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Good Morning. In today’s edition, a group of state attorneys general prepares its own antitrust investigation of tech companies, looking for clues to how WeWork’s parent might perform as a public company, and PG&E’s shares drop after a judge decides to allow a new civil trial related to a deadly wildfire. |
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A group of states is preparing to proceed with a joint antitrust investigation of big technology companies. The effort involving state attorneys general is expected to be formally launched as soon as next month, and is likely to focus on whether a handful of dominant technology platforms use their marketplace powers to stifle competition. The specific number of states that might join the investigation couldn’t be learned, though one person familiar with the effort said up to 20 or more might participate. Alphabet’s Google, Facebook, Amazon and Apple, likely to be a focus of the probe, all declined to comment. The new investigation could dovetail with plans by the Justice Department, which last month said it was opening an antitrust review focusing on tech companies. In addition to the Justice Department probe, the Federal Trade Commission is investigating antitrust concerns at Facebook, as well as competitive issues elsewhere in the industry. |
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| Do you support the decision from the attorneys general to investigate big tech in tandem with the Justice Department? Join the conversation. |
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The rocky experience of a WeWork rival that went public nearly 20 years ago is being looked at by investors and analysts for insight into what might lie ahead for the New York-based office-space provider, which last week released papers for its planned IPO. Unlike other startups that have recently gone public, WeWork parent We Co. already has a public competitor offering a similar business model: IWG. The Switzerland-based company also has roughly the same size footprint as WeWork. Some think that IWG’s travails during the economic downturn of the early 2000s, when its U.S. unit filed for bankruptcy, are an ominous sign for WeWork when the U.S. bond market and slowing global growth may be signaling the possibility of a U.S. recession. The IWG comparison also raises questions about whether We is worth what its backers say. IWG, which has been profitable for years, has a market capitalization roughly one-tenth the $47 billion private valuation of We, which has reported big losses. |
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From reporter Konrad Putzier: WeWork’s parent will have to convince investors that it is a different kind of business. Can it become the Facebook of buildings, a membership network connecting hundreds of millions of people through shared offices, apartments, schools and gyms? “We estimate a total opportunity of $3.0 trillion,” the company wrote in a public filing. It will also need to convince investors that it can shake off its operating-loss habit before money runs out. |
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PG&E shares plunged after a judge allowed a trial on whether its equipment caused the second-most destructive wildfire in California’s history. That case could add billions of dollars to the liabilities the bankrupt company faces. California fire investigators concluded in January that PG&E equipment didn’t cause the Tubbs fire, the deadliest in a series of wildfires that burned the state’s wine country in 2017. However, attorneys representing fire victims strongly dispute that finding and persuaded the judge overseeing PG&E’s chapter 11 proceeding to permit a state civil trial on the issue. PG&E shares Monday closed down more than 25%, at a seven-month low of $10.67. Citi analyst Praful Mehta cut his “buy” rating on PG&E, estimating that the fire could add $15 billion to the company’s liability costs. |
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The merger of Viacom and CBS will be lucrative for the top executives of both companies. Viacom Chief Executive Bob Bakish—who will become president and CEO of the combined company, ViacomCBS—has signed a new contract that lists salary, bonuses and other incentives valued at about $31 million a year, roughly 55% higher than his total compensation in the most recent fiscal year. The pay package would make Mr. Bakish the 12th-highest-paid CEO in the S&P 500, where median total pay last year was about $12.5 million. Acting CBS Chief Executive Joe Ianniello, who will be chairman and CEO of CBS, reporting to Mr. Bakish, will receive a payout of about $70 million when the deal closes. |
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Cereal makers, under competitive pressure, are struggling to improve sales of puffed rice, wheat flakes and oat clusters that were once a standard part of Americans’ morning routines. U.S. consumers purchased about $8.49 billion of cold cereal last year, according to market-research firm IRI, down 6% from five years earlier. Sales of hot cereals, a smaller category, grew 1% over the same period. General Mills and its peers have previously tried to turn around cereal’s fortunes. They renewed focus on sugary options and pitched cereal for dinner or as a late-night snack. Now, companies say they are stepping up spending by retooling marketing campaigns, increasing product investment and developing new flavors to try to keep shoppers engaged. |
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“Adult recess” is booming, because being a grown-up is hard. | | A game of red rover. PHOTO: EVY MAGES/THE WASHINGTON POST/GETTY IMAGES |
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Adults are reliving their playground memories—good and bad. Athleticism is nice, but not totally necessary. In Seattle’s Cal Anderson Park, for example, about 1,000 people turned out one Saturday this month for an adult recess that included kickball, hopscotch and tetherball, along with chicken nuggets and grilled-cheese sandwiches. |
