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Tag: iab-financial regulation

  • Enron Fast Facts | CNN

    Enron Fast Facts | CNN

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    CNN
     — 

    Here’s a look at Enron, an energy trading company that collapsed after a massive accounting fraud scheme was revealed. Its 2001 bankruptcy filing was the largest in American history at the time. Estimated losses totaled $74 billion.

    Enron was ranked as America’s fifth largest company by Fortune magazine in 2002, despite its 2001 bankruptcy filing.

    An independent review published in 2002 detailed how executives pocketed millions of dollars from complex, off-the-books partnerships while reporting inflated profits to shareholders.

    Executives including Kenneth Lay and Jeffrey Skilling were prosecuted for fraud-related crimes.

    Key figures sold their stock shortly before the company announced a sharp downturn in earnings.

    Lower-level employees were encouraged to invest in company stock for their retirement savings just before the company collapsed. The workers later filed a class action lawsuit and won an $85 million settlement.

    1985 – Houston Natural Gas merges with Omaha-based InterNorth to form Enron.

    1986 – Lay is appointed chairman and CEO of Enron.

    1989 – Enron enters the natural gas commodities trading market.

    1990 – Skilling, an energy consultant, is hired to run a new subsidiary called Enron Finance Corp.

    February 12, 2001 – Skilling becomes CEO while Lay stays on as chairman.

    August 14, 2001 – Skilling resigns and Lay becomes CEO again.

    August 2001 – Sherron Watkins, a vice president, warns Lay that the company could “implode in a wave of accounting scandals.”

    October 16, 2001 – Enron announces a third-quarter loss of $618 million. The company later reveals that it overstated earnings dating back to 1997.

    October 31, 2001 – The company discloses that it is under formal investigation by the Securities and Exchange Commission.

    November 9, 2001 – Enron confirms that it has agreed to be purchased by a rival company, Dynegy for $9 billion. On November 28, Dynegy announces it has terminated merger talks with Enron.

    December 2, 2001 – Enron files for Chapter 11 bankruptcy protection.

    January 9, 2002 – The US Department of Justice opens a criminal investigation into Enron’s collapse.

    January 10, 2002 – Arthur Andersen LLP, the accounting firm that handled Enron’s audits, discloses that its employees had destroyed company documents.

    January 15, 2002 – The New York Stock Exchange suspends trading of Enron shares.

    January 17, 2002 – Enron ends its partnership with Arthur Andersen.

    January 23, 2002 – Lay resigns as CEO. He later steps down from the board of directors.

    January 25, 2002 – Former Enron vice chairman J. Clifford Baxter is found dead in an apparent suicide.

    February 12, 2002 – Lay invokes his Fifth Amendment right before the Senate Commerce Committee.

    March 14, 2002 – The DOJ indicts Arthur Andersen for obstruction of justice. A jury later returns a guilty verdict for the accounting firm. The Supreme Court later overturns the conviction.

    February 19, 2004 – Skilling is charged with 35 counts of fraud and insider trading. He pleads not guilty.

    July 7, 2004 – Lay is indicted. He is charged with conspiracy, securities fraud, wire fraud, bank fraud and making false statements. During his arraignment the next day, he pleads not guilty to all 11 charges and is released on $500,000 unsecured bond.

    May 25, 2006 – Skilling and Lay are convicted of conspiracy and fraud. Skilling is also convicted on one count of insider trading and five counts of making false statements. The jury acquits Skilling on nine additional counts of insider trading.

    July 5, 2006 – Lay dies of a heart attack while awaiting sentencing.

    September 8, 2008 – A class action lawsuit filed by shareholders and investors is settled in federal court. The $7.2 billion settlement will be paid out by a group of banks accused of participating in the accounting fraud scheme.

    May 11, 2009 – Skilling files a petition with the Supreme Court to overturn his conviction after appeals with the lower courts fail.

    May 9, 2010 – “Enron,” a musical about the company’s collapse, closes on Broadway 12 days after opening amid slow ticket sales.

    April 16, 2012 – The Supreme Court rejects Skilling’s appeal.

    June 21, 2013 – A federal judge reduces Skilling’s sentence by more than 10 years. In return, Skilling agrees to stop challenging his conviction and forfeit roughly $42 million that will be distributed among the victims of the Enron fraud.

    December 8, 2015 – The SEC announces that it has obtained a summary judgment against Skilling, permanently barring him from serving as an officer or director of a publicly held company. The judgment settles a long-running civil suit by the SEC.

    February 21, 2019 – Skilling is released after serving over 12 years in federal prison.

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  • Microsoft, Amazon facing UK antitrust probe over cloud services | CNN Business

    Microsoft, Amazon facing UK antitrust probe over cloud services | CNN Business

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    London
    CNN
     — 

    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 highly concentrated 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.”

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  • US judge set to decertify Google Play class action | CNN Business

    US judge set to decertify Google Play class action | CNN Business

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    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.

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  • Google’s antitrust showdown: What’s at stake for the internet search titan | CNN Business

    Google’s antitrust showdown: What’s at stake for the internet search titan | CNN Business

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    CNN
     — 

    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.

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  • Landmark Google trial opens with sweeping DOJ accusations of illegal monopolization | CNN Business

    Landmark Google trial opens with sweeping DOJ accusations of illegal monopolization | CNN Business

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    CNN
     — 

    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.”

    Kent Walker, President of Global Affairs and Chief legal officer of Alphabet Inc., arrives at federal court on September 12, 2023 in Washington, DC. Google will defend its default-search deals in an antitrust trial against the U.S. Justice Department which begins today.

    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.

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  • US government and 17 states sue Amazon in landmark monopoly case | CNN Business

    US government and 17 states sue Amazon in landmark monopoly case | CNN Business

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    CNN
     — 

    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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  • California is about to give Hollywood studios a lucrative tax deal during the writers’ strike | CNN Business

    California is about to give Hollywood studios a lucrative tax deal during the writers’ strike | CNN Business

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    CNN
     — 

    The state of California is about to give movie and TV studios a new lucrative tax perk.

    A bill awaiting California Gov. Gavin Newsom’s signature would the state’s tax incentive program for film and TV productions for five years but with a key update: Studios with more tax credits than they can use will be able to exchange those credits for cash. The bill, part of the state’s overall budget plan, was passed by California legislators on Tuesday, and Newsom is expected to sign it on Friday.

    The bill also mandates any production that receives the tax credit to comply with new on-set firearm safety protocols following the 2021 deadly shooting on the set of Alec Baldwin’s film “Rust,” and it implements requirements aiming to meet diversity hiring targets.

    The new, refundable tax credits come as competition for film and TV production from other states and countries is on the rise. States like New York and Georgia are gaining share of the TV and film market, thanks to their own tax incentive programs, according to a 2021 report from FilmLA — a nonprofit organization that helps creators with production planning and film permitting.

    The bill should be a boon for studios like Netflix. The streaming giant had not previously been able to take full advantage of the tax credit program since it uses a separate research and development incentive from California to significantly reduce its tax liability. In a 2020 SEC filing, Netflix said it had $250 million in California R&D tax credits — far more than it could use.

    Disney and Comcast’s Universal Studios were the only two studios that benefited under California’s existing tax incentive program, due to their relatively larger tax bills from theme parks, according to Democratic assemblywoman Wendy Carrillo, one of the bill’s sponsors. The new bill could benefit other studios that don’t have theme parks in the state, including Warner Bros, which is owned by CNN parent company Warner Bros. Discovery.

