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Ukraine Braces for Major Russian Offensive

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Russia is preparing to launch a major new offensive against Ukraine in the coming weeks, a top Ukrainian security official said, adding to mounting concerns in Kyiv and the West that the Kremlin is preparing a renewed push to seize large areas of the country.

“Russia is preparing for maximum escalation,” said

Oleksiy Danilov,

the secretary of Ukraine’s National Security and Defence Council, in an interview with Sky News published online early Wednesday local time. “It is gathering everything possible, doing drills and training.”

The warning comes after weeks in which Ukrainian and Western officials have pointed to the risk of a possible new offensive by Russia in the months ahead. Within Russia, the military is under pressure to regain battlefield momentum after it lost broad swaths of territory to a Ukrainian offensive during the second half of last year. Ukraine’s forces recaptured large areas of the country seized by Russia earlier in the year, including Kherson, the only regional capital occupied by the Kremlin’s military.

Since the Ukrainian military’s offensive, the front lines of the conflict have become largely static, with Russia making incremental gains around the small city of Bakhmut. It has become a central battlefield in the war, with Russia sending wave upon wave of newly recruited soldiers to the front line.

Russia mobilized roughly 300,000 additional soldiers starting last September in what the Russian government termed a partial mobilization of reservists. Mr. Danilov said that he expected more than half of those newly mobilized soldiers would be used in any new offensive.

Mr. Danilov also said that a new Russian assault could coincide with the anniversary of Russia’s full-scale invasion of the country on Feb. 24, 2022.

A Ukrainian serviceman entered a shelter near a front-line position in the Donetsk region of eastern Ukraine at the end of January.



Photo:

yasuyoshi chiba/Agence France-Presse/Getty Images

Ukrainian President

Volodymyr Zelensky

said separately on Tuesday evening that he has been discussing with senior officials plans to thwart any new attempt by Russia to reverse its battlefield losses in Ukraine.

“We are studying the situation in detail in all major operational directions and in the long term. What the occupier is preparing for, and how we are already responding to Russia’s preparations for a revanche attempt,” he said in his nightly address to the nation.

In recent weeks Ukrainian officials have coupled warnings of a new Russian offensive with calls for Western countries to supply more weapons that could help counter a renewed attack. Following a decision last week by the U.S., Germany and other countries to provide Ukraine with at least 120 main battle tanks, Ukrainian officials have called for jet fighters. President Biden said on Monday that the U.S. wouldn’t provide F-16 warplanes to Ukraine, although he didn’t put a time frame on the prohibition.

Separately, Ukraine’s top prosecutor announced a slew of corruption cases against former senior Ukrainian officials on Wednesday. In a post on Facebook,

Andriy Kostin

said his office had officially notified six former top officials at the ministry of defense and other institutions of the cases. The accusations against them range from misuse of funds to embezzling and accepting bribes.

The announcement comes less than two weeks after Mr. Zelensky fired nearly a dozen senior officials in an effort to prevent and clamp down on corruption. The crackdown is seen as critical to his efforts to ensure the continued flow of Western military and financial support. Ordinary Ukrainians, who are fighting and dying by the thousands in the war, have also insisted on an end to corruption in the country.

“Corruption in war is looting!” said Mr. Kostin. “My signal to all officials at all levels, wherever they are: there will be no return to the past.”

Fighting raged in Ukraine’s east, the Ukrainian military said on Wednesday morning, with Ukrainian forces repelling Russian attacks in at least eight separate areas in the Donetsk region, including around Bakhmut, where Ukrainian troops have held out against overwhelming Russian firepower for more than six months. Ukraine’s military general staff said in an update on the fighting posted on Facebook that it inflicted heavy losses on Russian forces in the east. 

The Russian Defense Ministry on Wednesday said that Russian forces had eliminated Ukrainian units and fighting vehicles in the Donetsk region.

Outside of Bakhmut, Russian forces last month captured the nearby mining town of Soledar, raising fears that Russia’s mobilization of reservists was beginning to help it reclaim the military initiative in an area that has become highly symbolic and costly for both sides, although with uncertain strategic value on the battlefield. 

Russia also continued lethal shelling of the city of Kherson, which Ukrainian forces recaptured in November, local officials said. The region’s military administration said in a morning update on Wednesday that one person had been killed and another injured as Russian forces launched 42 separate mortar and rocket attacks on the area over the past day.

Russia has made incremental gains around Bakhmut, a Ukrainian city that has become a central battlefield in the war.



Photo:

Emanuele Satolli for The Wall Street Journal

The British Defense Ministry said Wednesday morning that Kherson “remains the most consistently shelled large Ukrainian city outside of the Donbas,” though Russia’s rationale for expending ammunition there remained unclear.

“Commanders are likely partially aiming to degrade civilian morale and to deter any Ukrainian counter-attacks across the Dnipro River,” the ministry said in an intelligence update posted on Twitter.

Ukraine’s recapture of Kherson was one of the most important symbolic defeats for the Kremlin in the entire war, providing a psychological boost for Ukrainian forces and a strategic victory in Ukraine’s push to retake its critical port cities along the Black Sea. Ukrainian officials have also said they have been striking in Russian-occupied territory south of the Dnipro river, which flows past the city of Kherson, since November.

