Biden Antitrust Officials Plan Final Salvo at Big Tech

Summary

WSJ What’s News – November 19, 2024

Hosted by The Wall Street Journal

---

Antitrust Actions in the Final Days of the Biden Administration

As the Biden administration nears its end, significant strides are being made in the realm of tech antitrust enforcement. U.S. antitrust officials are intensifying their efforts to dismantle the monopolistic structures of big tech giants, with a particular focus on Google and Microsoft.

Key Developments:

• Google’s Monopoly in Search: The Department of Justice (DOJ) secured a victory against Google in August, finding that the company maintained an unlawful monopoly in the search engine market. The DOJ is now awaiting judicial decisions on the appropriate remedies. According to Sam Schechner, a tech reporter for the Wall Street Journal, “The DOJ is arguing that Google might have to divest its Chrome browser or Android mobile operating system in some circumstances” (01:45).

• Potential Remedies and Government Actions: The DOJ has proposed that Google could be required to cease paying Apple its substantial fees to remain the default search engine on Safari browsers. Furthermore, there are impending actions against Microsoft’s cloud business, though Microsoft has so far declined to comment on the Federal Trade Commission’s (FTC) intentions.

• Administration’s Antitrust Agenda: Schechner elaborates on the administration's aggressive stance, highlighting the roles of key figures like FTC Chair Lina Khan and DOJ Antitrust Chief Jonathan Cantor. “The Biden administration has put in place some pretty strident figures when it comes to using the government's antitrust powers against big tech companies” (03:13). However, with a transition to a new administration, the future of these initiatives remains uncertain.

• Google’s Defense: Google has countered the DOJ's proposals, stating that splitting its core services would detrimentally impact both consumers and the broader tech ecosystem. Google’s VP of regulatory affairs emphasized, “The government was putting its thumb on the scale in ways that could harm consumers, developers, and American technological leadership” (02:40).

The Biden administration’s robust antitrust measures reflect a significant push to regulate and potentially restructure major tech companies, aiming to foster a more competitive and fair market landscape.

---

Trump Transition and Key Nominations

With the Trump administration preparing to return to power, several high-profile nominations are underway, accompanied by controversies and investigations.

Key Highlights:

• Sean Duffy for Transportation Secretary: President-elect Trump has announced former Wisconsin Representative Sean Duffy as his nominee for Transportation Secretary. Promoting the nomination on Truth Social, Trump outlined Duffy’s agenda to “push to rebuild highways, tunnels, and other infrastructure and to end the diversity, equity, and inclusion efforts for pilots and air traffic controllers” (04:26).

• Matt Gaetz for Attorney General and Ongoing Investigations: The nomination of former Florida Representative Matt Gaetz as Attorney General has stirred significant debate. A House Ethics Committee panel is set to convene to discuss allegations against Gaetz, including claims he engaged in sexual activities with a minor in 2017. Despite Gaetz’s steadfast denials, Trump’s transition team maintains his suitability for the role, asserting that the allegations are “baseless and intended to derail the second Trump administration” (04:26).

• Implications of the Ethics Investigation: The investigation into Gaetz had anticipated releasing a report earlier, but the process was stalled due to Gaetz’s resignation from Congress. There remains a possibility for the full House to approve a report through a floor vote, potentially bringing more clarity to the ongoing allegations.

These nominations underscore Trump's focus on reshaping key government departments, albeit amid significant scrutiny and ongoing ethical investigations.

---

Hong Kong's Crackdown on Pro-Democracy Activists

Hong Kong continues to experience stringent crackdowns under Beijing’s national security laws, significantly impacting its pro-democracy movement.

Key Developments:

• Mass Sentencing: In a landmark decision, 45 former lawmakers and activists were sentenced to prison terms ranging from four to ten years. This case marks one of the most severe applications of Hong Kong's national security law, aimed at suppressing dissent and dismantling the pro-democracy camp.

• Details of the Case: The defendants were charged for their involvement in an unofficial primary election, which prosecutors argued was intended to “paralyze Hong Kong's government” (07:54). Among them, college professor Benny Tighe received the longest sentence of ten years.

• Impact on Activism: Sam Schechner commented on the broader implications, stating, “Of course it will silence more people because you see how a primary can be illegal and lead to 10 years of sentencing” (06:23). This landmark case serves as a stark warning to other activists, effectively stifling the pro-democracy movement in the region.

• Statements from Affected Individuals: Amelia Wong, the girlfriend of one of the defendants, conveyed the chilling effect of the verdicts during a press interaction, highlighting the personal toll of the crackdown.

The severity of these sentences underscores Beijing’s unwavering stance against political dissent in Hong Kong, signaling a bleak future for the city’s pro-democracy advocates.

---

Canada and Mexico Brace for Potential Second Trump Term

Anticipating a possible second term for President Trump, Canada and Mexico are strategizing to safeguard their economies and navigate upcoming trade challenges.

