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How the Kremlin Is Forcing Ukrainians to Adopt Russian Life
by Aurelia Butler 30 July 2022, 17:50
In Russian-occupied regions in Ukraine, local leaders are forcing civilians to accept Russian rule. Next come sham elections that would formalize Vladimir V. Putin’s claim that they are Russian territories.They have handed out Russian passports, cellphone numbers and set-top boxes for watching Russian television. They have replaced Ukrainian currency with the ruble, rerouted the internet through Russian servers and arrested hundreds who have resisted assimilation.In ways big and small, the occupying authorities on territory seized by Moscow’s forces are using fear and indoctrination to compel Ukrainians to adopt a Russian way of life. “We are one people,” blue-white-and-red billboards say. “We are with Russia.”Now comes the next act in President Vladimir V. Putin’s 21st-century version of a war of conquest: the grass-roots “referendum.”Russia-appointed administrators in towns, villages and cities like Kherson in Ukraine’s south are setting the stage for a vote as early as September that the Kremlin will present as a popular desire in the region to become part of Russia. They are recruiting pro-Russia locals for new “election commissions” and promoting to Ukrainian civilians the putative benefits of joining their country; they are even reportedly printing the ballots already.Any referendum would be totally illegitimate, Ukrainian and Western officials say, but it would carry ominous consequences. Analysts both in Moscow and Ukraine expect that it would serve as a prelude to Mr. Putin’s officially declaring the conquered area to be Russian territory, protected by Russian nuclear weapons — making future attempts by Kyiv to drive out Russian forces potentially much more costly.Annexation would also represent Europe’s biggest territorial expansion by force since World War II, affecting an area several times larger than Crimea, the Ukrainian peninsula that Mr. Putin took over in 2014.In a photograph taken during a visit organized by the Russian military, a woman applied for Russian citizenship and a Russian passport in July in Melitopol, Ukraine.Sergei Ilnitsky/EPA, via ShutterstockThe prospect of another annexation has affected the military timetable as well, putting pressure on Kyiv to try a risky counteroffensive sooner, rather than waiting for more long-range Western weapons to arrive that would raise the chances of success.“Carrying out a referendum is not hard at all,” Vladimir Konstantinov, the speaker of the Russian-imposed Crimean Parliament, said in a phone interview this week. “They will ask: ‘Take us under your guardianship, under your development, under your security.’”Mr. Konstantinov, a longtime pro-Russia politician in Crimea, sat next to Mr. Putin at the Kremlin when the Russian president signed the document annexing the peninsula to Russia. He also helped organize the Crimean “referendum” in which 97 percent voted in favor of joining Russia — a result widely rejected by the international community as a sham.Our Coverage of the Russia-Ukraine WarGrain Blockade: A breakthrough deal aims to lift a Russian blockade on Ukrainian grain shipments. But Ukrainian farmers who have been living under the risk of missile attacks are skeptical the agreement will hold.In the South: As Ukraine lays the groundwork for a counteroffensive to retake Kherson, Russia is racing to bolster its troops in the region.Economic Havoc: As food, energy and commodity prices continue to climb around the world, few countries are feeling the bite as much as Ukraine.Explosion at a Prison: A blast at a Russian-held prison in eastern Ukraine killed at least 50 captured Ukrainian fighters. With no clarity on what happened, each country is blaming the other.Now, Mr. Konstantinov said, he is in constant touch with the Russian-imposed occupying authorities in the neighboring Kherson region, which Russian troops captured early in the war. He said that the authorities had told him a few days ago that they had started printing ballots, with the aim of holding a vote in September.Kherson is one of four regions in which officials are signaling planned referendums, along with Zaporizhzhia in the south and Luhansk and Donetsk in the east. While the Kremlin claims it will be up to the area’s residents to “determine their own future,” Mr. Putin last month hinted he expected to annex the regions outright: he compared the war in Ukraine with Peter the Great’s wars of conquest in the 18th century and said that, like the Russian czar, “it has also fallen to us to return” lost Russian territory.At the same time, the Kremlin appears to be keeping its options open by offering few specifics. Aleksei Chesnakov, a Moscow political consultant who has advised the Kremlin on Ukraine policy, said Moscow viewed referendums on joining Russia as its “base scenario” — though preparations for a potential vote were not yet complete. He declined to say whether he was involved in the process himself.Ukrainian troops fired on a Russian target last month in the Donetsk region.Tyler Hicks/The New York Times“The referendum scenario looks to be realistic and the priority in the absence of signals from Kyiv about readiness for negotiations on a settlement,” Mr. Chesnakov said in a written response to questions. “The legal and political vacuum, of course, needs to be filled.”As a result, a scramble to mobilize the residents of Russian-occupied territories for a referendum is increasingly visible on the ground — portrayed as the initiative of local leaders.The Russian-appointed authorities of the Zaporizhzhia and Kherson regions, for instance, announced this week that they were forming “election commissions” to prepare for referendums, which one official said could happen on Sept. 11 — a day when local and regional elections are scheduled to be held across Russia.The announcement invited residents to apply to join the election commission by submitting a passport copy, education records and two I.D.-size photographs.Officials are accompanying preparations for a vote with an intensified propaganda campaign — priming both the area’s residents as well as the domestic audience in Russia for a looming annexation. A new pro-Russian newspaper in the Zaporizhzhia region titled its second issue last week with the headline: “The referendum will be!” On the marquee weekly news show on Russian state television last Sunday, a report promised that “everything is being done to ensure that Kherson returns to its historical homeland as soon as possible.”“Russia is beginning to roll out a version of what you could call an annexation playbook,” John Kirby, the spokesman for the U.S. National Security Council, said this month, comparing the referendum preparations with the Kremlin’s moves in 2014 to try to justify its annexation of Crimea. “Annexation by force will be a gross violation of the U.N. Charter and we will not allow it to go unchallenged or unpunished.”In Kyiv, Ukraine’s capital, officials say any referendum on merging with Russia or forming a Russian client state in occupied areas would be illegal, riddled with fraud and do nothing to legitimize land seizures.“Together With Russia,” a billboard proclaimed in Crimea before a 2014 referendum on joining the Russian Federation, which was widely rejected by the West as a sham.Sergey Ponomarev for The New York TimesFor Ukrainian civilians, the occupation has been accompanied by myriad hardships, including shortages of cash and medicine — a situation the Russians try to exploit to win allegiance from locals by distributing “humanitarian aid.”Those seeking a sense of normalcy are being incentivized to apply for a Russian passport, which is now required for things like registering a motor vehicle or certain types of businesses; newborns and orphans are automatically registered as Russian citizens.“There’s no money in Kherson, there’s no work in Kherson,” said Andrei, 33, who worked in the service department of a car dealership in the city before the war. He left his home in the city with his wife and small child in early July and moved to western Ukraine.“Kherson has returned to the 1990s when only vodka, beer and cigarettes were for sale,” he said.After taking control in the Kherson and Zaporizhzhia regions, Russian forces sought out pro-Kremlin Ukrainian officials and installed them in government positions.At the same time, they engaged in a continuing campaign to stifle dissent that included abducting, torturing and executing political and cultural leaders who were deemed a threat, according to witnesses interviewed by The New York Times, Western and Ukrainian officials, and independent humanitarian groups like Human Rights Watch.Russian occupiers cut off access to Ukrainian cellular service, and limited the availability of YouTube and a popular messaging app, Viber. They introduced the ruble and started changing the school curriculum to the Russian one — which increasingly seeks to indoctrinate children with Mr. Putin’s worldview.A top priority appears to have been to get locals watching Russian television: Russian state broadcasting employees in Crimea were deployed to Kherson to start a news show called “Kherson and Zaporizhzhia 24,” and set-top boxes giving access to the Russian airwaves were distributed for free — or even delivered to residents not able to pick them up in person.Ihor Kolykhaiev, the mayor of Kherson, at his office in April 2021.Brendan Hoffman for The New York TimesIn an interview late last month, Ihor Kolykhaiev, the mayor of the city of Kherson since 2020, said the Russian propaganda, coupled with the feeling of being abandoned by the government in Kyiv, was slowly succeeding in changing the perceptions of some residents who have stayed behind — mainly pensioners and people with low incomes.