DealBook Briefing: Media Mergers Coming in 3, 2, 1 …


Andrew says the verdict is likely to rattle President Trump, a vocal opponent of the Time Warner deal. “Mr. Trump doesn’t like to lose, and that could make his administration more reluctant to police future deals that actually deserve to be blocked,” he writes in his latest column.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London.

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Elon Musk

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Shannon Stapleton/Reuters

Tesla is cutting staff in a bid for profitability

In a sign of financial sense, the carmaker announced that it would lay off 9 percent of its staff of 37,500. The cuts will mainly hit salaried employees and won’t affect production workers at its plant in Fremont, Calif. (That’s important, given its struggle to build enough Model 3 sedans.)

The aim is to slow Tesla’s cash burn: It lost $785 million in the first quarter, despite generating $3.4 billion in revenue. In an email to the staff, Elon Musk said that his company’s vision — to “accelerate the world’s transition to sustainable, clean energy” — would not happen “unless we eventually demonstrate that we can be sustainably profitable.”

DealBook’s take: Streamlining — and presumably reducing how rapidly it needs to raise money — sounds sensible for Tesla. But exciting new projects like an electric truck could now become harder to finance. There’s also a risk to that highflying stock: If Tesla behaves like a normal company, investors may start to value it as one.

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Kim Il-sung Square in Pyongyang, North Korea.

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Ed Jones/Agence France-Presse — Getty Images

Who wants to do business with North Korea?

When President Trump met Kim Jong-un in Singapore this week, one of his pitches to the dictator was the prospect of Western investment in North Korea. Businesses aren’t exactly lining up to build factories in Pyongyang — at least, not yet. But could that change? Alex Stevenson of the NYT assesses the chances:

Some in the business world find the idea intriguing. The North has a relatively young population and an underground entrepreneurial bent. It has a large amount of resources like rare earths and iron ore. And South Korea has offered the North a modernization plan that includes building railways and power plants.

Crossed wires? North Korean state media said Mr. Trump offered to lift sanctions on Pyongyang. That wasn’t the White House line.

The political flyaround

• President Trump is expected to impose tariffs on Chinese goods as soon as Friday. (Politico)

• Take a close look at Tom Barrack, a billionaire ally of Mr. Trump who has strong ties to the Middle East — and introduced him to Paul Manafort. (NYT)

• Mick Mulvaney’s time atop the Consumer Financial Protection Bureau — sorry, the “B.C.F.P.” — is near an end. His potential replacement: Representative Darrell Issa, a California Republican who isn’t running for re-election.

• A New York state court has curtailed the reach of the Martin Act, which has been used to bring fraud charges against Wall Street. (NYT)

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Protesters at a Seattle city council meeting in May.

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Elaine Thompson/Associated Press

Seattle fought Big Tech. Big Tech won.

Last month, city officials unveiled a business tax meant to help pay for homeless programs and affordable housing. It would have fallen in large part on Amazon. But the e-commerce behemoth lobbied hard against the tax — and now it’s dead.

The lesson for mayors and city governments elsewhere? Taking on tech titans is risky, especially if they employ lots of people in your district. More from David Streitfeld and Claire Ballentine of the NYT:

The politicians had no stomach for a protracted battle over jobs, even at a moment when the area’s unemployment rate is only 3.1 percent. “It is clear that the ordinance will lead to a prolonged, expensive political fight over the next five months that will do nothing to tackle our urgent housing and homelessness crisis,” they said.

The deals flyaround

• Toyota plans to invest $1 billion in Grab of Singapore, the biggest investment yet by a carmaker in the ride-hailing industry. That may not be unalloyed good news for Grab.

• Bird, a big player in electric scooter sharing, is said to be raising $300 million — equivalent to its total valuation three months ago — at a valuation of $2 billion. (NYT)

• Adyen, a European payments processor used by Uber, priced its I.P.O. at the top of the expected price range, valuing itself at $8.3 billion. (WSJ)

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Wang Zhao/Agence France-Presse — Getty Images

ZTE could be in trouble again

Republican senators are betting that President Trump won’t block their effort to restore penalties against the Chinese telecom company that the White House struck a deal to save.

What Senator Bob Corker, Republican of Tennessee, told the WSJ:

“I don’t think the president cares about ZTE. Someone told me that he gave [GOP lawmakers] a wink and a nod and told them he didn’t care. I don’t know if that’s true or not, but I think he did what he did for the Chinese leader but he doesn’t really care what Congress does.”

Elsewhere in ZTE news: The company’s stock resumed trading in Hong Kong overnight after a two-month hiatus, and its market valuation is down by $3 billion.

The tech flyaround

• Malware mined nearly 5 percent of all the Monero cryptocurrency in circulation. (Palo Alto Networks)

• A blockchain experiment in Britain could remove red tape at customs borders. (FT)

• IBM thinks it can make A.I. 100 times more energy-efficient. (MIT Technology Review)

• Bill Gates’s new energy fund has made its first investments, in grid storage. (Quartz)

• Facebook has opened a design lab to improve privacy. (Bloomberg)

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James Hill for The New York Times

Big banks predict who’ll win the World Cup

Ahead of the first game tomorrow, strategists and analysts have put their quantitative skills to use to predict the overall winner of the tournament. Their approaches — including A.I., statistical modeling, and economic analysis — show that picking a winner is just as divisive among the world’s largest banks as it is in sports bars from Moscow to Manchester.

UBS backs Germany, Goldman Brazil, and ING Spain. Here’s how they got to their results.

In other World Cup news: FIFA expects to make $6.1 billion from this year’s tournament. Some games will cause stock market weirdness. And people watching the tournament in Russia may have their devices hacked.

Revolving door

• Guess Inc.’s co-founder, Paul Marciano, has resigned from the clothing company after an investigation into allegations that he sexually harassed and assaulted women. (NYT)

• Cambridge Analytica’s former chief data officer, Alexander Tayler, is trying to reinvent himself as a consultant on data analytics — and compliance. (FT)

The speed read

• If robots come for our jobs, what should the government do? (NYT)

• America’s investment banks have been eating the lunch of European counterparts for years. That might be about to change. (FT)

• Why do economists rarely talk about inequality? Perhaps because they’re afraid of politics. (Bloomberg)

• Beijing says it will let foreign banks run securities businesses in China — so long as they have at least $15 billion in net assets. (WSJ)

• How long do we have to wait before productivity rises? (FT)

You can find live updates throughout the day at nytimes.com/dealbook.

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Big Day for AT&T, Time Warner and U.S. as Court Rules in Antitrust Case


What are the possible outcomes?

Judge Leon could block the deal.

Doing so might encourage the Justice Department to act more aggressively when it looks at deals in the future, and might prompt a rethink by companies with similar deals in the works.

A key argument against the government’s case is that the deal is a so-called vertical merger, which means that the two companies do not produce competing products: One makes media content, and the other distributes it. Some big takeovers lately have had similar profiles — the purchase of the insurer Aetna by the drugstore chain CVS, and Amazon’s purchase of Whole Foods — and they typically make it past regulators.

So a win for the government could really shake up some businesses’ plans and open the door for a new definition of antitrust regulation.

He could let it proceed without attaching any conditions.

That would, of course, have the opposite effect. It could be the green light for more vertical takeovers, and would be seen as a setback for the Trump administration.

If the deal is allowed to proceed, Comcast is expected to make a bid for most of 21st Century Fox’s television assets — setting up a bidding war against the Walt Disney Company, which has already struck a deal to buy those holdings.

