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Business

Why the Next Big-Tech Fights Are in State Capitals

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Tech companies are turning their attention to statehouses across the country as a wave of local bills opens a new frontier in the push to limit Silicon Valley’s power.

Arizona, Maryland and Virginia are among states where lawmakers are seeking to limit the power of tech companies like

Alphabet Inc.’s

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Google and

Apple Inc.

AAPL -0.76%

on a range of issues, from online privacy and digital advertisements to app-store fees. State policy proposals have bipartisan support from lawmakers who want to temper companies’ influence and financial clout, which have grown during the pandemic.

Google, Apple and others are hiring local lobbyists and immersing themselves in the minutiae of proposed legislation, according to state representatives. Tech companies face potential rules that would curb the reach of their platforms, crimp revenues with taxes or force them to facilitate additional privacy disclosures.

Prominent tech companies are embracing remote work amid an exodus of skilled labor from Silicon Valley. WSJ looks at what that could mean for innovation and productivity and what companies are doing to manage the impact.

While federal lawmakers have held hearings and are in discussions about policies to regulate tech companies, debates and votes could occur in states first. If passed, state laws matter because they can become de facto national standards in the absence of federal action, as with California’s 2018 privacy law, which gave consumers both the right to access personal information that businesses collect from them and the right to request that data be deleted and not sold.

Facebook Inc.

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initially opposed the California measures, but supported them after they took effect. Companies such as

Microsoft Corp.

have opted to honor the new rules across the country.

“So much has happened since California passed the original [data] privacy act” in 2018, said

Sam McGowan,

a senior analyst at policy research firm Beacon Policy Advisors LLC. Lawmakers’ concerns now stretch well beyond privacy to such topics as anticompetitive behavior and how social-media companies police content, he said.

In Arizona, a closely watched bill regarding app-store payments has cleared the state House and is expected to be debated in the Senate in the next several weeks. The legislation would free some software developers from fees that Apple and Google place on apps, which can run up to 30% of sales from paid apps and in-app purchases. App developers would be able to charge people directly through the payment system of their choice. The bill would apply to Arizona-based app developers and consumers yet could set a wider precedent.

Republican state

Rep. Regina Cobb,

the legislation’s chief sponsor, said the bill is about “consumer protection and transparency,” and said a final vote could take place within the next month. Ms. Cobb said she believes there are sufficient votes to pass the bill in the narrowly divided Senate. Apple and Google have lobbied heavily against the bill, Ms. Cobb said.

Apple declined to comment on lobbying in Arizona. A company spokeswoman said Apple “created the App Store to be a safe and trusted place for users to download the apps they love and a great business opportunity for developers. This legislation threatens to break that very successful model and undermine the strong protections we’ve put in place for customers.”

Google declined to comment on the legislation or any lobbying efforts in the state.

In February, Maryland lawmakers passed legislation that would tax the revenue of companies such as Google, Facebook and

Amazon.com Inc.

from digital ads. This month

Virginia Gov. Ralph Northam

signed into law new privacy rules similar to those in California, with added limits on the consumer data that companies can collect online.

Washington state has introduced privacy legislation. Some states have targeted online content moderation, with Texas proposing a measure that would prohibit social-media companies from banning users based on their viewpoints. New York state recently looked into changing its antitrust laws to make it easier for it to sue tech companies.

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States may have an easier path to pass laws than Congress does, Mr. McGowan said, because many state governments have fairly short legislative sessions lasting a few weeks or months, meaning bills can swiftly make their way through committees and to votes.

Tech companies’ soaring growth and influence during the pandemic has raised urgency at the state level, according to

Robert Siegel,

a lecturer in management and a business-strategy researcher at Stanford University.

The biggest five companies—Amazon, Google, Facebook, Apple and Microsoft—all saw staggering growth in 2020, as stuck-at-home Americans and businesses turned to online shopping, software and cloud-computing services, smart devices and video streaming. Those companies’ combined revenue grew by a fifth, to $1.1 trillion, and their collective market capitalization soared to $8 trillion during the pandemic.

