Daily Archives: July 31, 2020

Big tech is back in the spotlight.

The chief executives of Amazon, Apple, Facebook and Google testified before Congress on July 29 to defend their market dominance from accusations theyre stifling rivals. Lawmakers and regulators are increasingly talking about antitrust action and possibly breaking the companies up into smaller pieces.

I study the effects of digital technologies on lives and livelihoods across 90 countries. I believe advocates of breaking up big technology companies, as well as opponents, are both falling prey to some serious myths and misconceptions.

Arguments for and against antitrust action often use earlier cases as reference points.

The massive 19th-century monopoly Standard Oil, for example, has been referred to as the Google of its day. There are also people who are recalling the 1990s antitrust case against Microsoft.

Those cases may seem similar to todays situation, but this era is different in one crucial way: the global technology marketplace.

Currently, there are two big tech clusters. One is in the U.S., dominated by Google, Amazon, Facebook and Apple. The other is in China, dominated by Baidu, Alibaba, Tencent, Huawei and TikTok-maker ByteDance.

This global market is subject to very different political and policy pressures than regulators faced when dealing with Standard Oil and Microsoft. For example, the Chinese government has blocked most of the U.S. companies from entering its market. And the U.S. government has done likewise, blacklisting some Chinese outfits over perceived national security threats while discouraging others.

Since the COVID-19 outbreak, the Chinese government has doubled down on championing its own technology companies.

U.S. companies size and data accumulation capabilities give the country economic and political influence around the globe. If the U.S. technology giants are broken up, the result would be a vastly uneven global playing field, pitting fragmented U.S. companies against consolidated state-protected Chinese firms.

There are two main views of antitrust action among legal experts.

One focuses on consumer welfare, which has been the prevailing approach federal lawyers have taken since the 1960s. The other suggests that regulators should look at the underlying structure of the market and potential for powerful players to exploit their positions.

Those two sides seem to agree that price plays a key role. People who argue against breaking up the tech giants point out that Facebook and Google provide services that are free to the consumer, and that Amazons marketplace power drives its products costs down. On the other side, though, are those who say that having low or no prices is evidence that these companies are artificially lowering consumer costs to draw users into company-controlled systems that are hard to leave.

Both sides are missing the fact that the monetary price is less relevant as a measure of what users pay in the technology industry than it is in other types of business. Users pay for digital products with their data, rather than just money.

Regulators shouldnt focus only on the monetary costs to the users. Rather, they should ask whether users are being asked for more data than is strictly necessary, whether information is being collected in intrusive or abusive ways and whether customers are getting good value in exchange for their data.

There arent just two ways for this debate to end, with either a breakup of one or more technology giants or simply leaving things as they are for the market to develop further.

In my view, the best outcome is right in the middle. The errant company is sued to make necessary changes but isnt broken up. The very fact that the government filed a lawsuit leads to progress with other companies. That is exactly what happened in past cases against the Bell System, IBM and Microsoft.

In the 1956 federal consent decree against the Bell System telephone company, for example, which settled a seven-year legal saga, the company wasnt split up. Instead, Bell was required to license all its patents royalty-free to other businesses. This meant that some of the most profound technological innovations in history including the transistor, the solar cell and the laser became widely available, yielding computers, solar power and other technologies that are crucial to the modern world. When the Bell System was eventually broken up in 1982, it did not do nearly as much to spread innovation and competition as the agreement that kept the Bells together a quarter-century earlier.

The antitrust action against IBM lasted 13 years and didnt break up the company. However, as part of its tactics to avoid appearing to be a monopoly, IBM agreed to separate pricing for its hardware and software products, previously sold as an indivisible bundle. This created an opportunity for entrepreneurs Bill Gates and Paul Allen to create a new software-only company called Microsoft. The surge of software innovations that have followed can clearly trace their origins to the IBM settlement.

Two decades later, Microsoft was itself the target of an antitrust action. In the resulting settlement, Microsoft agreed to ensure its products were compatible with competitors software. That made room in the emerging internet marketplace for web browsers, the predecessors of Apples Safari, Mozillas Firefox and Google Chrome.

Even Margrethe Vestager, the European Unions top antitrust official and frequent tech-giant nemesis, has said that antitrust prosecutions are part of how technology grows. But that doesnt mean they all have to achieve their most extreme ends and be broken up.

The current pandemic has highlighted the value of the technological innovations of the big tech companies.

Americans are relying more than ever on the internet and online shopping and delivery, while mobility data has been critical in gauging social distancing behaviors and guiding policy. Digital tools for tracking coronavirus cases, deaths and social distancing behaviors in the smallest counties have circulated widely, and social media and smartphone videos were crucial to the recent protests and calls for social justice.

Altogether, this has led to a softening of public opinion toward big tech and calls for an end to talk of breaking them up.

But the pandemic has also revealed numerous digital fault lines: differences in access by country, race and region; the ability of tech companies to exploit labor; and potential for new kinds of misuse of data.