    The bill’s safety measures require productions to employ an adviser to oversee production safety and complete detailed risk assessments. Studios must also establish training requirements and standards that focus on the safe handling of firearms. Many of these safety protocols were voluntary before the bill.

    Dave Cortese, the Democratic state senator who introduced the safety protocols in the bill, said research for the legislation began soon after actor Baldwin fired a live round of ammunition from what he said he believed to be an unloaded prop gun during a film’s rehearsal. Cinematographer Halyna Hutchins was killed.

    “Conversations about this legislation started the week after the tragic loss of a cinematographer. Those negotiations have produced the nation’s first and best safety practices for California workers in the state’s vital motion picture industry,” Cortese said.

    In addition to refundable tax credits and stricter safety standards, the bill establishes specific diversity requirements. Studios must submit data about the diversity of their workforce to qualify for the full credit. The bill also adds a new member to the state’s film commission with diversity, equity, and inclusion expertise.

    The tax perk for Hollywood comes amid ongoing tension between the industry’s workforce and the studios’ bosses. The Writers Guild of America, has been on strike since early May, halting the production of many shows. The association’s more than 11,000 members are fighting over substantial issues like pay, the number of writers staffed on any given project, and whether artificial intelligence can be used in writing material.

    Actors may soon stage a work stoppage, as well. Members of the actors’ union, SAG-AFTRA, have voted to authorize a strike against the major studios if they cannot agree to the terms of a new contract. Similar to the WGA, the actors’ union has voiced similar concerns about pay and the use of AI.

    Democratic lawmakers in California celebrated the bill. Carrillo said the plan was a “grand compromise,” and it would help protect jobs in the state.

    “These are hundreds of thousands of jobs, most of which impact Los Angeles County and the city of Los Angeles. They’re good union jobs, they’re production jobs, they’re creative jobs,” she said.

    However, the bill has attracted some criticism. Chris Hoene, the executive director of the California Budget & Policy Center, a nonprofit think tank that provides analysis on state budget issues intending to improve outcomes for low-income communities and people of color in the state, called it “bad policy.”

    “Refundable tax credits were designed to help low-income households… so to take that refundability structure and apply it to a business tax credit, you would think there are some film companies that struggle to make ends meet and don’t make enough money to owe any taxes, but that’s not how it works,” he said.

    Hoene called the new policy a “giveaway that doesn’t have any positive outcomes.”

    The refundable credits are designed to help more than just the big studios, Carrillo said. Film and TV productions help support surrounding businesses in the area, including “small restaurants and catering services,” Carrillo said.

    “It’s very important that California has a competitive advantage and ultimately keeps these jobs and productions in our state while other states continue to announce more incentives,” she added.

    Still, Hoene argued that there were more effective ways to create well-paying jobs in California.

    “If we wanted to take scarce state resources to help workers, we could do that in ways that could provide them with assistance directly, rather than giving it to large corporations who are already minimizing their tax bills in other ways,” he said.

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  • Angry lawmakers accuse Fed of inaction in insider trading investigation | CNN Business

    Angry lawmakers accuse Fed of inaction in insider trading investigation | CNN Business

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    CNN
     — 

    Congressional lawmakers grilled Federal Reserve Inspector General Mark Bialek Wednesday over possible insider trading among Fed officials in 2020, accusing the nation’s central bank of inaction.

    The heads of the Boston and Dallas Federal Reserve banks retired early in 2021 after trades they made before and during the pandemic came to light. Bialek said his investigation into any potential legal violations from the trades is “ongoing.”

    A separate investigation by Bialek last year found no wrongdoing stemming from trades by a financial adviser on behalf of Fed Chair Jerome Powell’s family trust and by former Fed Vice Chair Richard Clarida.

    Bialek told members of a Senate Banking Subcommittee on Economic Policy that he was limited in what he could disclose because it would impede his ability to “conduct a thorough, independent investigation” into the former regional bank heads’ trades.

    Sen. Elizabeth Warren, D-Massachusetts, interrupted: “You have had a year and a half,” she said. “This is not strong oversight. In fact, it is not even competent oversight.”

    As Republican and Democratic lawmakers on the subcommittee pointed out, Bialek, who has served in his role since 2011, is appointed by members of the Fed’s Board of Governors, whom he is tasked with investigating. Bialek told lawmakers there was no conflict of interest and that he was still able to conduct fair, independent investigations. Warren, among others, said she was unconvinced.

    “It looks like, to anyone in the public, that you gave your boss a free pass,” she said. “The Fed continues to stonewall Congress, stonewall the public on the underlying information about these trades. This is not acceptable.”

    The Office of Inspector General declined to comment Wednesday night.

    After Silicon Valley Bank collapsed in March, Warren and Republican Sen. Rick Scott of Florida introduced a bill to require a presidentially appointed, Senate-confirmed inspector general to the Fed Board of Governors.

    A separate Fed investigation into SVB’s collapse, not involving Bialek, faulted Fed supervisors. Scott on Wednesday said he lacked confidence in Bialek’s ability to investigate those Fed supervisory lapses.

    “Somebody at the Federal Reserve that was responsible for these banks for supervision clearly did it wrong,” he said Wednesday, referring to bank collapses since 2008. “The average person in America pays for all this.”

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  • ‘You’ve underestimated us’: How McCarthy’s horse-trading stopped a GOP revolt in debt fight | CNN Politics

    ‘You’ve underestimated us’: How McCarthy’s horse-trading stopped a GOP revolt in debt fight | CNN Politics

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    CNN
     — 

    Speaker Kevin McCarthy rolled the dice.

    As he took his short walk from the speaker’s suite to the House floor on Wednesday evening, the California Republican wasn’t entirely sure he would have the votes on the most important bill of his young speakership: To raise the $31.4 trillion national debt limit on Republican support alone.

    McCarthy knew he was close but couldn’t guarantee it, according to a person familiar with the matter.

    After months of internal discussions, the speaker had been engaged in round-the-clock talks with pockets of dissident members, cutting deals and horse-trading to pick off one GOP vote after another in his high-stakes fight – all an attempt to show the White House and the country that his party speaks with one voice on the consequential economic battle.

    But one Republican member was absent on Wednesday – and some hard-right members would not explicitly say how they’d vote, forcing the speaker to make a risky bet. In the end, it was two Democratic absences that helped McCarthy: Allowing him to pass the bill on the narrowest of margins, 217-215, and now shifting the focus to the White House and Senate Democrats.

    “We are the only ones to lift the debt limit to make sure this economy is not in jeopardy,” McCarthy beamed in the Capitol’s ornate Statuary Hall moments after the gavel came down, calling on President Joe Biden to negotiate a spending-cut deal he has resisted for months. He added: “You’ve underestimated us.”

    It was an effort that was months in the making. Immediately after securing the speakership in a messy, 15-ballot race, McCarthy made the concerted decision to avoid the pitfalls of a predecessor, John Boehner, and allow rank-and-file members to feel like they could shape the ultimate package rather than being steamrolled by leadership. A dozen listening sessions were held by two members of his whip team, Reps. Tom Emmer of Minnesota and Guy Reschenthaler of Pennsylvania, starting in February and continuing with them calling every member through this past weekend. Then there were regular meetings of the so-called “five families” – nicknamed after the mob families in “The Godfather” – that represent various ideological factions of the conference and were led by Rep. Garret Graves of Louisiana.

    But even after they had agreed to an outline of their deal last week, McCarthy continued to run into pitfalls. In a meeting last week in the basement of the Capitol, he and his team moved to appease conservatives who wanted to target tax breaks for biofuels in the Democrats’ Inflation Reduction Act. McCarthy agreed, prompting a furious pushback by Iowa Republicans, including a tense phone call between Gov. Kim Reynolds and McCarthy.

