House lawmakers begin considering 6 bills meant to undo the dominance of Big Tech.

Daily Business Briefing

June 23, 2021, 12:31 p.m. ET

June 23, 2021, 12:31 p.m. ET


Credit…Pool photo by Saul Loeb

House lawmakers on Wednesday began the process of considering a legislative package that would overhaul the nation’s antitrust laws, an attempt to rein in the power of Google, Amazon, Apple and Facebook.

Over the course of the day, members of the House Judiciary Committee are expected to vote on six bills that could block the tech giants from prioritizing their own products online, force them to break off parts of their businesses and generate more resources for the law enforcement agencies that police Silicon Valley. Skeptical lawmakers can propose amendments to the bills or oppose the measures outright.

The move to consider the bills — which were introduced this month — reflects a growing concern about the power of the largest tech companies. The proposals have drawn support from members of both parties, uniting Democrats concerned about out-of-control businesses with Republicans who fear the power of online platforms to police content online.

“The digital marketplace suffers from a lack of competition,” said Representative David Cicilline, Democrat of Rhode Island Democrat and chairman of the subcommittee focused on antitrust. “Amazon, Apple, Facebook and Google are gatekeepers to the online economy.”

The proposals also have their share of critics.

Representative Jim Jordan of Ohio, the top Republican on the Judiciary Committee, and Mark Meadows, the former chief of staff to President Donald J. Trump, said in a Tuesday Fox News opinion column that if “you think Big Tech is bad now, just wait until Apple, Amazon, Facebook and Google are working in collusion with Big Government.” Some California Democrats have also grown concerned that the bills would slow the state’s economic engine.

The tech giants have mounted an aggressive campaign to block the bills. Tim Cook, Apple’s chief executive, has been personally calling members of Congress to express his concerns about the package. Executives at other companies have made statements in recent days opposing the bills. And scores of groups funded by the companies have urged lawmakers to oppose the proposals at Wednesday’s meeting.

Warren Buffett, the chairman and chief executive of Berkshire Hathaway.
Credit…Nati Harnik/Associated Press

Warren Buffett, the chairman and chief executive of Berkshire Hathaway, said on Wednesday that he had resigned as a trustee of the Bill and Melinda Gates Foundation, weeks after the couple announced their divorce.

Mr. Buffett, a longtime friend of Mr. Gates, had been a huge presence at the Gates Foundation: It is one of five nonprofit organizations to which he has pledged the majority of his fortune — estimated at $105.3 billion, according to Forbes — and the only one not run by a member of the Buffett family.

All told, Mr. Buffett, 90, has given Berkshire stock worth $41 billion at the time of donation to the five foundations. About $31 billion was given to the Gates Foundation in 2006. In the announcement on Wednesday, Mr. Buffett said he has donated an additional $4.1 billion.

“For years I have been a trustee — an inactive trustee at that — of only one recipient of my funds, the Bill and Melinda Gates Foundation (BMG),” Mr. Buffett said in a statement. “I am now resigning from that post, just as I have done at all corporate boards other than Berkshire’s.”

A representative for the foundation did not immediately return a request for comment.

Mr. Buffett did not give a reason for his action. The foundation’s reputation for global philanthropy has lately been overshadowed by reports of Mr. Gates’s questionable conduct in work-related settings. The New York Times has reported that on at least a few occasions, Mr. Gates pursued women who worked for him at Microsoft and at the foundation, according to people with direct knowledge of his overtures.

In 2019, Microsoft’s board, on which Mr. Gates sat, opened an inquiry into one of those cases after being notified that he had “sought to initiate an intimate relationship with a company employee in the year 2000,” a Microsoft spokesman said. The board hired a law firm to investigate.

That same year, Mr. Gates’s relationship with Jeffrey Epstein, the money manager and convicted sex criminal, burst into public view. The Times reported that the two had met several times — representatives for Mr. Gates have said it was only to discuss philanthropy — to the consternation of Melinda French Gates.

The following year, Mr. Gates stepped down from Microsoft’s board. He also stepped down from Berkshire’s board, saying then, “Warren and I were the best of friends long before I joined and will be long after.”

On Wednesday, Mr. Buffett acknowledged in his statement the recent debate over how little in income tax American billionaires — including himself — pay. Citing leaked Internal Revenue Service data, the news organization ProPublica reported that the Berkshire chief paid just $23.7 million in taxes from 2014 to 2018, a period when his wealth grew $24 billion.

