Andrew here. Ponder this: The judge in the Google search antitrust case has made a big ruling — which we get into below — that prevents Google from paying rivals to be their “exclusive” provider of search. But the decision also allows the company to continue to pay others like Apple to be a default search provider. What’s the difference? The answer is unclear. Could Apple, whose stock jumped on the news because it gets $20 billion a year from Google, still sell its search bar to Google while selling access to others, too?
We also take a look this morning at the breakup of Kraft Heinz, and the latest on the tariff drama.
Hitting the brakes on Big Tech antitrust
Google shareholders are breathing a sigh of relief after a federal judge spared the tech giant from the harshest possible punishment for violating federal antitrust law: a breakup.
Though the Justice Department praised Tuesday’s ruling as a win for competition in Silicon Valley, the real outcome could be that efforts to constrain the power of Big Tech may have limited effects.
“Courts must approach the task of crafting remedies with a healthy dose of humility,” Judge Amit Mehta of the U.S. District Court for the District of Columbia wrote in his ruling, outlining steps Google must take to address its illegal monopoly over web search. They include:
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Stop paying makers of web browsers and smartphones for exclusive rights to provide search, and from requiring its other products to be bundled on a device
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Share some of its search data with “qualified competitors,” potentially including rivals like Microsoft and DuckDuckGo
What he didn’t do: require Google to sell its Chrome browser, something the government had called for, or block it from paying for prime — but not exclusive — placement of its search engine.
Some big winners from the ruling:
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Google itself, with its shares leaping 8 percent in after-hours trading
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Apple, whose multibillion-dollar search arrangement with Google will most likely continue; its shares jumped 4 percent in post-market trading
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Mozilla, which gets nearly all of its U.S. revenue from a deal that makes Google the default search provider for its browser
The artificial intelligence boom may have spared Google. Mehta specifically cited the rise of generative A.I. companies as a factor in his ruling, with chatbots now providing stiff competition. They also have astonishingly deep pockets to battle Google: Just on Tuesday, Anthropic said it had raised $13 billion at a $183 billion valuation.
“These companies already are in a better position, both financially and technologically, to compete with Google than any traditional search company has been in decades (except perhaps Microsoft),” Mehta wrote.
The decision may provide hope for other tech giants under the antitrust microscope. Google is awaiting a different ruling in a case in which it was determined to have had a monopoly over some forms of ad technology. (The government has also called for Google to be forced to sell some of those systems.) Amazon, Apple and Meta are also battling prosecutors in court.
But Mehta’s ruling suggests that the courts may not feel compelled to force Big Tech to break up: “There are strong reasons not to jolt the system and to allow market forces to do the work,” he wrote.
Some are skeptical that this approach will amount to much: Nidhi Hegde, an executive director of the American Economic Liberties Project, a nonprofit group calling for tougher antitrust enforcement, derided the ruling as a “feckless remedy” that “must be appealed.”
HERE’S WHAT’S HAPPENING
President Trump’s Fed shake-up moves forward. Lawyers for Lisa Cook, the Fed governor on the hot seat, slammed Trump for making “cut-and-paste” accusations of mortgage fraud against her as he tries to remove her from office; the district judge hearing the case probably won’t rule before tomorrow. Separately, The Wall Street Journal reports that Treasury Secretary Scott Bessent is moving forward with the administration’s restaffing of the bank, as he plans to begin interviewing candidates on Friday to replace Jay Powell as chair.
Vogue names Chloe Malle as its editor, replacing Anna Wintour. The 39-year-old editor of Vogue’s website and co-host of its podcast became the magazine’s first new editor in 37 years. (Wintour will remain her boss, however, as Condé Nast’s chief content officer.) Malle, the daughter of the actress Candice Bergen and the director Louis Malle, may steer Vogue into publishing fewer, more collectible issues as it tries to stake a path through the magazine world’s decline.
Apple reportedly loses its lead A.I. researcher for robotics to Meta. Jian Zhang is the latest to depart the iPhone maker, Bloomberg reports; and three more A.I. researchers left Apple’s large language models team to join companies like OpenAI and Anthropic. The Apple Foundation Models team has lost some 10 people in recent weeks, amid worsening morale as the company weighs turning from homegrown models to outside technology.
A tariffs showdown
President Trump says he plans to call on the Supreme Court to keep his trade war going.
Investors are watching the development closely after a federal appeals court ruled last week that most of his reciprocal tariffs were illegal — though it left the duties in place — adding a new kind of uncertainty over his tariff strategy.
The latest: On Wednesday, bondholders sold off long-dated Treasury notes and bonds as debt fears grow. With the yield on the 30-year Treasury bond nearing 5 percent, some traders are fretting that a legal showdown over Trump’s tariffs could spill into the debt markets.
A setback for Trump might be welcome news for U.S. importers facing huge tariff bills. But it would be a huge blow for the Trump administration, potentially depriving Washington of a multibillion-dollar monthly windfall in tariff revenues that could ease the government’s huge debt load.
Trump understands the stakes. “If you took away tariffs, we could end up being a third-world country,” he said at the White House, a warning that some economists might call far-fetched, but might also risk piquing jittery bondholders’ concerns. (He also said the “stock market needs the tariffs,” a pronouncement that came as the S&P 500 fell for a second straight session.)