Write to Jared Malsin at jared.malsin@wsj.com

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Business

DOJ Seeks to Ban Sam Bankman-Fried From Contacting FTX Employees

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The Justice Department on Friday asked a federal judge to bar FTX founder

Sam Bankman-Fried

from communicating with current and former employees of the collapsed crypto exchange without a lawyer present after prosecutors alleged he recently contacted a potential witness in his criminal case.

Mr. Bankman-Fried, who faces federal charges related to the implosion of FTX, reached out to the general counsel of the company’s U.S. operation through an encrypted messaging application earlier this month, federal prosecutors said in a filing. Prosecutors said Mr. Bankman-Fried has also contacted other current and former FTX employees and are concerned that the communications could lead to witness tampering.

Prosecutors also requested the judge prohibit Mr. Bankman-Fried from communicating through encrypted messaging applications like Slack and Signal, saying that when he headed FTX he directed employees of the company and his crypto-investment firm Alameda Research to set their communications on these platforms to auto-delete after 30 days. That policy has impeded the government’s investigation, prosecutors said.

“Potential witnesses have described relevant and incriminating conversations with the defendant that took place on Slack and Signal that have already been autodeleted because of settings implemented at the defendant’s direction,” prosecutors said in the filing.

Lawyers for Mr. Bankman-Fried in a letter to the judge said the government was mischaracterizing innocuous conduct by their client in “an apparent effort to portray our client in the worst possible light.” They said the government’s request was overbroad and unnecessary, proposing instead that Mr. Bankman-Fried be prohibited from contacting certain limited witnesses, not all of FTX’s current and former employees.

FTX’s U.S. general counsel, Ryne Miller, couldn’t immediately be reached.

The Manhattan U.S. attorney’s office charged Mr. Bankman-Fried last month with stealing billions of dollars from FTX customers while misleading lenders and investors. He pleaded not guilty and is currently under court-ordered confinement in his parents’ Palo Alto, Calif., home while he awaits trial.

Mr. Bankman-Fried sent a Jan. 15 Signal message to the general counsel in which prosecutors allege he said he “would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other.”

Prosecutors didn’t identify the other employees that Mr. Bankman-Fried has allegedly tried to contact but called the communications to the general counsel and others troubling.

“Were the defendant to ‘vet’ his version of relevant events with potential witnesses, that might have the effect of discouraging witnesses from testifying in a manner contrary to the defendant’s narrative,” the Justice Department said in the filing.

Mr. Bankman-Fried’s lawyers said the message to Mr. Miller was more reasonably read as an attempt by Mr. Bankman-Fried to offer his assistance to FTX, not a “sinister attempt” to influence testimony at trial.

Write to James Fanelli at james.fanelli@wsj.com

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US

Video of Paul Pelosi Attack Shows Intruder Striking Former House Speaker’s Husband With a Hammer

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Video and audio evidence from the attack on Nancy Pelosi’s husband was released Friday, showing for the first time the sequence of events that ended with 82 year-old

Paul Pelosi

being knocked unconscious with a hammer as police officers tackled his assailant.

Some of the evidence was previously shown in court proceedings in the case against David DePape, who is being held without bond on charges of attempted murder, assault with a deadly weapon and elder abuse in the Oct. 28 attack on Mr. Pelosi. Mr. DePape has pleaded not guilty.

The evidence released Friday, which includes police body-camera footage, is the first opportunity for the public to see and hear in detail the events leading up to and including a predawn assault, which focused attention on violence aimed at politicians in the U.S.

Its release came after a coalition of news organizations filed a motion earlier this month requesting to see the evidence, which prosecutors had previously withheld. Judge Stephen Murphy of San Francisco Superior Court granted the motion Wednesday.

Adam Lipson, a San Francisco deputy public defender representing Mr. DePape, said it was, “a terrible mistake to release this evidence, and in particular the video. Releasing this footage is disrespectful to Mr. Pelosi, and serves no purpose except to feed the public desire for spectacle and violence.” 

He also said the release would make it hard for his client to get a fair trial.

Mrs. Pelosi, who was speaker of the House of Representatives until earlier this month, said Friday that she had no intention of watching the newly released evidence and thanked people for their prayers.

The video begins with footage from a Capitol Police camera trained on the Pelosi home in San Francisco’s Pacific Heights neighborhood; it shows Mr. DePape—wearing shorts and a jacket—walking up to a rear entrance at 3:04 a.m., taking out a claw hammer from a bag and putting on gloves.

After looking around several times, he initially pushed the head of the hammer against the glass in a set of french doors. When it wouldn’t open, he swung with full force 16 times until the glass shattered and then pushed his way through, shoulder first.

The next evidence released is audio of Mr. Pelosi’s call to 911 a few minutes later, in which he tried to convey to a dispatcher that he needed help. 

Mr. Pelosi told Mr. DePape he had to use the bathroom and called 911 from a phone charging there, a person with knowledge of the incident previously said.

“I guess I called by mistake,” Mr. Pelosi said at first to the operator. After she asked if he needed help, he told her, “There’s a gentleman here just waiting for my wife to come back,

Nancy Pelosi.