Far from giving the technology industry a free pass, the pandemic is an opportunity to take a more balanced view. Yes, lets celebrate the Silicon Valleys value, but lets not turn a blind eye to the problems they create or worsen.

During the hearings, youll likely hear politicians accentuate the bad stuff, while the tech CEOs will paint an overly rosy image of themselves. Antitrust is complicated enough without misconceptions clouding their judgments as well.

This is an updated and expanded version of an article originally published on July 17, 2019.

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Lawmakers keen to break up 'big tech' like Amazon and Google need to realize the world has changed a lot since Microsoft and Standard Oil - The...

In his opening statements, the chairman of Wednesdays historic tech hearing argued that regulating techs most dominant players is vital in the midst of the ongoing pandemic that has driven even more of American life online.

Prior to the COVID-19 pandemic, these corporations already stood out as titans in our economy, House Judiciary Antitrust Subcommittee Chair David Cicilline said. In the wake of COVID-19, however, they are likely to emerge stronger and more powerful than ever before.

The argument that tech stands to benefit from the COVID-19 crisis is a smart one and a timely attack thats difficult to dispute. While many major companies in other industries are struggling, grappling with layoffs or filing for bankruptcy, many of techs largest companies stand to emerge from the economic storm largely unscathed if not better off.

In his own opening remarks, ranking member Jim Sensenbrenner also argued that because Americans are relying more on online companies than ever before, techs power must be examined in light of the pandemic.

That responsibility comes with increased scrutiny of your dominance in the market, Sensenbrenner said.

Its not the first warning about tech companies amassing more power in the throes of the coronavirus crisis. A handful of members of Congress have called attention to mergers planned during the pandemic, citing concerns about adequate scrutiny for deals that could make techs already huge companies even larger and more dominant.

In April, Sen. Elizabeth Warren (D-MA) and Rep. Alexandria Ocasio-Cortez (D-NY) proposed the Pandemic Anti-Monopoly Act, which would freeze mergers during the crisis, calling out big tech specifically. The LEAST we should do is halt big mergers during COVID to slow the consolidation of sectors, Ocasio-Cortez said.

Cicilline also previously called for a freeze on mega-mergers and pushed for such a ban to be included in the economic stimulus package passed by Congress.

As hard as it is to believe, it is possible that our economy will emerge from this crisis even more concentrated and consolidated than before, Cicilline said. As American families shift more of their work, shopping and communication online, these giants stand to profit.

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Lawmakers argue that big tech stands to benefit from the pandemic and must be regulated - TechCrunch

Amazons Jeff Bezos, Apples Tim Cook, Googles Sundar Pichai and Facebooks Mark Zuckerberg, CEOs of four of the worlds most powerful companies, are testifying before Congress Wednesday.

Specifically, they are going before the Houses Subcommittee on Antitrust, Commercial, and Administrative Law, and the issue here boils down to power. How did these companies get it? Did they do so legally, or did they break rules? Finally, do they have too much power?

Erik Gordon, professor at the University of Michigans Ross School of Business, spoke with host Sabri Ben-Achour. The following is an edited transcript of their conversation.

Sabri Ben-Achour: So can you explain why this hearing is happening? And, specifically, why this question of how these companies became so powerful and whether they did so legally is an issue right now?

Erik Gordon: The hearing is happening because members of Congress think that these companies are really powerful, and that theyre abusing their power, and that Congress should look into it and maybe pass some new laws. The question you brought up is the key question. Under current antitrust law, its perfectly OK to be big and to be powerful, and, in fact, to be a monopoly, as long as you got big and powerful by lawful means, as long as you didnt do anything illegal. The government cant break you up, under current law, just for being big.

Ben-Achour: So whats an example of how, say, Google or Facebook or whichever might have accumulated power illegally?

Gordon: Suppose you have a dominant online search engine, and you use that search engine dominance to make you even more powerful in an other area. So, for example, suppose you say, You can only use my search engine, if you use my browser. Now you get big and powerful in the browser business, because you already had power in the search engine business. That would be an example of getting bigger and more powerful illegally.

Ben-Achour: Do you think anything significant will come out of these hearings? Or are they sort of theatrical?

Gordon: I have a sense that in an election year, were going to see some theater. Its an opportunity for politicians to control the questions. They get to put together some nice sound bites for their campaign. This isnt the first round of hearings we had, and in the other hearings, where there were some beat-ups of Zuckerberg and other tech people, oh, a few bills were introduced in Congress. They didnt go anywhere. Nothing much happened.

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Are the Big Tech companies breaking antitrust rules? Their CEOs testify before Congress. - Marketplace

The hearing on big tech antitrust matters on Wednesday was an embarrassment, and not a single governmental official there had the ability, will, or both, to bring any of the CEOs on hand to task.