“I think that something is changing in relationships, probably in people’s habits,” he said, estimating that 5 to 10 percent of his constituents had changed their mind because of the propaganda.“This is an irreversible process that will happen in the future,” he added. “And that’s what I’m really worried about. Then it will be almost impossible to restore it.”Mr. Kolykhaiev spoke in a video interview from a makeshift office in Kherson. Days later, his assistant announced he had been abducted by pro-Russian occupying forces. As of Friday, he had not been heard from.Mr. Putin has referred to Kherson and other parts of Ukraine’s southeast as Novorossiya, or New Russia — the region’s name after it was conquered by Catherine the Great in the 18th century and became part of the Russian Empire. In recent years, nostalgia in the region for the Soviet past and skepticism of the pro-Western government in Kyiv still lingered among older generations, even as the region was forging a new Ukrainian identity.Ukrainian flags and a banner that reads, “Kherson is Ukraine,” during a rally in March against Russian occupation in Kherson.Olexandr Chornyi/Associated PressEarly in the occupation this spring, residents of Kherson gathered repeatedly for large, boisterous protests to challenge Russian troops even if they provoked gunfire in response. This open confrontation has largely ended, according to a 30-year-old lifelong Kherson resident, Ivan, who remains in the city and asked that his last name be withheld because of the risks of speaking out publicly.“As soon as there is a large gathering of people, soldiers appear immediately,” he said by phone. “It’s really life-threatening at this point.”But signs of resistance are evident, residents said.“Our people go out at night and paint Ukrainian flags,” said another man, Andrei. “In yellow and blue letters they paint, ‘We believe in the Ukrainian Armed Forces.’”Andrew E. Kramer More
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Russian National Charged With Spreading Propaganda Through U.S. Groups
by Aurelia Butler 29 July 2022, 23:33
Federal authorities say the man recruited several American political groups and used them to sow discord and interfere with elections.MIAMI — The Russian man with a trim beard and patterned T-shirt appeared in a Florida political group’s YouTube livestream in March, less than three weeks after his country had invaded Ukraine, and falsely claimed that what had happened was not an invasion.“I would like to address the free people around the world to tell you that Western propaganda is lying when they say that Russia invaded Ukraine,” he said through an interpreter.His name was Aleksandr Viktorovich Ionov, and he described himself as a “human rights activist.”But federal authorities say he was working for the Russian government, orchestrating a yearslong influence campaign to use American political groups to spread Russian propaganda and interfere with U.S. elections. On Friday, the Justice Department revealed that it had charged Mr. Ionov with conspiring to have American citizens act as illegal agents of the Russian government.Mr. Ionov, 32, who lives in Moscow and is not in custody, is accused of recruiting three political groups in Florida, Georgia and California from December 2014 through March, providing them with financial support and directing them to publish Russian propaganda. On Friday, the Treasury Department imposed sanctions against him.David Walker, the top agent in the F.B.I.’s Tampa field office, called the allegations “some of the most egregious and blatant violations we’ve seen by the Russian government in order to destabilize and undermine trust in American democracy.”In 2017 and 2019, Mr. Ionov supported the campaigns of two candidates for local office in St. Petersburg, Fla., where one of the American political groups was based, according to a 24-page indictment. He wrote to a Russian official in 2019 that he had been “consulting every week” on one of the campaigns, the indictment said.“Our election campaign is kind of unique,” a Russian intelligence officer wrote to Mr. Ionov, adding, “Are we the first in history?” Mr. Ionov later referred to the candidate, who was not named in the indictment, as the one “whom we supervise.”In 2016, according to the indictment, Mr. Ionov paid for the St. Petersburg group to conduct a four-city protest tour supporting a “Petition on Crime of Genocide Against African People in the United States,” which the group had previously submitted to the United Nations at his direction.“The goal is to heighten grievances,” Peter Strzok, a former top F.B.I. counterintelligence official, said of the sort of behavior Mr. Ionov is accused of carrying out. “They just want to fund opposing forces. It’s a means to encourage social division at a low cost. The goal is to create strife and division.”Members of the Uhuru Movement spoke to reporters in Florida on Friday. Martha Asencio-Rhine/Tampa Bay Times, via Associated PressThe Russian government has a long history of trying to sow division in the U.S., in particular during the 2016 presidential campaign. Mr. Strzok said the Russians were known to plant stories with fringe groups in an effort to introduce disinformation into the media ecosystem.Federal investigators described Mr. Ionov as the founder and president of the Anti-Globalization Movement of Russia and said it was funded by the Russian government. They said he worked with at least three Russian officials and in conjunction with the F.S.B., a Russian intelligence agency.The indictment issued on Friday did not name the U.S. political groups, their leaders or the St. Petersburg candidates, who were identified only as Unindicted Co-conspirator 3 and Unindicted Co-conspirator 4. And Mr. Ionov is the only person who has been charged in the case.But leaders of the Uhuru Movement, which is based in St. Petersburg and part of the African People’s Socialist Party, said that their office and chairman’s home had been raided by federal agents on Friday morning as part of the investigation.“They handcuffed me and my wife,” the chairman, Omali Yeshitela, said on Facebook Live from outside the group’s new headquarters in St. Louis. He said he did not take Russian government money but would not be “morally opposed” to accepting funds from Russians or “anyone else who wants to support the struggles for Black people.”The indictment said that Mr. Ionov paid for the founder and chairman of the St. Petersburg group — identified as Unindicted Co-conspirator 1 — to travel to Moscow in 2015. Upon his return, the indictment said, the chairman said in emails with other group leaders that Mr. Ionov wanted the group to be “an instrument” of the Russian government, which did not “disturb us.”“Yes, I have been to Russia,” Mr. Yeshitela said in his Facebook Live appearance on Friday, without addressing when he went and who paid for his trip. He added that he has also been to other countries, including South Africa and Nicaragua.In St. Petersburg, Akilé Anai of the Uhuru Movement said in a news conference that federal authorities had seized her car and other personal property.She called the investigation an attack on the Uhuru Movement, which has long been a presence in St. Petersburg but has had little success in local politics.“We can have relationships with whoever we want to,” she said, adding that the Uhuru Movement has made no secret of backing Russia in the war in Ukraine. “We are in support of Russia.”Ms. Anai ran for the City Council in 2017 and 2019 as Eritha “Akilé” Cainion. She received about 18 percent of vote in the 2019 runoff election.Mr. Ionov is also accused of directing an unidentified political group in Sacramento that pushed for California’s secession from the United States. The indictment said that he helped fund a 2018 protest in the State Capitol and encouraged the group’s leader to try to get into the governor’s office.And Mr. Ionov is accused of directing an unidentified political group in Atlanta, paying for its members to travel to San Francisco this year to protest at the headquarters of a social media company that restricted pro-Russian posts about the invasion of Ukraine. Mr. Ionov even provided designs for protest signs, according to the indictment.After Russia invaded Ukraine in February, the indictment said that Mr. Ionov told his Russian intelligence associates that he had asked the St. Petersburg group to support Russia in the “information war unleashed” by the West.Adam Goldman More
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Targeting ‘Woke Capital’
by Aurelia Butler 29 July 2022, 12:41
