D.C. Gives Tech Giants an Earful

Washington takes aim at tech giants

Just about every day now in D.C., lawmakers seem eager to show their might against Big Tech. Yesterday gave them the opportunity to flex their muscles in two high-profile events at the Senate: the confirmation hearing for Lina Khan, a “progressive trustbuster” who was nominated for a seat at the F.T.C., and a judiciary committee hearing about Apple and Google’s control over their app stores. For good measure, a group of seven House Republicans yesterday announced a pledge to no longer take donations from major tech companies.

Here’s what you may have missed on a busy, and bruising, day for Big Tech — and what it means.

Lina Khan said she’d bring her tough-on-tech stance to the F.T.C. Ms. Khan referenced a “whole range of potential risks” she sees in the tech giants, including how they could parlay their dominance in one market into adjacent spaces. She said that when it comes to online advertising, which is fueled by consumer data, “companies may think it’s worth the cost of doing business to risk violating privacy laws.” The Democratic nominee received little pushback on her views during questioning.

At the other hearing, companies complained about Apple and Google. Spotify, which is suing Apple in Europe, said the company blocked it from telling customers that they could find cheaper subscription prices outside its iPhone app. Match Group testified that it now paid nearly $500 million a year to Apple and Google in app store fees, its single largest expense. Tile said Apple boxed out its products and then copied them, referencing the AirTag product Apple unveiled Tuesday.

Google made a questionable call. Match Group’s chief legal officer, Jared Sine, said Google had called the company the night before, after its planned testimony became public, wondering why the comments appeared to be tougher than what Match had said on a recent earnings call. “It looks like a threat, it talks like a threat, it’s a threat,” Senator Richard Blumenthal said. Wilson White, a government affairs official at Google, told senators that Match was an important partner and that Google would never aim to intimidate the company.

What happens next? The events were notable for the bipartisan distaste lawmakers showed for Big Tech. The parties have different reasons for being unhappy with social and search platforms, with Republicans focusing on claims of censorship and Democrats on misinformation, but their feelings appear more aligned on potential anti-competitive behavior by Big Tech gatekeepers in areas like app stores. Will this manifest itself into law? Senator Amy Klobuchar has already drafted a sweeping antitrust bill, but a more targeted piece of legislation focusing on app store conduct could go through more easily.

• In a trial next month, Apple is set to face off against Epic Games, which is suing Apple over the payment terms for its iPhone app, potentially providing more fodder for the critics of Big Tech who are looking to rein it in.

HERE’S WHAT’S HAPPENING

The E.U. plans to clamp down on A.I. Draft rules would set tight limits on the use of the technology, including in self-driving cars, hiring decisions, bank lending, school enrollment and more. It’s one of the most ambitious efforts to regulate A.I. before it becomes mainstream.

India suffers a surge in Covid-19 cases. The country recorded 312,731 new infections in a 24-hour period, the highest one-day level since the onset of the pandemic, raising concerns about its ability to control the coronavirus. Separately, Pfizer said it had identified counterfeit versions of its vaccine in Mexico and Poland.

Credit Suisse is raising nearly $2 billion after two trading scandals. The Swiss bank has been forced to rebuild its balance sheet following the collapse of Greensill Capital and the meltdown of Archegos. Meanwhile, it faces a new inquiry by Switzerland’s financial regulator over potential risk-management faults in its handling of Archegos.

Janet Yellen calls on corporate America to help the U.S. reach its climate goals. The Treasury secretary said the private sector would bear much of the burden of greening the American economy, and said the Biden administration was devising a financial reporting framework to make it easier to invest in assets like green bonds.

The $100 million deli is delisted. Hometown International, which gained an astronomical market cap despite owning one New Jersey deli, was barred from the OTCQB over-the-counter market for failing to comply with listing rules. The investor David Einhorn had flagged the penny stock’s puzzling market cap as a sign of a “fractured” market.

Is the SPAC boom over?

Around 100 blank-check funds went public each month in the first quarter of the year. So far in April, you could count the number of those I.P.O.s on two hands. The sudden drop in debuts of special purpose acquisition companies, or SPACs, has market watchers asking whether this is a pause for breath — or a more permanent plunge in popularity.

The slowdown coincides with increased S.E.C. scrutiny. The securities regulator issued a statement at the end of last month highlighting “the key considerations related to the unique risks and challenges of a private company entering the public markets through a merger with a SPAC.” Not long after, another note offered “guidance” on some of the trickier accounting issues related to blank-check funds. Neither statement suggested any rule changes, but with Gary Gensler, the S.E.C.’s new enforcement-minded chairman, taking over this week, SPAC sponsors have slowed their roll.