The very best you can say about Wednesday's hearing is that it was bipartisan. But you can only say that because Democrats and Republicans alike displayed equal ignorance, and favored their own political careers instead of doing the job they said they were there for.

Whether you think Apple, Google, Facebook, and Amazon are shiny-clean saints, slightly murky figures, or outright criminal, it doesn't matter. If there's anything to get away with, they got away with it and that was it, that latest round was over with nobody but the tech CEOs scoring any points.

America originally took the basics of its legal system and its hearing procedures from the UK, where one of the authors of this editorial is from. In the UK, there is a weekly Prime Minister's Questions session, the PMQs, and it is lauded as among the greatest examples of democracy in action but only by the people involved. To the people, it is an embarrassment. Highly paid and in theory highly educated people act in it the same way schoolboys do in the yard.

And for the Americans on the staff, this was more of the same ignorance and posturing on the irrelevant that we've seen for the last 20 years. It was elected officials wrapping themselves in the flag, trying to score points for re-election campaigns. Instead of listening to answers, they'd cut off the answers, and keep reading what were pre-prepared statements in the form of the worst Jeopardy game show-like presentation possible.

Not one single person facing off against Tim Cook and the rest, did a good job and got a good answer. There was Rep. Mary Gay Scanlon who had specific questions about Amazon's alleged destruction of rival Diapers.com, but she was only able to make Jeff Bezos squirm until her time was up. And, that diapers.com example was from more than a decade ago.

But, at least Scanlon came armed with specifics and research. This hearing purportedly followed an investigation begun back in 2019 but most appeared to have been briefed for the first time on their way into the room.

More platform confusion on display belies bigger knowledge problems

As an AppleInsider reader, the difference between Twitter and Facebook is so obvious to you that it seems impossible anyone could get them mixed up. If you're not a user, though, it's all one big social media monolith and it's not your job to find out which is which.

But, knowing what the differences are in a hearing ostensibly about big tech power, it literally was the job of the committee to know the difference. You might hope that they would already know the difference between Twitter and Facebook, and that they would know what an app is. The fact that they didn't isn't shocking at this point, and the fact that they were incapable of finding out during this entire investigation is shameful.

At first, this seemed like it might be similar to the decision then-senator Steve King made when he tried to grill Google's Sundar Pichai about an iPhone issue. It might or might not have been technological ignorance, but it was certainly political maneuvering and it was playing to the crowd instead of trying to find the truth.

The representatives in this hearing did not know what they were asking either, and that is a clear abdication of responsibility. You and I can't pin Mark Zuckerberg up against the wall and get him to answer for years of Facebook's issues. This august body could, and have the power to do so and they just didn't.

Five minutes in government meetings is meaningless, no matter how many laps you take

After significant wrangling by both the committee and the tech CEOs, each committee member was granted what turned out to be three five-minute slots in round-robin and parliamentary fashion in which to ask questions. Obviously, that's inadequate. But, apparently if you give a politicians five minutes, they will take the five minutes. We counted about four minutes and ten seconds on the average per five-minute allocation, for the representatives themselves and their political agenda.

Even the ones who actually did ask questions instead of proselytizing, they tended to interrupt the answers in a handful of seconds. Sometimes that was right and necessary these four big tech people are not dumb and they know five minutes can be eaten up very quickly with some padding.

But most of the time, the interruptions were not to get back on topic or to delve or to pull a CEO up for talking nonsense and there was a fair amount of that nonsense, but discussions of all the CEOs portraying their companies as scrappy underdogs under constant threat is a topic for another day. Most of the time, a representative would interrupt an answer in order to ask their next pre-prepared question with no regard to the answer just given. Answers don't matter to them, being seen to ask your questions does.

Repeatedly, too, we had the outright offensive demand that the CEOs answer complex issues with just a yes or no. If you're allowed a complex answer, you can hide in the details but there's a chance you'll reveal the truth. With a yes or no, there isn't.

The only people who ever demand a yes or no, are ones who have no interest in the answer, or in the truth. They solely and exclusively care about how they look to their voters back home.

There used to be an office in the US designed to help with this, but it is long gone

In 1972, The United States Congress established the bipartisan Office of Technology Assessment (OTA). It was specifically established to educate and brief the House and Senate on complex scientific and technical issues of the day, and was instrumental in the early digital distribution of governmental documents to not just the feds, but to the public as well. It was governed by 12 members of Congress six Republicans and six Democrats and had a staff of 143 people, mostly scientists, with a smattering of support people.

It cost the federal government about $22 million per year in the early '90s. That's millions, not billions. It was dissolved as unnecessary and "wasteful" in 1995, with arguments saying that governmental officials were more than capable enough to understand and govern fairly on the issues and technologies of the day.

They weren't capable of doing that without the OTA then, and as the years have passed, this has only gotten worse, and the skeleton crew of mostly non-scientists doing this kind of work at the Government Accountability Office is underfunded and understaffed for the increasingly complex matters at hand. What isn't clear, is if this inability to govern on these matters without education is willful, or just incompetent.

