A US judge plans to free Google from having to defend against a class action by 21 million consumers who claimed it violated federal antitrust law by overcharging them in its Google Play app store.
Monday’s decision by US District Judge James Donato in San Francisco could significantly reduce damages that Google, a unit of Alphabet, might owe over the distribution of Android mobile applications.
Consumers claimed they would have paid less for apps and enjoyed expanded choice but for Google’s alleged monopoly. Google has denied wrongdoing.
Donato said his Nov. 2022 class certification order should be thrown out because his decision, also announced Monday, not to let an economist testify as an expert witness for the consumers eliminated an “essential element” of their argument for certification.
The judge said he couldn’t decertify the class immediately because Google had been appealing his November order. He directed lawyers for Google and the consumers to try resolving that issue before a Sept. 7 hearing.
The class action included consumers from 12 US states and five territories, who were not part of a similar case against Google brought by various state attorneys general.
Class actions let plaintiffs sue as a group, and potentially obtain larger recoveries at lower cost than if they were forced to sue individually.
Lawyers for the consumers did not immediately respond to requests for comment. Google and its lawyers did not immediately respond to similar requests.
The case is part of wide-ranging antitrust litigation that includes 38 states and the District of Columbia, and companies including Epic Games and Match Group.
The case is In re Google Play Store Antitrust Litigation, US District Court, Northern District of California, No. 21-md-02981.
Google will face off in court Tuesday against government officials who have accused the company of antitrust violations in its massive search business, kicking off a long-anticipated legal showdown that could reshape one of the internet’s most dominant platforms.
The trial beginning this week in Washington before a federal judge marks the culmination of two ongoing lawsuits against Google that started during the Trump administration. Legal experts describe the actions as the country’s biggest monopolization case since the US government took on Microsoft in the 1990s.
In separate complaints, the Justice Department and dozens of states accused Google in 2020 of abusing its dominance in online search by allegedly harming competition through deals with wireless carriers and smartphone makers that made Google Search the default or exclusive option on products used by millions of consumers. The complaints eventually consolidated into a single case.
Google has maintained that it competes on the merits and that consumers prefer its tools because they are the best, not because it has moved to illegally restrict competition. Google’s search business provides more than half of the $283 billion in revenue and $76 billion in net income Google’s parent company, Alphabet, recorded in 2022. Search has fueled the company’s growth to a more than $1.7 trillion market capitalization.
Now, the company is set to defend itself in a multiweek trial that could upend the way Google distributes its search engine to users. The case is expected to feature testimony from high-profile witnesses including former employees of Google and Samsung, along with executives from Apple, including senior vice president Eddy Cue. It is the first case to go to trial in a series of court challenges targeting Google’s far-reaching economic power, testing the willingness of courts to clamp down on large tech platforms.
“This is a backwards-looking case at a time of unprecedented innovation,” said Google President of Global Affairs Kent Walker, “including breakthroughs in AI, new apps and new services, all of which are creating more competition and more options for people than ever before. People don’t use Google because they have to — they use it because they want to. It’s easy to switch your default search engine — we’re long past the era of dial-up internet and CD-ROMs.”
The trial may also be a bellwether for the more assertive antitrust agenda of the Biden administration.
In its initial complaint, the US government alleged in part that Google pays billions of dollars a year to device manufacturers including Apple, LG, Motorola and Samsung — and browser developers like Mozilla and Opera — to be their default search engine and in many cases to prohibit them from dealing with Google’s competitors.
As a result, the complaint alleges, “Google effectively owns or controls search distribution channels accounting for roughly 80 percent of the general search queries in the United States.”
The lawsuit also alleges that Google’s Android operating system deals with device makers are anticompetitive, because they require smartphone companies to pre-install other Google-owned apps, such as Gmail, Chrome or Maps.
At the time the lawsuit was first filed, US antitrust officials did not rule out the possibility of a Google breakup, warning that Google’s behavior could threaten future innovation or the rise of a Google successor.
Separately, a group of states, led by Colorado, made additional allegations against Google, claiming that the way Google structures its search results page harms competition by prioritizing the company’s own apps and services over web pages, links, reviews and content from other third-party sites.
But the judge overseeing the case, Judge Amit Mehta in the US District Court for the District of Columbia, tossed out those claims in a ruling last month, narrowing the scope of allegations Google must defend and saying the states had not done enough to show a trial was necessary to determine whether Google’s search results rankings were anticompetitive.
Despite that ruling, the trial represents the US government’s furthest progress in challenging Google to date. Mehta has said Google’s pole position among search engines on browsers and smartphones “is a hotly disputed issue” and that the trial will determine “whether, as a matter of actual market reality, Google’s position as the default search engine across multiple browsers is a form of exclusionary Conduct.”
In January, meanwhile, the Biden administration launched another antitrust suit against Google in opposition to the company’s advertising technology business, accusing it of maintaining an illegal monopoly. That case remains in its early stages at the US District Court for the Eastern District of Virginia.
US prosecutors opened a landmark antitrust trial against Google on Tuesday with sweeping allegations that for years the company intentionally stifled competition challenging its massive search engine, accusing the tech giant of spending billions to operate an illegal monopoly that has harmed every computer and mobile device user in the United States.
In opening remarks before a federal judge in Washington, lawyers for the Justice Department alleged that Google’s negotiation of exclusive contracts with wireless carriers and phone makers helped cement its dominant position in violation of US antitrust law.
The Google case has been described as one of the largest US antitrust trials since the federal government took on Microsoft in the 1990s, and involves some similar arguments about the tying of multiple proprietary products. The multi-week trial is expected to feature witness testimony from Google CEO Sundar Pichai, as well as other senior executives or former employees from Google, Apple, Microsoft and Samsung.
The effects of Google’s alleged misconduct are vast, DOJ lawyer Kenneth Dintzer told the court.
“This case is about the future of the internet, and whether Google’s search engine will ever face meaningful competition,” Dintzer said, adding that Google pays more than $10 billion a year to Apple and other companies to ensure that Google is the default or only search engine available on browsers and mobile devices used by millions.
Also anticompetitive, the Justice Department said, are Google’s contracts to ensure that Android devices come with Google apps and services — including Google search — preinstalled.
The deals guarantee a steady flow of user data to Google that further reinforces its monopoly, the US government said, leading to other consequences such as harms to consumer privacy and higher advertising prices.
“This feedback loop, this wheel has been turning for 12 years, and it always turns to Google’s advantage,” Dintzer said. The practice ultimately affects what consumers see in search results and prevents new rivals from gaining scale and market share, he added.
For Google’s opening statement, attorney John Schmidtlein said that Apple’s decision to make Google the default search engine in its Safari browser demonstrates how Google’s search engine is the superior product consumers prefer.
“Apple repeatedly chose Google as the default because Apple believed it was the best experience for its users,” he said.
The Google case “could not be more different” from the historic Microsoft litigation at the turn of the millennium, Schmidtlein continued.
Where the Microsoft case revolved around that company’s alleged harms to Netscape, a small browser maker, the Google case is based on claims that Google search has harmed a much larger and more powerful entity: Microsoft and its Bing search engine, Schmidtlein said.
“Google competed on the merits to win preinstallation and default status” on consumer devices and browsers, he insisted, attacking Microsoft as a failed search engine developer.
“The evidence will show that Microsoft’s Bing search engine failed to win customers because Microsoft did not invest [and] did not innovate,” Schmidtlein added. “At every critical juncture, the evidence will show that they were beaten in the market.”
And Schmidtlein argued that forbidding Google from being able to compete for default status on browsers and devices would lead to its own harms to competition in search, stating that contracts ensuring that Android devices come with certain apps preinstalled such as Google Maps and Gmail also promotes competition — against Apple.
“Google’s Android agreements are important components of a business model that has sustained the most important competitor to Apple for mobile devices in the United States,” Schmidtlein said.
Google has previously said that consumers choose Google’s search engine because it is the best and that they prefer it, not because of anticompetitive practices.
But DOJ prosecutors said Tuesday that they plan to present evidence in the case that Google knew what it was doing was illegal and that the company “hid and destroyed documents because they knew they were violating the antitrust laws.”
“The harm from Google contracts affects every phone and computer in the country,” Dintzer said.
Kent Walker, Google’s president of global affairs, and Rep. Ken Buck from Colorado were in attendance for the opening. Buck, a vocal tech industry critic, is the former top Republican on the House antitrust subcommittee — which in 2020 released a widely publicized investigative report finding that Amazon, Apple, Google and Facebook enjoyed “monopoly power.”
The trial marks the culmination of two ongoing lawsuits against Google that started during the Trump administration.
In separate complaints, the Justice Department and dozens of states accused Google in 2020 of abusing its dominance in online search but were eventually consolidated into a single case.
Google’s search business provides more than half of the $283 billion in revenue and $76 billion in net income Google’s parent company, Alphabet, recorded in 2022. Search has fueled the company’s growth to a more than $1.7 trillion market capitalization.
“This is a backwards-looking case at a time of unprecedented innovation,” said Walker in a statement, “including breakthroughs in AI, new apps and new services, all of which are creating more competition and more options for people than ever before. People don’t use Google because they have to — they use it because they want to. It’s easy to switch your default search engine — we’re long past the era of dial-up internet and CD-ROMs.”
The trial may also be a bellwether for the more assertive antitrust agenda of the Biden administration.
At the time the lawsuit was first filed, US antitrust officials did not rule out the possibility of a Google breakup, warning that Google’s behavior could threaten future innovation or the rise of a Google successor.
Separately, a group of states, led by Colorado, made additional allegations against Google, claiming that the way Google structures its search results page harms competition by prioritizing the company’s own apps and services over web pages, links, reviews and content from other third-party sites.
But the judge overseeing the case, Judge Amit Mehta in the US District Court for the District of Columbia, tossed out those claims in a ruling last month, narrowing the scope of allegations Google must defend and saying the states had not done enough to show a trial was necessary to determine whether Google’s search results rankings were anticompetitive.
