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The Trustbuster Who Has Apple and Google in His Sights

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Shortly after Jonathan Kanter took over the Justice Department’s antitrust division in November 2021, the agency secured an additional $50 million to investigate monopolies, bust criminal cartels and block mergers.To celebrate, Mr. Kanter bought a prop of a giant check, placed it outside his office and wrote on the check’s memo line: “Break ’Em Up.”Mr. Kanter, 50, has pushed that philosophy ever since, becoming a lead architect of the most significant effort in decades to fight the concentration of power in corporate America. On Thursday, he took his biggest swing when the Justice Department filed an antitrust lawsuit against Apple. In the 88-page lawsuit, the government argued that Apple had violated antitrust laws with practices intended to keep customers reliant on its iPhones and less likely to switch to competing devices.That lawsuit joins two Justice Department antitrust cases against Google that argue the company illegally shored up monopolies. Mr. Kanter’s staff has also challenged numerous corporate mergers, including suing to stop JetBlue Airways from buying Spirit Airlines.“We want to help real people by making sure that our antitrust laws work for workers, work for consumers, work for entrepreneurs and work to protect our democratic values,” Mr. Kanter said in a January interview. He declined to comment on the Google cases and other active litigation.At a news conference about the Apple lawsuit on Thursday, Mr. Kanter compared the action to past Justice Department challenges to Standard Oil, AT&T and Microsoft. The suit is aimed at protecting “the market for the innovations that we can’t yet perceive,” he said.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    An Emboldened F.T.C. Bolsters Biden’s Efforts to Address Inflation

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    With few unilateral options and little hope of legislation from Congress, the president’s early investment in competition policy could pay a political dividend.An independent federal agency has become one of the most reliable executors of President Biden’s attempts to fight inflation, at a time when the White House has few weapons of its own to quickly bring down stubbornly high prices of consumer staples like groceries.The Federal Trade Commission filed a lawsuit on Monday, joined by several state attorneys general, to challenge a merger between the supermarket giants Kroger and Albertsons. The agency’s rationale in many ways echoed Mr. Biden’s renewed attempts to blame corporate greed for rising prices and shrinking portions in grocery aisles.“If allowed, this merger would substantially lessen competition, likely resulting in Americans paying millions of dollars more for food and other essential household goods,” agency officials wrote in a legal complaint. Because grocery prices have risen significantly in recent years, they added, “the stakes for Americans are exceptionally high.”That is true for consumers, and it is true for the president. More Americans disapprove of his handling of the economy than approve of it. Consumer confidence, while improved in recent months, remains relatively weak for an economy with low unemployment and solid growth like the one Mr. Biden is presiding over.An internal analysis by White House economists suggests that no single factor is weighing more on consumer sentiment than grocery prices. Those costs soared in 2022 and have not fallen, though their rate of increase has slowed.White House officials concede that there is little more Mr. Biden can do unilaterally to reduce grocery prices and even less chance of legislative help from Congress. That is why Mr. Biden has resorted to the bully pulpit, calling on stores to reduce prices and chastising snack makers for engaging in “shrinkflation” — reducing portions while raising or maintaining prices.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Amazon Argues National Labor Relations Board Is Unconstitutional

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    The company made the novel claim, echoing arguments by SpaceX and Trader Joe’s, in a legal filing while fighting a case.In the latest sign of a growing backlash within corporate America to the 88-year-old federal agency that enforces labor rights, Amazon argued in a legal filing on Thursday that the National Labor Relations Board was unconstitutional.The move followed a similar argument by SpaceX, the rocket company founded and run by Elon Musk, in a legal complaint in January, and by Trader Joe’s during a labor board hearing a few weeks later.The labor board consists of a prosecutorial arm, which issues complaints against employers or unions deemed to have violated federally protected labor rights; administrative judges, who hear complaints; and a five-member board in Washington, to which decisions can be appealed.Amazon’s filing was part of a case before an administrative judge in which labor board prosecutors have accused Amazon of illegally retaliating against workers at a Staten Island warehouse known as JFK8, which unionized two years ago.The company’s lawyers repeatedly denied in their filing that Amazon had broken the law. Then, under a section titled “Other Defenses,” they argued that “the structure of the N.L.R.B. violates the separation of powers” by “impeding the executive power provided for in Article II of the United States Constitution.”The company also argued that the board or its actions or proceedings violated Articles I and III of the Constitution, as well as the Fifth and Seventh Amendments — in the last case because, the filing said, board hearings can seek legal remedies beyond what’s allowed without a trial by jury.Amazon declined to comment.The claims it made in the filing echo arguments that lawyers for SpaceX made in a federal lawsuit last month, after the labor board issued a complaint accusing the company of illegally firing eight employees for criticizing Mr. Musk. SpaceX sued in Texas, but a federal judge there on Thursday granted the board’s motion to transfer the case to California, where the company’s headquarters are located.In a statement, the board’s general counsel, Jennifer A. Abruzzo, said, “I am pleased that SpaceX’s blatant forum-shopping efforts in Texas attempting to enjoin the agency’s litigation against it have failed.”Wilma Liebman, a chairwoman of the labor board under President Barack Obama, called the arguments by Amazon and SpaceX “radical,” adding that “the constitutionality of the N.L.R.B. was settled nearly 90 years ago by the Supreme Court.”The arguments appear to align with a broader conservative effort to question the constitutionality of a variety of regulatory actions, some of which have resulted in cases before the Supreme Court.In January, the Supreme Court also agreed to hear a case brought by Starbucks, which is challenging a federal judge’s order reinstating employees who were fired during a union campaign. The outcome of the case could rein in the labor board’s longstanding practice of seeking reinstatement for workers while their cases are litigated, a process that can take years. More