She’s not going to be here for days, so I guess we’ll have to wait.”

When asked by the 911 operator if he knew the man, Mr. Pelosi said he didn’t. Mr. DePape can then be heard saying, “My name is David. I’m a friend of theirs.” 

Mr. Pelosi then hung up after saying, “He wants me to get the hell off the phone.”

Body camera footage of two San Francisco police officers dispatched to the home subsequently show them knocking on the front door. Mr. Pelosi opened the door, looking disheveled and not wearing pants, with his hand on a hammer that Mr. DePape is holding. After an officer asks, “What’s going on, man?”, Mr. DePape answered “Everything’s good.” 

An officer then ordered him to “drop the hammer,” after which the suspect answered “Um, nope” and began struggling with the smaller Mr. Pelosi for control. He quickly pinned the older man’s right arm to free the hammer and then raised it over his head to strike Mr. Pelosi. 

A door obscures Mr. Pelosi at this point, but the footage then shows the officers tackling Mr. DePape and handcuffing him as he lies on the floor, partially atop Mr. Pelosi, who appears to be unconscious.

Mr. Pelosi was treated at a local trauma center and later released home, where his wife said he faced a long recovery. Mrs. Pelosi said Friday that her husband is making progress on his recovery, but it will take more time.

—Natalie Andrews contributed to this article.

Write to Jim Carlton at Jim.Carlton@wsj.com

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Business

DOJ Sues Google, Seeking to Break Up Online Advertising Business

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The Justice Department is seeking the breakup of Google’s business brokering digital advertising across much of the internet, a major expansion of the legal challenges the company faces to its business in the U.S. and abroad.

A lawsuit filed Tuesday, the Justice Department’s second against the

Alphabet Inc.

GOOG -1.98%

unit following one filed in 2020, alleges that Google abuses its role as one of the largest brokers, suppliers and online auctioneers of ads placed on websites and mobile applications. The filing promises a protracted court battle with wide-ranging implications for the digital-advertising industry.

Filed in federal court in Virginia, the case alleges that Google abuses monopoly power in the ad-tech industry, hurting web publishers and advertisers that try to use competing products. Eight states, including California and New York, joined the Justice Department’s lawsuit.

The lawsuit asks the court to unwind Google’s “anticompetitive acquisitions,” such as its 2008 purchase of ad-serving company DoubleClick, and calls for the divestiture of its ad exchange.

“For 15 years Google has pursued a course of anticompetitive conduct that has allowed it to halt the rise of rival technologies, manipulate auction mechanics, insulate itself from competition, and forced advertisers and publishers to use its tools,” Attorney General

Merrick Garland

said at a press conference Tuesday. “Google has engaged in exclusionary conduct that has severely weakened if not destroyed competition in the ad-tech industry.”

Attorney General Merrick Garland said Tuesday that the digital-advertising industry was harmed by Google’s allegedly monopolistic conduct.



Photo:

Al Drago/Bloomberg News

A Google spokesman said the lawsuit “attempts to pick winners and losers in the highly competitive advertising technology sector.”

“DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow,” the spokesman said.

By calling for specific divestitures from Google’s ad-tech business, the Justice Department lawsuit went further in seeking a breakup than some antitrust experts had expected. Shares of Alphabet fell by about 2% in trading on Tuesday.

Though largely invisible to internet users, the ad-tech tools controlled by Google facilitate much of the buying and selling of digital ads that helps fund online publishers. Google’s business includes a tool publishers can use to offer ad space, a product for advertisers to buy those slots and an exchange that automatically links bidders with webpages as they are being loaded for individual users.

Big tech companies such as Google are under a barrage from lawmakers and regulators across multiple continents who have targeted the companies’ dominance in online markets. Justice Department officials also are investigating

Apple Inc.

The Federal Trade Commission has sued

Meta Platforms Inc.’s

Facebook unit over antitrust allegations and

Microsoft Corp.

to block its planned $75 billion acquisition of

Activision Blizzard Inc.

President Biden recently urged lawmakers from both parties to unite behind legislation seeking to rein in tech giants. The European Union also has opened cases looking at alleged anticompetitive conduct by Google, Meta and other companies.

The Justice Department’s 2020 lawsuit against Google targeted its position in online search markets, including an agreement to make Google search the default in Apple’s Safari web browser. Google is fighting the case, which is expected to go to trial this year.

Alphabet gets about 80% of its business from advertising. The Justice Department’s new suit targets the subset of that ad business that brokers the buying and selling of ads on other websites and apps. Google reported $31.7 billion in revenue in 2021 from that ad-brokering activity, or about 12% of Alphabet’s total revenue. Google distributes about 70% of that revenue to web publishers and developers.

Last year, Google offered to split off parts of its ad-tech business into a separate company under the Alphabet umbrella to fend off the most recent Justice Department investigation. DOJ officials rejected the offer and decided to pursue the lawsuit instead.

For years, Google has faced allegations from advertising- and media-industry executives, lawmakers and regulators that its presence at multiple points of the online ad-buying process harms publishers and gives it an unfair advantage over rivals. Google also operates the most popular search engine and the largest online video-streaming site, YouTube, giving rise to allegations it has tilted the market in its own favor.

