Tag: domestic-business

iPhone sales in China shrink as US political tensions grow | CNN Business

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Demand for Apple’s new iPhone 15 lineup is weaker in China than for last year’s models, according to analysts.

Sales for the iPhone 15 are down 4.5% in China compared to iPhone 14 sales in the first two weeks after its launch, according to Counterpoint Research. Separately, Bloomberg reported on Monday financial firm Jefferies said iPhone 15 sales dropped by a double-digit percentage following strong customer demand for Huawei’s new Mate 60 smartphone line.

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(AAPL) shares fell 0.08% following the reports.

The reports come amid a floundering Chinese economy, a struggling housing market, and more competition among higher-end vendors in China, particularly from Chinese device manufacturer Huawei.

“We’re seeing a lot of nationalism right now as Chinese consumers who think they’ve been wronged by the US government and sanctions are gravitating toward the Mate 60 and that is edging into Apple volumes,” Jeff Fieldhack, research director at Counterpoint, told CNN.

At the same time, China remains very important to Apple as it is the largest market behind the US. Fieldhack said he doesn’t believe Huawei will surpass Apple right now in terms of smartphone sales but expects continued interest in the Mate 60 will continue to “eek” into Apple’s numbers.

“Apple made a lot of gains during its launch period last year, where it became number one in China,” he said. “Things looked strong but now, with the political tension and competition, that is a reason for concern.”

However, the Phone 15 lineup is up about 10% year-over-year in the US, according to Counterpoint. That’s strong growth for Apple considering sales fell for the third consecutive quarter in August, ahead of the iPhone 15 launch.

The latest iPhone 15 devices come with a slimmer design, a more-advanced main camera system and a customizable Action button, which gives the silence button additional controls, from starting a voice memo to writing a note. Perhaps the biggest change coming to the models is that they will now use a USB-C charging cord, ending an 11-year run with Apple’s proprietary Lightning charging cable.

This isn’t the first time the Mate 60 has made headlines since its late August launch. In September, the US government sought more information about the Mate 60 Pro’s 5G Kirin 9000s processor reportedly developed specifically for the manufacturer. Its debut shocked industry experts who questioned how the company could make such a chip following sweeping efforts by the United States to restrict China’s access to foreign chip technology because of perceived national security concerns.

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August 2, 2023
Illinois Supreme Court upholds state’s assault-style weapons ban | CNN Politics

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The Illinois Supreme Court on Friday upheld the state’s assault-style weapons ban in a 4-3 ruling after months of legal challenges sought to dismantle the law.

State lawmakers in January passed, and Democratic Gov. J.B. Pritzker signed into law, a measure to ban assault-style rifles and high-capacity magazines. Those who already own such rifles face limitations on their sale and transfer and must register them with the Illinois State Police by 2024.

That law – which came about six months after the July 2022 Highland Park, Illinois, shooting – faced immediate lawsuits in state and federal court that argued it violated the Illinois and US constitutions.

A Macon County Circuit Court judge found earlier this year that exemptions to the law, including for law enforcement officers and armed guards at federally supervised nuclear sites, violated the equal protection clause of the state’s constitution.

The Illinois Supreme Court agreed to fast-track the state’s appeal, and in a 20-page opinion, reversed the circuit court’s judgment. The majority’s opinion claimed to focus on two core issues brought by the plaintiffs: Whether the law violated the plaintiffs’ right to equal protection and if it constituted special legislation that created laws for some firearms owners and not others. The majority opinion notably did not decide if the ban violated the Second Amendment, asserting that the plaintiffs had waived this issue.

“We express no opinion on the potential viability of plaintiffs’ waived claim concerning the Second Amendment,” they wrote.

However, one of the plaintiffs’ attorneys, Jerry Stocks, told CNN the majority justices misrepresented their arguments. Stocks said the Second Amendment is a fundamental right inextricably linked to their arguments and thus should have weighed heavily on scrutiny of the ban. Ignoring the issue altogether was improper, he said.

“We have a circus in Illinois and the clowns are in charge right now,” Stocks said.

Illinois Attorney General Kwame Raoul said the new law is a “critical part” of the state’s efforts to combat gun violence, and Pritzker’s office hailed the decision to uphold “a commonsense gun reform law to keep mass-killing machines off of our streets and out of our schools, malls, parks, and places of worship.”

Nancy Rotering, the Democratic mayor of Highland Park, called on Congress to act on tougher federal restrictions and said Friday’s decision “sends a message to residents that saving lives takes precedence over thoughts and prayers and acknowledges the importance of sensible gun control measures.”

Illinois has struggled to restrict the flow of illegal guns, particularly in Chicago, while officials in the state have faced legal hurdles to implementing new gun restrictions.

Despite gun rights advocates challenging the assault-style weapons ban and asking the US Supreme Court to block the ban – along with a city ordinance passed last year by Naperville, Illinois, that bans the sale of assault rifles – the US Supreme Court in May refused to intervene.

This story has been updated with additional details.

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August 2, 2023
YouTube to prohibit false claims about cancer treatments under its medical misinformation policy | CNN Business

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YouTube announced Tuesday that it will start removing false claims about cancer treatments as part of an ongoing effort to build out its medical misinformation policy.

Under the updated policy, YouTube will prohibit “content that promotes cancer treatments proven to be harmful or ineffective, or content that discourages viewers from seeking professional medical treatment,” Dr. Garth Graham, head of YouTube Health, said in a blog post Tuesday.

“This includes content that promotes unproven treatments in place of approved care or as a guaranteed cure, and treatments that have been specifically deemed harmful by health authorities,” he said, such as the misleading claim that patients should “take vitamin C instead of radiation therapy.”

The update is just one of several steps YouTube has made in recent years to build out its medical misinformation policy, which also prohibits false claims about vaccines and abortions, as well as content that promotes or glorifies eating disorders.

As part of the announcement, YouTube is rolling out a broader updated medical misinformation policy framework that will consider content in three categories: prevention, treatment and denial.

“To determine if a condition, treatment or substance is in scope of our medical misinformation policies, we’ll evaluate whether it’s associated with a high public health risk, publicly available guidance from health authorities around the world, and whether it’s generally prone to misinformation,” Graham said. He added that YouTube will take action on content that falls into that framework and “contradicts local health authorities or the World Health Organization.”

Graham said the policy is designed to preserve “the important balance of removing egregiously harmful content while ensuring space for debate and discussion.”

Cancer treatment fits YouTube’s updated medical misinformation framework because the disease poses a high public health risk and is a topic prone to frequent misinformation, and because there is “stable consensus about safe cancer treatments from local and global health authorities,” Graham said.

As with many social media policies, however, the challenge often isn’t introducing it but enforcing it. YouTube says its restrictions on cancer treatment misinformation will go into effect on Tuesday and enforcement will ramp up in the coming weeks. The company has previously said it uses both human and automated moderation to review videos and their context.