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    Supreme Court to Hear Starbucks Bid to Overturn Labor Ruling

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    The coffee chain has challenged a federal judge’s order to reinstate a group of union activists who were fired at a store in Memphis.The Supreme Court agreed on Friday to hear a case brought by Starbucks challenging a federal judge’s order to reinstate seven employees who were fired at a store in Memphis amid a union campaign there.Starbucks argued that the criteria for such intervention by judges in labor cases, which can also include measures like reopening shuttered stores, vary across regions of the country because federal appeals courts may adhere to different standards.A regional director for the National Labor Relations Board, the company’s opponent in the case, argued that the apparent differences in criteria among appeals courts were semantic rather than substantive, and that a single effective standard was already in place nationwide.The labor board had urged the Supreme Court to stay out of the case, whose outcome could affect union organizing across the country.The agency asks federal judges for temporary relief, like reinstatement of fired workers, because litigating charges of unfair labor practices can take years. The agency argues that retaliation against workers can have a chilling effect on organizing in the meantime, even if the workers ultimately win their case.In a statement on Friday, Starbucks said, “We are pleased the Supreme Court has decided to consider our request to level the playing field for all U.S. employers by ensuring that a single standard is applied as federal district courts.”The labor board declined to comment.The union organizing campaign at Starbucks began in the Buffalo area in 2021 and quickly spread to other states. The union, Workers United, represents workers at more than 370 Starbucks stores, out of roughly 9,600 company-owned stores in the United States.The labor board has issued dozens of complaints against the company based on hundreds of accusations of labor law violations, including threats and retaliation against workers who are seeking to unionize and a failure to bargain in good faith. This week, the agency issued a complaint accusing the company of unilaterally changing work hours and schedules in unionized stores around the country.The company has denied violating labor law and said in a statement that it contested the latest complaint and planned “to defend our lawful business decisions” before a judge.The case that led to the dispute before the Supreme Court involves seven workers who were fired in February 2022 after they let local journalists into a closed store to conduct interviews. Starbucks said the incident violated company rules; the workers and the union said the company did not enforce such rules against workers who were not involved in union organizing.The labor board found merit in the workers’ accusations and issued a complaint two months later. A federal judge granted the labor board’s request for an order reinstating the workers that August, and a federal appeals court upheld the order.“Starbucks is seeking a bailout for its illegal union-busting from Trump’s Supreme Court,” Workers United said in a statement on Friday. “There’s no doubt that Starbucks broke federal law by firing workers in Memphis for joining together in a union.”Starbucks said it was critical for the Supreme Court to wade into the case because the labor board was becoming more ambitious in asking judges to order remedies like reinstatement of fired workers.The labor board noted in its filing with the Supreme Court that it was bringing fewer injunctions overall than in some recent years — only 21 were authorized in 2022, down from more than 35 in 2014 and 2015.A Supreme Court decision could in principle raise the bar for judges to issue orders reinstating workers, effectively limiting the labor board’s ability to win temporary relief for workers during a union campaign.The case is not the only recent challenge to the labor board’s authority. After the board issued a complaint accusing the rocket company SpaceX of illegally firing eight employees for criticizing its chief executive, Elon Musk, the company filed a lawsuit this month arguing that the agency’s setup for adjudicating complaints is unconstitutional.The company said in its lawsuit that the agency’s structure violated its right to a trial by jury. More

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    Choice Hotel Franchise Owners Push Back on Merger With Wyndham

