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Sep 24, 2020

Bonds: Treasury yields are flat ahead of jobless claims

 

Elliot Smith


Treasury yields held steady on Thursday as investors await the latest weekly jobless claims data.

The yield on the benchmark 10-year Treasury note was lower at 0.6692% and the yield on the 30-year Treasury bond slid to 1.4084%. Yields move inversely to prices.

Treasurys

TICKER COMPANY YIELD CHANGE %CHANGE
US3MU.S. 3 Month Treasury0.0990.000.00
US1YU.S. 1 Year Treasury0.1220.0030.00
US2YU.S. 2 Year Treasury0.1390.000.00
US5YU.S. 5 Year Treasury0.272-0.0070.00
US10YU.S. 10 Year Treasury0.666-0.010.00
US30YU.S. 30 Year Treasury1.405-0.020.00

Thursday’s focus will be on the latest jobless claims report from the Labor Department, due at 8:30 a.m. ET, with economists polled by Reuters expecting new unemployment filings last week to come in at 840,000, down from 860,000 the previous week. Continuing claims are also expected to fall.

Wednesday saw another plunge for risk assets, with the Dow closing more than 500 points lower as tech stocks tumbled once again, with investors also spooked by uncertainty around the resurgence in coronavirus cases and prospects of further federal stimulus measures.

Federal Reserve policymakers on Wednesday vowed to keep interest rates near zero and retain an accommodative monetary policy stance for years in order to help reduce unemployment, but called for greater fiscal help from Congress.

U.S. business activity slowed in September, a survey showed Wednesday, with manufacturing gains offset by a reversal in the services sector as the recovery appears to be losing momentum at the end of the third quarter.

In other news, President Donald Trump has refused to commit to a peaceful transition of power if he loses the Nov. 3 election, instead suggesting that the election outcome could end up before the Supreme Court, placing further emphasis on his rush to replace the late Justice Ruth Bader Ginsburg with a conservative justice before the election.

Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin will resume testimony before Congress at 10 a.m. ET, while August’s new home sales figures are published at the same time.

Auctions will be held Wednesday for $30 billion of 4-week Treasury bills, $35 billion of 8-week bills and $50 billion of 7-year notes.

Market Insider | Biggest Moves Premarket: Stocks making the biggest moves in the premarket: Accenture, Darden Restaurants, BlackBerry & more

 

Peter Schacknow


Take a look at some of the biggest movers in the premarket:

Accenture (ACN) – The consulting firm reported quarterly profit of $1.70 per share, falling 3 cents a share short of Wall Street forecasts. Revenue also came in slightly shy of estimates and the company gave a weaker-than-expected current-quarter revenue forecast, as clients spend less due to the Covid-19 pandemic.

E.W. Scripps (SSP) – Scripps announced a deal buy privately held TV network operator ION Media for $2.65 billion. The deal is being backed by Warren Buffett’s Berkshire Hathaway (BRK.B), with Berkshire making a $600 million preferred equity investment in Scripps to help finance the purchase.

BlackBerry (BB) – The software company beat estimates by 9 cents a share, with quarterly earnings of 11 cents per share. Revenue was also above expectations, on strong demand for its security and car software.

CarMax (KMX) – The used-vehicle retailer earned $1.79 per share for its latest quarter, well above the consensus estimate of $1.08 a share. Revenue was also above analysts’ forecasts. CarMax saw vehicle sales rise by 3.9%, with comparable-store sales up 1.2%, and its financing profit increased by 29%.

Darden Restaurants (DRI) – The parent of Olive Garden and other restaurant chains earned 28 cents per share for its latest quarter, beating the consensus estimate of 5 cents a share. Revenue was very slightly below Street forecasts with sales during the quarter at about 82% of prior-year levels. The company also reinstated its dividend.

FactSet (FDS) – The financial information and services provider earned $2.88 per share for its latest quarter, 34 cents a share above estimates. Revenue came in above forecasts as well. FactSet said it expected fiscal 2021 adjusted earnings of $10.75 to $11.15 per share, compared to a consensus estimate of $10.84 a share.