Despite that ruling, the trial represents the US government’s furthest progress in challenging Google to date. Mehta has said Google’s pole position among search engines on browsers and smartphones “is a hotly disputed issue” and that the trial will determine “whether, as a matter of actual market reality, Google’s position as the default search engine across multiple browsers is a form of exclusionary Conduct.”
In January, meanwhile, the Biden administration launched another antitrust suit against Google in opposition to the company’s advertising technology business, accusing it of maintaining an illegal monopoly. That case remains in its early stages at the US District Court for the Eastern District of Virginia.
The US government and 17 states are suing Amazon in a landmark monopoly case reflecting years of allegations that the e-commerce giant abused its economic dominance and harmed fair competition.
The groundbreaking lawsuit by the Federal Trade Commission and 17 attorneys general marks the US government’s sharpest attack yet against Amazon, a company that started off selling books on the internet but has since become known as “the everything store,” expanding into selling a vast range of consumer products, creating a globe-spanning logistics network and becoming a powerhouse in other technologies such as cloud computing.
The complaint alleges Amazon unfairly promotes its own platform and services at the expense of third-party sellers who rely on the company’s e-commerce marketplace for distribution.
For example, according to the FTC, Amazon has harmed competition by requiring sellers on its platform to purchase Amazon’s in-house logistics services in order to secure the best seller benefits, referred to as “Prime” eligibility. It also claims the company anticompetitively forces sellers to list their products on Amazon at the lowest prices anywhere on the web, instead of allowing sellers to offer their products at competing marketplaces for a lower price.
That practice is already the subject of a separate lawsuit targeting Amazon filed by California’s attorney general last year.
Because of Amazon’s dominance in e-commerce, sellers have little option but to accept Amazon’s terms, the FTC alleges, resulting in higher prices for consumers and a worse consumer experience. Amazon also ranks its own products in marketplace search results higher than those sold by third parties, the FTC said.
Amazon is “squarely focused on preventing anyone else from gaining that same critical mass of customers,” FTC Chair Lina Khan told reporters Tuesday. “This complaint reflects the cutting edge and best thinking on how competition occurs in digital markets and, similarly, the tactics that Amazon has used to suffocate rivals, deprive them of oxygen, and really leave a stunted landscape in its wake.”
The states involved in the case are Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin.
The complaint was filed in the US District Court for the Western District of Washington, and seeks a court order blocking Amazon from engaging in the allegedly anticompetitive behavior. Khan declined to say Tuesday whether the agency will be seeking a breakup of the company, saying the case is currently focused on proving Amazon’s liability under federal antitrust law.
The suit makes Amazon the third tech giant after Google and Meta to be hit with sweeping US government allegations that the company spent years violating federal antitrust laws, reflecting policymakers’ growing worldwide hostility toward Big Tech that intensified after 2016. The litigation could take years to play out. But just as Amazon founder Jeff Bezos and his spectacular wealth have inspired critics to draw comparisons to America’s Gilded Age, so may the FTC lawsuit come to symbolize a modern repeat of the antitrust crackdown of the early 20th century.
In a release, Khan accused Amazon of using “punitive and coercive tactics” to preserve an illegal monopoly.
“Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them,” Khan said. “Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”
“Today’s suit makes clear the FTC’s focus has radically departed from its mission of protecting consumers and competition. The practices the FTC is challenging have helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store,”said David Zapolsky, Amazon’s Senior Vice President of Global Public policy and General Counsel. “If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses—the opposite of what antitrust law is designed to do. The lawsuit filed by the FTC today is wrong on the facts and the law, and we look forward to making that case in court.”
For years, Amazon’s critics including US lawmakers, European regulators, third-party sellers, consumer advocacy groups and more have accused the company of everything from mistreating its workers to forcing its third-party sellers to accept anticompetitive terms. Amazon has unfairly used sellers’ own commercial data against them, opponents have said, so it can figure out what products Amazon should sell itself. And the fact that Amazon competes with sellers on the very same marketplace it controls represents a conflict of interest that should be considered illegal, many of Amazon’s critics have said.
The lawsuit represents a watershed moment in Khan’s career. She is widely credited with kickstarting antitrust scrutiny of Amazon in the United States with a seminal law paper in 2017. She later helped lead a congressional investigation into the tech industry’s alleged competition abuses, detailing in a 450-page report how Amazon — as well as Apple, Google and Meta — enjoy “monopoly power” and that there is “significant evidence” to show that the companies’ anticompetitive conduct has hindered innovation, reduced consumer choice and weakened democracy.
The investigation led to a raft of legislative proposals aimed at reining in the companies, but the most significant ones have stalled under a barrage of industry lobbying and decisions by congressional leaders not to bring the bills up for a final vote.
Lawmakers’ inaction has left it to antitrust enforcers to police the tech industry’s alleged harms to competition. In 2021, President Joe Biden stunned many in Washington when he tapped Khan not only to serve on the FTC but to lead the agency, sending a signal that he supported tough antitrust oversight.
Since then Khan has taken an aggressive enforcement posture, particularly toward the tech industry. Under her watch, the FTC has sued to block numerous tech acquisitions, most notably Microsoft’s $69 billion deal to acquire video game publisher Activision Blizzard. It has moved to restrict how companies may collect and use consumers’ personal information, and warned them of the risks of generative artificial intelligence.
Throughout, the FTC has scrutinized Amazon — suing the company in June for allegedly tricking millions of consumers into signing up for Amazon Prime and reaching multimillion-dollar settlements in May with the company over alleged privacy violations linked to Amazon’s smart home devices.
But the latest suit against Amazon may rank as the most significant of all, because it drives at the heart of Amazon’s e-commerce business and focuses on some of the most persistent criticisms of the company. In a sign of how threatening Amazon perceived Khan’s ascent to be, the company in 2021 called for her recusal from all cases involving the tech giant.
Khan has resisted those calls. On Tuesday, the FTC said it held a unanimous 3-0 vote authorizing the lawsuit; Khan was among those voting to proceed.
Microsoft and Amazon could be in hot water over apparently making it difficult for UK customers to use multiple suppliers of vital cloud services.
The Competition and Markets Authority (CMA), the country’s antitrust regulator, said Thursday it was launching an investigation into the UK cloud infrastructure services market to determine whether players were engaged in anti-competitive practices.
Cloud computing firms, such as Microsoft and Amazon Web Services (AWS), use data centers around the world to provide remote access to computing services and storage. This “cloud infrastructure” forms the foundation for how software applications, such as Gmail and Dropbox, are developed and run.
The CMA probe has been initiated following a report from Britain’s media and communications regulator Ofcom, which found that the supply of cloud infrastructure in the United Kingdom is highlyconcentrated and competition limited.
“We welcome Ofcom’s referral of public cloud infrastructure services to us for in-depth scrutiny,” CMA CEO Sarah Cardell said in a statement.
“This is a £7.5 billion market that underpins a whole host of online services — from social media to [artificial intelligence] foundation models. Many businesses now completely rely on cloud services, making effective competition in this market essential.”
The CMA said it would conclude its investigation by April 2025.
The probe is the latest evidence of increased scrutiny of big tech companies by European regulators, which have tightened rules in recent years in areas such as data protection and targeted advertising.
The European Digital Services Act, which came into force at the end of August, reflects one of the most comprehensive and ambitious efforts by policymakers anywhere to regulate tech giants. It applies to companies including Amazon (AMZN), Apple (AAPL), Google (GOOG), Microsoft (MSFT), Snapchat, TikTok and Meta (META), the owner of Facebook and Instagram.
According to Ofcom, last year Microsoft and AWS had a combined market share of 70-80% in the UK cloud infrastructure services market. Google is their closest competitor with a share of 5-10%.
In its report, Ofcom identified features of the market that make it more difficult for customers to change providers or to use multiple providers, such as switching fees.
“If customers have difficulty switching and using multiple providers, it could make it harder for competitors to gain scale and challenge AWS and Microsoft effectively for the business of new and existing customers,” Ofcom wrote.
The report also raised concerns about the software licensing practices of some cloud providers, particularly Microsoft.
Both Amazon and Microsoft said they would engage “constructively” with the CMA.
But a spokesperson for AWS added that the company disagreed with Ofcom’s findings. “We… believe they are based on a fundamental misconception of how the IT sector functions, and the services and discounts on offer,” the spokesperson said, noting that “the cloud has made switching between providers easier than ever.”
A spokesperson for Microsoft added: “We are committed to ensuring the UK cloud industry remains innovative, highly competitive and an accelerator for growth across the economy.”
Britain’s media and communications regulator Ofcom says it has “significant concerns” that Amazon and Microsoft could be harming competition in the market for cloud services.
In a statement Wednesday, Ofcom said it was “proposing to refer” the cloud services market to the Competition and Markets Authority, the UK antitrust regulator, for further investigation.
Ofcom’s own probe, which it launched in October, had so far uncovered some “concerning practices, including by some of the biggest tech firms in the world,” said Fergal Farragher, the Ofcom director leading the investigation.
“High barriers to switching are already harming competition in what is a fast-growing market. We think more in-depth scrutiny is needed, to make sure it’s working well for people and businesses who rely on these services,” Farragher added.
The Competition and Markets Authority said it received Ofcom’s provisional findings Wednesday and was reviewing them. “We stand ready to carry out a market investigation into this area, should Ofcom determine it is required,” a spokesperson said.
The Ofcom announcement comes days after Google Cloud accused Microsoft
(MSFT) of anti-competitive cloud computing practices. In an interview with Reuters, Google Cloud Vice President Amit Zavery said the company had raised the issue with antitrust agencies and urged EU antitrust regulators to take a closer look.
Cloud services are delivered to businesses and consumers over the internet and include applications such as Gmail and Dropbox.
Europe’s Digital Markets Act, which will apply fromMay, aims to enhance competition in online services. Britain’s own Digital Markets, Competition and Consumer Bill is expected to come before lawmakers this year.
According to Ofcom, Amazon
(AMZN) Web Services and Microsoft’s Azure have a combined UK market share of 60%-70% in cloud services. Google
(GOOGL) is their closest competitor with 5%-10%.