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The Dallas headquarter of AT&T, whose proposed merger with Time Warner was challenged in court by the Trump administration. A ruling is expected Tuesday.

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Dylan Hollingsworth for The New York Times

It’s possible that the Justice Department will appeal a ruling that goes against it, though, so things may not end there.

He could approve it but attach conditions.

The aim of the conditions would broadly be to keep AT&T from using its control of content like HBO or CNN as a weapon to increase costs for its rivals. The fear is that AT&T could charge rivals a high price for, say, HBO to make AT&T’s own product more competitive.

One way to address this would be to appoint a third party to oversee disagreements between AT&T and the cable companies that want to license Time Warner content. The government doesn’t like that approach.

Another option is to demand that AT&T and Time Warner sell off some plum assets. AT&T and Time Warner don’t like this approach, so would be expected to appeal any such decision.

Doesn’t the government challenge deals all the time?

It’s true that deals get challenged all the time, but the government’s focus in the past has typically been on protecting consumers by keeping one company, or a small group of companies, from owning too much of any one specific industry. It comes up when companies buy their competitors — what’s known as horizontal integration.

For example, in 2016, a federal judge blocked the merger of Staples and Office Depot after the Federal Trade Commission argued that the combination would leave Americans with only one dominant retailer focused on pens, paper clips and Post-it notes.

What makes the AT&T decision noteworthy is that the deal is being challenged even though it doesn’t share all the characteristics of horizontal integration.

“Vertical mergers do not fit the traditional horizontal-merger analytical framework used by the U.S. regulatory authorities,” R. Mark McCareins, a professor at the Kellogg School of Management at Northwestern University, wrote in an online discussion about vertical mergers. It means the trade commission and the Department of Justice “are faced with pounding a square peg into a round hole.”

[Read more: The Time Warner case is not AT&T’s first tangle with U.S. antitrust law.]

Didn’t this get political at one point?

Yup. Time Warner owns CNN, which President Trump has publicly and repeatedly attacked as fake news.

“AT&T is buying Time Warner, and thus CNN,” he said at a campaign rally when the deal was announced. He said it was “a deal we will not approve in my administration.”

The government had said that Mr. Trump did not communicate with antitrust officials on the deal and that their decision to oppose the merger had not been ordered by the White House. During the trial, Judge Leon rejected many of AT&T’s efforts to introduce evidence about political interference into the case.

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AT&T’s Many Run-Ins With the Government


The ruling expected Tuesday in the AT&T-Time Warner case is just the latest chapter in AT&T’s tangles with United States antitrust law over the years.

AT&T, one of the world’s largest telecommunications companies, figures prominently in the annals of antitrust law.

Since the late 19th century, under various names and configurations, the entity once known as Ma Bell has often been targeted by regulators trying to rein in its size and keep it from amassing monopoly power.

On Tuesday afternoon, a federal judge is expected to issue a ruling in AT&T’s latest battle with the Justice Department, which is attempting to block the company’s $85.4 billion takeover of Time Warner. The current courtroom battle is a reminder of the complicated balancing act the government must strike in regulating ever-changing companies.

“AT&T has been a dominant company from the very beginning and has sought to maintain its dominance through varying government interactions,” said Gerald Brock, a former Federal Communications Commission staff member who is a professor of public policy at George Washington University. “That’s been the sense of AT&T through the ages — that they seem to have a lot of power, but people also want to be able to communicate in a way that AT&T allows them to do.”

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An 1880 engraving of New York’s central telephone exchange office.CreditCulver

1876

With Bell’s Invention, a Company Is Born

Alexander Graham Bell receives two patents for his telephone. A year later, the Bell Telephone Company, the precursor to AT&T, issues stock to seven shareholders. In 1881, the company acquires Western Electric Company, a supplier of telephone equipment.

CreditThe New York Times

The result: The telegraph business was already giving way to telephones, so the sale of the Western Union stake was not a big loss. Opening up AT&T’s long-distance lines to independent telephone companies satisfied regulators who were seeking greater efficiencies, but it also made the companies more dependent on the Bell System service.

1956

Concessions in an Antitrust Case

AT&T settles an antitrust lawsuit by agreeing to stay out of the burgeoning computer industry. It also agrees to generally license its patents — opening the door for transistors, invented by Bell Labs in 1947, to spread far and wide.

The context: The lawsuit, filed in 1949 by the administration of President Harry S. Truman, sought to break apart Western Electric, the Bell System’s manufacturing arm, from the parent company. Western Electric was overcharging AT&T, the government argued, and so was forcing telephone customers to pay higher rates. It also charged that technological innovations developed within the Bell Labs monopoly were being kept under wraps.

The result: The Bell System was still a powerful monopoly, virtually the lone source for telephone service in the United States, but it would be denied the chance to develop the next big shift in telecommunications: computers.

CreditThe New York Times

1982

The Demise of ‘Ma Bell’

AT&T ends a seven-year-old antitrust case by agreeing to disassemble itself into several independent pieces, essentially breaking apart the monopoly it had enjoyed since early in the century.

The context: Technology developed outside the Bell System had been gnawing at AT&T’s monopoly for years. Microwave towers, for example, could transmit signals, circumventing the Bell System wires. A 1968 regulatory decision allowed independent companies to connect to AT&T’s network. AT&T, meanwhile, was eager to shed the prohibition on computer work it agreed to in the 1956 antitrust settlement.

The result: Some pieces of the Bell System would be swallowed by other corporate entities, while others, such as Verizon, would be huge successes in the new landscape. AT&T, a shadow of its former self, was eventually acquired by a former “Baby Bell,” SBC Communications (formerly Southwestern Bell). The new combination become AT&T Inc.

Randall Stephenson, left, AT&T’s chief executive, at a hearing before Congress in 2011 over AT&T’s bid for T-Mobile.CreditAlex Wong/Getty Images

2011

Expansion Plans Rebuffed

AT&T, facing strong opposition from federal regulators, abandons its plan to acquire the mobile phone service T-Mobile USA for $39 billion.

The context: AT&T was hungry for more radio spectrum, which carries wireless calls and data, as smartphones became must-have devices. Adding T-Mobile would have helped solve that problem, and would have made AT&T the nation’s largest cellphone service provider. Spearheading the merger: Randall L. Stephenson, in his first big strategic step since becoming AT&T’s chairman and chief executive in 2007.

But the Obama administration said antitrust oversight had gotten weaker in recent years and strongly objected to the deal, saying it would result in higher prices and less innovation. The Justice Department was joined in opposing the merger by several state attorneys general and the Federal Communications Commission, which published a lengthy report laying out its concerns.

The result: The failure of the deal was a major setback for AT&T’s growth plans and left the company scrambling for a new solution to its network constraints.

Time Warner offices in New York City. Today’s Time Warner is the byproduct of many rounds of spinoffs and acquisitions.CreditSam Hodgson for The New York Times

DealBook Briefing: How AT&T and Novartis Became Part of the Michael Cohen Saga


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Chip Somodevilla/Getty Images

How Trump’s Iran move could affect the global economy

With President Trump making good on his threat to withdraw from the Iran nuclear deal, the business world has been grappling with what to do next. European companies like Total were considering whether to abandon investments — their governments promised unspecified protections — while Boeing and G.E. were also caught in the crossfire.