Given the stakes and what some view as the inevitability of more regulation, tech companies must play a more active role in influencing legislation, Mr. Siegel said. Facebook and Google are among tech companies now calling for federal rules on issues such as data privacy and artificial intelligence.

“Large technology companies have no choice but to engage,” Mr. Siegel said. “So much money has been made by these companies, and that has everyone gunning for them. They have a size and scale and reach that nobody has.”

Facebook Vice President of State and Local Policy

Will Castleberry

said the company “will continue to support bills that are good for consumers, but a patchwork approach to privacy doesn’t give the consistency or clarity that consumers or businesses need. That’s why we hope Congress will pass a national privacy law.”

Technology companies have stepped up legislative spending at different levels of government recently. Facebook and Amazon outspent all other U.S. companies in federal lobbying last year, The Wall Street Journal reported in January.

Facebook spent nearly $20 million, up about 18% from the previous year, while Amazon spent about $18 million last year, up about 11%. Apple disclosed $6.7 million in lobbying spending, down from a record $7.4 million in 2019, and Google also reported a drop, spending $7.5 million. Google and Facebook are facing multiple antitrust lawsuits, and Amazon and Apple have been the subject of preliminary inquiries that could advance further under the Biden administration.

States are also using courts to seek change. A Colorado-led coalition of attorneys general filed an antitrust suit against Google in December over its dominance in online search. Meanwhile, California is looking into how Amazon treats sellers in its online marketplace, and authorities in Connecticut are investigating how Amazon sells and distributes digital books.

Amazon declined to comment.

Write to Sebastian Herrera at Sebastian.Herrera@wsj.com and Dan Frosch at dan.frosch@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Grab Is in Talks to Go Public Through a SPAC Merger

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Grab Holdings Inc. is in talks to go public through a merger with a SPAC that could value the Southeast Asian ride-hailing startup at as much as $40 billion, making it by far the largest such deal on record.

The Singapore company is discussing a deal with a special-purpose acquisition company affiliated with Altimeter Capital Management LP that would value it at between $35 billion and $40 billion, according to people familiar with the matter. (Altimeter has two SPACS; it couldn’t be learned which one is in talks with Grab.)

As part of the deal, Grab would raise between $3 billion and $4 billion in a so-called PIPE, a funding round that typically accompanies a SPAC merger, the people said. That amount could still change as Grab and Altimeter will start meeting with mutual funds and other potential investors soon, some of the people said.

The parties could announce the deal in the next few weeks, though the talks could still fall apart and Grab could revert to an earlier plan to stage a traditional initial public offering on a U.S. exchange this year.

Should they move forward with a SPAC deal, it would be the high-water mark in a recent explosion of such transactions, in which an empty shell raises money in an IPO with plans to later find one or more companies to merge with. In some cases, the SPAC ends up with only a small sliver of the newly public target.

The vehicles have caught fire in the last couple of years, with everyone from former baseball player Alex Rodriguez to ex-House Speaker Paul Ryan getting in on the action. They have helped break a bottleneck between the private and public markets as companies that were reluctant to go public line up to combine with SPACs, which offer in many cases a speedier route to a listing without costs and disclosure limitations that accompany traditional IPOs.

The biggest SPAC deal to date is United Wholesale Mortgage’s roughly $16 billion combination with Gores Holdings IV Inc., announced in September. The biggest one so far this year is electric-vehicle company Lucid Motors Inc.’s agreement last month to merge with Michael Klein’s

Churchill Capital Corp.

IV, a deal valued at nearly $12 billion, according to Dealogic.

So far this year, a record $70 billion-plus has been raised for SPACs, which account for more than 70% of all public stock sales, according to Dealogic. A slew of companies are in talks for a SPAC merger or already have agreed to one, including office-sharing firm WeWork, online photo-book maker Shutterfly Inc. and online lender Social Finance Inc.

In addition to ride-hailing, Grab, which traces its roots back to 2011, delivers restaurant, grocery and other items and provides digital financial services to merchants.