YouTube also plans to promote cancer-related content from the Mayo Clinic and other authoritative sources.

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August 2, 2023
Maui conspiracy theories are spreading on social media. Why this always happens after a disaster | CNN Business

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A slew of viral conspiracy videos on social media have made baseless claims that the Maui wildfires were started intentionally as part of a land grab, highlighting how quickly misinformation spreads after a disaster.

While the cause of the fires hasn’t been determined, Hawaiian Electric — the major power company on Maui — is under scrutiny for not shutting down power lines when high winds created dangerous fire conditions. (Hawaiian Electric previously said both the company and the state are conducting investigations into what happened). Maui experienced high winds from Hurricane Dora in the south while it was also grappling with a drought. Wildfires across the region have long been a concern.

Still, conspiracy theories continue to circulate as nearly 400 people are still unaccounted for.

It’s not uncommon for conspiracy theories to make the rounds after a national crisis. According to Renee DiResta, a research manager at Stanford University who studies misinformation, people often look for a way to make sense of the world when they are anxious or have a feeling of powerlessness.

“Theories that attribute the cause of a crisis to a specific bad actor offer a villain to blame, someone to potentially hold responsible,” DiResta said. “The conspiracy theories that are the most effective and plausible are usually based on some grain of truth and connect to some existing set of beliefs about the world.”

For example, someone who distrusts the government may be more inclined to believe someone who posts negatively about a government agency.

Conspiracy theorists on varying platforms claim the fires, which killed at least 114 people earlier this month, were planned as part of a strategic effort to weed out less wealthy residents on Maui and make room for multi-million dollar developments.

In one video, a user claims a friend sent him a video of a laser beam “coming out of the sky, directly targeting the city.” “This was a direct energy weapon assault,” he said. The video remains posted but now includes a label from Instagram listing it as “false information.” The imagery appears to be from a previous SpaceX launch in California.

Related far-fetched theories say the alleged “laser beams” were programmed not to hit anything blue, explaining why so many blue beach umbrellas were left unscathed by the fires.

Other social media users allege elite Maui residents were behind the fires so they could buy the destroyed land at a discounted price and rebuild potentially a “smart city.”

“You’re telling me that these cheaper lower middle class houses burnt down directly across the street and all of the mansions are still standing?” one YouTube user posted, referencing aerial imagery taken of the destruction.

One tweet about a celebrity purchasing hundreds of acres across Maui over the past few years has received more than 12 million views on X, the platform formerly known as Twitter.

When a conspiracy theory gains traction online, others may chime in and offer explanations for details not discussed in the original post. Social media algorithms can amplify these theories based on user attention and interactions.

“Social media is incredibly valuable in crisis events as people on the ground can report the facts directly, but that usefulness is tempered, and can be dangerous, if misleading claims proliferate particularly in the immediate aftermath,” DiResta said.

Social media platforms like Instagram, TikTok and YouTube have taken steps to curb the spread of conspiracy theories and misinformation, but some videos can slip through the cracks. Many platforms use a mix of tech monitoring tools and human reviewers to enforce their community guidelines.

Ahead of the publishing of this article, TikTok removed several conspiracy theory videos sent by CNN that were in violation of its community guidelines, which it characterizes as “inaccurate, misleading, or false content that may cause significant harm to individuals or society, regardless of intent” on the platform. A company spokesperson said more than 40,000 trust and safety professionals around the world review and moderate content at all hours of the day.

Meanwhile, in a statement provided to CNN, YouTube spokesperson Elena Hernandez said the platform uses different sections, such as top news, developing news and a fact-check panel, to provide users with as much context and background information as possible on certain trending topics, and will remove content when necessary.

“During major news events, such as the horrific fires in Hawaii, our systems are designed to raise up content from authoritative sources in search results and recommendations,” Hernandez said.

Instagram also employs third-party fact-checkers to contact sources, check public data and work to verify images and videos on questionable content. They then rate and provide labels to the content in question, such as “false,” “altered” or “missing context,” to encourage viewers to think critically about what they’re about to see.

As a result, those posts show up far less often in users’ feeds and repeat offenders can face varying risks, such as losing monetization on their pages.

Social media platform X did not immediately respond to a request for comment.

Michael Inouye, a principal analyst at market research firm ABI Research, said social media companies are in a challenging spot because they want to uphold freedom of speech, but do so in an environment where posts that receive the most shares and likes often rise to the top of user feeds. That means posts sharing conspiracy theories that spark fear and emotion may perform better in a crisis than those sharing straightforward, accurate information.

“Ultimately, social media will have to decide if it wants to be a better news organization or remain this ‘open’ platform for expression that can run counter to the ethics and standards that is required by news reporting,” Inouye said. “The problem is, even if something isn’t labeled as ‘news,’ some will still interpret personal opinion as truth, which puts us back in the same position.”

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August 2, 2023
X will allow political ads again and hire for safety and election teams ahead of 2024 elections | CNN Business

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X, the platform formerly known as Twitter, is hiring for its safety and elections teams ahead of the 2024 US presidential election and will again allow political ads for the first time since 2019.

“We’re currently expanding our safety and elections teams to focus on combating manipulation, surfacing inauthentic accounts and closely monitoring the platform for emerging threats,” the company said in a blog post Tuesday, in which it also laid out its approach to political discourse and preventing voter manipulation as campaign season ramps up.

The announcement comes after months of changes to the platform and how it handles content moderation after Elon Musk took over the company last fall. Shortly after his takeover, Musk laid off huge swaths of the company’s staff, including many employees responsible for safety, platform manipulation and election policy. (Musk later boasted about having cut roughly 80% of the company’s staff.)

It also follows criticism by Musk about how the platform’s previous leadership handled political discourse, including claims of censorship.

According to X’s Tuesday blog post, the platform will continue to apply its civic integrity policy — which prohibits the use of the platform for “manipulating or interfering in elections,” including posting content that could mislead people about how, when or where to participate in civic processes such as voting — for a “limited period of time before and during an election.”

“We’re updating this policy to make sure we strike the right balance between tackling the most harmful types of content—those that could intimidate or deceive people into surrendering their right to participate in a civic process—and not censoring political debate,” X said. The platform will add public labels to posts that violate the civic integrity policy and let users know when reach has been restricted on such content.

The practices laid out in X’s Tuesday post are not all that different from how the platform handled misinformation related to elections under its previous leadership. Ahead of the 2022 midterms, the platform said it would label and demote, for example, false claims about how to cast a ballot or the outcomes of a race.