Meanwhile, oil continued to rise as the U.S. warned buyers to curb purchases from Iran within six months. (Saudi Arabia, Iran’s regional rival, said it would help stabilize markets.)

Peter Eavis’s take: While Mr. Trump’s foreign policies haven’t yet caused serious losses in the stock market, investors’ stoicism could face greater tests soon. Earnings growth for corporate America this year probably peaked in the first quarter. And since neither the E.U. nor China looks close to caving to Mr. Trump’s threats, global trade tensions look set to escalate.

The big question: How hard will the U.S. crack down on allies who don’t go along with sanctions — is this another trade fight?

Elsewhere in Iran news: Peter Thiel’s Palantir was helping monitor Iran. Some cybersecurity experts fear Iran will now hack more.

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Vodafone’s chief executive, Vittorio Colao.

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Sergio Perez/Reuters

Vodafone’s big deal reshapes European telecoms

In agreeing to buy Liberty Global’s cable networks in Germany and Eastern Europe for $22 billion, the British telecom giant is making the biggest move yet to consolidate the Continent’s internet industry. Vodafone won’t just be in wireless: It will offer high-speed internet and cable to 54 million customers.

Why this matters, according to analysts at JPMorgan Chase (via the FT):

We believe this event is a bellwether for the sector, and could potentially contribute toward a flurry of consolidation across Europe.

Not so fast: Expect Deutsche Telekom, now in Vodafone’s cross hairs, to fight the transaction.

Other telecom-adjacent news: Disney’s best quarterly results in two years were overshadowed by Comcast’s amassing a war chest to potentially challenge its Fox bid. James Murdoch won’t join Disney in any case. ESPN’s $750 million, five-year U.F.C. streaming deal shows that sports rights remain highly valuable. Sinclair Broadcasting may woo Sean Hannity and Jeanine Pirro. SoftBank’s latest earnings surpassed estimates because Sprint finally turned a quarterly profit.

The political flyaround

• Richard Cordray, the former head of the C.F.P.B., won the Democratic nomination for Ohio governor, while Don Blankenship, the former Massey Energy C.E.O., came in third in the Republican Senate primary in West Virginia. (NYT)

• The House voted to scrap an Obama-era rule meant to prevent discrimination by auto lenders. (NYT)

• Insurers in some markets plan huge price increases for Affordable Care Act plans, partly because of the repeal of the individual mandate. (Axios)

• The tax incentives that Racine, Wis., or Newark throw at Foxconn or Amazon are signs of desperation, Eduardo Porter writes. (NYT)

• Shareholder gun-control activists plan to speak at Sturm Ruger’s annual meeting today, but don’t expect much change. (NYT)

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Eric Schneiderman

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Frank Franklin Ii/Associated Press

Inside the race to replace Eric Schneiderman

New York lawmakers have been considering whether to replace the state’s attorney general, a leading critic of both President Trump and Harvey Weinstein, with a woman. Potential candidates include Letitia James, New York City’s public advocate, and Kathleen Rice, who challenged Mr. Schneiderman for the job. (Ben Lawsky, once New York’s top financial regulator, has also been mentioned.)

Whoever replaces Mr. Schneiderman must decide whether to continue his moves against Mr. Trump.

And Gov. Andrew Cuomo has appointed a special prosecutor — not the Manhattan district attorney, Cy Vance Jr. — to investigate Mr. Schneiderman.

Elsewhere in workplace misconduct: Five more Nike executives have left amid a furor over harassment and discrimination. A judge approved the sale of Weinstein Company assets to Lantern Capital. And Martin Sorrell, who left WPP after unspecified allegations, plans a new venture.

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Yuriko Nakao/Reuters

The deals flyaround

• Toshiba is reportedly worried that Chinese regulators won’t approve its $18 billion deal to sell its memory business to a group led by Bain Capital. (WSJ)

• Glassdoor, the recruiting site, agreed to sell itself to Japan’s Recruit for $1.2 billion. (Bloomberg)

• Keystone Foods, the main U.S. supplier of Chicken McNuggets, has reportedly drawn interest from Cargill, Tyson Foods and Fosun International. (Bloomberg)

• The billionaire Albert Frère sold his 6.6 percent stake in Burberry, sending shares in the fashion house down nearly 7 percent. (Bloomberg)

• Prince Alwaleed bin Talal and Ashkenazy Acquisition agreed to buy full control of the Plaza Hotel in New York for a reported $600 million. (WSJ)

• TPG Capital is reportedly in talks to invest in Anastasia Beverly Hills, a makeup company, at a $3 billion valuation. (CNBC)

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Chris Cox

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Peter Earl McCollough for The New York Times

What does Facebook’s reorganization signal?

The company’s biggest mainstream products outside its main app — Instagram, Messenger and WhatsApp — will now fall under Facebook’s chief product officer, Chris Cox. A group of emerging technologies, including a new blockchain-focused team, will be overseen by Mike Schroepfer, the chief tech officer. And ads, personnel, security and growth will be run by Javier Olivan, who has led growth efforts.

Though the move had been under consideration for a while, the Cambridge Analytica scandal sped up those efforts, according to the NYT. And it may streamline reporting lines and help keep Facebook nimble. But while it gives Mr. Cox in particular more prominence, it doesn’t fundamentally change things.

Elsewhere in Facebook news: The company will block political ads from groups outside Ireland ahead of that country’s referendum on abortion. And Jeffrey Zients, an Obama administration official, will replace the WhatsApp co-founder Jan Koum as a director.

Elsewhere in tech: Here’s a prototype Uber flying taxi. The surge in A.I. and cryptocurrencies has created a shortage of graphics chips. Japan’s industrial future might be stuff that makes stuff. The union-affiliated CtW Investment Group plans to campaign against several Tesla directors. What else tech giants can do to improve racial diversity.

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Sally Yates

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Nicholas Hunt/Getty Images

Revolving door

Sally Yates, the former acting attorney general, has returned to King & Spalding as a partner specializing in investigations. (King & Spalding)

• Jefferies has hired Peter Scheman from Goldman Sachs as a co-head of Americas industrial banking. (Reuters)

The speed read

• MoviePass, which goes through about $21.7 million a month, has $15.5 million left in cash. (Bloomberg)

• Deutsche Bank is reportedly considering cutting about a fifth of its U.S. staff. (Bloomberg)

• Picasso’s “Fillette à la Corbeille Fleurie,” once owned by David and Peggy Rockefeller, sold for $115 million at auction. And a New York judge rejected a lawsuit against the sale of Jean-Michel Basquiat’s “Flesh and Spirit.”

• The House of Lords amended Brexit legislation to demand that Britain stay in the European Economic Area. (BBC)

• Argentina has begun negotiating for credit from the I.M.F., still widely blamed there for a 2001 debt crisis. (NYT)

• Denver Post journalists came to Manhattan to protest the paper’s owner, the hedge fund Alden Global Capital. (NYT)

• Nordstrom Rack’s president flew to St. Louis to apologize to three black teens it had falsely accused of attempted theft. (NYT)

• Audi, Volkswagen’s luxury brand, found emissions-manipulating software in about 60,000 of its best-selling diesel vehicles. (WSJ)

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Common Sense: Amazon, the Elephant in the Antitrust Room


But Amazon is already vertically integrated — it creates content and distributes it over the internet. So are Netflix, Google (with YouTube) and Facebook (with its Watch feature and other offerings).

