Published on Apr 09, 2024
The judge assigned to the DOJ/Apple lawsuit has limited experience ruling on antitrust. The New Jersey federal judge overseeing the Justice Department’s sprawling challenge to Apple’s (AAPL) alleged illegal monopolization of the iPhone ecosystem is in for quite the crash course on antitrust. The historic case appears to be Judge Michael Farbiarz’s first courtroom exposure to competition law, according to a Capitol Forum review of court records.
Farbiarz, a President Joe Biden nominee who took the bench in May of last year, spent most of his career as an assistant U.S. attorney in the Southern District of New York, where he led a series of successful national security prosecutions. His high-profile cases include the prosecution of the Somali pirates who attacked the shipping vessel Maersk Alabama, an incident later portrayed in the movie Captain Phillips.
After his ten-year stint as a prosecutor, in 2016 Farbiarz became general counsel for the Port Authority of New York and New Jersey, where he managed a law department of over a hundred people and oversaw “a broad range of legal matters, principally related to litigation, transactional matters, and regulatory matters,” according to his judicial questionnaire.
But those matters, which included antidiscrimination law, bankruptcy, class actions, commercial disputes, and employment law, among others, don’t appear to involve antitrust. And the Apple case, which raises thorny questions of market definition, interoperability, and the evolution of technology, will require Farbiarz to become intimately familiar with a veritable mountain of case law, not to mention what comes out in discovery.
“Antitrust cases are notorious for their complexity, both on the facts and on the law,” said Erika Douglas, a professor at Temple University School of Law who specializes in antitrust and data privacy.
Farbiarz is familiar with Third Circuit jurisprudence, however. In a series of written answers to judicial nomination questions posed by Senator Lindsey Graham (R-SC), Farbiarz named a 1978 decision by the appeals court in Xerox Corp. v. SCM Corp. as reflecting his own judicial philosophy. A three-judge panel ruled in favor of the lower court’s decision to deny a motion to dismiss, finding that Xerox’s (XRX) claims of patent infringement were distinct enough from a major antitrust case between the two companies that was proceeding in a separate district court.
The new jurist is likely to remain immersed in Apple’s walled garden for the foreseeable future: he’s been assigned at least five private cases that mirror the DOJ’s in the weeks since the department filed its suit.
Rumored Alphabet acquisition of HubSpot would trip regulatory wires. Google’s (GOOG) parent company, Alphabet, is considering acquiring marketing and customer relationship software developer HubSpot (HUBS), Reuters reported on Thursday, citing people familiar with the matter. HubSpot is worth about $34 billion and Google is facing a multitude of antitrust lawsuits, including two from the DOJ alone, so the deal—if it does happen—is sure to attract scrutiny. Google and HubSpot did not respond to requests for comment on the report.
If confirmed, the acquisition could end up violating Section 8 of the Clayton Act, which prohibits competitors from sharing board members. The Capitol Forum reported last June that Robin L. Washington’s position on the boards of both Alphabet and Salesforce (CRM) could pose a Section 8 issue if the two software companies were deemed competitors.
While the current overlap—mostly in productivity and communication tools—appears small enough to evade scrutiny, buying HubSpot would place Alphabet in direct competition with Salesforce in the customer relationship software market. In this scenario, Ms. Washington’s dual position may be harder to justify, especially after the recent resignations of two Warner Bros. Discover (WBD) board members following DOJ scrutiny.
Bipartisan data privacy bill would give the FTC a new bureau. Rep. Cathy McMorris Rodgers (R-WA) and Sen. Maria Cantwell (D-WA) unveiled a discussion draft of their data privacy bill. The American Privacy Rights Act is unlike many previous attempts to pass a comprehensive data privacy law because it has both bipartisan support and the support of Cantwell—both of which are necessary for it to have a chance of passing.
Among other things, the bill gives the Federal Trade Commission enforcement power and a new, third bureau through which to do it (state attorneys general will also have enforcement power, and there is a private right of action), though doesn’t appear to include any additional funding for the agency. It also ends the FTC’s ongoing rulemaking on commercial surveillance and data security.
TSMC wins subsidies after playing hardball, while Intel faces setbacks. On Monday the Commerce Department announced a $6.6 billion grant for Taiwan Semiconductor Manufacturing Company (TSMC), the second-largest disbursal of federal funding from the CHIPS and Science Act. The preeminent chipmaker will use the funds, along with billions in loans, to build three plants—one more than previously announced—in Phoenix, Arizona.
The Phoenix hub will produce 4-nanometer chips by 2025 and more advanced generations before the end of the decade. U.S. companies make up about 70% of TSMC’s customer base, Commerce Secretary Gina Raimondo said.
The long-awaited announcement followed months of tense negotiations; TSMC had originally sought $15 billion. In January, TSMC executives pushed back construction timelines in what analysts and U.S. officials called a negotiating tactic.
While experts agree on the importance of bringing TSMC’s production to U.S. soil, some anti-monopoly advocates argue that the U.S. should focus on boosting newer chipmakers that could challenge TSMC’s dominance. TSMC’s relationship with Apple, in which Apple gets special pricing and exclusive access to leading edge chips, has brought windfalls for both companies at the expense of competitors, as The Capitol Forum previously reported.
“TSMC, and its biggest customer Apple, are the primary contributors to the hollowing out of America’s semiconductor industry because it serves their business interests to thwart the rise of rivals elsewhere,” the American Economic Liberties Project said in a statement. “This proposal changes none of the anti-competitive practices that TSMC and Apple use to block new entrants. Leading edge chip supply will remain brittle, mostly offshore and controlled by one dominant firm.”