West Virginia’s banning of five big Wall Street banks for doing business with the state is yet another step toward a politicized world of red brands and blue brands. Florida’s DeSantis: Make profits great again.Phelan M. Ebenhack/Associated PressStates take action against ‘woke C.E.O.s’ Five big Wall Street firms woke up to a headache yesterday, and the ailment seems to be spreading fast. Riley Moore, the outspoken treasurer of West Virginia, announced that Goldman Sachs, JPMorgan, BlackRock, Morgan Stanley and Wells Fargo were banned from doing business with the state because they had stopped supporting the coal industry, reports The Times’s David Gelles.The banks have sharply reduced financing for new coal projects, while BlackRock has been reducing its actively managed holdings in coal companies since 2020. Coal, the most polluting fossil fuel, has become less profitable in recent years.Some of the firms do business with West Virginia in various ways. JPMorgan, for example, handles some banking services for West Virginia’s public university. But the dollar figures are relatively small, and the law does not affect the holdings of the state’s pension fund.The development is yet another step toward a politicized world of red brands and blue brands. In these hyperpartisan times, companies are increasingly being caught between conservatives and progressives, and some brands are being typecast as Republican or Democratic. The timing of the announcement was striking, coming just hours after Senator Joe Manchin of West Virginia, who had been the chief Democratic holdout on climate legislation, relented and agreed to sign on.Meanwhile in Florida, Gov. Ron DeSantis unloaded on the supposedly “woke” ideology of some financial services firms, criticizing E.S.G. investing and announcing plans for legislation that would “prohibit big banks, credit card companies and money transmitters from discriminating against customers for their religious, political or social beliefs.” At a news conference this week, he also said he wanted to prohibit the state’s pension fund managers from considering environmental factors when making investment decisions. Instead, he said, they need to be focusing only on “maximizing the return on investment.”Businesses now “marginalize” people because of political disagreements, DeSantis said. “That is not the way you can run an economy effectively.” He singled out PayPal, which has cut off accounts associated with far-right groups that participated in the Jan. 6 Capitol riot, and GoFundMe, which blocked donations to a group supporting truckers who occupied Ottawa this year.HERE’S WHAT’S HAPPENING Amazon’s shares soar as the company says consumer demand remains strong. The positive comments from C.E.O. Andrew Jassy and other top executives caused investors to shrug off the fact that the giant internet retailer reported its slowest quarterly sales growth in two decades, and has cut nearly 100,000 workers. Apple’s quarterly results were also better than expected, as Big Tech’s profits have been resilient even as the economy has slowed.The eurozone economy grew faster than expected, but so did inflation. Positive G.D.P. growth for the region, a day after the U.S. reported that economic growth slumped for the second quarter in a row, relieved some worries about growing stagflation. Still, inflation in the eurozone hit 8.9 percent in July compared with a year ago, a fresh record.The Biden administration plans to offer updated booster shots in September. With reformulated shots from Pfizer and Moderna on the horizon, the F.D.A. has decided that Americans under 50 should wait to receive second boosters.Read More About Oil and Gas PricesPrices Drop: U.S. gas prices have been on the decline, offering some relief to drivers. But weather, war and demand will influence how long it lasts.Stock Market: As financial markets around the world fell this spring amid worries about inflation and rising interest rates, energy was the only sector gaining ground. Summer Driving Season: The spike in gas prices is being driven in part by vacationers hitting the road. Here’s what our reporter saw on a recent trip.Gas Tax Holiday: President Biden called on Congress to temporarily suspend the federal gas tax, but experts remain skeptical the move would benefit consumers much, because tax is such a small percentage of the price you pay at the pump..A new book reignites a debate about how L.A. Times editors handled a 2017 exposé. Paul Pringle, a veteran reporter at the L.A. Times, writes in his book “Bad City” that top editors tried to slow-walk the paper’s initial groundbreaking article, which detailed how the dean of the University of Southern California’s medical school used drugs with young people.Trader Joe’s workers at a Massachusetts store form a union. It is the only one of the supermarket chain’s more than 500 stores with a formal union, but similar moves are afoot elsewhere, just as the union campaign has spread at Starbucks. Trader Joe’s will face at least one more union vote soon, at a Minneapolis store next month, and workers at a store in Colorado filed an election petition this week.Big oil’s big profitsOil companies are reporting surging profits, even as consumers and world leaders are dealing with the hardships caused by higher energy prices.Buoyed by high oil and gas prices, the energy sector is expected to have swelled earnings by more than 250 percent in the second quarter. Exxon Mobil and Chevron, the U.S.’s two largest oil companies, reported record profits this morning, with Exxon’s profit more than tripling from a year ago. Europe’s biggest oil companies, Shell and TotalEnergies, yesterday reported a combined $21 billion in profits.The fallout from Russia’s invasion of Ukraine has led to significant financial benefits for energy companies and their investors. The pain of rising energy prices and shortages, though, has been felt particularly strongly by consumers and businesses in Europe, which received roughly half of Russia’s oil exports before the invasion. In Asia and Africa, higher energy prices could push millions of people back into energy poverty, the International Energy Agency warned last month.It’s also led to claims of profiteering. President Biden said last month that oil companies were benefiting from their own underinvestment in refining capacity. In Britain, Boris Johnson, the outgoing prime minister, imposed a windfall tax on major oil and gas companies. But a top contender to replace him, Liz Truss, said that she opposed the tax because it would send “the wrong signal to the world,” and that Shell should be encouraged to invest in Britain.Oil companies have pointed the finger back at politicians. Ben van Beurden, Shell’s chief executive, said yesterday that energy prices were high in part because of government policies that discouraged investment in oil and natural gas in recent years.Gas prices in the U.S. have fallen over the last month, and there are some indications that more relief could be ahead. Citigroup said in a research note today that it expected growth in the supply of oil to outpace weaker demand. Still, geopolitical factors and the weather could change the trajectory of prices, particularly if the U.S. has an active hurricane season that disrupts refining capacity. “Just a few of these risks materializing could work up a continued perfect storm of high volatility,” Citigroup said.“There is a principle at stake. What can you buy if you have unlimited cash? Can you bend every rule? Can you take apart monuments?”— Stefan Lewis, a former member of Rotterdam’s City Council, explaining the outrage over the city’s decision, which has since been reversed, to temporarily dismantle a bridge to accommodate Jeff Bezos and his superyacht.The dark secrets of corporate subsidy deals Every year, state and local officials negotiate about $95 billion in economic development deals, competing with one another to recruit companies to their communities with lucrative subsidies in exchange for their business.But some corporations are becoming increasingly aggressive about forcing officials to sign nondisclosure agreements that could end up hurting the communities that the businesses were supposed to help, according to a new report by the American Economic Liberties Project, a progressive antitrust advocacy group. The N.D.A.s sometimes prohibit officials from disclosing basic information about a corporation, like its name and the type of business it’s building, Pat Garofalo, an author of the report, told DealBook.These N.D.A.s prevent community members, like workers and local businesses, from sharing their input on the deal until after it is completed. One recent example is the $4 billion battery factory that Panasonic will build in Kansas, which will get nearly $1 billion in subsidies. Before the deal was completed, Panasonic was also negotiating with Oklahoma, and the states were in a bidding war over the electronics giant’s business. But lawmakers could not talk about the corporation on the other side of the bargaining table in public — and sometimes didn’t even know its name. In April, Oklahoma officials complained that they had two hours to contemplate a complex incentive package worth $700 million, or about 8 percent of the state budget. “How am I supposed to go back to my constituents and say, ‘I gave away three-quarters of a billion dollars to a company that I don’t even know their name?’ Is that responsible?” State Representative Collin Walke said during an appropriations meeting.Some states have introduced bills to ban these N.D.A.s, which the report calls “an extremely common tactic” in development deals. This year, such legislation was introduced in New York, Michigan, Illinois, and Florida. New York’s State Senate voted unanimously to approve a ban. Garofalo thinks the New York lawmakers were galvanized by the Amazon HQ2 bid that fell apart in 2019. But he notes that communities don’t have to wait for politicians to fix the problem. Engaged citizens have used public meeting and records laws to solve subsidy mysteries, and sometimes a little transparency is all it takes, Garofalo said. “When the public does get a say,” he told DealBook, “the deals are better, or bad deals are knocked off right away.”THE SPEED READ Deals“Private equity giant Carlyle’s latest big play: Small Brooklyn buildings” (The Real Deal)Ernst & Young’s plan to split is reportedly being held up by debt issues. (WSJ)Newsmax renewed a deal to be carried by Verizon’s Fios, days before its rival One America News is to be dropped. Both are known for their loyalty to former President Trump. (NYT)PolicyThe private equity industry is objecting to a proposed U.S. tax increase on carried-interest income. (NYT)“Dry Fountains, Cold Pools, Less Beer? Germans Tip-Toe Up the Path to Energy Savings” (NYT)The big question is not whether the U.S. is in a recession. It’s whether the economy’s problems will worsen. (NYT’s The Morning)Best of the restArchitects have a reimagined vision for the former Deutsche Bank atrium at 60 Wall Street, with plans to make it look less like a Mediterranean spa and more like a Singapore airport. (NYT)Instagram is rolling back some product changes after celebrities like Kylie Jenner and Kim Kardashian criticized them. (NYT)TV showrunners are demanding that studios create protocols to protect employees in states where abortion has been outlawed. (Variety)Richard Rosenthal, the top defense lawyer for dangerous dogs, has even frustrated animal rights groups. (NYT)We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com. More