Which is why the so-called FANG companies (Facebook, Apple, Amazon, Netflix and Google) loomed large at the just-completed AT&T-Time Warner trial and may well figure in a Sprint-T-Mobile decision, even though none of the technology giants is directly involved or is a party to the litigation.

AT&T’s chief executive, Randall Stephenson, repeatedly referred to the technology giants during the trial, and made clear that they are what drove the merger. “The media and entertainment industry is going through some rather significant disruption,” he testified. “It’s coming from predominately folks in the tech sector.”

The Time Warner chief executive, Jeff Bewkes, made the same argument. “They have the content, the programming, and they have the technological capability of delivering it straight to you,” he said, adding that by “they” he meant the FANGs. “And they can communicate with you about that relationship and what to watch and how to value the program.”

In closing arguments this week, AT&T and Time Warner’s lead trial lawyer, Daniel Petrocelli, argued that a combined company could use the kind of data about its users that is routinely collected by the tech companies to enhance its programming and offer more targeted advertising. It could use the resulting higher revenues to reduce consumer prices by what he estimated to be $500 million per year.

The government’s lead lawyer, Craig Conrath, provided a counterargument: “The fact that AT&T may want to compete in some other market, that doesn’t give them a free pass to reduce competition in the pay-TV market,” he said. (The pay-TV market has traditionally included subscription TV providers, including cable and satellite, but not over-the-internet providers like Amazon and Netflix.)

AT&T sees Netflix, YouTube and Amazon as “the wolves at the door,” said Scott Hemphill, an antitrust expert at the New York University School of Law. “That’s the center of their theory.”

Time Warner’s content companies, like HBO, CNN and the Turner channels, “are just islands of content unmoored from the consumer,” he said.

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Although they aren’t parties to the government’s lawsuit, the biggest tech players, Facebook, Apple, Amazon, Netflix and Google, have cast a shadow at the AT&T-Time Warner trial.

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Jason Henry for The New York Times

Of course, the argument can be made that AT&T doesn’t need to buy a company like Time Warner — it could create a media content company of its own. That’s what Amazon and Netflix did, and both companies now outspend Time Warner on original programming.

But from a consumer standpoint, it doesn’t really matter. “The major tech platforms are becoming vertically integrated as they create their own content to push out over their distribution platforms,” Rich Greenfield of the investment firm BTIG wrote in a recent research note. “In turn, is it O.K. to be vertically integrated if you build your way in, but not to buy your way into it? What if instead of an acquisition of Time Warner, AT&T just spent $8 billion a year on content creation, the way Netflix is — would that be legal, but buying Time Warner is not?”

Whether the FANG companies compete in the same markets with AT&T and Time Warner is of more than academic interest — it could well influence Judge Richard Leon’s decision, which he said he would deliver no later than June 12.

If Judge Leon does take such an expanded view of the market, AT&T and Time Warner would most likely prevail. Even if he does find some violations, he could impose conditions on the merger rather than block it entirely, much as Comcast had to accept conditions on its purchase of NBC Universal.

Making a case that the proposed Sprint-T-Mobile merger would benefit consumers is far more difficult. The deal has drawn near-unanimous opposition from antitrust experts.

The Sprint-T-Mobile tie-up, in contrast to AT&T-Time Warner, would be a horizontal merger — a combination of direct competitors, that way reducing the number of players operating in the market. Those kinds of deals have traditionally received more antitrust scrutiny.

The government rejected the same merger less than four years ago, and the result was robust competition and lower prices for wireless services — exactly what antitrust regulators fervently hope for. Before that, in 2011, the government blocked a proposed merger of AT&T and T-Mobile.

So the question is whether the markets in which they compete have so changed since then that a merger now wouldn’t harm consumers.

The two companies will need to argue that the market is no longer just the four wireless providers, but now includes the technology giants and broadband and cable companies like Comcast. A merged Sprint and T-Mobile would command only a small share of such a vastly expanded market, and wouldn’t have the power to raise prices.

That may arguably be the case for video, which can now be streamed over wireless handsets, but not for voice calls and texting, at least not yet. Sprint and T-Mobile are talking up the potential for 5G technology to further blur the lines between traditional markets, but widespread use of 5G is still years in the future.

Courts and antitrust regulators “don’t usually consider merger defenses that depend on the existence of undeployed technology,” said Herbert Hovenkamp, an antitrust professor at the University of Pennsylvania Law School and the Wharton School. “Our crystal balls aren’t that good. We don’t have the power to gaze five years down the road, especially when it comes to fast-changing technology.”

While Professor Hovenkamp said he understood the argument AT&T and Time Warner were making about Amazon, “this whole generic idea that companies need to merge to go up against Amazon may play to a general audience, but if you take it to its logical conclusion, it could be used to validate nearly every merger.”

Perhaps T-Mobile and Sprint could hold off a few years, and return with evidence that they’re actually competing with the big tech companies rather than merely anticipating that competition.

Then again, given the vagaries of the Trump administration’s antitrust policies, “they may feel there’s no reason not to roll the dice now,” Mr. Hovenkamp said.

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Pretty in Pink: T-Mobile Chief Is the Colorful Outlier of Wireless


It’s a bold move, and one that illustrates Mr. Legere’s willingness to disrupt the status quo, even if he appears to have the weaker hand.

“He wants to take on the titans of AT&T and Verizon,” said Steve Grasso, director of institutional sales at Stuart Frankel and a market analyst for CNBC, who knows Mr. Legere socially. “He’s a pit bull.”

The combination of T-Mobile and Sprint has been years in the making, as both companies have sought to add scale and compete with their larger rivals. Yet the last time the companies formally attempted a deal, in 2014, it was Sprint that was planning to acquire T-Mobile.

That deal fell apart in the face of regulatory scrutiny. And since then, Mr. Legere has managed to build T-Mobile’s business by flouting convention. Under his leadership, T-Mobile began offering unlimited data, reduced prices and less stringent contract commitments.

When Mr. Legere took over in 2012, he was a very different executive, and T-Mobile was a very different company.

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Mr. Legere, left, has for years favored T-Mobile’s pink in his wardrobe. The Sprint chief executive Marcelo Claure added Sprint’s yellow to his outfit after their two companies announced an agreement to combine.

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Brendan Mcdermid/Reuters

T-Mobile was reeling from a failed attempt to sell itself to AT&T and struggling to distinguish itself from other low cost carriers like Sprint and Metro PCS. Mr. Legere, who spent 20 years working at AT&T, was a conventional, if ambitious, telecommunications executive.

“He was a finance guy,” said Dan Hesse, the former chief executive of Sprint, who was a mentor of Mr. Legere’s at AT&T. “The first time I saw John after he was named C.E.O. of T-Mobile, he was there in his suit.”

That soon changed. In 2013, Mr. Legere was onstage at an event in Las Vegas with Joe Torre, the former manager of the Yankees, promoting a partnership between T-Mobile and Major League Baseball.

When reporters asked him about the state of the wireless industry, he responded with a tirade about how badly customers were mistreated, and what he planned to do differently.

“It hit a chord,’’ he told Business Insider. “It was an action statement for me — I’m sure it sounded a bit arrogant — that I was going to fix this industry. From then on, I started to be the brand.”

Soon, Mr. Legere, now 59, had a whole new look. He grew his hair to his shoulders. He wore company T-shirts wherever he went. He pulled on custom pink Converse sneakers emblazoned with the T-Mobile logo. Before long, the finance guy looked more like an aging rock star.