Rite Aid (RAD) – The drugstore chain reported a quarterly profit of 25 cents per share, compared to analysts’ expectations of a 1 cent per share loss. Revenue was also above estimates, with strength in both the retail pharmacy and pharmacy services segments.

UnitedHealth (UNH) – The health insurer is in advanced talks to buy online pharmacy startup DivvyDose, according to a Bloomberg report. The proposed deal is said to be worth about $300 million, according to people familiar with the matter, although nothing has been finalized.

Nikola (NKLA) – Nathan Anderson, head of short-selling firm Hindenburg Research, told The Wall Street Journal that more bad news will emerge about the electric truck maker Nikola. Hindenburg recently released a report about a series of improprieties at Nikola, which has hit the stock hard even as Nikola calls the report “false and misleading.”

Dollar Tree (DLTR) – Dollar Tree is resuming its stock buyback program, after suspending it in March due to the pandemic. The discount retailer has roughly $800 million in buyback authorization remaining under that program.

H.B. Fuller (FUL) – Fuller reported quarterly earnings of 76 cents per share, 6 cents a share above estimates. The adhesives maker’s revenue also topped forecasts. The company said it has performed well during the pandemic, although it does expect current-quarter revenue to be flat to lower compared to a year ago.

Jefferies Financial (JEF) – Jefferies earned $1.07 per share for its third quarter, well above the consensus forecast of 34 cents a share. The investment firm also saw revenue top estimates, helped by record investment banking and asset management revenue.

Goldman Sachs (GS) – Goldman was upgraded to “buy” from “neutral” at UBS, which said Goldman is already generating solid results in the current environment and could benefit further from election-related volatility.

FedEx (FDX) – FedEx was upgraded to “buy” from “hold” at Stifel, which said FedEx is benefiting from pandemic-related changes, including much faster growth in demand levels than originally anticipated.

Analysis | The Cybersecurity 202: Democrats are trying to boost confidence in election security while Trump sows more doubt

Joseph Marks


It explicitly bans candidates from accepting from foreign sources anything that might influence an election, such as “opposition research, polling, or other non-public information.” That’s a jab at Trump, who’s speculated openly that he might accept dirt about a political opponent from a foreign government. 

The bill also mandates that campaigns notify the FBI and the Federal Election Commission about foreign contacts and threatens up to five years in prison and $1 million in fines for violations. The architects of the bill, which also includes measures to strengthen Congress’s ability to check executive power abuses, are informally calling it the “post-Trump reforms,” Karoun Demirjian reports.

Trump, meanwhile, refused during a news conference to commit to ensure a peaceful transition of power after November's election, replying, “We’re going to have to see what happens.”

He went on to condemn “ballots” — a seeming reference to mail-in ballots, which he’s routinely attacked without evidence — and to suggest that if states back off using mail ballots it will ensure both a peaceful transition of power and his reelection.

“Get rid of the ballots, and you’ll have a very — we’ll have a very peaceful, there won’t be a transfer, frankly. There’ll be a continuation,” Trump said. “The ballots are out of control. You know it. And you know who knows it better than anybody else? The Democrats know it better than anybody else.”

The comments underscored the stark contrast between Democrats’ efforts to raise public confidence in elections and Trump’s efforts to undermine that confidence with less than six weeks to go before Election Day. 

They marked an escalation — even by the standards of Trump’s caustic rhetoric. 

The remarks could help prompt unrest if there are disputes about the election outcome or even if it takes longer than usual to tally preliminary results, which is highly likely because of the dramatic increase in mail voting during the pandemic.

The comments come as a handful of states have already sent out mail ballots and numerous others are preparing to do so in the next week

Election officials from both parties have generally declined to follow Trump’s lead in attacking mail ballots. That’s been the case even when the president has rejiggered his criticism to focus narrowly on states opting to send such ballots directly to all the state’s registered voters during the pandemic, such as California, Nevada and New Jersey. 

The Trump campaign lost a legal battle to halt Nevada's plan and backed off a similar lawsuit in California. A New Jersey legal fight is ongoing. 