Trump signaled that he would ask the justices as soon as Wednesday to fast-track a decision over the legality of his reciprocal tariffs, the punishing levies he’s imposed on much of the world. The administration has used a 1970s law, which grants the president the power to impose sanctions and embargoes to address global threats, to justify those duties.
Many legal scholars have challenged that interpretation, however. One issue: The law does not explicitly mention “tariffs (or any of its synonyms) nor has procedural safeguards that contain clear limits on the president’s power to impose tariffs” as last week’s court ruling noted.
Still, Trump sounded confident about his chances. He called last week’s court ruling “very shocking.” Labeling the federal appeals docket that ruled against him “a liberal court,” he expressed optimism that the case was “going up to the Supreme Court.”
Even if the administration were to lose in the Supreme Court, Trump could turn to other laws to continue his tariffs barrage. But they’d probably be temporary.
The latest twist in Trump’s trade war could add more markets drama. “The Bond Vigilantes might start acting up again if they can no longer look forward to a significant reduction in the federal deficit attributable to tariff revenues,” Ed Yardeni, a noted investment strategist, wrote in a research note on Tuesday.
Pic of the day
Among those who attended Tuesday’s U.S. Open men’s quarterfinal tennis match between Novak Djokovic and Taylor Fritz were: Adam Silver, the N.B.A. commissioner, Josh Kushner, the venture capitalist who leads Thrive Capital, and Bob Iger, the C.E.O. of Disney and an investor in Thrive.
The Big Food shake-up continues
There’s been a frenzy of deals hitting the grocery aisles — and Wall Street is watching.
On Tuesday, Kraft Heinz announced that it was splitting into two businesses, while the activist investor Elliott Investment Management took a roughly $4 billion stake in PepsiCo.
The latest moves were far from unique, Niko Gallogly reports. Over the past year, more than $60 billion has been announced in industry acquisitions and investments. Consider the following transactions:
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Mars, the company behind M&M’s and Snickers, agreed last year to acquire Kellanova in a deal valued at $35.9 billion.
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Ferrero, the Italian candy maker that sells Nutella and Tic Tacs, announced plans in July to buy the cereal business WK Kellogg for $3.1 billion.
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And just last month, Keurig Dr Pepper said that it would acquire the European coffee company JDE Peet’s for roughly $18 billion.
Big Food faces big challenges. The wave of deals comes less from optimism about the sector than from the realization that it has to adapt to a changed marketplace. Warren Buffett expressed as much on Tuesday, telling CNBC that he was “disappointed” in the Kraft Heinz split, which largely unwinds the merger he masterminded in 2015. Shares fell 7 percent on Tuesday, wiping out more than $2 billion in market capitalization.
The skinny: Consumers, feeling the sting of inflation, are trading brand-name goods for private-label products. A growing distrust of ultraprocessed foods and the rise of weight-loss drugs like Ozempic isn’t helping, driving down sales and stock prices.
In response, major food and beverage players are entering a “phase of divestitures and spinoffs,” said Farzad Mukhi, a managing director at the M&A advisory firm Kroll.
The Kraft Heinz split will separate its high-performing brands, like Heinz ketchup and Philadelphia cream cheese, from laggards like Oscar Mayer and Kraft Singles. And Elliott has proposed that PepsiCo divest from its slower-growing assets like Quaker Oats and invest instead in its top-performing Frito-Lay brands.
Through divestitures, these companies are betting that what remains will drive growth and profits. And, as smaller entities, they are better positioned for mergers and acquisitions. Indeed, the Kellanova and WK Kellogg businesses bought in the past year were created when Kellogg split into two in fall 2023.
THE SPEED READ
Deals
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OpenAI agreed to buy Statsig, a product testing start-up, for $1.1 billion in stock. (Bloomberg)
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Air Lease, an aircraft leasing company founded by the aviation mogul Steven Udvar-Hazy, agreed to sell itself to investors including Apollo Global Management for $7.4 billion. (CNBC)
Technology and artificial intelligence
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“How Elon Musk Is Remaking Grok in His Image” (NYT)
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The Trump administration revoked TSMC’s authorization to freely ship U.S. chip-making tools to China without a license. (FT)
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Mike Novogratz, the crypto entrepreneur, said that A.I. agents would become the biggest users of stablecoins. (Bloomberg)
Best of the rest
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The N.F.L. accused Nielsen of systematically undercounting game audiences by not including Amazon, Netflix and YouTube viewership data. (Sportico)
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“Nestlé C.E.O.’s Unraveling Started With a Tip to an Employee Hotline” (WSJ)
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Andrew Ross Sorkin is a columnist and the founder of DealBook, the flagship business and policy newsletter at The Times and an annual conference.
Bernhard Warner is a senior editor for DealBook, a newsletter from The Times, covering business trends, the economy and the markets.
Sarah Kessler is the weekend edition editor of the DealBook newsletter and writes features on business.
Michael J. de la Merced has covered global business and finance news for The Times since 2006.
Niko Gallogly is a Times business reporter, covering diversity and environmental and social justice efforts in corporate America. Email them at [email protected].
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