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This week neatly encapsulated the state of US antitrust enforcement: messy.On Monday, a Washington, DC, judge threw out two landmark Facebook lawsuits. One case, seeking to unwind Facebook’s acquisitions of Instagram and WhatsApp, is permanently dead. But the judge told federal prosecutors to refile the second case, this time with more math to prove Facebook is the world’s dominant social media company. The ruling was a reminder that antitrust lawsuits now hinge on the vagaries of convoluted economic models more than legal arguments about Big Tech’s moves to squash competition.It’s a combination of neutralizing a competitor and improving Facebook, Zuckerberg said in a reply. “There are network effects around social products and a finite number of different social mechanics to invent. Once someone wins at a specific mechanic, it’s difficult for others to supplant them without doing something different.”
Zuckerberg continued: “One way of looking at this is that what we’re really buying is time. Even if some new competitors springs up, buying Instagram, Path, Foursquare, etc now will give us a year or more to integrate their dynamics before anyone can get close to their scale again. Within that time, if we incorporate the social mechanics they were using, those new products won’t get much traction since we’ll already have their mechanics deployed at scale.”
Forty-five minutes later, Zuckerberg sent a carefully worded clarification to his earlier, looser remarks.
“I didn’t mean to imply that we’d be buying them to prevent them from competing with us in any way,” he wrote.
On Wednesday, a Congressional committee passed six tech-focused antitrust bills, with proposals ranging from the banal (raising merger filing fees) to the extreme (legally mandated breakups of big tech conglomerates). That all the bills made it out of committee marks a stark shift from the government’s tech-worshipping 2010s, and the vote also surfaced new bipartisan voting coalitions. Pro-business Republicans joined with Silicon Valley Democrats to oppose the bills, but were overpowered by tech antagonists on the left and the right who are channeling the popular rage against tech monopolies.“I will tell you, I’m not 100% there to break up Big Tech, but I’m close,” said Rep. Dan Bishop, R-N.C. “And this is the bill that if it were done right, would be the vehicle to put that on the table.”
Though an amendment he introduced failed, antitrust subcommittee Chairman David Cicilline, D-R.I. and Jayapal expressed a willingness to work with Bishop on potentially including a nod to his idea in the bill. Bishop essentially sought to try to expedite antitrust cases to the courts by removing a regulatory step. Cicilline had called it “the most interesting amendment of the markup” even though he did not support it, and Judiciary Committee Chairman Jim Jordan, R-Ohio called it “the amendment.”
In an interview after the markup on Thursday, Buck, the ranking member on the antitrust subcommittee who supported the legislation, told CNBC he expects more work will be done before the bills move forward.
“I don’t think the bills are going to be on the floor for a couple of months because of the August recess, so I think that the opportunity to work together is certainly there,” he said.
It’s clear that even after such a long debate, the bill authors still have a lot of work to do. After the markup adjourned, bipartisan members of the California delegation on the committee released a joint statement, urging further revision to the bills despite their passage from the committee.
They also said the committee members did not have enough time to properly consider the bills prior to the markup.
“The bill text as debated is not close to ready for Floor consideration,” wrote Correa, Swalwell, Lofgren and Reps. Darrell Issa, R-Calif., and Tom McClintock, R-Calif. “We urge the sponsors of the bills to take the necessary time, commit to a comprehensive approach, and work with their bipartisan colleagues of this Committee to address the concerns articulated during markup to further develop these bills.”
Buck responded to criticism from his colleagues who felt they didn’t have enough time to review the bills, saying “it’s a common objection” but that “the ideas in the bill were summarized in reports that were written last October.”
To cap off the week, the Federal Trade Commission—the top US antitrust enforcement agency—moved Thursday to significantly expand its authority. Under the direction of Lina Khan, the antitrust crusader who just took over as the commission’s chair, the body began a slow, bureaucratic process to revive its rulemaking powers, by which it could act on its own to outlaw specific business practices that kill competition.
Four years ago, Lina Khan was at the leftmost fringe of US antitrust thought. Yesterday (June 15), a bipartisan group of 69 senators—including 21 Republicans—voted to confirm her appointment to the Federal Trade Commission, giving her a pivotal role atop the country’s leading antitrust enforcement agency. Khan’s confirmation signals just how quickly her aggressive anti-monopoly stance has moved from the realm of academic radicals into the mainstream of American politics.