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    Franchisees are fighting Choice Hotels’ attempted takeover of its biggest rival, which would create a dominant player in the budget hotel sector.When Patrick Pacious, the chief executive of a large portfolio of hotel brands, promoted a blockbuster attempt to acquire a competitor in October, he said the proposed merger would lower costs and attract more customers for the families and small businesses that own most of the company’s locations.“Our franchisees instantly grasped the strategic benefit this would bring to their hotels,” Mr. Pacious, who leads Choice Hotels, said on CNBC.As the weeks have passed, however, the reaction has not been positive. Wyndham Hotels and Resorts, the target of the proposed deal, rejected the offer from Choice, which is now pursuing a hostile takeover. And in early December, an association representing the majority of hoteliers who own Choice and Wyndham-branded properties came out strongly against it.“We all don’t know what’s driving this merger. Many of us feel it’s not needed,” said Bharat Patel, the chairman of the organization, the Asian American Hotel Owners Association. The group surveyed its 20,000 members and found that about 77 percent of respondents who own hotels under either brand or both thought a merger would hurt their business.“I’m not against Choice or Wyndham,” said Mr. Patel, who owns two Choice hotels. “We just need robust competition in the markets.”That opposition illustrates a growing resistance to consolidation in industries that have grown more concentrated in recent years. Even some Wall Street analysts have expressed skepticism that Choice’s proposal is a good idea.The views of hotel owners could become a hurdle for Choice as it seeks approval for a merger from the Federal Trade Commission, which has taken an interest in franchising as evidence has mounted that the economic and legal relationship has increasingly tilted in favor of brand owners and away from franchisees.To understand why franchisees are worried, it’s helpful to understand how hotels are structured.About 70 percent of the nation’s 5.7 million hotel rooms operate under one of the several big national brands like Marriott or Hilton, according to the real estate data firm CoStar. The rest are independent.Over the past few decades, franchise chains have bought one another and merged to the point where the top six companies by number of rooms — Marriott, Hilton, InterContinental, Best Western, Choice and Wyndham — account for about 80 percent of all branded hotels.How a Choice/Wyndham merger would stack upCombining the two companies would create America’s largest branded hotel chain

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    Number of hotel rooms in the United States
    Note: Data is as of Dec. 19.Source: CoStar GroupBy The New York TimesUnlike fast food franchisees, hotel owners typically develop or buy their own buildings, representing a multimillion-dollar investment for each property. The industry has drawn thousands of immigrant entrepreneurs from South Asia. Some owners accumulate sprawling portfolios, but most end up with just a few hotels.The average member of the Asian American owners’ group owns just two hotels, most commonly with one of the economy or midscale brands. Choice and Wyndham dominate that segment, with 6,270 and 5,907 hotels in the United States, including Days Inn, Howard Johnson, Quality Inn and Econo Lodge.Being part of a franchise network provides a recognized name, a business plan and collective purchasing that is supposed to give small businesses the benefits of scale. In exchange, hotel owners pay the brands a fee to join, ongoing royalties and other payments for marketing, technology and consulting.As a result, franchisees are effectively customers of the hotel brands. Less competition between hotel chains can leave owners with fewer options and, thus, less leverage to demand better services for a lower cost.Consider the frustrations of Jayanti Patel, who owns a Comfort Inn — one of Choice’s 22 brands — in Gettysburg, Pa.He said Choice had been taking a larger cut, via charges like an $18 monthly fee for reporting his property’s energy use, discounts for rooms booked with rewards programs and penalties when guests file complaints. Mr. Patel also laments declining service, such as from revenue management consultants who are supposed to provide advice that increases his profits. Choice has outsourced this work to a service that operates partly overseas.Mr. Patel said his profit margins had become “thinner and thinner,” and he’s considering signing up with a different brand when his franchise agreement ends in a couple of years. Friends who own Wyndham-branded properties seem happy, so he might adopt one of its brands as long as Choice doesn’t acquire that chain.“When my window comes up in 2026, 99 percent I don’t want to renew my agreement,” Mr. Patel said. “And maybe If I want to go to Wyndham, they have nearly 20 brands, and I lose that opportunity, because it will be the same thing.”Choice argues that as its rivals have expanded and merged, it also needs to grow to offer hotel owners bigger savings on supplies like signage and bedsheets. The company is also promising to bargain down the commissions that hotel owners pay websites like Expedia and Booking.com, which are particularly crucial in the budget segment.