Of course, it isn't clear how much the concept manned by a skeleton crew helps with the problem if that inability to deal with complex scientific or technological matters is willful. The European Parliamentary Technology Assessment (EPTA) performs roughly the same tasks, with roughly the same manning, and it doesn't seem to help decisions there either.

Not the first time, and it won't be the last

At first glance, this seems like more of the same that we've come to expect from the US government when it comes to technology. But, this time they went too far. Wednesday's hearing was the least productive federal hearing we've had the misfortune to have to sit through in two full decades. And yes, this includes the supreme court case discussing live video streaming service Aereo that likened the service to a parking lot and a dry cleaner's shop, somehow.

You know that each of the four CEOs had a debriefing with their executive board after the hearing. You can bet that each one of them had a stiff drink and counted their lucky stars that it went the way it did.

As CEOs, they should be relieved. As Americans, they should be scared. The House of Judiciary correctly and properly identified a huge issue, and it spoke correctly of the importance of this hearing. But then, it destroyed its authority by presenting a circus of schoolyard children. And, that comparison probably isn't fair to the children.

Maybe the next hearing, or the one after that will be better. We're not expecting it, though.

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When it comes to big tech, US government official incompetence is embarrassing and horrifying - AppleInsider

Technology companies now make up around 20% of the state's overall economic impact.

SEATTLE As Congress investigates whether big tech companies are too big, Seattle continues to see fast growth as these companies expand.

Currently, tech companies make up 20.2% of Washington state's overall economy, according to a recent study by CompTIA.

In Seattle, the overall footprint among companies like Amazon, Apple, Google, and Facebook is expanding. Amazon's global headquarters is now more than 40 owned and leased buildings in Seattle.

When it comes to jobs, the impact is growing too.

Amazon currently employs around 50,000 people in the region. Apple, which is moving into two 12-story buildings on Dexter Avenue in Seattle, is planning to move in around 2,000 employees.

Google is putting the finishing touches on its new five-building campus along Mercer Street and is expected to provide around 4,500 jobs.

Facebook, which is also now growingwith five buildings in Seattle, has around 5,000 employees in the city.

But many feel that big tech growth can also do more harm than good.

"These four companies represent a private government that can overtake many countries in a way," said Hanson Hosein, co-director of the Communication Leadership master's program at the University of Washington. Hosein has been closely studying tech growth in Seattle for more than a decade.

"We're talking billions of people and trillions of dollars," he said. "That power is disproportionate, and the concern is very anti-democratic because they're not that accountable to us."

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Big tech companies continue to expand in Seattle - KING5.com

BY THE NUMBERS

Dow futures indicated a roughly 70-point gain at the opening bell, ahead of a blockbuster Big Tech congressional hearing, a Fed policy statement and another batch of corporate earnings reports. S&P 500 and Nasdaq futures also were mildly higher. The Dow on Tuesday fell about 205 points, or .77%. The S&P 500 gave up .65% while the tech-heavy Nasdaq Composite sank 1.27%.

The Dow, S&P 500 and Nasdaq have fallen in three of the past four trading days, although all remain on course for solid July gains. The Dow begins the new day at a more than two-week low, coming off its lowest close since July 13.

*Treasury yields edge higher ahead of Fed interest rate decision (CNBC)

The Federal Reserve's Open Market Committee will issue its latest policy statement at 2:00 p.m. ET, followed by Fed Chairman Jerome Powell's virtual news conference 30 minutes later.

General Electric (GE), Boeing (BA), and General Motors (GM) lead a long list of morning earnings reports; streaming service Spotify (SPOT) also reports. After the bell, PayPal (PYPL), Qualcomm (QCOM) and Yum China (YUMC) are scheduled to post quarterly earnings.

*GM swings to a loss as coronavirus shuttered factories and devastated sales (CNBC)*GE reports quarterly loss as coronavirus pandemic hits hard (Reuters)*Boeing posts net loss of $2.4 billion and slows aircraft production amid coronavirus-weakened demand (CNBC)

Total mortgage application volume fell 0.8% last week from the previous week, according to theMortgage Bankers Association's latest report.Mortgage applications to buy a home were down 2% last week compared to the prior week but 21% higher annually. (CNBC)

The CEOs of Amazon, Apple, Google-parent Alphabet and Facebookare set to testify in front the House Antitrust Subcommittee later today. The blockbuster virtual hearing will be Amazon chief executive Jeff Bezos' first congressional testimony. It comes as part of the House Judiciary Committee's investigation into Big Tech and potential anti-competitive practices. Mark Zuckerberg is expected to defend Facebook's acquisitions of Instagram and WhatsApp, portraying them as key to creating better services for both users and advertisers. (CNBC)