    It was an issue that could have derailed the bill and one that put McCarthy in familiar crosshairs between competing factions of his conference. But he ultimately cut a deal past 2 a.m. on Wednesday and helped move closer to securing the votes more than 15 hours later.

    “They realized that you were not going to be able to steamroll four people from Iowa,” said Rep. Zach Nunn, an Iowa freshman, referring to the four GOP members of the delegation.

    Yet more problems emerged, and McCarthy moved to head them off. Rep. Nancy Mace told reporters Wednesday morning she was ready to vote against the plan over her concerns it didn’t go far enough to balance the budget. But after an afternoon meeting in his office, the South Carolina Republican said she would back the plan. The promise, according to a source familiar with the matter: Votes on bills dealing with women’s access to reproductive health care and a vote on a bill dealing with active shooter alerts.

    “I haven’t gotten rolled yet by the leadership on anything,” Mace said, defending her deal-cutting.

    The ultimate plan would raise the debt limit by $1.5 trillion and propose to implement a slew of spending cuts to domestic programs, in addition to new work requirements on Medicaid beneficiaries and provisions targeting Biden’s domestic and regulatory agenda. It would save $4.8 trillion over the next 10 years, according to the Congressional Budget Office. But the $1.5 trillion increase would only last through March 2024 at the latest.

    In a private meeting in the Capitol, GOP leaders debated how high of a debt limit increase they should seek. Some had floated odd numbers because it sounded more intentional than an even number. One member suggested $1.69 trillion, but that was rejected because of the innuendos associated with such a figure, according to three GOP sources. Ultimately, a $1. 5 trillion increase was the number they settled on.

    Republicans say the deal-cutting that has since transpired was the result of new relationships forged from McCarthy’s drawn-out fight for the speaker’s gavel in January.

    “Absolutely, it has reaped benefits to everyone in the conference,” Rep. French Hill, a Republican of Arkansas, said of the relationships that were formed.

    But passing the bill was never a sure bet – something McCarthy sensed last week as he moved to appease conservatives and push for a repeal of energy tax breaks.

    “This is going to come back to bite us,” McCarthy warned conservatives last week, according to a person in the room, as they demanded the bill repeal green energy tax credits and other provisions in the Inflation Reduction Act. McCarthy feared taking that step would unlock a process allowing the Senate to later jam the House on thorny tax-related provisions.

    But he had a more immediate problem: The governor of Iowa.

    A fired-up Reynolds, the two-term Republican governor, was on the phone with McCarthy on Tuesday, relaying concerns over the provision in his debt ceiling plan to repeal tax breaks for ethanol use, according to people familiar with the call, warning it would be detrimental to farmers in her state.

    All four GOP members of the Iowa delegation, who were also in constant communication with the governor, informed leadership in a Tuesday night meeting that clawing back the tax credits was a “red line” for them, according to sources in the room.

    McCarthy now had a math problem. His allies had believed that the Iowa Republicans, some of the closest allies of leadership, would swallow the provisions and ultimately side with their party in their high-stakes fight with the White House. But they had miscalculated, forcing the speaker to cut a last-ditch deal after repeatedly insisting they would not open the bill to changes.

    Nunn, the Iowa Republican, told CNN he learned about the deal at around 2:30 a.m. on Wednesday, when Graves came to his office along with Rep. Michelle Fischbach, a Minnesota Republican who had similar issues with the ethanol provisions.

    “We had been in conversation throughout the entire day, but by Tuesday, we had really ratcheted up,” Nunn told CNN. “Iowa nice also means Iowa stubborn.”

    It was an issue that GOP leaders had sought to avoid. They had worried that if they cut a deal with the Iowa delegation, they would have to make similar deals with members from fossil-fuel heavy districts in order to make them happy.

    And the leadership knew if they were going to make 11th-hour changes to appease Midwestern Republicans, they’d have to offer some concessions to conservatives as well, and ultimately agreed to a faster implementation of the Medicaid work requirements. Yet even that wasn’t enough to satisfy some conservatives who had been pushing for that change – namely GOP Rep. Matt Gaetz of Florida, who was upset that the deal was cut at the last minute after the leaders said they wouldn’t change the bill, according to people familiar with the matter. He was one of four who later voted against the plan.

    Rep. Ken Buck, a member of the whip team, said in the end, he voted “no” because the GOP bill didn’t do enough to reduce the deficit. The Colorado Republican told CNN, “$58 trillion with Biden’s numbers and $53 trillion, it’s just too much debt.”

    But one member that McCarthy had been lobbying came through: freshman Rep. Eli Crane. The Arizona Republican had been wavering on the bill and was being heavily whipped by leadership, but said he ultimately backed the legislation because of his constituents.

    “We conducted a poll at a teletown hall last night and the people that responded overwhelmingly supported this bill,” he told CNN. “It kind of surprised me, honestly.”

    With this victory secured, McCarthy could later have an even bigger test on his hands: If he is forced to ask his conference to get behind any deal with Biden to raise the debt limit – something that almost certainly wouldn’t go as far as the House plan for spending cuts.

    His members are watching him closely.

    “What Kevin has assured us is he’s not coming back and presenting a watered-down version,” said Rep. Ralph Norman of South Carolina, a member of the House Freedom Caucus.

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  • Today is Tax Day. Here’s what you need to know if you haven’t filed your return yet — and even if you have | CNN Business

    Today is Tax Day. Here’s what you need to know if you haven’t filed your return yet — and even if you have | CNN Business

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    Editor’s Note: This is an updated version of a story that originally ran on April 14, 2023.


    New York
    CNN
     — 

    It’s April 18, the official deadline to file your federal and state income tax returns for 2022. (It is also, apparently, National Animal Crackers Day for those who celebrate.)

    Whether you have already filed your tax return or still need to, the good news is this tax filing season has gone much more smoothly than the past three, which were hurt by the pandemic.

    “This is the first tax season since 2019 where the IRS and the nation were on normal footing,” IRS Commissioner Danny Werfel said in a call with reporters.

    For instance, Werfel noted that since January, thanks to an infusion of some new funding after years of budget cuts, IRS employees have been able to answer 87% of calls from filers with questions. Last year, they answered fewer than 15%. And the wait times on those phone calls dropped to just 4 minutes this filing season from 27 minutes last filing season.

    The agency also added a roster of new online tools for filers, he added.

    Those online tools may be especially helpful today if you are scrambling to get your return in before midnight. Or, if you’ve come to the realization that you need to file for an extension. Either way, here are some key things to know:

    Not everyone has to file on April 18: If you live in a federally declared disaster area, have a business there — or have relevant tax documents stored by businesses in that area — it’s likely the IRS has already extended the filing and payment deadlines for you. Here is where you can find the specific extension dates for each disaster area.

    Thanks to many rounds of extreme weather in recent months, for instance, tax filers in most of California — which accounts for 10% to 15% of all federal filers — have already been granted an extension until Oct. 16 to file and to pay, according to an IRS spokesperson.

    If you’re in the armed forces and are currently or were recently stationed in a combat zone, the filing and payment deadlines for your 2022 taxes are most likely extended by 180 days. But your specific extended filing and payment deadlines will depend on the day you leave (or left) the combat zone. This IRS publication offers more detail.

    Lastly, if you made little to no money last year (typically less than $12,950 for single filers and $25,900 for married couples), you may not be required to file a return. But you may want to anyway if you think you are eligible for a refund thanks to, for instance, refundable tax credits such as the Earned Income Tax Credit. (Use this IRS tool to gauge whether you are required to file this year.) You also are likely eligible to use IRS Free File (intended for those with adjusted gross income of $73,000 or less) so it won’t cost you to submit a return.