“Combining with Wyndham would enable us to continue to deliver enhanced profitability for franchisees — by helping to lower their costs and grow their direct revenue while providing our best-in-class technology platform,” Choice said in a statement.However, many hotel owners say that even if Choice did negotiate lower prices, they are skeptical that they would reap those benefits. In 2020, 90 franchisees filed a lawsuit that accused the company of, among other things, not passing along rebates from contracts with vendors. A judge ruled that hotel owners would have to pursue their claims in separate arbitration cases, and several did.Rich Gandhi, a hotelier in New Jersey, supports a campaign for state legislation that would improve the rights of franchisees in the hospitality industry.Hannah Yoon for The New York TimesChoice prevailed in two of those proceedings. But in one, brought by a hotelier in North Dakota, an arbitrator found this past summer that Choice had “made virtually no efforts to leverage its size, scale and distribution to obtain volume discounts.” He ordered Choice to pay $760,008 in legal fees and compensation. Choice is contesting the award.The case is just one example, but it squares with recent economic research. A 2017 study found that while being part of a hotel franchise system helped bring in guests, it did not lower the cost of doing business compared with operating an independent hotel.But litigating on your own is expensive, which is why few franchisees do so even when they feel they’ve been mistreated.Rich Gandhi, a hotelier in New Jersey, is supporting a campaign for state legislation that would improve the rights of franchisees in the hospitality industry. He leads a three-year-old group called Reform Lodging that is also opposing the merger.Mr. Gandhi has turned four of his Choice-branded hotels into Best Westerns and Red Roof Inns, both non-Choice brands that he said offered better assistance, fewer restrictions and more reasonable fees. Choice, he argued, introduced too many competitors to his area because it makes money from selling new franchises and controlling more of the market, even if the practice squeezes existing owners.“They want the biggest pie, because to them it’s all incremental revenue,” Mr. Gandhi said. “If you keep accumulating all these buildings and provide no support, it’s like one of those old pyramid schemes that’s ready to fall apart, which is exactly what’s happening.”A representative for Choice referred The New York Times to four hoteliers who it said would speak favorably of the merger. Two of them, including the chairman of the Choice Hotels Owners Council — to which all franchisees must belong and pay dues — declined to comment on the record. A third, who owns three Radisson hotels and was happy when Choice bought the brand, said the purchase of Wyndham — a much bigger company — could pose problems.The fourth, a Florida hotelier, Azim Saju, said that despite the loss of competition, if Choice acquired Wyndham the company would still have an incentive to make sure franchisees stayed afloat.“The concern is valid, but the bottom line is that franchising doesn’t do well unless the franchisees are profitable,” Mr. Saju said. “I think Choice has become more conscientious of the importance of franchisee profitability in order to further their success.”The dissatisfaction of hotel owners could hurt Choice’s ability to absorb Wyndham, especially if more franchisees switch to other brands. That prospect has soured some Wall Street analysts on the deal.“In hotel franchising, the critical constituency, as much as consumers walking in the door, is that franchising community,” said David Katz, an analyst who covers the hospitality and gambling industries for Jefferies & Company. “They’re going to own more than 50 percent of the limited service and economy hotels in the United States, and not have the full support of the largest franchisee organization out there? I think that merits further debate.”Franchisee support isn’t important just for morale. It could also sway federal regulators, who have started to take into account the effect of corporate mergers not just on their consumers but also on suppliers like book authors, chicken farmers and Amazon sellers.“Traditionally in antitrust there’s this consumer welfare standard, which is focused on ‘Is this going to be good or bad for consumers?’” said Brett Hollenbeck, an associate professor at the Anderson School of Management of the University of California, Los Angeles. “If the F.T.C. doesn’t feel like this argument will hold sway, they could try a more novel theory, which is that it could hurt franchisees.”Choice said it anticipated that its deal would be approved and was expecting to complete the transaction within a year. Its offer to buy all outstanding Wyndham shares extends through March, when it will try to replace the directors on the company’s board with people who will approve the sale. More

