Risk Channel delivers the latest, most relevant and useful business intelligence to key decision makers and influencers, each weekday morning.

The U.S. Department of Justice, 16 states, and the District of Columbia have launched an antitrust lawsuit against Apple, alleging that the firm makes it difficult for competitors to integrate with the iPhone, ultimately raising prices for consumers. It claims that Apple, which controls more than 65% of the U.S. smartphone market, tries to keep users from switching to devices on outside operating systems, such as Android smartphones. “Each step in Apple’s course of conduct built and reinforced the moat around its smartphone monopoly,” the government said in the lawsuit, which was filed in the U.S. District Court for the District of New Jersey. Apple says these practices make its iPhones more secure than other smartphones. But app developers and rival device makers say Apple uses its power to crush competition. The lawsuit asks the court to stop Apple from engaging in current practices, including blocking cloud-streaming apps, undermining messaging across smartphone operating systems and preventing the creation of digital wallet alternatives. In a statement, Apple said it believes the lawsuit "is wrong on the facts and the law," adding that it will "vigorously" defend against it.

 

CNN

Fox News

New York Times

Wall Street Journal

Microsoft has agreed to pay Inflection AI $650m to license its AI software and has hired the startup's co-founders and most of its employees. The deal, resembling a so-called "acqui-hire," but without an acquisition, could raise antitrust concerns with U.S. regulators. With a much smaller headcount, Inflection is now trying to offload some of its compute capacity, or access to computing power that can be used for tasks including training AI models, according to people familiar with the matter. The company is also said to be pursuing a partial refund from its cloud computing partner CoreWeave in a move that could reduce costs related to building AI models as Inflection pivots to an enterprise rather than consumer business model. Reid Hoffman, a Microsoft board member, will stay on at Inflection as a director and co-founder. The new CEO will be Sean White, a board member who was previously the chief research and development officer at Mozilla.

 

Bloomberg

The Information

Investors are demanding data on indirect greenhouse gas emissions that are excluded from new U.S. financial disclosure rules, according to the chair of the International Sustainability Standards Board (ISSB). The Securities and Exchange Commission (SEC) recently dropped the requirement for companies to disclose Scope 3 emissions, which account for the majority of a company's carbon footprint. However, investors are still pushing for this information, as other jurisdictions, such as the European Union and California, have passed laws requiring Scope 3 emissions disclosure. "Investors say Scope 3 is important," ISSB Chair Emmanuel Faber said in an interview. "If all companies report Scope 3, absent local regulation but because they are being asked by investors and banks, the result is (that information) is out there." Some of the companies and trade groups that sent more than 16,000 comment letters in response to the SEC's draft climate rules urged the regulator to accept disclosures based on ISSB's recommendations as an alternative to the SEC's own rules.

 

US News and World Report

The Federal Trade Commission (FTC) has recommended further investigation into the profits of grocery store operators and promotions offered by consumer products makers. The FTC's report comes as it sues Kroger over concerns that its acquisition of Albertsons would lead to price hikes. The study, launched in 2021, found that some in the industry took advantage of the vulnerable supply chain crisis during the pandemic. President Joe Biden has previously accused grocery chains of "ripping people off." The FTC's report revealed that annual profits for food and beverage retailers have risen substantially and remain elevated, casting doubt on claims that rising prices are due to retailers' own rising costs. The commission also highlighted the need for further study into trade promotions, which were reduced during the pandemic and harmed traditional grocers. The report does not inform the recent case against Kroger and Albertsons, and the FTC clarified that it does not make claims of illegality.

 

New York Times

Wall Street Journal

The Federal Deposit Insurance Corporation (FDIC) has proposed a new policy that would subject bank mergers to heightened scrutiny. The rules would apply to any takeover that created a bank with more than $50bn in assets, and would become more onerous for any deal above $100bn. The FDIC's board of directors voted 3-2 in favour of the proposal, which comes after several lenders with more than $100bn in assets ran into difficulties.

 

Bloomberg

Financial Times

A divided U.S. appeals court has ruled that Meta Platforms, the owner of Facebook and Instagram, must face a class action lawsuit by advertisers who claim they were overcharged due to fraudulent inflation of ad reach numbers. The 9th U.S. Circuit Court of Appeals in San Francisco allowed advertisers to sue as a group for damages related to Meta's claims about the "potential reach" of their ads. Advertisers allege that the metric measured social media accounts rather than actual people, leading to an inflation of potential viewers by up to 400%. The court also decertified a separate class seeking injunctive relief. Meta Platforms, which relies heavily on ad revenue, has not yet commented on the ruling. The lawsuit includes claims that senior executives were aware of the inflation and attempted to cover it up. The class action covers millions of individuals and businesses that have paid for ads on Facebook and Instagram since August 2014. The case is DZ Reserve et al v Meta Platforms Inc, 9th U.S. Circuit Court of Appeals, No. 22-15916.

 

Bloomberg

Privacy litigation is rapidly growing in the U.S., with new claims being filed based on alleged violations of older privacy laws. One recent example is the surge in lawsuits claiming that the use of Meta Pixel, a tracking technology, violates state wiretap laws and the Video Privacy Protection Act. Another trend is the targeting of companies that profit from the sale of personal information, such as data brokers and online look-up services. New Jersey is currently experiencing a boom in privacy litigation, with over 140 lawsuits filed in February alone against data brokers for violating "Daniel's Law." This law prohibits the posting or disclosure of certain public officials' contact information. Companies defending claims under Daniel's Law face challenges due to the law's broad definitions. The law provides for liquidated damages of $1,000 per violation. Atlas Data Privacy Corporation has filed 142 complaints under Daniel's Law, alleging that large online data brokers have refused to remove protected information. The defendants have yet to respond to the complaints. Entities must be cautious not to miss the 10-day deletion window required under Daniel's Law. Other states may follow suit and pass similar laws, creating new avenues of liability.