Benjamin Hovland, chair of the Election Assistance Commission, disputed there’s any tangible difference between mail ballots that voters request and ones that are sent automatically during a panel discussion I moderated yesterday sponsored by the Advanced Technology Academic Research Center and the Information Technology Industry Council. 

“It’s tomato, tomahto,” he said, noting that both mail-voting systems include extensive procedures to verify ballots were sent by the correct voter. Hovland's agency helps states improve election security and administration and delivers federal election money to states. 

Election experts were quick to slam Trump’s comments. 

Georgetown University professor and voting machine security expert Matt Blaze:

David Becker, executive director of the Center for Election Innovation and Research:

Here’s the think tank Freedom House, which advocates democratic reforms across the globe: 

Democratic lawmakers hit back too. Here’s Rep. Ro Khanna (D-Calif.):

Democrats, by contrast, have made election integrity a key priority since taking the House in 2018. 

Their first major piece of legislation included more than $1 billion for election security along with mandates that states include paper records for ballots. After the pandemic struck, House and Senate Democrats pushed for about $4 billion to help states ramp up mail voting and make other reforms so people could vote safely in person during the pandemic.

They’ve also introduced a slew of smaller reforms that are unlikely to pass the Republican-controlled Senate but signal their prioritization of election security. This week, for example, the House passed a bill clarifying that hacking voting systems is a federal crime.

Also this week, Oregon’s two Democratic senators, Ron Wyden and Jeff Merkley, introduced a measure delivering $500 million to help states and counties reduce long polling lines. The bill would also require states to file public plans for reducing wait times at all polling places to 30 minutes or less. The irony: Oregon is one of five states that has historically voted nearly entirely by mail. 

The keys

Trump’s nominee for Homeland Security secretary denies whistleblower claims he held back intelligence about Russian election interference.   

Chad Wolf, who’s acting secretary of the Department of Homeland Security, called those claims from DHS’s former intelligence chief patently false" during his confirmation hearing, the Associated Press's Ben Fox reports

In a whistleblower complaint earlier this month, former DHS intelligence chief Brian Murphy claimed that Wolf told him to stop providing reports on Russian intelligence because it made Trump look bad. Murphy also said Wolf asked him to withhold a bulletin about a Russian disinformation campaign against Joe Biden. The DHS inspector general is still investigating the claims.

Wolf told the committee the bulletin was held to add additional context but that the underlying intelligence didn't change. Murphy's lawyer Mark Zaid disputed that. 

“We outright challenge Mr. Wolf’s testimony and we look forward to the opportunity to provide classified testimony to Congressional and OIG oversight authorities to describe details to the contrary,” he said.

TikTok is asking a federal court to halt Trump's ban. 

The legal maneuver suggests that TikTok and the Trump administration may not reach a deal this week to address national security concerns with the app, Rachel Lerman reports

TikTok is racing to finalize a deal before the ban is set to go into effect Sunday. Trump has said he won't make a deal if TikTok’s Chinese owner, ByteDance, is still involved with the company, but it seems unlikely Bytedance would accept such a deal. The company is seeking approval for the deal from the Chines government. 

The White House has expressed concerns that TikTok's Chinese ownership would allow the Chinese government to compel it to hand over U.S. user data. TikTok says it has never been asked for such data and would decline to provide it if asked. In the company's filing yesterday, its global chief security officer added that it has safeguards in place against any large unauthorized downloads.

The Justice Department countered that the emergency delay is unnecessary because the ban will only affect new downloads of the app and updates, not people who already use the app.

A coalition of users of WeChat, another Chinese-owned app, recently won a court injunction to temporarily halt a similar ban.

Former eBay workers pleaded guilty to a cyberstalking campaign that included sending victims a bloody pig mask.

The four eBay security and global intelligence team members targeted the victims with Twitter and email threats and mailed live cockroaches in addition to sending the pig mask, Reuters's Nate Raymond reports. They were among seven total defendants charged in the case, including two former eBay security executives.

