March 12, 2019

💽 Good Tuesday morning.

Situational awareness: Milwaukee will host the Democratic National Convention, July 13-16, 2020. Republicans will gather in Charlotte, Aug. 24-27, 2020.

  • Elon Musk lawyers accuse the SEC of an "unconstitutional power grab" over tweets.
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1 big thing ... Exclusive: Johnson & Johnson called opioid "kingpin"

Illustration: Lazaro Gamio/Axios

Johnson & Johnson was the "kingpin" that fueled America's opioid crisis, serving as a top supplier, seller and lobbyist, according to the Oklahoma official leading the legal fight against the companies that helped create the crisis, Axios health care business reporter Bob Herman writes.

  • Why it matters: Purdue Pharma, which makes OxyContin, has been the main target so far in lawsuits. But court documents show attorneys general also are trying to cast a wider net, drawing more attention to J&J's role in the global opioid market.

The first big trial of the opioid epidemic is set to begin in May in Oklahoma. It will set the stage for similar litigation in other states, as well as the consolidated nationwide lawsuit that has been compared to the tobacco litigation of the 1990s.

  • Oklahoma Attorney General Mike Hunter has asked a state court to publicly release millions of pages of confidential documents that J&J submitted during the discovery phase of the case.
  • "The public interest in this information is urgent, enduring and overwhelming," he wrote.

The intrigue: Johnson & Johnson may be better known for selling Band-Aids and baby powder, but the company has an extensive history with prescription painkillers.

  • J&J produced raw narcotics in Tasmanian poppy fields, created other active opioid ingredients, and then supplied the products to other opioid makers — including Purdue Pharma.
  • The company boasted at the time that one of its opium poppies "enabled the growth of oxycodone," and said the morphine content of a different poppy was "the highest in the world," according to investor slides obtained by Axios.
  • J&J sold the 2 subsidiaries that handled that business, Noramco and Tasmanian Alkaloids, to a private equity firm in 2016 for $650 million.
  • J&J also sold off Nucynta, an opioid pill it had marketed, for $1 billion in 2015.
  • It still sells Duragesic, a fentanyl patch that had peak sales of $2 billion in 2004.

That's not all: Oklahoma is alleging J&J targeted vulnerable populations, including children and older adults, for painkiller prescriptions. The state also says J&J funded groups that aggressively advocated for easy access to opioids.

  • Because J&J divested its opioid businesses, Oklahoma's lawyers say, documents related to those activities aren't valuable trade secrets to J&J anymore, and therefore should be made public.

J&J urged the Oklahoma court to deny the attorney general's request, saying the state is seeking "sensationalistic headlines and to poison potential jurors."

  • In statements to Axios, J&J said its subsidiaries "met all laws and regulations" and that all allegations are "baseless and unsubstantiated."

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2. Fatal distraction: Tech's worry as D.C. bares fangs

Illustration: Lazaro Gamio/Axios

The prospect of corporate breakups isn't Silicon's biggest worry, Axios' Scott Rosenberg and Ina Fried report:

  • Instead, insiders fear missing the next cycle of industry change if they're distracted and hobbled by antitrust conflicts.

Why it matters: If executives are busy answering lawmaker inquiries and defending regulator lawsuits, they're less likely to be protecting their businesses from upstart challengers.

  • And if they're under constant regulatory scrutiny, they'll be less able to either elbow aside or snatch up the competition.

The bottom line: No tech giant has ever been split up by courts, regulators or legislators.

  • Be smart: For antitrust advocates, the corporate breakup endgame may not matter if they can still achieve a key goal: ensuring that dominant incumbents can't squash or swallow the next wave of tech innovation. 

3. All in: U.S. pulls diplomats from Venezuela

Amid a massive power outage, people collect water from a sewage canal by the Guaire River in Caracas. (Juan Barreto/AFP/Getty Images)

Secretary of State Mike Pompeo announced last night that the U.S. is pulling the remaining staff from its embassy in Venezuela, citing the deteriorating situation in the South American nation, AP reports:

  • Venezuela is struggling to restore electricity following four days of blackouts.

The mood in Caracas, the capital, was desperate.

  • In the photo above, people converge on a polluted river to fill water bottles.
  • Spain's airline pilots union asked for Spanish airline Air Europa to stop flying to Venezuela after one of its crews was attacked at gunpoint in Caracas.