X added that it is following through on a commitment to allow expanded political advertising. The company began taking steps in that direction in January, when it relaxed a ban on issue advertising and promised that further changes to political ads would be coming. Twitter initially implemented restrictions on political and issue advertising in 2019 amid concerns that politicians could seek to target users with false or misleading information.

On Tuesday, X said promoted political posts would again be allowed and that the ads would be subject to certain policies.

“This will include prohibiting the promotion of false or misleading content,” X said in the blog post, “including false or misleading information intended to undermine public confidence in an election, while seeking to preserve free and open political discourse.”

The blog post added that X will create a “global advertising transparency center” that will allow users to review political ads — a capability that is required under Europe’s new Digital Services Act, a law that X and other very large tech platforms were expected to comply with as of last week.

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August 2, 2023
Elon Musk’s X Corp. sues California AG over content moderation law | CNN Business

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Elon Musk’s X Corp., the parent company of the platform formerly known as Twitter, on Friday sued California’s attorney general over the state’s new content moderation law.

California Gov. Gavin Newsom signed bill AB 587 into law last September. The law requires social media companies to post their terms of service online and submit a semiannual report to the state attorney general outlining their content moderation policies and practices. Platforms must, among other things, disclose how their automated content moderation systems work, how they define controversial content categories such as “hate speech” and “disinformation,” and the number of pieces of content flagged or removed in such categories.

Newsom’s office touted the bill as a way to improve transparency from social networks. But in a complaint filed in California’s Eastern District Court against California Attorney General Robert Bonta, X alleged that the law violates the First Amendment and California’s constitution by potentially compelling the company to moderate users’ politically charged speech.

The law “compels companies like X Corp. to engage in speech against their will, impermissibly interferes with the constitutionally-protected editorial judgments of companies such as X Corp., has both the purpose and likely effect of pressuring companies such as X Corp. to remove, demonetize, or deprioritize constitutionally-protected speech,” the company alleged in the complaint. It added that the law could place an “undue burden” on social media companies such as Musk’s X, which is headquartered in California.

Attorney General Bonta’s press office said in an email to CNN: “While we have not yet been served with the complaint, we will review it and respond in court.”

A spokesperson for Newsom sent CNN a statement from last September in which the governor remarked on the bill.

“California will not stand by as social media is weaponized to spread hate and disinformation that threaten our communities and foundational values as a country,” Newsom said in the statement. “Californians deserve to know how these platforms are impacting our public discourse, and this action brings much-needed transparency and accountability to the policies that shape the social media content we consume every day.”

The lawsuit comes as Musk has escalated his rhetoric over what kinds of speech should be permitted on his platform, as the company’s core advertising business has taken a major revenue hit over concerns, among other things, about the approach to content moderation. Under Musk’s leadership, the platform has made several changes to its content policies, including ceasing enforcement of its Covid-19 misinformation policy and reinstating many previously banned users.

Just last month, at least two brands paused their ad spending on X after their advertisements ran alongside an account promoting Nazism. (X suspended the account after the issue was flagged and said ad impressions on the page were minimal.)

The billionaire this week threatened a lawsuit against the Anti-Defamation League for defamation, claiming that the nonprofit organization’s statements about rising hate speech on the social media platform have torpedoed X’s advertising revenue. (The ADL says it does not comment on legal threats, but CEO Jonathan Greenblatt spoke out against the #BanTheADL campaign on X.)

In Friday’s lawsuit, X Corp. alleged that requiring social media companies to report their moderation practices could pressure the platforms into “limiting or censoring constitutionally-protected content that the State finds objectionable.” It also claimed that the law could force social platforms “to take public positions on controversial and politically charged issues” and thus tailor those positions in a way it otherwise wouldn’t to avoid public scrutiny.

The law “‘compel[s]’ X Corp. to ‘speak a particular message,’ which necessarily ‘alters the content of’ its speech,’” in violation of its First Amendment rights, the company alleges in the complaint.

The lawsuit seeks a jury trial on the constitutionality and legal validity of the California law.

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August 2, 2023
France orders Apple to pull iPhone 12 off shelves for high radiation levels | CNN Business

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Apple is fighting France’s claims that the iPhone 12 surpasses European radiation exposure limits after French regulators on Tuesday ordered a pause on sales and a fix to phones already sold to customers.

France’s National Frequency Agency said it “has demanded that Apple withdraw the iPhone 12 from the French market, effective 12 September 2023, as measures show the specific absorption rate exceeds the set limits.” The agency said the iPhone 12 is not compliant with European Union regulations.

“Apple must immediately adopt all necessary measures to prevent the iPhone 12 in the supply chain from being made available on the market,” ANFR added.

Disputing the agency’s claims, Apple said it had already given the agency multiple lab results conducted by the company and independent third parties that showed the device’s compliance with relevant SAR regulations and global standards.

The company said it was contesting the AFNR’s review results and would continue to work with the agency to demonstrate the phone’s compliance.

SAR is a measure of the rate of energy absorption by the body from the source being measured, according to the ANFR. But experts and regulators generally say not to worry.

“To date, and after much research performed, no adverse health effect has been causally linked with exposure to wireless technologies,” according to the World Health Organization. “Provided that the overall exposure remains below international guidelines, no consequences for public health are anticipated.”

ANFR ruled that for iPhone 12s already in use, Apple “must adopt all necessary corrective measures to bring the telephones into conformity as soon as possible, otherwise, Apple will have to recall the equipment.”

The measure was effective from Tuesday, with the regulator adding it would ensure the product is no longer offered for sale in all distribution channels in France from that day.

France’s Minister for the Digital Economy Jean-Noel Barrot confirmed in a tweet that iPhone 12 sales are “halted in France until Apple offers an update for all affected devices.”

“The @anfr found that the iPhone 12 was emitting a level of waves slightly higher than the authorized threshold,” Barrot wrote in another tweet, translated from French. “This level is more than 10 times lower than the level at which there could be a health risk.”

The announcement came as Apple unveiled the iPhone 15 and iPhone 15 Pro, Apple’s newest iteration of its iconic product, at its annual keynote event in California on Tuesday.

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August 2, 2023
Biden administration seeks to remove medical bills from credit reports | CNN Politics

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Millions of Americans with unpaid medical bills would no longer have that debt show up on credit reports under proposals being considered by the Consumer Financial Protection Bureau.

The agency, which is soliciting feedback from small businesses that may be affected, expects to issue a proposed rule next year, the bureau said Thursday.

If the rule is finalized, consumer credit companies would be barred from including medical debt and collection information on reports that creditors use to make underwriting decisions.

Creditors would only be able consider non-medical information when evaluating borrowers’ loan applications. And debt collectors would no longer be able to use the listing of medical debt on credit reports as leverage to pressure consumers into paying questionable bills, the bureau said.

