US appeals court clears AT&T’s $81B purchase of Time Warner
By MARCY GORDON and TALI ARBEL
AP Business Writers
Wednesday, February 27
WASHINGTON (AP) — A federal appeals court on Tuesday cleared AT&T’s takeover of Time Warner, rejecting the Trump administration’s claims that the $81 billion deal will harm consumers and reduce competition in the TV industry.
The ruling by the U.S. Court of Appeals in Washington came in the high-stakes competition case, approving one of the biggest media marriages ever. It was already completed last spring, soon after a federal trial judge approved it. AT&T, a wireless carrier and TV and home internet provider, absorbed Time Warner, the owner of CNN, HBO, the Warner Bros. movie studio, “Game of Thrones,” sports programming and other shows.
Many observers had expected the decision favorable to AT&T from the three-judge appeals court panel. The decision was unanimous to uphold the trial judge’s June ruling. Opposing the merger forced the Justice Department to argue against standing legal doctrine that favors mergers among companies that don’t compete directly with each other, what’s known as a vertical merger.
The U.S. antitrust lawsuit against Dallas-based AT&T marked the first time in decades that the government has challenged that doctrine by suing to block a vertical merger.
The ruling dealt a major setback to the Trump Justice Department. The department said it won’t appeal the ruling. Its chances of prevailing at the Supreme Court were considered dim.
“We are grateful that the Court of Appeals considered our objections to the district court opinion,” spokesman Jeremy Edwards said. “The department has no plans to seek further review.”
The appeals court judges said U.S. District Judge Richard Leon was correct to dismiss the government’s argument that AT&T’s takeover of Time Warner would hurt competition, limit choices and jack up prices for consumers to watch TV and movies.
“The government failed to meet its burden of proof” for its theory that costs for Time Warner’s Turner Broadcasting content would increase after the merger, mainly through threats of programming “blackouts,” the judges wrote. The Turner networks include CNN.
The Justice Department antitrust attorneys had asserted that Leon misunderstood the complexities of the TV industry and the nature of AT&T’s competitors.
The idea behind the merger was to help AT&T — which claims about 25 million of the 90 million U.S. households that are pay TV customers — compete better with online rivals like Netflix, YouTube and Hulu.
AT&T already had a streaming service, DirecTV Now, but it launched a cheaper offering called WatchTV soon after the deal closed. It’s planning another streaming service, “WarnerMedia,” for later this year.
“The merger of these innovative companies has already yielded significant consumer benefits, and it will continue to do so for years to come,” AT&T General Counsel David McAtee said in a statement.
The Justice Department was committed to pursuing the long-shot bid against the merger, rather than considering conditions that could have been imposed on AT&T by the trial court to make the deal more acceptable. The head of Justice’s antitrust division, Makan Delrahim, doesn’t like merger conditions requiring regulators to keep an eye on the combined company’s conduct for years after.
But politics and presidential influence also could have been a factor, suggested Matthew Cantor, an attorney focusing on telecom antitrust matters at Constantine Cannon in New York. When the deal was first made public in October 2016, it drew fire from then-candidate Donald Trump, who promised to kill it “because it’s too much concentration of power in the hands of too few.” Trump as president has publicly feuded with Time Warner’s CNN, calling it “failing” and a purveyor of “fake news,” and suspending one of its correspondents from the White House.
“It seems to me that political considerations played into this,” Cantor said. “It’s odd that the Justice Department has gone after this merger as its principal merger case. … This was a very tough case. It’s very hard to challenge a vertical merger.”
The case could affect future antitrust regulation. It underscores that the government should look at vertical mergers more critically, particularly when the companies combining are already in industries that have few competitors, said Diana Moss, president of the American Antitrust Institute.
There has been a rush of deal-making in the cable, entertainment and telecom industries over the last few years, and Leon’s ruling opened the doors for more efforts.
Just a day after his decision, Comcast jumped back into a bidding war with Disney for most of 21st Century Fox’s TV and movie businesses. Disney eventually won, and Comcast bought British broadcaster Sky instead.
In other deal activity, wireless carriers Sprint and T-Mobile also are attempting to combine. The Justice Department and the Federal Communications Commission are still reviewing that deal, which is not a vertical merger. Sprint and T-Mobile are direct competitors.