Meanwhile, leading U.S. chipmaker Intel (INTC) is struggling. The company’s foundry business lost $7 billion in 2023, up from $5.2 billion in 2022. CEO Pat Gelsinger revealed on a call with analysts that Intel outsources almost a third of its chips from companies like TSMC, against which Intel is supposed to be competing. Intel is also having trouble attracting customers that aren’t itself: in 2023, only 5% of its foundry revenue came from external buyers, according to a recent filing.
Even so, last month Intel received the largest CHIPS award yet: $8.5 billion in direct funding. Asked by the New York Times about how Intel can overcome its challenges while satisfying both shareholders and U.S. officials, Gelsinger recently said: “You have to trust me, and you have to be patient.”
Paramount might be on the cusp of a sale. Paramount Global (PARA) may have found its buyer, according to the Wall Street Journal: Skydance Media, which the WSJ reported last week is now in exclusive merger talks. Skydance is owned by David Ellison, son of Oracle (ORCL) founder and billionaire Larry Ellison.
Google is reportedly considering charging for its AI-powered search. Google is also considering charging for AI-powered search, the Financial Times reports. If true, this would be the first time Google charged for one of its search products, which have always been free to users and funded by Google’s lucrative ad business. The company is currently the subject of an inquiry from the FTC into investments in and partnerships with generative AI companies, along with Microsoft (MSFT), OpenAI, Amazon (AMZN), and Anthropic.
A Google spokesperson said the company doesn’t have anything to announce “right now,” but didn’t outright deny the report, saying in a statement: “We’re continuing to rapidly improve the product to serve new user needs. We’re not working on or considering an ad-free search experience. As we’ve done many times before, we’ll continue to build new premium capabilities and services to enhance our subscription offerings across Google.”
Microsoft makes its Teams split global. Microsoft is splitting Teams from its Office and Microsoft 365 subscription software bundle globally. The company initially made this change last year for most of its European users in response to an antitrust investigation from the European Commission. The decision to extend that to the rest of the world, the company said, was meant to ensure “globally consistent licensing” and “clarity for customers.”
Regulation/Legislation
FCC will soon vote to restore net neutrality. The Federal Communications Commission will have its much-anticipated vote to restore net neutrality during its next Open Meeting, scheduled for April 25. Chair Jessica Rosenworcel was an FCC commissioner back in 2015 when the agency first voted to re-classify internet service providers as Title II carriers, subjecting them to increased oversight—including requiring them to treat all internet traffic equally, also known as net neutrality. Rosenworcel was also a commissioner in 2017 when the FCC, under the Republican chair Ajit Pai, voted to repeal it.
“After the prior administration abdicated authority over broadband services, the FCC has been handcuffed from acting to fully secure broadband networks, protect consumer data, and ensure the internet remains fast, open, and fair. A return to the FCC’s overwhelmingly popular and court-approved standard of net neutrality will allow the agency to serve once again as a strong consumer advocate of an open internet,” Rosenworcel said in a statement.
Pai called the move, which would undo a significant part of his legacy as FCC chair, a “complete waste of time.”
The FTC continues its right to repair push. The FTC is asking the public to send in stories of trying to get products repaired and warranties honored. Among other things, the agency says it’s interested in how difficult it was to repair products at independent shops or for consumers to do it themselves. The FTC has been very vocal about its support of “right to repair” laws and policies, saying that they will increase competition in both repair services and replacement parts.
Litigation
Meta wants the FTC’s lawsuit dismissed. Meta (META) has filed for a summary judgement to dismiss the FTC’s case against it. The company said in its statement that the FTC has “has done nothing to build its case through the discovery process,” that it faces plenty of competition, and that its acquisitions of Instagram and WhatsApp were cleared more than a decade ago.
Hiring
DOJ: Senior Litigation Counsel, Antitrust Division. Multiple openings based in San Francisco, DC, Chicago, and New York.
DoorDash: Director of the Competition and Litigation. Position can be based in Chicago, New York, Los Angeles, San Francisco, or DC.
ByteDance: The China-based company best known in the U.S. as TikTok’s owner, is looking for a DC-based Senior AI Technology Policy counsel.
DLA Piper: AI Policy Advisor, based in DC.
Latham & Watkins: Research & Litigation Services Attorney, specializing in AI. Position can be based in New York, Chicago, Boston, Austin, or San Diego.
Cisco: Principal Corporate Counsel, antitrust. Experience in the technology industry is “a plus.” Based in San Jose, but Seattle, Chicago, and Austin are listed as alternate locations.
Amazon: Corporate Counsel, Litigation. The company is looking for someone with “experience in competition matters,” based in Seattle or Arlington, VA.
Amazon: Corporate Counsel, Ops AI/ML. Amazon is also looking for someone who will be “an integral part of our AI/ML compliance implementation” and a “subject matter expert on emerging AI/ML regulations.” Position is based in Seattle or New York City.
Coming up
April 9: CHIPS for America and Natcast: An Update on the NSTC
April 10-12: American Bar Association’s Antitrust Spring Meeting
April 18-19: University of Chicago’s Antitrust and Competition Conference
April 25: FCC April 2024 Open Commission Meeting
May 2-3: CompLaw’s Antitrust West Coast event
May 21: American Economic Liberties Project’s Anti-Monopoly Summit