Its backers include

SoftBank Group Corp.

,

Uber Technologies Inc.

and

Toyota Motor Corp.

It was last publicly valued at around $15 billion in an October 2019 fundraising round, according to PitchBook.

Its valuation is on the rise as public investors pile into other ride-hailing and food-delivery companies. Uber’s shares have jumped sharply in the past several months, while

DoorDash Inc.

went public in December at a valuation far in excess of where it had raised money privately. The restaurant-delivery company now has a market capitalization of nearly $47 billion.

Altimeter’s SPACs—Altimeter Growth Corp. and Altimeter Growth Corp. 2—raised $450 million and $400 million in October and January IPOs, respectively. Altimeter Capital, of Menlo Park, Calif., has around $16 billion under management and primarily invests in technology companies.

The firm has racked up a string of successful investments and was one of the main participants in a January round of funding

Roblox Corp.

raised ahead of its IPO at $45 a share. In its debut Wednesday, shares of the videogame platform traded more than 50% above that level and continued rising Thursday.

SoftBank, which invested through its Vision Fund, is also poised to win big on Grab, just as another of its bets proves to be a gigantic winner: The Japanese technology-investing giant has now made roughly $25 billion on paper on its $2.7 billion investment in South Korean e-commerce company

Coupang Inc.,

which soared 41% in its trading debut Thursday.

Private companies are flooding to special-purpose acquisition companies, or SPACs, to bypass the traditional IPO process and gain a public listing. WSJ explains why some critics say investing in these so-called blank-check companies isn’t worth the risk. Illustration: Zoë Soriano/WSJ

Write to Maureen Farrell at maureen.farrell@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Philanthropist MacKenzie Scott, Ex-Wife of Jeff Bezos, Marries Seattle School Teacher

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MacKenzie Scott, the philanthropist formerly married to

Jeff Bezos,

has married again following her 2019 divorce from the

Amazon.com Inc.

founder, according to a person familiar with the matter.

Ms. Scott, one of the world’s wealthiest women, has married Dan Jewett, a science teacher at a Seattle private school, according to the person.

Ms. Scott has devoted much of her time recently to philanthropic efforts benefiting women-led charities, food banks and Black colleges, among other institutions. Since her divorce, Ms. Scott has given away more than $4 billion of her fortune, according to a post she wrote on Medium in December.

In a post dated Saturday on Ms. Scott’s page on the Giving Pledge website, for billionaires who have promised to donate most of their fortune to philanthropic efforts, Mr. Jewett signed on to her commitment.

“It is strange to be writing a letter indicating I plan to give away the majority of my wealth during my lifetime, as I have never sought to gather the kind of wealth required to feel like saying such a thing would have particular meaning,” Mr. Jewett’s post says.

“Dan is such a great guy, and I am happy and excited for the both of them,” said Mr. Bezos in a statement provided by an Amazon spokesman.

Ms. Scott and Mr. Jewett couldn’t immediately be reached for comment on Sunday.

Ms. Scott and Mr. Bezos, both Princeton University graduates, met while working at a hedge fund in New York. She helped him start Amazon in 1994, and is the author of two novels. Her Amazon author page now says that she “lives in Seattle with her four children and her husband, Dan.”

At the time of their 2019 divorce, after 25 years of marriage, Mr. Bezos was the wealthiest person in the world, with his stake of more than 16% of Amazon. Ms. Scott received 4% of Amazon’s shares as part of their divorce settlement, though Mr. Bezos kept voting rights for those shares.

Ms. Scott joined the Giving Pledge in May 2019, shortly after terms of her divorce with Mr. Bezos were finalized. The pledge was started by Bill and

Melinda Gates

and

Warren Buffett

in 2010. Mr. Bezos hasn’t joined the pledge.