Rivals say that Google’s power in digital advertising stems from a series of acquisitions Google used to build its ad-tech business, beginning with the company’s $3.1 billion purchase of DoubleClick. The FTC approved the merger in a controversial decision. Google went on to purchase a host of other startups including the mobile-advertising company AdMob.

“Having inserted itself into all aspects of the digital advertising marketplace, Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies,” the complaint read.

Google has said it has no plans to sell or exit the ad-tech business. It has also strongly contested claims in a lawsuit filed by state attorneys general, led by Texas, containing allegations similar to the Justice Department complaint. A federal judge denied the bulk of Google’s motion to dismiss the case last year, allowing it to proceed to the discovery stage and ultimately toward trial.

Google’s Android operating system is the most popular in the world—you can find Android code on everything from Peloton bikes to kitchen appliances and even NASA satellites. WSJ’s Dalvin Brown explains why it is the world’s most-used OS. Illustration: Rami Abukalam

Any divestiture of parts of Google’s ad-tech business would cause big ripple effects across the online advertising industry, which has recently shown signs of weakness as consumers dial back purchases in response to worsening economic conditions.

Breaking off parts of Google’s ad-tech business from the rest of the company could take years of litigation to resolve. Depending on the outcome of the case, ad-tech executives have said the results could range from a higher share of ad dollars flowing to publishers to lower overall spending because digital ads would be less efficient without Google brokering them.

The 149-page complaint makes detailed allegations about the internal workings of Google’s ad-tech operations. The suit alleges, for instance, that Google used anticompetitive tactics to build up the market share of its own ad server, which issues requests for advertisements on behalf of websites, and then used that market power to effectively push publishers into sending their ad inventory only to Google’s in-house ad exchange, AdX.

The Justice Department argues, in part, that this conduct locked out rival ad-tech providers, increasing prices for advertisers and costs of publishers.

“Google keeps at least thirty cents—and sometimes far more—of each advertising dollar flowing from advertisers to website publishers through Google’s ad tech tools,” the lawsuit alleges. “Google’s own internal documents concede that Google would earn far less in a competitive market.”

The lawsuit also alleges that Google executives worked to kill a rival online-bidding technology called “header bidding,” which the lawsuit says the company referred to internally as an “existential threat.” As part of a plan dubbed Project Poirot, the company allegedly changed its own ad-buying tools to underbid on behalf of advertisers when they turned to outside ad exchanges that used header bidding, so those rivals would lose more auctions and “dry out,” the complaint says.

At one point, Google also approached

Amazon.com Inc.,

to ask “what it would take for Amazon to stop investing in its header bidding product,” the complaint alleges, adding that Amazon rebuffed those requests.

“Google uses its dominion over digital advertising technology to funnel more transactions to its own ad tech products where it extracts inflated fees to line its own pockets at the expense of the advertisers and publishers it purportedly serves,” the complaint read.

The Justice Department case overlaps in some ways with the late 2020 lawsuit from the group of U.S. states led by Texas.

In Tuesday’s complaint, the Justice Department quotes some of the same internal communications as the Texas-led lawsuit, including how one Google executive compared the company’s control over ad-tech to the financial sector: “The analogy would be if Goldman or Citibank owned the NYSE,” referring to the New York Stock Exchange.

The case also shares similarities with an investigation that the EU’s top antitrust enforcer, the European Commission, opened in 2021, as well as one by the U.K.’s Competition and Markets Authority. Those probes are exploring allegations that Google favors its own ad-buying tools in the advertising auctions it runs, but also look at other elements of Google’s ad-tech business. The EU, for instance, is also looking at Google’s alleged exclusion of competitors from brokering ad-buys on its video site YouTube.

Mr. Garland said Tuesday that the Justice Department filed its own lawsuit because the federal government was harmed by Google’s allegedly monopolistic conduct. Federal agencies have since 2019 spent over $100 million on display ads, the complaint says. The government paid inflated fees and was harmed by manipulated advertising prices because of Google’s anticompetitive conduct, the lawsuit alleges.

Microsoft is deepening its partnership with OpenAI, the company behind ChatGPT and Dall-E. That has investors and analysts speculating whether Microsoft could challenge Google’s dominance in search. WSJ Heard on the Street columnist Dan Gallagher joins host Zoe Thomas to discuss how AI could affect search and at what cost.

Jonathan Kanter,

the assistant attorney general for antitrust, said while there are similarities with other lawsuits against Google, the Justice Department’s complaint is based on its own investigation that yielded “meticulous detail” about Google’s ad-tech business.

“We detail many facts, many episodes that in the individual and in the aggregate have maintained numerous monopolies,” Mr. Kanter said.

Google has attempted to settle the claims against its ad-tech business. In addition to offering to split off parts of its ad-tech business to avoid the Justice Department suit, the company last year discussed with the EU an offer to allow competitors to broker the sale of ads directly on the video service.

In 2021, the company agreed to give U.K. antitrust regulators effective veto power over elements of its plans to remove a technology called third-party cookies from its Chrome browser to settle an investigation there into the plan.