Khan made a name for herself as a law student with an influential 2017 Yale Law Journal article that called for the US to revamp the legal standards that have guided judges in antitrust cases since the 1980s. Rather than focusing narrowly on whether a dominant company is raising prices for consumers, Khan argued courts should consider a broader range of factors to go after businesses that use their market power to squash competition.
The article helped ignite fresh debate over the state of America’s anemic antitrust enforcement and made Khan one of the leading voices in an academic movement seeking to overhaul the country’s monopoly policy. Critics derisively labeled Khan’s school of thought “hipster antitrust,” casting it as a contrarian and unserious viewpoint that could never take hold in the US.
The fight, in other words, is far from settled. But if there’s one takeaway from this week’s mixed bag, it’s that the most important battles are playing out in Congress and the FTC—not the courts. Under the existing antitrust regime, prosecutors have little hope of landing decisive blows against tech giants through lawsuits.
They need lawmakers and regulators to give them real ammunition if they’re going to put a dent in the biggest firms’ dominance.A bipartisan group of US lawmakers unveiled a package of five bills this afternoon aimed at reining in big tech companies’ most anti-competitive business practices.
The proposals were a long time coming. If passed, they would restore Congress’s longstanding tradition of regularly updating the antitrust laws to address the worst competition-squashing business behavior of the day—and they would give regulators and prosecutors much more ammunition to go after tech giants.
Updating monopoly laws used to be a routine part of Congress’s job.
After US lawmakers passed the landmark Sherman Antitrust Act in 1890, they tweaked the law in 1914, 1936, and 1950 to keep up with all the new ways dominant businesses found to exploit their market power over the years. After 1950, however, antitrust legislation went dormant. Lawmakers haven’t overhauled the rules in seven decades, leaving them woefully inadequate to restrain cutting-edge tech companies whose business models no mid-century legislator could have predicted.
In the absence of new laws, American regulators and antitrust prosecutors have had to rely on the lowest common denominator of US anti-monopoly policy: the consumer welfare standard. Narrowly defined, this legal standard holds that business practices are only anti-competitive if they raise prices for consumers. That has forced prosecutors to twist every lawsuit about competition-squashing behavior into a convoluted argument about economic models and projections for consumer prices, which makes it very difficult—and expensive—to win cases against big companies.. —Nicolás Rivero.
FIVE THINGS FROM Q-MHI WE ESPECIALLY LIKED
Africa’s budding cannabis industry.
Covid-19 and debt loads are making African countries contemplate something that was unimaginable just a few years ago: the legalization of cannabis. Stephen Kafeero describes how growth in Western markets is proving enticing to entrepreneurs and policymakers, despite a legacy of punitive colonial era and morality laws which have, until now, kept the cultivation and sale of the plant predominantly underground.
The prospect of legalized cannabis in Africa, unimaginable less than a decade ago, is accelerating, driven by the potential for much-needed revenue and the impact of the Covid-19 pandemic.
Generations of Africans have faced the wrath of colonial era and morality laws surrounding cannabis use, with many involved in cultivating and selling the plant jailed, forced to operate underground, or had their livelihoods destroyed. But as governments search for more sources of revenue, this once-closed space is opening up, albeit not necessarily for smallholder growers or local consumption.
Developments in Western markets, where legalization is spreading rapidly, and the prospect of cashing in on the fast growing multi-billion dollar sector, are contributing to the sweeping reforms on the continent. At least 10 countries in Africa are enacting some form of legal framework for the product, while many others are pondering a move in a similar direction. —Jackie Bischof, talent lab editor.
A shortage of shipping containers.
At a moment where everything from rental cars to chicken wings is in short supply, the vessels our goods come in are also experiencing too great of a demand. It’s yet another indication of how much Covid-19 has thrown a wrench in global trade. Nico Rivero’s piece answers every question you never knew you ha about shipping containers, how they could be in short supply, and how long the shortage will last.
Shipping containers are the lifeblood of world trade: Virtually every product and part that circulates through the global economy travels across the seas, railroads, and highways ensconced in their corrugated metal embrace. But lately, those all-important containers are in short supply in the places where they’re needed most.
Indian exporters to North America and Europe are complaining that the wait times to find a shipping container can stretch as long as three weeks. British exporters say the shortage has delayed shipments to east Asia for up to two months. And in the meantime, container prices have nearly doubled.