At the same time, Mr. Legere embraced social media as a tool to promote himself and needle his adversaries. On Facebook, he started a cooking show, “Slow Cooker Sunday.” On YouTube, he called AT&T and Verizon “dumb and dumber.”

And on Twitter, he began hurling insults at competitors and tangling with rival C.E.O.s — including Sprint’s Marcelo Claure.

Twitter users ate it up, and Mr. Legere now has more than 5.6 million followers. Twitter even designed him a custom emoji.

Offline, Mr. Legere also cultivated an eccentric image. He is a regular visitor to T-Mobile stores and call centers, where he delivers boisterous pep talks. At company meetings, he offers employees $100 if they will ask him a question in the form of a song. And in the office, he is fond of riding around on a Segway.

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Mr. Legere taking a selfie before a T-Mobile event in Los Angeles in 2015. He has cultivated an eccentric image with boisterous pep talks to employees and the look of an aging rock star.

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Patrick T. Fallon/Bloomberg

“John has built a franchise around T-Mobile, which is in part his own,” said Stephen Scherr, head of the consumer and commercial banking division at Goldman Sachs, who has worked with Mr. Legere for more than a decade.

But Mr. Legere has paired showmanship with results. During his tenure, T-Mobile has added subscribers and increased revenues and profits. “He’s also a great operator,” Mr. Scherr said. “He runs a really good business.”

If Mr. Legere succeeds in finally joining T-Mobile and Sprint, the man who wanted to come off as the consummate outsider will have pulled off the ultimate insider move: a mega-merger to combine two rival companies and seize a greater share of a changing industry.

Regulators are certain to take a close look at the proposed combination, and there is a chance they could block the deal. However, there is reason to believe that they could view the union more favorably than they did four years ago.

Under President Trump, antitrust enforcement has become unpredictable. The Justice Department has mounted a court fight against the proposed combination of AT&T and Time Warner, which do not directly compete with one another. At the same time, there appears to be little resistance to the proposed acquisition of 21st Century Fox assets by Disney, a deal which would reduce competition in the film and television industry.

Mr. Legere, who is sensitive to public perceptions, seems to have anticipated this moment. In January 2017, after Mr. Trump’s election but before his inauguration, Mr. Legere was asked about his view of the regulatory environment under the Trump administration.

“It’s hard not to be excited,’’ he said, about regulatory views that would be “conducive to us significantly expanding our business.”

Mr. Legere added that he was hoping to meet Mr. Trump, and offered roundabout praise for the president’s famously antagonistic approach to social media, saying that Mr. Trump had replaced him as one of the “kings of mean on Twitter.”

Mr. Legere knew from had firsthand experience. In 2015, after Mr. Trump insulted the U.F.C. fighter Ronda Rousey on Twitter, Mr. Legere came to her defense. In the ensuing exchange, Mr. Legere said Mr. Trump wasn’t presidential material.

“I am an undecided Republican,” Mr. Legere wrote. “Well not totally undecided, I know what I don’t want :)”

But it seems that the prospect of a multibillion deal can heal old wounds.

Mr. Legere has since deleted that tweet about the president. And on Sunday, Mr. Legere was making the rounds with Mr. Claure of Sprint, another old social media sparring partner, to talk up their alliance.

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Future of AT&T-Time Warner Deal Is in Judge’s Hands


The six-week courtroom battle, featuring top executives and glimpses of trade secrets, has been one of the most closely watched antitrust cases in years. It has the potential to reshape the fast-changing telecom and entertainment landscape, which is facing new competition from tech companies.

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“The only lessening of competition that would occur is if this merger is blocked,” the lead lawyer for AT&T and Time Warner said. The Justice Department’s lead lawyer said, “There are hundreds of millions of dollars in harms to consumers.”

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Christian Hansen for The New York Times

The judge’s opinion could also help set the course for antitrust regulation in the years ahead. A victory for the companies could embolden executives to pursue new deals. A government win could slow future deal-making. On Sunday, T-Mobile and Sprint announced a merger to better compete against AT&T, in a deal that is also expected to face close antitrust scrutiny.

The case has centered on the question of harm to consumers and whether the merger would lead to price increases. The Justice Department presented several theories for why prices could go up hundreds of millions of dollars a year over all for cable subscribers. The core idea is that AT&T could threaten to withhold Time Warner content, like N.B.A. games and CNN, to extract more money from rival cable and satellite operators that wanted to run that “must-have” programming.

The call for selling off business lines showed how little the two sides have changed their strategy throughout the trial. The Justice Department, which had made the same demand before it sued in November, says only the divestitures would solve antitrust concerns because restrictions on business practices are rarely well enforced.

The government called witnesses from Dish’s Sling TV and from Cox, Charter and RCN, which provide cable and broadband service, to discuss their fears that AT&T, one of the nation’s largest satellite television providers, would use Time Warner’s programming as its weapon to hurt them. The Justice Department also relied heavily on an economic analysis by Carl Shapiro, a professor at the University of California, Berkeley, that estimated monthly cable bills could go up at least 27 cents.

“These witnesses came across the country to share their concerns,” said Craig Conrath, the Justice Department’s lead lawyer. He said the potential antitrust violations from the deal were not “theoretical.”

“There are hundreds of millions of dollars in harms to consumers,” Mr. Conrath said.

AT&T and Time Warner fiercely attacked those economic arguments during the trial and in the closing argument on Monday. Rivals are always motivated to argue against the activities of competitors, Mr. Petrocelli said.

The companies assailed the economic analysis of Mr. Shapiro, saying the data sets used were not complete and cherry-picked points.

“It is the centerpiece of this case,” Mr. Petrocelli said. But he said Mr. Shapiro’s arguments were “a complete failure of proof.”

The companies’ ability to raise doubts about the Justice Department’s case put the government in a challenging position, analysts said.

“The burden of proof is on the government, and the consensus view is that it would be an uphill battle for the government,” said Paul Glenchur, a senior telecommunications and cable analyst for Hedgeye Potomac Research.

For a merger focused on the future of technology, the trial felt stuck in time. A clock on the wall was frozen at 5:05. Cellphones and other device were forced off. Lawyers relied on boxes of files and binders wheeled in on library carts. Judge Leon, with bow ties and cuff links, was a stickler for order and schedules. He took careful notes by pencil.

Political questions have hovered over the trial, but have not been allowed in the courtroom. President Trump, a vocal critic of Time Warner’s CNN, said during the election campaign that the merger should be blocked. Makan Delrahim, the Justice Department’s head of antitrust, told the court in filings that the White House had not influenced his decision. Judge Leon, however, said he wanted to keep the trial focused on the merits of the deal.

The outcome of the trial may not be a simple yes or no on the merger. Judge Leon may push the parties to work out a settlement that would let the merger proceed with the promise of assigning a third-party arbitrator to resolve business disputes over Time Warner content. He could also, as the government suggested, demand that some parts of the merged company be sold before the deal is approved.

Whichever side loses is expected to appeal.

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DealBook Briefing: T-Mobile and Sprint Are Trying to Win Over Washington. Will They Succeed?


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Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Amie Tsang in London.

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Steven Mnuchin

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Elise Amendola/Associated Press

What’s on tap at the Milken Institute’s Global Conference

The gathering reliably draws leaders from Wall Street, Hollywood and sports to Los Angeles to discuss trade, health care, investing and more. This year’s conference will touch on hot topics like the trade tensions between the U.S. and China, the #MeToo movement, the planned talks with North Korea, and the backlash against Silicon Valley.