The campaign targeted two bloggers who had been critical of eBay. One of the executives identified in the case, former chief executive Devin Wenig, denied any involvement and has not been charged.

Defending the ballot

A company that sells election data sharing tools to U.S. states and counties says its internal systems were hacked.

The company, Tyler Technologies, said it didn’t believe its clients’ software was breached, Joseph Menn at Reuters reports

The report comes amid widespread concerns about potential hacks from Russia and other U.S. adversaries aimed at upending or undermining confidence in November’s election. Intelligence and DHS officials have said they’ve seen no significant efforts by such adversaries to compromise election equipment this election cycle, though they’ve spotted numerous social media disinformation campaigns. 

Election officials use Tyler’s tools to display voting results among other tasks, Joseph reports. The company didn’t release details about the hack or say if hackers had demanded a ransom. 

Government scan

U.S. Customs and Border Protection failed to safeguard sensitive data that was ultimately exposed by a contractor, a watchdog report says.

Hill happenings

Democrats are calling for Trump administration officials to declassify information about election threats. 

The outcry comes after the Senate Armed Services Committee received two briefings from top officials, the Hill's Maggie Miller reports. “I am very deeply concerned, I think the American people need to know what we heard,” Sen. Richard Blumenthal (D-Conn.) told reporters. He said that the threat Congress was briefed on was really potentially shocking.

Senate Intelligence Committee Democrats, who were briefed by Director of National Intelligence John Ratcliffe yesterday, also called for more transparency. 

“I think that clearly the American people as of now are not going to get what they need,” committee member Ron Wyden told the Hill. “I am not confident that the American people will get what they need to know in terms of information about the major issues in front of us, and taking steps to change it.”

Cyber insecurity

Instagram fixed a bug that allowed hackers to take over accounts with just a photo.

The vulnerability would have given hackers access to a user's phone contacts, location data, phone camera and files stored on the device, researchers at Check Point found

Instagram issued a patch for the vulnerability after Check Point researchers flagged it.

More cybersecurity news:

Daybook

  • The Senate Homeland Security Committee will hold a hearing on threats to the homeland with FBI Director Christopher A. Wray as a witness today at 10 a.m.
  • New Americas Open Technology Institute will hold a virtual panel exploring how Internet platforms are addressing the spread of election-related misinformation on Oct. 1 at 1:30 p.m.

Secure log off

Fall is here folks. 

DealBook: Another Big Investment in Racial Justice

 

12-15 minutes - Source: NYT


Credit...Prakash Singh/Agence France-Presse — Getty Images

Exclusive: Square’s $100 million plan to invest in Black communities

Jack Dorsey’s financial company — known for its credit-card readers, Cash payments app and Square Capital lending program — plans to announce today that it will invest in an array of funds and lenders focused on underserved communities of color, joining a growing number of big businesses taking on racial economic inequality.

Square promises to invest $100 million, or about 3 percent of its cash, in four chunks:

• $25 million in deposits at Community Development Financial Institutions, or C.D.F.I.s, and Minority Depository Financial Institutions, or M.D.I.s. By parking some of its cash with these firms — much as Netflix has said it would — Square hopes to bolster their ability to lend in underserved communities.

• $25 million in The Keepers Fund, a vehicle sponsored by the National Bankers’ Association meant to invest in M.D.I.s.

• $25 million in the Black Economic Development Fund, which was created by the Local Initiatives Support Corporation to support Black-led banks and businesses.

• $25 million will be reserved for future programs.

These types of investments “fuel economic justice and opportunity in underserved communities and support a broadly shared prosperity throughout the country,” Maurice Jones, the C.E.O. of the Local Initiatives Support Corporation, said in a statement.

The initiative grew from a $5 million move last year. Square deposited the money with C.D.F.I.s last year, Amrita Ahuja, Square’s C.F.O., told DealBook’s Michael de la Merced. That plan was devised by Square’s treasury and government relations teams, with senior executives only learning about it later. (“Our leadership team were surprised — and loved it,” she said.)