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Big Tech and the Fed
by Aurelia Butler 27 July 2022, 12:09
Some tech companies’ earnings are flagging, in what could be a positive sign for the Federal Reserve.Still big.Noah Berger/Agence France-Presse — Getty ImagesWhat tech earnings say about the economy The long-booming bottom lines of major tech companies are all of a sudden smaller than expected. That might be a good thing. Big Tech sailed through the pandemic with its profits mostly intact. The fact that some firms’ results are now flagging could be a positive sign for the Federal Reserve, which is trying to engineer a slowdown as it fights the nation’s worst bout of inflation in four decades.The big question for investors, and perhaps the Fed, is whether the profits of Apple, Alphabet, Amazon and the other tech giants, along with corporate America in general, have fallen enough.Microsoft and Alphabet, Google’s parent company, kicked off what appears to be a disappointing round of quarterly reports for the U.S.’s largest tech companies yesterday. Meta will release its results this afternoon, with Apple and Amazon rounding out Big Tech’s earnings announcements tomorrow.Microsoft’s profits, while below expectations, were still up. Sales of its signature software products, like Office, rose 13 percent. Its cloud services were up 40 percent. And LinkedIn, the professional social network Microsoft bought in 2016, grew 26 percent from a year ago, continuing to benefit from the tightest job market in decades.Alphabet’s sales rose 13 percent. In another good sign for the economy, the jump was driven by better-than-expected sales in its core Google search engine business, while results were mixed elsewhere. A jump in expenses and an exit from its Russian-related businesses caused profits to slump 14 percent.The results were positive enough for investors. Alphabet’s shares rose nearly 5 percent on the earnings news to $110. Microsoft’s shares jumped $10, or nearly 4 percent, to $262. Executives at both companies said they saw evidence of a weaker economy. “We are not immune to what is happening in the macro broadly,” Satya Nadella, Microsoft’s chief executive, said on a call with analysts. Alphabet’s chief financial officer, Ruth Porat, told analysts that a pullback in spending by some advertisers reflected “uncertainty about a number of factors.”Few are betting that the earnings reports will change the Fed’s approach. Its policymakers are meeting this week, and they are widely expected to continue raising benchmark interest rates. While central bankers “will likely acknowledge a recent weakening in economic momentum, the Fed will likely feel the need to appear resolute in battling inflation until there are clear signs that it is abating,” wrote David Kelly, the chief global strategist of J.P. Morgan Asset Management, in a note to clients earlier this week.HERE’S WHAT’S HAPPENING Kraken, the crypto exchange, is under investigation for possible sanctions violations. The Treasury Department is looking into whether Kraken illegally allowed users in Iran and elsewhere to buy and sell digital tokens. Shares of Coinbase, a larger crypto exchange, plunged yesterday after reports that the S.E.C. was investigating whether it allowed trading in unregistered securities. Cathie Wood’s Ark funds reportedly dumped Coinbase shares yesterday for the first time this year.Antitrust legislation aimed at Big Tech may be off the table for now. Chuck Schumer, the Senate majority leader, told donors at a Capitol Hill fund-raiser yesterday that the American Innovation and Choice Online Act, which he had promised to bring to a vote this summer, lacks the support needed to get it to the Senate floor, Bloomberg reported. The bill’s bipartisan backers have been pressuring Schumer to act fast, before midterm elections that could change the balance of power in Congress.One America News, once a dependable Trump promoter, is struggling to survive. The network is being dropped by major carriers and faces a wave of defamation lawsuits for its outlandish stories about the 2020 election. OAN’s most recent blow is from Verizon, which will stop carrying the network on its Fios television service this week. It is now available to only a few thousand people who subscribe to regional cable providers.Teva Pharmaceuticals reaches a tentative $4.25 billion settlement over opioids. The proposed settlement, which is with some 2,500 local governments, states and tribes, would end thousands of lawsuits against one of the largest producers of the painkillers during the height of the opioid epidemic.Florida’s largest utility secretly funded a website that attacked its critics. Florida Power & Light bankrolled and controlled The Capitolist, a news site aimed at Florida lawmakers, through intermediaries from an Alabama consulting firm, an investigation by The Miami Herald found. The site claimed to be independent, but it advocated rate hikes and legislative favors in efforts that were directed by top executives at the utility.BlackRock downshifts on E.S.G. BlackRock, the world’s largest asset manager, slashed its support for shareholder proposals on environmental and social issues this year, backing only 24 percent of such resolutions in the proxy season that ended in June, down from 43 percent in the previous period. The firm, which has long led the conscious investing movement, said this year’s proposals were “less supportable” and cited new regulatory guidance that opened the door to a broader range of policy-related proposals.The firm has criticized overly “prescriptive” resolutions. In a May memo, BlackRock signaled that Russia’s war in Ukraine was straining global energy supplies and shifting its calculations. “Many climate-related shareholder proposals sought to dictate the pace of companies’ energy transition plans despite continued consumer demand,” wrote the firm’s global head of investment stewardship, Sandy Boss. She noted that shareholders generally supported fewer environmental and social proposals this year as well, voting for 27 percent of resolutions, down from 36 percent in the previous proxy period.Opposition to E.S.G. is mounting. The environmental, social and governance investment push has been labeled “woke capitalism” by critics and is under fire from executives like Tesla’s Elon Musk, major investors like Bill Ackman and Republican politicians. In a speech yesterday, former Vice President Mike Pence, a possible 2024 hopeful, said that big government and big business were together advancing a “pernicious woke agenda.”E.S.G. supporters say critics may have a point. Andrew Behar, C.E.O. of the shareholder advocacy group As You Sow, agrees that many supposed E.S.G. investments don’t reflect true sustainability — with ever more capital directed toward the idea and many funds failing to live up to their promises. Behar argued that more corporate disclosures — which anti-E.S.G. groups oppose — would help to ensure that green investing actually works. He argues that critics also ignore a key financial incentive driving investor interest: knowing and lowering the costs of environmental issues throughout company operations, including risks from changing weather and the transition to more sustainable models. “We don’t have an E.S.G. problem,” Behar told DealBook. “We have a naming problem.”“I quit Starbucks. I had to. I just didn’t feel like that was justifiable. It’s like a small car payment.” — Fontaine Weyman, a 43-year-old songwriter from Charleston, S.C., on changing her coffee habits. Many Americans are dealing with the fastest inflation of their adult lives across a broad range of goods and services.Instagram tries to explain itself Instagram responded yesterday to criticism from some of its most popular users, including Kylie Jenner, about new features that made it more like its top rival, TikTok, the fast-growing video app owned by the Chinese company ByteDance.Adam Mosseri, Instagram’s head, said that it was experimenting with several changes, and that he knew users were unhappy. “It’s not yet good,” he said of some of the tweaks in a video post. He stressed Instagram’s commitment to photos, the app’s original focus, but said, “I’m going to be honest, I do believe that more and more of Instagram is going to become video over time.”Reels, a short-video product, is one of the six main investment priorities at Meta, which owns Facebook and Instagram, according to an internal memo last month from Chris Cox, the company’s chief product officer. Cox said that users had doubled the amount of time they spent on Reels year over year, and that Meta would prioritize boosting ads in Reels “as quickly as possible.” Last week, Instagram announced that almost all videos in the app would be posted as Reels.The changes come as Meta heads into a new phase. Mark Zuckerberg, its founder and chief executive, has cut costs, reshuffled his leadership team and made clear that low-performing employees will be let go, writes The Times’s Mike Isaac. “Realistically, there are probably a bunch of people at the company who shouldn’t be here,” Zuckerberg said on a call late last month. In recent months, profit at Meta has fallen and revenue has slowed as the company has spent lavishly on augmented and virtual reality projects, and as the economic slowdown has hurt its advertising business.The high-profile complaints about Instagram’s revamp started in recent days, when Kylie Jenner, the beauty mogul with 361 million Instagram followers, shared an image on the site that read: “Make Instagram Instagram again. (stop trying to be tiktok i just want to see cute photos of my friends.) Sincerely, everyone.”