Ofcom said the three companies charged high “egress fees” for transferring data out of a cloud, which discourages customers from switching providers or using multiple providers to best serve their needs.
It also flagged technical restrictions imposed by the leading providers that prevent some of the services of one provider working effectively with cloud services from other firms, and said that fee discounts were structured to incentivize customers to use a single provider for all or most of their cloud needs.
There were indications that these market features were already causing harm, “with evidence of cloud customers facing significant price increases when they come to renew their contracts,” Ofcom said.
A Microsoft spokesperson said the company would continue to engage with Ofcom on its investigation. “We remain committed to ensuring the UK cloud industry stays highly competitive,” the spokesperson added. CNN has also contacted Amazon and Google.
Ofcom has invited feedback on its interim findings and will publish a final decision by October 5 on whether to refer the cloud services market to the Competition and Markets Authority.
“Making a market investigation reference would be a significant step for Ofcom to take. Our proposal reflects the importance of cloud computing to UK consumers and businesses,” it said.
Alibaba’s landmark restructuring has sent its shares soaring in New York and Hong Kong, as investors bet on the return of regulatory support for China’s tech industry and private businesses aftermore than two years of a brutal crackdown.
But the nature of the overhaul, in which the internet conglomerate will split its business into six separate units, is a sign that Beijing’s campaign against Big Tech hasn’t fundamentally changed. Regulators still intend to reduce the monopolistic nature of tech giants and limit their power, even as they urge private companies to do their part to create jobs and boost a flagging economy.
The news of the restructuring came shortly after the return of co-founder Jack Ma to mainland China. Ma had been spending time overseas and otherwise keeping a low profile since the Chinese government began a fierce crackdown on the tech sector in late 2020.
“It appears that Alibaba’s break-up has been orchestrated by Beijing,” said Brock Silvers, chief investment officer for Kaiyuan Capital.
“This idea is reinforced by Jack Ma’s sudden reappearance, which now seems like a planned media event intended to boost market sentiment at a critical moment.”
It worked. Shares in Alibaba
(BABA), which has a market capitalization of $260 billion, soared 13% in Hong Kong on Wednesday, following a 14% surge on Wall Street overnight, leading the tech sector’s gains in the Asia Pacific.
Ma is seen as a symbol of China’s tech industry and a barometer of the Chinese government’s support for private business. His presence is perceived as evidence of a more supportive approach to the private sector, at a time when China’s economy badly needs growth.
In October 2020, the once high-profile entrepreneur criticized the country’s financial regulatory system for being too rigid and unfriendly to small business. As a result, the authorities shelved Ant Group’s planned $35 billion IPO at the last minute.
A sweeping regulatory crackdown on Big Tech followed, which later engulfed China’s most powerful private companies, wiping huge sums off their market value. Alibaba’s stock is still down 70% from its peak just days before regulators abruptly pulled the Ant Group IPO.
But almost three years on, the dynamics have changed.
The Chinese government is now facing significant economic challenges. It’s eager to shore up growth and reinvigorate confidence in the tech sector following its emergence from three years of strict Covid-19 controls.
Alibaba’s restructuring is “part of [Beijing’s] strategy to shore up confidence in the private sector,” said Hong Hao, chief economist for Grow Investment Group.
In a policy shift, Chinese leader Xi Jinping recently urged the government to support private businesses, while calling on entrepreneurs to play a role in boosting growth and tech innovation, so that China can better counter what he called “containment” and “suppression” from the West led by the United States.
Premier Li Qiang, a trusted ally of Xi who was confirmed as the country’s No 2 official this month, followed up by rolling out a series of measures intended to repair ties between the government and the private sector.
“For a period of time last year, there were some incorrect discussions and comments in the society, which made some private entrepreneurs feel worried,” Premier Li said at his first news conference earlier this month.
China may need Alibaba now, but it’s not nearly as powerful as it was, according to analysts.
The breakup appears to “curb the influence of tech titans,” Silvers said. “It would serve as a stark reminder of Beijing’s uncomfortable relationship with the private sector, despite recent reassurances.”
Beijing’s major concern is that private tech firms have become too big and powerful. During its years-long clampdowns, the government sought to reduce the monopolistic nature of many prominent tech companies, slapping them with big fines, banning apps from stores and demanding that some firms completely overhaul their businesses.
“[Alibaba’s restructuring plan] offers a way to limit monopoly power and platform sway,” Hong said.
It could serve as a model for other Chinese tech giants going forward.
“Tencent is the obvious [one] next,” Hong said, adding that the social media and gaming gianthas already started reducing its stake in portfolio companies, including food delivery company Meituan.
Investors and analysts have cheered Alibaba’s restructuring.
The move marks the most significant overhaul in the company’s 24-year history and will “unlock the value” of its various businesses, it said on Tuesday.
Alibaba’s business will be split into six units: domestic e-commerce, international e-commerce, cloud computing, local services, logistics, and media and entertainment.
The domestic e-commerce group, which includes Taobao and contributes to a majority of the company’s revenues, will remain a wholly-owned unit. The other five, meanwhile, will have their own CEOs and can pursue separate public listings.
“The market is the best litmus test, and each business group and company can pursue independent fundraising and IPOs when they are ready,” Alibaba CEO Daniel Zhang said in an email to employees.
Some analysts welcomed the move, believing it will lead investors to reassess the valuation of Alibaba.
Citi analysts said Tuesday their target price for Alibaba’s US-listed stock was $156 per share, which is nearly 60% higher than Tuesday’s closing level.
Google should face court sanctions over “intentional and repeated destruction” of company chat logs that the US government expected to use in its antitrust case targeting Google’s search business, the Justice Department said Thursday.
Despite Google’s promises to preserve internal communications relevant to the suit, for years the company maintained a policy of deleting certain employee chats automatically after 24 hours, DOJ said in a filing in District of Columbia federal court.
The practice has harmed the US government’s case against the tech giant, DOJ alleged.
“Google’s daily destruction of written records prejudiced the United States by depriving it of a rich source of candid discussions between Google’s executives, including likely trial witnesses,” the filing said.
“We strongly refute the DOJ’s claims,” Google
(GOOGL) said in a statement. “Our teams have conscientiously worked for years to respond to inquiries and litigation. In fact, we have produced over 4 million documents in this case alone, and millions more to regulators around the world.”
The federal government’s call for sanctions adds to the pressure Google faces as it battles antitrust suits on multiple fronts, and highlights a rare move by prosecutors.
Through a setting in its chat software, Google employees can save chat history for up to 18 months — but only if the setting is manually enabled, the US government said in its filing, adding that Google routinely trained and encouraged employees to discuss sensitive topics over chat messages they knew would be auto-deleted the next day.
The filing cites several attached exhibits in which Google employees, sensing that a conversation was about to stray into sensitive territory, suggested that the discussion continue on the chat platform, with history turned off.
The government’s filing follows a similar sanctions motion against Google by Epic Games, maker of the hit video game “Fortnite,” in a separate antitrust case related to Google’s app store. The two sides faced off in an evidentiary hearing last month; on Feb. 15, the judge in the case ordered Google to produce more chat messages.
Thursday’s DOJ filing also cites the Epic evidentiary hearing, saying that it proved Google destroyed records of at least nine individuals who were each considered potential trial witnesses, and that the federal judge overseeing that case agreed the chats could have contained relevant evidence but that Google “did not systematically preserve those chats.”
“Google admitted that — for litigations spanning the past five years — it has never preserved all chats for relevant individuals by turning chat history on,” the DOJ filing said.
It was not until earlier this month that Google agreed to preserve the chats, the filing alleged, after failing to disclose to prosecutors its practice of deleting history-off chats after 24 hours.
It is not the first time DOJ has tussled with Google over evidence. Last year, in the same case, the agency asked the court to sanction Google for a program known as “Communicate with Care,” in which the company allegedly trained employees to copy lawyers on emails as a way to claim attorney-client privilege on communications that were business sensitive but did not seek legal advice and did not merit confidentiality.
While Judge Amit Mehta declined to issue sanctions at the time, he ordered that all of the emails in question be re-reviewed.
The Justice Department and eight states sued Google on Tuesday, accusing the company of harming competition with its dominance in the online advertising market and calling for it to be broken up.
The move marks the Biden administration’s first blockbuster antitrust case against a Big Tech company. The eight states joining the suit include California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia.
The fresh complaint significantly escalates the risks to Google emanating from Washington, where lawmakers and regulators have frequently raised concerns about the tech giant’s power but have so far failed to pass new legislation or regulations that might rein in the company or its peers.
For years, Google’s critics have claimed that the company’s extensive role in the ecosystem that enables advertisers to place ads, and for publishers to offer up digital ad space, represents a conflict of interest that Google has exploited anticompetitively.
In Tuesday’s complaint, a copy of which was viewed by CNN, the Justice Department alleged that Google actively and illegally maintained that dominance by engaging in a campaign to thwart competition. Google gobbled up rivals through anticompetitive mergers, the US government said, and bullied publishers and advertisers into using the company’s proprietary ad technology products.
As part of the lawsuit, the US government called for Google to be broken up and for the court to order the company to spin off at least its online advertising exchange and its ad server for publishers, if not more.
Google, the US government alleged, “has corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising. Having inserted itself into all aspects of the digital advertising marketplace, Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies.”
The suit was filed in the US District Court for the Eastern District of Virginia.
Tuesday’s suit marks the federal government’s second antitrust complaint against Google since 2020, when the Trump administration sued over Google’s alleged anticompetitive harms in search and search advertising. That case is still ongoing. Google has also been the target of antitrust litigation by state and private actors.
In a statement, Google said the DOJ suit “attempts to pick winners and losers in the highly competitive advertising technology sector.”
“DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow,” a Google spokesperson said, adding that a federal judge last year knocked down a claim that Google colluded with Facebook in a separate antitrust suit led by the state of Texas. That judge also ruled, however, that a number of monopolization claims in the Texas case could move forward.