Key Insights:

• USMCA and Trade Protectionism: Santiago Perez and Vipal Monga discussed the implications of Trump’s protectionist policies on the United States-Mexico-Canada Agreement (USMCA). The review of USMCA in 2026 is a focal point, with Trump signaling a desire for increased protections and the imposition of substantial tariffs on Mexican imports.

• Canadian Concerns: An unnamed Canadian official expressed apprehension, noting that “China will be at the center of concerns for both the US and Canada”. Canada anticipates that any revamped USMCA could enforce stricter regional content rules, mandating higher North American content in manufactured goods to counteract Chinese competition (08:08).

• Impact on Canadian Economy: Vipal Monga highlighted the economic stakes, pointing out that approximately 78% of Canada’s exports are directed towards the U.S. A hypothetical 10% tariff could precipitate a recession in Canada, severely impacting sectors like automotive and energy. In response, Canada is employing a “Team Canada approach”, with diplomats and provincial leaders actively engaging with U.S. counterparts to advocate against punitive measures and emphasize the reciprocal harm tariffs could inflict on American consumers (09:35).

• Border Security and Immigration Pressures: The U.S.-Mexico border remains a critical area of focus. Mexico has reported a 74% decrease in illegal border crossings under the current administration, but fears that Trump’s policies might reverse these gains. Enhanced U.S. tariffs may compel Mexico to enforce more stringent border controls, potentially exacerbating migration flows and straining bilateral relations (10:31).

• Potential Migration to Canada: Vipal Monga revealed a surge in Americans seeking to migrate to Canada, driven by uncertainty over Trump’s potential policies. Canadian authorities, including the RCMP and Canadian Border Patrol, are preparing for a possible influx, though there are concerns about the capacity to manage a large-scale migration event (11:40).

The proactive measures by Canada and Mexico reflect their strategic efforts to mitigate the economic and social impacts of a protectionist U.S. stance, striving to maintain stability and robust trade relations in the face of potential policy shifts.

---

Market Highlights

The financial markets witnessed notable movements influenced by corporate developments and potential mergers.

Key Updates:

• Super Microcomputer’s Stock Surge: Shares of Super Microcomputer soared by over 30% in after-hours trading following the company’s submission of a plan to remain listed on the Nasdaq. This move comes after Super Microcomputer missed crucial deadlines for financial reporting, signaling potential stabilization and investor confidence in the company’s future prospects (12:36).

• Blackstone’s Potential Deal on Jersey Mike’s Subs: Private equity giant Blackstone is nearing an acquisition deal for Jersey Mike’s Subs, valuing the sandwich chain at approximately $8 billion. This deal, if successfully finalized, could be announced imminently, provided negotiations continue smoothly (12:36).

• Earnings Season Insights: As the earnings season approaches its conclusion, WSJ What’s News announced the release of a special bonus episode focusing on key themes from the latest financial results. Listeners are encouraged to tune in for in-depth analysis and expert commentary on the prevailing market trends (12:36).

These market movements highlight the dynamic nature of the financial sector, with significant investments and strategic decisions shaping the landscape for the upcoming quarter.

---

Concluding Remarks

The November 19, 2024, episode of WSJ What’s News delivered a comprehensive overview of pressing issues spanning antitrust enforcement, political transitions, international relations, and market dynamics. By integrating expert insights and on-the-ground reporting, the podcast provided listeners with a nuanced understanding of the factors influencing global and domestic landscapes as the political and economic year draws to a close.

---

For more detailed discussions and updates, listen to the full episode of WSJ What’s News.

Transcript

[Sam Schechner]

You can get the most important meal of the day any time of day. I'm Talking about the $5 big deal breakfast meal from Jack in the Box, available all day and all night. A breakfast Jack with a freshly cracked egg, a hash brown and French toast sticks for five bucks. Sounds good for breakfast, lunch and dinner at Jack. Every bite's a big deal. Order Jack's five dollar Big Deal Breakfast Meal now.

[Luke Vargas]

Top Biden officials ready a final antitrust salvo targeting Big Tech. Plus a court in Hong Kong hands down strict sentences in a case that crushed the city's pro democracy camp and will speak with Journal reporters in Canada and Mexico about the likely changes coming to those countries trade relations with the.

[Vipal Monga]

U.S. what the Trump administration wants to do is ensure that Canada and Mexico are not used as a backdoor to get tariffed goods, particularly from China into.

[Luke Vargas]

The U.S. it's Tuesday, November 19th. I'm Luke Vargas for the Wall Street Journal and here is the AM Edition of what's news, the top headlines and business stories moving your world today. With the clock ticking down before Inauguration Day, U.S. antitrust officials are preparing a final blitz against the tech industry involving more merger scrutiny alongside a potential investigation into microso. We report the Justice Department's next move in the antitrust case it won challenging Google's efforts to maintain a monopoly in search is also due tomorrow. Journal tech reporter Sam Schechner joins me now with more. Sam, what are we seeing here?

