or retired early as the planet heats up.”

• “By the companies’ own estimates, a majority of those financial risks could start to materialize in the next five years or so.”

“The disclosures offer only a partial glimpse at the potential price tag of climate change,” Mr. Plumer writes. “Only a fraction of companies worldwide currently report their climate risks, and many large firms, including energy giants Exxon Mobil and Chevron, did not submit a disclosure to CDP last year.”

“On the flip side, the CDP report found, many companies also see moneymaking potential in climate change. Some 225 of the world’s largest corporations highlighted roughly $2.1 trillion of possible opportunities in a warming world, with the majority expected to materialize within the next five years.”

Image
Credit...Brittany Hosea-Small/Agence France-Presse — Getty Images

The iPhone maker made a bunch of announcements yesterday during its annual developer conference in San Jose, Calif. Here are the highlights.

Doubling down on privacy. The company is putting limits on how, and how often, apps can gain access to users’ location data without their permission. It also announced a way for people to sign into third-party apps and services using an Apple ID that shares less information than those of rivals sometimes do.

IPads that work better for work. The tablet is getting its own operating system, which is meant to make it easier to use the device as a primary work computer.

Expensive computers. A new version of the Mac Pro, Apple’s high-performance professional desktop computer, will start at $6,000. (Why not pair it with the company’s new $5,000 monitor and $1,000 display stand!)

The death of iTunes. The iconic music player and library is being carved up into Apple Music, Apple Podcasts and Apple TV. Farewell.

And more: IPhone apps are headed to the Mac’s App Store; a new version of MacOS will let you use an iPad as a second screen for your computer; and the Apple Watch is getting its own App Store. The company is also backing off from its crackdown on some third-party apps that was broadly viewed as anticompetitive.

Every year, someone bids millions of dollars to have lunch with Warren Buffett. This year, it’s Justin Sun, who founded the cryptocurrency Tron and is C.E.O. of the file-sharing site BitTorrent.

Mr. Sun paid $4.6 million for the chance to eat with Mr. Buffett at a steakhouse in New York City. It’s a record for the charity auction, which benefits the antipoverty charity Glide.

“I’m excited to talk to Warren Buffett about the promise of blockchain,” Mr. Sun said. He plans to invite other industry executives — he’s allowed to bring up to seven — to the meet-up.

They have their work cut out. Mr. Buffett is a noted skeptic of cryptocurrencies: He once derided trading in them as “just dementia,” and called Bitcoin “rat poison squared.”

Justin Osofsky, a longtime Facebook executive, will become Instagram’s C.O.O.

Alex Beard, the head of Glencore’s oil division, will step down. He’ll be replaced by Alex Sanna, who has led the trading firm’s diesel business.

Credit Suisse hired Tang Zhenyi, a former chairman of the investment group CLSA, as the C.E.O. of its China operations.

JPMorgan Chase named Xavier Bindel as a co-head of technology investment banking for Europe, the Middle East and Africa. He’ll serve alongside Matthew Gehl.

Deals

• Fiat Chrysler and Renault tried to reassure the French government over the weekend about their proposed merger. But any concessions could make minority shareholders less enthusiastic about the deal. (NYT, Bloomberg Opinion)

• Blackstone’s $18.7 billion deal to buy a collection of U.S. warehouses is a huge bet on Amazon and e-commerce. (WSJ)

• Humana said that it won’t bid for fellow health insurer Centene. (WSJ)

• A British financial watchdog is investigating whether a Citigroup employee leaked information about major deals to a stock trader before they were made public. (WSJ)

Politics and policy

• President Trump suggested a boycott of AT&T to punish the company over news coverage from its CNN division. (NYT)

• A former business partner of the Trump Organization claimed in a lawsuit that the company evaded taxes in Panama. (NYT)

• Congress finally approved a $19.1 billion disaster-aid package, overcoming objections from some House Republicans. (NYT)

• The movie and TV producer Peter Chernin is trying to raise millions of dollars to fight new anti-abortion laws. But Hollywood’s opposition to the measures may be flimsier than it seems. (NYT, CNN)

• No, Justice Clarence Thomas isn’t retiring from the Supreme Court. (NYT)

Tech

• YouTube’s automated recommendation system has helped create a vast video catalog of children for pedophiles. (NYT)

• A decision by Britain on whether to use Huawei’s 5G hardware appears to be delayed. (FT)

• E-commerce companies are nervous about how new European antifraud measures during customer checkouts could affect sales. (FT)

• AT&T, Verizon and T-Mobile were the biggest spenders in two recent F.C.C. spectrum auctions. (WSJ)

• Tesla makes a healthy income from selling greenhouse gas credits to G.M. and Fiat Chrysler. (Fortune)

Best of the rest

• Boeing’s C.E.O. said that its 737 Max jets should be flying again by the end of the year. (CNBC)

• FedEx reportedly misrouted Huawei’s packages because it was trying to comply with the Trump administration’s crackdown on the Chinese tech company. (WSJ)

• Some parents charged in the college admissions scandal will reportedly claim that the sums of money they gave were donations, not bribes, in an attempt to avoid prosecution. (Bloomberg)

• Sweden won’t seek an arrest warrant for Julian Assange, which could make it easier for the U.S. to extradite him. (WSJ)

• Refinitiv, the data arm spun out of Reuters, blocked news about Tiananmen Square from data terminals in China. (FT)

Thanks for reading! We’ll see you tomorrow.

We’d love your feedback. Please email thoughts and suggestions to business@nytimes.com.

Advertisement

SKIP ADVERTISEMENT