In France, Google agreed to pay a fine of 220 million euros, equivalent to about $239 million, and to improve data access to competing ad-tech companies, to not use its data in ways rivals couldn’t reproduce to settle a similar antitrust investigation in the country.

—Keach Hagey contributed to this article.

Write to Miles Kruppa at miles.kruppa@wsj.com and Sam Schechner at Sam.Schechner@wsj.com

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US

Iowa Shooting That Left Two Dead Was Likely Gang-Related, Des Moines Police Say

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Police are investigating a possible gang-related motive after two students were shot dead at an Iowa education center for at-risk youth.

Two male students, 18 years old and 16 years old, were fatally shot when a suspect pulled out a 9mm handgun and began firing just before 1 p.m. local time, a spokesperson for Des Moines Police said.

The gunfire broke out inside a common area used by the Starts Right Here education program in Des Moines. The organization’s president and founder

William Holmes,

a rapper who performs under the name Will Keeps, was injured in the shooting and remains hospitalized in a serious condition.

“The incident was definitely targeted, it was not random. There was nothing random about this,” Sgt.

Paul Parizek

said.

Mr. Walls and the two student victims were affiliated with rival gangs, he added.

Police later charged 18-year-old Des Moines resident Preston Walls with two counts of first-degree murder, along with attempted murder and gang participation. It was not clear who was serving as Mr. Walls’s attorney.

Two other suspects remain in custody.

First responders performed CPR on the victims found at the scene, according to Mr. Parizek. The students were brought to a local hospital but couldn’t be saved, he said.

The Des Moines incident comes after a mass shooting in California over the weekend left 11 people dead and another nine injured. Police are looking at a troubled romantic relationship as a possible motive for the state’s deadliest mass shooting in years. Also over the weekend, a nightclub shooting in Baton Rouge, La., injured over 10.

Des Moines police said Mr. Walls entered a common area at the Starts Right Here building where all three victims were. Mr. Holmes attempted to escort him from the area when Mr. Walls pulled away and began to shoot, Des Moines police said.

Police responding to reports of gunfire saw a suspicious vehicle leaving the area. The automobile was pulled over about 20 minutes later, roughly 2 miles from the education center, police said.

Two other people stayed in the car while Mr. Walls ran from the vehicle. A police dog helped track him down, Mr. Parizek said. Mr. Walls was taken into custody and a 9mm handgun was found nearby. Its ammunition magazine had a capacity of 31 rounds and contained three, police said. 

The Starts Right Here website said it works with at-risk youth in the Des Moines Public Schools. The nonprofit has Des Moines Police Department Chief

Dana Wingert

on its board of directors and Iowa Gov.

Kim Reynolds

on its advisory board. 

“I’ve seen first-hand how hard Will Keeps and his staff work to help at-risk kids through this alternative education program. My heart breaks for them, these kids and their families,” Ms. Reynolds, a Republican, said in a statement. 

Mr. Parizek said the program deals with children “with a variety of challenges, some that many of us can’t wrap our brain around.”

Write to Talal Ansari at talal.ansari@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the January 24, 2023, print edition as ‘Shooting Kills Two Students In Iowa.’

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Business

T-Mobile Says Hackers Stole Data on About 37 Million Customers

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T-Mobile

TMUS -0.52%

US Inc. said hackers accessed data, including birth dates and billing addresses, for about 37 million of its customers, the second major security lapse at the wireless company in two years.

The company said in a regulatory filing Thursday that it discovered the problem on Jan. 5 and was working with law-enforcement officials and cybersecurity consultants. T-Mobile said it believes the hackers had access to its data since Nov. 25 but that it has since been able to stop the malicious activity.

The cellphone carrier said it is currently notifying affected customers and that it believes the most sensitive types of records—such as credit card numbers, Social Security numbers and account passwords—weren’t compromised. T-Mobile has more than 110 million customers.

The company said its preliminary investigation indicates that data on about 37 million current postpaid and prepaid customer accounts was exposed. The company said hackers may have obtained names, billing addresses, emails, phone numbers, birth dates and account numbers. Information such as the number of lines on the account and plan features could have also been accessed, the company said.

“Some basic customer information (nearly all of which is the type widely available in marketing databases or directories) was obtained,” T-Mobile said in a statement. “No passwords, payment card information, social security numbers, government ID numbers or other financial account information were compromised.”

The company said its systems weren’t breached but someone was improperly obtaining data through an API, or application programming interface, that can provide some customer information. The company said it shut down the activity within 24 hours of discovering it.

The company’s investigation into the incident is ongoing. T-Mobile warned that it could incur significant costs tied to the incident, though it said it doesn’t currently expect a material effect on the company’s operations. The company is set to report fourth-quarter results on Feb. 1.

T-Mobile acknowledged a security lapse in 2021 after personal information regarding more than 50 million of its current, former and prospective customers was found for sale online. T-Mobile later raised its estimate and said about 76.6 million U.S. residents had some sort of records exposed.

A 21-year-old American living in Turkey claimed credit for the 2021 intrusion and said the company’s security practices cleared an easy path for the theft of the data, which included Social Security numbers, birth dates and phone-specific identifiers. T-Mobile’s chief executive later apologized for the failure and said the company would improve its data safeguards.