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    Women Could Fill Truck Driver Jobs. Companies Won’t Let Them.

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    Three women filed a discrimination complaint against a trucking company over its same-sex training policy, which they say prevented them from being hired.The trucking industry has complained for years that there is a dire shortage of workers willing to drive big rigs. But some women say many trucking companies have made it effectively impossible for them to get those jobs.Trucking companies often refuse to hire women if the businesses do not have women available to train them. And because fewer than 5 percent of truck drivers in the United States are women, there are few female trainers to go around.The same-sex training policies are common across the industry, truckers and legal experts say, even though a federal judge ruled in 2014 that it was unlawful for a trucking company to require that female job candidates be paired only with female trainers.Ashli Streeter of Killeen, Texas, said she had borrowed $7,000 to attend a truck driving school and earn her commercial driving license in hopes of landing a job that would pay more than the warehouse work she had done. But she said Stevens Transport, a Dallas-based company, had told her that she couldn’t be hired because the business had no women to train her. Other trucking companies turned her down for the same reason.“I got licensed, and I clearly could drive,” Ms. Streeter said. “It was disheartening.”Ms. Streeter and two other women filed a complaint against Stevens Transport with the Equal Employment Opportunity Commission on Thursday, contending that the company’s same-sex training policy unfairly denied them driving jobs. The commission investigates allegations made against employers, and, if it determines a violation has occurred, it may bring its own lawsuit. The commission had brought the lawsuit that resulted in the 2014 federal court decision against similar policies at another trucking company, Prime.Critics of the industry said the persistence of same-sex training nearly a decade after that ruling, which did not set national legal precedent, was evidence that trucking companies had not done enough to hire women who could help solve their labor woes.“It’s frustrating to see that we have not evolved at all,” said Desiree Wood, a trucker who is the president and founder of Real Women in Trucking, a nonprofit.Ms. Wood’s group is joining the three women in their E.E.O.C. complaint against Stevens, which was filed by Peter Romer-Friedman, a labor lawyer in Washington, and the National Women’s Law Center.Companies that insist on using women to train female applicants generally do so because they want to avoid claims of sexual harassment. Trainers typically spend weeks alone with trainees on the road, where the two often have to sleep in the same cab.Critics of same-sex training acknowledge that sexual harassment is a problem, but they say trucking companies should address it with better vetting and anti-harassment programs. Employers could reduce the risk of harassment by paying for trainees to sleep in a hotel room, which some companies already do.Women made up 4.8 percent of the 1.37 million truck drivers in the United States in 2021, according to the most recent government statistics, up from 4 percent a decade earlier.Long-haul truck driving can be a demanding job. Drivers are away from home for days. Yet some women say they are attracted to it because it can pay around $50,000 a year, with experienced drivers making a lot more. Truck driving generally pays more than many other jobs that don’t require a college degree, including those in retail stores, warehouses or child care centers.Women made up 4.8 percent of truck drivers in 2021, according to the most recent government statistics.Mikayla Whitmore for The New York TimesThe infrastructure act of 2021 required the Federal Motor Carrier Safety Administration to set up an advisory board to support women pursuing trucking careers and identify practices that keep women out of the profession.Robin Hutcheson, the administrator of the agency, said requiring same-sex training would appear to be a barrier to entry. “If that is happening, that would be something that we would want to take a look at,” she said in an interview.Ms. Streeter, a mother of three, said she had applied to Stevens because it hired people straight out of trucking school. She told Stevens representatives that she was willing to be trained by a man, but to no avail.Bruce Dean, general counsel at Stevens, denied the allegations in the suit. “The fundamental premise in the charge — that Stevens Transport Inc. only allows women trainers to train women trainees — is false,” he said in a statement, adding that the company “has had a cross-gender training program, where both men and women trainers train female trainees, for decades.”Some legal experts said that, although same-sex training was ruled unlawful in only one federal court, trucking companies would struggle to defend such policies before other judges. Under federal employment discrimination law, employers can seek special legal exemptions to treat women differently from men, but courts have granted them very rarely.“Basically, what the law says is that a company needs to be able to walk and chew gum at the same time,” said Deborah Brake, a professor at the University of Pittsburgh who specializes in employment and gender law. “They need to be able to give women equal employment opportunities and prevent and remedy sexual harassment.”Ms. Streeter said she had made meager earnings from infrequent truck driving gigs while hoping to get a position at Stevens. Later this month, she will become a driver in the trucking fleet of a large retailer.Kim Howard, one of the other women who filed the E.E.O.C. complaint against Stevens, said she was attracted to truck driving by the prospect of a steady wage after working for decades as an actor in New York.“It was very much a blow,” she said of being rejected because of the training policy. “I honestly don’t know how I financially made it through.”Ms. Howard, who is now employed at another trucking company, said she had worked briefly at a company where she was trained by two men who treated her well. “It’s quite possible for a woman to be trained by a man, and a man to be a professional about what the job is,” she said.Other female drivers said they had been mistreated by male trainers who could be relentlessly dismissive and sometimes refused to teach them important skills, like reversing a truck with a large trailer attached.Rowan Kannard, a truck driver from Wisconsin who is not involved in the complaint against Stevens, said a male trainer had spent little time training her on a run to California in 2019.At a truck stop where she felt unsafe, Ms. Kannard said, the trainer demanded that she leave the cab — and then locked her out. She asked to stop the training and was flown back to Wisconsin. Yet she said she did not believe that same-sex training for women was necessary. “Some of these men that are training, they should probably go through a course.”Desiree Wood, the president of Real Women in Trucking, says the trucking industry has not evolved to hire and train more women.Mikayla Whitmore for The New York TimesMs. Wood, of Real Women in Trucking, said trucking companies’ training policies were misguided for another reason — there is no guarantee that a woman will treat another woman better than a male trainer. She said a female trainer had once hurled racist abuse at her and told her to drive dangerously.“I’m Mexican — she hated Mexicans and wanted to tell me all about it the whole time I was on the truck,” Ms. Wood said, “She screamed at me to speed in zones where it was not safe.”Still, some women support same-sex training policies.Ellen Voie, who founded the nonprofit Women in Trucking, said truck driving should be treated differently from other professions because trainers and trainees spent so much time together in close quarters.“I do not know of any other mode of transportation that confines men and women in an area that has sleeping quarters,” Ms. Voie said.Lawyers for Prime, the company that lost the E.E.O.C. suit in 2014 challenging its same-sex training policy, called Ms. Voie as an expert witness to defend the practice. In her testimony, she contended that women who were passed over by companies that didn’t have female trainers available could have found work at other trucking companies. She still believes that.But Ms. Voie added that trucking companies also needed to do more to improve training for women, including placing cameras in cabs to monitor bad behavior and paying for hotel rooms so trainers and trainees can sleep separately.Steve Rush, who recently sold his New Jersey trucking company, stopped using sleeper cabs over a decade ago, sending drivers to hotels. He said fewer of his drivers quit compared with the rest of the industry, as a result.“What woman in her right mind wants to go out and learn how to drive a truck and have to jump into the sleeper that some guy’s just crawled out of,” he said.Ben Casselman More

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    U.S. Blasts Google Over Paying $10 Billion a Year to Cut Out Search Rivals