*Jeff Bezos will testify about how Amazon is the quintessential American company (CNBC)*Google CEO Sundar Pichai plans to tell Congress the company faces plenty of competition (CNBC)*Tim Cook will testify that Apple is in fierce competition with Google and Huawei (CNBC)

Biotech firm Moderna (MRNA) is planning to price its potential coronavirus vaccine at $50 to $60 per course for high-income countries, according to a Financial Times report. The price for the two-dose vaccine comes in higher than the proposed price from Pfizer(PFE) and German-based BioNTech, according to Reuters, based on the companies' $1.95 billion deal with the U.S. government to produce and deliver 100 million doses. The price for Moderna's vaccine, which entered late-stage human trials earlier this week, is not finalized, Reuters reported. (FT)

Hong Kong is increasing its restrictions to curb the spread of Covid-19 as local officials warn the city is at risk of a large-scale virus outbreak. There's been an "upsurge" in local infections, said Chief ExecutiveCarrie Lam, who warned of overrunning the health-care system. The government is banning gatherings of more than two people, suspending indoor dining at restaurants and requiring face masks in public. (Reuters)

*Europe scrambles to avoid a second coronavirus wave, as infections rise (Washington Post)

The U.S. Senate will not pass a coronavirus relief bill that does not have liability shields for businesses and universities, Majority LeaderMitch McConnelltold CNBC. The Kentucky Republican said Tuesday on "Closing Bell" that the GOP was "not negotiating over liability protection," but he added the party was open to compromise with Democrats on other issues. Senate Republicans released their roughly $1 trillion legislative proposal on Monday. (CNBC)

*Most swing state voters support extending $600 weekly unemployment benefit, CNBC/Change Research poll finds(CNBC)

The Trump administration has started negotiations with the office of Oregon's governor over the presence of federal agents in Portland, according to the Associated Press, expressing a willingness to scale back if the state increases its own enforcement in the city, which has seen nearly two months of nightly protests in the wake of George Floyd's death. The talks are still in the early stages and no agreement is in place, the wire service reported. (AP)

*Portland protests bring early-morning clash with feds after more than 1,000 turn out Tuesday (The Oregonian)* Attorney General Barr, grilled by House Democrats, defends aggressive federal response in Portland (LA Times)

In a historic move,AMC Theaters(AMC) and Comcast-ownedUniversal Picturesinked an agreement to shorten the theatrical release window for Universal's movies, allowing them to head to digital streaming just 17 days after their debut on the big screen. Theaters previously would have the exclusive rights to films for about 90 days. AMC will share in some of the new revenue from the digital on-demand rentals. Comcast is parent company of CNBC and NBCUniversal. (CNBC)

Starbucks (SBUX) exceeded Wall Street expectations in its earnings report and raised its adjusted earnings outlook for the fiscal fourth quarter, sending its stock up more than 5% in premarket trading. The coffee chain expressed optimism about its recovery from the coronavirus in the U.S. and China, although it saw global same-store sales plunge 40% in the quarter. (CNBC)

*Restaurant transactions plateau as coronavirus cases surge (CNBC)

The American Federation of Teachers, one of the largest teachers' unions in the U.S., will support any of its local chapters that decide to strike if they feel school reopening plans are not safe enough. The federation, which represents 1.7 million school employees, said in its Tuesday resolution that striking should be the last option, but it called for reopening plans to include social distancing measures and mask requirements. It also said buildings should only reopen in places where coronavirus transmission rates are low. (USA Today)

Visa (V) came in 4 cents above estimates with quarterly earnings of $1.07 per share, with revenue above estimates as well. The payments processor did say that payment volume was down 10% during the quarter with profit dropping 23%, as consumer spending was hit by rising unemployment.

Mondelez (MDLZ) reported adjusted quarterly profit of 63 cents per share, 7 cents above estimates, with the snack maker's revenue slightly above Wall Street forecasts. Strong demand for its snacks in North America helped offset other declines, and Mondelez also announced an 11% dividend increase.

FireEye (FEYE) surprised analysts who had expected a loss by reporting an adjusted profit of 9 cents per share with revenue above estimates as well. The cybersecurity company benefited from the shift to cloud-based work amid the pandemic.

Avis Budget (CAR) reported a quarterly loss of $5.60 per share, slightly smaller than the loss of $5.68 that analysts were expecting. The car rental's revenue beat estimates, with a recovering used car market and increased leisure rentals helping results.

L Brands (LB) is cutting 15% of its corporate staff, amounting to 850 jobs. The parent of Victoria's Secret and Bath & Body Works also projected a smaller than expected current quarter sales decline.

Spirit Airlines (SAVE) will tell its unions to be prepared for possible October furloughs of 20 to 30% of workers, according to a memo sent to employees and first reported by Reuters.

Advanced Micro Devices (AMD) beat estimates by 2 cents with adjusted quarterly profit of 18 cents per share, with the chip maker's revenue above estimates as well. AMD also raised its full-year forecast, as the surge in the number of employees working from home raises demands for its chips.