T-Mobile proposed paying $350 million to settle a class-action lawsuit tied to the 2021 hack. As part of the settlement, the company also pledged to spend $150 million for security technology in 2022 and this year.

Write to Will Feuer at Will.Feuer@wsj.com

Corrections & Amplifications
T-Mobile US Inc. acknowledged a security lapse in 2021. An earlier version of this article incorrectly said it was last year. (Corrected on Jan. 19)

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Business

FTC Plan to Ban Noncompete Clauses Shifts Companies’ Focus

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Businesses and lawyers are beginning to assess what the Federal Trade Commission’s proposed ban of noncompete clauses in employment contracts could mean for worker mobility, wages and the way future compensation agreements are structured. 

While a full or partial ban could expand the pool of potential hires, it also would weaken a tool that employers have come to rely on to retain talent and protect trade secrets and other proprietary information, lawyers say. More companies likely would turn to a patchwork of alternative mechanisms to keep people from leaving and taking valuable information with them, including nondisclosure agreements and employment contracts that reward longevity, they say. 

“Employers have operated with an understanding that they can protect their interests through noncompetes,” said Matthew Durham, a Salt Lake City-based attorney with Dorsey & Whitney LLP who advises companies on employment matters. “What you’re seeing, reflected in the FTC proposal and elsewhere, is a growing hostility to the idea that there should be those kinds of restrictions, and it’s changing the environment that employers have been comfortable with in the last number of years.”

The FTC proposed a ban this month on nearly all noncompetes, saying that the clauses—which typically prohibit workers from moving to a new employer or starting new ventures of their own—hamper competition in the labor market, suppress wages and hold back innovation and entrepreneurship. The proposal came in response to an executive order from President Biden in 2021.

Businesses say they impose noncompete clauses on employees to protect trade secrets and other confidential information, including customer lists and financial data.

The FTC contends that noncompete clauses discourage innovation and entrepreneurship.



Photo:

Eric Lee for The Wall Street Journal

Mr. Durham and others say they believe the FTC may narrow its rule after hearing comments from the public, including employers and business organizations that have already signaled their opposition to the current proposal. The agency could, for example, allow noncompetes for highly compensated workers.

Noncompetes are common in employment contracts for senior employees like software engineers, sales representatives and top executives. Over time, they have been applied to many parts of the U.S. workforce, including some janitors, baristas, schoolteachers and entry-level workers. According to the FTC, one in five U.S. workers is currently subject to a noncompete clause.

Noncompetes are regulated at the state level, and many states have already taken action to limit use of the clauses by, in some cases, forbidding employers from imposing them on people earning under a particular wage threshold or for certain types of workers. 

“The vast majority of people in America can’t afford a lawyer to defend a noncompete case,” said Jonathan Pollard, an attorney in Florida who represents workers whose employers are trying to enforce noncompete clauses. “Just the threat of enforcement is often enough to restrain talent in the labor market.”

The Federal Trade Commission proposed a new ban on noncompete clauses, which the agency says hurts workers and competition. Companies argue they protect trade secrets. WSJ breaks down what a federal ban could mean for workers and businesses. Photo illustration: Jacob Reynolds

Some states, such as California and Oklahoma, hold that the clauses are unenforceable in all or nearly all employment contracts. 

A number of studies suggest noncompetes suppress wages and innovation. A review of Oregon’s 2008 ban on noncompetes for hourly workers found that wages rose an average of 2% to 3%. Another study, examining Hawaii’s 2015 ban on noncompete agreements for high-tech workers, found an 11% increase in job moves and a 4% increase in new-hire salaries.

The clauses restrain not just pay and entrepreneurship, but also professional development, workers and some attorneys say. 

Daniel Bachhuber had worked as a software consultant for years when he decided to take an in-house job in the fall of 2018. His new employer required that he sign a one-year noncompete agreement, which he said was so broad it would have prevented him from practicing his core skills if he were to leave the company or be fired.

Mr. Bachhuber balked. Earlier in his career, he had been laid off a few weeks into a new job, just after his first child was born. If that happened at the new job, he recalled thinking, he would be unable to earn a living for a year. “I’m always thinking, worst case scenario, what kind of downstream protection do I have?” the 35-year-old said. “Even if I was employed just one day, I couldn’t go back to the same clients I had.”

Daniel Bachhuber turned down a job after an employer wouldn’t change a noncompete clause.



Photo:

Mason Trinca for The Wall Street Journal

He consulted a lawyer and tried to renegotiate the contract, hoping to salvage a role that would have expanded his skills and given him a chance to work directly with the chief technology officer on special projects. The company declined to change the noncompete clause and, reluctantly, Mr. Bachhuber turned down the position. 

Employers have other tools to protect information besides noncompete agreements, including nondisclosure agreements, trade secret laws and nonsolicitation agreements, which prohibit workers from poaching customers or employees of their prior firm. 

But those tools generally can only be used after an employee violates the agreement, said Julie Levinson Werner, who represents employers as a partner with law firm Lowenstein Sandler LLP. “Once someone goes to another company, you’re really on the honor system. You have no way to monitor what information is being disclosed or not,” she said.