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    The Justice Department and 38 states and territories on Tuesday laid out how Google had systematically wielded its power in online search to cow competitors, as the internet giant fiercely parried back, in the opening of the most consequential trial over tech power in the modern internet era.In a packed courtroom at the E. Barrett Prettyman U.S. Courthouse in Washington, the Justice Department and states painted a picture of how Google had used its deep pockets and dominant position, paying $10 billion a year to Apple and others to be the default search provider on smartphones. Google viewed those agreements as a “powerful strategic weapon” to cut out rivals and entrench its search engine, the government said.“This feedback loop, this wheel, has been turning for more than 12 years,” said Kenneth Dintzer, the Justice Department’s lead courtroom lawyer. “And it always turns to Google’s advantage.”Google denied that it had illegally used agreements to exclude its search competitors and said it had simply provided a superior product, adding that people can easily switch which search engine they use. The company also said that internet search extends more broadly than its general search engine and pointed to the many ways that people now find information online, such as Amazon for shopping, TikTok for entertainment and Expedia for travel.“Users today have more search options and more ways to access information online than ever before,” said John E. Schmidtlein, the lawyer who opened for Google.The back-and-forth came in the federal government’s first monopoly trial since it tried to break up Microsoft more than two decades ago. This case — U.S. et al. v. Google — is set to have profound implications not only for the internet behemoth but for a generation of other large tech companies that have come to influence how people shop, communicate, entertain themselves and work.Over the next 10 weeks, the government and Google will present arguments and question dozens of witnesses, digging into how the company came to power and whether it broke the law to maintain and magnify its dominance. The final ruling, by Judge Amit P. Mehta of the U.S. District Court of the District of Columbia, could shift the balance of power in the tech industry, which is embroiled in a race over artificial intelligence that could transform and disrupt people’s lives.A government victory could set limits on Google and change its business practices, sending a humbling message to the other tech giants. If Google wins, it could act as a referendum on increasingly aggressive government regulators, raise questions about the efficacy of century-old antitrust laws and further embolden Silicon Valley.“It is a test of whether our current antitrust laws — the Sherman Act, written in 1890 — can adapt to markets that are susceptible to monopolization in the 21st century,” said Bill Baer, a former top antitrust official at the Justice Department, adding that Google was “indisputably powerful.”The case is part of a sweeping effort by the Biden administration and states to rein in the biggest tech companies. The Justice Department has filed a second lawsuit against Google over its advertising technology, which could go to trial as early as next year. The Federal Trade Commission is separately moving toward a trial in an antitrust lawsuit against Meta. Investigations remain open in efforts that could lead to antitrust lawsuits against Amazon and Apple.The Justice Department filed the case accusing Google of illegally maintaining its dominance in search in October 2020. Months later, a group of attorneys general from 35 states, Puerto Rico, Guam and the District of Columbia filed their own lawsuit arguing that Google had abused its monopoly over search. Judge Mehta is considering both lawsuits during the trial.The case centers on the agreements that Google reached with browser developers, smartphone manufacturers and wireless carriers to use Google as the default search engine on their products. Since the lawsuit was filed, more than five million documents and depositions of more than 150 witnesses have been submitted to the court. Last month, Judge Mehta narrowed the scope of the trial, while allowing the core claims of monopoly abuse in search to remain.The trial unfolded on Tuesday in Courtroom 10 at Washington’s federal courthouse, a complex minutes from Capitol Hill. It drew a large crowd, with some people standing in line to enter as early as 4:30 a.m. Officials from the Google rivals Yelp and Microsoft also attended, as did dozens of attorneys and staff from the Justice Department, states and Google after years of work on the case.Judge Mehta began the proceedings punctually. In the government’s opening statement, Mr. Dintzer focused on the search agreements Google had struck with Apple and others. He referenced internal company documents that described how Google would not share revenue with Apple without “default placement” on its devices and how it worked to ensure that Apple couldn’t redirect searches to its Siri assistant.“Your honor, this is a monopolist flexing,” Mr. Dintzer said.In blunt language, Mr. Dintzer also argued that Google had tried to hide documents from antitrust enforcers by including lawyers on conversations and marking them as subject to attorney-client privilege. He showed a message from Sundar Pichai, Google’s chief executive, asking for the chat history to be turned off in one conversation.“They turned history off, your honor, so they could rewrite it here in this courtroom,” Mr. Dintzer said.William Cavanaugh, a lawyer for the states, echoed Mr. Dintzer’s concerns about Google’s agreements to become the default search engines on smartphones. He added that Google had limited a product used to place ads on other search engines to hurt Microsoft, which makes the Bing search engine.In response, Mr. Schmidtlein, Google’s lawyer, argued that the company’s default agreements with browser makers don’t lock up the market the way that the Justice Department said. Browser makers such as Apple and Mozilla both promote other search engines, he said, and it was easy for users to switch their default search engine.Using a slide show, Mr. Schmidtlein demonstrated the number of taps or clicks required to change the default on popular smartphones. People who wished to switch their search engine but did not know how could search Google for instructions or watch a video tutorial on YouTube, which Google owns, he said.The government’s evidence was coming from “snippets and out-of-context” emails, he said.The lawyers also sparred over whether Google was as dominant as the government claimed. The Justice Department and the states said Google competes primarily with broad search engines that act as a single place to look for multiple types of information. But Mr. Schmidtlein said Google’s universe of competitors was wider, including online retailers like Amazon, food delivery apps like DoorDash and travel booking sites like Expedia.In the afternoon, the Justice Department called Hal Varian, Google’s chief economist, as its first witness to establish that the company had long been aware of its power in search and deliberately tried to sidestep antitrust scrutiny.In more than three hours of testimony, Mr. Varian was asked about views that he shared with other Google employees on the power of defaults, the threat of Microsoft’s entry into search and his awareness of language that could invite the attention of antitrust regulators. The Justice Department drew from Mr. Varian’s emails and memos from as far back as the early 2000s.Mr. Varian is scheduled to return to the witness stand on Wednesday.Nico Grant More