“PRETTY PLEASE,” Kim Kardashian, Jenner’s half sister and the seventh-most-followed Instagram user, echoed in a later post. Yesterday, Chrissy Teigen, a model and author with 39 million followers, responded to Mosseri in a tweet, saying, “we don’t wanna make videos Adam lol.”Companies have reason to listen when social media stars speak up, writes The Times’s Kalley Huang. In 2018, after Snapchat overhauled its interface, Jenner tweeted: “sooo does anyone else not open Snapchat anymore? Or is it just me….” Within a week, Snap, the app’s parent company, had lost $1.3 billion in market value.THE SPEED READ DealsThe activist investor Elliott Management reportedly has a stake in Paypal and is pushing it to cut costs faster. (WSJ, Bloomberg)Twitter shareholders will be asked to vote on Elon Musk’s potential acquisition in September. (Bloomberg)PolicyThe Senate advanced an industrial policy bill that includes more than $52 billion in subsidies for chip makers building U.S. plants. (NYT)The short seller Carson Block is being sued over a $14 million award from the S.E.C. that raised questions about the agency’s whistle-blower program. (Bloomberg)After Apple launched a “buy now, pay later” service, the top U.S. consumer finance regulator warned Big Tech about undermining competition in the sector. (FT)A federal judge ruled that Uber doesn’t have to offer wheelchair-accessible cars in every city. (The Verge)Best of the restCredit Suisse, which reported larger second-quarter losses than expected, replaced its C.E.O. (FT)Customers are paying billions of dollars in fees for “free” checking. (Bloomberg)The default settings in Apple, Google, Amazon and Microsoft products that you should turn off right away. (NYT)This man sells mud to Major League Baseball. (NYT)“The Case of the $5,000 Springsteen Tickets” (NYT)R.I.P., Choco Taco. (NYT)We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com. More
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President Biden’s Human Rights Dilemma
by Aurelia Butler 23 July 2022, 14:05
The complications of keeping campaign promises.It was a fraught fist bump.As you heard on Monday’s episode, President Biden’s chosen greeting for Crown Prince Mohammed bin Salman of Saudi Arabia became a diplomatic drama.After years of bombastic foreign policy tweets, analyzing the subtleties of Mr. Biden’s behavior feels like a throwback to the tan-suit era — a time when diplomacy was in the details.But this wasn’t the only fist bump Mr. Biden gave on his tour of the Middle East. He also extended one to Prime Minister Yair Lapid while disembarking from Air Force One in Israel.Below, Rachelle Bonja, the lead producer of the episode, looks more closely at Mr. Biden’s Middle East tour and explains the significance of a few diplomatic decisions we didn’t get the chance to discuss on the show.The big idea: Biden’s human rights dilemmaThe Daily strives to reveal a new idea in every episode. Below, we go deeper on our episode with Ben Hubbard, The Times’s Beirut bureau chief, about President Biden’s foreign policy.At the beginning of his campaign, President Biden set out a clear goal: to make human rights the center of American foreign policy. He promised to return to a previous era of international relations, before Donald J. Trump introduced an “America first” doctrine and withdrew from international agreements. However, Mr. Biden’s visit to Israel and Saudi Arabia quickly became a test of one of his boldest campaign promises.In both countries, Mr. Biden was under pressure to keep his commitment to speak out against human rights abuses, specifically by condemning the recent killings of journalists.As a candidate, Mr. Biden was explicit about how he felt the United States should deal with Saudi Arabia after the 2018 killing of Jamal Khashoggi, a former Washington Post columnist. (American intelligence officials have determined that the crown prince approved the operation to assassinate Mr. Khashoggi.)Mr. Biden said that his plan was to make the Saudis “pay the price, and make them in fact the pariah that they are.”But when the war in Ukraine drove American gas prices over $5 a gallon, Mr. Biden’s approach to the crown prince, who manages the country’s oil reserves, shifted focus.Although Mr. Biden said Friday night that he had confronted the crown prince over the murder during their closed-door meeting, the Saudi government disputed the nature of the interaction. Now the president is being criticized for his apparent compromise on human rights.But this wasn’t the only human rights dilemma Mr. Biden faced on his trip.Before he arrived in the Middle East, the president had not publicly addressed the killing of Shireen Abu Akleh. Ms. Abu Akleh was a Palestinian American journalist for Al Jazeera who was fatally shot in May while wearing a press vest and covering an Israeli raid in the West Bank for the network. Several investigations, including one by The New York Times, found that the bullets had come from the location of an Israeli Army unit.The United Nations’ human rights office concluded that “the shots that killed Abu Akleh and injured her colleague Ali Sammoudi came from Israeli security forces and not from indiscriminate firing by armed Palestinians,” Ravina Shamdasani, a spokeswoman for the agency, said.Despite pressure from Ms. Abu Akleh’s family and others to address the killing, Mr. Biden did not mention Ms. Abu Akleh’s death while he was in Israel.Instead, in Jerusalem, the president reaffirmed his commitment to Israel as an ally and as an “independent Jewish state.” He called for a “lasting negotiated peace between the State of Israel and the Palestinian people.”Mr. Biden later visited Bethlehem in the Palestinian territories, where he spoke about Ms. Abu Akleh and called for accountability in her killing: “The United States will continue to insist on a full and transparent accounting of her death and will continue to stand up for media freedom everywhere in the world,” he said.Ms. Abu Akleh’s family has called for a joint investigation of her killing. While Israel had previously offered to examine the bullet that killed Ms. Abu Akleh in the presence of Palestinian and American representatives, the Palestinian Authority has refused a joint investigation, citing distrust of the Israelis. Mr. Biden’s decision to call for an investigation only while speaking in the Palestinian territories has stoked accusations that the president is trying to shield Israel from scrutiny.The two visits highlight how Mr. Biden has compromised on his previously stated commitments — a contradiction pointed out in a tweet by Hatice Cengiz, Mr. Khashoggi’s fiancée.If he were alive, she wrote, Mr. Khashoggi might have tweeted at Mr. Biden, asking: “Is this the accountability you promised for my murder? The blood of MBS’s next victim is on your hands.”From the Daily team: Your weekend playlistIn October 2020, a group outside the Saudi Consulate in Istanbul commemorated the second anniversary of the death of Jamal Khashoggi.Murad Sezer/ReutersHere is some further listening on the Middle East and its leaders to add to your weekend playlist.Nine Days in Gaza: Last summer, a two-week outbreak of violence occurred between Israelis and Palestinians. We spoke to a resident of Gaza City, Rahf Hallaq, about her life and what the conflict was like for her.Biden’s Saudi Dilemma: More than a year before last week’s meeting with Prince Mohammed, Mr. Biden took the bold step of releasing an intelligence report that implicated the crown prince in the killing of Mr. Khashoggi.The Disappearance of a Saudi Journalist: Saudi Arabia’s crown prince has promoted himself to the West as a reformer determined to create a more free and open society. The killing of Mr. Khashoggi changed that. (From 2018.)On The Daily this weekMonday: What did the meeting between President Biden and Crown Prince Mohammed bin Salman tell us about relations between the countries they lead?Tuesday: Has the era of global cooperation over planet-warming emissions ended?Wednesday: How abortion bans are restricting miscarriage care.Thursday: A prosecutor who worked on the Mueller inquiry discusses the possibility of criminal charges against former President Donald J. Trump.Friday: As the Great Salt Lake dries up, Utah is facing an “environmental nuclear bomb.”That’s it for the Daily newsletter. See you next week.Have thoughts about the show? Tell us what you think at thedaily@nytimes.com.Were you forwarded this newsletter? Subscribe here to get it delivered to your inbox.Love podcasts? Join The New York Times Podcast Club on Facebook. More
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Draghi’s Fall Reverberates Beyond Italy
by Aurelia Butler 22 July 2022, 19:39