[Sam Schechner]

What we're seeing is that in the closing days of the Biden administration, they're pushing forward on what's been a pretty aggressive tech antitrust agenda. You mentioned the case against Google that the DOJ won back in August. That's about how Google has allegedly kept a monopoly in search. It's cash cow. And we're still waiting for the judge to decide what remedies it might order Google to undertake in order to fix the anti competitive practices they were found guilty of engaging in. According to a document that was seen by my colleague Dave Michaels, the DOJ is arguing that Google might have to divest its Chrome browser or Android mobile operating system in some circumstances. It would also be forced to stop paying Apple billions of dollars a year to make Google the search engine default on its Safari web browsers. But as you mentioned, there are other cases that the government is preparing to make.

[Luke Vargas]

Indeed. And we should add, Sam, that Google has said that spinning off Chrome and Android would harm the free products. And its VP of regulatory affairs said the government was putting its thumb on the scale in ways that could harm consumers, developers and American technological leadership. Separately, Microsoft declined to comment on the Federal Trade Commission laying the groundwork to open an investigation into Microsoft's cloud business. Suffice it to say, Sam, this is a lot of potential antitrust action coming in the waning days of an administration, and with little clarity about whether that action would continue beyond January.

[Sam Schechner]

Well, what we have is a Biden administration that has put in place some pretty strident figures when it comes to using the government's antitrust powers against big tech companies. The FTC chair Lina Khan, the DOJ antitrust chief Jonathan Cantor. Pretty clearly they're going to be replaced under a new administration, or at least that seems highly likely. Whether or not their crusade will change is another thing. On one hand, you have Trump saying that he's going to undo a lot of what the Biden administration has put in place. That being said, the first Trump administration was no friend necessarily to big tech. Indeed, the case that Google lost to the government back in August was one that the first Trump administration brought. Another wrinkle is that you have to distinguish between cases brought like the one the government is considering against Microsoft for its cloud business and merger control. Whether or not they approve mergers, Republicans have generally been more open to allowing big mergers. And so will that free up more deal making in the tech industry? Only time will tell.

[Luke Vargas]

That was Journal Tech reporter Sam Schechner. Sam, thanks.

[Sam Schechner]

Always a pleasure, Luke.

[Luke Vargas]

Meanwhile, President elect Trump plans to nominate former Wisconsin Representative Sean Duffy as Transportation secretary. Posting on Truth Social, Trump suggested that Duffey's tenure would include a push to rebuild highways, tunnels and other infrastructure and to end the diversity, equity and inclusion efforts for pilots and air traffic controllers. A House Ethics committee panel investigating former Florida Representative Matt Gaetz, Trump's pick for attorney general, is expected to meet tomorrow to discuss its next steps. That's as new details emerge about testimony given to the panel, including that a witness described seeing Gaetz have sex with a 17 year old girl in 2017 when he serving in Congress. That's according to the woman's lawyer, who said the woman and another witness also told the House panel that Gaetz had paid them for sex. Gaetz has long denied both allegations, and a Trump transition spokesman said he remains the right man for the job and that the allegations against Gaetz were baseless and intended to derail the second Trump administration. The House panel investigating Gates had expected to release a report on its findings last week, but didn't do so after Gaetz resigned from Congress to pursue the attorney general nomination. However, the report could still be released through a floor vote by the full house. And In Hong Kong, 45 ex lawmakers and activists have been sentenced to between four and 10 years in prison in the biggest national security case in the city under a Beijing imposed law that crushed Hong Kong's pro democracy movement. The defendants were tried for their roles in an unofficial primary election that prosecutors said was aimed at paralyzing Hong Kong's government. One of the organizers, college professor Benny Tighe, was handed the longest sentence of 10 years. Amelia Wong, the girlfriend of another defendant, spoke to reporters after the verdicts.

[Sam Schechner]

Of course it will silence more people because you see how a primary can be illegal and lead to 10 years of sentencing. So of course it will silence more.

[Luke Vargas]

Coming up, we'll unpack how Canada and Mexico are preparing for a more protectionist America and how the countries could navigate potential trade roadblocks laid down by Washington. That's after the break. What do Mattel, Banana Republic, Butcherbox, and Glossier all have in common? They power their businesses with Shopify. Shopify is the most innovative and scaled commerce platform on the planet that also happens to have the best converting checkout on the planet. And that's no industry secret. That's Shopify. Learn [e-mail] Enterprise as countries around the world ready themselves for what a second Trump presidency means for trade, security and international relations, America's two immediate neighbors are bracing for a more protectionist president. Our Daniel Bach spoke with Santiago Perez, the Journal's deputy Latin America editor in Mexico City, and Journal Canada reporter Vipal Manga to see how the countries are preparing for four more years of Trump.