The lawsuit is a frontal assault against Google’s massive, primary business of advertising. Google generated $209 billion in advertising revenue in 2021, according to its annual report, a figure representing more than 80% of its total revenue. By comparison, the next largest giant in online advertising, Facebook-parent Meta, generated $115 billion in 2021.
Third-party estimates suggest that Google and Facebook accounted for the majority of US digital ad revenues, hitting a peak around 2017, with Google taking about a third of the market. Since then, however, others including Amazon have begun encroaching on that business.
The US complaint echoes concerns that have prompted similar antitrust investigations in the United Kingdom and in the European Union.
Google not only controls the platform publishers use to sell online ad inventory, the Justice Department alleged Tuesday, but also the advertising tools marketers use to claim that inventory and the exchange that facilitates those transactions.
“Google’s pervasive power over the entire ad tech industry has been questioned by its own digital advertising executives,” the complaint said, “at least one of whom aptly begged the question: ‘[I]s there a deeper issue with us owning the platform, the exchange, and a huge network? The analogy would be if Goldman or Citibank owned the NYSE.’”
Tuesday’s complaint marks an opening salvo against Big Tech by DOJ’s antitrust chief, Jonathan Kanter. Kanter has spent months laying the groundwork for a broader offensive against the tech industry’s most dominant companies, reflecting commitments by President Joe Biden and others in the US government to hold powerful firms accountable. Under Kanter, Justice Department antitrust officials have pushed to bring more cases to trial as well as to prosecute cases involving unconventional legal theories.
In 2020, House lawmakers released a 450-page report finding that Google, along with Amazon, Apple and Facebook, hold “monopoly power” in key business segments. The report was the result of a 16-month investigation in which congressional staff reviewed corporate documents and interviewed the tech industry’s many customers and rivals. It concluded, among other things, that Google was uniquely positioned to benefit from its powerful role in the online ad industry.
“With a sizable share in the ad exchange market and the ad intermediary market, and as a leading supplier of ad space, Google simultaneously acts on behalf of publishers and advertisers, while also trading for itself,” the report said.
In the fervor-filled days leading up to the November 16 launch of the long-awaited Artemis I mission, an uncrewed trip around the moon, some industry insiders admitted to having conflicting emotions about the event.
On one hand, there was the thrill of watching NASA take its first steps toward eventually getting humans back to the lunar surface; on the other, a shadow cast by the long and costly process it took to get there.
“I have mixed feelings, though I hope that we have a successful mission,” former NASA astronaut Leroy Chiao said in an opinion roundtable interview with The New York Times. “It is always exciting to see a new vehicle fly. For perspective, we went from creating NASA to landing humans on the moon in just under 11 years. This program has, in one version or another, been ongoing since 2004.”
There have been numerous delays with the development of the rocket at the center of the Artemis I mission: NASA’s Space Launch System (SLS), the most powerful rocket ever flown — and one of the most controversial. The towering launch vehicle was originally expected to take flight in 2016. And the decade-plus that the rocket was in development sparked years of blistering criticism targeted toward the space agency and Boeing, which holds the primary contract for the SLS rocket’s core.
NASA’s Office of Inspector General (OIG) repeatedly called out what it referred to as Boeing’s “poor performance,” as a contributing factor in the billions of dollars in cost overruns and schedule delays that plagued SLS.
“Cost increases and schedule delays of Core Stage development can be traced largely to management, technical, and infrastructure issues driven by Boeing’s poor performance,” one 2018 report from NASA’s OIG, the first in a series of audits the OIG completed surrounding NASA’s management of the SLS program, read. And a report in 2020 laid out similar grievances.
For its part, Boeing has pushed back on the criticism, pointing to rigorous testing requirements and the overall success of the program. The OIG report also included correspondence from NASA, which noted in 2018 that it “had already recognized the opportunity to improve contract performance management” and agreed with the report’s recommendations.
Despite all the heated debate that has followed SLS, by all accounts, the rocket is here to stay. And officials at NASA and Boeing said its first launch two months ago was practically flawless.
“I worked over 50 Space Shuttle launches,” Boeing SLS program manager John Shannon told CNN by phone. “And I don’t ever remember a launch that was as clean as that one was, which for a first-time rocket — especially one that had been through as much as this one through all the testing — really put an exclamation point on how reliable and robust this vehicle really is.”
The Artemis program manager at NASA, Mike Sarafin, also said during a post-launch news conference that the rocket “performed spot-on.”
But with its complicated history and its hefty price tag, SLS could still face detractors in the years to come.
Many have questioned why SLS needs to exist at all. With the estimated cost per launch standing at more than $4 billion for the first four Artemis missions, it’s possible commercial rockets, like the massive Mars rocket SpaceX is building, could get the job done more efficiently, as the chief of space policy at the nonprofit exploration advocacy group Planetary Society, Casey Dreier, recently observed in an article laying out both sides of the SLS argument.
(NASA Administrator Bill Nelson noted that the $4 billion per-launch cost estimate includes development costs that the space agency hopes will be amortized over the course of 10 or more missions.)
Boeing was selected in 2012 to build SLS’s “core stage,” which is the hulking orange fuselage that houses most of the massive engines that give the rocket its first burst of power at liftoff.
Though more than 1,000 companies were involved with designing and building SLS, Boeing’s work involved the largest and most expensive portion of the rocket.
That process began over a decade ago, and when the Artemis program was established in 2019, it gave the rocket its purpose: return humans to the moon, establish a permanent lunar outpost, and, eventually, pave the path toward getting humans to Mars.
But the SLS is no longer the only rocket involved in the program. NASA gave SpaceX a significant role in 2021, giving the company a fixed-price contract for use of its Mars rocket as the vehicle that will ferry astronauts to the lunar surface after they leave Earth and travel to the moon’s orbit on SLS. SpaceX’s forthcoming rocket, called Starship, is also intended to be capable of completing a crewed mission to the moon or Mars on its own. (Starship, it should be noted, is still in the development phases and has not yet been tested in orbit.)
Boeing has repeatedly argued that SLS is essential and capable of performing tasks that other rockets cannot.
“The bottom line is there’s nothing else like the SLS because it was built from the ground up to be human rated,” Shannon said. “It is the only vehicle that can take the Orion spacecraft and the service module to the moon. And that’s the purpose-built design — to take large hardware and humans to cislunar space, and nothing else exists that can do that.”
Starship, meanwhile, is not tailored solely to NASA’s specific lunar goals. SpaceX CEO Elon Musk has talked for more than a decade about his desire to get humans to Mars. More recently, he has said Starship could also be used to house giant space telescopes.
Yet, another reason critics remain skeptical of SLS is because of its origins. The rocket’s conception can be traced back to NASA’s Constellation program, which was a plan to return to the moon mapped out under former President George W. Bush that was later canceled.
But the SLS has survived. Many observers have suggested a big reason was the desire to maintain space industry jobs in certain Congressional districts and to beef up aerospace supply chains.
Much of the criticism levied against SLS, however, has focused on the actual process of getting the rocket built.
At one point in 2019, former NASA administrator Jim Bridenstine considered sidelining the SLS rocket entirely, citing frustrations with the delays.
“At the end of the day, the contractors had an obligation to deliver what NASA had contracted for them to deliver,” Bridenstine told CNN by phone last month. “And I was frustrated like most of America.”
Still, Bridenstine said, when his office reviewed the matter, it found “there were no options that were going to cost less money or take less time than just finishing the SLS” — and the rocket was never ultimately sidelined. (Bridenstine noted he was also publicly critical of delayed projects led by SpaceX and others.)
The SLS rocket ended up flying its first launch more than six years later than originally intended. NASA had allocated $6.2 billion to the SLS program as of 2018, but that price tag more than tripled to $23 billion as of 2022, according to an analysis by the Planetary Society.
Those escalating costs can be traced back to the type of contracts that NASA signed with Boeing and its other major suppliers for SLS. It’s called cost-plus, which puts the financial burden on NASA when projects face cost overruns while still offering contractors extra payments, or award fees.
In testimony before the Senate Appropriations Subcommittee on Science last year, current NASA Administrator Bill Nelson criticized the cost-plus contracting method, calling it a “plague.”
More in vogue are “fixed-price” contracts, which have a firm price cap, like the kind NASA gave to Boeing and SpaceX for its Commercial Crew Program.
In an interview with CNN in December, however, Nelson stood by cost-plus contracting for SLS and Orion, the vehicle that is designed to carry astronauts and rides atop the rocket to space. He said that without that type of contract, in his view, NASA’s private-sector contractors simply wouldn’t be willing to take on a rocket designed for such a specific purpose and exploring deep space. Building a rocket as specific and technically complex as SLS isn’t a risk many private-sector companies are anxious to take on, he noted.
“You really have difficulty in the development of a new and very exquisite spacecraft … on a fixed-price contract,” he said.
“That industry is just not willing to accept that kind of thing, with the exception of the landers,” he added, referring to two other branches of the Artemis program: robotic landers that will deliver cargo to the moon’s surface and SpaceX’s $2.9 billion lunar lander contract. Both of those will use fixed-price — often referred to as “commercial” — contracts.
“And even there, they’re getting a considerable investment by the federal government,” Nelson said.
Still, government watchdogs have not pulled punches when assessing these cost-plus contracts and Boeing’s role.
“We did notice very poor contractor performance on Boeing’s part. There’s poor planning and poor execution,” NASA Inspector General Paul Martin said during testimony before the House’s Subcommittee on Space and Aeronautics last year. “We saw that the cost-plus contracts that NASA had been using…worked to the contractor’s — rather than NASA’s — advantage.”
Shannon, the Boeing executive, acknowledged in an interview that Boeing and SLS have faced loud detractors, but he said that the value of the drawn out development and testing program would become evident as SLS flies.
“I am extremely proud that NASA — even though there were significant schedule pressures — they could set up a test program that was incredibly comprehensive,” he said. “The Boeing team worked through that test process and hit every mark on it. And you see the results. You see a vehicle that is not just visually spectacular, but its performance was spectacular. And it really put us on the road to be able to do lunar exploration again, which is something that’s very important in this country.”
