DealBook Briefing: Big Tech Enters Antitrust Purgatory

Welcome to antitrust limbo, Big Tech
And then there were four. Yesterday, we learned that the federal government might be preparing antitrust inquiries into Apple and Facebook as well as into Google and Amazon, Cecilia Kang, David Streitfeld and Annie Karni of the NYT write.
• “The Justice Department has agreed to handle potential antitrust investigations related to Apple and Google, while the Federal Trade Commission will take on Facebook and Amazon.”
• House lawmakers are also planning 18 months of hearings and subpoenas for internal corporate documents into “major digital platforms,” which could “lead to the first overhaul of antitrust rules in many decades.”
“This is about how do we get competition back in this space,” said Representative David Cicilline, the chairman of the House Judiciary’s subcommittee on antitrust that will lead that investigation.
The agencies don’t appear to have opened official investigations yet. “But the scrutiny from Washington could lead to years of headaches for the companies, raising the prospect of lawsuits to break up companies, hefty fines or new laws limiting their reach,” Ms. Kang, Mr. Streitfeld and Ms. Karni write.
Tech stocks dropped on the news. Facebook fell more than 7 percent, Alphabet (Google’s parent) by over 6 percent and Amazon by 4 percent. Even Apple, which announced several new products yesterday, sank by 1 percent. The tech-heavy Nasdaq slid into correction territory.
What comes next is slow and difficult. Antitrust inquiries are time-consuming. And these companies, which didn’t exist when antitrust laws were written, raise challenges for investigators. It’s also unclear that regulators would break up the tech companies, as many people have recently called for.
More: Senator Elizabeth Warren’s presidential campaign put up a billboard calling for the breakup of Big Tech — in the heart of San Francisco.
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Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London.
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Trump’s Mexico tariffs could meet resistance from G.O.P.
President Trump’s plans for tariffs to curb immigration could be opposed by members of his party, according to the WaPo.
“Congressional Republicans have begun discussing whether they may have to vote to block President Trump’s planned new tariffs on Mexico,” the WaPo reports, citing unnamed sources. The plan: Override Mr. Trump’s declaration of a national emergency. Unlike in the spring, the resistance would probably command a veto-proof majority, the paper said.
Such a vote “would be the G.O.P.’s most dramatic act of defiance since Trump took office.”
The worry: The tariffs may amount to tax increases. Jim Tankersley of the NYT writes that the levies on Europe, China and Mexico “would more than wipe out any gains from his $1.5 trillion tax cut for low- and middle-income earners, leaving them with less money to spend into a consumer-driven economy.”
The tariffs would erase Mr. Trump’s biggest selling point for 2020: the strong economy. Bank of America has already cut its forecast for corporate profits in 2019, citing the trade war with China.
Mexico hopes to appease Mr. Trump by cracking down on migrants trying to enter the U.S. But Mexican officials also warned that they could slap tariffs on some U.S. goods in retaliation.
More: The next front in Mr. Trump’s trade war with China may be Chinese researchers at American universities. And analysts doubt that a trade deal with the U.S. would enable Britain to compensate for leaving Europe.
James Bullard, the president of the St. Louis Fed.  Edgar Su/Reuters
Wall Street really wants an interest-rate cut
Bets that the Fed will lower interest rates soon have surged in recent days. But if those wagers are wrong, things could get ugly.
“The Fed funds futures market suggests a better than 50-50 chance that the central bank will announce a cut at its meeting in July,” Matt Phillips of the NYT writes. “In early May, those odds were below 20 percent.”
Strategists at JPMorgan Chase now predict two rate cuts this year, according to Alexandra Scaggs of Barron’s. They also cut year-end forecasts for Treasury yields.
Hopes have been buoyed by the head of the St. Louis Fed, James Bullard, who said yesterday that current economic conditions “suggest that the current policy rate setting is inappropriately high” and that rate cuts “may be warranted soon.”
But overheated expectations for rate cuts “could leave the market vulnerable to any sign that the Fed is wavering,” Mr. Phillips writes.
Expect some insight today when Jay Powell, the Fed’s chairman, delivers a speech on monetary policy at a conference in Chicago.
More: Australia’s central bank has cut rates to record lows.