    Your paycheck may not be your only source of income: If you had one full-time job you may think that is the only income you made and have to report. But that’s not necessarily so.

    Other potentially taxable and reportable income sources include:

    • Interest on your savings
    • Investment income (e.g., dividends and capital gains)
    • Pay for part-time or seasonal work, or a side hustle
    • Unemployment income
    • Social Security benefits or distribution from a retirement account
    • Tips
    • Gambling winnings
    • Income from a rental property you own

    Organize your tax documents: By now you should have received every tax document that third parties are required to send you (your employer, bank, brokerage, etc.).

    If you don’t recall receiving a hard copy of a tax form in the mail, check your email and your online accounts — a document may have been sent to you electronically.

    Here are some of the tax forms you may have received:

    • W-2 from your wage or salaried jobs
    • 1099-B for capital gains and losses on your investments
    • 1099-DIV from your brokerage or company where you own stock for dividends or other distributions from their investments
    • 1099-INT for interest over $10 on your savings at a financial institution
    • 1099-NEC from your clients, if you worked as a contractor
    • 1099-K for payments for goods and services through third-party platforms like Venmo, CashApp or Etsy. The 1099-K is required if you made more than $20,000 in over 200 transactions during the year. (Next year the reporting threshold drops to $600.) But even if you didn’t get a 1099-K you still must report all the income that you made over third-party platforms in 2022.
    • 1099-Rs for distributions over $10 that you received for a pension, annuity, retirement account, profit-sharing plan or insurance contract
    • SSA-1099 or SSA-1042S for Social Security benefits received.

    “Be aware that there’s no form for some taxable income, like proceeds from renting out your vacation property, meaning you’re responsible for reporting it on your own,” according to the Illinois CPA Society.

    One very last-minute way to reduce your 2022 tax bill: If you’re eligible to make a tax-deductible contribution to an IRA and haven’t done so for last year, you have until April 18 to contribute up to $6,000 ($7,000 if you’re 50 or older). That will reduce your tax bill and augment your retirement savings.

    Proofread your return before submitting it: Do this whether you’re using tax software or working with a professional tax preparer.

    Little mistakes and oversights delay the processing of your return (and the issuance of your refund if you’re owed one). You want to avoid things like having a typo in your name, birth date, Social Security number or direct deposit number; choosing the wrong filing status (e.g., married vs single); making a simple math error; or leaving a required field blank.

    What to do if you can’t file by April 18: If you’re not able to file on time, fill out Form 4868 electronically or on paper and send it in no later than today. You will be granted an automatic six-month extension to file.

    Note, however, that an extension to file is not an extension to pay. You will be charged interest (currently running at 7%) and a penalty on any amount you still owe for 2022 but haven’t paid by April 18.

    So if you suspect you still owe tax — perhaps you had some income outside of your job for which tax wasn’t withheld or you had a big capital gain last year — approximate how much more you owe and send that money to the IRS by the end of today.

    You can choose to do so by mail, attaching a check to your extension request form. Make sure your envelope is postmarked no later than April 18.

    Or the more efficient route is pay what you owe electronically at IRS.gov, said CPA Damien Martin, a tax partner at EY. If you do that, the IRS notes you will not have to file a Form 4868. “The IRS will automatically process an extension of time to file,” the agency notes in its instructions.

    If you opt to electronically pay directly from your bank account, which is free, select “extension” and then “tax year 2022” when given the option.

    You can also pay by credit or debit card, but you will be charged a processing fee. Doing so, though, may become much more costly than just a fee if you charge your tax payment but don’t pay your credit card bill off in full every month, since you likely pay a high interest rate on outstanding balances.

    If you can’t pay what you owe in full, the IRS does have some payment plan options. But it might be smart to first consult with a certified public accountant or a tax preparer who is an enrolled agent to make sure you are making the best choice for your circumstance.

    If you still owe income taxes to your state, remember that you may need to go through a similar exercise of filing for an extension and making a payment to your state’s revenue department, Martin said.

    Use this interactive tax assistant for basic questions you may have: The IRS provides an “interactive tax assistant” that can help you answer more than 50 basic questions pertaining to your individual circumstance on income, deductions, credits and other technical questions.

    If you’ve already filed your return, you’re probably glad to have it in the rear view mirror. But you may still have a few questions about what’s ahead.

    What about my refund? If you are due a refund, the IRS typically sends it within 21 days of receiving your return. When yours does arrive, it may be smaller than last year, even if your financial life didn’t change much. That’s because a number of Covid-related tax breaks expired.

    So far, the average refund paid was $2,878 for the week ending April 7, down from $3,175 at the same point in last year’s filing season.

    Will I be audited?: The reasons and methods for auditing a taxpayer can vary — and many audits result in “no change,” meaning you don’t end up owing anything more to the IRS. But one thing is common for the vast majority of US tax filers: Audit rates are exceedingly low.

    For filers reporting incomes between $50,000 and $200,000, only 0.1% of them were audited in 2020, according to the latest data from the IRS. Even for very high income filers, audit rates were quite low: Just 0.4% for those reporting income of between $1 million and $5 million; 0.7% for those with income between $5 million and $10 million; and 2.4% for returns with income over $10 million.

    Looking ahead, the IRS commissioner noted in a press call that the agency will be using money from the Inflation Reduction Act to bolster its compliance efforts to focus more on auditing high-income individuals — defined as making $400,000 or more. As for filers with income below that level, he said he did not anticipate any change in the likelihood they would be audited.

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  • EPA proposes new tailpipe rules that could push EVs to make up two-thirds of new car sales in US by 2032 | CNN Politics

    EPA proposes new tailpipe rules that could push EVs to make up two-thirds of new car sales in US by 2032 | CNN Politics

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    CNN
     — 

    The Environmental Protection Agency on Wednesday proposed ambitious new car pollution rules that could require electric vehicles to account for up to two-thirds of new cars sold in the US by 2032, in what would be one of the Biden administration’s most aggressive climate-change policies yet.

    The tailpipe standards would also have the effect of cutting planet-warming pollution from cars in half. Transportation accounts for nearly 30% of all greenhouse gas emissions in the US, according to the EPA.

    EPA Administrator Michael Regan called the regulations “the strongest-ever federal pollution standards for cars and trucks.”

    Regan touted the proposed rules on “CNN News Central” on Wednesday, claiming they would bring down costs for consumers and slash planet-warming pollution.

    “This is a future for everyone, and we’re starting to see all of the auto industry move in this direction,” Regan told CNN’s Sara Sidner, saying strong auto emissions rules have been part of President Joe Biden’s “vision from day one.”

    EPA officials said that they are considering several different emissions proposals, which could result in anywhere from a 64% to 69% electric vehicle adoption rate by early next decade. If approved, the emissions standards would start model year 2027 vehicles.

    The agency anticipates the new rules would mean EVs could also make up nearly half of all new medium-duty vehicles, like delivery trucks, by model year 2032. Officials are also proposing stronger standards for heavy-duty vehicles, including dump trucks, public utility trucks, and transit and school buses.

    One expert told CNN the Biden administration’s proposal is a pivotal moment for the US auto industry and consumers.

    “It’s a pretty big deal,” said Thomas Boylan, a former Environmental Protection Agency official and the regulatory director for the EV trade group Zero Emission Transportation Association. “This is really going to set the tone for the rest of the decade and into the 2030s in terms of what this administration is looking for the auto industry to do when it comes to decarbonizing and ultimately electrifying.”