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Observers on both sides say that limitations on the clauses will compel employers to get more creative about how they retain talent, using everything from compensation to career advancement to keep workers engaged and loyal to the company. Some companies use deferred compensation—such as retention bonuses or rolling stock options that vest after, say, three years—to give people incentives to stay.

“Do you get better results with honey or vinegar?” said Ms. Werner. “If you want to motivate people and have them happy to stay, you have to look at compensation, the overall environment, how you treat them.”

The fate of the FTC’s final rule is up in the air. After a 60-day comment period, the commissioners will consider potential changes to the initial proposal and then issue a final rule. That rule will likely be challenged by business groups or individual companies, and courts will determine its trajectory, attorneys say.

Write to Lauren Weber at Lauren.Weber@wsj.com

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Business

Elon Musk, Tesla Poised for Trial Over Tweets Proposing to Take Car Maker Private

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Elon Musk

is headed to court in a securities-fraud trial over tweets from 2018 in which he floated the possibility of taking

Tesla Inc.

private, with in-person jury selection poised to begin Tuesday. 

The class-action case originates with an Aug. 7, 2018 tweet in which the Tesla chief executive said, “Am considering taking Tesla private at $420. Funding secured.” 

An investor,

Glen Littleton,

sued Tesla, Mr. Musk and members of Tesla’s board at the time, alleging that Mr. Musk’s tweets were false and cost investors billions by spurring swings in the prices for Tesla stock, options and bonds. In court filings, Mr. Musk has said he was indeed considering taking Tesla private and believed he had the support of Saudi Arabia’s sovereign-wealth fund to do so. The deal, which would have been valued around $72 billion, never materialized.

U.S. District Judge

Edward Chen,

who is overseeing the San Francisco jury trial that is scheduled to run through Feb. 1, has ruled that Mr. Musk’s tweets about taking the company private weren’t true and that he acted recklessly in making them. 

Questions for the jury include whether Mr. Musk’s tweets were material to investors and whether he knew they were untrue.

The case is unusual in that securities-fraud cases usually resolve before going to trial, such as through a settlement, said

Jill Fisch,

a securities-law professor at the University of Pennsylvania. The defendants in this case face “an uphill battle” in light of the judge’s pretrial decision about the veracity of Mr. Musk’s statements, she said.

Attorneys for the lead plaintiff didn’t respond to a request for comment, nor did an attorney for Tesla, Mr. Musk and the other board members.

Twitter has been in turmoil since Elon Musk took over. To get a sense of what’s going on behind the scenes, The Wall Street Journal spoke with former Tesla and SpaceX employees to better understand how Musk leads companies. Illustration: Ryan Trefes

Mr. Musk is expected to take the stand as early as Wednesday, some two months after he did so in Delaware in a trial over his pay package at Tesla. In 2021, he also appeared before Delaware’s business-law court to defend Tesla’s roughly $2.1 billion 2016 takeover of home-solar company SolarCity Corp. 

Also on the list of possible witnesses are Tesla board chair

Robyn Denholm,

board members

Ira Ehrenpreis,

James Murdoch

and

Kimbal Musk

—the CEO’s brother. The head of investor relations,

Martin Viecha,

also may be called.

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What do you think will be the outcome of the case over Elon Musk’s 2018 Tesla tweet? Join the conversation below.

This week’s trial comes at a busy time for Mr. Musk, who has been scrambling to turn around Twitter Inc. after buying the social-media company last fall in a deal valued at $44 billion. His rocket company SpaceX is pushing for the first orbital launch of a new rocket Mr. Musk wants to use for deep-space missions. 

Tesla, meanwhile, has slashed prices across its vehicle lineup, with some of last week’s cuts in the U.S. nearing 20%, in a bid to juice demand. The company’s stock has fallen roughly 70% since its peak in November 2021, erasing around $850 billion in market value. Mr. Musk’s personal wealth has fallen more than $200 billion in that time, according to the Bloomberg Billionaires Index.

Court proceedings involving Mr. Musk can be feisty. In the SolarCity case, for example, Mr. Musk called opposing counsel a “bad human being.”

Tesla has reduced prices across its vehicle lineup in an effort to boost demand.



Photo:

Jay Janner/USA TODAY NETWORK/Reuters

In advance of this week’s trial, Mr. Musk asked the court to move the trial to Texas on the basis that potential jurors in San Francisco could be biased against him. Judge Chen rejected the request. 

“It isn’t that hard it seems to me to find 15 people,” he said.  

The court requires nine jurors and six alternates to proceed with the case. Roughly 190 potential jurors were asked to fill out questionnaires about their views of Mr. Musk and other issues. The court plans to bring in about 50 of them for further questioning Tuesday. 

Opening arguments could start as early as Tuesday after the jury is selected.

The lead plaintiff is seeking damages for investor losses he alleges stemmed from Mr. Musk’s and Tesla’s statements. Tesla stock closed up 11% the day Mr. Musk initially tweeted about potentially taking Tesla private, later giving back all those gains and falling further as questions emerged about the deal. 

