The coronavirus sapped $2.8 billion in revenue from AT&T in its most recent quarter, mostly in its WarnerMedia TV and film division. Its satellite TV business, DirecTV, continued to bleed customers.
“I expect we’re going to be dealing with some of these economic challenges in the COVID environment as we move forward here,” said AT&T CEO John Stankey during a call with analysts Thursday.
WarnerMedia revenue fell 23% to $6.8 billion due to a pullback by TV advertisers, particularly as there were no live sports, and movie theaters closed.
Hollywood shut down production due to the pandemic, delaying movie releases and series for both traditional TV and streaming services. Stankey said the company hopes to resume film and TV production next month.
The company is hoping to navigate the shift to online video with its HBO Max service, which launched in late May. AT&T said 4.1 million customers “activated” a Max account. It’s not specified how many were existing HBO customers who upgraded to Max for free and how many were new customers; there are 36.3 million U.S. subscribers to HBO Max or HBO. The company said it had “work to do to educate and motivate” HBO customers that they could switch to HBO Max, which has more content.
HBO “has gotten off to a rather inauspicious start,” wrote MoffettNathanson analyst Craig Moffett in a note to investors.
In the wireless business, AT&T’s biggest, revenues were relatively steady, slipping 1% to $17.15 billion. It lost 151,000 customers who pay a monthly cellphone bill. That number included 340,000 people that AT&T kept providing service to even though they had stopped paying because of economic difficulties due to the pandemic as part of the “Keep America Connected Pledge” many telecom companies made to the Federal Communications Commission. That agreement with the FCC ended on June 30. CFO John Stephens said the company is contacting those customers and wants to try to keep them, but didn’t specify how the pricing would work. AT&T said it also had 159,000 home internet customers who weren’t paying because of the pandemic.
Tens of millions of people in the U.S. can’t get broadband or can’t afford it, and that has only grown more difficult for them during the pandemic as work, school and social interaction have shifted online.
The company added 135,000 customers to prepaid phone service, which tends to be cheaper.
AT&T Inc. also lost 886,000 customers in its “premium” TV division, which is mostly DirecTV subscribers. That video base has shrunk by a quarter in two years.
Overall, the Dallas company’s quarterly profit fell 65% to $1.28 billion, or 17 cents per share.
Adjusted for asset impairment costs and other items, earnings came to 83 cents per share. Wall Street expected per-share earnings of 78 cents, according to a survey by Zacks Investment Research.
Revenue fell 9% to $40.95 billion, just shy of expectations.
AT&T shares fell less than 1% to close at $29.90 Thursday.
By TALI ARBEL AP Technology Writer.
Justice Dept. files landmark antitrust case against Google
WASHINGTON (AP) — The Justice Department on Tuesday sued Google for abusing its dominance in online search and advertising — the government’s most significant attempt to protect competition since its groundbreaking case against Microsoft more than 20 years ago.
And it could just be an opening salvo. Other major tech companies including Apple, Amazon and Facebook are under investigation at both the Justice Department and the Federal Trade Commission.
“Google is the gateway to the internet and a search advertising behemoth,” U.S. Deputy Attorney General Jeff Rosen told reporters. “It has maintained its monopoly power through exclusionary practices that are harmful to competition.”
Lawmakers and consumer advocates have long accused Google of abusing its dominance in online search and advertising. The case filed in federal court in Washington, D.C., alleges that Google uses billions of dollars collected from advertisers to pay phone manufacturers to ensure Google is the default search engine on browsers. That stifles competition and innovation from smaller upstart rivals to Google and harms consumers by reducing the quality of search and limiting privacy protections and alternative search options, the government alleges.
Critics contend that multibillion-dollar fines and mandated changes in Google’s practices imposed by European regulators in recent years weren’t severe enough and Google needs to be broken up to change its conduct. The Justice Department didn’t lay out specific remedies along those lines, although it asked the court to order structural relief “as needed to remedy any anticompetitive harm.”