Amazon’s business has been a major beneficiary of the pandemic, driving up its stock price. Mr. Bezos, after jostling for a time with

Elon Musk

for the title, again ranks as the world’s richest person, with a net worth of around $177 billion, according to wealth rankings by Forbes and Bloomberg. Ms. Scott ranks the 22nd richest person, at around $53 billion.

Mr. Jewett is a teacher at Lakeside School, according to the school’s website.

“In a stroke of happy coincidence, I am married to one of the most generous and kind people I know—and joining her in a commitment to pass on an enormous financial wealth to serve others,” Mr. Jewett said in his Giving Pledge letter.

Write to Dana Mattioli at dana.mattioli@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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World

Facebook’s Tussle With Australia Over News Is Just the Beginning

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Facebook Inc.’s

FB 2.12%

battle with publishers and regulators around the world over how the social-media giant handles news is far from finished after striking an agreement this week with the Australian government to pay for content.

The agreement Facebook reached Tuesday with Australia’s government to restore news content to its platform comes as political leaders elsewhere have pledged to increase scrutiny on tech giants, and as news outlets also plan to amp up pressure on the company to cut deals. The matter also raises questions about which publishers should get paid for news content and how much.

Facebook’s deal with Australia gives it a path to avoid required payments to publishers for news content, so long as the company works toward reaching agreements with publishers on its own accord.

“We appreciate the government has created flexibility to move forward making deals with publishers, while giving us 30 days’ notice before a designation,” said

Campbell Brown,

Facebook’s vice president of global news partnerships. If Facebook’s negotiations with individual Australian publishers fail to satisfy the government, the company could reimpose its news ban rather than be forced to comply with the new law’s terms for setting payments.

“I am hopeful there will not be a need for that step,” Ms. Brown said.

The compromise as envisioned would be an alternative to the voluntary payments that Facebook has made to “partner” news outlets for its News Tab product for mobile users in the U.S. and other countries.

The payments Facebook has made to date aren’t overly costly for the company, whose ad business drove it to a record $86 billion in revenue last year. News content accounts for only 4% of what people see in their main newsfeed, Facebook said when it announced that it would remove news from the platform in Australia last week.

Facebook blocked people in Australia from viewing or sharing news articles as lawmakers debated a bill to compel social-media companies to pay for content. The legislation is being watched globally and could offer a model for other countries. Photo: Josh Edelson/Getty Images

News publishers rely on the audience that Facebook and

Alphabet Inc.’s

Google deliver. In the hours after Facebook’s decision to shut off news sharing in Australia, news publishers in the country saw traffic from readers outside Australia decrease by about 20%, data from analytics firm Chartbeat showed.

Roughly 36% of Americans get their news from Facebook, according to a fall 2020 study from Pew Research, compared with 23% who get it from Alphabet’s YouTube and 15% from

Twitter.

If Facebook were to have to pay for news content on a global basis, the cost would be significant, said Cascend Securities analyst

Eric Ross.

“Margins disappear when you have to all of a sudden pay for things that were free,” he said.

“
There is finally a much greater appreciation of the value of credible journalism.
”


— USA Today Publisher Maribel Perez Wadsworth

The brouhaha between Facebook and Australia’s news providers comes as it and Google face antitrust lawsuits in the U.S. and regulatory scrutiny elsewhere. Australia and other countries seeking payment for news content on behalf of publishers argue that Facebook is abusing its market power by trying to minimize or avoid such expenses. A 2019 Australian report deemed the large platforms threatened upstart social-media companies as well as advertisers and the news industry at large.

Both Facebook and Google say that their platforms help journalism. As Facebook itself has noted, publishers world-wide already seek to maximize the attention their work receives on social media without any promise of compensation.

One U.S. news publisher said the Facebook dispute in Australia suggested the social-media company has renewed interest in paying publishers after being previously reluctant to do so.

“We’re at a tipping point,” said

Maribel Perez Wadsworth,

publisher of USA Today, the flagship title of

Gannett Co.

, the largest newspaper chain in the U.S. “There is finally a much greater appreciation of the value of credible journalism.”

USA Today participates in the Facebook news tab offering in the U.S. via a licensing agreement.