    Regan and White House National Climate Adviser Ali Zaidi hailed the proposed regulations as a major climate win that would also save American consumers money in the coming years.

    Zaidi said that in the Biden administration’s first few years, the number of EVs on US roads had already tripled, while the number of public charging stations had doubled. And Zaidi vowed more to come, with funding from Biden’s infrastructure law for a network of EV charging stations combined with consumer tax credits.

    “Whether you measure today’s announcements by the dollars saved, the gallons reduced, or the pollution that will no longer be pumped into the air, this is a win for the American people,” Zaidi said.

    Yet even as the administration is writing aggressive regulations to push the market toward EVs, a Gallup poll released Wednesday suggests that Americans are not yet sold on the idea. Gallup polled more than 1,000 adults in the US last month and found that 41% said they would not buy an electric vehicle.

    Not only are EVs still more expensive than gas-powered cars, but consumers also haven’t yet grasped the climate benefits of transitioning to zero-emissions vehicles, the poll found. Six in 10 respondents said they believe EVs help the environment “only a little” or “not at all,” Gallup reported.

    Transportation is the biggest source of planet-warming pollution in the US, and light duty vehicles – the average cars Americans drive – account for 58% of those emissions. The UN’s Intergovernmental Panel on Climate Change reported last year that aggressive, pollution-slashing changes in the global transportation sector – including the transition to EVs – could reduce the sector’s emissions by more than 80%.

    Speaking on CNN, Regan also emphasized that switching to an EV would save consumers money in the long run.

    “Folks who purchase electric vehicles will see a cost savings over the lifespan of the vehicle, because they’re not having to buy gas, having to pay for maintenance,” Regan said. “So this is a huge opportunity for everyone in this country.”

    Other countries, including the EU and China, are moving faster toward adopting EVs. In the US, California has already proposed that zero-emissions vehicles make up 70% of new car sales by 2030, and 17 other states plan to follow California’s lead.

    That means much of the US car industry will already be transitioning ahead of the proposed federal rules.

    “I believe it’s pretty doable,” Margo Oge, chair of the International Council on Clean Transportation and a former Obama EPA official, said of the aggressive transition to EVs. “The industry is there. Europe is ahead of the US, China is ahead of Europe – and these companies are global companies.”

    New federal tax credits are coming next week that aim to help American consumers save up to $7,500 on an EV. But they have incredibly complex requirements for the auto industry – including that the cars’ batteries and components come from the US or countries it has a free-trade agreement with.

    Still, Boylan said the regulations are designed to gradually work over the next decade, by which time consumers should have far more electric vehicle options to choose from.

    “You’ve got the tax credits as the carrot,” Boylan said. The proposed tailpipe regulation “provides the stick to backstop these incentives and push the industry forward.”

    Regan told CNN the rules would be phased in gradually, giving auto makers and consumers years before they fully go into effect. During that time, the administration is focused on installing more EV charging stations and expanding access to $7,500 federal EV tax credits.

    “What we’re looking at is a ramp-up period,” Regan said on CNN. “We’re going to see a massive buildup over the next couple years, and we’re starting to see those electric vehicle sales numbers grow already.”

    The EPA will take public comment on the proposal before finalizing the rules in the coming months.

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  • Amazon, Microsoft could face UK antitrust probe over cloud services | CNN Business

    Amazon, Microsoft could face UK antitrust probe over cloud services | CNN Business

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    London
    CNN
     — 

    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 from May, 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.

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  • Taxes and adulting: What to know about filing taxes on your own for the first time | CNN Business

    Taxes and adulting: What to know about filing taxes on your own for the first time | CNN Business

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    New York
    CNN
     — 

    For most people in their early- to mid-20s, filing taxes is right up there with having to pay rent and realizing you can’t take summers off anymore: an unwelcome fact of being an adult.

    If you’re a recent graduate working your first full-time job or supporting yourself for the first time, this tax-filing season may indeed be your first experience doing your own taxes without the help of a parent.

    So here are seven things to keep in mind.

    If you’re confounded by filing your taxes, you may think it’s because you’re young and inexperienced. Nonsense. Tax filers of all ages get confused by tax rules and the intricacies of all the tax documents required. And it doesn’t help that tax provisions are tweaked frequently.

    Your tax return is a financial snapshot of your life over a 12-month period, in this case 2022. And a lot can happen during that time that will have tax implications and need to be reported.

    “Think about what went on in your life in the past year,” said Tom O’Saben, the director of tax content at the National Association of Tax Preparers.

    For example, O’Saben asked, did you work more than one job? Did you move for a new job? Did you get laid off? Did you get married or have a child? Did you make student loan payments? Did you make money selling anything you own? Did you buy a home?

    Next, pull together all necessary documentation. In addition to receipts and other paperwork you may have kept, you should also have tax forms that were either mailed to you or sent electronically — from your employers, brokerage firms, college, loan servicers, the state unemployment office, etc.

    You’ll need the information on these forms to fill out your tax return accurately. Keep in mind, the IRS also has a copy of these “third-party” forms that were sent to you, so its systems will flag if there is any discrepancy between what is on the form sent to you and what you put on your return.

    Most people realize what they earn at a full-time job is subject to income tax and that those taxes are automatically withheld by your employer.

    But any side hustle income you generate, or money you make as a gig worker, is also taxable, even if you’re paid in cash or via a payment app. Ditto for tips. And often tax on that type of income is not withheld. You’re just paid a gross amount and will have to set aside money to cover the taxes owed on it.

    Severance payments and unemployment benefits may be taxable too.

    And so is investment income — meaning the profits (or “capital gain”) you make on the sale of an investment or property — which is basically the price for which you sell something minus the original price you paid for it. (Also worth noting: if you have investment income, also called “passive” income, it is taxed at a lower rate than your paycheck — i.e., “earned” income — assuming you held your investment longer than a year.)

    Most dividends and interest payments are also taxable.

    And remember all that lucrative fun you had betting on the SuperBowl or spending a weekend with friends in Vegas? Yup, your winnings from gambling and sports betting are considered taxable income. (The semi-good news is if you had any gambling losses last year, they can offset your wins, so it may be that you won’t owe tax on your winnings if your losses cancel them out.)

    For many of these types of income you should have received forms from your employer (a W2 if you’re a full-time employee); from your clients if you’re a contract or gig worker (eg. a 1099-K, a 1099-NEC) or, starting next year, from the payment apps on which you get paid for your goods and services (e.g., a 1099-MISC). Meanwhile, banks and brokerage firms will send you 1099-INTs (for interest), 1099-DIVs (for dividends) and 1099-Bs (for your capital gains and losses).

    If you live in Alaska, Florida, Nevada, South Dakota, Texas, Washington or Wyoming, you don’t have to file a state tax return because those states don’t impose an income tax. If you live in New Hampshire and Tennessee, you won’t have to file a return for your salary and wages. But you may have to file a return if you got income from dividends and interest during the tax year.

    The standard deduction reduces your adjusted gross income. The amount for tax year 2022 is $12,950 for singles; $25,900 for married couples filing jointly; and $19,400 for heads of household (e.g., a single parent).

    “That’s the amount of money you don’t have to pay tax on,” O’Saben noted.

    The only filers who itemize their deductions are those whose deductions add up to more than the standard deduction. Itemized deductions include: charitable contributions, state and local income and property taxes, mortgage interest and casualty loss if you live in a federally declared disaster area.