• Mr. Dorsey, who has publicly supported the Black Lives Matter movement, has personally pledged $1 billion to relief programs tied to the pandemic. And the company’s Square Capital division distributed more than $870 million in small-business loans through the federal government’s Paycheck Protection Program.

A plan to drastically boost funds for Black communities took shape this summer, Ms. Ahuja said. Though Square had intended to expand its efforts since early in the year, the plan took on new urgency as executives saw data on how badly Black communities were hurt by the pandemic.

• What gave Square the confidence to act, Ms. Ahuja said, was having a solid balance sheet. (A $1 billion convertible bond offering in the spring helped.)

The move fits Square’s corporate mission of helping businesses grow through finance. “Part of the reason that Square exists is for this very purpose,” Ms. Ahuja said. “It’s not just doing good in the world, it’s good business, too.”

____________________________

Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut, Lauren Hirsch in New York, Ephrat Livni in Washington, and Michael J. de la Merced and Jason Karaian in London.

____________________________

Image

Credit...Marvel Studios/Disney, via Associated Press

TikTok filed for an injunction to block President Trump’s ban. The company asked a federal judge in Washington to stay the Trump administration’s order to remove its app from the Apple and Google app stores. Meanwhile, it has applied for an export license from China for its algorithm, a key step in sealing its deal with Oracle and Walmart. And here’s how TikTok factors into the retail giant’s future.

Tesla owners were locked out of their cars. An hourlong network outage disabled the app that gives drivers control over their high-tech electric vehicles. “This kind of thing will become increasingly common in the future,” the futurist Richard Watson told DealBook, musing that even our toasters and windows may someday be beyond our control. The incident also came at an awkward time for Tesla, whose shares fell 10 percent yesterday after investors were underwhelmed by its new battery technology.

JPMorgan Chase is reportedly set to settle a market-manipulation case for $1 billion. Bloomberg reports that the fine would resolve an investigation into accusations of “spoofing,” or flooding the market with fake orders to move prices, in markets for metals futures and Treasury securities.

Disney delayed several blockbuster movie releases. With audiences largely staying away from movie theaters, the studio pushed back Marvel’s “Black Widow” to May, and Steven Spielberg’s remake of “West Side Story” to December 2021.

Goodbye, Uncle Ben. Mars announced that it will rebrand Uncle Ben’s rice to Ben’s Original and remove the image of an older Black man smiling on the box. It’s the latest example of companies revamping or retiring brands criticized for trading on racist stereotypes, including Aunt Jemima, Cream of Wheat and Mrs. Butterworth’s.

Image

Credit...Pool photo by Yuri Gripas/EPA, via Shutterstock

At a news conference last night, President Trump refused to endorse a “peaceful” transfer of power if he loses the election in November, responding to the question with a noncommittal, “We’re going to have to see what happens.” The prospect of a contested election result is a major risk for businesses, markets and the economy, already factoring into some deal makers’ plans.

“There won’t be a transfer, frankly. There will be a continuation,” Mr. Trump said when asked about whether he would accept the result if he lost. He again raised concerns about the reliability of mail-in ballots, without citing evidence.

It might be more than rhetoric. In The Atlantic’s current cover story — “The Election That Could Break America” — Barton Gellman reports, citing unnamed sources, that Mr. Trump’s re-election campaign has held discussions with state officials about potentially bypassing election results:

According to sources in the Republican Party at the state and national levels, the Trump campaign is discussing contingency plans to bypass election results and appoint loyal electors in battleground states where Republicans hold the legislative majority. With a justification based on claims of rampant fraud, Trump would ask state legislators to set aside the popular vote and exercise their power to choose a slate of electors directly. The longer Trump succeeds in keeping the vote count in doubt, the more pressure legislators will feel to act before the safe-harbor deadline expires.

Members of a union representing workers at Kroger-owned supermarkets in the Seattle area have filed complaints with the National Labor Relations Board, arguing that managers improperly forbade them from wearing Black Lives Matter buttons. It’s one of many companies dealing with the thorny issues around social, political and protest symbols in the workplace.