But the rocket is still facing criticism. During a Congressional hearing with the House’s Science, Space, and Technology Committee in March 2022, NASA’s Inspector General said that current cost estimates for SLS were “unsustainable,” gauging that the space agency will have spent $93 billion on the Artemis program from 2012 through September 2025.
Martin, the NASA inspector general, specifically pointed to Boeing as one of the contractors that would need to find “efficiencies” to bring down those costs as the Artemis program moves forward.
In a December 7 statement to CNN, Boeing once again defended SLS and its price point.
“Boeing is and has been committed to improving our processes — both while the program was in its developmental stage and now as it transitions to an operational phase,” the statement read, noting the company already implemented “lessons learned” from building the first rocket to “drive efficiencies from a cost and schedule perspective” for future SLS rockets.
“When adjusted for inflation, NASA has developed SLS for a quarter of the cost of the Saturn V and half the cost of the Space Shuttle,” the statement noted. “These programs have also been essential to investing in the NASA centers, workforce and test facilities that are used by a broad range of civil and commercial partners across NASA and industry.”
The successful launch of SLS was a welcome winning moment for Boeing. Over the past few years, the company has been mired in controversy, including ongoing delays and myriad issues with Starliner, a spacecraft built for NASA’s Commercial Crew Program, and scandal after scandal plaguing its airplane division.
Now that the Artemis I mission has returned safely home, NASA and Boeing can turn to preparing more of the gargantuan SLS rockets to launch even loftier missions.
SLS is slated to launch the Artemis II mission, which will take four astronauts on a journey around the moon, in 2024. From there, SLS will be the backbone of the Artemis III mission that will return humans to the lunar surface for the first time in five decades and a series of increasingly complex missions as NASA works to create its permanent lunar outpost.
Shannon, the Boeing SLS program manager, told CNN that construction of the next two SLS rocket cores is well underway, with the booster for Artemis II on track to be finished in April — more than a year before the mission is scheduled to take off. All of the “major components” for a third SLS rocket are also completed, Shannon added.
For the third SLS core and beyond, Boeing is also moving final assembly to new facilities Florida, freeing up space at its manufacturing facilities to increase production, which may help drive down costs.
Shannon declined to share a specific price point for the new rockets or share any internal pricing goals, though NASA is expected to sign new contracts for the rockets that will launch the Artemis V mission and beyond, which could significantly change the price per launch.
Nelson also told CNN in December that NASA “will be making improvements, and we will find cost savings where we can,” such as with the decision to use commercial contracts for other vehicles under the Artemis program umbrella.
How and whether those contracts bear out remain to be seen: SpaceX needs to get its Starship rocket flying, a massive space station called Gateway needs to come to fruition, and at least some of the robotic lunar landers designed to carry cargo to the moon will need to prove their effectiveness. It’s also not yet clear whether those contracts will result in enough cost savings for the critics of SLS, including NASA’s OIG, to consider the Artemis program sustainable.
As for SLS, Nelson also told reporters December 11, just after the conclusion of the Artemis I mission, that he had every reason to expect that lawmakers would continue to fund the rocket and NASA’s broader moon program.
“I’m not worried about the support from the Congress,” Nelson said.
And Bridenstine, Nelson’s predecessor who has been publicly critical SLS, said that he ultimately stands by SLS and points out that, controversies aside, it does have rare bipartisan support from its bankrollers.
“We are in a spot now where this is going to be successful,” Bridenstine said last month, recalling when he first realized the Artemis program had support from the right and left. “All of America is going to be proud of this program. And yes, there are going to be differences. People are gonna say well, you should go all commercial and drop SLS…but at the end of the day, what we have to do is we have to bring together all of the things that are the best programs that we can get for America and use them to go to the moon.”
Apple and Google’s continued hosting of TikTok on their app stores, despite US national security concerns about the short-form video app, reflects the tech giants’ “gatekeeper” power and should be made part of any antitrust reviews the app stores may face, a member of the Federal Communications Commission wrote to the Justice Department last week.
The previously unreported letter — sent on Dec. 2 to DOJ antitrust chief Jonathan Kanter and obtained by CNN — said that continuing to make TikTok available on the app stores risks harming consumers, whose personal information US officials have worried may be being fed to the Chinese government.
Beyond possible consumer harm, TikTok’s continued presence on app stores also undercuts Apple and Google’s arguments that their dominance in app distribution leads to better user security and privacy, FCC Commissioner Brendan Carr wrote in the letter.
It’s the latest attempt by Carr, a top Republican at the FCC, to pressure Apple and Google to remove TikTok. Last month, Carr called for the US government to ban TikTok over the bipartisan concerns that China could wield its influence over TikTok’s parent, ByteDance, to gain access to US user data or to disseminate propaganda and disinformation. Now, Carr is trying a new tack by framing the TikTok matter as an antitrust issue.
“Apple and Google are not exercising their ironclad control over apps for the altruistic or procompetitive purposes that they put forward as defenses to existing antitrust or competition claims,” Carr wrote. “Instead, their conduct shows that those rationales are merely pretextual — talismanic references invoked to shield themselves from liability.”
DOJ’s Antitrust Division should consider that “to the extent that it assesses the reasonableness of Apple’s and Google’s anticompetitive actions,” Carr added.
Google declined to comment. Apple the Justice Department didn’t immediately respond to a request for comment.
The FCC does not regulate app stores or social media, focusing instead on telecommunications and traditional media such as radio and television broadcasters and cable operators. But Carr has become the most vocal commissioner to speak out on TikTok, drawing what he’s said are lessons from the FCC’s own decisions to block Huawei, ZTE and other telecom companies with ties to China from the US market.
His remarks also echo those by prominent lawmakers of both parties, including Virginia Democratic Sen. Mark Warner and Florida Republican Sen. Marco Rubio, who together lead the Senate Intelligence Committee.
Carr’s call comes as Apple and Google’s critics have increasingly sought to apply the nation’s antitrust laws against the tech giants. Third-party software developers have long alleged that Apple and Google’s app store fees and rules are monopolistic and anticompetitive. A high-profile 2020 lawsuit along those lines brought by Epic Games, the maker of video game “Fortnite,” has so far proven largely unsuccessful, though an appeal is pending.
More recently, Apple’s conservative critics have accused the company of abusing “monopoly” power by allegedly threatening to remove Twitter from its app store — a claim that Twitter’s new owner Elon Musk has made without evidence and that he says has since been resolved thanks to a conversation with Apple CEO Tim Cook. Apple has not commented on Musk’s allegation or purported exchange with Cook.
For years, TikTok has been negotiating with the Committee on Foreign Investment in the United States, a multi-agency US government panel charged with reviewing the national security implications of foreign investment deals, to arrive at an agreement to allow TikTok to operate in the US market despite the security concerns.
TikTok has said Project Texas, its plan to migrate US user data exclusively to cloud servers hosted by Oracle, is a core part of the solution. Last week, TikTok CEO Shou Zi Chew said at a conference hosted by the New York Times that “no foreign government has asked us for user data before, and if they did, we would say no.”
In congressional testimony, TikTok has said it maintains robust data controls but has sought to sidestep questions about its parent company and declined to stop letting China-based employees access US users’ data.
Two European chip deals have run into trouble over their links with China, a sign of concern spreading in the West over potential Chinese control of critical infrastructure.
Last week, the new owner of Britain’s biggest chipmaker was ordered to unwind its takeover, just days after another chip factory sale was blocked in Germany. Both transactions were hit by national security concerns, and had involved acquisitions by Chinese-owned companies.
In the United Kingdom, Nexperia, a Dutch subsidiary of Shanghai-listed semiconductor maker Wingtech, was told by the government to sell at least 86% of its stake in Newport Wafer Fab, more than a year after taking control of the factory. Staffers have since been protesting the decision, saying it puts nearly 600 jobs at risk.
In Germany, the economic ministry barred Elmos Semiconductor, an automotive chipmaker, from selling its factory in the city of Dortmund to Silex, a Swedish subsidiary of China’s Sai Microelectronics.
Chipmaking was already emerging as a new front in US-China tensions. Now the two troubled deals illustrate how the pressure is also rising in Europe, particularly as Western officials face calls for key sectors to be kept out of Chinese control.
“These decisions mark a shift towards tougher stances regarding Chinese investment in critical industries in Europe,” said Xiaomeng Lu, director of geo‑technology at Eurasia Group.
“US pressure definitely contributed to these decisions. [A] growing sense of technology sovereignty also likely prompted these moves — governments around the world are increasingly [viewing the] semiconductors industry as a strategic resource and seek to protect them from foreign takeovers.”
Legal experts said the two decisions were notable because each deal was initially thought to have been cleared.
The Newport Wafer case is “the first completed acquisition” that needs to be unwound under a UK national security and investment (NSI) act, which took full effect in January, according to Ian Giles, head of antitrust and competition for Europe, the Middle East and Asia for Norton Rose.
Nexperia said last week that it was “shocked” by the decision, and that “the UK government chose not to enter into a meaningful dialogue with Nexperia or even visit the Newport site.”
The company added that it had offered to avoid “activities of potential concern, and to provide the UK government with direct control and participation in the management of Newport,” a 28-acre site in south Wales.
The factory makes silicon wafers, the basis for making computer chips. Many of its products eventually power cars and medical equipment. Nexperia has indicated that workers at the facility now face an uncertain future.
In an open letter to the UK government last Thursday, the Nexperia Newport Staff Association said that it was “in disbelief” that employees’ livelihoods had been “put in jeopardy in the run-up to Christmas.”
“This is clearly a deeply political decision,” the group wrote, rejecting the idea that the deal would undermine British security. “You must see sense and protect our jobs by allowing Nexperia to keep their Newport factory.”
For Elmos, German authorities had initially indicated that they would issue a conditional approval, and even shared a draft approval after an intense review process lasting about 10 months, the company said in a statement following the injunction.