“Research shows that medical bills have little predictive value in credit decisions, yet tens of millions of American households are dealing with medical debt on their credit reports,” said CFPB Director Rohit Chopra. “When someone gets sick, they should be able to focus on getting better, rather than fighting debt collectors trying to extort them into paying bills they may not even owe.”

Roughly 20% of Americans reported having medical debt, according to a 2022 report from the bureau. But Chopra stressed that many health care bills contain mistakes.

“Families are often barraged with a string of confusing and error-ridden bills, and too many of us have ended up in a doom loop of disputes between insurance companies and health care providers,” he said. “These bills, even ones where the patient doesn’t owe anything further, can end up being reported on the patient’s credit report.”

The proposals under consideration are the latest step in the bureau’s efforts to curb the impact of medical debt on consumers. CFPB and other agencies are also looking into medical billing practices, including costly products such as medical credit cards and installment loans.

The White House has also sought to help lessen Americans’ medical debt burden as part of its effort to help people contend with inflation and higher costs of living. Last year, it laid out a four-point plan to help protect consumers, including having the bureau investigate credit reporting companies and debt collectors that violate patients’ and families’ rights.

Medical debt has lowered people’s credit scores, which affects their ability to buy a home, get a mortgage or own a small business, Vice President Kamala Harris said in a call with reporters on Thursday.

“We know credit scores determine whether a person can have economic health and well-being, much less the ability to grow their wealth,” she said. “Today, we are offering a solution to fix this problem … Together, these measures will improve the credit scores of millions of Americans so that they will better be able to invest in their future.”

Also last year, the three largest credit reporting agencies – Equifax, Experian and TransUnion – announced they would remove nearly 70% of medical debt from consumer credit reports.

The agencies no longer include medical debt that went to collections on consumer credit reports once it has been paid off. That eliminated billions of dollars of debt on consumer records.

In addition, unpaid medical collection debt no longer appears on credit reports for the first year, whereas the previous grace period was six months. That gives people more time to work with their health insurers or providers to address the bills. And medical collection debt of less than $500 is no longer included on credit reports.

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August 2, 2023
Amazon invests up to $4 billion in Anthropic AI in exchange for minority stake and further AWS integration | CNN Business

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Amazon said on Monday that it’s investing up to $4 billion into the artificial intelligence company Anthropic in exchange for partial ownership and Anthropic’s greater use of Amazon Web Services (AWS), the e-commerce giant’s cloud computing platform.

The deepening partnership between the two companies highlights how some large tech firms with massive cloud computing resources are increasingly leveraging those assets to gain a bigger foothold in AI.

As part of the deal, AWS will become the “primary” cloud provider for Anthropic, with the AI company using Amazon’s cloud platform to do “the majority” of its AI model development and research into AI safety, the companies said. That will include using Amazon’s suite of in-house AI chips.

Anthropic also made a “long-term commitment” to offer its AI models to AWS customers, Amazon said, and promised to give AWS users early access to features such as the ability to adapt Anthropic models for specific use cases.

“With today’s announcement, customers will have early access to features for customizing Anthropic models, using their own proprietary data to create their own private models, and will be able to utilize fine-tuning capabilities via a self-service feature,” Amazon said in a release.

Anthropic already offers its models to AWS users through Amazon Bedrock, Amazon’s one-stop shop for AI products. Bedrock also provides access to models from other providers including Stability AI and AI21 Labs, along with proprietary models developed by Amazon itself.

In a release, Anthropic said that Amazon’s minority stake would not change its corporate governance structure nor its commitments to developing AI responsibly.

“We will conduct pre-deployment tests of new models to help us manage the risks of increasingly capable AI systems,” Anthropic said.

Amazon and Anthropic both made commitments to the Biden administration this year to conduct external audits of its AI systems before releasing them to the public.

Amazon’s investment in Anthropic follows similar moves by cloud leaders such as Microsoft. In 2019, Microsoft invested $1 billion in ChatGPT-maker OpenAI. More recently, Microsoft made a $10 billion investment in OpenAI this year and launched a push to bring OpenAI’s technology into consumer-facing Microsoft products, such as Bing.

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August 2, 2023
Netflix shutters its DVD rental business, marking the end of the red envelope era | CNN Business

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Netflix will send out its last red envelope on Friday, marking an end to 25 years of mailing DVDs to members.

The company announced earlier this year it is shutting down its DVD-by-mail service, 16 years after it gradually shifted its focus to streaming content online. Netflix will continue to accept returns of customers’ remaining DVDs until October 27.

Introduced in 1998 when Netflix first launched, the DVD service promised an easier rental experience than having to drive to the nearest Blockbuster or Hollywood Video. The red envelopes, which have long been synonymous with Netflix itself, littered homes and dorm rooms across the country.

Although the idea of receiving a DVD in the mail now may sound almost as outdated as dial-up internet, some longtime customers told CNN they continued to find value in the DVD option.

Colin McEvoy, a father of two from Bethlehem, Pennsylvania and a self-described film fanatic, said he rushed through 40 movies in the last few weeks to get through the remainder of his queue before the service ends. McEvoy has remained faithful to Netflix’s DVD service so he can keep watching Bollywood and obscure independent films not often found on streaming services.

“I was basically watching them as soon as I got them, and then returning the discs as quickly as possible to get as many as I could,” said McEvoy, who has been using Netflix’s DVD-by-mail service since 2001, just three years after it launched.

“I remember I was in high school when I first signed up for it, and the concept was so novel I had to really convince my dad that it was a legit service and not some sort of Internet scam,” said McEvoy, who uses an old Xbox 360 to play his Netflix DVDs. “Now I have friends who’ve seen my red Netflix envelopes arrive in the mail, and either didn’t remember what they were or couldn’t believe that I still got the DVDs in the mail.”

Some other Netflix users stood by its DVD service not only for the selection but for added perks. Brandon Cordy, a 41-year-old graphic designer from Atlanta, previously told CNN he stuck with DVDs because many digital rentals don’t come with special features or audio commentaries.

There are other factors, too. Michael Inouye, an analyst at ABI Research, said some consumers may still not have access to reliable or fast enough broadband connections, or simply prefer physical media to digital, much in the way that some audio enthusiasts still purchase and collect CDs and records.

For Netflix, however, the offering has made less sense in recent years. “Our goal has always been to provide the best service for our members, but as the DVD business continues to shrink, that’s going to become increasingly difficult,” co-CEO Ted Sarandos wrote in a blog post in April.

Shutting down its DVD business could help Netflix better focus resources as it expands into new markets such as gaming as well as live and interactive content. Its DVD business has also declined significantly in recent years. In 2021, Netflix’s non-streaming revenue – mostly attributable to DVDs – amounted to 0.6% of its revenue, or just over $182 million.