Attendees include Treasury Secretary Steven Mnuchin, Tim Sloan of Wells Fargo, Leon Black of Apollo Global Management and Eric Schmidt of Google.

Among today’s sessions are a survey of the markets that includes Mike Corbat of Citigroup, and a broad discussion of global affairs that includes David Solomon of Goldman Sachs. Make sure to check DealBook for highlights.

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German cars are one of the sticking points in talks on whether temporary exemptions to tariffs will be made permanent.

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Fabian Bimmer/Reuters

Are the U.S. and Europe are on the brink of a trade battle?

Come 12:01 a.m. Tuesday, temporary exemptions expire for President Trump’s imported steel tariffs. That includes the E.U., Canada and Brazil. And for the E.U. in particular, no further extension means that the political bloc “should be ready to decisively defend its interests within the framework of multilateral trade rules.” (Which sounds a lot like a trade war.)

Axios reports that key Trump economic officials are split on what to do: Steven Mnuchin and Larry Kudlow want to provide extensions to give negotiations more time, while hard-liners like Peter Navarro, a top trade adviser, are opposed to such a move.

Just in case, industrial companies are stocking up on steel and aluminum.

Elsewhere in trade: John Bolton, Mr. Trump’s new national security adviser, suggested that the U.S. won’t offer sanctions relief to North Korea until the country commits to nuclear disarmament. Labour lawmakers pressed the British government to more closely scrutinize whether I.P.O.s are being abused by Russian oligarchs.

The political flyaround

• Meet Richard Uihlein, the shipping supplies magnate who has become one of the most prolific Republican donors around. (WaPo)

• Richard Cordray, the former chief of the Consumer Financial Protection Bureau, is battling Dennis Kucinich for the mantle of more progressive Democrat in the race for Ohio’s governorship. (NYT)

• How the public relations executive Ronn Torossian became omnipresent in various story lines in the Trump universe. (Politico)

• Sajid Javid has replaced Amber Rudd as Britain’s home secretary. Ms. Rudd quit late yesterday, amid growing criticism over her handling of a damaging immigration crisis. (NYT)

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A bitcoin mine in Inner Mongolia.

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Giulia Marchi for The New York Times

“The blockchain will belong to the Russians.”

So declared Gigory Marshalko, an F.S.B. agent who lead Russia’s delegation to the International Standards Organization. It’s the latest sign of the interest of countries like China, Britain and the U.S. in blockchain, which lies at the heart of cryptocurrencies like Bitcoin — and in controlling the technology’s evolution.

The worries of some critics, according to Nathaniel Popper:

Countries that devote more resources to the process could successfully push their preferred cryptographic algorithms to be the standards, potentially creating so-called back doors that could be used in the future to spy on blockchain activity.

Elsewhere in tech: Amazon has asked candidates for its second headquarters how they plan to deal with increased traffic and housing demands. How using Tesla’s Autopilot cost a British man his driving privileges for 18 months. Tesla burns through about $6,400 every minute. Regulators are worried about how dependent banks are on the cloud.

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Neil Hall/Reuters

The deals flyaround

• J Sainsbury will buy Walmart’s Asda for about $10 billion to create Britain’s biggest grocery chain. The move is likely to face close scrutiny by Britain’s competition regulator. It’s also a sign of Walmart ceding ground internationally (except in India, where it’s pursuing a deal for the e-commerce company Flipkart).

• In pursuing acquisitions abroad, Japanese companies like Takeda Pharmaceuticals are fulfilling the promises of “Abenomics.” (FT)

• Marathon Petroleum is said to be set to buy Andeavor, a pipeline and refining company, for over $20 billion. (WSJ)

• A New York Supreme Court judge temporarily blocked Fujifilm’s merger with Xerox on Friday, after activist investors sued to block the deal. (Reuters)

• CVC Capital Partners has reportedly approached WPP about buying its Kantar market research unit. (FT)

• Prologis agreed to buy DCT Industrial Trust, an industrial real estate investment trust, for about $8.4 billion in a bet on growing demand for warehouses. (WSJ)

• Du Xiaoman Financial, a financial services business spun from Baidu, has drawn a $1.9 billion investment from TPG and the Carlyle Group. (WSJ)

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Paige Azavedo, one of the women who reported a Nike executive for berating them in front of peers.

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Kyle Johnson for The New York Times

Nike shows the cost of harassment on business

The exodus of executives amid revelations of a toxic corporate culture have shaken up the athletic giant. But critics interviewed by the NYT said that systemic mistreatment of women also cost Nike traction in a huge product category: women’s products, the fastest-growing part of the market.

More from Julie Creswell, Kevin Draper and Rachel Abrams:

While Nike executives have told investors that the women’s category was a crucial part of its revenue growth strategy, former employees said it was not given the budget it needed to roll out the sophisticated marketing campaigns that were the hallmark of traditional men’s sports, like basketball.

Elsewhere in harassment news: Steve Wynn has sued a former Wynn Resorts employee for defamation, accusing him of spreading false allegations of sexual misconduct in news reports. Tom Brokaw angrily denied harassment allegations against him in an email to confidants.

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Hamad I Mohammed/Reuters

Revolving door

• Aramco added Lynn Laverty Elsenhans, the former Sunoco C.E.O., to its board as its first female director. (WSJ)

The speed read

• Samsung plans to drastically simplify the conglomerate’s ownership structure, loosening ties with the Lee family. (WSJ)

• A fire broke out over the weekend in a 33-floor building in Baku, Azerbaijan, that was once a Trump-branded tower. (NYT)

• Bob Dylan has a new gig: making whiskey. (NYT)

• Noble Group’s fight for survival has moved to the courts, with firms like Goldman Sachs and Deutsche Bank listed as defendants in a legal battle with the dissident shareholder Goldilocks Investment. (Bloomberg)

• Owning real estate in limited liability companies protects property owners, but it has also turned out to enable problematic behavior, like laundering money or being a bad landlord. (NYT)

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You can find live updates throughout the day at nytimes.com/dealbook.

We’d love your feedback. Please email thoughts and suggestions to bizday@nytimes.com.

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Scott Pruitt Before the E.P.A.: Fancy Homes, a Shell Company and Friends With Money


According to real estate records, the 2003 purchase of the house for $375,000 came at a steep discount of about $100,000 from what Ms. Lindsey had paid a year earlier — a shortfall picked up by her employer, the telecom giant SBC Oklahoma.

SBC, previously known as Southwestern Bell and later as AT&T, had been lobbying lawmakers in the early 2000s on a range of matters, including a deregulation bill that would allow it to raise rates and a separate regulatory effort to reopen a case involving allegations that it had bribed local officials a decade earlier. Mr. Pruitt sided with the company on both matters, state records show.

In 2005, the shell company — Capitol House L.L.C. — sold the property for $95,000 more than it had paid. While shell companies are legal, they often obscure the people who have an interest in them, and none of Mr. Pruitt’s financial disclosure filings in Oklahoma mentioned the company or the proceeds — a potential violation of the state’s ethics rules.

The Oklahoma City deal, which has not been previously reported, was one of several instances in which Mr. Pruitt appeared to have benefited from his relationships with Mr. Kelly and Mr. Wagner while in state politics.

