A Big Swing at Big Tech – The New York Times

Europes one-two punch

The European Union has just agreed on one of the worlds most far-reaching laws to rein in the power of tech companies.

The Digital Markets Act is aimed at stopping the largest tech platforms from using their interlocking services and considerable resources to box in users and squeeze emerging rivals. It could potentially reshape app stores, online advertising, e-commerce, messaging services and other everyday digital tools, in Europe and beyond.

The law will apply to gatekeeper platforms with a market value of more than 75 billion euros, or about $83 billion, which include Alphabet, Amazon, Apple, Meta and Microsoft. Violators of the law, which could take effect later this year, would face significant fines.

The law is part of a one-two punch by European regulators. As early as next month, the E.U. is expected to reach agreement on a law that would force social media companies to police their platforms more aggressively. And these come after the bloc put the worlds strictest rules to protect peoples online data into effect in 2018. (Thats why nearly every website has pop-ups asking you for permission to track your data.)

Here are some of the potential effects of the new law:

Apple would have to allow alternative app stores for the first time, and companies like Spotify and Epic Games would be allowed to use alternative billing systems inside their apps. Google said this week that it would begin to allow this for some apps.

Speaking of Google, it would have to give Android users options to use other email and search services on handsets in Europe (similar to what it has already been doing in response to a previous E.U. antitrust judgment).

Amazon would be barred from using data collected from outside sellers on its services so that it could offer competing products, a practice that is the subject of a separate E.U. antitrust investigation.

WhatsApp, which is owned by Meta, would be required to offer a way for users of rival services like Signal or Telegram to exchange messages with somebody using WhatsApp.

The largest sellers of online ads, Meta and Google, would be limited from offering targeted ads without consent.

Europes new rules are a preview of whats to come elsewhere, since its often easier for companies to apply the standards across their entire operations rather than in one geography. Still, companies are expected to look for ways to diminish the impact of the new law through the courts.

The U.S. charges four Russians with a vast infrastructure cyberattack. The group, which includes three officials in Moscows domestic intelligence agency, is accused of hacking energy companies around the world including a nuclear power plant in Kansas from 2014 to 2018.

China Eastern Airlines grounds hundreds of Boeing jets. The airline temporarily halted the use of 223 737-800 planes, the model involved in the crash of a flight that carried 132 people; no survivors have yet been found. Adding to the mystery surrounding the cause of the crash is that both pilots were among the most experienced in China.

Uber reaches a truce with Big Taxi in New York City. The ride-hailing giant will team up with two taxi companies, Curb and CMT, to let New Yorkers order a yellow cab via the Uber app. The deal will help both sides of a longtime rivalry recover from the pandemic.

Instacart cuts its valuation by nearly 40 percent. The privately held grocery delivery app told employees it now valued itself at $24 billion, down from $39 billion. The move reflects the battering tech companies have faced in the public markets, but could also give employees more upside with newly issued stock-based compensation.

A campaign to let unvaccinated athletes play in New York succeeds. Executives at pro sports teams, including the Mets owner Steve Cohen, paid tens of thousands to lobby city and state officials on changing Covid protocols, The Times reports. Mayor Eric Adams of New York City announced the end of the ban yesterday, though he insisted lobbying played no role.

The U.S. and E.U. announced a deal that would see more American natural gas shipped to Europe, as the Continent tries to reduce its reliance on Russian energy. European officials rejected Russias demand that it pay for gas in rubles.

President Biden said that Russia should be removed from the G20 (and if not, Ukraine should be allowed to attend the groups meetings).

The Russian crew of a $700-million yacht docked in Italy, which U.S. officials say could be owned by Vladimir Putin, abruptly left their jobs. Goldman Sachs paused new business with a private equity firm whose money comes mostly from sanctioned Russian oligarchs, one of whom described to The Financial Times what his life is like under the restrictions.

The U.S. will accept up to 100,000 refugees fleeing Ukraine, but its underresourced immigration system is already struggling to process tens of thousands of Afghans.

For up-to-the-minute news, see The Timess live blog and updated maps.

Last month, Jennifer Sey quit a top job at Levis, giving up a potential shot at C.E.O., via an essay that was widely circulated online. In the post, Sey said the clothing company where she had worked for more than 20 years warned her against expressing her personal views on social media, broadcast media and elsewhere, that closing schools during the pandemic made kids worse off. She quit instead of negotiating an exit package, which attracted even more attention to her situation.