The cost to operate its DVD business may also be a factor, especially as Netflix rethinks expenses broadly amid heightened streaming competition and broader economic uncertainty. “Moving plastic discs around costs far more money than streaming digital bits,” said Eric Schmitt, senior director analyst at Gartner Research. “Removing and replacing damaged and lost inventory are also cost considerations.”

Even before Netflix announced the news, some longtime subscribers said they could see the writing on the wall.

“The inventory of available titles, while still vast, had been contracting some over the years with some movies that were once available no longer being so,” Cordy said. “Turnaround times to get a new movie or movies also started to take longer, so I knew it was only a matter of time. But I didn’t want it to end if I could help it.”

Other DVD subscribers were hoping for a happy ending. Bill Rouhana, the CEO of Chicken Soup for the Soul Entertainment – which owns DVD rental service Redbox – told The Hollywood Reporter in April he hoped to purchase Netflix’s DVD business. “I’d like to buy it… I wish Netflix would sell me that business instead of shutting it down,” he said. Redbox remains popular despite the shift in streaming, but took a hit during the pandemic because of the lack of new movies and TV shows to fill the boxes.

A Netflix spokesperson told CNN it has no plans to sell the DVD business and will be recycling the majority of its DVDs through third-party companies that specialize in recycling digital and electronic media. It will also donate some of its inventory to organizations focused on film and media.

Netflix is also offering subscribers a “finale surprise” where they could opt-in to receive up to 10 DVDs selected at random from their queue.

McEvoy, who already subscribes to Disney+, Hulu, the Criterion channel and Mubi, said he’s now testing out other services such as Eros (Indian cinema) and Viki (Korean and Chinese films) for harder-to-find content. Still, he said, he’s “sad” to see Netflix’s DVD service depart.

“I absolutely would not have been able to find all of those movies [I’ve watched] if not for the Netflix DVD service,” he said.

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August 2, 2023
South Korean firms get indefinite waiver on US chip gear supplies to China | CNN Business

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Samsung Electronics and SK Hynix will be allowed to supply US chip equipment to their China factories indefinitely without separate US approvals, South Korea’s presidential office and the companies said on Monday.

The United States had been expected to extend a waiver granted to the South Korean chipmakers on a requirement for licenses to bring US chip equipment into China.

“Uncertainties about South Korean semiconductor firms’ operations and investments in China have been greatly eased; they will be able to calmly seek long-term global management strategies,” said Choi Sang-mok, senior presidential secretary for economic affairs.

The United States has already notified Samsung and SK Hynix of the decision, indicating that it is in effect, Choi said.

The US Department of Commerce is updating its “validated end user” list, denoting which entities can receive exports of which technology, to allow Samsung and SK Hynix to keep supplying certain US chipmaking tools to their China factories, the presidential office said.

Once included in the list, there is no need to obtain permission for separate export cases.

Samsung and SK Hynix, the world’s largest and second-largest memory chipmakers, have invested billions of dollars in their chip production facilities in China and welcomed the move.

“Through close coordination with relevant governments, uncertainties related to the operation of our semiconductor manufacturing lines in China have been significantly removed,” Samsung said in a statement.

SK Hynix said: “We welcome the US government’s decision to extend a waiver with regard to the export control regulations. We believe the decision will contribute to the stabilization of the global semiconductor supply chain.”

Samsung Electronics makes about 40% of its NAND flash chips at its plant in Xian, while SK Hynix makes about 40% of its DRAM chips in Wuxi and 20% of its NAND flash chips in Dalian.

The companies together controlled nearly 70% of the global DRAM market and 50% of the NAND flash market as of end-June, data from TrendForce showed.

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August 2, 2023
US watchdog teases crackdown on data brokers that sell Americans’ personal information | CNN Business

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Washington
CNN
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The US government plans to rein in the vast data broker industry with new, privacy-focused regulations that aim to safeguard millions of Americans’ personal information from data breaches, violent criminals and even artificial intelligence chatbots.

The coming proposal by the Consumer Financial Protection Bureau would extend existing regulations that govern credit reports, arrest records and other data to what the agency describes as the “surveillance industry,” or the sprawling economy of businesses that traffic in increasingly digitized personal information.

The potential rules, which are not yet public or final, could bar data brokers from selling certain types of consumer information — including a person’s income or their criminal and payment history — except in specific circumstances, the CFPB said.

The push could also see new restrictions on the sale of personal information such as Social Security numbers, names and addresses, which the CFPB said data brokers often buy from the major credit reporting bureaus to create their own profiles on individual consumers.

Issued under the Fair Credit Reporting Act, the regulations would seek to ensure that data brokers selling that sensitive information do so only for valid financial purposes such as employment background checks or credit decisions, and not for unrelated purposes that may allow third parties to use the data to, for example, train AI algorithms or chatbots, the CFPB said.

The announcement follows an agency study into the data broker industry this year that found widespread concerns about how consumer data is being collected, used and shared. The inquiry received numerous submissions from the public warning about the disproportionate risks that unregulated data sharing can have on minorities, seniors, immigrants and victims of domestic violence.

“Reports about monetization of sensitive information — everything from the financial details of members of the U.S. military to lists of specific people experiencing dementia — are particularly worrisome when data is powering ‘artificial intelligence’ and other automated decision-making about our lives,” CFPB Director Rohit Chopra said in a statement. “The CFPB will be taking steps to ensure that modern-day data brokers in the surveillance industry know that they cannot engage in illegal collection and sharing of our data.”

The CFPB’s proposal will first be floated with a group of small businesses for feedback before being publicly unveiled in a formal rulemaking, the agency said.

The CFPB isn’t the only US agency clamping down on the massive data industry. Last year, the Federal Trade Commission proposed a sweeping set of regulations that may restrict how all businesses collect and use consumer data, taking aim at what FTC Chair Lina Khan has described as the “persistent tracking and routinized surveillance of individuals.”

The agency initiatives reflect how Congress has continually failed to produce a comprehensive, national-level consumer privacy law, despite years of lawmaker negotiations and the rise of privacy regulations overseas that increasingly affect US businesses.

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August 2, 2023
Arm’s mega IPO could be just around the corner, a year after the biggest chip deal in history fell apart | CNN Business

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New York
CNN
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A hotly anticipated IPO for a company that designs chips for 99% of the world’s smartphones is just around the corner, after it filed paperwork Monday to go public.

Arm is a British tech company that architects power-sipping microchips for phones and tablets and licenses them to CPU makers, including Apple and Samsung. The company was public until 2016, when Japan’s Softbank bought it for $32 billion.

Softbank tried to offload Arm to Nvidia for $40 billion, in what would have been the biggest chip deal of all time. But global antitrust regulators put a stop to it, and the deal fell apart in February 2022.

Arm had been a hot commodity for decades, when the smartphone business was booming. But sales of smartphones have subsided recently, as customers opt to keep their phones for longer and new tech features have become less enticing to consumers.