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What We’re Following In Washington: The Trump administration agreed to allow some U.S. companies another 90 days to continue doing business with China’s Huawei. The president called for the Federal Reserve to sharply cut interest rates, and aides said they are also examining other policies to bolster the economy. Large-Craft Warning: The U.S. has warned Greece against hosting the Iranian tanker released by Gibraltar over the weekend, as it continues efforts to block the vessel. Clinic Funding: Planned Parenthood Federation of America said it would withdraw from the federal Title X family-planning program rather than comply with a new rule preventing clinics from referring patients for abortions. Hong Kong: Twitter and Facebook took down accounts they say are suspected of having links to the Chinese government and were trying to undermine antigovernment protests in Hong Kong. A large peaceful march in the city over the weekend has raised pressure on government officials to find a political solution. A member of the British consular staff in the city has been detained in mainland China after a trip to Shenzhen, just across the border from Hong Kong. |
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Ousted: Hugh Hurwitz, the acting head of the Federal Bureau of Prisons, was removed from his post, continuing the fallout over the suicide of disgraced financier Jeffrey Epstein in a New York detention facility. Suspicious Silence: The number of Russian nuclear-monitoring stations that have gone silent has doubled to four, heightening concerns that Moscow could be trying to hide evidence from an explosion at a missile-test site. Off the Force: The NYPD officer who faced disciplinary charges over the 2014 death of Eric Garner, which sparked nationwide protests, was fired. |
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Trending Stories at WSJ.com The Business Roundtable—whose members include the CEOs of dozens of the biggest U.S. companies—changed its statement of the “purpose of a corporation,” chipping away at the notion that decision-making should revolve around what is best for shareholders. (Read) A possible economic warning sign: RV shipments are slipping. (Read) It is peak shark season off Cape Cod, Mass., and the creatures are an inescapable presence this summer. (Read) |
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What Else We’re Reading Apple has committed more than $6 billion for original shows and movies ahead of the launch of its streaming service. (Financial Times) Huawei founder Ren Zhengfei warned in an internal memo the telecom company is at a “live or die moment” and advised underutilized employees to form “commando squads” to explore new projects. (Bloomberg) The 1619 Project examines the legacy of American slavery on the 400th anniversary of its beginning, when a ship carrying more than 20 enslaved Africans arrived in the British colony of Virginia in August 1619. (New York Times) |
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Today’s Question and Answer In response to our question about who should shoulder the blame for a slowing U.S. economy: Ben Richmond, New York It is irresponsible to blame Jerome Powell for economic problems, as he raised interest rates as the economy was growing, continuing the Fed’s trajectory. President Trump’s actions have led to uncertainty: pursuing tariffs harmful to economic growth and pushing a tax cut that gave the economy a sugar high but increased budget deficits, making it more difficult to alleviate economic pain when the next recession inevitably comes. Rebecca Wichern, Delaware The question is binary but the issue is multifaceted. The Fed refused to raise rates for eight years while conducting a massive experiment in creative money-manufacturing. It then shocked an economy that showed signs of life by sharply reversing course in 2018. Both tracks were extreme, appearing to be politically motivated. The president is leading a cold war with China over our national security, our economy and our world leadership. Is he doing it perfectly? No. Could our odds of winning improve if Congress and the New York Times tried to support this effort? Yes. Local governments face unprecedented pressures from population explosions that we cannot fund to mandated levels, putting crushing loads on taxpayers. Much of the TV media has turned into opinion shows focusing on scenarios of gloom. Fear sells. Many areas of the world have become flashpoints where war could break out. I’m impressed we’re doing as well as we are. Michael Stejskal, Texas I’m not sure we can attribute blame to President Trump or the Fed. It seems to be a more general cyclical nature to me. The question at hand should be less about who is to blame and the timing of the recession, and more about how do we best prepare for it? America’s obsession with Keynesian economic principles and debt (personal, corporate and government) is concerning. Moreover, I believe any recession occurring during this tumultuous political climate will be harder to recover from: Where will the consensus and game plan on how to resolve it come from? Expansionary monetary policy has its limits. John M. Smith, Texas The apparent, and perhaps temporary, slowing of our economy need not be laid entirely at the feet of either President Trump or Jerome Powell. With a large percentage of our trading partners experiencing negative interest rates and commodity prices waning, something different and perhaps sinister is happening. A large dose of fiscal stimulus may be just the ticket—and financed at the lowest rates in our history. Eugene Ziegler, Florida Perhaps it is us, who are maxed out on our credit cards, mortgages, college debt and auto loans. Question for tomorrow’s 10-Point: The Business Roundtable changed its statement about the purpose of a corporation, saying a company’s leaders should take into account not only shareholders but also employees, customers and society. What do you think the “purpose of a corporation” should be? Email us your comments, which we may edit before publication, to 10point@wsj.com, and make sure to include your first and last name and location. |
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| The 10-Point was the name given to the news column that runs on the front page of The Wall Street Journal. Today’s newsletter was curated and edited by Eleanor Miller in New York and Keith Collins in Hong Kong in collaboration with Editor in Chief Matt Murray. Let us know what you think by replying to this email. The 10-Point is a WSJ member benefit. If someone forwarded you this email, we invite you to join us and enjoy the full breadth of scoops, analysis and great storytelling from our journalists around the globe. |
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