The union argues that buttons are legally protected guild insignia. The U.F.C.W. 21 union spokesman Tom Geiger told DealBook that Kroger’s claim about its dress code was unfounded. “The union for years has had and produced buttons that members have worn without interference,” he said. Kroger, the largest U.S. supermarket operator, announced a $5 million fund in June to “support the advancement of racial equity and justice.” Kroger did not respond to a request for comment.

How other companies are addressing this question: Some have created their own insignia that employees can wear to ensure consistency — and a measure of control — of potentially contentious messages, with mixed results. One of the Kroger-owned chains designed wristbands for employees to wear to show their allyship, with messages like “Standing Together.”

American Airlines and Delta designed their own Black Lives Matter pins that crew can wear.

Starbucks first banned employees from wearing Black Lives Matter shirts and pins, then reversed course and made its own T-shirts with the message after facing calls for boycotts.

Goodyear drew President Trump’s ire when social media posts suggested that the company supported wearing Black Lives Matter symbols but not the pro-police Blue Lives Matter message; the company stressed that both were acceptable, as messages about “racial justice and equity issues,” but that messages explicitly supporting candidates or political parties were not.

Image

The Justice Department unveiled a proposal for rewriting Section 230 of the act, which would weaken the legal protections for internet companies around user-posted content on their platforms.

The draft legislation would make it riskier for companies to remove offensive content, requiring them to show an “objectively reasonable belief” that the material promoted terrorism or violence or was otherwise unlawful. That’s in line with claims from the Trump administration about the alleged censoring of conservative viewpoints. It would also hold companies legally liable if they intentionally promoted harmful content, or refused to act on complaints.

The proposal received a mixed reaction. Coming so close to the election risks the move becoming “so bogged in the partisan muck that there is no there there,” writes our colleague Shira Ovide of the On Tech newsletter:

The issue is complicated by political interests. Some conservatives have misrepresented what the law says and want these companies to intervene less in what people say online to avoid what they view as partisan censorship. Some Democrats want to hold websites more responsible for false information, but haven’t talked about the possible unintended consequences of doing so.

Skeptical people — hello, I am you — might be shouting at me through their screens. Our government officials and elected representatives are not banging the table about Amazon mistreating small merchants or conservative bias in Gmail folders because they’re thinking deeply about our world and how it works. This is about their side winning.

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Credit...Alexander Drago/Reuters

The topics for the first presidential debate, to be held on Sept. 29, were announced this week. We asked readers for the best questions to ask, and you responded in droves. Some of the responses:

“What are your thoughts on imposing term limits on Supreme Court justices?” — Jay Tuckerman in the Philippines

“What is your plan to reduce climate pollution in order to protect the long-term stability of our economy?” — Dominique Browning in New York

“Given the looming defaults in debt securities tied to the hotel industry, do you believe a federal bailout or ‘debt jubilee’ is needed to prevent a collapse in the market?” — Aaron Koral in Tucson, Ariz.

“In the interest of transparency, will you commit to releasing your tax returns prior to the next debate?” — Mary Clark in Loveland, Colo.

“In corporate America, most companies force a C.E.O. to retire at either 65 or 67. If an age limit was imposed on the presidency, what age should it be?” — Mark Banholzer in Park City, Utah

Deals

• WeWork agreed to sell control of its business in China to an investor, Trustbridge Partners. The unit has suffered during the pandemic. (Reuters)

• Penske Media, the owner of Variety, agreed to take over daily operations of Hollywood’s other big trade publication, the Hollywood Reporter, as part of a joint venture. (Variety)

Politics and policy

• Stay-at-home orders are the most effective way to reduce Covid-19 infections, according to a new study, and do less economic damage than closing nonessential businesses. (Bloomberg)

• The Silicon Valley mogul Reid Hoffman is spending millions to help elect Joe Biden — but some Democrats resent his efforts to transform their party. (Recode)

• California plans to ban sales of new gasoline-powered cars by 2035. (Bloomberg)

Tech

• A close look at how Magic Leap, the much-hyped augmented-reality start-up, fell short. (Bloomberg)

• Google is developing a hybrid work plan, after internal surveys showed most employees don’t want to come to the office full time. (CNBC)

Best of the rest

• Americans have lost $145 million to coronavirus-linked frauds, according to the Federal Trade Commission. (NYT)

• Wall Street is betting that the suburbs of the future will be full of renters. (Bloomberg)

• The Prime-branded competitor to Peloton’s exercise bike that wasn’t. (Business Insider)

News | Business | Tech: To Fight Apple and Google, Smaller App Rivals Organize a Coalition

 

By Erin Griffith


Spotify, Match Group, Epic Games and others have created a nonprofit alliance that they hope will amplify a protest against the power of the giants.