The company, in its regulatory filing, said sales slipped 1% to $2.7 billion in the year that ended March 31, 2023. In the following quarter, which ended in June, sales fell 2.5%.

Still, Arm has piqued the interest of tech investors who are looking to catch the AI wave. Softbank CEO Masayoshi Son has touted Arm as an AI company that could have “exponential growth.” He promised ChatGPT-like services would eventually be offered on Arm-designed machines.

In its IPO filing, Arm said the company “will be central” to the transition to AI.

“Arm CPUs already run AI and [machine learning] workloads in billions of devices, including smartphones, cameras, digital TVs, cars and cloud data centers,” the company said. “In the emerging area of large language models, generative AI and autonomous driving, there will be a heightened emphasis on the low power acceleration of these algorithms.”

But Son and Arm’s AI promises may overstate the company’s potential, at least somewhat. Arm-based chips have appeared in some gadgets beyond smartphones and tablets, such as servers that are less power-hungry. But Arm said it does not make AI chips and is not a direct competitor to Nvidia and others that make chips that are purpose-built for AI. Nvidia’s stock has exploded more than 200% this year.

Arm did not list the number of shares it planned to sell, so a valuation wasn’t determinable yet. But Reuters reported Softbank is looking to basically double its investment from seven years ago with a $60 billion to $70 billion valuation for Arm when it IPOs, likely next month.

Softbank also this week bought the 25% stake in Arm that it did not own directly but that had been held by the Saudi Vision Fund, which Softbank manages. That purchase valued Arm at $64 billion, according to the Financial Times.

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August 2, 2023
Abortion politics take center stage after Biden campaign capitalizes on GOP debate rift | CNN Politics

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More than a year after the Supreme Court overturned Roe v. Wade, Republican candidates remain split over how to move forward on abortion, a political liability Democrats are eager to exploit regardless of who becomes the Republican nominee.

The GOP divide was laid bare on the debate stage this week, as candidates backed a 15-week abortion ban, deferred to the states or tried to split the difference. President Joe Biden’s campaign responded immediately in a new digital ad, painting the field’s top contenders as extreme on the issue – and signaling what the Democratic campaign is likely to focus on in the coming year.

When it comes to the future of abortion access, Republican candidates are facing pressure on all sides.

GOP-led state legislatures have passed a wave of complete or near-total abortion bans that go beyond what most Americans support. Voters have supported abortion rights ballot initiatives and candidates in several key elections over the last year. And anti-abortion and evangelical groups are demanding presidential candidates go on the offensive and get as specific as possible.

“The debate reflected the many different views among Republicans regarding abortion policy: not only what the policy ought to be, but what level of government ought to be making the decisions,” said Whit Ayres, a Republican pollster. “There’s no real consensus at this point.”

Biden’s reelection campaign has also homed in on remarks GOP candidates made on abortion during the debate. In talking points sent out to surrogates Wednesday night, the campaign claimed Republicans “spent two hours shouting over each other on … who has the best plan to ban abortion nationwide,” CNN reported Thursday.

Biden’s team followed up Friday morning with a digital ad, “These Guys,” highlighting comments former President Donald Trump, South Carolina Sen. Tim Scott and Florida Gov. Ron DeSantis have made on abortion, including a clip of DeSantis on the debate stage. The ad, aimed at women in seven battleground states, is part of a $25 million ad campaign CNN first reported earlier this week.

The ad also reaffirms Biden’s stance on abortion: that the U.S. should maintain the standard set in the landmark 1973 Roe v. Wade decision, which allowed for abortion up until fetal viability, generally viewed as around 24 weeks.

“This ad is the first of many that will hold all MAGA Republicans accountable for their extreme, losing positions throughout the cycle, while also highlighting the President’s support for women and their fundamental freedoms,” Biden campaign manager Julie Chavez Rodriguez said in a statement.

Polling suggests that Americans support some legal abortion, but with limits. Seventy-three percent of respondents to an Associated Press-NORC Center for Public Affairs Research poll released last month said abortion should be allowed during the first six weeks of pregnancy, including 88% of Democrats and 56% of Republicans surveyed. Asked if states should allow abortion at 15 weeks, 51% of those surveyed said yes, including 75% of Democrats and 29% of Republicans.

Only 27% of those surveyed supported allowing abortion until 24 weeks of pregnancy.

Democrats are hoping that abortion access will continue to be an issue that helps them with voters heading into 2024. Since last year’s Dobbs v. Jackson decision overturned Roe and left abortion access up to individual states, Democrats and abortion rights activists have racked up a number of wins in special elections and ballot initiatives, and the party overperformed in the 2022 midterm elections.

Trump – whose handpicked nominees lost key Senate races in Nevada, Arizona, Pennsylvania and Georgia – went on to write a January social media post blaming the party’s midterm losses on “the ‘abortion issue,’ poorly handled by many Republicans, especially those that insisted on No Exceptions.”

Tom Bonier, chief executive of TargetSmart, a Democratic political targeting firm, said he expects abortion will be an even stronger issue for his party heading into the 2024 election.

“The evidence that we’re seeing at this point is that abortion rights as a political issue is having an even greater impact than it did last year, which is saying a lot because it had a huge impact on elections in 2022,” he said.

Bonier cited two causes for abortion’s growing influence. Voters, he said, no longer have to imagine what life would look like after Roe. They’re experiencing it firsthand. At the same time, Republicans have not adopted their message to address the political climate, he said. That dynamic was on display in the ad released by the Biden campaign Friday.

“It literally speaks for itself as an issue at this point, that Republicans have not moderated, that in some ways they’ve actually got further to the right,” he said.

Nearly two dozen states have moved to ban or restrict abortion in the wake of Dobbs. Some of the bans have been blocked in court, including the six-week limit DeSantis signed in April. Abortion is currently legal in Florida until 15 weeks of pregnancy.

Republicans have begun to coalesce around the idea of a federal abortion ban after 15 weeks of pregnancy. Susan B. Anthony Pro-Life America, an anti-abortion group, has called on candidates to support the 15-week limit at minimum, with room for states to pass more restrictive measures.

“A number of GOP officeholders and even presidential aspirants use ‘states’ rights’ as an excuse to tape their mouths shut on abortion,” Marjorie Dannenfelser, president of Susan B. Anthony Pro-Life America, wrote in a Thursday Washington Post op-ed with former Trump White House senior adviser Kellyanne Conway. “This should not, and will not, stand.”

Former UN Ambassador and South Carolina Gov. Nikki Haley, former Arkansas Gov. Asa Hutchinson, North Dakota Gov. Doug Burgum and DeSantis all declined to commit to signing a 15-week ban, while former Vice President Mike Pence and Scott did. The latter two criticized their opponents in post-debate interviews. Scott said in a Thursday Fox News interview that it is “a problem for our nation” that some candidates said they would not commit to a 15-week ban, while Pence also took a jab at Trump.