Arbel reported from New York.
The City That Refused to Play Amazon’s Game
San Antonio told Jeff Bezos to beat it over a year before New York sent him packing.
By Jim Hightower | February 27, 2019
The richest man in the world, who heads one of the world’s largest and richest corporations, is also filthy rich in arrogance and pomposity.
Jeff Bezos of Amazon demanded that a city’s officials kowtow to him by handing billions of taxpayer dollars to his retail behemoth, essentially bribing him to locate an Amazon headquarters there. But — lo and behold — the city mustered its collective integrity and pride to say “no” to his devil’s bargain.
The city I’m bragging on isn’t New York City, which recently made national news by rejecting Amazon’s attempt to fleece its taxpayers. Rather, I’m saluting San Antonio, Texas, which in 2017 simply refused to play Bezos’ con game when he first rolled it out.
While 238 cities and states groveled in front of the diminutive potentate, San Antonio’s mayor and top county official sent a “Dear Jeff” letter kissing him off. They said their city has much to offer, but any development deal “has to be the right fit; not just for the company, but for the entire community,” adding that “blindly giving away the farm isn’t our style.”
The officials wrote that a key criterion for awarding any incentives was whether a company is “a good corporate citizen.” Noting that Amazon almost certainly had already chosen its preferred location, they called the national “search” a money-grubbing scam. “This public process is, intentionally or not, creating a bidding war amongst states and cities,” they charged.
Why should public officials anywhere be throwing billions of scarce public dollars at a pompous corporate prince who neither needs nor deserves such tribute?
City and state officials everywhere need to follow the example of New York and San Antonio, agreeing to stop bidding against each other in the corporate bribe racket.
OtherWords columnist Jim Hightower is a radio commentator, writer, and public speaker. Distributed by OtherWords.org.
Canada’s ex-attorney general to testify about SNC scandal
By ROB GILLIES
TORONTO (AP) — Canada’s former attorney general is expected to testify Wednesday about whether she was inappropriately pressured by Prime Minister Justin Trudeau’s office to avoid prosecuting a major Canadian engineering company.
Ex-Attorney General Jody Wilson-Raybould has said she wants to tell “her truth” and she will speak at a hearing of the Parliament justice committee.
Trudeau’s government has been on the defensive since the Globe and Mail newspaper reported Feb. 7 that Trudeau or his staff pressured Wilson-Raybould last year to try to avoid a criminal prosecution of Montreal-based SNC-Lavalin over allegations of corruption involving government contracts in Libya. Critics say that would be improper political meddling in a legal case.
The scandal has been a significant blow to Trudeau, who is facing an election this year. Gerald Butts, Trudeau’s closet adviser, resigned last week but denied that he or anyone else pressured Wilson-Raybould. Michael Wernick, the top civil servant in the government, has also said that no inappropriate pressure was put on Wilson-Raybould and that Trudeau repeatedly assured Wilson-Raybould the decision on the SNC-Lavalin prosecution was hers alone.
Wilson-Raybould resigned from the Cabinet on Feb. 12 as veteran affairs minister but gave no reasons. She had been demoted from justice minister last month, and was furious, releasing a 2,000-word statement after that.
The Globe and Mail’s report this month said Trudeau’s office pressured her to instruct the director of public prosecutions to negotiate a remediation agreement with SNC-Lavalin. The agreement would have allowed the company to pay reparations but avoid a criminal trial on charges of corruption and bribery.
If convicted criminally, the company would be banned from receiving any federal government business for a decade. SNC-Lavalin is a major employer in Quebec, with about 3,400 employees in the province, 9,000 employees in Canada and more than 50,000 worldwide.
Trudeau largely waived lawyer-client privilege to allow Wilson-Raybould to speak and said Tuesday that he’s “pleased” she will get that opportunity.
Wilson-Raybould accepted the committee’s invitation to testify but complained in a letter to the justice committee that the waiver does not release her to talk about any communications she had after she was named minister of veteran affairs or her resignation from the Cabinet.
She will begin her testimony with a 30-minute opening statement.