The downfall of Italy’s prime minister has raised concerns across Europe about the power of populist movements and whether they will erode unity against Russian aggression.ROME — Just over a month ago, Prime Minister Mario Draghi of Italy boarded an overnight train with the leaders of France and Germany bound for Kyiv. During the 10-hour trip, they joked about how the French president had the nicest accommodations. But, more important, they asserted their resolute support for Ukraine in the face of Russian aggression. The pictures of the men tucked in a cabin around a wooden conference table evoked a clubby style of crisis management reminiscent of World War II.The mere fact that Mr. Draghi had a seat at that table reflected how, by the force of his stature and credibility, he had made his country — one saddled by debt and persistent political instability — an equal partner with Europe’s most important powers. Critical to that success was not only his economic bona fides as the former president of the European Central Bank but also his unflinching recognition that Russia’s war presented as an existential challenge to Europe and its values.All of that has now been thrown into jeopardy since a multi-flanked populist rebellion, motivated by an opportunistic power grab, stunningly torpedoed Mr. Draghi’s government this week. Snap elections have been called for September, with polls showing that an alliance dominated by hard-right nationalists and populists is heavily favored to run Italy come the fall.Mr. Draghi’s downfall already amounts to the toppling of the establishment that populist forces across Europe dream of. It has now raised concerns, far transcending Italy, of just how much resilience the movements retain on the continent, and of what damage an Italian government more sympathetic to Russia and less committed to the European Union could do to the cohesion of the West as it faces perhaps its greatest combination of security and economic challenges since the Cold War.“Draghi’s departure is a real problem for Europe, a tough blow,” said Gianfranco Pasquino, professor emeritus of political science at Bologna University. “Draghi had a clear position against the Russian aggression in Ukraine. Europe will lose in compactness because the next prime minister will almost certainly be less convinced that the responsibility for the war lies with Russia.”If there was any question of where the sympathies of European leaders lie in Italy’s power struggle, before his downfall Mr. Draghi received offerings of support from the White House, President Emmanuel Macron of France, Chancellor Olaf Scholz of Germany and others.Mario Draghi, left, and French President Emmanuel Macron examining debris as they visited Irpin, outside Kyiv, Ukraine, last month.Pool photo by Ludovic MarinPrime Minister Pedro Sanchez of Spain wrote “Europe needs leaders like Mario.” When Mr. Draghi made his last-ditch appeal to Italy’s fractious parties to stick with him on Wednesday, Prime Minister Antonio Costa of Portugal wrote him to thank him for reconsidering his resignation, according to a person close to Mr. Draghi.But now, with Mr. Macron lamenting the loss of a “Great Italian statesman,” anxiety has spread around the continent about what will come next.Mr. Draghi’s rebalancing of Italy’s position on Russia is all the more remarkable considering where it started. Italy has among Western Europe’s strongest bonds with Russia. During the Cold War, it was the home of the largest Communist Party in the West, and Italy depended on Russia for more than 40 percent of its gas.Mr. Draghi made it his mission to break that pattern. He leveraged his strong relationship with the U.S. treasury secretary, Janet Yellen, to spearhead the sanctions on the Russian Central Bank.By the example of his public speeches, he pressured his allies, including Mr. Macron, to agree that Ukraine should eventually be a member of the European Union.In the days before the fatal vote in the Senate that brought down his government, Mr. Draghi visited Algeria to announce a gas deal by which that country will supplant Russia as Italy’s biggest gas supplier.Those achievements are now at risk after what started last week as a rebellion within his coalition by the Five Star Movement, an ailing anti-establishment party, ended in a grab for power by conservatives, hard-right populists and nationalists who sensed a clear electoral opportunity, and went for the kill.They abandoned Mr. Draghi in a confidence vote. Now, if Italian voters do not punish them for ending a government that was broadly considered the country’s most capable and competent in years, they may come out on top in elections.Prime Minister Draghi speaking to ministers and Senators on Wednesday, the day his national unity coalition collapsed. Andreas Solaro/Agence France-Presse, via Getty ImagesThe maneuvering by the alliance seemed far from spontaneous.Ahead of the vote, Matteo Salvini, the leader of the hard-right League party, huddled with former prime minister Silvio Berlusconi over a long sweaty lunch at the mogul’s villa on the Appian Way and discussed what to do.Giorgia Meloni, the leader of the Brothers of Italy, a party with post-fascist roots who has incessantly called for elections from the opposition, said she spoke with Mr. Berlusconi a few days earlier and that he had invited her to the meeting as well, but that she demurred, saying it was better they meet after the vote. She said she spoke on the phone with Mr. Salvini only after Mr. Draghi’s speech in parliament.“I didn’t want them to be forced to do what they did,” she said, referring to Mr. Salvini and Mr. Berlusconi, who abandoned Mr. Draghi and collapsed the government. “I knew it would only work if they were sure about leaving that government.”Each has something to be gained in their alliance. Mr. Salvini, the hard right leader of the League party, not long ago the most popular politician in the country, had seen his standing eroded as part of Mr. Draghi’s government, while Ms. Meloni had gobbled up angry support from the opposition, supplanting him now as Italy’s rising political star. Mr. Berlusconi, nearly a political has-been at age 85, was useful and necessary to both, but also could use their coattails to ride back to power.Together, polls show, they have the support of more than 45 percent of voters. That is worrying to many critics of Russia. Mr. Salvini wore shirts with Mr. Putin’s face on them in Moscow’s Red Square and in the European Parliament, his party signed a cooperation deal with Mr. Putin’s Russia United party in 2017.Ms. Meloni, in what some analysts see as a cunning move to distinguish herself from Mr. Salvini and make herself a more acceptable candidate for prime minister, has emerged as a strong supporter of Ukraine.League leader Matteo Salvini and Brothers of Italy leader Giorgia Meloni meeting with with Silvio Berlusconi, right, in October 2021.Guglielmo Mangiapane/ReutersMr. Berlusconi used to host Mr. Putin’s daughters at his Sardinian villa and was long Mr. Putin’s closest ally in Western Europe. But now, some of Mr. Berlusconi’s longtime backers say, he has forgotten his European values and crossed the Rubicon to the nationalist and Putin-enabling side.Renato Brunetta, Italy’s Minister for Public Administration, and a long time member of former Prime Minister Silvio Berlusconi’s Forza Italia, quit the party after it joined with the populist League party in withdrawing support from Mr. Draghi and destroying the government.He said he left because Mr. Berlusconi’s decision to abandon the government was irresponsible and antithetical to the values of the party over the last 30 years. Asked whether he believed Mr. Berlusconi, sometimes shaky, was actually lucid enough to make the decision, he said “it would be even more grave” if he was.Italy, long a laboratory for European politics, has also been the incubator for the continent’s populism and transformation of hard-right movements into mainstream forces.When Mr. Berlusconi entered politics, largely to protect his business interests in the 1990s, he cast himself as a pro-business, and moderate, conservative. But in order to cobble together a winning coalition, he had brought in the League and a post-fascist party that would become Ms. Meloni’s.Now the situation has inverted. Ms. Meloni and Mr. Salvini need Mr. Berlusconi’s small electoral support in order to win elections and form a government. They are in charge.“It is a coalition of the right, because it is not center-right anymore,” said Mr. Brunetta. “It’s a right-right coalition with sovereigntist tendencies, extremist and Putin-phile.”Supporters of Mr. Draghi take some solace in the fact that he will stick around in a limited caretaker capacity until the next government is seated, with control over issues related to the pandemic, international affairs — including Ukraine policy — and the billions of euros in recovery funds from Europe. That money is delivered in tranches, and strict requirements need to be met before the funds are released.Supporters of Mr. Draghi acknowledged that major new overhauls on major problems such as pensions were now off the table, but they argued that the recovery funds were more or less safe because no government, not even a hard-right populist one, would walk away from all that money, and so would follow through on Mr. Draghi’s vision for modernization funded by those euros.But if the last week has shown anything, it is that political calculations sometimes outweigh the national interest.Supporters of Prime Minister Draghi demonstrating in Milan on Monday.Mourad Balti Touati/EPA, via ShutterstockThe government’s achievements are already “at risk” over the next months of Mr. Draghi’s limited powers, said Mr. Brunetta, but if the nationalist front won, he said, “obviously it will be even worse.”Mr. Brunetta said Mr. Draghi arrived on the political scene in the first place because there was a “crisis of the traditional parties” in Italy. He said that the 17 months in government, and the support it garnered in the public, showed that there was “a Draghian constituency,” which wanted moderate, pragmatic and value-based governance.The problem, he said, was there were “no political parties, or especially a coalition, to represent them” and he hoped one could be born before the election but “there was little time.”And in the meantime, he said, some things were for sure. Italy had lost influence in Europe and the continent would suffer, too, for the loss of Mr. Draghi.“Europe,” he said, “is weakened.”Gaia Pianigiani More
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Amazon Acquires One Medical in Push Into Health Care
by Aurelia Butler 22 July 2022, 12:38