“Whether it be with Gov. Desantis or Nikki Haley or others onstage, frankly most of the candidates running, including the one that did not show up tonight, are all trying to relegate the question of abortion as a states-only issue,” he told CNN’s Dana Bash on Wednesday.

Trump has not said whether he would back a 15-week ban and has suggested he would leave it with the states. In May, he criticized the six-week ban DeSantis signed as “too harsh” for the anti-abortion movement but declined to say whether he supported it personally. A month later he told the audience at a Faith and Freedom Coalition conference that while there “remains a vital role for the federal government” to play in abortion policy, people want it to be a state-level issue.

“I believe the greatest progress for pro-life is now being made in the states, where everyone wanted to be,” Trump said. Pence used his remarks at the same conference to call on every GOP candidate to back a 15-week ban as a national standard.

If a consensus is reached it will likely be whatever the eventual Republican nominee backs, though Ayres would advise candidates to leave the issue to the states — if that’s what they personally believe, he said.

“Ultimately, a candidate has to look into his or her heart and soul to find a position they’re comfortable with, otherwise, they’ll never be able to articulate it effectively,” he said.

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August 2, 2023
Google launches watermarks for AI-generated images | CNN Business

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New York
CNN
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In an effort to help prevent the spread of misinformation, Google on Tuesday unveiled an invisible, permanent watermark on images that will identify them as computer-generated.

The technology, called SynthID, embeds the watermark directly into images created by Imagen, one of Google’s latest text-to-image generators. The AI-generated label remains regardless of modifications like added filters or altered colors.

The SynthID tool can also scan incoming images and identify the likelihood they were made by Imagen by scanning for the watermark with three levels of certainty: detected, not detected and possibly detected.

“While this technology isn’t perfect, our internal testing shows that it’s accurate against many common image manipulations,” wrote Google in a blog post Tuesday.

A beta version of SynthID is now available to some customers of Vertex AI, Google’s generative-AI platform for developers. The company says SynthID, created by Google’s DeepMind unit in partnership with Google Cloud, will continue to evolve and may expand into other Google products or third parties.

Deepfakes and altered photographs

As deepfake and edited images and videos become increasingly realistic, tech companies are scrambling to find a reliable way to identify and flag manipulated content. In recent months, an AI-generated image of Pope Francis in a puffer jacket went viral and AI-generated images of former President Donald Trump getting arrested were widely shared before he was indicted.

Vera Jourova, vice president of the European Commission, called for signatories of the EU Code of Practice on Disinformation – a list that includes Google, Meta, Microsoft and TikTok – to “put in place technology to recognize such content and clearly label this to users” in June.

With the announcement of SynthID, Google joins a growing number of startups and Big Tech companies that are trying to find solutions. Some of these companies bear names like Truepic and Reality Defender, which speak to the potential stakes of the effort: protecting our very sense of what’s real and what’s not.

The Coalition for Content Provenance and Authenticity (C2PA), an Adobe-backed consortium, has been the leader in digital watermark efforts, while Google has largely taken its own approach.

In May, Google announced a tool called About this image, offering users the ability to see when images found on its site were originally indexed by Google, where images might have first appeared and where else they can be found online.

The tech company also announced that every AI-generated image created by Google will carry a markup in the original file to “give context” if the image is found on another website or platform.

But as AI technology develops faster than humans can keep up, it’s unclear whether these technical solutions will be able to fully address the problem. OpenAI, the company behind Dall-E and ChatGPT, admitted earlier this year that its own effort to help detect AI-generated writing, rather than images, is “imperfect,” and warned it should be “taken with a grain of salt.”

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August 2, 2023
Appeals court says Biden admin likely violated First Amendment but narrows order blocking officials from communicating with social media companies | CNN Politics

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CNN
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A federal appeals court on Friday said the Biden administration likely violated the First Amendment in some of its communications with social media companies, but also narrowed a lower court judge’s order on the matter.

The US 5th Circuit Court of Appeals ruled that certain administration officials – namely in the White House, the surgeon general, the US Centers for Disease Control and Prevention, and the Federal Bureau of Investigation – likely “coerced or significantly encouraged social media platforms to moderate content” in violation of the First Amendment in its efforts to combat Covid-19 disinformation.

But the three-judge panel said the preliminary injunction issued by US District Judge Terry Doughty in July, which ordered some Biden administration agencies and top officials not to communicate with social media companies about certain content, was “both vague and broader than necessary to remedy the Plaintiffs’ injuries, as shown at this preliminary juncture.”

The Biden administration had previously argued in the lawsuit brought by Republican attorneys general claiming unconstitutional censorship that channels with social media companies must stay open so that the federal government can help protect the public from threats to election security, Covid-19 misinformation and other dangers.

In briefs submitted earlier this summer, the administration wrote, “There is a categorical, well-settled distinction between persuasion and coercion,” adding that Doughty had “equated legitimate efforts at persuasion with illicit efforts to coerce.”

The 5th Circuit left in place part of the injunction that barred certain Biden administration officials from “threatening, pressuring, or coercing social-media companies in any manner to remove, delete, suppress, or reduce posted content of postings containing protected free speech.”

“But,” the appeals court said, “those terms could also capture otherwise legal speech. So, the injunction’s language must be further tailored to exclusively target illegal conduct and provide the officials with additional guidance or instruction on what behavior is prohibited.”

The appeals court reversed several aspects of Doughty’s sweeping order, concluding that those pieces of it risked blocking the federal government “from engaging in legal conduct.”

The 5th circuit left the order, which had been temporarily blocked earlier in the summer, on pause for 10 days so that the case can be appealed to the Supreme Court.

The opinion was handed down jointly by Circuit Judges Edith Clement, Jennifer Walker Elrod and Don Willett – all appointees of Republican presidents.

The conservative appeals court sided with many of the arguments put forward by the plaintiffs, which included private individuals as well Missouri and Louisiana, but also narrowed the injunction’s scope so that it only applied to the White House, the surgeon general, the CDC and the FBI. Doughty had included other agencies in his July order.

This story has been updated with additional information.

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August 2, 2023
China says it hasn’t issued any ban on Apple’s iPhone | CNN Business

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Beijing/Washington
CNN
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China hasn’t issued any laws or rules to ban the use of iPhones or any other foreign phone brand, a Chinese government spokesperson said on Wednesday.

“We have always been open to foreign companies and welcome them to seize the opportunities and share the fruits of China’s economic development,” Ministry of Foreign Affairs spokesperson Mao Ning said at a press conference in Beijing.

