May 21, 2019

Axios Login

By Ina Fried
Ina Fried

Congrats to the Golden State Warriors, who are headed back to the NBA Finals, and to my partner, AJ, who is just 4 wins away from not having to hear me talk about basketball for a few months.

1 big thing: T-Mobile/Sprint deal hinges on DOJ

Illustration: Rebecca Zisser/Axios

A split may be forming between federal regulators on whether to approve T-Mobile's $26.5 billion purchase of Sprint, Axios' David McCabe reports.

The big picture: Despite a host of concessions offered by the companies that won over FCC chairman Ajit Pai, the fate of the deal hinges on the competition questions that reportedly continue to dog the deal at the Department of Justice.

Details: In order to get the deal approved, T-Mobile has pledged to not raise prices for 3 years after the merger, to cover 85% of rural Americans with its 5G network within 3 years, and to sell off Sprint's Boost Mobile prepaid wireless service.

  • T-Mobile has also argued that its deal will help the U.S. compete with China, appealing to the Trump administration's American First platform and the FCC's 5G FAST plan.

The other side: Critics of the deal say moving from 4 national carriers to 3 will raise prices for consumers and result in job loss, no matter what the companies promise. Critics are also skeptical of T-Mobile's pledge to build 5G in rural areas.

Catch up quick: On Monday morning, it seemed that the package of conditions had worked: Pai said that the deal was in the "public interest" and that he would recommend that his fellow commissioners approve it.

  • Less than an hour later, Republican commissioner Brendan Carr said he agreed and would support the deal.
  • That left T-Mobile only one vote shy of approval — and the two stocks soared.
  • A senior FCC official said that the divestiture of Boost Mobile would address concerns about the deal's affect on competition, which the official said were focused on the low-cost market.

But, but, but: Later that day Bloomberg reported that the DOJ was leaning toward killing the merger due to concerns that consolidation would hurt competition.

  • Both stocks ended the day below the high that followed Pai's announcement.

How it works: The DOJ's antitrust division and FCC use different legal standards to gauge competitive effects of mergers.

  • At the DOJ, deals are approved if they won't hurt competition, which is usually determined by potential impact on consumer prices.
  • At the FCC, deals are approved based on whether they are in the public interest — a squishier standard that in recent years has been used to encourage wider deployment of broadband by merging companies.

Flashback: If the DOJ does end up scuttling the deal, it wouldn't the first time for the agency to take issue with a major merger involving T-Mobile.

Go deeper: David has more here.

2. Huawei gets a limited reprieve

Huawei has gotten temporary permission to continue buying U.S.-made components, but only to maintain existing networks or support existing devices.

The latest: The Commerce Department has granted a 90-day order easing last week's near-total ban against Huawei getting goods or services from U.S. companies.

Why it matters: Without such a reprieve, network operators that use Huawei gear and owners of Huawei phones could have found themselves quickly vulnerable to security or other issues, with Huawei barred from helping resolve them.

Yes, but: This move is designed to avoid disruptions to phone networks, not to allow Huawei to pursue new business.

  • Among those calling for Huawei to get broader exceptions is the Semiconductor Industry Association, the trade group representing U.S. chipmakers.
  • "We hope to work with the Administration to broaden the scope of the license so it advances U.S. security goals in a manner that does not undermine the ability of the U.S. semiconductor industry to compete globally," SIA chief executive John Neuffer said in a statement.
3. Scoop: Dotdash to launch paint biz via Amazon

Photo: DotDash

Dotdash, the digital publishing company that grew from, is launching a new millennial paint line with Amazon, Axios' Sara Fischer reports.

Why it matters: This is the first time that Dotdash, which is expected to bring in roughly $150 million in revenue this year, is selling its own direct-to-consumer products.

Details: The new interior paint line will be called "The Spruce Best Home," and will be created and curated by the editorial team for Dotdash-owned home decor website, The Spruce

  • The paint is developed in partnership with MASCO, parent company to Kilz and Behr paints, and will be available exclusively on Amazon.
  • The idea is that The Spruce will use insights and data from its audience of design and home decor enthusiasts to inform the paint line for Amazon.

The big picture: The move is part of Dotdash's effort to transition its business more into e-commerce. The majority of the company's revenue today comes from ads.

  • Other digital publishers, like BuzzFeed, Who What Wear and New York Media, are also experimenting with commerce as the advertising landscape grows more crowded. 
  • Most of those companies are partnering with mass market retailers, like Target, Walmart or Amazon, to debut exclusive product lines.

Yes, but: For Dotdash, this will be more of a branding play than a strict revenue-driver — at least at first.

  • The company has invested in building and acquiring a network of digital brands with authority in specific topics, like health, home decor and travel so it can one day leverage the trust and familiarity of those brands off of its own channels.

Go deeper: Sara has more here.

4. IRS promises new cryptocurrency tax guidance

Illustration: Lazaro Gamio/Axios

The IRS is planning to issue new guidance "soon" about the taxing of cryptocurrencies and other digital tokens, the agency's chief said in a letter to Rep. Tom Emmer, Axios' Kia Kokalitcheva reports.

Why it matters: The IRS hasn't issued guidance on the topic since 2014, leaving investors and enthusiasts increasingly frustrated, especially with new developments like Bitcoin forks that have complicated matters.

Members of Congress have attempted to clarify the rules by introducing bills or asking the IRS to provide more guidance.

Go deeper: Taxes are tricky for cryptocurrency investors

5. Take Note

On Tap

  • The WSJ's Future of Everything conference continues in New York; Collision continues in Toronto.

Trading Places

  • Snap promoted Derek Andersen, currently VP of finance, to be its permanent CFO. It also named interim CFO Lara Sweet as its new chief people officer. (CNN)
  • Y Combinator named Geoff Ralston as president, while Sam Altman will shift to an adviser role. (TechCrunch)


6. After you Login

This is my kind of "Game of Thrones" episode. That is, an appearance of GoT cast members on Sesame Street.

Ina Fried