During his eight years as a Republican state senator, Mr. Pruitt also upgraded his family residence in suburban Tulsa from a small ranch-style home to a lakefront property in a gated community. In addition, he bought a sizable stake in a minor league baseball team, and took a second job at Mr. Wagner’s corporate law firm. Mr. Kelly’s bank, SpiritBank, would be there for much of it — providing financing for Mr. Pruitt’s Tulsa home and his stake in the baseball team, as well as the mortgage for the Oklahoma City house.

Mr. Pruitt’s interactions with SBC also show that his blurring of lines with lobbyists has roots in his Oklahoma years. One of the issues at the E.P.A. that has gotten Mr. Pruitt in trouble with government watchdogs involved his renting a room in Washington for $50 a night from the wife of an energy lobbyist who has had business in front of the agency.

Lobbyists and others in Oklahoma state politics who encountered Mr. Pruitt recalled him as a tough competitor who always had his eye on a higher office. Some called him a “Boy Scout” who was stingy with his money, while others said privately that he had exuded a sense of entitlement — that rules did not apply to him.

David Walters, a former Oklahoma governor and Democrat, described Mr. Pruitt as someone who looked out for himself over the needs of constituents, especially during his years as attorney general.

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“For those ego-minded politicians, it would be pretty cool to have this house close to the capitol,” said Marsha Lindsey, the lobbyist who previously owned the home.

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Brandon Thibodeaux for The New York Times

“I was disappointed to find him operating in a hyperpartisan manner and seemingly representing corporate interests over Oklahoma citizens,” Mr. Walters said.

In response to questions submitted by The New York Times about Mr. Pruitt’s finances in Oklahoma, an E.P.A. spokeswoman said Mr. Pruitt’s business dealings with Mr. Kelly and Mr. Wagner “were ethical” and his stake in the shell company “was a simple real estate investment.”

“Mr. Wagner and Mr. Kelly left high-profile positions in law and banking in Oklahoma, to serve in the administration,” the spokeswoman said in an email. “They are dedicated E.P.A. employees who have earned the respect and admiration of E.P.A. career employees across the country. They serve the country professionally, and transparently — and are committed to ensuring the programs they work on are successful.”

Rubbing Shoulders in Oklahoma City

The house on Northeast 17th Street in the historic Lincoln Terrace neighborhood here was built in 1928 and has a grand staircase and an arched doorway. Ms. Lindsey said one of the home’s attractions was that it looked out on the white dome of the State Capitol.

Mr. Pruitt stayed in the house for parts of 2004 and 2005, neighbors said. The residence put him within walking distance of his job — legislators worked only part of the year, mainly from February through May — and also near SBC Bricktown Ballpark, which was home to his baseball team, the RedHawks, now known as the Dodgers.

Jim Dunlap, then a Republican leader in the State Senate, said he rented a room from Mr. Pruitt above the garage. He was under the impression that Mr. Pruitt had bought the home as an investment with a group of lawyers, he said.

“This was a place where you slept and had dinner,” Mr. Dunlap said. “It was all above board.”

Oklahoma campaign disclosures filed by Mr. Pruitt at the time made no mention of the home purchase or the rental agreement with Mr. Dunlap. Real estate records show that the transfer of ownership from Ms. Lindsey, the lobbyist, was rather complicated and involved multiple steps — none of them with any public reference to Mr. Pruitt, though the E.P.A. spokeswoman confirmed that he was one of five co-owners of the shell company.

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The shell company was registered to Kenneth Wagner, an E.P.A. aide and law school friend of Mr. Pruitt’s.

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Maryland Department of Natural Resources

When asked whether such a disclosure would be necessary, the executive director of the Oklahoma Ethics Commission, Ashley Kemp, referred The Times to a 2005 ethics manual. The rules required disclosing “every business or entity” in which an official held securities valued at $5,000 or more. Securities were defined to include “documents that represent a share in a company.”

The E.P.A. spokeswoman did not respond to questions about Mr. Pruitt’s disclosure filings in Oklahoma.

In November 2003, Ms. Lindsey signed the deed of the home over to a relocation company SBC had hired to handle her move and severance. She was reimbursed for close to $475,000, the amount she had paid for the house in 2002, as her contract required, she said.

The next day, the relocation company signed the property over to Jon Jiles, a health care executive who has a range of business interests and made contributions to Mr. Pruitt’s political campaigns. Records show no mortgage was involved, and Mr. Jiles paid $375,000 in cash.

That December, Mr. Wagner officially registered the Capitol House shell company with the Oklahoma authorities, and Mr. Jiles transferred the deed to the newly formed company. Mr. Jiles was listed as a manager of Capitol House, and Mr. Wagner as the registered agent.

The following month, SpiritBank, where Mr. Kelly was chief executive, approved a mortgage in the amount of $420,000 in the name of Capital House L.L.C., another spelling of the entity.

Ms. Lindsey, the former lobbyist, said she had been focused on her impending move to Dallas, and had deferred the sale and other arrangements to the company’s relocation agent. She said she had known nothing about the involvement of the shell company and did not recall the final sale price. “The bottom line is — it is unusual to take a $100,000 loss on the house” after being on the market for just a few weeks, she said.

Asked about the drop in price, AT&T said in a statement that two independent firms appraised the house and that its average value came to $390,000. The valuation and sale were handled by the relocation business, the company added.

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The State Capitol in Oklahoma City. Lobbyists and others in state politics recalled Mr. Pruitt as a tough competitor who always had his eye on a higher office.

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Brett Deering for The New York Times

Mr. Jiles, in an email exchange, said he became involved because Mr. Wagner presented the house as “a good deal” and a convenient place to stay. He said he had no other business interactions with Mr. Pruitt.

“A cash transaction was most likely used because sellers will often sell for less if it’s a cash deal rather than a finance deal,” Mr. Jiles said. “And I was likely the one most able to do a cash deal at the time.”

In a statement, SpiritBank’s chief executive and president, Rick Harper, said the bank was legally prohibited from commenting on specific loans, but added, “SpiritBank is confident these loans were made in accordance with applicable laws and regulations.”

The deal came at a time when SBC was a major employer in the state and a lobbying force in Oklahoma City.

As president of SBC Oklahoma and a registered lobbyist, Ms. Lindsey said she entertained lawmakers at her home. Moreover, SBC was known to court lawmakers with gifts, including tickets for Mr. Pruitt and others to watch Oklahoma State University play in the men’s basketball Final Four in 2004, The Oklahoman reported at the time.

“It gives us a chance to try to build a relationship with a lawmaker or an official,” a spokesman, Andy Morgan, told the newspaper. “Events like that offer a much more relaxed atmosphere.” He added: “We’re one of the state’s largest employers. It’s important that lawmakers are informed about issues affecting our company.”

The prospect of another investigation into a longstanding bribery case had especially rattled SBC. In the early 1990s, an SBC lobbyist had been found guilty in federal court of paying a bribe to a public utilities commissioner to sway a vote that allowed the company to keep federal tax savings rather than disburse them to its ratepayers. But the vote itself was never overturned, and in 2003, another commissioner proposed reopening the investigation, claiming SBC still owed billions of dollars in refunds. The commissioner dropped his plans for an investigation after state legislators, and the attorney general at the time, Drew Edmondson, pushed back against the effort.

Later, when Mr. Pruitt became attorney general, he helped quash another attempt to revisit the SBC bribery case. In a March 2011 letter, Mr. Pruitt’s office warned that any commissioner who reopened the investigation could face prosecution for the misuse of public funds.

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Mr. Pruitt with Albert Kelly, a top aide at the E.P.A. Mr. Kelly, previously chief executive of SpiritBank, was recently barred from working in the finance industry.