 

Reuters

H&R Block is suing the U.S. Federal Trade Commission (FTC) in Kansas City, Missouri, seeking an order that could upend the agency’s case accusing the tax giant of misleading consumers about the scope of its free tax-filing services. H&R Block was alleged to have deceived customers with broad marketing for “free” online tax filing services that really only apply to simple returns, and that it had unfairly deleted consumers' tax data. Wednesday’s lawsuit cites the power of U.S. presidents enshrined in the Constitution to remove “inferior officers.” It says the FTC’s internal judges are improperly insulated from that authority, and that the agency must abandon their use.

 

CNN

JPMorgan has filed a lawsuit against Argus Information and Advisory Services, accusing the company of misappropriating its trade secrets. The lawsuit alleges that Argus misused confidential credit card data obtained while serving as a data aggregator for federal financial regulators. JPMorgan claims that Argus used the data to support its analytics work, violating government contracts that prohibited such use. The lawsuit also states that a whistleblower informed JPMorgan about Argus' misappropriation of data. JPMorgan is seeking monetary damages and other court relief. TransUnion, which acquired Argus in 2022, stated that the lawsuit relates to actions that occurred before the acquisition. Verisk Analytics, the parent company of Argus, has denied the allegations. The case is ongoing in the U.S. District Court for the District of Delaware.

 

Reuters

A U.S. bankruptcy judge has ordered the arrest of William Cameron Morton, a hedge fund manager who allegedly helped Indian education technology startup Byju's hide $533m from its lenders. Byju's Alpha, a subsidiary controlled by Byju's lenders, filed for U.S. bankruptcy in February after defaulting on $1.2bn in debt. Byju's had sent $533m to Morton's hedge fund, Camshaft Capital. Morton failed to appear in court and provide proof of his hospitalization or location, leading to a warrant for his arrest. Morton and Camshaft will be fined $10,000 per day until they cooperate with the investigation. Byju's lenders have filed a lawsuit against Morton and Camshaft, questioning the transfer of funds to an unqualified hedge fund manager. Byju's former parent company, Think & Learn Private Ltd, was once valued at $22bn.

 

Reuters

The nonpartisan Congressional Budget Office (CBO) is expecting the federal debt as a share of the U.S. economy to hit a record by 2029. In its latest 30-year outlook, the budget office said that the cost of interest payments on the debt will double to 6.3% of GDP, with spending on social safety net programs to account for more than half of the rest of the nation's outlays. Debt as a share of GDP is projected to hit a record 107% in 2029 and 166% in 2054. However, the CBO also upgraded its growth outlook for the next three decades, largely based on growth in the size of the labor force from increased immigration.

 

New York Times

Washington Examiner

The former CEO of South Africa-headquartered furniture distributor Steinhoff, Markus Jooste, has shot himself in the head a day after being fined $25m for publishing false financial statements. He was facing the prospect of arrest in South Africa, in addition to an arrest warrant for fraud in Germany. A probe into irregular accounting wiped more than 85% from its share price in 2017. PwC investigators found in 2019 that Steinhoff’s financial statements had been boosted by €6.5bn in “fictitious or irregular” transactions over more than a decade.

 

Bloomberg

Financial Times

Financial Times

The U.K.'s Institute of the Motor Industry has warned lawmakers that Chinese-made electric cars on Britain’s roads could be controlled remotely by the Communist Party and used to steal sensitive data from motorists. A submission from the institute to the parliamentary national security strategy committee warned: “Chinese-connected EVs flooding the country could be the most effective Trojan horse that the Chinese establishment has to impact the U.K.” Separately, Sir Richard Dearlove, the former head of MI6, the overseas intelligence service of the U.K., has called on the government to consider banning the use of Chinese electric vehicles on sensitive national infrastructure sites. He said: “The Chinese ban Tesla from their own sensitive areas and sites - they understand the problem, and they are putting us in a situation where it could be done to us.”

 

The Times

IRS Commissioner Danny Werfel plans to expand the agency's pursuit of high-wealth tax dodgers with new initiatives. The IRS is using tools like artificial intelligence (AI) to detect abuses and fight sophisticated scammers. Efforts to crack down on high-wealth tax cheats are starting to have an impact, with large corporate filers taking notice and resulting in more compliance and revenue. Werfel is promising better service and debunking myths about the agency's plans to hire armed agents. The IRS is also piloting a program for people to file their taxes directly to the agency without the help of commercial software. Mr. Werfel is promising taxpayers better service this year as he works to repair the agency's image as an outdated and maligned tax collector. “We have some myth-busting to do,” he said  referring to claims that the agency plans to hire 87,000 armed agents ready to harass middle-income earners. ”We are not," he said. “We are hiring phone assisters armed only with phone headsets. We're hiring accountants armed only with calculators.”

 

US News and World Report

Subway has signed a 10-year deal with PepsiCo, ending a relationship with Coca-Cola dating back to 2003. The new partnership, which begins in 2025, "underscores Subway's commitment to delivering better food and a better guest experience, which includes ensuring the brand's beverage offerings align with guest preferences across demographics," the company said.

 

USA Today

CBS News