By Andrew Nusca and David Meyer
March 19, 2018

Good morning. Andrew Nusca here, filling in for Alan.

AT&T and the U.S. Justice Department will face each other in court this week to decide the fate of the telecom company’s $85 billion proposed merger with media company Time Warner.

After a year and a half, the arguments of the case are fairly well known. AT&T argues the two companies don’t directly compete and therefore aren’t subject to an antitrust challenge. Meanwhile the Justice Department insists that a deal will give the combined company enough leverage to harm its competition, regardless of whether it’s a so-called vertical merger, in which a company acquires a supplier.

Even if you’re not in the media industry like me—I should note here that Time Warner owned Fortune until 2014—the trial is worth watching for its implications for the rest of corporate America.

Namely: How can large legacy companies compete with the largest tech companies—Alphabet, Amazon, Apple, Facebook, and so forth—if they can’t scale up through M&A? The world’s largest telecom company combining with the No. 3 entertainment company is sure to create an enormous media giant worthy of scrutiny. Indeed, the combined market cap of ATT-TWX is about $300 billion. But how big is too big when you’re competing against companies with market caps well above $500 billion? What would you do if one or more deep-pocketed tech companies came gunning for your industry?

Technology has allowed business to become more fluid and cross-competitive than ever before. Times have changed; so have markets. We’ll soon find out if the law should change with them, too.

Speaking of what to watch this week: I’m in sunny Laguna Niguel, Calif., for Fortune’s fabulous Brainstorm Health conference. Among those who will grace the stage today: Aetna CEO Mark Bertolini, who will likely have a thing or two to say about tech companies gunning for his industry. Watch the livestream here.

More news below.

Andrew Nusca


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