Without referring to the ProPublica article specifically, Mr. Buffett acknowledged that he had “relatively little” income, with his wealth flowing largely from his Berkshire holdings. He also argued that his charitable donations led to only about 40 cents in tax savings per $1,000 in donations.

A longtime advocate of tightening tax rules for the wealthy, Mr. Buffett said Wednesday that although tax deductions were important to some wealthy donors, “it is fitting that Congress periodically revisits the tax policy for charitable contributions, particularly in respect to donors who get imaginative.”

The announcement puts more public distance between two billionaires who have been close friends for three decades. Mr. Gates was a near-constant presence at Berkshire’s annual shareholder meetings since joining its board in 2004, and the two share a passion for the card game bridge.

That friendship eventually extended to shared philanthropy.

Four years after Mr. Buffett pledged his initial billions to the Gates Foundation, Mr. Buffett and the Gateses created the Giving Pledge in 2010, a public commitment to philanthropy in which signatories promise to give away the bulk of their wealth. Taking their cues from the Gateses and Mr. Buffett, hundreds of the world’s wealthy have signed up.

Gary Kelly, the chief executive of Southwest Airlines.
Credit…Pool photo by Alex Edelman/EPA, via Shutterstock

Gary Kelly, the longtime chief executive of Southwest Airlines, will step down early next year, the airline announced on Wednesday. Mr. Kelly has been in the top job since 2004, expanding Southwest into the nation’s largest airline by number of passengers.

Mr. Kelly will become executive chairman and is expected to remain in that role at least through 2026. Robert E. Jordan will become chief executive on Feb. 1, 2022.

“Bob and I have worked side by side for more than 30 years,” Mr. Kelly said in a statement. “He is a gifted and experienced executive and well-prepared to take on this important role.”

The news comes as Southwest, which has been in business for 50 years, emerges from the pandemic, which devastated the airline business. Analysts believe that travel will rebound strongly this summer and Southwest appears well positioned to sell lots of tickets.

The airline entered the pandemic in better financial health other large U.S. carriers. After suffering its first loss in nearly half-a-century last year, Southwest became the first major airline to report a quarterly profit in the first quarter.

Unlike its three largest competitors — American Airlines, Delta Air Lines and United Airlines — Southwest flies almost exclusively within the United States. That means its business should recover faster because it is not very reliant on international travel, which is expected to come back more slowly.

The airline has added more than a dozen new destinations since the pandemic began, including at the dominant airports in Houston and Chicago. This month, Southwest revealed it had more than doubled an order for Boeing’s 737 Max airplane next year, committing to take 64 with the option to buy dozens more.

Known for his jovial demeanor, Mr. Kelly, an accountant by training, has led Southwest with a steady hand, successfully guiding the company through the 2008 financial crisis and pandemic. He is widely respected in the corporate world. Mr. Kelly is Southwest’s second-longest serving chief executive, behind only Herb Kelleher, the airline’s charismatic co-founder who died in 2019.

Mr. Jordan, the incoming chief executive, joined Southwest in 1988, two years after Mr. Kelly. Mr. Jordan, 60, helped lead the acquisition of AirTran Airways and the development of the airline’s frequent flier program.

He is executive vice president of corporate service, a role in which he oversees human resources and communications and outreach.

“I’m humbled, honored, and excited to be asked to serve as the next C.E.O.,” Mr. Jordan said in a statement. “The heart of Southwest is our people; they make the difference for our customers, and I look forward to serving them.”

A Brexit protest outside the Houses of Parliament in London in 2019.
Credit…Tolga Akmen/Agence France-Presse — Getty Images

Five years ago, on June 23, 2016, Britain voted to leave the European Union. The separation has hardly been smooth, and in some ways the effects have yet to appear, the DealBook newsletter reports.

The referendum result upended Britain’s politics, divided its people and fundamentally altered its business environment.

Some of the fallout was immediate. The day after the referendum, the value of the British pound plunged the most in its history, setting off a period of rising inflation.

Other effects have emerged more slowly. In the past six months — after Britain formally left the bloc’s single market and customs union — the impact has been harder to discern through the turmoil of the pandemic.

After the vote, business investment stalled. Companies were too unsure about Britain’s major trading relationships to make big decisions. By the time there was any certainty, the coronavirus had hit British shores. Now, the government is planning a “super deduction” tax break to bolster investment. That could spur spending, but the underlying pace of growth is unlikely to return to its pre-referendum level.