News Corp,

owner of The Wall Street Journal, has a commercial agreement to supply news through Facebook. Last week the company reached a three-year deal with Google to license content from its publication and produce new products for Google platforms.

Australia’s efforts could prompt nontraditional media, such as independent journalists who publish articles on writing platforms like Medium, to demand payments, said Bernstein analyst

Mark Shmulik.

“The concern is, what if we no longer draw a line at media conglomerates? … That’s a pathway Facebook doesn’t want to go down,” he said.

Earlier this month Australian officials talked with their counterparts from Canada, Germany, France and Finland about those countries making similar rules on tech platforms paying news publishers, said

Steven Guilbeault,

Canada’s minister in charge of cultural policy, adding that the coalition of countries could expand over time.

Mr. Guilbeault said he’s encouraged by developments in Australia, and intends to introduce measures this spring that have the support of its global allies and relevant stakeholders. On Monday Canadian Prime Minister

Justin Trudeau

spoke with his Australian counterpart,

Scott Morrison,

about potential cooperation in pursuing regulation of online platforms, according to a summary of the conversation released by Mr. Trudeau’s office.

”We need to find a solution that is sustainable for news publishers, small and large, digital platforms, and for the health of our democracy,” Mr. Guilbeault said.

The battle over payments to news outlets has simmered—and at times boiled over—in Europe for more than a decade. A new European Union copyright law passed in 2019 and the involvement of antitrust regulators have given news media fresh leverage by, among other things, creating new copyright control for press outlets over the use of their publications on the internet by tech companies, except in the case of very short extracts and hyperlinks.

In France, the only country that so far has so far implemented the EU law, Google last November signed licensing agreements for its News Showcase product with several publications, including Le Monde. The agreements came after a French court reaffirmed an order from the country’s antitrust regulator that Google must negotiate.

Google said it has signed News Showcase deals with more than 500 publications in a dozen countries, including Germany, the U.K. and Australia. Google last October pledged $1 billion over three years to such licensing deals, but declined to say Tuesday how much of that amount has been spent.

“We have hundreds of partnerships with news publishers large and small, making us one of the biggest funders of journalism,” a Google spokeswoman said.

Facebook said that publications’ posting of their articles to its platform constitutes a license under the French law, and remains unchanged. The company currently only shows links, rather than rich previews, when users post news articles from French publications themselves, unless the publication has given Facebook explicit permission.

A Facebook spokesman said the company is in talks in France and Germany to launch its Facebook News product, which pays to license articles from news outlets. The product launched last month in the U.K. with articles from publications including the Guardian.

Facebook has previously said it provided hundreds of millions of dollars to publications through its various tools for advertising and subscriptions.

—Sam Schechner and Paul Vieira contributed to this article.

Write to Jeff Horwitz at Jeff.Horwitz@wsj.com and Sarah E. Needleman at sarah.needleman@wsj.com

Corrections & Amplifications
Facebook generated a record $86 billion in revenue last year. An earlier version of this article incorrectly said Facebook generated $70.7 billion in revenue. (Corrected on Feb. 23)

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Disney, HubSpot, Cloudflare, Coherent: What to Watch When the Stock Market Opens Today

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Here’s what we’re watching ahead of Friday’s trading action.

—U.S. stock futures edged lower Friday, putting the S&P 500 on track to end the week with muted gains after notching its ninth record closing high for 2021.

Futures tied to the S&P 500 slipped 0.3%, pointing to a drop after the opening bell. Contracts linked to the Nasdaq-100 Index edged down 0.3%, suggesting that technology stocks may also slip. Read our full market wrap.

What’s Coming Up

—The University of Michigan’s consumer sentiment index for the opening weeks of February, due at 10 a.m. ET, is expected to inch up to 80.8 from 79.0 at the end of January.

Market Movers to Watch

—All hail Baby Yoda. Walt Disney  shares were up 0.9% ahead of the bell after the entertainment giant reported a first-quarter profit, as its flagship streaming service, Disney+, added more than 21 million new subscribers during the period. But the pandemic continued to zap results in the company’s movie-distribution and theme-park segments.

