Sep 9, 2021

Axios Login

First off, I have new glasses. And, may I say, you look sharp!

  • Please join Axios co-founder and CEO Jim VandeHei and leaders from Salesforce, Edelman and Gallup today at 12:30pm ET for a virtual event on navigating the Great Resignation. Register here.

Situational awareness: Brazilian President Jair Bolsonaro has temporarily banned social media companies from removing content, as he seeks to undermine the legitimacy of next year's election, per NYT.

Today's newsletter is 1,103 words, a 4-minute read.

1 big thing: The FTC's Amazon quandary

Illustration: Annelise Capossela/Axios

Amazon's proposed $8.45 billion purchase of Hollywood studio MGM is presenting the Federal Trade Commission, which will soon decide whether to block the deal, with an ideological Rorschach test, Axios' Margaret Harding McGill reports.

Progressives see it as self-evident that regulators should not allow Amazon to further extend its already vast market power. They expect to find an ally in FTC chair Lina Khan, who built her reputation making the case that Amazon is a monopolist that should be checked.

  • But business groups and conservatives point out that Amazon has nothing like a lock on the highly competitive marketplace for streaming movies and TV shows, making any case against the MGM deal unlikely to pass muster in court.

Why it matters: How Khan's FTC chooses to proceed will offer a roadmap for the Biden administration's approach to corporate mergers and acquisitions.

What's happening: More than 30 progressive groups signed a letter last week urging the FTC to stop the deal to slow Amazon's "growing dominance."

  • They argue MGM will give Amazon access to must-have content, and that will give it the "ability to lock consumers into its sprawling platform and punish businesses and workers that do not accede to its demands."

What they're saying: Increasing the power of Amazon Prime through the lure of MGM's library — which includes the James Bond and Rocky franchises — will facilitate Amazon's consolidation of the retail industry, Demand Progress Education Fund executive director David Segal told Axios.

  • "We see further consolidation by Amazon as generally concerning, especially given how ruthless Amazon's use of data is to elevate and entrench its own standing and to steer consumers toward particular products and services and to undercut competitors," Segal said.

Yes, but: A traditional FTC antitrust review would assess the deal's impact on competition for content among video distributors.

  • Given the number of content producers and streaming options, experts, including former FTC competition bureau director Bruce Hoffman, said it appears unlikely the deal is anticompetitive.
  • "Amazon will no more have a monopoly over James Bond than Netflix has a supposed monopoly over 'Stranger Things,'" said Adam Kovacevich, founder of industry group Chamber of Progress, which counts Amazon among its partner companies.

Between the lines: That view of how to evaluate mergers is too narrow, a former Democratic senate staffer who has worked on antitrust issues told Axios, pointing out that Amazon is already facing an antitrust investigation at the FTC.

  • "You can't look at it in a siloed black box like that, and the fact that they have is why the economy has gotten so concentrated," the former staffer said. "There hasn't been meaningful antitrust enforcement in a very long time."
2. Theranos trial, day one: Lies vs. mistakes

At the opening of Theranos founder Elizabeth Holmes' trial, prosecution and defense offered two divergent portrayals of the defendant to the jury: she is either a calculating CEO who lied to get money, or a zealous entrepreneur who made mistakes along the way, Axios' Kia Kokalitcheva writes from the San Jose courtroom.

Why it matters: The trial, which is expected to last 13 weeks, is the highest profile fraud case yet to come out of Silicon Valley, where startups often "fake it 'til they make it."

What they're saying: "The evidence will show that the defendant agreed with her co-defendant on a scheme to defraud Theranos investors and Theranos patients," prosecutor Robert Leach told the jury.

  • "This is a case about fraud, a case about lying and cheating to get money."

The other side: The defense's opening statements argued that, though Theranos ultimately failed and things didn't work out, that was because Holmes made mistakes, not because she committed crimes.

  • "Elizabeth Holmes worked herself to the bone for 15 years trying to make lab testing cheaper and more accessible," Holmes defense lawyer Lance Wade told the jury in the late morning. "Now, in the end, Theranos failed. And Ms. Holmes walked away with nothing. But failure is not a crime."

Go deeper: Silicon Valley's biggest fraud is on trial

3. Calif. warehouse quota limit passes

An Amazon warehouse in Germany. Photo: Ronny Hartmann/AFP via Getty Images.

Warehouse workers in California, including Amazon's, will gain more legal pathways to fight speed quotas set by employers thanks to a bill passed Wednesday, Axios' Noah Garfinkel reports.

Why it matters: This bill is the first of its kind, and proponents argue it could help ensure the safety and wellbeing of a massive and growing workforce.

Details: The bill creates pathways to appeal to employers if workers can't meet safety quotas or take breaks they are entitled to.

  • Gov. Gavin Newsom (D) has not indicated whether he'll sign the bill, per NPR.

Background: Warehouse jobs have ballooned in recent years. Amazon leads the charge with over 950,000 workers across the U.S. — making it the second-largest employer in the country.

  • Amazon's quotas have drawn scrutiny, even as similar productivity metrics are being adopted across the industry, per NPR.
4. A massive regional gap is opening around AI

Illustration: Annelise Capossela/Axios

A handful of superstar U.S. metro areas are leading the way in AI, while much of the rest of the country is at risk of being left behind, Axios Future's Bryan Walsh reports.

Why it matters: AI can enhance productivity and growth in multiple sectors, but as a technology that tends to centralize around a handful of talent hubs, it could also increase regional economic disparities.

What's happening: In a report released yesterday, researchers at the Brookings Institution assessed the geographic distribution of AI talent, investment and research around the U.S.

  • The Bay Area — including both San Francisco and San Jose — was far and away the leader, accounting for one-quarter of AI conference papers, patents and companies.
  • Add in another 13 "early adopter" cities — including New York, Austin and Seattle — and these 15 metro areas account for two-thirds of the nation's AI assets and capabilities.

The other side: More than half of the 261 U.S. metro areas surveyed by Brookings exhibit no significant AI activities at all.

The bottom line: "The winner-takes-all dynamics of AI are strong," says Mark Muro, policy director at Brookings' Metropolitan Policy Program and a co-author of the report — and pushing against them won't be easy.

5. Take note

On Tap

Trading Places

  • VMware promoted Kit Colbert to chief technology officer. Colbert was previously CTO of its cloud unit.

ICYMI

6. After you Login

Chris Arvin's tweet announcing their engagement to Kat Siegal. Screenshot: @chrisarvinsf (Twitter)

Congrats to Chris Arvin and Kat Siegal, both San Francisco-based public transit enthusiasts, who got engaged on the N Judah streetcar on Wednesday.