Should Google Shrink to Save Itself?

Should Google Shrink to Save Itself?

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As antitrust regulators turn up the heat, the company is reportedly considering a sale or spinoff of its third-party ad tech unit, Keach Hagey and Rob Copeland of the WSJ report, citing unnamed sources.

The context:

• The Justice Department has increasingly focused on Google’s third-party ad business, which was “built largely on the company’s 2008 acquisition of the ad-technology firm DoubleClick,” Ms. Hagey and Mr. Copeland write.

• Google’s ad-tech business consists of software used to buy and sell ads across the web.

• Critics say Google unfairly bundles these tools together and uses them to help its own services, like search and YouTube.

Some Google executives have discussed informally “whether the company should consider divesting its third-party ad tech business, according to people familiar with the situation,” Ms. Hagey and Mr. Copeland write. (A Google spokeswoman said there were no plans to divest the unit.)

Proponents of divesting the business note that the ad tech arm “has steadily declined in importance to Google overall since the DoubleClick purchase, while units like search and YouTube have soared.” That’s because web search traffic is stagnant, while mobile internet use is booming.

“For Google, a partial voluntary breakup of its advertising business might be preferable to whatever regulators come up with on their own,” Alex Webb of Bloomberg Opinion writes.

The mattress seller officially priced its I.P.O. at $12 a share, the low end of a sharply cut price range. It’s a sign that public-market investors remain sour on money-losing start-ups with no clear path to profitability.

The bed-in-a-box company is valued around $476 million. Just last year, it was valued around $1.1 billion in a private fund-raising round.

Investors remain wary of money-burning I.P.O. candidates, having turned up their noses at Uber and WeWork last year. It shows the public markets aren’t willing to subsidize these companies’ growth efforts.

It’s not the only bad news for start-ups this week: The Federal Trade Commission moved to block the sale of Harry’s, the upstart razor brand, to the owner of Schick. If unprofitable start-ups can’t sell themselves to bigger rivals, and they suffer badly when they go public, what can they do?

Market fundamentals didn’t appear to apply to the electric-car maker’s shares this past year. At least they didn’t until yesterday.

Tesla’s stock fell 17 percent, in what Tom Maloney of Bloomberg notes was its worst drop in eight years. Shares closed yesterday at $734.70, which is three times more than where they traded in June.

Elon Musk lost $5.9 billion on paper in just one day, leaving him with an estimated net worth of $39.3 billion. (He could still earn a huge bonus if he keeps Tesla’s market value above $100 billion over six months: The company is currently valued at $132 billion.)

The stock dropped after even hardened Tesla critics conceded defeat. The hedge fund manager Steve Eisman, who famously profited by betting against subprime mortgage lenders before the financial crisis, said he had covered his bet against the company amid its “cultlike” rally.

Today’s a new day, however. Shares in Tesla were up 2 percent in premarket trading.

Beijing said today that it would cut tariffs on $75 billion of U.S. imports. Analysts say the coronavirus outbreak was a major factor in the decision.

China will halve tariffs on some American products starting Feb. 14. The Finance Ministry said in a statement that the move was meant to “alleviate economic and trade frictions and expand economic and trade cooperation” between China and the U.S.

But analysts saw the economic impact of the coronavirus. With Chinese consumers sharply cutting spending, it appeared unlikely that Beijing would be able to hit targets for increasing U.S. imports that were laid out in the recently signed trade agreement with Washington anytime soon.

“I see it as a measure to signal to the U.S. that, ‘We’re not going to be able to ramp up imports straight away, but we’re still on board with the deal,’ ” Julian Evans-Pritchard, senior China economist at Capital Economics, told the FT.

Global markets rose this morning, and S&P 500 futures pointed toward a positive open when trading begins.

The Trump administration’s feud with New York State over protecting immigrants has expanded in a way that could affect many New York business travelers.

Residents of New York State are temporarily barred from applying for Global Entry and similar programs that let travelers speed through borders and airport security lines, Zolan Kanno-Youngs and Jesse McKinley of the NYT report.

The move is tied to the enactment of the Green Light Law, which prohibits agencies such as Immigration and Customs Enforcement and Customs and Border Protection from gaining access to New York D.M.V. databases without a court order.

It’s the latest stage of the battle between federal officials and New York State over immigration. The Trump administration has already criticized New York City for policies that protect undocumented immigrants.

“This is obviously political retaliation by the federal government, and we’re going to review our legal options,” a senior adviser to Gov. Andrew M. Cuomo said.

As part of a request for early release, the mastermind of the largest Ponzi scheme in history told a court yesterday that he had terminal kidney disease, David Yaffe-Bellany of the NYT reports.

Doctors have determined that Mr. Madoff has just over a year to live, according to medical records attached to his filing. Under federal guidelines, prisoners who receive that kind of diagnosis can be eligible for early release.

He has already served 11 years of his 150-year prison sentence for a variety of crimes, including money laundering, perjury and theft. Victims of his fraud lost an estimated $13 billion.

Federal officials denied a previous request, saying that “his release at this time would minimize the severity of his offense.”

Bernie Ebbers, the former WorldCom C.E.O., was given early release in December from his 25-year prison sentence after his health deteriorated sharply. He died on Sunday.


• Analysts don’t understand why the Intercontinental Exchange would want to buy eBay. (FT)

• Spotify agreed to buy The Ringer, the website founded by Bill Simmons, to add more podcasts to its offerings. (NYT)

• Nestlé plans to invest $200 million in the drug maker Aimmune Therapeutics, whose peanut allergy treatment recently won F.D.A. approval. (Reuters)

• Vanguard became famous for offering index funds. Now it’s getting into private equity. (WSJ)

Politics and policy

• The United States trade deficit shrank last year — because the economy is cooling, not because factories are reopening. (NYT)

• Bernie Sanders and Pete Buttigieg are nearly tied in the latest results from the Iowa Democratic caucuses. (NYT)

• Britain plans to ask the public which E.U. rules the country should scrap. (FT)


• Jeff Weiner will step down as C.E.O. of LinkedIn on June 1 and become the social network’s executive chairman. He’ll be succeeded by Ryan Roslansky, the company’s product chief. (CNBC)

• Facebook’s move to encrypt its messaging platforms has run into opposition from child welfare advocates, who worry that the measure would let predators act with impunity. (NYT)

• Huawei, the Chinese tech giant, sued Verizon for patent infringement. (CNBC)

• The C.I.A. plans to offer more cloud-computing contracts to Amazon rivals. (Bloomberg)

Best of the rest

• Some bondholders are said to have reached a deal with of Puerto Rico’s oversight board, possibly paving the way for the U.S. territory to exit bankruptcy protection. (WSJ)

• Three big investors in Credit Suisse have sided with the Swiss bank’s C.E.O., Tidjane Thiam, in his fight with the firm’s chairman, Urs Rohner. (FT)

• The latest generation of Nike’s super-sneakers will qualify for the Tokyo Olympics. (WSJ)

• Kirk Douglas, the Hollywood star, died yesterday. He was 103. (NYT)

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