[Santiago Perez]

Santiago, I want to start with you. The U.S. mexico, Canada trade agreement is up for review in 2026, and Trump has said he'll look for more protections for America. He's also threatened to slap steep tariffs on Mexican imports. How worried are Mexican officials?

[Unnamed Canadian Official]

Well, there's a significant degree of concern, of course, but they believe that China will be at the center of concerns for both the US And Canada. And they also believe that if the US Is to create a competitive trade bloc against China, the option would be to have a competitive usmca. So essentially, we could see more regional content rules, which are the rules that, you know, determine how manufacturing is done in the U.S. mexico, and Canada and how much North American content these goods must have.

[Vipal Monga]

The thinking that I'm hearing is that what the Trump administration wants to do is ensure that Canada and Mexico are not used as a backdoor to get tariffed goods, particularly from China, into the US So it seems that any agreement that would be signed with those USMCA countries would require them to impose tariffs on all non signatory countries, which could include European companies, which would almost certainly include China, to close those back doors. That is a risk to a country like Canada, which is a major trading nation and depends on trade relationships with Europe and Asian countries as well. So that might be a bitter pill that they would have to swallow if they want to make a deal with.

[Santiago Perez]

The U.S. but the alternative would also be painful, right? Vipal, do you have a sense of how officials in Ottawa are bracing for this?

[Vipal Monga]

So about 78% of Canada's exports go directly to the U.S. a 10% tariff across the board on all those would send Canada into a recession. Clearly, auto sector is a major part of the exports that Canada sends, but it's not the only thing. There's also things like oil and gas and Canada's hoping for some exemptions. The other thing that Canada is doing to prepare is they have this thing that they call the Team Canada approach where they send their US Ambassador, premiers from the provinces, cabinet ministers to meet with governors and people in Washington and the Trump team to sort of reiterate how important Canada is and sort of send the message that that tariffs would also hurt U.S. consumers.

[Santiago Perez]

Santiago border security a major element of the U.S. mexico relationship. Will they be able to put pressure on Mexico to stem the flow of immigrants? And what is the concern there for the Sheinbaum administration?

[Unnamed Canadian Official]

Yes, for sure they will. Mexican officials now say that the border enforcement policies implemented by Schoenbound's predecessor, Nationalist President Andres Manuel Lopez Obrador, is working now. Illegal border crossings have dropped by 74% so far this year at the U. S. Mexico border. The problem is that the Trump administration is also likely to remove some of the and eliminate some of the policies implemented by the Biden government. And that may create more incentives actually for migrants to rush to the border, especially before he takes office. He will likely increase pressure, possibly through tariffs, to have the Mexican government implement tougher policies at its own southern border with Guatemala to prevent the migrants from crossing in.

[Santiago Perez]

Lastly, Veepol, a story that always gets play in Canada around elections, as it did following Trump's victory in 2016, is people who don't like his vision of America saying they're going to migrate north of the border. How do Canadians see this and is that actually a thing?

[Vipal Monga]

So I've talked to a few immigration lawyers in the past week or so and they are reporting more calls from Americans trying to move to Canada than than they've ever had before. It's not that easy to get into Canada, and I think that the expectation is that it's a wave of concern that might ebb in the next few weeks. Of more concern to them is a potential flood of migrants leaving the US and going north to Canada. The Canadian law enforcement forces, the RCMP and the Canadian Border Patrol are preparing for what they expect to be a major rush to Canadian borders in the next weeks and months. It's unclear that the Canadian system can handle the influx, so it is major worry.

[Santiago Perez]

I've been speaking to Santiago Perez, the Journal's deputy Latin America editor in Mexico City, and Vipal Monga, the Journal's reporter in Toronto. Santiago Vipol, thank you so much.

[Unnamed Canadian Official]

Both thank you.

[Vipal Monga]

Thanks.

[Luke Vargas]

And turning quickly to markets now, shares of Super Microcomputer have jumped more than 30% in off hours trading after it submitted a plan to allow it to keep trading on the nasdaq. The AI server maker had missed deadlines for providing financial reports to investors. And shares of private equity company Blackstone will also be in focus following a Journal report that it's nearing a deal for Jersey Mike subs that would value the closely held sandwich chain at around $8 billion. The deal could be announced soon, assuming talks don't fall apart. And if you're wondering what to make of this earnings season as it draws to a close, we'll be releasing a special bonus episode of the POD tomorrow looking at some of the big themes from the latest round of financial results. Check it out tomorrow afternoon between our YouTub usual AM and PM editions and let us know what you think. And that's it for what's news for Tuesday morning. Today's show was produced by Kate Bullivant. Our supervising producer was Daniel Bach. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.