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Business

Tencent Executive Held by China Over Links to Corruption Case

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An executive at Tencent Holdings Ltd. , China’s most valuable publicly listed company, has been held by Chinese authorities, part of a probe into a high-profile corruption case involving one of the country’s former top law-enforcement officials, people familiar with the matter said.

Zhang Feng has been under investigation by China’s antigraft inspector since early last year for alleged unauthorized sharing of personal data collected by Tencent’s social-media app WeChat, the people said. They said Mr. Zhang was suspected of turning over WeChat data to former Vice Public Security Minister Sun Lijun, who is being investigated by Beijing for undisclosed violations of Communist Party rules.

Investigators are looking at what type of data Mr. Zhang allegedly might have shared with Mr. Sun and what Mr. Sun might have done with it, the people said.

Hong Kong-listed Tencent, which has a market capitalization of about $900 billion, confirmed Thursday that Mr. Zhang is under investigation. The case “relates to allegations of personal corruption and has no relation to WeChat or Weixin,” a spokesman said in a statement to The Wall Street Journal. Weixin is WeChat’s sister app for the Chinese market.

Mr. Zhang was referred to as a Tencent vice president in a statement released by the municipal government of Zhangjiakou, a city near Beijing, in which he was described as having met the city’s mayor in October 2018.

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Business

Stock Futures Rise Ahead of Inflation Data

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U.S. stock futures climbed Wednesday ahead of U.S. inflation data, suggesting that the major indexes will resume this month’s rally.

Futures tied to the S&P 500 and the Dow Jones Industrial Average gained 0.3%. Contracts on the technology-heavy Nasdaq-100 also advanced 0.3%. Both the S&P 500 and the Dow closed lower on Tuesday after notching record highs earlier in the week.

Stocks have pushed higher this month, with the benchmark S&P 500 notching its eighth record close of the year on Monday. Investors are betting that President Biden’s $1.9 trillion stimulus package will help bolster the economy while vaccinations help reduce Covid-19 fatalities. Investor sentiment has also been buoyed by companies’ quarterly results that have largely proved to be better than expected.

“As long as earnings estimates are going up, stocks are going up,” said Andrew Slimmon, a managing director and portfolio manager at Morgan Stanley Investment Management. “The magnitude of the earnings beats we have seen are so great because earnings have been way underestimated.”

Ahead of the opening bell, ride-hailing firm Lyft rose over 12% after posting a narrower annual loss, suggesting the company is moving toward profitability. Rival Uber Technologies is among the companies scheduled to release its results after the market closes. Uber rose more than 6% premarket.

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Business

China’s Love of TikTok-Style Apps Powers $5 Billion IPO

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Kuaishou Technology has its eyes on the world’s biggest initial public offering in more than a year, seeking to raise about $5 billion from a Hong Kong share sale as short-video and live-streaming apps surge in popularity in China.

Kuaishou—which competes with ByteDance Ltd., the rival Chinese company behind TikTok and its sister app Douyin—started taking investor orders Monday. With the offering, which could value it at more than $60 billion, Kuaishou is joining a string of tech companies from China that have listed in Hong Kong.

Kuaishou, which means “fast hand” in Chinese, is backed by Tencent Holdings Ltd. It was co-founded by Su Hua and Cheng Yixiao, software engineers who previously worked for Google China and Hewlett Packard , respectively.

Both Kuaishou and ByteDance have capitalized on growing demand from younger Chinese people to watch and record short videos on their smartphones. Its namesake short-video platform is the world’s second-largest, according to data cited in its prospectus, and there were 305 million average daily active users of its apps and mini-programs in China for the nine months as of September.

With a minimum deal size of $4.95 billion, the IPO would be the largest in the world since late 2019, when state-controlled Saudi Arabian Oil Co., commonly known as Aramco, raised $29.4 billion, Dealogic figures show.

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