    But even if you just take the standard deduction you may also take in addition what are called “above-the-line” deductions. These include up to $2,500 in student loan interest that you paid in 2022 (your student loan servicer should send you a Form 1098-E); any contributions you made to a deductible IRA or to a Health Savings Account; and, if you’re a teacher, up to $300 of what you spent on school supplies and personal protective equipment for your classroom.

    [For a fuller list of different types of taxable income (“additional income”) and above-the-line deductions (“adjustments to income”), see Schedule 1 to the federal 1040 form.]

    A tax credit is a dollar-for-dollar reduction of your tax bill and if it’s a “refundable” credit, which some are, it can actually increase your refund.

    Some credits to be aware of, especially if you’re not making a lot of income:

    The Earned Income Tax Credit: The EITC is intended to help low- and moderate-income workers (defined in 2022 as those with earned income under $59,187), and especially filers with children.

    The EITC is also available to earners without qualifying children and it’s worth $560 for 2022.

    Education credits: If you were in school last year, footed the costs and are not claimed as a dependent on anyone else’s tax return, you may be eligible for an American Opportunity Tax Credit or a Lifetime Learning Credit. To see if you qualify, here’s an IRS table comparing the eligibility requirements and the value of each of those credits. Also, check to see if your educational institution sent you a Form 1098-T, which you will need if you claim one of these credits.

    The Saver’s Credit: The Saver’s Credit is a federal match for lower-income earners’ retirement contributions for up to $2,000 a year.

    The Child Tax Credit: If you’re a parent you may claim a maximum child tax credit of $2,000 for each child through age 16 if your modified adjusted gross income is below $200,000 ($400,000 if filing jointly). Above those levels, the child tax credit starts to get reduced. And the portion of the credit treated as refundable — meaning it is paid to you even if you don’t owe any federal income tax — is capped at $1,500, and that is only available to those with earned income of at least $2,500.

    And if you paid for child care in 2022, you may be eligible to claim a dependent care credit.

    Your federal tax return is due on April 18. That is the day by which you must have filed your 2022 individual tax return and paid any remaining federal income taxes owed for last year. The only exceptions are for those who lived in federally declared disaster areas, in which case their deadlines are later.

    But anyone can apply for — and will automatically be granted — a six-month extension until October 16, 2023 to file their return if they submit Form 4868 by April 18.

    Note, though, that an extension to file is not an extension to pay if you still owe the IRS more in taxes for last year than you actually paid in 2022.

    So, unless you have good reason to believe you will receive a refund, get a ballpark estimate of what more you think you’ll owe the IRS and send in that check by April 18 if you file for an extension. Otherwise you could be hit with a late payment penalty. And that could be compounded by a failure-to-file penalty if you didn’t file on time or didn’t get an automatic filing extension.

    Sign up for CNN’s Adulthood, But Better newsletter series. Our seven-part guide has tips to help you make more informed decisions around personal finance, career, wellness and personal connections.

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  • Alibaba’s restructuring and Jack Ma’s homecoming are all part of China’s plan | CNN Business

    Alibaba’s restructuring and Jack Ma’s homecoming are all part of China’s plan | CNN Business

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    Hong Kong
    CNN
     — 

    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 after more 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 giant has 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.

    -— CNN’s Riley Zhang contributed reporting.

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  • Treasury secretary rules out bailout for Silicon Valley Bank | CNN Politics

    Treasury secretary rules out bailout for Silicon Valley Bank | CNN Politics

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    Washington
    CNN
     — 

    Treasury Secretary Janet Yellen on Sunday ruled out a federal bailout for Silicon Valley Bank following its spectacular collapse last week.

    “Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out, and we’re certainly not looking,” Yellen told CBS News when asked if there will be a bailout. “And the reforms that have been put in place means that we’re not going to do that again.”

    Also Sunday, Shalanda Young, the director of the White House Office of Management and Budget, stressed in an interview with CNN’s Kaitlan Collins on “State of the Union” that the US banking system at large was “more resilient” now.

    “It has a better foundation than before the [2008] financial crisis. That’s largely due to the reforms put in place,” Young said on “State of the Union.”

    Yellen said she’s been hearing from depositors all weekend, many of whom are “small businesses” and employ thousands of people. “I’ve been working all weekend with our banking regulators to design appropriate policies to address this situation,” the Treasury secretary said, declining to provide further details.

    SVB collapsed Friday morning after a stunning 48 hours in which a bank run and a capital crisis led to the second-largest failure of a financial institution in US history.

    California regulators closed down the tech lender and put it under the control of the US Federal Deposit Insurance Corporation. The FDIC is acting as a receiver, which typically means it will liquidate the bank’s assets to pay back its customers, including depositors and creditors.

    Despite initial panic on Wall Street over the run on SVB, which caused its shares to crater, analysts said the bank’s collapse is unlikely to set off the kind of domino effect that gripped the banking industry during the financial crisis.

    But the collapse has prompted a bailout debate in Washington as lawmakers assess the fallout.

    Republican Rep. Nancy Mace of South Carolina told Collins in a separate interview on “State of the Union” that she doesn’t support a bailout “at this time” but cautioned, “It’s still very early.”

    “We cannot keep bailing out private companies because there’s no consequences to their actions. People, when they make mistakes or break the law, have to be held accountable in this country,” she said.

    While relatively unknown outside Silicon Valley, SVB was among the top 20 American commercial banks, with $209 billion in total assets at the end of last year, according to the FDIC. It’s the largest lender to fail since Washington Mutual collapsed in 2008.

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  • Rubio wants to block Ford from tax breaks for using Chinese battery technology | CNN Business

    Rubio wants to block Ford from tax breaks for using Chinese battery technology | CNN Business

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    US Senator Marco Rubio on Thursday introduced legislation that takes aim at Ford’s deal to use technology from Chinese battery company CATL as part of the automaker’s plan to spend $3.5 billion to build a battery plant in Michigan.

    Rubio, the top Republican on the Intelligence Committee, introduced legislation that would block tax credits for electric vehicle batteries produced using Chinese technology, saying it would “significantly restrict the eligibility of IRA tax credits and prevent Chinese companies from benefiting.”

    Ford said in response to Rubio that “making those batteries here at home is much better than continuing to rely exclusively on foreign imports, like other auto companies do. A wholly owned Ford subsidiary alone will build, own and operate this plant. No other entity will get US tax dollars for this project.”

    Last month, Rubio asked the Biden administration to review Ford’s deal to use technology from CATL.

    Rubio called for an immediate Committee on Foreign Investment in the United States (CFIUS) review of the licensing agreement between Ford and CATL.

    Rubio said the deal “will only deepen US reliance on the Chinese Communist Party for battery tech, and is likely designed to make the factory eligible for Inflation Reduction Act (IRA) tax credits.”

    CFIUS is a US Treasury-led interagency panel that reviews proposed transactions to ensure they do not harm national security.

    Treasury declined to comment, but Energy Secretary Jennifer Granholm said last month the Ford deal will “bringing advanced manufacturing capabilities from overseas to the United States is key to our competitiveness, will stimulate our economy, and create good-paying American jobs.”

    Ford has said the plant would create 2,500 jobs and begin producing lower cost and faster recharging lithium-iron-phosphate batteries in 2026.

    The $430 billion IRA imposes restrictions on battery sourcing and is designed to wean the United States off the Chinese supply chain for electric vehicles (EVs). The IRA will eventually bar credits if any EV battery components were manufactured by a “foreign entity of concern,” in a provision aimed at China.

