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Good morning. David Meyer here in Berlin, filling in for Alan.
There has been much talk recently about “breaking up” Big Tech. Democratic presidential contender Elizabeth Warren has made it one of her most visible policies, with Amazon and Facebook in her sights. Even Facebook co-founder Chris Hughes has called for the social network to be fragmented in order to check its unprecedented power.
But there is a risk of “Break ‘Em Up” calls becoming a kneejerk response to very complex problems that aren’t essentially antitrust matters.
An example can be found in an opinion piece by former Labor Secretary Robert Reich, published yesterday in the Guardian. The piece deals with the issue of politicians spreading untruths on Facebook and Twitter. Pointing out the enormous reach of those platforms, Reich argues that “if they’re unwilling to protect the public against powerful lies, they shouldn’t have as much power to spread them.”
The solution, Reich posits, is to break up Facebook and Twitter. He speculates that the result would be that “the public will have more diverse sources of information, some of which will expose the lies.” Antitrust laws are supposedly appropriate because, apart from holding down consumer prices, they are also about protecting democracy.
One problem with this argument is that Facebook and Twitter already contain diverse sources of information of the sort that Reich wants to see. Do they surface those sources in front of the eyeballs that ought to see them? That’s a difficult question, tied up with the so-called filter bubble effect. But it’s not necessarily an antitrust question.
With Facebook, there is an arguable case for saying the company should be broken up, as its acquisitions of WhatsApp and Instagram have made it and its policies practically unavoidable for billions of users. However, I have no idea what breaking up Twitter would entail. It’s far from being a monolithic entity, and it’s only used by 22% of Americans.
Reich’s issue with Twitter is that President Trump uses it to reach so many millions of people, but that’s not a sign of inadequate competition that requires legal remedies—more likely, it’s because more traditional media heavily use Twitter as a news source.
There are good reasons for the resurgence of interest in antitrust law, particularly when dealing with tech firms that operate marketplaces and formulate search results in which they themselves are active, perhaps unfairly-promoted participants. But it would be a mistake to use antitrust as a sledgehammer for addressing all of Big Tech’s sins.
McDonald's has a new CEO: Chris Kempczinski, previously the president of McDonald's USA (who is in turn being replaced by McDonald's international operated markets chief, Joe Erlinger.) Why is Steve Easterbrook out as CEO? He had a (consensual) relationship with an employee, which is strictly forbidden under company rules. Fortune
Commerce Secretary Wilbur Ross has indicated that the U.S. may not levy big new tariffs on European cars. Ross: "Our hope is that the negotiations we’ve been having with individual companies about their capital investment plans will bear enough fruit that it may not be necessary to put [national-security-related trade measures] fully into effect, may not even be necessary to put it partly in effect." Bloomberg
The sportwear firm Under Armour is under federal investigation over its accounting practices. The Justice Department and SEC are reportedly examining whether the company shifted sales from quarter to quarter in order to prettify its financials. Under Armour's shares dropped as much as 16% on the news. Wall Street Journal
Saudi Aramco has formally announced its upcoming IPO on the kingdom's stock exchange, following clearance by Saudi regulators. Chairman Yasir Al-Rumayyan: ""I think this is the right time for us—coming to a juncture where we want to take Aramco to be a public company, to have more disclosure." CNN
AROUND THE WATER COOLER
Microsoft's Japanese operation tested a four-day work week this August, with 2,300 employees getting a three-day weekend. Productivity rose almost 40% compared with the same month the year before—largely thanks to shorter meetings and more remote conferences—while electricity and office consumable costs also plummeted. CNBC
The European Central Bank and the German financial regulator BaFin are not thrilled about Deutsche Bank chief Christian Sewing being both CEO and investment bank head. They fear the dual role could spell trouble for DB's restructuring, and would like to see the positions separated again. Financial Times
China's Singles Day is the world's biggest shopping event. But this year, U.S. brands may be shut out—a broad boycott seems to be underway, with over three-quarters of Chinese consumers considering avoiding American companies' wares on November 11. Fortune
TikTok will not testify at a Tuesday congressional hearing about its potential risks to American consumers. The Chinese short-video app, owned by ByteDance, is a global hit but has raised lawmakers' suspicions over its privacy and censorship policies, and its effect on U.S. national security. ByteDance: "Unfortunately, on short notice, we were unable to provide a witness who would be able to contribute to a substantive discussion." South China Morning Post