CEO DailyCFO DailyBroadsheetData SheetTerm Sheet

Biden finds an ally against Big Tech

July 13, 2021, 6:02 PM UTC

The Biden administration is taking on U.S. tech giants, first by installing Federal Trade Commission chair Lina Khan—an antitrust hawk—and now by signing a sweeping executive order that tackles antitrust and tech acquisitions.

And the European Union has taken notice.

The E.U.’s top technology regulator, Margrethe Vestager, praised President Biden’s recent executive order and new FTC chair Lina Khan during a Washington Post Live event on Monday.

“We do not have a global competition enforcer, but we have global companies,” Vestager said, when asked if companies like Facebook and Amazon were too big to regulate.

While the U.S. has typically let Amazon, Facebook, Google, Microsoft, and others grow and command markets with little intervention, the E.U. has been left to regulate consequences of that growth. And it has been effective at that role, shown in how quickly regulators grappled with the importance of personal data protection and instituted General Data Protection Regulation (GDPR) across the E.U.

But so far, both U.S. and E.U. antitrust action against tech giants has been largely ineffective. After four years and $10 billion in disputed fines, the E.U.’s antitrust lawsuits against Google are still being fought in court. Google has already accounted for the loss of cash for the fines in its 2018 and 2019 financial filings, as it was set aside in a holding account as part of the agreement. It then made a $41 billion profit in 2020, effectively erasing any doubt that even exorbitant fines would meaningfully change how the company operates.

In the U.S., the FTC almost got its antitrust case against Facebook thrown out entirely by failing to even define Facebook’s market share, and now has until the end of July to refile its main complaint.

Even when regulators have “won,” there’s little to show in terms of meaningful change. Let’s take the Google example further, and look at one of the first antitrust cases that have actually stuck. The company settled with French authorities for prioritizing its own ad-selling tools in its ad-campaign dashboard in early June, to the tune of $270 million. A drop in the proverbial bucket. But the real victory, those regulators said, were the business practice changes: Google was forced into a three-year agreement to give competitors more data and have its ad metrics platform integrate a little better with others. There was no admission of guilt, and the settlement is only binding in France.

This is great for French ad-tech firms, but it does little to actually address Google’s behavior at large, or even beyond 2024.

However, French authorities also levied a $593 million fine on Google today for failing to reach deals with news sites to license the use of news content. The government gave Google a two-month window to negotiate future contracts.

It’s unclear what international cooperation may look like in this context, but the U.S. and E.U. both have complimentary strengths. The E.U. has no shortage of bullishness and political apparatus to pursue large antitrust cases, and has shown it can force through enormous, forward-thinking legislation to rein in tech companies. GDPR shows that tech companies are willing to bend to accommodate the E..U’s 450 million residents, rather than ceasing operation in that economic zone entirely.

And while the U.S. has taken a comparatively glacial approach to tech legislation, it has a new mandate from the Biden administration’s latest executive order to regulate past mergers that have let these companies become so dominant.

At the very least, we might get a definition of a monopoly for an age of products that are used by billions of people every day.

Dave Gershgorn
@DaveGershgorn

Fortune produced a ranking that gets back to the core of why professionals decide to pursue MBAs: To better position their careers and significantly improve lifetime earnings. The payoff of an MBA continues to increase, and Fortune’s research finds an extraordinary rise in starting salaries for MBAs.

NEWSWORTHY

Italy wins, and social media moderation fails. Black players on the England football team are being harassed online after losing the UEFA Euro 2020 championship match to Italy, The Verge reports. The global scale of harassment and racist comments led England's Football Association to critique tech companies' moderation practices, saying they "need to step up and take accountability and action to ban abusers from their platforms, gather evidence that can lead to prosecution and support making the platforms free from this type of abhorrent abuse.”

Social media gets cut in Cuba. After sprawling protests against shortages of food and medicine, the government-owned telecom Empresa de Telecomunicaciones de Cuba blocked access to sites like WhatsApp, Facebook, and Instagram on Monday. The disruptions, noted by Internet monitor NetBlocks, show that even the national cellular network, Cubacel, was temporarily restricting social media access. Those using a virtual private network, or VPN, were still able to avoid the censorship.

Elon Musk spars in court. Tesla CEO Elon Musk faced scrutiny in court over the company's $2.6 billion acquisition of Solar City in 2016, reports The Washington Post. The case centers around Musk's personal involvement in SolarCity, as he owned a portion of the company himself, and it was run by two family members. Musk contended in court that the acquisition will pay off in time for Tesla owners, as solar technology becomes more widely available. The trial continues today.

Google reins in free video calls. Free video calls on Google Meet will now be limited to 60 minutes, reports 9to5Mac. While this is a relatively innocuous limit, it comes a day after Google announced a new $10/month subscription that adds professional features to video calls, calendars, and meeting scheduling forms.

 

FOOD FOR THOUGHT

When Amazon and the feds fight, Netflix wins. President Biden's executive order targeting tech mergers may put extra scrutiny on Amazon's $8 billion acquisition to buy MGM Studios. That would be a relief for Netflix, writes Hollywood Reporter's Eriq Gardener. Since the MGM purchase mainly would fill Prime Video's shelves with more exclusive content, a block of that acquisition lets Netflix keep a competitive advantage.

Here's more from the article:

If the FTC takes Biden’s tip and pulls back on Trump-era guidelines for vertical mergers, that could hurt Amazon’s prospect for acquiring MGM and transforming its Prime service into Netflix’s toughest competitor. (Not that FTC chair Lina Khan needs any more reasons to stick it to Amazon.) And if the DOJ begins scrutinizing proposed mergers for how they impact labor markets, that could hold ramifications for WarnerMedia-Discovery or any other future tie-up that could threaten Netflix’s ability to win the streaming wars.

 

IN CASE YOU MISSED IT

Melinda French Gates invests in Female Founders Fund’s new $57 million fund by Emma Hinchliffe

American Express makes debut into NFT rewards with SZA by Jessica Mathews

Will Beijing’s crackdown on Didi sour global investors on China tech stocks? by Clay Chandler and Eamon Barrett

Europe’s manufacturers fear landmark carbon import tax may do more harm than good by Christiaan Hetzner and David Meyer

Some of these stories require a subscription to access. Thank you for supporting our journalism.

BEFORE YOU GO

What's in a blue check? After rebooting its beleaguered verification service, which doles out blue "Verified" checkmarks under subjective determinations of public interest, Twitter mistakenly verified six bot accounts. After an inquiry from The Daily Dot, Twitter deleted the accounts and claimed the verification was inadvertent. But all six of the accounts had the same followers, and none had tweeted. 

Our mission to make business better is fueled by readers like you. To enjoy unlimited access to our journalism, subscribe today.