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  • Former Ohio House speaker convicted in $60 million bribery scheme | CNN Politics

    Former Ohio House speaker convicted in $60 million bribery scheme | CNN Politics

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    CNN
     — 

    A former Republican speaker of Ohio’s House of Representatives was convicted by a federal jury Thursday on racketeering conspiracy charges in connection with a $60 million bribery scheme.

    Former Speaker Larry Householder and former Ohio Republican Party Chair Mathew Borges, who was also convicted Thursday, could face up to 20 years in prison for orchestrating the scheme to accept bribes in exchange for ensuring the passage of a billion-dollar bailout for a nuclear energy company.

    “As presented by the trial team, Larry Householder illegally sold the statehouse, and thus he ultimately betrayed the great people of Ohio he was elected to serve,” said US Attorney Kenneth Parker.

    Steven Bradley, an attorney for Householder, expressed disappointment with the verdict.

    “We will take some time to discuss and evaluate our legal options moving forward and will most certainly pursue an appeal,” he said. “Larry is looking forward to going home and spending time with his family after what has been an exhausting seven week trial.”

    CNN reached out to an attorney for Borges for comment.

    The release did not explicitly identify the nuclear energy company involved in the scheme but noted that utility company FirstEnergy Corp. previously agreed to pay a $230 million penalty for “conspiring to bribe public officials and others” as part of a deferred prosecution settlement.

    Jennifer Young, a manager for external communications at FirstEnergy Corp., told CNN that “while it would be inappropriate to comment on the verdict, FirstEnergy has taken decisive actions over the past several years to strengthen our leadership team and ensure a culture of strong ethics, integrity and accountability across the company.”

    Jeffrey Longstreth, Householder’s longtime campaign and political strategist, and Juan Cespedes, a lobbyist, previously pleaded guilty to their roles in the racketeering conspiracy.

    Beginning in March 2017, FirstEnergy began making quarterly $250,000 payments to Householder’s tax-exempt social welfare account named Generation Now, US attorneys in Ohio’s southern district laid out in their case.

    Householder’s team then used that money to support the passage of House Bill 6, a $1 billion bailout that saved two nuclear power plants operated by FirstEnergy Corp., and stop a ballot effort to overturn the law.

    Millions of those dollars went to Householder’s bid for speaker, to other state House candidates likely to support him and to his team’s own pockets.

    Householder spent over $500,000 of those funds to “pay off his credit card balances, repair his Florida home and settle a business lawsuit,” according to prosecutors.

    Borges used about $366,000 for his own benefit and used another $15,000 to bribe an Ohio Republican operative for information on the number of signatures collected on the ballot referendum opposing HB 6, the news release said.

    Householder and his associates were arrested and charged with racketeering conspiracy in July 2020.

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  • DOJ seeks court sanctions against Google over ‘intentional destruction’ of chat logs | CNN Business

    DOJ seeks court sanctions against Google over ‘intentional destruction’ of chat logs | CNN Business

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    Washington
    CNN
     — 

    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.

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  • How Google’s long period of online dominance could end | CNN Business

    How Google’s long period of online dominance could end | CNN Business

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    Washington
    CNN
     — 

    For the better part of 15 years, Google has seemed like an unstoppable force, powered by the strength of its online search engine and digital advertising business. But both now look increasingly vulnerable.

    This week, the Justice Department accused Google of running an illegal monopoly in its online advertising business and called for parts of it to be broken up. The case comes a couple of years after the Trump administration filed a similar suit going after the tech giant’s dominance in search.

    Google said the Justice Department is “doubling down on a flawed argument” and that the latest suit “attempts to pick winners and losers in the highly competitive advertising technology sector.” If successful, however, both blockbuster cases could upend a business model that’s made Google the most powerful advertising company on the internet. It would be the most consequential antitrust victory against a tech giant since the US government took on Microsoft more than 20 years ago.

    But even though the lawsuits drive at the heart of Google’s revenue machine, they could take years to play out. In the meantime, two other thorny issues are poised to determine Google’s future on a potentially shorter timeframe: The rise of generative artificial intelligence and what appears to be an accelerating decline in Google’s online ad marketshare.

    Just days before the DOJ suit, Google announced plans to cut 12,000 employees amid a dramatic slowdown in its revenue growth, and as it works to refocus its efforts partly around AI.

    Google has long been synonymous with online searches; it was one of the first modern tech companies whose name would become a verb. But a new threat emerged late last year when OpenAI, an artificial intelligence research company, publicly released a viral new AI chatbot tool called ChatGPT.

    Users of ChatGPT have showcased the bot’s ability to create poetry, draft legal documents, write code and explain complex ideas, with little more than a simple prompt. Trained on a vast amount of online data, ChatGPT can generate lengthy responses to open-ended questions, though it’s prone to some errors, or answer simple questions – “Who was the 25th president of the United States?” – which one might have previously had to scroll through search results on Google to find.

    ChatGPT is trained on vast amounts of data and uses this to generate responses to user prompts. While ChatGPT’s underlying technology has existed for some time, the fact that anyone can create an account and experiment with the tool has led to loads of hype for generative AI and made the technology’s potential instantly understandable to millions in a way that was only abstract before. It has also reportedly prompted Google’s management to declare a “code red” situation for its search business.

    “Google may be only a year or two away from total disruption. AI will eliminate the Search Engine Result Page, which is where they make most of their money,” Paul Buchheit, one of the creators of Gmail, tweeted last year. “Even if they catch up on AI, they can’t fully deploy it without destroying the most valuable part of their business!”

    If more users begin to rely on AI for their information needs, the argument goes, it could undercut Google’s search advertising, which is part of a $149 billion business segment at the company. Media coverage of ChatGPT has doubled down on this notion, with some outlets pitting ChatGPT against Google in head-to-head tests.

    There are some reasons to doubt this nightmare scenario might play out for Google.

    For one thing, Google operates at a vastly different scale. In November, Google’s website received more than 86 billion visits, compared to less than 300 million for ChatGPT, according to the traffic analysis website SimilarWeb. (ChatGPT was released publicly in late November.) For another, even in a world where Google provides specific, AI-generated responses to user queries, it could still analyze the queries to provide search advertising, just as it does today.

    Google has its own investments in highly sophisticated artificial intelligence. One of its AI-driven chat programs, LaMDA, even became a flashpoint last year after an engineer at the company claimed it had achieved sentience. (Google has disputed the claim and fired the engineer for breaches of company policy.)

    Google CEO Sundar Pichai has reportedly told employees that even though Google has similar capabilities to ChatGPT, the company has yet to commit to giving out AI-generated search responses because of the risk of providing inaccurate information, which could be detrimental to Google in the long run.

    Google’s stance highlights both its incredible influence, as the most trusted search engine on earth, and one of the core problems of generative AI: Due to the technology’s black-box design, it’s virtually impossible to find out how the technology arrived at a specific result. For many people, and for many years to come, being able to evaluate different sources of information for themselves may trump the convenience of receiving a single answer.

    All this has taken place against the backdrop of what seems to be an extended, multi-year decline in Google’s online advertising marketshare. Google’s position in digital advertising peaked in 2017 with 34.7% of the US market, according to third-party industry estimates, and is on pace to account for 28.8% this year.

    Google isn’t the only advertising giant to experience this trend. One-off factors like the pandemic and the war in Ukraine, as well as fears of a looming recession, have broadly affected the online advertising industry. Others, like Facebook-parent Meta, have been particularly susceptible to systemic changes such as Apple’s app privacy updates restricting the amount of information marketers can access about iOS users.

    But the decline also comes as Google faces new competition in the market. Rivals including Amazon, TikTok and even Apple have been attracting an increasing share of the digital advertising pie.