Business chief says delaying Brexit helps provide ‘sanity’
By JILL LAWLESS
Wednesday, February 27
LONDON (AP) — Prime Minister Theresa May insisted Wednesday that Britain will leave the European Union on schedule next month, while the head of a major business organization said May’s grudging decision to allow lawmakers to vote to delay Brexit provides an “option on sanity.”
May has bowed to pressure from within her own Conservative government and given Parliament the chance to delay Britain’s scheduled March 29 departure if lawmakers fail to approve her divorce agreement with the bloc.
May stressed that she personally opposes extending the Brexit deadline, and said “the United Kingdom remains on course to leave the European Union with a deal” if lawmakers “hold their nerve.” Writing in the Daily Mail, May said talks with the EU about securing changes to the divorce deal to make it more palatable to Parliament have “begun to bear fruit.”
The House of Commons rejected May’s deal with the EU last month — largely over concerns about a provision to guarantee an open border between the U.K.’s Northern Ireland and EU member Ireland — and sent May back to Brussels to get changes.
The EU is adamant that the legally binding withdrawal agreement can’t be changed, though the bloc’s negotiators are holding talks with U.K. Attorney General Geoffrey Cox about potential tweaks or additions around the margins.
On Tuesday, May gave Parliament a greater say over Brexit to forestall a rebellion by pro-EU members of her government, who threatened to quit and vote with the opposition in order to rule out a disruptive “no-deal” Brexit.
She said Parliament will get to vote again on the deal by March 12. If it is rejected, lawmakers will then vote on whether to leave the EU without an agreement or seek to postpone Brexit by up to three months.
The move angered pro-Brexit lawmakers, who fear any postponement could be a step toward stopping Britain’s departure.
It was welcomed, however, by pro-EU members of Britain’s divided Parliament. They will try to impose more conditions on the government’s Brexit negotiating strategy in a series of votes on Wednesday evening.
British businesses also welcomed the prospect of a delay. They warn that without a deal, Britain risks a chaotic departure that could disrupt trade between the U.K. and the EU, its biggest trading partner.
Confederation of British Industry head Carolyn Fairbairn said neither business nor the government is ready to leave, and exiting without a deal would be “a wrecking ball on our economy.”
Delaying Brexit would require approval from all 27 other EU countries, whose leaders are annoyed by what they see as the inability of feuding British politicians to agree on what kind of relationship the U.K. wants with the bloc.
Chief EU Brexit negotiator Michel Barnier said Wednesday that there must be clarity that extending negotiations would not just prolong the impasse facing both sides.
EU politicians say Britain must have a good reason for seeking a pause.
French President Emmanuel Macron said any such request would need to be justified by “a clear perspective on the goal.”
“We don’t need time, we need decisions,” he said at a joint news conference in Paris with German Chancellor Angela Merkel.
Merkel said the EU would not refuse Britain “a bit more time.”
She said “we are aiming for an orderly solution — an orderly withdrawal by the British from the European Union.”
Sylvie Corbet in Paris, Geir Moulson in Berlin and Danica Kirka in London contributed to this story.
Follow AP’s full coverage of Brexit at: https://www.apnews.com/Brexit
China is catching up to the US on artificial intelligence research
February 27, 2019
The U.S. may be ahead for now, but not by much.
Author: Thomas H. Davenport, Professor of Information Technology and Management, Babson College
Disclosure statement: MIT Press provides funding as a member of The Conversation US.
Researchers, companies and countries around the world are racing to explore – and exploit – the possibilities of artificial intelligence technology. China is working on an extremely aggressive multi-billion-dollar plan for government investment into AI research and applications. The U.S. government has been slower to act.
The Obama administration issued a report on AI near the end of its term. Since then, little has happened – until a Feb. 11 executive order from President Donald Trump encouraging the country to do more with AI.
The executive order has several parts, including directing federal agencies to invest in AI and train workers “in AI-relevant skills,” making federal data and computing resources available to AI researchers and telling the National Institute of Standards and Technology to create standards for AI systems that are reliable and work well together. These are all good ideas, but they lack funding and bureaucratic structure. So after researching how large organizations use AI for the past five years, in my view the executive order alone is not likely to transform the American approach to AI.