The shortage of shipping containers is yet another symptom of the havoc the pandemic has wrought on international supply chains. As a result, freight costs are rising, which in turn leads to higher prices for consumer goods. “This matters in the near term because the supply issues will have a direct impact on inflation,” said Suresh Acharya, a professor at the University of Maryland’s business school who studies supply chain. — Alex Ossola, membership editor.
Learning from the lobster capital of Europe.
After some political maneuvering this week, the US state of Maine is set to study how wind turbines off its coast are affecting the local lobster industry, which wanted a moratorium on wind farms. Luckily, there are years of research from across the ocean to show how the two industries can productively coexist. Clarisa Diaz explores the conflict and potential compromises in a story with helpful visuals and an encouraging message for the future of Maine’s coastal waters.
Offshore wind is a huge opportunity for the US but the fishing industry is worried about its businesses. Notably, the lobster industry pushed for the moratorium on wind farms near Maine’s coast that advanced through the local state legislature yesterday.
Maine is now set to study the effect of wind turbines operating in its waters, but the effect of wind farms on lobstering areas already has years of research in Europe. And it has revealed lessons for both the wind and fishing industries in the US.
The waters off Bridlington, UK, and nearby along the Holderness coast make up the largest lobster fishery in Europe. It’s regarded as the region’s lobster capital. While its lobster catch is significantly smaller than that of the North American Atlantic, the industry there provides a case study for how to develop a mutually beneficial partnership between wind farm developers and the fishing industry. — Heather Landy, executive editor.
Clash of India’s titans.
When telecom tycoon Mukesh Ambani announced a $10 billion investment in renewable power last month, he immediately set up a showdown with India’s other richest man: energy baron Gautam Adani. Niharika Sharma lays out the stakes, which include worries that Ambani could run Adani out of the industry, or that the two men could create an unbreakable duopoly that would slow India’s energy transition.
India’s renewable energy sector is set to become a battleground for the country’s top billionaires.
On June 24, when India’s richest man, Mukesh Ambani, announced his clean energy business, many heads turned to the country’s second-wealthiest man Gautam Adani who has had a strong presence in the renewables space for many years. Everyone was keen to know what Adani’s next moves will be to achieve his ambition of becoming India’s largest clean energy player by 2030.
The share price of Adani Green Energy, the renewables business of the Adani Group—which has gone up by around 850% over the last year—fell following Ambani’s announcement, perhaps due to fears that the company’s future growth would be under pressure. —Nicolás Rivero, tech reporter
A desk of one’s own.
Everyone seems to love working from home, but, oh, how I have missed the office! And, now that I’m back in it, I miss my desk. Hot desking leaves me cold, just like it does Anne Quito, who dedicated this week’s The Memo newsletter to the joy and value of having your own working space in the office, and what is lost when all workers—I mean, desks—become interchangeable.
The term “hot desk” was inspired by a 16th-century naval practice called “hot bedding” or “hot racking.” In ships and submarines, soldiers took shifts sleeping in one bed to save space, with the name alluding to the previous occupant’s body heat. Experts like Philip Ross, CEO of the management consulting firm UnWork, say that “hot desking” is the solution for the post-Covid office. He predicts that companies will need 60% less office space due to the popularity of hybrid work arrangements.
It all sounds practical, but there’s a big part of me that misses having my own desk. Being assigned a small piece of real estate in the office used to be part of the thrill of being on staff. It provided a mooring point where one could safely dock for the workweek and keep all sorts of useful and idiosyncratic objects. Clutter was a prerogative. In the drawers of the desks I’ve occupied over the years were pieces of mail, photographs, candy, a cardigan, dress shoes, and an Edna Mode talking doll that I’ve somehow shuffled from job to job over the years. Most of these things were packed in a file box when the office was swept clean during lockdowns. — Annalisa Merelli, reporter
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|ONE MEMBERSHIP THING THAT MADE US |
As humans evolved, certain frequencies of light set our circadian rhythms, the body’s 24-hour internal clock that regulates sleep and other processes. We’re used to more blue and green wavelengths in the day, and more red at night.But the way we live now tends to scramble that natural inclination. The screens we stare at during many of our waking hours emit blue light, which wakes us up (screen time has been connected to sleep problems). And we never fully get the “quiet down” signal because we don’t go to bed with the sun, instead staying up past dark with our artificial lights.“We’ve sort of made the night optional,” says Michael Grandner, director of the Sleep and Health Research Program at the University of Arizona.✦ Darkness might be optional, but sleep certainly isn’t. Read more in our latest field guide.