EBay (EBAY) reported adjusted quarterly earnings of $1.08 per share, 2 cents above estimates, with the e-commerce company's revenue also beating forecasts. It also raised its full-year outlook, amid more online shopping by people staying indoors during the coronavirus pandemic.

Amgen (AMGN) earned an adjusted $4.25 per share for its latest quarter, compared to a $3.82 consensus estimate, with revenue above forecasts as well. The biotech company was helped by stronger sales of its newer drugs.

Budweiser has unveiled its newest beer with a twist. It has no alcohol. The 50-calorie Bud Zero is now going out nationwide and was created with the help of former NBA star Dwyane Wade. The new drink gives Anheuser Busch Inbev (BUD) further exposure to the non-alcoholic beer category, which has been growing fast this year. (USA Today)

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What to watch today: Dow to open higher ahead of Big Tech hearing and Fed policy decision - CNBC

It is an unfortunate characteristic of new industries that they tend quickly to become dominated by a small number of big players. This is particularly the case with tech, where powerful network effects are at work; the more people that use them, the more they attract others in search of compatibility. Monopoly is naturally occurring.

Yet to make the case for breakup, you have to demonstrate a positive benefit to consumers, competition, and innovation. This can only ever be supposition. It is not obvious, for instance, why separating Amazons servers business from its retail operation, or Facebook from Instagram, would help these objectives.

But please, no more pleading the national champions cause. An idea I naively imagined had been put to bed by the debilitating experience of state directed industrial strategy in the immediate postwar period is regrettably making something of a comeback, not just as a defence of Big Tech in an age of superpower conflict, but as a desirable economic goal in itself.

Even in Britain, we see evidence of such thinking. That the UK should jeopardise a decent trade deal with the EU for the sake of remaining free to dole out state aid to political obsessions andfavoured champions, as Dominic Cummings, the Prime Minister's chief adviser, seems minded,is beyond ridiculous. Governments do not have a good record in backing winners.

Nor is it a good idea for governments to hitch their wagonsto any particular corporate interest; to deliberately favour one over another is not just corrupt, it alsodiscourages competition, and therefore innovation and diversity in the economy, ultimately making it less resilient.

Sometimes regulators need to step in to ensure markets remain open and honest. To maintain the publics trust, the tech giants must learn to self regulate and pay their taxes, or they will indeed end up going the same way as the railroad barons, AT&T, IBM and other targets of Americas penchant for taking down the economically overmighty.

With great power comes responsibility; most of the evidence is that Bezos, Zuckerberg et al have taken these lessons on board.

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We like and value Big Tech, so why are we so determined to do it down? - Telegraph.co.uk

The coronavirus pandemic might have slammed the broader market in the June quarter but tech isnt expected to have seen much effect on earnings.

For the sector, second-quarter earnings are expected to be down 10.9% on 0.3% lower revenues. But thats far better compared to the overall earnings picture. This is because total earnings for S&P 500 companies are projected to decline 42.9% on 9.6% lower revenues (read more: The Technology Sector Shows its Earnings Power Amid Coronavirus).

Thus, investors are now keeping an eye on four big tech companies in terms of market capitalization that are slated to report their June-quarter earnings on Jul 30, after the closing bell. Apple Inc. AAPL, Amazon.com, Inc. AMZN, Alphabet Inc. GOOGL and Facebook, Inc. FB worth nearly $5 trillion are mostly expected to come up with encouraging earnings results.

The big four are expected to have benefitted from the coronavirus-led shutdown measures as some of their businesses gained immensely from consumers, mostly working and learning from home. At the same time, these companies have been gaining immensely from secular trends like cloud computing and robust telecommunications infrastructure demand for which skyrocketed amid the health crisis.

The big four tech stocks along with Microsoft Corporation MSFT have in fact returned 49% over the past year, whereas the rest of the companies in the S&P 500 cohort have barely moved. Jonathan Golub, chief U.S. equity strategist at Credit Suisse, noted that net margins of the big four and Microsoft taken together are 17.3% on average in the trailing 12 months, which is 70% higher than the rest of the S&P 500 companies. And profits of the five stocks were up 3.1% in the same period against a 9.2% decline for the other S&P 500 companies.

But if financial results for the to-be-reported quarter fall short of expectations, it could cause big market gyrations in after-hour trading and again on Jul 31. After all, their sheer size no doubt will have a big impact on the market and could easily decide whether the bourses will continue to hit new highs. Nevertheless, Golub has calmed investors concerns by saying that these companies have strong cash positions and their higher margins should certainly help them post better results in periods of market stress. Let us, thus, take a look at how they will fare this time around

One of the areas of Apples business that investors expect to have shone in the June quarter is the services segment. It has always been Apples most lucrative segment in terms of gross profit, and investors anticipate lockdown measures and social-distancing norms in the quarter to have fuelled rapid growth in the segment that includes the App Store and Apple Pay.