    Whatever the cause, Google’s advertising business, which is still massive, seems to face growing headwinds. And those headwinds could be exacerbated if some of the predictions about generative AI come to pass, or if the Justice Department’s lawsuits ultimately weaken Google’s grip on digital advertising.

    As part of the case, the US government has asked a federal court to unwind two acquisitions that allegedly helped cement a Google monopoly in advertising. Dismantling Google’s tightly integrated ads machine will restore competition and make it harder for Google to extract monopoly profits, according to the US government.

    This and other antitrust suits — though threatening in their own right — simply add pressure to the broader dilemma facing Google as it stares down a new era of potentially tumultuous technological change.

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  • Ticketmaster gets grilled: 6 takeaways from hearing over Taylor Swift concert fiasco | CNN Business

    Ticketmaster gets grilled: 6 takeaways from hearing over Taylor Swift concert fiasco | CNN Business

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    CNN
     — 

    Lawmakers grilled a top executive of Ticketmaster’s parent company, Live Nation Entertainment, on Tuesday after the service’s inability to process orders for Taylor Swift’s upcoming tour left millions of people unable to buy tickets late last year.

    During the three-hour hearing, senators pressed Live Nation president and CFO Joe Berchtold and some other witnesses on whether his company was too dominant in the industry, thereby harming rivals, musicians and fans.

    “I want to congratulate and thank you for an absolutely stunning achievement,” Sen. Richard Blumenthal said to Berthtold. “You have brought together Republicans and Democrats in an absolutely unified cause.”

    Here’s a look at the big takeaways from the hearing:

    When tickets for Swift’s new five-month Eras Tour went on sale on Ticketmaster in mid November, heavy demand snarled the ticketing site, infuriating fans who couldn’t snag tickets. Unable to resolve the problems, Ticketmaster subsequently canceled Swift’s concert ticket sales to the general public, citing “extraordinarily high demands on ticketing systems and insufficient remaining ticket inventory to meet that demand.”

    In his testimony Tuesday, Berchtold partly blamed the Swift ticketing incident on the bots.

    Ticketmaster, he said, was “hit with three times the amount of bot traffic than we had ever experienced” amid the “unprecedented demand for Taylor Swift tickets.” The bot activity “required us to slow down and even pause our sales. This is what led to a terrible consumer experience that we deeply regret.”

    Berchtold also went on defense more broadly about his company. He emphasized that Ticketmaster does not set ticket prices, does not determine the number of tickets put up for sale and that “in most cases, venues set service and ticketing fees,” not Ticketmaster.

    He also rejected suggestions that its dominance has allowed for soaring fees, citing data from the market intelligence firm Pollstar showing that Live Nation controls about 200 out of approximately 4,000 venues in the United States, or about 5%.

    The venues controlled by Live Nation set fees that are “consistent with the other venues in the marketplace,” he said.

    Members of the entertainment industry and one rival spoke out against Ticketmaster’s dominance in the industry.

    Jack Groetzinger, CEO of SeatGeek, alleged that many venue owners “fear losing Live Nation concerts if they don’t use Ticketmaster” and its services, and argued the company must be broken up.

    “Live Nation controls the most popular entertainers in the world, routes most of the large tours, operates the ticketing systems and even owns many of the venues,” he told lawmakers. “This power over the entire live entertainment industry allows Live Nation to maintain its monopolistic influence over the primary ticketing market.”

    He continued: “As long as Live Nation remains both the dominant concert promoter and ticketer of major venues in the US, the industry will continue to lack competition and struggle,” he said.

    Bandmate Jordan Cohen, right, listens as singer-songwriter Clyde Lawrence, left, testifies before a Senate Judiciary Committee hearing to examine promoting competition and protecting consumers in live entertainment.

    Clyde Lawrence, a singer-songwriter on the witness panel, explained how the company acts as a promoter, a venue and the ticketing company, which eats into performing artists’ revenues. Artists, he said, have no leverage over Live Nation.

    “Since both our pay and theirs is a share of the show’s profits, we should be true partners aligned in our incentives — keep costs low while ensuring the best fan experience,” he said. “But with Live Nation not only acting as the promoter but also the owner and operator of the venue, it seriously complicates these incentives.”

    Lawrence also said with Ticketmaster, “we’ll see a 40%-ish or closer to 50% fee added on top” of the base ticket price.

    The fallout from the ticketing fiasco once again cast a harsh spotlight on Ticketmaster and its power in the industry, more than a decade after it completed its merger with Live Nation despite concerns the deal would create a near monopoly in the ticketing sector.

    “To have a strong capitalist system, you have to have competition,” Sen. Amy Klobuchar, a Democrat from Minnesota, said during her opening remarks. “You can’t have too much consolidation — something that, unfortunately for this country, as an ode to Taylor Swift, I will say, we know ‘all too well.’”

    Kathleen Bradish, vice president for legal advocacy at the American Antitrust Institute, called Ticketmaster “a very traditional monopoly” and told lawmakers the lack of competition in the live entertainment industry results in consumers having to pay higher prices.

    “Its dominance in markets up and down the live entertainment supply chain creates the incentive and the ability to limit competition and protect its market position,” she explained. “Customers pay the price for these monopolistic acts with higher ticket prices and fees, lower quality, less choice and less innovation.”

    On the concert side, the company excludes “smaller or independent concert promoters and venues. In digital ticketing, it includes excluding ticket resellers and brokers who provide important competition via the secondary ticketing market,” she said.

    Lawmakers repeatedly questioned the US government’s past handling of the Live Nation merger with Ticketmaster. It involved a legally binding consent agreement that allowed the company to merge with Ticketmaster so long as the combined company abided by a number of behavioral conditions.

    A 2019 Justice Department review found that Live Nation was not meeting its commitments under the order, but instead of suing, the Department modified the agreement and extended it for another five years, according to Bradish at the American Antitrust Institute.

    “DOJ should pursue new enforcement action to obtain effective structural relief,” said Bradish, calling for a breakup of Live Nation under either Section 7 of the Clayton Act or Section 2 of the Sherman Act.

    A Senate Judiciary Committee hearing on Tuesday examined promoting competition and protecting consumers in live entertainment on Capitol Hill

    Sen. Mike Lee said the way that history has unfolded since the Live Nation merger raises “very serious doubts” about the usefulness of consent agreements imposed by the federal government.

    If the current Justice Department concludes that the consent decree has been violated, “unwinding the merger ought to be on the table,” Blumenthal said.

    In response to Berchtold’s explanation about the bot problem, some lawmakers questioned the company’s security practices, noting many small businesses can determine when bad actors are infiltrating their systems.

    Republican Senator Marsha Blackburn suggested Berchtold strengthen its cyberprotections, get better advice and hire new IT workers to better protect its systems. (Berchtold said the company has poured billions of dollars into security to protect its systems over the years.)

    Another Republican, Sen. John Kennedy, went further in criticizing the company over the Swift ticketing issue. He said whoever at Live Nation was in charge of the incident “ought to be fired.”

    In the back half of the hearing, some of the focus shifted to possible solutions – but there were no easy answers.

    Some lawmakers focused on the ability to resell tickets. While this option can be useful for customers who need to change plans, it can also help prop up the scalping market.

    When senators discussed whether restricting the ability to transfer tickets would help, Live Nation’s exec was in favor of it. But the SeatGeek CEO said this might only entrench Live Nation’s dominance, as it holds the kind of market share that would force consumers to solely transact there in the absence of other resale market options.

    – CNN’s Brian Fung and Aditi Sangal contributed to this report

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