Acts of kindness: People whose food would rot in refrigerators without power donated it to a restaurant, which cooked it for charities and hospitals.

  • 🌎 CNN International (what I have on in the wee hours) as I type ... "Crisis in Venezuela: ORPHANAGES HIT WITH FOOD SHORTAGES, NO FUNDING."

Bonus: The U.S. industries that depend on immigrants

Industries in the U.S. that provide food, shelter, clothing and health care often rely on the labor of immigrants, Axios' Stef Kight reports, citing new data from New American Economy (NAE), a group that supports immigration.

Data: New American Economy; Chart: Chris Canipe/Axios
Data: New American Economy; Chart: Chris Canipe/Axios

Go deeper.

4. www is 3-0 today

Google's homepage marks the birthday.

Sir Tim Berners-Lee of Boston, the British computer scientist credited with inventing the World Wide Web, writes 30 years after his proposal on March 12, 1989, for "linked information systems" that include hypertext:

  • "The web has become a public square, a library, a doctor’s office, a shop, a school, a design studio, an office, a cinema, a bank, and so much more."
  • "Of course with every new feature, every new website, the divide between those who are online and those who are not increases."

"And while the web has created opportunity, given marginalized groups a voice, and made our daily lives easier, it has also created opportunity for scammers, given a voice to those who spread hatred, and made all kinds of crime easier."

  • "But given how much the web has changed in the past 30 years, it would be defeatist and unimaginative to assume that the web as we know it can’t be changed for the better in the next 30."

5. 🎧 What we're listening to: How economy impacts diversity

Illustration: Sarah Grillo/Axios

Sallie Krawcheck was one of the most senior women in the male-dominated world of Wall Street.

  • In today's Masters of Scale podcast, Krawcheck, who now runs a digital investment platform for women called Ellevest, says business embraces employee diversity in boom times and rejects it when things go south:
Did you know that for a long time after the financial crisis, diversity went backwards on Wall Street? And it's actually not unusual for industries that go through a period of crisis [to] circle the wagons.
And what I saw was, "We'd love to promote this woman or this person of color, but we can't take the risk." And so everybody reverts to their comfort, and uses that excuse, the fact that we're in the midst of this battle.

Why it matters: We're in the midst of a long economic expansion, low unemployment and a record run for stocks. But there are plenty of economic storm clouds on the horizon. So if Krawcheck is correct, corporate America's push for greater employee diversity may have peaked.

  • The same goes for Silicon Valley, where even the most socially progressive companies are still overwhelmingly male and white.

Hear the episode.

  • Go deeper: The persistence of the "gender investing gap."
  • Editor's note: Details of this podcast available exclusively to Axios readers first through a partnership with Masters of Scale.

6. Pelosi calls POTUS "unfit"

Courtesy N.Y. Post

The headline from Speaker Pelosi's interview with the WashPost Magazine's Joe Heim was that impeachment would be too divisive. But she said a lot more:

Has President Trump done anything that has been good for America?

  • "He’s been a great organizer for Democrats, a great fundraiser for Democrats."

Do you see yourself in this new generation of women lawmakers?

  • "I say this to them: I was you. I used to carry the [protest] signs pushing strollers. … But when you cross over the threshold and come to Congress, ... you have to want to get results."
  • "The young women today, though, coming in … the way they balance family and children and home, I’m in awe of them."

Do you believe Trump fit to be president?

  • "Are we talking ethically? Intellectually? Politically? What are we talking here?"

All —

  • "All of the above. No. No. I don’t think he is. I mean, ethically unfit. Intellectually unfit. Curiosity-wise unfit. No, I don’t think he’s fit to be president of the United States."

