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‘Emperors of the online economy’
For more than five hours yesterday, U.S. lawmakers grilled Jeff Bezos, Tim Cook, Sundar Pichai and Mark Zuckerberg over the power that their companies command and the potential for abusing that power. Talk about Zoom fatigue. (Or, technically, Cisco Webex fatigue.)
The chairman of the antitrust subcommittee set the tone early. Representative David Cicilline, Democrat of Rhode Island, called Amazon, Apple, Facebook and Google “emperors of the online economy” that “enjoy the power to pick winners and losers, shake down small businesses and enrich themselves while choking off competitors.”
These moments stood out to us:
• Jeff Bezos of Amazon faced questions about his company’s relationships with third-party sellers. When Representative Pramila Jayapal, the Democrat who represents Amazon’s district in Washington, asked him whether the company misused sales data to develop products that competes with those merchants, a rattled Mr. Bezos said, “I can’t answer that question yes or no.”
• Tim Cook of Apple was confronted over his company’s iron-fisted control of its App Store and whether its demands of other developers were unfair. When Representative Jerry Nadler of New York asked whether Apple’s pressing Airbnb and ClassPass for additional commissions for sales made through their apps constituted “pandemic profiteering,” Mr. Cook said the tech giant would “never” do that — but said some such cases would require additional payouts to Apple.
• Sundar Pichai of Google confronted several questions about his company’s dominance in advertising. The hearing began when Mr. Cicilline said documents showed the tech giant sought to create “a walled garden that increasingly keeps users within its sites.” Mr. Pichai responded, “I’m really focused on giving users what they want.”
• Mark Zuckerberg of Facebook was presented with awkward emails that he sent in 2012 to Facebook’s C.F.O. about acquiring smaller competitors, including Instagram. “One way of looking at this is that what we’re really buying is time,” Mr. Zuckerberg wrote. Less than an hour after sending that email, the Facebook founder sent another noting that, “I didn’t mean to imply that we’d be buying them to prevent them from competing with us in any way.” Mr. Nadler pressed him hard on this.
How they rated. The C.E.O.s appeared virtually, beamed into the hearing room where socially-distanced, masked lawmakers sat on a wood-paneled stage. The Times’s Mike Isaac gave Mr. Bezos the best marks for the quality of his setup: “8/10 for the cool Pacific Northwest dad office vibes. Two points subtracted for his connectivity issues.” The Times’s fashion critic, Vanessa Friedman, rated their attire, noting that they “looked more like four guys dressed up in their first graduation suits — serious, sincere, a little uncomfortable — than the four horsemen of the digital apocalypse whose planetary power was a threat to one and all.”
By the numbers. Mr. Cook drew fewer questions from lawmakers than the others, as compiled by The Times’s Kellen Browning. But Apple’s chief stood out for the number of times he shifted attention to competitors, or to China, arguing that their market power was more pressing: He employed this tactic 13 times during the hearing, twice as often as Mr. Zuckerberg, according to Kellen’s calculations.
What the C.E.O.s didn’t say. The website Protocol listed all the questions that the executives responded to with some variation of “I’ll get back to you on that.” Kellen notes that Mr. Pichai did this the most, 13 times, versus seven times for Mr. Zuckerberg and three each for Mr. Bezos and Mr. Cook.
• Today, the executives will be on safer ground, as all four report quarterly earnings after the market closes. Will they stick to discussing income statements and balance sheets, or will they push back on what was said during yesterday’s proceedings?
Here’s what is happening
Pandemic unemployment benefits are set to expire on Friday. The extra $600 a week that many jobless workers in the U.S. have relied upon are likely to vanish after President Trump undercut Senate Republicans’ effort to negotiate a coronavirus aid package with Democrats.
TikTok’s C.E.O. tried to reduce the political heat. Kevin Mayer, the video app’s American chief, offered to open up some of its core algorithms to address concerns about its treatment of user data and ownership by a Chinese tech giant. Republican lawmakers say a separate plan for TikTok to sell a majority stake to Western investors wouldn’t allay their concerns.
Big European corporates reported earnings. It was a mixed bag: Airbus reported a big loss for the first half and vowed to conserve cash; AstraZeneca reported a 26 percent rise in earnings for its first half as sales of new drugs beat forecasts; Credit Suisse beat expectations, thanks to a surge in trading revenue; trading also aided Shell, which reported a smaller-than-expected loss, and Total, which disclosed a surprise profit; and Nestlé announced an 18 percent rise in first-half profit but warned of slowing growth for the rest of the year.
Qualcomm struck a patent deal with Huawei. The U.S. chip maker announced that it had settled a long-running licensing dispute at a time when the Trump administration has cracked down on the Chinese tech giant. Shares in Qualcomm jumped 12 percent on the news.