Tim Schaper, head of antitrust and competition for Germany at Norton Rose, said government intervention was also significant given that “Elmos’ technology is said to be quite old, state of the art in the 1990s, and allegedly not of great industrial importance.”
“The transaction became the plaything of a public debate about Chinese investors’ acquiring stakes in key German technologies,” he said.
It’s possible that regulators were concerned about an outflow of technical know how, according to Alexander Rinne, the Munich-based head of international law firm Milbank’s European antitrust practice.
“Elmos is known for making chips for the automotive sector, which is Germany’s core industry and the pride of the country,” he said in an interview.
Elmos and Nexperia both declined interview requests. A Nexperia spokesperson told CNN Business on Tuesday that it was “considering its options regarding the UK government’s decision.”
Chips are a growing source of tension between the United States and China. Washington has declared a shortage of the materials a national security issue, and highlighted the importance of remaining competitive in advanced technology capabilities.
This year, the United States ramped up its own restrictions and pressed allies to enact their own, according to Lu. In August, the US government ordered two top chipmakers, Nvidia
(NVDA) and AMD
(AMD), to halt exports of certain high-performance chips to China.
Two months later, the Biden administration unveiled sweeping export controls that banned Chinese companies from buying advanced chips and chip-making equipment without a license. The rules also restricted the ability of American citizens or US green card holders to provide support for the development or production of chips at certain manufacturing facilities in China.
The pressure is mounting. On Monday, NATO Secretary General Jens Stoltenberg urged the West to “be careful not to create new dependencies” on China. Speaking at a NATO parliamentary assembly in Madrid, Stoltenberg said he was seeing “growing Chinese efforts” to control Western critical infrastructure, supply chains, and key industrial sectors.
“We cannot give authoritarian regimes any chance to exploit our vulnerabilities and undermine us,” he said.
China has pushed back on the handling of the two European semiconductor cases.
“We firmly oppose the UK’s move, and call on the UK to respect the legitimate rights and interests of Chinese companies and provide a fair, just, and (a) non-discriminatory business environment,” Chinese Foreign Ministry Spokesperson Mao Ning told a press briefing last Friday when asked about the Newport Wafer order. “The UK has overstretched the concept of national security and abused state power.”
Zhao Lijian, another Chinese Foreign Ministry spokesperson, called on Germany and other countries to “refrain from politicizing normal economic and trade cooperation” at a press conference earlier this month, without addressing Elmos specifically.
Germany has shown greater scrutiny of Chinese buyers this year. Last month, a bid by Chinese state shipping giant Cosco for a stake in a Hamburg port terminal operator sparked similar controversy. Under pressure from some members of the government, the size of the investment was later limited.
Attorneys say if the chipmakers appeal, they could face an uncertain battle that may drag on for years.
In each case, they would need to file a challenge in court within roughly a month of regulators’ decisions, barring exceptional circumstances, according to Norton Rose.
Both Britain and Germany have recently added rules that expand government oversight over such decisions, making outcomes harder to predict. In Germany, a change to foreign direct investment rules in 2020 meant the government can intervene in prospective deals “if there is a ‘probable impairment of public order and security,’” said Schaper.
Previously, by contrast, it could only impose restrictions “if there was an ‘actual, sufficiently serious threat to public order and security,’” he told CNN Business.
In the UK, the ability of the government to retroactively review deals under the NSI Act “was really something that was considered surprising and far-reaching,” said Andrea Hamilton, a London-based partner at Milbank.
“If challenged, as Nexperia apparently intends, it will also become a test case as to [the] extent of the NSI Act’s limits,” she said.
Elsewhere, attention is shifting to the Netherlands. The Dutch government is currently facing pressure from the United States to limit exports to China, particularly from ASML
(ASML), a semiconductor equipment maker that holds a dominant position in the lithography machine market, according to Lu at Eurasia Group.
“It will become the next case study,” she told CNN Business.
The Netherlands has made clear it will form its own position.
Asked about the issue this month, Dutch Minister for Foreign Trade Liesje Schreinemacher said the country would “not copy the US export restrictions for China one-to-one.”
“We make our own assessment,” she said in an interview with Dutch newspaper NRC.
— CNN’s Zahid Mahmood, Rose Roobeek-Coppack and Laura He contributed to this report.
Senator Amy Klobuchar criticized Ticketmaster in an open letter to its CEO, saying she has “serious concerns” about the company’s operations following a service meltdown Tuesday that left Taylor Swift fans irate.
In the letter to CEO Michael Rapino, the Democrat from Minnesota and chair of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, wrote that complaints from Swift fans unable to buy tickets for her upcoming tour, in addition to criticism about high fees, suggests that the company “continues to abuse its market positions.”
“Ticketmaster’s power in the primary ticket market insulates it from the competitive pressures that typically push companies to innovate and improve their services. That can result in the types of dramatic service failures we saw this week, where consumers are the ones that pay the price,” Klobuchar wrote.
Ticketmaster and Live Nation, the country’s largest concert promoter, merged about a decade ago. Klobuchar noted that the company at the time pledged to “develop an easy-access, one-stop platform” for ticket delivery. On Thursday, the senator told Rapino that it “appears that your confidence was misplaced.”
“When Ticketmaster merged with Live Nation in 2010, it was subject to an antitrust consent decree that prohibited it from abusing its market position,” Klobuchar wrote. “Nonetheless, there have been numerous complaints about your company’s compliance with that decree.”
The letter includes a list of questions for Rapino to answer by next week. Ticketmaster did not immediately respond to a request for comment from CNN Business.
On Tuesday, the company said “there has been historically unprecedented demand with millions showing up” to buy tickets for Swift’s tour and thanked fans for their “patience.”
Klobuchar is the latest high-profile politician to openly criticize Ticketmaster for the ticketing disaster that left bad blood between Swift fans and the company.
“@Ticketmaster’s excessive wait times and fees are completely unacceptable, as seen with today’s @taylorswift13 tickets, and are a symptom of a larger problem. It’s no secret that Live Nation-Ticketmaster is an unchecked monopoly,” Rep. David Cicilline, currently the chairman of the Antitrust Subcommittee, tweeted on Tuesday.
“Daily reminder that Ticketmaster is a monopoly, its merger with LiveNation should never have been approved, and they need to be reined in,” tweeted Rep. Alexandria Ocasio-Cortez.
Complaints about the company’s monopoly power go back long, long before Tuesday’s ticket problems, when the platform appeared to crash or freeze during presale purchases for Swift’s latest tour.
In 1994, when Taylor Swift was only four years oldand ticket purchase queues were in person or on the phone, not online, the rock group Pearl Jam filed a complaint with the Justice Department’s antitrust division asserting that Ticketmaster has a “virtually absolute monopoly on the distribution of tickets to concerts.” It tried to book its tour only at venues that didn’t use Ticketmaster.
The Justice Department and many state attorneys general have made similar complaints over the years.
Despite those concerns, Ticketmaster continued to grow more dominant. Pearl Jam’s complaint was quietly dismissed. The Justice Department and states allowed the Live Nation Ticketmaster merger to go through despite a 2010 court filing in the case raising objections to the merger. In the filing, the Justice Department said that Ticketmaster’s share among major concert venues exceeded 80%.
– CNN Business’ Chris Isidore contributed to this report.
GIFs — those short, animated images that were a staple of internet memes and culture in the 1990s and 2000s — may be going out of fashion now as social media users have largely moved on to emojis and video.
But a long-running legal battle over who can control access to them, culminating this week in a rare defeat for Meta (META), the parent of Facebook, could have major ramifications for Big Tech regulation. While the stakes of the case itself were relatively small, policy experts say the outcome is certain to embolden antitrust regulators around the globe and could chip away at the image of Big Tech as an invincible juggernaut.
On Tuesday, UK regulators forced Meta to unwind its 2020 purchase of Giphy, one of the largest searchable internet libraries of GIFs.
Meta had fought the breakup effort. But after an appeals tribunal this past summer largely upheld the government’s decision, Meta said this week it would sell Giphy in response to the final order from the UK requiring a spin-off.
The concession marks a key moment in the global tug-of-war between governments and tech giants. It’s the first time any government — and one outside the United States at that — has successfully forced Meta to accept a breakup, albeit a partial one, since regulators worldwide began scrutinizing its economic dominance.
“The Citadel may have been breached,” said Joel Mitnick, an antitrust attorney at the law firm Cadwalader, Wickersham & Taft.
Meta, more than any other tech company, has drawn the attention of regulators for its acquisitions, which to critics have often looked like attempts to kill off potential competitive threats before they can flourish. In particular, they’ve pointed to its deal for Instagram in 2012 and WhatsApp in 2014, both of which were far pricier than the $400 million it reportedly paid for Giphy.
Meta is currently defending against a US government antitrust suit seeking to force the company to spin off Instagram and WhatsApp, and another that would block a more recent proposed acquisition of a virtual reality startup known as Within Unlimited.
The company said this week that it will continue to explore acquisitions despite the UK ruling. In issuing its decision, the UK’s competition regulator said Meta’s Giphy acquisition risked eliminating a competitor in digital advertising and cutting off third-party access to Giphy’s GIFs.
GIFs aren’t a core part of Meta’s business; the company has sought to reposition itself instead as a leader in virtual reality technology. Even when Meta’s deal was first announced, it was widely regarded as a headscratcher and not an obvious threat to competition, according to Adam Kovacevich, CEO of the Chamber of Progress, an industry advocacy group funded partly by Meta.
“Almost no one thought Meta was securing some kind of major coup with this deal,” Kovacevich tweeted, arguing that the case primarily served as a political exercise for UK regulators to demonstrate their post-Brexit relevance.
Paul Gallant, an industry analyst at Cowen Inc., said that that only emphasizes how closely regulators are watching tech mergers now, and underscores how much of a wake-up call the UK ruling is.
“Successfully blocking this deal will catch the eyes of the biggest tech companies in the world,” Gallant said. “The biggest tech companies have grown significantly through mergers and acquisitions, so this decision has the potential to complicate that strategy.”