That opens the door to possible fundamental changes such as a spinoff of the company’s Chrome browser.
Google vowed to defend itself and responded immediately via tweet: “Today’s lawsuit by the Department of Justice is deeply flawed. People use Google because they choose to — not because they’re forced to or because they can’t find alternatives.”
Eleven states, all with Republican attorneys general, joined the federal government in the lawsuit. But several other states demurred.
The attorneys general of New York, Colorado, Iowa, Nebraska, North Carolina, Tennessee and Utah released a statement Monday saying they have not concluded their investigation into Google and would want to consolidate their case with the DOJ’s if they decided to file. “It’s a bipartisan statement,” said spokesman Fabien Levy of the New York State attorney general’s office. “There’s things that still need to be fleshed out, basically”
President Donald Trump’s administration has long had Google in its sights. One of Trump’s top economic advisers said two years ago that the White House was considering whether Google searches should be subject to government regulation. Trump has often criticized Google, recycling unfounded claims by conservatives that the search giant is biased against conservatives and suppresses their viewpoints.
Rosen told reporters that allegations of anti-conservative bias are “a totally separate set of concerns” from the issue of competition.
Sally Hubbard, an antitrust expert who runs enforcement strategy at the Open Markets Institute, said it was a welcome surprise to see the Justice Department’s openness to the possibility of structurally breaking up Google, and not just imposing conditions on its behavior as has happened in Europe.
“Traditionally, Republicans are hesitant to speak of breakups,” she said. “Personally, I’ll be very disappointed if I see a settlement. Google has shown it won’t adhere to any behavioral conditions.”
The argument for reining in Google has gathered force as the company stretched far beyond its 1998 roots as a search engine governed by the motto “Don’t Be Evil.” It’s since grown into a diversified goliath with online tentacles that scoop up personal data from billions of people via services ranging from search, video and maps to smartphone software. That data helps feed the advertising machine that has turned Google into a behemoth.
The company owns the leading web browser in Chrome, the world’s largest smartphone operating system in Android, the top video site in YouTube and the most popular digital mapping system. Some critics have singled out YouTube and Android as among Google businesses that should be considered for divestiture.
Google, whose corporate parent Alphabet Inc. has a market value just over $1 trillion, controls about 90% of global web searches. Barring a settlement, a trial would likely begin late next year or in 2022.
The company, based in Mountain View, California, argues that although its businesses are large, they are useful and beneficial to consumers. It maintains that its services face ample competition and have unleashed innovations that help people manage their lives.
Most of Google’s services are offered for free in exchange for personal information that helps it sell its ads.
In a Tuesday presentation with a handful of reporters, Google argued that its services have helped hold down the prices of smartphones and that consumers can easily switch away from services like Google Search even if it’s the default option on smartphones and in some internet browsers.
A recent report from a House Judiciary subcommittee concluded that Google has monopoly power in the market for search. It said the company established its position in several markets through acquisition, snapping up successful technologies that other businesses had developed — buying an estimated 260 companies in 20 years.
The Democratic congressman who led that investigation called Tuesday’s action “long overdue.”
“It is critical that the Justice Department’s lawsuit focuses on Google’s monopolization of search and search advertising, while also targeting the anticompetitive business practices Google is using to leverage this monopoly into other areas, such as maps, browsers, video, and voice assistants,” Rep. David Cicilline of Rhode Island said in a statement.
Columbia Law professor Tim Wu called the suit almost a carbon copy of the government’s 1998 lawsuit against Microsoft. He said via email that the U.S. government has a decent chance of winning. “However, the likely remedies — i.e., knock it off, no more making Google the default — are not particularly likely to transform the broader tech ecosystem.”
Other advocates, however, said the Justice Department’s timing — it’s only two weeks to Election Day — smacked of politics. The government’s “narrow focus and alienation of the bipartisan state attorneys general is evidence of an unserious approach driven by politics and is likely to result in nothing more than a choreographed slap on the wrist for Google,” Alex Harman, a competition policy advocate at Public Citizen, said in a statement.