China is doing far more than talking about AI. In 2017, the country’s national government announced it wanted to make the country and its industries world leaders in AI technologies by 2030. The government’s latest venture capital fund is expected to invest more than US$30 billion in AI and related technologies within state-owned firms, and that fund joins even larger state-funded VC funds.
One Chinese state alone has said it will devote $5 billion to developing AI technologies and businesses. The city of Beijing has committed $2 billion to developing an AI-focused industrial park. A major port, Tianjin, plans to invest $16 billion in its local AI industry.
These government programs will support ambitious major projects, startups and academic research in AI. The national effort also includes using AI in China’s defense and intelligence industries; the country’s leaders are not reluctant to use AI for social and political control. For example, both AI-driven facial recognition, even to catch jaywalkers, and “social credit” – an AI-driven credit score that factors in social behaviors – are already in use.
U.S. investment plans, mostly in the defense industry, are dwarfed by the Chinese effort. DARPA, the Defense Department’s research arm, has sponsored AI research and competitions for many years, and has a $2 billion fund called “AI Next” to help develop the next wave of AI technologies in universities and companies. It’s not yet clear how much real progress its efforts have made.
Private sector contributions
The U.S. has a strong private sector effort in this technology. There are, for instance, many more AI firms in the U.S. than in China.
American investment appears strong, too. In 2015, for example, the combined research and development spending at the U.S.-headquartered companies Google, Apple, Facebook, IBM, Microsoft and Amazon was $54 billion. Much of that spending went toward AI research, but some of the work actually happened in China and elsewhere outside the U.S. That work has been used to personalize ads, improve search results, recognize and label faces and generally make products smarter.
In China, the private sector is much more closely tied to government plans than in the U.S. The Chinese government has asked four large AI-oriented firms in China – Baidu, Tencent, Alibaba and iFlytek – to develop AI hardware and software systems to handle autonomous driving and language processing, so other companies could build on those skills.
China may have also surpassed the American historic advantage in venture capital investments. In 2018, U.S. AI startups received $9.3 billion in venture funding – a record amount, but the number of deals was down from 2017. However, one report from China suggests that in the first half of 2018, Chinese venture investments – many of which involved AI – were higher than in the U.S. Data from 2017 suggest that Chinese AI firms received more venture funding than U.S. companies, although the American funding went to many more firms.
Beyond investment money
There are other factors than investment that determine a country’s long-term competitiveness on AI. Talent is an important one. The U.S. had an historical edge in this regard, with strong technical universities, many technology sector employers and relatively open immigration policies.
A recent analysis of LinkedIn data suggests that the U.S. has far more AI engineers than China does. But China is closing the gap rapidly, with a variety of education and training programs beginning as early as elementary school. The Trump administration’s restrictions on immigration are encouraging some of the world’s best AI researchers to stay home, rather than come to the U.S.
Another element in long-term AI success is how particular regions build mutually reinforcing communities of companies, university ecosystems and government agencies. Silicon Valley is the world leader in this regard, and China doesn’t have anything to match it yet. Both the U.S. and China could learn from efforts in Canada, such as the work by the Montreal Institute for Learning Algorithms, which has offered companies access to facilities, venture capital and university research partnerships to accelerate AI development in that city.
A final key element in AI progress is data: The more data a country’s companies have, the better able they are to develop capable AI systems. Chinese online firms have massive amounts of consumer data on which to train machine learning algorithms. Because of its very large number of inhabitants, the population’s heavy use of digital services and its lax regulatory environment, China clearly beats the U.S. on data.
I still think the U.S. has the edge over China in AI capabilities at the moment. However, as much as I would like the U.S. to win this race over the long run, if I were a betting man I would bet on China. As I describe in my new book “The AI Advantage,” China is executing its strategy for AI, and the U.S. is still wrestling to create one. China is also reaping the benefits of having a determined government, an inexhaustible pot of money, a growing cadre of smart researchers and a large, digital-hungry population.
Perhaps if the leadership of the U.S. government devoted as much attention and investment to AI as it does to its other strong priorities, the U.S. could maintain its lead in the field. That seems unlikely over the next couple of years, however.
Thomas H. Davenport is the author of: The AI Advantage: How to Put the Artificial Intelligence Revolution to Work. MIT Press provides funding as a member of The Conversation US.