She added that China has noticed “many media reports on the security incidents of Apple’s iPhone,” and that the country “attaches great importance to information and cyber security.”

Mao did not elaborate. She also urged foreign cellphone companies in China to follow the country’s privacy laws and to prevent “any person or organization” stealing data stored in their customers’ phones.

Last week, The Wall Street Journal reported that China had banned the use of iPhones by central government officials, citing unnamed people familiar with the matter. The report triggered a drop in Apple’s shares -— the stock suffered its largest daily loss in a month.

The White House said on Wednesday it was watching the developments with “concern.”

“It seems to be a piece of the kinds of aggressive and inappropriate retaliation to US companies that we’ve seen from the PRC in the past, that’s what this appears to be,” John Kirby, National Security Council spokesman, told reporters during a news conference, referring to the People’s Republic of China.

“But the truth is, we don’t have perfect visibility on exactly what they’re doing and why, and we certainly would call on them to be more transparent about what they’re seeing and what they’re doing,” he said.

Over the past few months, a growing list of American and international consulting companies have been ensnared in Beijing’s widening crackdown on what it perceives as national security risks.

In March, Chinese authorities closed the Beijing office of Mintz Group, an American corporate due diligence firm, and detained five of its local staff. The company was later fined about $1.5 million for allegedly conducting unapproved statistical work in the country.

In April, police questioned staff at the Shanghai offices of global consulting giant Bain & Company. A few weeks later, state media released details of multiple raids on the offices of Capvision, an international expert network firm with headquarters in Shanghai and New York, by state security forces.

Apple is one of the highest profile and most established American brands in China. It is the largest foreign market for the company’s products, and Chinese sales represented about a fifth of the company’s total revenue last year. Apple hasn’t replied to a request for comment.

The company doesn’t disclose iPhone sales by country, but analysts at research firm TechInsights estimate that there were more iPhone sales in China than in the United States last quarter. Apple also produces the majority of its iPhones in Chinese factories.

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August 2, 2023
McCarthy says defense spending bill will get a vote this week ‘win or lose’ | CNN Politics

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CNN
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House Speaker Kevin McCarthy said Sunday that the Defense Department appropriations bill that was paused last week before it even made it to the floor for debate will come up for a vote this week “win or lose.”

“We will do that this week,” McCarthy said on Fox News, adding “unfortunately I had a handful of members last week that literally stopped the Department of Defense appropriations coming forward,” referring to members of his right flank who have stymied two appropriations bills thus far.

“I gave them an opportunity this weekend to try to work through this, and we’ll bring it to the floor win or lose,” McCarthy told Maria Bartiromo.

House Republican leadership was hoping to put a series of standalone spending bills on the floor to try to build consensus and unite the conference, but it’s been a gamble. Leadership was left scrambling over the defense spending bill after one member of the House Freedom Caucus, Rep. Ralph Norman of South Carolina, voted against the bill in the Rules Committee and another, Rep. Dan Bishop of North Carolina, told CNN he would vote against the rule on the floor.

Both the debate and the scheduled votes were pulled minutes before the chamber was due to gavel in Wednesday.

McCarthy on Sunday pointed a finger at the Senate, saying not only does the House have to work with the upper chamber, but that the Senate “blew up last week too. They couldn’t pass anything.”

“And unfortunately on the Senate side, the Republicans and Democrats over there are writing bills to spend more money. Ours are the most conservative, but if we don’t ask them, we’re weaker in the negotiations. So anytime a Republican wants to hold back and stop the floor from working when Republicans have the majority, that puts us in a weaker position to win in the end of the day,” he said.

But McCarthy said a government shutdown “would only give strength to the Democrats. It would give the power to Biden.”

With no serious progress on Capitol Hill as Congress stares down a spending deadline at the end of the month, lawmakers are acknowledging that at this point a government shutdown is not only possible, but may soon be inevitable.

That’s particularly true if the political dynamics at play among McCarthy, the hardliners in his conference and the US Senate don’t change fast.

“I want to make sure we don’t shut down. I don’t think that is a win for the American public and I definitely believe that will make (Republicans’) hand weaker,” McCarthy said.

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August 2, 2023
Britain says may clear restructured Microsoft-Activision deal | CNN Business

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Microsoft’s restructuring of its proposed $69 billion acquisition of Activision Blizzard “opens the door” to the biggest ever gaming deal being cleared, Britain’s antitrust regulator said Friday.

Microsoft (MSFT) announced the deal in early 2022, but it was blocked in April by the UK competition regulator, which was concerned the US tech giant would gain too much control of the nascent cloud gaming market.

Activision Blizzard (ATVI), which makes “Call of Duty,” agreed in August to sell its streaming rights to Ubisoft Entertainment in a new attempt to win over the Competition and Markets Authority (CMA).

The Ubisoft divestment “substantially addresses previous concerns,” the Competition and Markets Authority said in a statement.

“While the CMA has identified limited residual concerns with the new deal, Microsoft has put forward remedies which the CMA has provisionally concluded should address these issues,” the regulator said.

Consummating the deal would turn Microsoft into the third largest video game publisher in the world, after Tencent and Sony.

Microsoft said it was “encouraged by this positive development in the CMA’s review process.”

“We presented solutions that we believe fully address the CMA’s remaining concerns related to cloud game streaming, and we will continue to work toward earning approval to close prior to the October 18 deadline,” Microsoft President Brad Smith said.

Activision, which also makes “World of Warcraft,” “Overwatch” and “Candy Crush,” said the preliminary approval was great news for its future with Microsoft.

The European Union waved the deal through in May after accepting Microsoft’s commitments to license Activision’s games to other platforms, the same remedies that Britain had rejected.

The US Federal Trade Commission also opposes the deal, but it has failed to stop it. A federal judge ruled in July that the deal can close, a decision the FTC is appealing.

The CMA’s decision to reopen the case was a radical departure from its play book, but it said on Friday it had been consistent and Microsoft had “substantially restructured the deal” to address its concerns.

“It would have been far better, though, if Microsoft had put forward this restructure during our original investigation,” CMA Chief Executive Sarah Cardell said.

“This case illustrates the costs, uncertainty and delay that parties can incur if a credible and effective remedy option exists but is not put on the table at the right time.”

Equity analyst Sophie Lund-Yates at Hargreaves Lansdown said the loss of the cloud gaming rights was not an ideal concession for Microsoft to have to make, but it was necessary collateral if the deal were to be waved through.

“This looks to be the final bump in the road,” she said.

The CMA said there were “residual concerns” around the Ubisoft deal, but Microsoft has offered remedies to ensure the terms of the sale were enforceable by the regulator.

It is now consulting on the remedies before making a final decision.

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August 2, 2023
US government and 17 states sue Amazon in landmark monopoly case | CNN Business

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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.

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August 2, 2023