WE’RE OBSESSED WITH SLEEP
We just wrapped up Sleep Week here at Quartz. Here are the tl;dr versions of what we’ve been obsessing over, but be sure to click through if you missed any—we promise they make for excellent bedtime reading.
Napping: This undervalued sleep reserve has mental, physical, and economic benefits.
Circadian rhythms: Sometimes our internal clocks are at odds with modern life.
Sleepwalking: The medical community has no idea why some people are prone to (mostly) harmless nocturnal wanderings.
Mattresses: Take a peek under the covers of the $81 billion global industry.
Sleep deprivation: Your lack of shuteye is a real drain on the global economy.
FIVE THINGS FROM ELSEWHERE THAT MADE US SMARTER
The fat of the land.
Former US president Donald Trump’s top agriculture official, Sonny Perdue, is facing allegations of corruption after one of the country’s largest farm companies sold him land worth millions of dollars for just $250,000 when he joined the cabinet. This Washington Post investigation by Desmond Butler explores the deal and the gaps where US financial disclosures fail to inform the public about conflicts of interest. “This stinks to high heaven,”said Julie O’Sullivan, a Georgetown University law professor and former federal prosecutor. “It deserves a prosecutor’s attention,” she added. “Only a prosecutor with the powers of the grand jury can find out, in fact, whether there was a quid pro quo that existed at the time of the deal.”
Public officials are barred from accepting anything of value if the benefit is given “with intent to influence.”ADM, which spent millions of dollars lobbying the U.S. government during the Trump presidency, certainly had many interests before the USDA during Perdue’s tenure.
“We did not receive any special favors from Mr. Perdue during his administration,” Anderson said, “and it is unfair and inaccurate to imply that we did.”
ADM sold theplant in Estill, S.C., to Perdue’s then-company, AGrowStar, for $250,000 — a fraction of what county and independent appraisers say it is worth. Six years earlier, ADM had paid more than $5.5 million for the same land, a figure that closely matches assessments by independent experts contacted by The Post, who analyzed the value based on state records and drone footage of the property.
Months after Perdue took over the U.S. Department of Agriculture, his family trust sold AGrowStar to a group of investors along with all of its real estate for an undisclosed amount. According to Brown, AGrowStar sold for about $12 million.
The real estate sales illustrate the limits of the financial disclosure rules intended to reveal potential conflicts of interest before confirmation. Officials are not required to detail their companies’ transactions or any business deals completed before their confirmations.The sale of Perdue’s company was also obscured by complex financial moves that appear to have evaded at least the spirit of an agreement Perdue made with the U.S. Office of Government Ethics, according to Walter Shaub, who led the agency at the time.
“This may be a matter for the FBI to investigate, frankly,” he said.
Weeks after the lucrative deal with ADM, Perdue pledged that if confirmed he would uphold the highest ethical standards.“For the American taxpayers, our customers, I will prioritize customer service every day,” he told senators at his confirmation hearing.
“They expect and have every right to demand that we conduct the people’s business efficiently, effectively, and with the utmost integrity.”
While ADM asserts that the property was sold at fair market value, the commercial appraiser for Hampton County’s tax assessment office is skeptical.
“I would question the sale,” Robert Bates said. “It was an extremely low price to be paid for that facility.”. — Tim Fernholz, senior reporter.
India’s other Covid-19 crisis.
India has the world’s third highest number of billionaires but also continues to rank poorly in the Global Hunger Index. This divide has been exacerbated further by the coronavirus. In Article 14, Deepa Sinha explains how the Indian government’s mishandling of the crisis is disrupting nutritional schemes for women and children, leaving millions ravaged by a different pandemic: hunger.
For every year since 2006, the Global Hunger Index has revealed that India ranks poorly even compared to much poorer countries across Asia and Africa: for example, India has consistently ranked below Ghana, Kenya and Nepal.
While there was some improvement in child malnutrition between 2006 and 2016, the partial results of the most recent National Family Health Survey (5) conducted in 2019 show that there is some reversal of the gains previously made, indicators such as childhood stunting, wasting and underweight worsening in most states (see here).
While malnutrition is affected by multiple factors, the poor quality of diets has been a persistent problem in India.
A study by Kalyani Raghunathan and others from the International Food Policy Research Institute (IFPRI) published in 2020, found that the cost of nutritious diets in 2011 constituted approximately 50-60% of male and about 70-80% of female daily wages (the cost of the cheapest foods that meet the food-based dietary guidelines, of the National Institute of Nutrition). They estimated that 45-64% of the rural poor cannot afford a nutritious diet that meets India’s national food-based dietary guidelines.