The defendants have said the plaintiff won’t be able to prove to a jury that the statements were materially false. Mr. Musk was considering taking Tesla private, the defendants have said, even if some of his assertions about the deal may not have been literally accurate.

Defendants, in a trial brief, said Mr. Musk believed he had secured backing to take the car maker private from Saudi Arabia’s sovereign-wealth fund, the Public Investment Fund. A lawyer for the defendants said Friday that his team had chosen not to enforce subpoenas calling on fund representatives to testify. The sovereign-wealth fund didn’t respond to a request for comment.

Mr. Musk and Tesla each agreed in 2018 to pay $20 million to settle civil charges brought by the Securities and Exchange Commission over the same tweets. Mr. Musk also agreed to step down as chairman of the company, while remaining CEO. He later said in legal filings that he felt pressured to settle with the SEC. Last year, a federal judge denied Mr. Musk’s request to scrap his settlement.

Write to Rebecca Elliott at rebecca.elliott@wsj.com and Meghan Bobrowsky at meghan.bobrowsky@wsj.com

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Entertainment

Vince McMahon Plots Return to WWE

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Vince McMahon,

the majority owner and former chief executive of

World Wrestling Entertainment Inc.,

WWE 2.26%

plans to return to the company following his retirement last year amid a sexual-harassment scandal to pursue a sale of the business, according to people familiar with the matter.

Mr. McMahon, who has majority voting power through his ownership of WWE’s Class-B stock, has told the company that he is electing himself and two former co-presidents and directors, Michelle Wilson and

George Barrios,

to the board, the people said. The move to reinstate Mr. McMahon, which the board previously rebuffed, and the others will require three current directors to vacate their positions.

Mr. McMahon, whose abrupt departure in July 2022 followed disclosures by The Wall Street Journal of multiple payouts to women who had alleged sexual misconduct and infidelity, expects he will be able to assume the role of executive chairman, though he would need board approval for that, the people said.

It isn’t clear where that would leave his daughter, Stephanie McMahon. After his departure, she took over as chairwoman and co-CEO alongside

Nick Khan,

the company’s former president.

The 77-year-old sent a letter to WWE’s board in late December detailing his desire to return to the company he ran for four decades, to help spearhead a strategic-review process, the people said. Mr. McMahon believes there is a narrow window to kick off a sales process because WWE’s media rights—including for its flagship programs “Raw” and “SmackDown”—are about to be renegotiated, according to the people.

Mr. McMahon believes the media landscape is evolving quickly and more companies are looking to own the intellectual property they use on their streaming platforms, making WWE an attractive takeover target, the people said. WWE, which generates most of its revenue from selling content rights, posted its first year of over $1 billion in revenue in 2021. The company currently has a market value of just over $5 billion.

The board responded last month in a letter to Mr. McMahon that it was prepared to initiate a review process and would welcome working with him on it. However, it said it unanimously agreed that Mr. McMahon’s return to the business wouldn’t be in shareholders’ best interest, according to people familiar with the letters.

The board also asked Mr. McMahon to confirm his commitment to repay expenses incurred by WWE related to an investigation of the allegations and requested that he agree not to return to the company during government probes of the matter, the people said. Mr. McMahon said in response that he remains willing to continue working to complete any reimbursement for reasonable expenses related to the investigation, to the extent they aren’t covered by insurance, but he declined to agree to not return to the company.

He has communicated to the board that unless he has direct involvement as executive chairman from the outset of a strategic review, he won’t support or approve any media-rights deal or sale, the people said.

Mr. McMahon retired as WWE chief executive and chairman in July amid a board investigation of sexual-misconduct claims against him. The Journal reported that he had agreed to pay more than $12 million in secret settlements since 2006 to his accusers.

The Securities and Exchange Commission and federal prosecutors launched inquiries into the payments. WWE later disclosed additional payments in 2007 and 2009 totaling $5 million that it said were unrelated to the allegations of misconduct that led to its internal investigation.

WWE’s board ultimately found that the payments, though made by Mr. McMahon personally, should have been booked as WWE expenses because they benefited the company.

Mr. McMahon had told people that he intended to make a comeback at WWE, the Journal reported last month. He said that he received bad advice from people close to him last year to step down, according to the people familiar with his comments.

—Joe Palazzolo and Ted Mann contributed to this article.

Write to Lauren Thomas at lauren.thomas@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Bahamas Regulator Says It Seized $3.5 Billion in FTX Crypto Assets

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Bahamas securities regulators said they seized digital assets valued at $3.5 billion from FTX’s local operation in mid-November as the cryptocurrency exchange spiraled toward collapse, a figure that FTX’s U.S. managers cast doubt on Friday.

Christina Rolle, executive director of the Securities Commission of the Bahamas, said in an affidavit made public Thursday that the commission sought control of the crypto assets held by FTX Digital Markets Ltd. last month after FTX co-founder Sam Bankman-Fried told local authorities under oath about a hacking attempt. Her affidavit, filed with the Supreme Court of the Bahamas, also confirmed that the Securities Commission relied on Mr. Bankman-Fried and another FTX co-founder, Gary Wang, to make the transfers happen.

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