March 25, 2022, 3:52 p.m. ET

Her departure raises issues like whether corporations can control the personal speech of their employees and the politics tied to speaking on certain platforms, like Fox News opinion shows, The Timess Sapna Maheshwari reports.

Seys tweets went beyond just questioning school closings. She criticized guidance from the C.D.C. and accused Dr. Anthony Fauci of fearmongering. This came as Levis was trying to set Covid safety protocols in its stores and manage potential pushback from customers and employees. Outside of the company, Seys comments drew threats of boycotts. Levis said that its social media guidelines allow employees to speak out online, as long as they are mindful of the companys reputation.

Sey said her speech should have been protected, since she was speaking as a concerned mother, not a corporate executive. She argued she was subject to viewpoint discrimination by Levis, and said there hadnt been a problem in the past when she spoke in support of liberal causes.

Complicating matters is that executives are expected to speak out more often on social issues these days. A private employer can impose restrictions on employees speech or conduct, said Sarah Sobieraj, a professor of sociology at Tufts University. The key issue here is where that boundary lies and what about when youre not working.

Adam Silver, the N.B.A. commissioner, on criticism of the leagues stance on human rights in China. The former N.B.A. player Enes Kanter Freedom has taken the league to task for continuing to do business in the country, and said that he is being blackballed by teams as a result.

Mark Sirower has been scrutinizing deals for decades, and finding mostly failures. His 1997 book The Synergy Trap examined the major mergers of the 1980s, deeming two-thirds of them ultimately unsuccessful.

In a new follow-up with his Deloitte colleague Jeffery Weirens, The Synergy Solution, they examine more than 1,000 deals spanning 24 years, worth over $5 trillion with similarly dismal results. Yet dealmaking is hotter than ever. Sirower talked to DealBook about this moment in mergers. The interview has been edited and condensed.

Whats happening in M.&A.?

Its staggering by any historical standard. Were at all-time record highs. In 2021 we had a huge uptick in the value and volume of deals. The value went up roughly 60 percent, to $5.5 trillion. The volume went up 26 percent, to over 60,000 transactions. This is the number that really got me the number of big deals. Deals over $1 billion doubled in 2021, so 2 percent of deals made up over 65 percent of the value.

How should we interpret these numbers?

This is the fourth merger wave Ive seen. When we get to this part of the wave, companies tend to be reactive if theyre unprepared. Companies that werent doing deals start doing them, or companies that have been acquisitive now start doing more or bigger deals, and at near-all-time-high market valuations.

Why such enthusiasm?

One of the things weve learned over time is that M.&A. is highly correlated with rising stock markets. Its partly optimism, thinking it is going to go on forever.

Whats different about this wave?

In the 80s and 90s, it was still pretty much a U.S.-dominated market. Now its very much a global market. U.S. targets last year represented less than half of the total deal value.

Given the pandemic, war and supply chain strains, will the globalization trend end?

The data doesnt bear it out. I thought when Covid hit it was just going to crush our business. And it didnt.

Deals

SoftBank is said to be seeking a valuation of at least $60 billion for the chip maker Arm in its U.S. market debut; Goldman Sachs is likely to lead the I.P.O. (Bloomberg, Reuters)

Bed Bath & Beyond is said to be near a deal with the activist investor Ryan Cohen to add three new directors. (Bloomberg)

Venture capitalists are so eager to invest in crypto companies that theyre willing to forego customary board seats. (FT)

Policy

Senator Joe Manchin, Democrat of West Virginia, has reportedly described a much smaller version of President Bidens $3.5 trillion climate and social spending bill that he would accept. (Axios)

Text messages show that Ginni Thomas, wife of Supreme Court Justice Clarence Thomas, pressed President Donald Trumps chief of staff to pursue efforts to overturn the 2020 election. (NYT)

New York State prosecutors charged a former party producer with laundering $2.7 million in Bitcoin for criminals between 2018 and 2021. (NYT)

Best of the rest

Ned Johnson, who transformed Fidelity into an investment-management giant, died on Wednesday. He was 91. (NYT)

Irate Google employees pressed executives about pay and performance reviews at a recent internal town hall. Some also appear particularly unhappy with the company taking away heated bidets at California offices. (CNBC, Protocol)

The podcast host Joe Rogan called activist Big Tech employees lunatics. (NY Post)

As People Go Back to Offices, Competition Heats Up for Parking Spots (WSJ)

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A Big Swing at Big Tech - The New York Times