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    Amazon to Meet Regulators as U.S. Considers Possible Antitrust Suit

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    Amazon’s meetings with the Federal Trade Commission, known as “last rites” meetings, are typically a final step before the agency votes on filing a lawsuit.Amazon is scheduled to meet with members of the Federal Trade Commission next week to discuss an antitrust lawsuit that the agency may be preparing to file to challenge the power of the retailer’s sprawling business, according to a person with knowledge of the plans.The meetings are set to be held with Lina Khan, the F.T.C. chair, and Rebecca Kelly Slaughter and Alvaro Bedoya, who are F.T.C. commissioners, said the person, who spoke on the condition of anonymity because the discussions are confidential.The meetings signal that the F.T.C. is nearing a decision on whether to move forward with a lawsuit alleging that Amazon has violated antimonopoly laws. Such discussions are sometimes known as “last rites” meetings, named after the prayers some Christians receive on their deathbed. The conversations, which are usually one of the final steps before the agency’s commissioners vote on a lawsuit, give the company a chance to make its case.If the F.T.C. files suit, it would be one of the most significant challenges to Amazon’s business in the company’s nearly 30-year history. Amazon, a $1.4 trillion behemoth, has become a major force in the economy. It now owns not just its trademark online store, but the movie studio Metro-Goldwyn-Mayer, the primary care practice One Medical and the high-end grocery chain Whole Foods. It is also one of the world’s largest provider of cloud computing services.The F.T.C. has investigated Amazon’s business for years. The company’s critics and competitors have argued that the once-upstart online bookstore has used its retailing clout to squeeze the merchants that use its platform to sell their wares. U.S. officials have grown increasingly concerned about the influence and reach of giant tech companies like Amazon, Google and Meta, which owns Facebook and Instagram. The Justice Department has filed several antitrust lawsuits against Google, with two scheduled to go to trial next month. The F.T.C. has also sued Meta over accusations that it snuffed out young competitors by buying Instagram and WhatsApp.Some of those efforts have stumbled in the courts. Federal judges declined this year to stop Meta from acquiring a virtual reality start-up and Microsoft from buying the video game powerhouse Activision Blizzard, dooming F.T.C. challenges to both deals. In 2022, the Justice Department also lost its bid to challenge UnitedHealth Group’s plan to buy a health tech company.Stacy Mitchell, a co-executive director of the advocacy organization Institute for Local Self-Reliance and an Amazon critic, said she hoped the F.T.C. would pursue a sweeping case against the tech giant. She said the agency should focus on how Amazon’s control of the retail business — from its store to its logistics network that delivers packages — let it hurt competitors and merchants.“It’s a watershed moment,” she said. “What we need to see from the F.T.C. is a case that targets the core of Amazon’s monopolization strategy.”Amazon has said that it competes aggressively with other retailers and that efforts to regulate its business would only hurt consumers and the businesses that sell products through its site.Under the leadership of Andy Jassy, Amazon’s chief executive, the retailer has recently been in retrenchment mode. The company has cut costs, laying off thousands of workers as growth slumped after a soaring period fueled by the pandemic. Last week, Amazon announced that its revenue in the second quarter of the year had increased 11 percent, to $134.4 billion, beating analysts’ expectations.In June, the F.T.C. sued Amazon in a separate case that accused the company of tricking users into subscribing to its Prime fast-shipping membership program and then making it difficult for them to cancel.Amazon has also faced scrutiny from states and regulators in other countries. The District of Columbia’s attorney general filed a lawsuit against the company in 2021, arguing that it had used unfair pricing policies against merchants on its site. The lawsuit was thrown out by a judge, though the attorney general has tried to revive the case. California filed a similar lawsuit last year that is moving forward. In December, Amazon also reached a deal to end a European Union antitrust investigation by agreeing to change some of its practices.If the F.T.C. sues, it would formally pit Ms. Khan — who has been one of Amazon’s most prominent detractors — against the company.While a law student at Yale, Ms. Khan had argued that Amazon’s growth represented a failure of American antitrust laws, which she said had become myopically focused on consumer prices as a measure of whether businesses were violating the law. Amazon’s prices were often low, she wrote in a widely read 2017 paper, but that failed to account for other ways it could bully players across the economy.The paper’s success supercharged a debate in Washington about the power of the tech giants. In 2019, federal antitrust regulators decided to investigate some of the companies. In keeping with a longstanding practice of dividing responsibilities, the Justice Department agreed to look at Google and Apple while the F.T.C. examined Facebook and Amazon.President Biden named Ms. Khan chair to oversee the F.T.C. — giving her control of the Amazon investigation — roughly two years later. More

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    Amazon Union Group, Challenging Christian Smalls, Seeks Vote