Republicans and Democrats have accelerated their criticism of Big Tech in recent months, although sometimes for different reasons. It’s unclear what the status of the government’s suit against Google would be if a Joe Biden administration were to take over next year.
The Justice Department sought support for its suit from states across the country that share concerns about Google’s conduct. A bipartisan coalition of 50 U.S. states and territories, led by Texas Attorney General Ken Paxton, announced a year ago they were investigating Google’s business practices, citing “potential monopolistic behavior.”
Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina and Texas joined the Justice Department lawsuit.
By MICHAEL BALSAMO and MARCY GORDON Associated Press, AP Technology Writers Michael Liedtke in San Ramon, Calif., Matt O’Brien in Providence, R.I., and Frank Bajak in Boston contributed to this report.
Follow Balsamo and Gordon on Twitter at https://twitter.com/MikeBalsamo1 and https://twitter.com/mgordonap.
Intel to sell NAND business to SKorean rival for $9 billion
Intel has agreed to a $9 billion deal to sell most of its memory business to South Korea’s SK Hynix as it moves toward more diverse technologies while shedding a major Chinese factory at a time of deepening trade friction between Washington and Beijing.
Intel said it will keep its “Optane” business of more advanced memory products, which analysts say are mostly produced in the United States.
According to the plan confirmed by the companies on Tuesday, SK Hynix will acquire Intel’s NAND memory chip and storage business, including a related manufacturing site in the northeastern Chinese city of Dalian. SK Hynix said the companies expect to get required governmental approvals for the deal by late 2021.
The transaction, if completed, could reportedly make SK Hynix the world’s second-largest provider of NAND flash memory chips behind Samsung Electronics, another South Korean chip giant.
Demand for flash memory has strengthened in recent months due to buying of personal computers and servers as the coronavirus pandemic forces millions to work from home.
Intel said it plans to invest proceeds from the transaction into advancing long-growth priorities, including technologies related to artificial intelligence and fifth-generation wireless networks.
“This transaction will allow us to further prioritize our investments in differentiated technology where we can play a bigger role in the success of our customers and deliver attractive returns to our stockholders,” Bob Swan, Intel’s CEO, said in a statement.
SEOUL, South Korea (AP).
Is Facebook really ready for the 2020 election?
Ever since Russian agents and other opportunists abused its platform in an attempt to manipulate the 2016 U.S. presidential election, Facebook has insisted — repeatedly — that it’s learned its lesson and is no longer a conduit for misinformation, voter suppression and election disruption.
But it has been a long and halting journey for the social network. Critical outsiders, as well as some of Facebook’s own employees, say the company’s efforts to revise its rules and tighten its safeguards remain wholly insufficient to the task, despite it having spent billions on the project. As for why, they point to the company’s persistent unwillingness to act decisively over much of that time.
“Am I concerned about the election? I’m terrified,” said Roger McNamee, a Silicon Valley venture capitalist and an early Facebook investor turned vocal critic. “At the company’s current scale, it’s a clear and present danger to democracy and national security.”
The company’s rhetoric has certainly gotten an update. CEO Mark Zuckerberg now casually references possible outcomes that were unimaginable in 2016 — among them, possible civil unrest and potentially a disputed election that Facebook could easily make even worse — as challenges the platform now faces.
“This election is not going to be business as usual,” Zuckerberg wrote in a September Facebook post in which he outlined Facebook’s efforts to encourage voting and remove misinformation from its service. “We all have a responsibility to protect our democracy.”
Yet for years Facebook executives have seemed to be caught off guard whenever their platform — created to connect the world — was used for malicious purposes. Zuckerberg has offered multiple apologies over the years, as if no one could have predicted that people would use Facebook to live-stream murders and suicides, incite ethnic cleansings, promote fake cancer cures or attempt to steal elections.