Ashley Judd can sue Harvey Weinstein for sexual harassment. A panel of judges overturned a lower court’s ruling that the actress could not sue Mr. Weinstein for sexual harassment under California law because Ms. Judd and the movie producer did not have a specific business relationship at the time that she said the misconduct took place.
It’s going to be bad
The Commerce Department will today publish a preliminary estimate of U.S. economic output for the second quarter. It’s expected to be the worst result since quarterly G.D.P. statistics were first compiled more than 70 years ago.
How bad? The headline number is expected to show that G.D.P. fell 35 percent in the second quarter. But that doesn’t mean that the economy shrank by more than a third in just three months, The Times’s Ben Casselman explains. The U.S. reports these statistics using annualized rates, which amplify short-term changes. In fact, G.D.P. is expected to be about 10 percent smaller in the second quarter than it was in the first. (That would be about the same as Germany, which reported a 10.1 percent decline in its G.D.P. this morning.) Still terrible, but not quite as eye-popping.
“The path of the economy will depend significantly on the course of the virus.” Underscoring the economy’s fragility, the Fed chairman Jay Powell noted at a news conference yesterday that containing the coronavirus was the “fundamental” factor that would determine the path of growth in the future. That path is “extraordinarily uncertain,” he said, adding that a rebound in the labor market was “going to take a while.” In the meantime, the central bank is “not even thinking about thinking about thinking about raising rates.” (Compared with his last news conference, that’s an extra “thinking about.”)
The not-so painful C.E.O. pay cuts
As the pandemic hit, prompting waves of furloughs and layoffs, many corporate leaders showed solidarity by cutting their pay. As it turns out, it often wasn’t much of a sacrifice.
Two-thirds of C.E.O.s who reduced their pay took only a 10 percent hit at most, The Times’s Peter Eavis reports, citing a study by the research firm CGLytics. The reductions typically hit executives’ salaries, which form only a small part of their total pay. (Stock awards and bonuses are usually much bigger parts of their pay packages.)
Here’s how some C.E.O.s fared, compared with what they earned in 2019:
• Ed Bastian of Delta Air Lines took a 5.35 percent cut.
• Oscar Munoz of United Airlines took a 3 percent cut.
• Bob Iger of Walt Disney took a 3.3 percent cut.
• Arne Sorenson of Marriott took a cut of less than 2 percent.
• Glenn Kelman of the real estate brokerage Redfin took a $284,000 cut, worth 100 percent of his 2019 pay.
What’s up with Kodak?
Its stock price, for starters. Shares in the erstwhile photography pioneer soared in recent days as it won a federal loan to produce ingredients for coronavirus treatments. But the timing of the trading has aroused suspicion.
Kodak’s stock jumped more than 15 times higher this week, representing a potential second act for a company that has struggled to find a new direction. Momentum begets momentum, and perhaps unsurprisingly, Kodak shares have become a favorite of speculative day traders on the Robinhood app, where nearly 79,000 users added the stock to their portfolios in just 24 hours.
Some have cried foul, pointing to heavy trading volumes ahead of Kodak’s official announcement about the government loan. The Wall Street Journal reports that there is an explanation: Kodak had briefed news outlets in its hometown, Rochester, N.Y. — but neglected to say that the information was not for public reporting at the time. Some of those tweets and stories were deleted shortly after posting, but not before eagle-eyed traders saw the news.
The speed read
Deals
• Deutsche Bank’s C.E.O., Christian Sewing, rejected speculation that the German lender would seek to revive merger talks with its rival Commerzbank. (Reuters)
• The online lender OnDeck Capital has agreed to sell itself for $90 million, after going public in 2014 at a $1.3 billion valuation. (Bloomberg)
• Cerevel Therapeutics, a biotech start-up created by Pfizer and Bain Capital that focuses on neurological diseases, will go public by merging with a so-called blank check company. (Stat)
Politics and policy
• The U.S. Postal Service reached an agreement with the Treasury Department over a $10 billion pandemic loan. (WSJ)
• President Trump held a pair of fund-raisers in Texas oil country, courting energy moguls with permits for new projects and denouncing Joe Biden’s clean-energy proposals. (Bloomberg)
Tech
• Huawei has become the world’s biggest smartphone maker, mostly because of a big slip in Samsung’s international sales. (CNBC)
• The messaging app Telegram filed an antitrust complaint with Europe’s competition regulator over Apple’s App Store policies. (FT)
Best of the rest
• How did Starbucks get left behind in the pandemic? (Marker)
• Some are hoping that the coronavirus will lead to the end of the penny. (NYT)
• Two days ago, Bill Gates told Andrew on CNBC that Elon Musk’s “position is to maintain a high level of outrageous comments.” The Tesla C.E.O. has taken that to heart. (@elonmusk)
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