In many ways, the UK’s success in rolling back the Giphy merger reflects the cooperation and consensus that has emerged among antitrust agencies around the world, said William Kovacic, former chairman of the Federal Trade Commission and a law professor at George Washington University.
The ruling will give non-UK regulators greater confidence that their own attempts to block tech industry consolidation may be achievable or, at the very least, not be viewed as radical, he added.
“It gives you the ability to resist the argument that you are a rogue agency or a rogue jurisdiction,” Kovacic said. “It is more comforting to travel in a group than alone.”
Emboldened regulators could seek to block more deals, or perhaps bring more cases alleging anticompetitive behavior. But just because the Giphy case could inspire more enforcement, that doesn’t necessarily mean they’ll be successful. That’s because, in major markets such as the United States, antitrust cases first must be proven in court before any penalties can be imposed. And US courts don’t typically take foreign antitrust rulings into account; their job is to interpret US law.
In that respect, said Mitnick, US antitrust officials face a tougher challenge than their counterparts in Europe and in other places where regulators face lower procedural hurdles.
A successful US breakup prosecution, Mitnick said, “remains a very high wall to scale.”
In less than 48 hours, Meta’s Twitter rival Threads has surpassed 70 million sign-ups, upended the social media landscape and appears to have rattled Twitter enough that it is now threatening legal action against Meta.
But even as users signed up for Threads in droves, with some clearly eager to flee the chaos of Elon Musk’s Twitter, the sudden success of Meta’s app could raise a new set of concerns.
Meta has long been criticized for its market dominance, and for allegedly trying to choke off competition by copying and killing rival applications. Now, some competition experts and even some Threads users worry that if the new app’s traction continues, it may simply lead to the accumulation of even more power and dominance for Meta and its CEO Mark Zuckerberg.
“The prospect of total monopoly by Meta, yikes,” wrote one user. “It’s a real problem for society when a few dozen people and companies own every single thing so that no alternative paradigms can exist that they don’t co-opt from the cradle,” replied another.
Twitter had always been much smaller than Meta’s platforms, but it had an outsized influence in tech, media and politics. As Twitter faltered under Musk, though, a cottage industry emerged of smaller apps trying to capture some of its magic. Now more than any of them, Meta seems best positioned to claim the crown.
Threads’ blockbuster launch this week highlights the uncomfortable reality of the modern digital economy: To potentially beat some of the biggest players in the industry, you might have to be a giant yourself.
The overnight success of Threads is a testament both to the dissatisfaction with Musk’s ownership of Twitter and to the unique power and reach of one of Meta’s most important properties: Instagram.
Instagram has more than two billion users, far more than the 238 million users Twitter reported having in the months before Musk took over. When new users sign up for Threads, which they do using an Instagram account, the app prompts them to follow all of their existing Instagram contacts with a single tap. It’s optional, but is easy to accept, and it takes a conscious decision to decline.
By promoting Threads through Instagram, and by sharing Instagram user data with Threads to let people instantly recreate their social networks, Meta has significantly greased the onboarding process. That frictionless experience has allowed Threads to leapfrog what’s known in the industry as the “cold start” problem, in which a new platform struggles to gain new users because there are no other users there to attract them.
Thanks to the Instagram integration, “that biggest problem, the chicken-egg problem, has been solved from the jump,” Reddit co-founder and venture investor Alexis Ohanian said in a video Thursday (posted, naturally, on Threads).
That Threads appeared to clear that hurdle easily, Ohanian said, makes him “bullish” on the new app.
But that same innovation that made signing up so many users so quickly may raise competition concerns, particularly in Europe where new antitrust rules for digital platforms are set to go into effect in a matter of months.
“From a competition perspective this can be problematic because Meta can use it to leverage its market power and raise barriers to entry, as other rivals would not have the customer base Meta has via Instagram,” said Agustin Reyna, director of legal and economic affairs at the Brussels-based consumer advocacy organization BEUC.
Under the EU’s Digital Markets Act (DMA), “digital gatekeepers” — a term that’s expected to cover Meta and/or its subsidiaries — will be prohibited from combining a user’s data from multiple platforms without consent, Reyna said. Another restriction forbids requiring users to sign up for one platform as a condition of using another.
Instagram CEO Adam Mosseri appeared to acknowledge those issues this week in an interview with The Verge. Threads won’t be launching in the EU for now, he said, because of “complexities with complying with some of the laws coming into effect next year” — a statement The Verge suggested was a reference to the DMA.
The DMA was passed specifically to deal with the antitrust concerns raised by large tech platforms. That Threads apparently cannot (yet) comply with rules designed to protect competition underscores uncertainty about the app’s potential competitive impact.
Meta’s approach to Threads could also revive longstanding criticisms about the company’s alleged practice of copying and killing rivals, particularly as Twitter has warned Meta it may sue over claims of trade secret theft (an allegation Meta denies).
The issue isn’t limited to the realm of social media. As the world races to develop artificial intelligence, Threads represents a huge new opportunity for Meta to gather training data for its own AI technology, in a way that could help it catch up to industry leaders such as OpenAI and Google. That could complicate any attempt at a comprehensive analysis of what Threads means for competition in tech.
Part of what makes the debate so complicated is Threads’ seemingly very real threat to Twitter.
If Threads puts pressure on Twitter to improve its service, that is a form of competition between apps, said Geoffrey Manne, founder of the Portland, Oregon-based International Center for Law and Economics.
But, he added, if it leads to a concentration of power in the social media industry more broadly, it could mean a reduction in competition overall. It all depends on how you define the market.
“I’m inclined to say it does both simultaneously, and the ultimate consequences aren’t so clear,” Manne said.
Rather than viewing it through the lens of a social media market, one helpful way to look at the issue is from the perspective of the advertising market, he said. It’s possible that once Threads introduces advertising — which Zuckerberg has said won’t happen until the app has increased to significant scale — Threads simply reinforces Meta’s advertising market power, Manne said. That could lead to further antitrust scrutiny for Meta even if the question about competition in social media is ambiguous.
Jeff Blattner, a former DOJ antitrust official, said it can only benefit consumers to have Threads as a rival to Twitter.
“Two platforms run by maniac billionaires are better than one,” he wrote on Threads — though if Threads is so successful as to effectively knock out Twitter altogether, then in some ways the original question about Meta’s dominance will still stand.
Threads has one thing going for it that may nip any competition concerns in the bud: A commitment to integrate with the same open protocols used by other distributed social media alternatives, such as Mastodon.
That would give users the option to migrate their accounts, along with all their follower data intact, to a rival like Mastodon that isn’t controlled by Meta.
While that interoperability isn’t available yet, Mosseri has repeatedly highlighted it as a priority on his to-do list.
When and if it happens, that could be a significant step. What may appear now as an audience grab by Meta could someday wind up being how millions of people were onboarded to a massive, decentralized social networking infrastructure that is not controlled by any single company, individual or organization.
“This is why we think interoperability requirements are so important,” said Charlotte Slaiman, a competition expert at the Washington-based consumer group Public Knowledge. If users could port their entire social graph from one rival to another whenever they wanted, she said, “we could have more fair competition based on the quality of the product, not just incumbency advantage.”
Google intentionally sought to “hide the ball” in a high-profile antitrust case by automatically deleting employee chat messages that could have been used as evidence in the suit, a federal judge ruled Tuesday, dealing a blow to the tech giant.
The ruling condemns Google’s document preservation practices and their impact on litigation, which could have a broader impact as the company defends a range of suits on multiple fronts.
Google will not face immediate sanctions for its missteps apart from having to cover the legal fees that plaintiffs incurred in bringing the sanctions motion, wrote Judge James Donato in his order. A non-monetary penalty could still be imposed following further court proceedings. But Donato repeatedly criticized Google this week for trying to keep sensitive chat logs out of the record.
“The Court concludes that Google intended to subvert the discovery process, and that Chat evidence was ‘lost with the intent to prevent its use in litigation’ and ‘with the intent to deprive another party of the information’s use in the litigation,’” Donato wrote.
In what Donato described as a “fundamental problem,” Google appeared to turn a blind eye to employees’ liberal use of a chat feature that deletes the logs after 24 hours, according to the ruling. The feature enabled Google employees to have conversations about topics relevant to its app store practices — and the topic of the lawsuit — with greater confidence the messages would not be used in court. Employees were also given the discretion to determine for themselves what constituted conversations that needed to be preserved, Donato wrote.
That was “in sharp contrast” to how Google automatically preserves company emails that are subject to a litigation hold, he added, saying that Google omitted any mention of its practices surrounding chats until it was specifically forced to address the matter by the plaintiffs’ sanctions motion.
The Justice Department has filed a similar sanctions motion against Google in an ongoing antitrust suit over Google’s search business. Though that case is unfolding in a different federal court, Donato’s ruling Tuesday could give other courts more ammunition to reach the same conclusion.
In a statement, Google said it has endeavored to meet its discovery obligations.
“Our teams have conscientiously worked, for years, to respond to Epic and the state AGs’ discovery requests and we have produced over three million documents, including thousands of chats,” said a Google spokexperson. “We’ll continue to show the court how choice, security, and openness are built into Android and Google Play.”
A group of states that sued to break up Facebook-parent Meta in 2020 were years too late to file their challenge and failed to make a persuasive case that the company’s data policies harmed competition, a federal appeals court ruled Thursday in a sweeping victory for the tech giant.
In siding with Meta, the decision by a three-judge panel of the US Court of Appeals for the DC Circuit upheld a lower-court decision tossing out the suit initially filed by New York and dozens of other states.
The decision is a blow to regulators who have cited Meta as a prime example of the way tech giants have allegedly abused their dominance. And it casts a shadow over a parallel antitrust case against Meta that was brought by the Federal Trade Commission at around the same time.
The states’ original complaint had sought to unwind Meta’s past acquisitions of Instagram and WhatsApp, accusing the company of a “buy-or-bury” approach that violated antitrust laws.