Business investment in Britain

It’s too soon to determine the overall impact on trade, especially for more than 180,000 British businesses whose only experience of international trade was with the European Union. New customs checks, veterinary requirements and other regulations have already restricted the movement of goods, and new agreements with far-flung countries aren’t expected to replace the deal Britain had with its nearest neighbors as a member of the trade bloc. By the government’s own estimates, its new trade deal with Australia will increase G.D.P. by as much as 500 million pounds (about $700 million) over 15 years, or 0.02 percent of output.

The financial services industry, one of Britain’s most prosperous sectors, resigned itself early to diminished status in Europe. This year, European shares and derivatives trading has shifted out of London, and banks are still moving employees to other European capitals. In response, the British government is trying to revive London’s reputation as a finance hub by overhauling rules on listings — welcoming SPACs, among other things — and loosening regulations for start-ups.

For many, Brexit was never about the economy, it was about immigration. Industries that relied heavily on European workers warned from the start about a looming labor crisis as it became harder for E.U. citizens to move to Britain. As the country recovers from the pandemic, that crisis has arrived.

Restaurants and hotels have been thwarted by staff shortages. There are warnings that there aren’t enough food production workers or truck drivers. Pandemic restrictions were a factor in foreign workers leaving the country, and industry groups are lobbying the government for exceptions to visa rules so that more chefs, truck drivers and butchers can be hired from the European Union, as they don’t expect those workers to easily return (or enough locals to step into the roles).

Britain’s last year in the bloc coincided with its worst recession in three centuries because of the pandemic. Recovering from the crisis won’t be easy for any country, but businesses in Britain are also contending with the end of a four-decade economic union. It could be another five years, or more, before we know the true shape of Britain’s post-Brexit economy.

U.S. stocks rose slightly on Wednesday, with the S&P 500 climbing for a third consecutive day after Jerome H. Powell, the Federal Reserve chair, reiterated to lawmakers on Tuesday that the recent jump in inflation was mostly explained by bottlenecks in supply.

Stocks have fluctuated in the past week after central bank policymakers turned more hawkish, acknowledging that rising prices and a stronger economic recovery would lead to higher interest rates in 2023.

On Tuesday, Mr. Powell also emphasized that the Fed was looking at maximum employment as a “broad and inclusive goal,” which means officials will look at employment outcomes for different gender and ethnic groups.

Cryptocurrency prices rose on Wednesday after a week of tumultuous trading. The decline comes as China intensifies its crackdown on Bitcoin, which fell below $30,000 on Tuesday for the first time since January.

  • The S&P 500 rose 0.2 percent in early trading, while the Nasdaq composite rose more than 0.3 percent.

  • The yield on 10-year U.S. Treasury notes rose to 1.48 percent on Wednesday. An index of the U.S. dollar fell 0.2 percent.

  • Bitcoin rose more than 16 percent to $34,343.

  • Oil prices climbed higher. West Texas Intermediate, the U.S. crude benchmark, rose 1.9 percent up $74.21 a barrel. Brent crude, the global benchmark, rose 1.5 percent to $75.93.

Most European stock indexes fell on Wednesday even as surveys of manufacturing and services activity showed economic momentum was building in June across the continent. In Germany, the composite Purchasing Managers’ Index climbed to 60.4, the highest reading in a decade. The surveys for the eurozone also beat economists’ forecasts.

But the data for currency bloc and Britain showed prices were rising quickly, which is likely to further fuel concerns about inflation. In Britain, the rate of inflation for companies’ output prices reached a record high for the second month in a row.

“Companies responded to rising workloads by taking on extra staff at an unprecedented rate at the end of the second quarter,” wrote Chris Williamson, an economist at IHS Markit, which produces the surveys. “Also hitting previously unsurpassed levels, however, were rates of inflation of input costs and output prices” because of supply-chain disruption.

The Stoxx 600 Europe fell 0.4 percent. The CAC in France and the DAX in Germany were down 0.7 percent. The FTSE 100 in Britain rose 0.3 percent, pushed higher by energy and health care stocks.

The headquarters of the European Central Bank, in Frankfurt. All central banks should begin offering digital equivalents to cash, the Bank for International Settlements said.
Credit…Kai Pfaffenbach/Reuters

An umbrella organization for the world’s central banks urged its members on Wednesday to issue digital equivalents to cash that would offer some of the advantages of cryptocurrencies without the risks.

Central bank digital currencies “are an idea whose time has come,” Hyun Song Shin, the economic adviser and head of research at the Bank for International Settlements in Basel, Switzerland, said in a statement Wednesday.