But Apples fortunes are heavily dependent on iPhone sales. And the companys fiscal third-quarter iPhone sales are believed to have remained muted due to sluggish demand in China. Thus, Apples sales are expected at $51.94 billion, indicating a year-over-year decline of 3.5%. Earnings per share are also likely to come in at $2.03, suggesting a 6.9% decline year over year. Traditionally, Apples third-quarter fiscal results are always the weakest. The Zacks Rank #3 (Hold) company currently has an Earnings ESP of +0.72%. Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can see the complete list of todays Zacks #1 Rank stocks here.

With majority of retail stores remaining closed in the June quarter, online sales picked up lockdown and social-distancing measures. Whats more, financial relief packages by the government and an uptick in employment rates increased disposable income in the quarter, something that boosted online sales.

Separately, Amazons focus on cloud computing might have improved the e-commerce giants financial results. This is because as majority of people remotely worked during the quarter ending June 2020, most companies had to move a bulk portion of their workloads to the cloud. The Zacks Rank #3 company currently has an Earnings ESP of +107.82%.

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The pandemic helped Facebook increase user engagement with its several social media platforms as people had to stay at home amid stringent lockdown measures imposed to curtail the spread of the deadly virus.

Therefore, Facebook is widely expected to have seen a surge in the usage of its services like Messenger, Instagram and WhatsApp in the second quarter.

Thus, the companys expected revenues for the June quarter is $17.29 billion, indicating a year-over-year increase of 2.4%. Similarly, the company expects earnings per share of $1.44, indicating a 58.2% increase from the same period last year. Whats more, the Zacks Rank #3 company has an Earnings ESP of +4.86%.

The numbers werent encouraging for Alphabet in the first quarter. But three months later, Alphabets shares went up nearly 21%. So, what happened? This is because the stay-at-home economy in the second quarter buoyed Alphabets YouTube and Cloud services that provided home-based access to the outside world.

However, Alphabet had to bear significant costs in providing cloud services. Needless to say, rising litigations across the world due to its dominant position in search also remained a headwind in the June quarter. As a result, the Zacks Rank #3 company currently has an Earnings ESP of -1.12%.

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Click to get this free report Microsoft Corporation (MSFT) : Free Stock Analysis Report Amazon.com, Inc. (AMZN) : Free Stock Analysis Report Apple Inc. (AAPL) : Free Stock Analysis Report Facebook, Inc. (FB) : Free Stock Analysis Report Alphabet Inc. (GOOGL) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research

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All Eyes on Big Tech Earnings: Here's What to Expect - Yahoo Finance

FCC Commissioner Brendan Carr argues there is a growing and bipartisan consensus to reform Section 230 of the Communications Decency Act, which is in the spotlight after Google allegedly targeted conservative websites ZeroHedge and the Federalist.

Sen. Josh Hawley, R-Mo., on Tuesday introduced a bill that would remove Section 230 protections for Big Tech companies that "display manipulative, behavioral ads or provide data to be used for them."

Section 230 of the 1996 Communications Decency Act ensures internet platforms and social media websites are not held liable for content published by third-party users, which includeadvertisers.

"Big Techs manipulative advertising regime comes with a massive hidden price tag for consumers while providing almost no return to anyone but themselves," Hawley said in a Tuesday statement. "From privacy violations to harming children to suppression of speech, the ramifications are very real."

He added that the manipulative ads seen on social media and other platforms "are not what Congress had in mind when passing Section 230, and now is the time to put a stop to this abuse."

SHOULD SECTION 230 BE REVISED?

One example when a website used Section 230 to defend its role in publishing problematic ads to its platform is a 2015 lawsuit brought against Backpage owner Village Voice Media Holdings.The suit titled J.S. v. Village Voice alleges that Backpage.com posted advertisements that resulted in the sexual abuse of three underaged girls.

"J.S. allegedly was raped multiple times by adult customers who responded to the advertisements. J.S. filed a complaint alleging state law claims for damages against Backpage ... asserting claims for negligence, outrage, sexual exploitation of children, ratification/vicarious liability, unjust enrichment" and more, the case opinion from a Washington state courtreads.

WHAT IF SECTION 230 IS REVOKED?

Backpage tried to dismiss claims in thetrial court on the grounds of Section 230 immunity,but the court denied the move, giving the plaintiffs an opportunity to prove that Backpage helped develop the ads and was therefore subject to liability. The plaintiffs reached a settlement with Backpage.com in October 2017.

A person working on a laptop in North Andover, Mass. (AP Photo/Elise Amendola, File)

Hawley, a staunch critic of Big Tech and social media companies, also accused tech giants,in a press release announcing the proposed legislation,like Facebook and Google of tracking users without their consent for the purpose of profiting off ads

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Section 230 has sparked debate recently along party lines; some Democrats believe the law offers unjust protections to platforms that allow third-party users, including President Trump, to post problematic or harmful content, while some Republicans argue that the law protects social media companies that they allege actively seek to suppress certain political viewpoints or users.