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M. Scott Mahaskey/Politico

A Run of Good Fortune

Around the same time Mr. Pruitt invested in the house in Oklahoma City, he had finished a big business deal that involved Mr. Kelly, Mr. Wagner and a campaign donor who ran a large staffing company.

A baseball player in college, Mr. Pruitt bought an approximately 25 percent stake in the Oklahoma City RedHawks and became the team’s managing partner, making him a highly visible spokesman for the local team. Mr. Wagner also purchased a small stake, and Mr. Kelly’s bank provided financing for the deal, as first reported by The Intercept, which also disclosed the bank’s loans for one of Mr. Pruitt’s suburban Tulsa homes.

Mr. Pruitt’s main partner was Robert Funk, the business magnate who ran Express Services, the staffing firm. The sale price was not disclosed, but news reports suggested they paid over $11.5 million, with Mr. Funk carrying the biggest load.

Two months after the deal closed in November 2003, Mr. Funk attended a news conference where Mr. Pruitt announced legislation that would make it harder for Oklahoma workers to claim certain kinds of injury compensation, something that would benefit companies like Mr. Funk’s.

The relationship continued, with Mr. Funk serving as campaign chairman during Mr. Pruitt’s unsuccessful bid for lieutenant governor in 2006. Mr. Pruitt announced his candidacy outside the ballpark and cited his efforts on workers’ compensation among his achievements.

After losing the election, Mr. Pruitt took a break from public office, but continued his business relationship with Mr. Funk, proposing a $200 million town center on a parking lot next to the ballpark. The City Council balked at the project, but Mr. Pruitt’s ambitions and prominence grew.

Back at home in Tulsa, Mr. Pruitt worked with Mr. Wagner’s firm, which had offices in SpiritBank’s building. As a corporate lawyer, Mr. Wagner frequently represented the bank, but also represented a used car dealership run by Mr. Pruitt’s family.

In 2004, Mr. Pruitt upgraded from a modest one-story home where his family had lived for over a decade to a $605,000 lakeside house a mile away. SpiritBank financed the home. The E.P.A. spokeswoman said Mr. Pruitt was able to afford the house “due to his sale of personal assets.”

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Mr. Pruitt with Robert Funk in 2003. They invested together in the minor league baseball team the Oklahoma City RedHawks.

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The Oklahoman

In September 2010, as Mr. Pruitt was on his way to successfully winning his race for attorney general, he and Mr. Funk announced that they had sold the RedHawks. They did not disclose the price, but Forbes estimated its value a few years later at $21 million. SpiritBank, where Mr. Kelly was still chief executive, “played a key role in facilitating” the deal by providing acquisition financing, a news release said.

As a candidate for attorney general, Mr. Pruitt was not required to disclose the extent of his assets and how much money he made, but there were hints that his finances had improved since his early days as a state senator. Early into his term, he and his wife paid $1.18 million for a 5,518-square-foot Cotswold-style stone residence, featured in a book on Tulsa homes. It has five fireplaces, a library and a guest apartment.

The Attorney General Years

During his six years as attorney general, Mr. Pruitt blazed a path of spending that holds new meaning now that his E.P.A. expenditures are the subject of investigations and growing political outrage.

Mr. Pruitt moved the attorney general’s outpost in Tulsa to a prime suite in the Bank of America tower, an almost $12,000-a-month space that quadrupled the annual rent. He required his staff to regularly drive him between Tulsa and Oklahoma City, according to several people familiar with his time as attorney general.

And he channeled state contracts to Mr. Wagner’s law firm, which was already doing business with the state.

From 2011 to 2017, state records show, the attorney general’s office awarded more than $600,000 in contracts to Mr. Wagner’s Tulsa-based law firm, Latham, Wagner Steele & Lehman — greatly increasing work with the firm, which had gotten a total of about $100,000 over the four years before that. These contracts are not competitively bid. The additional expenditures reflected an approach, contentious even among some fellow Republicans, to hire private lawyers for state business, often for cases challenging federal regulations.

“He said that these people had special expertise that his agency didn’t have,” said Paul Wesselhoft, a Republican former state representative. “He has an army of lawyers with expertise. He didn’t have to spend that extra tax money to hire another law firm. It didn’t seem frugal.”

Mr. Pruitt used the Bank of America building as a base for his growing political ambitions. Oklahoma Strong Leadership, a political action committee he formed in 2015 to help finance fellow Republicans’ campaigns, operated out of the building. The group shared a suite with another PAC tied to Mr. Pruitt, Liberty 2.0, as well as his campaign office.

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U.S. Said to Investigate AT&T and Verizon Over Wireless Collusion Claim


The investigation highlights a push by the Justice Department’s antitrust chief, Makan Delrahim, to crack down on the opaque world of intellectual property, or I.P., standards. He has said the Justice Department will scrutinize potential coordination in standards-setting organizations that can hurt competition.

“In the context of antitrust and I.P., we will be inclined to investigate and enforce when we see evidence of collusive conduct undertaken for the purpose of fixing prices, or excluding particular competitors or products,” Mr. Delrahim said in a speech this month at a conference in Washington. He previously warned of the potential for “cartel-like behavior” by competitors that got together with standards-setting organizations.

At the same time, the Justice Department is suing AT&T to block its $85.4 billion merger with Time Warner. Mr. Delrahim has said the deal will hurt competition and lead to higher prices for cable customers. AT&T and Time Warner have strongly disputed the claims in a federal trial that is expected to end this month.

Currently, most mobile phones use SIM cards, which contain unique identifying information about a user and are inserted into the devices so the phones can function. People typically have to buy a new SIM card when changing carriers.

The eSIM technology, which was introduced in early 2016, is embedded in mobile phones and other devices so that people do not need SIM cards anymore.

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The investigation may also include major American carriers other than AT&T and Verizon, a person with knowledge of the inquiry said.

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Brandon Thibodeaux for The New York Times

The eSIM technology is supported by gadget makers including Apple, Google and Microsoft, as well as several wireless carriers globally and in the United States. The Apple Watch 3, Google Pixel 2 smartphone and Microsoft Surface all have eSIM abilities, for example. The technology would make it easier for people to use local carriers when traveling internationally and would free up storage space in devices to use for other technologies like bigger processors and batteries.

The push by the major carriers to restrict the flexibility of eSIM runs counter to a movement in which consumers were gaining more flexibility to move from carrier to carrier. In late 2013, under pressure by the Federal Communications Commission, the wireless industry agreed to let people take devices off any particular network without penalty once the devices were fully paid for.

After the formal complaints against AT&T and Verizon were filed, several device makers and other wireless companies voiced similar concerns to the agency about the carriers’ actions around eSIM, four people familiar with the investigation said. The investigation may also include other major American carriers, another person said.

“The actions would limit choice for consumers and harm competition,” said Ferras Vinh, a policy expert at the Center for Democracy and Technology.

In a private meeting of a task force called G.S.M.A. North America this year, AT&T and Verizon pushed for the ability to lock phones to their networks, bypassing the purpose of eSIM technology, said Harold Feld, a senior vice president of Public Knowledge, a nonprofit consumer group, who was briefed on the meeting. Verizon has said it needed to be able to lock down phones to prevent theft and fraud.

“There is a constant problem with industry standards-setting organizations that on the one hand allow the industry to come together for the purpose of efficiency but can be very anticompetitive and operate in secrecy,” Mr. Feld said.

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