The internet giant acquired One Medical, a national chain of primary care clinics, for $3.9 billion.Twitter’s shares fell after the social media platform, which is locked in a legal battle with Elon Musk over its future ownership, reported that it lost $270 million in the second quarter. Alphabet, Apple, Meta and Microsoft will report their earnings next week, with many forecasters expecting more disappointing results. Now delivering diagnoses.Patrick T. Fallon/Agence France-Presse — Getty ImagesJassy’s big bet on health careYesterday, Amazon announced its first major acquisition during Andy Jassy’s tenure as C.E.O., with the $3.9 billion purchase of One Medical, a national chain of primary care clinics that is backed by the private equity firm the Carlyle Group.Amazon’s ambitions in health care go back more than two decades, writes The Times’s Karen Weise. But none of its forays into the sector have had notable success, or have been as big as the One Medical acquisition. Its previous bets in health care include:Investing in Drugstore.com in 1999. (Jeff Bezos served on the company’s board.)Teaming up with JPMorgan and Berkshire Hathaway in 2018 to start Haven, in an amorphous effort to explore new ways to deliver health care to their work forces. The venture formally ended last year.Buying the start-up PillPack, an online pharmacy that focuses on recurring monthly medications, in 2018 for $753 million. It later began Amazon Pharmacy, which, like PillPack, delivers medications, and it integrated discounts for customers with Prime memberships.Running its own primary and urgent care service, called Amazon Care, beginning in 2019, to treat its employees. Amazon Care has tried to get other employers to offer its service, with limited success.The One Medical deal gives Amazon access to more data. One Medical built its own electronic medical records system, and it has 15 years’ worth of medical and health-system data that Amazon could tap. Although individual patient records are generally protected under federal health privacy laws, the big data expertise that has fueled Amazon’s success can be powerful in health care — for predicting costs, targeting interventions and developing products and treatments.It could also test the new antitrust regime. Last night, Senator Amy Klobuchar said she was calling on the F.T.C. to “thoroughly investigate” the deal, citing Amazon’s previous investments in health care and its access to data. And while Amazon hardly dominates heath care, the Justice Department and the F.T.C. have sought to rewrite the rules for reviewing big mergers to broaden the scope for intervention. Lina Khan, who leads the F.T.C., has long contended that there is an antitrust argument against Amazon. She has not so far filed a suit against the company in her time as chair. Her agency reviewed and approved Amazon’s acquisition of the movie studio Metro-Goldwyn-Mayer, though that was before Democrats held a majority on the commission.When asked by The Washington Post last month about Amazon’s push into health care, Khan said, “Our current approach to thinking about mergers still has more work to do to fully understand what it means for these businesses to enter into all these other markets and industries.”HERE’S WHAT’S HAPPENING Turkey promises a deal to get grain out of Ukraine’s blocked ports. The Turkish presidency says that a signing ceremony will be held today for a deal between Ukraine and Russia aiming to allow millions of tons of Ukrainian grain to be exported, alleviating a global food shortage.President Biden has “very mild” Covid symptoms. Biden, 79, tested positive for the coronavirus yesterday. Karine Jean-Pierre, the White House press secretary, said he would “continue to carry out all of his duties fully” while isolating.Snap shares plunge after a disappointing quarterly report. The company, which runs the social media platform Snapchat, said it would “substantially reduce” hiring and that revenue growth in its current uncompleted quarter was approximately zero. Jessica Lessin, the editor of the tech-focused news site The Information, said, Snap’s results “raise questions about digital advertising in the current macroeconomic climate.”The U.S. government files its first criminal case about crypto insider trading. A former Coinbase employee and two other men were charged with buying and selling digital assets based on confidential information from the cryptocurrency exchange. The three men, one of whom has fled to India, are said to have made $1.5 million on 14 trades over a 10-month period.China will faces severe heat waves over the next 10 days. Regions could be hit by temperatures of 40 degrees Celsius (104 degrees Fahrenheit) or higher, forecasts suggest, and some cities in Zhejiang Province, which has many factories, issued red alerts today.Trump’s inaction in actionAs a mob of his supporters assaulted the Capitol on Jan. 6, Trump refused to stop them, according to former Trump administration officials, who testified yesterday to the House committee investigating the attack. Over 187 minutes, Trump sat in his dining room off the Oval Office, watching the violence on television, not just ignoring calls to respond, but repeatedly signaling that he did not want anything done.It was one of the most dramatic hearings of the inquiry, write The Times’s Luke Broadwater and Maggie Haberman. Still, the assertion that Mr. Trump was derelict in duty raised ethical, moral and legal questions, but it might not be the basis for a criminal charge, according to Representative Elaine Luria, Democrat of Virginia, who led much of last night’s proceedings. The media critic Brian Stelter, of CNN, called yesterday evening’s hearing “the most Fox-centric hearing yet — and none of it was shown live by Fox,” underscoring how divided the U.S. media landscape is.Here were the takeaways:Trump ignored a torrent of pleas from inside and outside the White House to call off his supporters. Members of Congress, aides and his own daughter, Ivanka, pleaded with Mr. Trump to call off the violence as it unfolded in front of him on television, The Times’s Michael S. Schmidt notes. Representative Adam Kinzinger, the Illinois Republican who helped lead the hearing, said that the president, after learning of the Capitol breach, resisted putting out a tweet saying, “Stay peaceful.”Even the next day, Trump was not fully willing to concede the race. Outtakes from a taped address of the president’s speech on Jan. 7 showed the president saying he didn’t want to say “the election is over.”Members of Pence’s Secret Service security detail feared for their lives as protesters drew nearer. “I don’t like talking about it, but there were calls to say goodbye to family members, so on and so forth,” one official, whom the committee declined to name, said.Gen. Mark A. Milley, the chairman of the Joint Chiefs of Staff, the nation’s highest-ranking military officer, told the panel: “You’re the commander in chief. You’ve got an assault going on on the Capitol of the United States of America, and there’s nothing? No call? Nothing? Zero?”More hearings are planned for September.YouTube’s policy on pulling abortion-related content has skeptics YouTube said on Twitter yesterday that it would be removing videos over the next few weeks that provided instructions for “unsafe abortion methods.” Citing its medical misinformation policies, it also said that it would be removing content that promoted “false claims about abortion safety” and that it would start including information from health authorities alongside abortion content.YouTube’s announcement was a step in the right direction, but it should have happened a long time ago, said Imran Ahmed, the C.E.O. and founder of the nonprofit organization the Center for Countering Digital Hate. “Even though we welcome any change in their rule, why on earth were home remedies for abortion ever permitted on their site?” he told DealBook, citing the medical risks associated with using dangerous methods. He recommended that YouTube provided a hotline to groups that offer accurate information on reproductive health care.Since the Supreme Court’s decision to overturn Roe v. Wade in June, abortion has been banned in at least eight states, and videos offering home remedies to induce abortions have spread on YouTube, TikTok and social media platforms. Experts have urged caution, saying these methods may be dangerous and there is no data on whether they work. A 2020 survey published in the journal JAMA Network Open estimated that 7 percent of American women would attempt a self-managed abortion at some point in their lives.For YouTube, the challenge will be enforcement, said Katharine Trendacosta, an associate director of policy and activism at the Electronic Frontier Foundation, a nonprofit digital rights group. Trendacosta told DealBook that she questioned whether YouTube had the staffing and processes in place to pull this off. “I have trouble with these announcements because it doesn’t tell me if they’re going to hire enough people to implement it,” she said.THE SPEED READ DealsThe U.K. competition watchdog cleared a merger of the sports broadcasting businesses of BT Group and Warner Bros. Discovery. (Reuters)Malaysia’s AMMB, a financial services manager, is reportedly considering a sale of its asset-management unit. (Bloomberg)“Amazon Wants 100,000 Electric Vans. Can Rivian Deliver?” (NYT)The toymaker Mattel reported a 20 percent jump in sales. (NYT)PolicyRussia is keeping Germany guessing on gas shipments. (NYT)Truckers protesting a labor law have blocked roads that serve the Port of Oakland in California. (NYT)The E.C.B. has a new tool to keep bond markets in check. It doesn’t want to use it. (NYT)In good news for consumers, the economy and President Biden, gas prices are finally falling. (The Morning)Best of the restSwatch’s $260 MoonSwatch is helping to revive the brand. (Bloomberg Businessweek)A look at the PGA Tour’s lobbying effort against the Saudi-backed LIV golf league. (CNBC)A 35,000-acre forest fire in Spain was accidentally started by a Dutch carbon offset company. (Vice)Despite Putin’s efforts to destroy Ukraine’s economy, tech companies there are still thriving. (NYT)“Pro-Putin Biker Gang Rides Into E.U. Sanctions Roadblock” (FT)We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com. More
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Twitter Takes Round 1