SPACs’ recent performance has also been lousy. Analysts at Goldman Sachs note that a stock price index of 200 SPACs (pre- and post-merger) has badly underperformed the market this year, down 17 percent versus a 10 percent gain in the S&P 500. SPACs have also lagged an index of unprofitable tech stocks, suggesting that investors have particular concerns about SPACs, since plenty of them have acquired other unprofitable tech companies.

But we haven’t heard the last of SPACs. The amount of money these shell companies have raised to date could drive $900 billion in M.&A. activity over the next two years, according to the Goldman analysts. And more than 25 SPACs filed I.P.O. registration documents this month, per SPAC Research, adding to a pipeline of more than 200 others that have disclosed plans to go public but haven’t yet sealed the deal, for whatever reason.

“I needed to meet with my manager tomorrow, this isn’t convenient.”

— Jonathan Frostick, a program manager at HSBC, recalled his first thoughts upon having a heart attack. A LinkedIn post he wrote from his hospital bed about reassessing his approach to life and work has been shared more than 200,000 times.

What went wrong with the Super League

The Super League, the doomed effort to create an exclusive new tournament for Europe’s top soccer clubs, was widely criticized — by players, coaches, fans and politicians — as an effort to import American-style competition and economics. Frank McCourt, the American owner of the storied French soccer team Olympique de Marseille, told DealBook that the league — which he publicly denounced — never made sense.

The Super League would have created a closed competition with guaranteed places for 15 clubs, and would have introduced revenue sharing and spending caps. That more closely resembles U.S. leagues like the N.F.L. than the more freewheeling system of European soccer.

“It felt like imposing an American flavor on a different culture,” said Mr. McCourt, who previously owned the L.A. Dodgers before buying control of Marseille (l’OM to its fans) in 2016. JPMorgan Chase’s role in financing the Super League bolstered this notion, though its architect was Florentino Pérez, the Spanish president of Real Madrid.

For all their money and brand clout, the clubs didn’t take into account what fans wanted, which became clear when public outcry prompted many founding members to drop out. “There is no football without fans,” Mr. McCourt said. “What is their perspective?” (Fan demands are something that he knows well: He met with several earlier this year after supporters stormed Marseille’s training grounds to protest the club’s performance.)

• Mr. McCourt said he favors plans by UEFA, the European soccer overseer, to expand its Champions League tournament, a much-debated move that gained new urgency as the Super League became a threat. “There’s a process that UEFA is going through with all of the stakeholders,” he said, contrasting the approach with the more limited decision-making behind the Super League.

• As Rory Smith of The Times put it: “It was all, in some way, unserious: There was a cobbled-together website, an uninspiring logo and an American banker, but no broadcaster, no suite of sponsors and, in the end, no commitment to see any of it through.”

THE SPEED READ

Deals

• U.S. start-ups raised $69 billion in the first quarter, 40 percent more than the previous quarterly record; and private equity firms are more willing to fund mega-leveraged buyouts. (WSJ)

• Shares in UiPath rose 23 percent in their trading debut, in one of the biggest public offerings by a software company on record. (Bloomberg)

• Maybe the day traders were right: Hertz unveiled a bankruptcy reorganization plan that provides some value to pre-Chapter-11 stockholders. (MarketWatch)

Politics and policy

• The White House is weighing options for overhauling opportunity zones, a Trump-era tax break meant to drive investment in poorer areas — but largely used for development in wealthier ones. (NYT)

• The S.E.C. is reportedly weighing stricter disclosure rules for investment firms, which may require more frequent reports on a wider variety of holdings. (Bloomberg)

Tech

• A jury ruled that Intel did not infringe patents held by an affiliate of the investment firm Fortress; at stake was $3 billion in requested damages. (Reuters)

• The electric vehicle maker Arrival says it can replace huge assembly lines with much smaller factories. (NYT)

• Apple reportedly plans to expand its ad business — just as it rolls out privacy rules for its devices that would hurt rivals like Facebook. (FT)

Best of the rest

• Nike’s contract with the estate of Kobe Bryant has ended. What happens next is complicated. (NYT)

• “Welcome to the YOLO Economy” (NYT)

• The hottest investment in commercial real estate right now: the humble car wash. (Commercial Observer)

We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.