Hawley, for example, introduced another Section 230-related bill in June that would require internet platforms to "submit to an external audit that proves by clear and convincing evidence that their algorithms and content-removal practices are politically neutral," according to a release.

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As the CEOs of Amazon, Apple, Facebook, and Google prepare forhistorictestimony today in front of the House antitrust committee and withlegal chargesexpected soon I have a request: Before we dismiss the possibility of breaking them up, can we please stop comparing the worlds most powerful companies to eggs?

The current Chair of the U.S. Federal Trade Commission stated that after Facebook and Instagram have integrated their systems following their merger, splitting up the two social networks becomes more difficult because the eggs are scrambled. The U.S. Department of Justice antitrust chief under President Obama made a similar observation that it can be very difficult, or impossible, to unscramble the eggs. Over decades, references to this breakfast plate have repeatedly appeared in official speeches, scholarly articles, and judicial rulings.

The metaphor is misguided. Businesses routinely break themselves up. More than3,000 voluntary divestitures occur each year, amounting to abouta third of all mergers and acquisitions. Many are enormous. Not that long ago, Hewlett-Packard split itselfdown the middle to createtwo independent Fortune 100 companies. Last year Fox sold its movie business to Disney for$71 billion.

In other words, while most in the government and academia see breakups as radical and extreme, leading business executives see them as astandard part of corporate governance. I know because I have advised executives at several of the nations largest companies on massive reorganizations. If we must analogize monopolies to eggs, at the very least we should recognize that while nobody unscrambles eggs, we regularly carve up omelets after theyre prepared.

This seemingly harmless metaphor expresses a potentially devastating worldview that helps explain why the government has not broken up any of the largest U.S. companies since 1984. Thats when the Department of Justicesplit the AT&T monopoly into seven pieces, a move widely celebrated especially byconsumers who were paying over eight dollars for a five-minute call from Washington, D.C. to New York.

Today, however, even many leadingleft-leaning intellectualscalling for more aggressive antitrust enforcement opposesplitting up Big Tech due to breakups perceived messiness. They prefer other remedies, like mandating access. Access mandates leave the monopoly in place but require it to help competitors. For instance, rather than forcing Facebook to divest its previous acquisition, Instagram, the social network could be required to allow users to transfer their accounts or post simultaneously to other social networks.

One clear problem with this and other alternative remedies is that theyare unlikely to deter anticompetitive behavior. At trial,companies almost always fight for something other than breakups. Weaker remedies give CEOs incentives to build monopolies. Equally problematic is that these other remedies are extremely difficult and expensive. For example, requiring Amazon to share its platform fairly with competitors would require ongoing monitoring by the government over decades to ensure compliance.

In contrast, breakups are cleaner and cheaper because they provide a one-off event after which the government can move on. By instead pushing antitrust toward government-heavy remedies, the resistance to breakups leaves antitrust with only unattractive options. Unattractive remedies mean enforcers are less likely to take any action.

In other words, the animosity toward breakups has enfeebled the very institution of antitrust in America.

Of course, while breakups of Facebook and Instagram or Google and Waze may make sense, there are limits to how much some of these tech companies can be carved up without harming consumers. And antitrust breakups involve considerable costs in executing the reorganization. As a result, some caution is appropriate in choosing them as the remedy, and access mandates have a place in the antitrust arsenal. It would be a mistake to launch into an indiscriminate breakup rampage of all concentrated industries.

In weighing those costs, however, authorities should recognize that even private divestitures require tremendous organizational expenses. The key in both public and private breakups is not to let the inevitable reorganization costs prevent economic progress. In 1911, John D. Rockefellers lawyers argued that breaking up his oil monopoly would not only be dangerous to the industry, but calamitous to shareholders. Similar arguments were made before theAT&T breakup.

ButRockefellers wealth skyrocketed after the Standard Oil breakup, and AT&T shareholders who held onto their stock earnedhigh returns. Thats because buyers of broken up monopolies pay for the carved-up pieces. And smaller,nimbler companies can better adapt to changing markets. More importantly, nobody can deny thatthose U.S. industries subsequently flourished and led the world.

A better antitrust analogy would be to firefighting.The Forest Serviceregularly manages controlled burns, which prevent catastrophic wildfires and enable ecosystems to thrive. Occasional breakups that have costs in the short-term can help make markets healthier in the long run. The harms to our economy from large monopolies are far more certain than the speculative fears of messy breakups.

Rory Van Loo is a professor at Boston University and the author, most recently, ofIn Defense of Breakups: Administering a Radical Remedy. He previously advised multinational corporate executives on mergers and acquisitions. Follow him on Twitter @RoryVanLoo

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Stop with the egg metaphor in discussing Big Tech break-ups | TheHill - The Hill