While other platforms like Twitter and YouTube have also struggled to address misinformation and hateful content, Facebook stands apart for its reach and scale and, compared to many other platforms, its slower response to the challenges identified in 2016.
In the immediate aftermath of President Donald Trump’s election, Zuckerberg offered a remarkably tone-deaf quip regarding the notion that “fake news” spread on Facebook could have influenced the 2016 election, calling it “a pretty crazy idea.” A week later, he walked back the comment.
Since then, Facebook has issued a stream of mea culpas for its slowness to act against threats to the 2016 election and promised to do better. “I don’t think they have become better at listening,” said David Kirkpatrick, author of a book on Facebook’s rise. “What’s changed is more people have been telling them they need to do something.”
The company has hired outside fact-checkers, added restrictions — then more restrictions — on political advertisements and taken down thousands of accounts, pages and groups it found to be engaging in “coordinated inauthentic behavior.” That’s Facebook’s term for fake accounts and groups that maliciously target political discourse in countries ranging from Albania to Zimbabwe.
It’s also started added warning labels to posts that contain misinformation about voting and has, at times, taken steps to limit the circulation of misleading posts. In recent weeks the platform also banned posts that deny the Holocaust and joined Twitter in limiting the spread of an unverified political story about Hunter Biden, son of Democratic presidential candidate Joe Biden, published by the conservative New York Post.
All this unquestionably puts Facebook in a better position than it was in four years ago. But that doesn’t mean it’s fully prepared. Despite tightened rules banning them, violent militias are still using the platform to organize. Recently, this included a foiled plot to kidnap the governor of Michigan.
In the four years since the last election, Facebook’s earnings and user growth have soared. This year, analysts expect the company to rake in profits of $23.2 billion on revenue of $80 billion, according to FactSet. It currently boasts 2.7 billion users worldwide, up from 1.8 billion at this time in 2016.
Facebook faces a number of government investigations into its size and market power, including an antitrust probe by the U.S. Federal Trade Commission. An earlier FTC investigation socked Facebook with a large $5 billion fine, but didn’t require any additional changes.
“Their No. 1 priority is growth, not reducing harm,” Kirkpatrick said. “And that is unlikely to change.”
Part of the problem: Zuckerberg maintains an iron grip on the company, yet doesn’t take criticism of him or his creation seriously, charges social media expert Jennifer Grygiel, a Syracuse University communications professor. But the public knows what’s going on, they said. “They see COVID misinformation. They see how Donald Trump exploits it. They can’t unsee it.”
Facebook insists it takes the challenge of misinformation seriously — especially when it comes to the election.
“Elections have changed since 2016, and so has Facebook,” the company said in a statement laying out its policies on the election and voting. “We have more people and better technology to protect our platforms, and we’ve improved our content policies and enforcement.”
Grygiel says such comments are par for the course: “This company uses PR in place of an ethical business model.”
Kirkpatrick notes that board members and executives who have pushed back against the CEO — a group that includes the founders of Instagram and WhatsApp — have left the company.
“He is so certain that Facebook’s overall impact on the world is positive” and that critics don’t give him enough credit for that, Kirkpatrick said of Zuckerberg. As a result, the Facebook CEO isn’t inclined to take constructive feedback. “He doesn’t have to do anything he doesn’t want to. He has no oversight,” Kirkpatrick said.
The federal government has so far left Facebook to its own devices, a lack of accountability that has only empowered the company, according to U.S. Rep. Pramila Jayapal, a Washington Democrat who grilled Zuckerberg during a July Capitol Hill hearing.
Warning labels are of limited value if the algorithms underlying the platform are designed to push polarizing material at users, she said. “I think Facebook has done some things that indicate it understands its role. But it has been, in my opinion, far too little, too late.”
By BARBARA ORTUTAY and DAVID KLEPPER Associated Press.
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