Credit...John Taggart for The New York Times

SAN FRANCISCO — For months, complaints from tech companies against Apple’s and Google’s power have grown louder.

Spotify, the music streaming app, criticized Apple for the rules it imposed in the App Store. A founder of the software company Basecamp attacked Apple’s “highway robbery rates” on apps. And last month, Epic Games, maker of the popular game Fortnite, sued Apple and Google, claiming they violated antitrust rules.

Now these app makers are uniting in an unusual show of opposition against Apple and Google and the power they have over their app stores. On Thursday, the smaller companies said they had formed the Coalition for App Fairness, a nonprofit group that plans to push for changes in the app stores and “protect the app economy.” The 13 initial members include Spotify, Basecamp, Epic and Match Group, which has apps like Tinder and Hinge.

“They’ve collectively decided, ‘We’re not alone in this, and maybe what we should do is advocate on behalf of everybody,’” said Sarah Maxwell, a spokeswoman for the group. She added that the new nonprofit would be “a voice for many.”

Scrutiny of the largest tech companies has reached a new intensity. The Department of Justice is expected to file an antitrust case against Google as soon as next week, focused on the company’s dominance in internet search. In July, Congress grilled the chief executives of Google, Apple, Amazon and Facebook about their practices in a high-profile antitrust hearing. And in Europe, regulators have opened a formal antitrust investigation into Apple’s App Store tactics and are preparing to bring antitrust charges against Amazon for abusing its dominance in internet commerce.

For years, smaller rivals were loath to speak up against the mammoth companies for fear of retaliation. But the growing backlash has emboldened them to take action.

Spotify and others have become more vocal. And on Monday, Epic and Apple are set to meet in a virtual courtroom in the Northern District of California to present their cases for whether Fortnite should stay on the App Store, before a trial over the antitrust complaint next year.

At the heart of the new alliance’s effort is opposition to Apple’s and Google’s tight grip on their app stores and the fortunes of the apps in them. The two companies control virtually all of the world’s smartphones through their software and the distribution of apps via their stores. Both also charge a 30 percent fee for payments made inside apps in their systems.

App makers have increasingly taken issue with the payment rules, arguing that a 30 percent fee is a tax that hobbles their ability to compete. In some cases, they have said, they are competing with Apple’s and Google’s own apps and their unfair advantages.

Apple has argued that its fee is standard across online marketplaces.

On Thursday, the coalition published a list of 10 principles, outlined on its website, for what it said were fairer app practices. They include a more transparent process for getting apps approved and the right to communicate directly with their users. The top principle states that developers should not be forced to exclusively use the payments systems of the app store publishers.

Each of the alliance’s members has agreed to contribute an undisclosed membership fee to the effort.

“Apple leverages its platform to give its own services an unfair advantage over competitors,” said Kirsten Daru, vice president and general counsel of Tile, a start-up that makes Bluetooth tracking devices and is part of the new nonprofit. “That’s bad for consumers, competition and innovation.”

Ms. Daru testified to lawmakers this year that Apple had begun making the permissions around Tile’s app more difficult for people to use after it developed a competing feature.

The coalition came together in recent months after discussions among executives at Tile, Epic, Spotify and Match Group, the four companies that have been most vocal in their opposition to the big tech companies, Ms. Maxwell said.

Some of the conversations took place after Apple and Google booted Fortnite from their app stores last month for violating their payment rules. As Epic’s fight with Apple and Google escalated, Spotify and Match Group spoke out in support of the video game company.