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    A split over the stewardship of the union’s high-profile president, Christian Smalls, has led a rival faction to file a lawsuit seeking an election.A dissident group within the Amazon Labor Union, the only certified union in the country representing Amazon employees, filed a complaint in federal court Monday seeking to force the union to hold a leadership election.The union won an election at a Staten Island warehouse with more than 8,000 employees in April 2022, but Amazon has challenged the result and has yet to begin bargaining on a contract.The rise of the dissident group, which calls itself the A.L.U. Democratic Reform Caucus and includes a co-founder and former treasurer of the union, reflects a growing split within the union that appears to have undermined its ability to pressure Amazon. The split has also threatened to sap the broader labor movement of the momentum generated by last year’s high-profile victory.In its complaint, the reform caucus argues that the union and its president, Christian Smalls, illegally “refuse to hold officer elections which should have been scheduled no later than March 2023.”The complaint asks a federal judge to schedule an election of the union’s top officers for no later than Aug. 30 and to appoint a neutral monitor to oversee the election.Mr. Smalls said in a text message Monday that the complaint was “a ridiculous claim with zero facts or merit,” and a law firm representing the union said it would seek legal sanctions against the reform group’s lawyer if the complaint was filed.The complaint states that under an earlier version of the union’s constitution, a leadership election was required within 60 days of the National Labor Relations Board’s certification of its victory.But in December, the month before the labor board certification, the union’s leadership presented a new constitution to the membership that scheduled elections after the union ratifies a contract with Amazon — an accomplishment that could take years, if it happens at all.On Friday, the reform caucus sent the union’s leadership a letter laying out its proposal to hold prompt elections, saying it would go to court Monday if the leadership didn’t embrace the proposal.The reform group is made of up more than 40 active organizers who are also plaintiffs in the legal complaint, including Connor Spence, a union co-founder and former treasurer; Brett Daniels, the union’s former organizing director; and Brima Sylla, a prominent organizer at the Staten Island warehouse.The group said in its letter that enacting the proposal could “mean the difference between an A.L.U. which is strong, effective, and a beacon of democracy in the labor movement” and “an A.L.U. which, in the end, became exactly what Amazon warned workers it would become: a business that takes away the workers’ voices.”Mr. Smalls said in his text that the union leadership had worked closely with its law firm to ensure that its actions were legal, as well as with the U.S. Labor Department.Jeanne Mirer, a lawyer for the union, wrote to a lawyer for the reform caucus that the lawsuit was frivolous and based on falsehoods. She said that Mr. Spence had “improperly and unilaterally” replaced the union’s founding constitution with a revised version in June 2022, and that the revision, which called for elections after certification, had never been formally adopted by the union’s board.Retu Singla, another lawyer for the union, said in an interview that the constitution was never made final because there were disagreements about it within the union’s leadership.Mr. Spence said he and other members of the union’s board had revised the constitution while consulting extensively with the union’s lawyers. A second union official involved in the discussions corroborated his account.The split within the union dates from last fall, when several longtime Amazon Labor Union organizers became frustrated with Mr. Smalls after a lopsided loss in a union election at an Amazon warehouse near Albany, N.Y.In a meeting shortly after the election, organizers argued that control of the union rested in too few hands and that the leadership should be elected, giving rank-and-file workers more input.The skeptics also complained that Mr. Smalls was committing the union to elections without a plan for how to win them, and that the union needed a better process for determining which organizing efforts to support. Many organizers worried that Mr. Smalls spent too much time traveling the country to make public appearances rather than focus on the contract fight on Staten Island.Mr. Smalls later said in an interview that his travel was necessary to help raise money for the union and that the critics’ preferred approach — building up worker support for a potential strike that could bring Amazon to the bargaining table — was counterproductive because it could alarm workers who feared losing their livelihoods.He said a worker-led movement shouldn’t turn its back on workers at other warehouses if they sought to unionize. A top union official hired by Mr. Smalls also argued that holding an election before the union had a more systematic way of reaching out to workers would be undemocratic because only the most committed activists would vote.When Mr. Smalls unveiled the new union constitution in December, scheduling elections after a contract was ratified, many of the skeptics walked out. The two factions have operated independently this year, with both sides holding regular meetings with members.In April, the reform caucus began circulating a petition among workers at the Staten Island warehouse calling on the leadership to amend the constitution and hold prompt elections. The petition has been signed by hundreds of workers at the facility.The petition soon became a point of tension with Mr. Smalls. In an exchange with a member of the reform caucus on WhatsApp in early May, copies of which are included in Monday’s legal complaint, Mr. Smalls said the union would “take legal action against you” if the caucus did not abandon the petition.The tensions appeared to ease later that month after the union leadership under Mr. Smalls proposed that the two sides enter mediation. The reform caucus accepted the invitation and suspended the petition campaign.But according to a memo that the mediator, Bill Fletcher Jr., sent both sides on June 29 and that was viewed by The New York Times, the union leadership backed out of the mediation process on June 18 without explanation.“I am concerned that the apparent turmoil within the ALU E. Board means that little is being done to organize the workers and prepare for the battle with Amazon,” Mr. Fletcher wrote in the memo, referring to the union’s executive board. “This situation seriously weakens support among the workers.”Colin Moynihan More