by Aurelia Butler 20 July 2022, 12:37
Judge Kathaleen McCormick granted the social media giant’s request for an expedited hearing. Now, the two sides are gearing up for a trial in October.Twitter: 1, Musk: 0.Jim Wilson/The New York TimesTwitter suit takes the fast laneTwitter won its effort to expedite its trial with Elon Musk yesterday, in its lawsuit to force Musk to close his $44 billion acquisition of the company. So many people tried to listen to the proceedings that the dial-in hit capacity — and we hear advisers across Wall Street were huddled around speakerphones.It’s a big win for Twitter. In granting an expedited hearing, Judge Kathaleen McCormick effectively repudiated the notion that the court needed to allow time for a deep dive into whether Twitter had accurately counted the number of bots on its platform. She cited the “cloud of uncertainty” that was hanging over the company the longer the case went undecided as the reason for her decision to fast-track the trial. And in what may be another good sign for Twitter, Judge McCormick said she was unsure that damages would be a sufficient remedy for the social media company, which wants Musk to buy it, not pay damages to walk away.Please see Page 5. A centerpiece of Musk’s claims is that Twitter’s disclosures about the percentage of active users on its platform that are bots are misleading, which would have a “material adverse effect” on the company’s value. But Musk has yet to tell the court what, exactly, in Twitter’s disclosures might be false. This became an issue when Musk’s lawyer at Quinn Emanuel, Andy Rossman, took aim at Page 5 of Twitter’s annual report, which explains its bot count. But Twitter’s lawyer at Wachtell, Bill Savitt, in his rebuttal, noted that Twitter fills that page with hedges and warnings that numbers might be off. (It reads, in part: “Our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated.”) Of Twitter’s disclosure, Savitt said: “This does not require a recreation of all things known to humanity.” Judge McCormick seemingly agreed.The two sides are gearing up for a trial in October. Over the next weeks, they have to agree on schedules for depositions and discovery. And Musk will have time to prepare for another hearing before Judge McCormick that month: a defense of his whopping Tesla pay package — money that could come in handy if she forces him to buy Twitter.HERE’S WHAT’S HAPPENING Netflix loses fewer subscribers than expected. The streaming service reported yesterday that it lost nearly 1 million subscribers in the second quarter, far fewer than it had forecast. What’s more, Netflix said some of its strategies to stem losses, like an ad-supported option for consumers and a crackdown on password sharing, would boost revenue as soon as next year.A heroic act in an Indiana mall shooting renews the debate over gun access. In the days since a 22-year-old armed bystander killed a gunman two minutes into a shooting spree, the U.S. is again debating the wisdom of easier access to guns. But an analysis of 433 active shooter attacks in the U.S. between 2000 and 2021 found just 22 had ended with a bystander shooting the attacker, according to the Advanced Law Enforcement Rapid Response Training Center at Texas State University.The CHIPS Act passes a procedural hurdle in the Senate with more than 60 votes. The legislation, stalled for more than a year, gives chip manufacturers what they say is help they need to build factories in the U.S. The Senate is expected today to officially vote to pass the bill, which has been slimmed down and still needs to return to the House before it can go to the president.Intelligence agencies say Russia remains a threat in elections. Top F.B.I. and National Security Agency officials warned yesterday that Russia could still seek to meddle or promote disinformation during the 2022 midterm races, even as it wages war in Ukraine. Iran and China also remained potent threats, the officials said.The House moves to protect same-sex marriage from Supreme Court reversal. New legislation, which garnered some Republican support, would recognize same-sex marriages at the federal level, but it faces an uncertain path in the Senate. The move was a direct answer to Justice Clarence Thomas’s concurring opinion in the ruling last month that overturned federal abortion rights.The loans that may haunt Silicon ValleyTech workers have taken out loans in recent years based on the value of their start-up stock. But as the start-up economy has deflated, that may come back to haunt them, writes The Times’s Erin Griffith.Start-up loans stem from the way workers are typically paid. As part of their compensation, most employees at privately held tech companies receive stock options. That’s where loans and other financing options come in. Start-up stock is used as a form of collateral for cash advances. The loans vary in structure, but most providers charge interest and take a percentage of the worker’s stock when the company sells or goes public. Some are structured as contracts or investments.This lending industry has boomed in recent years. Many of the providers were created in the mid-2010s as hot start-ups like Uber and Airbnb put off initial public offerings of stock as long as they could, hitting private market valuations in the tens of billions of dollars.Debate has ignited in Silicon Valley over the proliferation of loans backed by stakes in still-private start-ups. Proponents say the loans are necessary for employees to participate in tech’s wealth-creation engine. But critics say the loans create needless risk in an already-risky industry and are reminiscent of the dot-com era in the early 2000s, when many tech workers were badly burned by similar loans.As the start-up economy deflates, these loans can be risky. While most are structured to be forgiven if a start-up fails, employees could still face a tax bill because the loan forgiveness is treated as taxable income.“No one’s been thinking about what happens when things go down,” said Rick Heitzmann, an investor at FirstMark Capital. “Everyone’s only thinking about the upside.”“The thing I’ve always been taught by my parents is to be the first one in and last one out. But there’s no one else there.”— Alex Hyman, who pictured his internship at a Los Angeles entertainment agency this summer as being one part “Entourage” and one part “The Office,” but found it more like “Home Alone.” It’s a common experience in an age of remote-working bosses.Mooch’s crypto problemAnthony Scaramucci, who is famous for his 11-day stint as former President Donald Trump’s communications director, is facing a mass exodus of investors from his funds.Earlier this week, Bloomberg reported that Scaramucci’s firm SkyBridge Capital had halted withdrawals from one of its smaller funds, Legion Strategies, which contains just over $200 million. But Scaramucci is also struggling to hold onto investors in SkyBridge’s flagship fund, the SkyBridge Multi-Adviser Hedge Fund Portfolios, which managed as much as $2 billion at the end of March. Its investments lost nearly a quarter of their value in the second quarter.Investors in SkyBridge’s flagship fund are seeking to withdraw as much as $890 million, or about half of the money that it held as of the end of last month, Scaramucci told DealBook. But many of those investors will be stuck in the fund for a while. Under its rules, investors in the Multi-Adviser fund are only allowed to withdraw money during certain windows. Those used to occur four times a year, but SkyBridge cut them to twice a year in 2020, after big losses at the beginning of the pandemic. Earlier this month, SkyBridge told investors they would only collectively receive about 16 percent of the money they requested. The letter said it was issuing investors’ notes that would be paid no later than October.Scaramucci’s losses come just over a year after SkyBridge’s pivot into crypto. SkyBridge’s flagship fund, which Scaramucci bought from Citigroup, has long specialized in buying and selling stakes of other hedge funds. For a time, that, along with strong performance in the years after the 2008 financial crisis, made Scaramucci one of the most powerful players in the hedge fund industry.Scaramucci says he is still a long-term believer in crypto. The fund manager says that about 22 percent of his flagship fund remained in crypto and related investments as of the end of last month. “I am not smart enough to time the market,” he told DealBook. “But we’ve done a tremendous amount of research and we think anyone who has will see that blockchain technology is good and is the future.”THE SPEED READ DealsPimco bought $1 billion worth of debt backing Apollo’s acquisition of a payments company at a steep discount. (Bloomberg)Start-ups are racing for share of the market for home chargers of electric vehicles, and several have already been acquired. (Reuters)“Sam Bankman-Fried Turns $2 Trillion Crypto Rout Into Buying Opportunity” (Bloomberg Businessweek)PolicyDan Cox, a Trump loyalist, won the primary to be the Republican candidate for governor of Maryland. (NYT)Novavax’s Covid vaccine was cleared for use in the U.S. (NYT)The Secret Service said texts requested by the Jan. 6 commission were probably lost for good. (NYT)U.K. inflation has exceeded economists’ forecasts, hitting 9.4 percent (FT)President Vladimir Putin signaled that Russia would resume gas deliveries through a key pipeline but at a reduced level. (NYT)Best of the restLeaked salary data at Twitter showed a pay gap of as much as 225 percent for the same role in different countries. (Input)Soaring overdose rates in the pandemic reflect widening racial disparities. (NYT)How the pain of past economic crises is haunting Italy. (NYT)“Fighting a Brutal Regime With the Help of a Video Game” (NYT)We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com. More

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