Apple has argued that Epic’s situation “is entirely of Epic’s own making.”

The new coalition could spur more companies to publicly voice longstanding complaints, its members said. Peter Smith, chief executive of Blockchain.com, said his cryptocurrency finance company had joined the group partly because it offered strength in numbers.

“Can they ban us all?” he said. “I doubt it.”

Apple has blocked Blockchain’s apps several times, Mr. Smith said. Some customers were so frustrated by the blockages that they posted videos of themselves destroying iPhones with machetes.

“These app stores have gotten so big that they are effectively deciding what customers get access to,” Mr. Smith said.

Tim Sweeney, Epic’s chief executive, said his company had received “vast, vast amounts of communication” from app developers who supported it after it sued. But many are afraid to speak up publicly, he said.

“Apple and Google have infinite ways of retaliating without it being obvious to the outside world” by slowing down apps, reinterpreting rules in negative ways or saying no to new features, Mr. Sweeney said in an interview this week.

He said Epic had a history of standing up for what it thought was right. “But of course,” he added, “it is very stressful to go through, you know, a fight with two companies that are over 200 times our size.”

US Market | Futures Indicator: Dow closes more than 500 points lower as tech pressure mounts, Apple slides 4%

 

Fred Imbert, Maggie Fitzgerald


Stocks fell sharply on Wednesday, adding to September’s struggles, as tech shares took another leg lower and investors fretted over uncertainty around the coronavirus pandemic and further stimulus. 

The Dow Jones Industrial Average closed 525.05 points lower, or 1.9%, at 26,763.13. Earlier in the session, the Dow was up 176 points. The S&P 500 slid 2.4% to 3,236.92 and the Nasdaq Composite pulled back by 3% to close at 10,632.99.

“Investors are being whipsawed by conflicting COVID headlines and the growth vs. cyclical debate,” said Adam Crisafulli of Vital Knowledge in a note. “The result is sentiment souring on both growth and cyclical for the moment (which obviously means stocks are for sale broadly).”

Shares of Amazon and Netflix dropped 4.1% and 4.2%, respectively, to lead Big Tech lower. Facebook slid 2.3%. Alphabet closed 3.5% lower. Apple ended the day down 4.2% and Microsoft dipped 3.3%.

Shares of Tesla fell 10.3% after Elon Musk offered new delivery predictions for 2020 and detailed a new battery design that he claims will make Tesla’s cars cheaper to produce. The stock was also under pressure after Tesla sued the U.S. government to overturn tariffs on China. 

The S&P 500 and Dow are down 7.5% and 5.9%, respectively, for the month. The Nasdaq has dropped 9.7% over that time period. Shares of Facebook, Amazon, Apple, Netflix, Alphabet and Microsoft are all down at least 11% in September. 

“This rotation out of tech and into cyclical stocks has picked up legs in September,” said Art Hogan, chief market strategist at National Securities. He added that “September is a historically tough month and this one has been a quagmire of headwinds. Today is reflective of that.”

Investors have faced a slew of headwinds this month, including a rising number of global coronavirus cases and uncertainty around new U.S. fiscal stimulus.

Earlier this week, the U.K. said it would impose stricter measures to curb the coronavirus outbreak. To be sure, President Donald Trump said the U.S. would not be implementing a second round of lockdowns. “The U.K. just shut down again. They just announced that they’re going to do a shutdown, and we’re not going to be doing that,” Trump said.

On the stimulus front, lawmakers are still struggling to move forward with a new package. Federal Reserve Chairman Jerome Powell said before Congress on Wednesday that further fiscal stimulus is still needed for the U.S. economic recovery to continue. 

“We’ve come a long way pretty quickly, and that’s great. But there’s a long way to go. So I just would say we need to stay with it, all of us. The recovery will go faster if there’s support coming both from Congress and from the Fed,” Powell said

Nike shares jumped 8.8% after the company said digital sales surged more than 80% last quarter. Earnings and sales blew past analysts expectations last quarter and the company gave a forecast for growth in the new fiscal year.