The Bank for International Settlement’s 63 members include the Federal Reserve, the European Central Bank, the People’s Bank of China and almost all other major central banks, and serves as a forum for them to coordinate and exchange ideas. The organization’s endorsement of digital currencies adds momentum to efforts already underway at most central banks to answer the challenge posed by cryptocurrencies, which threaten to disrupt governments’ hold on monetary policy.

In an article published as part of its annual economic report, the organization was sharply critical of cryptocurrencies like Bitcoin. The bank described cryptocurrencies, which tend to suffer extreme fluctuations in value, as vehicles for speculation rather than a reliable means of payment.

Cryptocurrencies have become popular with organized crime because of their anonymity and independence from government control. Also, the computer power needed to create Bitcoins and maintain the cryptocurrency’s infrastructure uses enormous amounts of electricity, contributing to climate change.

“By now, it is clear that cryptocurrencies are speculative assets rather than money, and in many cases are used to facilitate money laundering, ransomware attacks and other financial crimes,” the Bank for International Settlements said. “Bitcoin in particular has few redeeming public interest attributes when also considering its wasteful energy footprint.”

The article also warned that tech companies could issue digital currencies that would acquire dominant market positions, siphoning off a percentage of transactions that would be out of proportion to the service they provide.

The Bank for International Settlements acknowledged, though, that digital currencies were unstoppable, and offered detailed advice to central banks on how they might design their own counterparts.

Crucially, the bank said that, in contrast to cryptocurrencies, transactions with an official digital currency should not be anonymous. That would remove one of the main lures of cryptocurrencies to their boosters.

“Effective identification is crucial to every payment system,” the bank argued. “It guarantees the system’s safety and integrity, by preventing fraud and bolstering efforts to counter money laundering and other illicit activities.”

  • The U.S. clothing company PVH said on Wednesday that it would sell the intellectual property and other assets tied to brands including Izod, Van Heusen and Arrow to Authentic Brands Group for $220 million. PVH said it was a “difficult decision” and that it planned to focus on its brands like Calvin Klein. Authentic Brands has been amassing a portfolio of struggling brands in recent years, a trend that accelerated during the pandemic.

  • The International Brotherhood of Teamsters, which represents more than one million workers in North America in industries including parcel delivery and freight, will vote on whether to make it a priority to organize Amazon workers and help them win a union contract. “Amazon is changing the nature of work in our country and touches many core Teamster industries and employers,” states the resolution, which will be voted on at the Teamsters convention on Thursday. The company “presents an existential threat to the standards we have set in these industries,” it says.

  • Sales of homes in the United States fell for the fourth consecutive month in May as a sharp rise in prices and a shortage of houses for sale led to a slowdown in the market. Existing home sales fell 0.9 percent in May from April, the National Association of Realtors said Tuesday, with the median sales price climbing nearly 24 percent from a year earlier to a record $350,300.

A view of the offices of the financial trading company Morgan Stanley in New York City.
Credit…Justin Lane/EPA, via Shutterstock

Morgan Stanley will require employees and visitors to be vaccinated against the coronavirus when they enter its New York offices next month.

Starting July 12, employees, contingent workers, clients and visitors at Morgan Stanley’s buildings in New York City and Westchester County must attest that they are fully vaccinated, a person familiar with the matter said, citing a memo from Mandell Crawley, the bank’s chief human resources officer. Staff members who don’t will be required to work remotely, added the person, who spoke on condition of anonymity to discuss personnel-related matters.

Although the requirement relies on an honor system for now rather than proof of vaccination, it will allow the bank to lift other pandemic protocols, such as face coverings and physical distancing. Some office spaces for Morgan Stanley’s institutional securities, investment and wealth management divisions already allow only those who have received their shots to work from their desks.

Companies across America are grappling with the question of whether to ask employees about their vaccination status, or to require those returning to offices to be vaccinated. The Equal Employment Opportunity Commission said last month that both actions were legal. Still, some senior executives have worried about pushback from employees.

This month, Goldman Sachs said its employees in the United States would have to report their vaccination status. Other big Wall Street banks, including JPMorgan Chase and Bank of America, are encouraging workers to disclose their vaccination status voluntarily. BlackRock, the asset manager, will allow only vaccinated staff to return to the office beginning next month, Bloomberg reported. Those firms, however, stopped short of also asking clients and visitors to attest to being vaccinated.

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