7. Book portrays Javanka as enablers-in-chief

Jared Kushner and Ivanka Trump head to Pittsburgh in October after the synagogue shooting. (Mandel Ngan/AFP/Getty Images)

The N.Y. Times' Annie Karni and Maggie Haberman get the jump on "Kushner Inc.," a book by investigative journalist Vicky Ward that's out a week from today:

She portrays Ms. Trump and Mr. Kushner as two children forged by their domineering fathers — one overinvolved with his son, one disengaged from his daughter — who have climbed to positions of power by disregarding protocol and skirting the rules when they can. And Ms. Ward tries to unravel the narrative that the two serve as stabilizing voices inside an otherwise chaotic White House, depicting them instead as Mr. Trump’s chief enablers. ...
Ms. Trump and Mr. Kushner wanted to control who could travel on trips funded by the State Department, Ms. Ward wrote, citing a source at the department. Ms. Trump also often requested to travel on Air Force planes when it was not appropriate. When Rex W. Tillerson, the former secretary of state, would deny the requests, the couple would invite along a cabinet secretary, often Treasury Secretary Steven Mnuchin, to get access to a plane.

Response from Peter Mirijanian, spokesperson for Abbe Lowell, attorney for Jared Kushner:

  • "Every point that Ms. Ward mentioned in what she called her 'fact checking' stage was entirely false. It seems she has written a book of fiction rather than any serious attempt to get the facts. Correcting everything wrong would take too long and be pointless."

8. 2020 vision: Mayor Pete talks to Axios

Pete Buttigieg and Ana Marie Cox stand backstage at Conversations About America's Future: Mayor Pete Buttigieg during the 2019 SXSW Conference. Photo: Hutton Supancic/Getty Images for SXSW)=

South Bend Mayor Pete Buttigieg, 37, who would beat JFK as the youngest American to be elected president, tells Dan Primack's Pro Rata podcast that we're largely behind China on artificial intelligence:

  • "This is not a game where we can afford to be left behind. ... It requires a national strategy. I'd expect the country that literally invented the Internet in a publicly-sponsored research environment to be ahead of the curve instead of falling behind on things like AI ... that are going to power the 21st century."
  • Mayor Pete has called for an end to the electoral college, but likes the Iowa/N.H. process.

Hear the interview.

🥊 P.S. Sizing up the candidates' South by Southwest appearances, BBC North America reporter Anthony Zurcher writes:

  • Sen. Elizabeth Warren "came to Austin to bury big tech companies, not to praise them. Despite this, she had the best reception of any politician ... not named Alexandria Ocasio-Cortez."

9. Fox News still trying for Dem debate

Bret Baier and Martha MacCallum anchor Election Night '18. (Courtesy Fox News)

Fox News anchor Martha MacCallum tells me she hopes the Democratic National Committee will reconsider, saying tough debate questions aren't "an attack — it's a challenge."

  • And Fox News chief political anchor Bret Baier says: "We have viewers that are Democrats, independents, Republicans — and there are lots of them."

The top anchors said they were disappointed by the DNC's rejection of Fox News as a host for one of the 12 party-sanctioned 2020 debates.

  • Why it matters: Network debate hosts reap journalistic prestige and massive exposure. For cable networks, debates can be huge ratings and revenue draws.

The DNC's debate announcement says candidates aren't barred from "forums" in which one candidate appears on stage at a time.

  • But candidates are asked not to participate in "debates," where two or more candidates interact.

Executives at Fox News say they're open to sponsoring a televised town hall — albeit one without the imprimatur of the Democratic Party.

  • A DNC official replies: "We think it’s important to reach voters where they’re at, and will continue to do so. But after the story came out in The New Yorker, a debate on FOX became untenable."

10. 📱 1 phone thing: The rise of the burners

Minimalist phones, in small sizes with limited functions, have gained a following with smartphone addicts trying to break their habit, per a Wall Street Journal A-hed by Sarah Krouse (subscription):

  • "Major smartphone makers are still pushing more powerful mobile devices with big screens and a host of cameras.
  • But there are signs "that the world’s appetite for the latest, flashiest smartphone is waning as the devices become more commoditized and other connected items, such as smartwatches and smart home speakers, duplicate some of their functionality. Smartphone shipments world-wide have been falling since late 2017."

The new crop of minimalist phones, priced around $300 to $350, help wean you off premium models that keep them constantly connected.

  • A 3.8-inch Palm "companion device" shares a number with your smartphone and can host the same apps, just on a smaller screen.
  • A 4.6-inch phone "from Swiss devicemaker Punkt ... has a small, dark screen that allows only basic phone calls and texts. ... The phone doesn’t include an internet browser or a way to add apps, but it can turn into a Wi-Fi hot spot."