In 2021, a federal judge dismissed the complaint, saying that the lawsuit came long after the acquisitions had been completed in 2012 and 2014. Thursday’s appellate decision agreed.
“An injunction breaking up Facebook, ordering it to divest itself of Instagram and WhatsApp under court supervision, would have severe consequences, consequences that would not have existed if the States had timely brought their suit and prevailed,” wrote Senior Circuit Judge Raymond Randolph.
In addition, Randolph wrote, state allegations claiming that Meta’s — then Facebook’s — policies placing restrictions on app developers were anticompetitive didn’t hold up.
The policies in question, Randolph wrote, simply told app developers they could not use Facebook’s platform “to duplicate Facebook’s core products,” and did not rise to the level of an antitrust violation under federal law.
Although the states argued that Facebook’s policies at the time — which have since been removed — discouraged innovation by the company’s rivals, the complaint failed to establish how widely the policies affected Facebook’s third-party developers.
“The States thus have not adequately alleged that this policy substantially foreclosed Facebook’s competitors, giving us an additional reason to reject their exclusive dealing theory,” the court held.
A spokesperson for New York Attorney General Letitia James didn’t immediately respond to a request for comment.
In a statement, Meta said the state’s case reflected a mischaracterization of “the vibrant competitive ecosystem in which we operate.”
“In affirming the dismissal of this case, the court noted that this enforcement action was ‘odd’ because we compete in an industry that is experiencing ‘rapid growth and innovation with no end in sight,’ Meta said. “Moving forward, Meta will defend itself vigorously against the FTC’s distortion of antitrust laws and attacks on an American success story that are contrary to the interests of people and businesses who value our services.”
In spite of Thursday’s decision, Meta must still face a similar lawsuit by the FTC, which also seeks to break up the company in connection with its Instagram and WhatsApp acquisitions.
Last year, the same federal judge who dismissed the state suit, James Boasberg, allowed the federal suit to proceed. Boasberg had tossed out the FTC suit as well in 2021, saying the agency had failed to make an initial showing that Meta holds a monopoly in personal social networking. But he permitted the FTC to re-file its complaint with changes.
Google’s advertising business should be broken up, European Union officials said Wednesday, alleging that the tech giant’s involvement in multiple parts of the digital advertising supply chain creates “inherent conflicts of interest” that risk harming competition.
The formal accusations mark the latest antitrust challenge to Google over its sprawling ad tech business, following a lawsuit by the US Justice Department in January that also called for a breakup of the company.
The EU Commission has submitted its allegations to Google in writing, officials said, kicking off a legal process that could potentially end in billions of dollars in fines in addition to a possible breakup that could impact part of its core advertising business.
The commission alleges that since 2014, Google has unfairly boosted its own proprietary ad exchange — the online auction house known as AdX that matches advertisers and publishers — through its simultaneous ownership of some of the most popular ad tools for publishers and advertisers.
For example, the commission claims, advertisers who used Google’s ad buying tools frequently had their purchases routed to AdX instead of to rival ad exchanges.
Meanwhile, Google’s publisher-facing tools unfairly gave AdX a leg up over rival ad exchanges, the commission alleged, because Google’s publisher tools gave AdX competitive bidding information that the exchange could use to help advertisers win an auction.
One proposed solution by the commission would spin off Google’s ad exchange and publisher tools from the ad-buying tools it provides to advertisers.
“@Google controls both sides of the #adtech market: sell & buy,” tweeted Margrethe Vestager, the commission’s top competition official. “We are concerned that it may have abused its dominance to favour its own #AdX platform. If confirmed, this is illegal.”
In a statement, Dan Taylor, Google’s vice president of global ads, said the EU’s probe “focuses on a narrow aspect of our advertising business,” that the company opposes the commission’s preliminary conclusions and that Google plans to “respond accordingly.”
“Our advertising technology tools help websites and apps fund their content, and enable businesses of all sizes to effectively reach new customers. Google remains committed to creating value for our publisher and advertiser partners in this highly competitive sector,” Taylor said.
A Google spokesperson told CNN Wednesday that the company has only just received the commission’s complaint and that it will take time to review the commission’s claims. Google also added that it will oppose calls for a breakup.
Gannett, the largest newspaper publisher in the United States, is suing Google, alleging the tech giant holds a monopoly over the digital ad market.
The publisher of USA Today and more than 200 local publications filed the lawsuit in a New York federal court on Tuesday, and is seeking unspecified damages. Gannett argues in court documents that Google and its parent company, Alphabet, controls how publishers buy and sell ads online.
“The result is dramatically less revenue for publishers and Google’s ad-tech rivals, while Google enjoys exorbitant monopoly profits,” the lawsuit states.
Google controls about a quarter of the US digital advertising market, with Meta, Amazon and TikTok combining for another third, according to eMarketer. News publishers and other websites combine for the other roughly 40%. Big Tech’s share of the market is beginning to erode slightly, but Google remains by far the largest individual player.
That means publishers often rely at least in part on Google’s advertising technology to support their operations: Gannett says Google controls 90% of the ad market for publishers.
Michael Reed, Gannett’s chairman and CEO, said in a statement Tuesday that Google’s dominance in the online advertising industry has come “at the expense of publishers, readers and everyone else.”
“Digital advertising is the lifeblood of the online economy,” Reed added. “Without free and fair competition for digital ad space, publishers cannot invest in their newsrooms.”
Dan Taylor, Google’s vice president of global ads, told CNN that the claims in the suit “are simply wrong.”
“Publishers have many options to choose from when it comes to using advertising technology to monetize – in fact, Gannett uses dozens of competing ad services, including Google Ad Manager,” Taylor said in a statement Tuesday. “And when publishers choose to use Google tools, they keep the vast majority of revenue.”
He continued: “We’ll show the court how our advertising products benefit publishers and help them fund their content online.”
The legal action from Gannett comes as Google faces a growing number of antitrust complaints in the United States and the European Union over its advertising business, which remains its central moneymaker.
EU officials said last week that Google’s advertising business should be broken up, alleging that the tech giant’s involvement in multiple parts of the digital advertising supply chain creates “inherent conflicts of interest” that risk harming competition.
Earlier this year, the Justice Department and eight states sued Google, accusing the company of harming competition with its dominance in the online advertising market and similarly calling for it to be broken up.
Microsoft
(MSFT) and the video game giant Activision Blizzard
(ATVI) will face off Thursday against the US government in a high-stakes battle over one of the largest technology acquisitions in history.
The showdown in federal court will have the CEOs of both companies taking the stand to defend their $69 billion merger against claims that the combination could violate US antitrust law and harm millions of consumers.
The outcome of the fight will shape the future of the multibillion-dollar games industry. It will also impact enormously popular gaming franchises such as “Call of Duty” and “World of Warcraft,” which Activision owns and would be transferred to Microsoft under the deal.
Also testifying will be the top financial executives from both companies; senior leaders from Microsoft’s Xbox division; the CEO of Microsoft Gaming, Phil Spencer; and a vocal critic of the deal, Sony gaming CEO Jim Ryan.
The days-long affair begins Thursday and is scheduled to run through next week.
In bringing the case, the Federal Trade Commission is asking a US district court judge for an injunction that would temporarily halt the deal. That would keep the companies from closing their merger, at least until the FTC’s in-house court rules in a separate proceeding on whether the acquisition is anticompetitive.
But this week’s fight over a preliminary injunction may prove decisive for the deal as a whole. Microsoft has said that a victory for the FTC at this stage “will effectively block the transaction” overall.
In this hearing, the FTC does not need to prove that the deal is anticompetitive. It just needs to show that the agency would be likely to succeed in doing so if the case moves ahead, and that otherwise its ability to enforce US antitrust law would be harmed.
The clash comes as Microsoft and Activision face down a contractual July 18 deadline to consummate the deal. Failure to close, or any permanent court order to block the merger, could force Microsoft to pay a $3 billion breakup fee to Activision, according to the deal’s terms.
The FTC lawsuit has put Microsoft under the harshest antitrust scrutiny in the US in more than two decades. It also could be a crucial test for the FTC at a time when it’s trying to rein in the tech industry broadly, with mixed success.
In its initial challenge to the merger in its in-house court last year, the FTC alleged the deal would harm competition by turning Microsoft into the world’s third-largest video game publisher — allowing it to raise video game prices with impunity, restrict Activision titles from rival platforms and harm game quality and player experiences on consoles and gaming services.
Some of those concerns have also been raised internationally. The UK government has challenged the acquisition, and the New Zealand government on Tuesday warned that the deal could be anticompetitive.
Microsoft has sought to address the concerns by hammering out multi-year licensing agreements with competitors such as Nintendo and Nvidia to ensure that their platforms will continue to receive popular titles if the deal goes through.
The company has also put forth an 11-point pledge to keep its platforms open, a commitment that applies not only to the Activision Blizzard deal but to virtually all of Microsoft’s gaming business going forward.
Last month, Microsoft said the European Union would require it to license Activision games “automatically” to competing cloud gaming services as a condition of allowing the merger to proceed in the EU. That commitment, Microsoft said, “will apply globally and will empower millions of consumers worldwide to play these games on any device they choose.”
Although EU regulators have said the concession addresses their concerns, officials in the US and the UK are continuing with their legal opposition to the deal.
The standoff particularly focuses attention on FTC Chair Lina Khan, a tech industry critic who has argued for litigating difficult cases and for introducing novel legal theories to help adapt US antitrust law to the digital age.
Khan won a significant victory last year when the FTC forced Nvidia to abandon its attempted acquisition of the chipmaker Arm. The deal would have combined two companies in adjacent industries in what is known as a vertical merger, a type of deal that is rarely blocked in the United States.
But Khan also suffered a setback when the FTC unsuccessfully tried to block Facebook-parent Meta from acquiring Within Unlimited, a virtual reality startup. The FTC had argued that the acquisition was an attempt by Meta to quash competition in the nascent VR industry, but earlier this year, a federal judge declined to issue a preliminary injunction of the kind the FTC now seeks against Microsoft. The FTC dropped its case against Meta soon after.