Given the trend that real wage growth experienced a slump after 2014 and was negative for certain categories by 2019 and the further depression in wages post the pandemic, it can be expected that an even larger proportion of the population cannot afford nutritious diets currently.
Two further aspects exacerbate this situation. First, the urban poor have also been badly hit post the pandemic and, second, we are now also witnessing a spike in inflation. However, the response of the government to this hunger crisis has been inadequate and one of denial. — Priyanka Vora, audience editor.
Are US streets paved with gold?
The US needs infrastructure. But can it pay for it? The price of roads, highways, bridges and tunnels has soared since America’s 20th-century building spree—interstates are now five times more pricey per mile than they were in 1990. For Vox, Jerusalem Demsas explores just what’s driving this, and whether there’s anything that can be done.
In an interview in early June, Transportation Secretary Pete Buttigieg acknowledged the problem, but he offered no solutions except the need to study it further.
Biden’s original infrastructure proposal included $621 billion for roads, rail, and bridges. His plan is billed not only as an infrastructure plan but one that would help respond to the climate crisis. A big part of that is making it easier for more Americans to travel by mass transit. The Biden plan noted that “America lags its peers — including Canada, the U.K., and Australia — in the on-time and on-budget delivery of infrastructure,” but that understates the problem.
Not only are these projects inordinately expensive, states and localities are not even attempting to build particularly ambitious projects. The US is the sixth-most expensive country in the world to build rapid-rail transit infrastructure like the New York City Subway, the Washington Metro, or the Chicago “L.” And that’s with the nation often avoiding tunneling projects, which are often the most complicated and expensive parts of any new metro line. According to the Transit Costs Project, the five countries with higher costs than the US “are building projects that are more than 80 percent tunneled … [whereas in the US] only 37 percent of the total track length is tunneled.”
Leah Brooks, an economist at George Washington University, also studied the highway problem. Her research finds that states spent nearly three times as much to build a mile of highway in the 1980s as they did in the early ‘60s.
“Big picture for the interstate highway system is that we saw relatively reasonable cost increases [from the mid 1950s] to about the early ‘70s and then pretty substantial cost increases thereafter,” Brooks explained. — Michael Coren, deputy emerging industries editor.
The bots are coming—to fire you
Contract drivers who handle deliveries for Amazon quickly learn the company uses algorithms to track performance measures such as how fast they complete their routes. Often they’ll get automated emails with feedback. Drivers say Amazon’s bots are even firing them when they fall short, sometimes for issues outside their control, Spencer Soper reports for Bloomberg. As Amazon increasingly uses algorithms to manage employees, it’s raising questions about the fairness of human resources without the humans. — Marc Bain, senior reporter.
The president’s briefcase.
After he died unexpectedly last week, former Philippine president Benigno Aquino’s aides revealed to the Philippine Star’s Brooke Villanueva the objects they schlepped to every public engagement. Stowed in a decidedly plain black bag was a copy of the constitution, maps, reports, and a big calculator—material evidence of a man who, if lacking in charisma, was hell-bent on leading with accountability and moral discipline during a time when corruption was the rule of the land.
What was inside the bulky black bag of former President Benigno “Noynoy” Aquino III? According to the revealing stories of Aquino’s two former close-in aides, the bag and its contents epitomized the former president’s leadership style and exacting standards.
During his term, Aquino, who passed away June 24, always had an aide carrying the bag just a step or two behind him. These staff said the bag was very important for the former president as he used its contents as basis for his decisions.
Raf Ignacio, who worked for Aquino for five years, recalled how he never lost sight of his duty to serve the Philippines. “He was very tough on his staff and demanded nothing less than excellence from everybody he worked with—that’s a very admirable trait because the Filipino people deserve no less,” he told.
Knowing that his decisions and statements could affect millions of Filipinos, the responsibilities of his staff were centered on “making sure that he was armed with all the data to make a sound decision,” Ignacio wrote in a Facebook post.
According to CF Orbes—who worked for Aquino when he was still in the Senate in 2008 and up until his presidency in 2010—his eagerness to be well-informed and prepared for his engagements went beyond such briefers. “It wasn’t just making sure he had that, but making sure to account for all eventualities. He likes to use visual representations in his meetings to explain his points,” he told — Anne Quito, design reporter.