DealBook Briefing: Facebook Co-Founder Helps Make a Case for Breaking It Up

DealBook Briefing: Facebook Co-Founder Helps Make a Case for Breaking It Up

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Chris Hughes helped create the company when he was Mark Zuckerberg’s roommate at Harvard, and collected millions for his work. Now he’s working with academics to create arguments for dismantling the tech giant, Steve Lohr of the NYT reports.

Mr. Hughes has participated in meetings with regulators like the F.T.C., the Justice Department and state attorneys general. In those meetings, he has joined Scott Hemphill of New York University and Tim Wu of Columbia in laying out an antitrust case against Facebook.

Their case: Facebook has used acquisitions over the years — including purchases of Instagram and WhatsApp — to neutralize potential rivals, charge advertisers higher prices and create worse experiences for users.

Mr. Hughes could provide investigators with leads to current and former company employees and competitors to interview or subpoena, Mr. Lohr writes. It isn’t clear what role he’s formally providing.

The argument could be compelling, antitrust experts say, since it focuses on specific situations instead of a broad review of Facebook’s behavior. That said, it would require regulators to show actual economic harm.

Why this matters: “Mr. Hughes’s involvement stands out because few founders have gone on to argue for the dismantling of their company,” Mr. Lohr writes. (Mr. Hughes has already written an NYT Op-Ed calling for more regulation of the tech giant.)

More: Australia plans stricter regulations for Facebook and Google. And while Mr. Zuckerberg warned about the business risks of tougher government oversight, investors apparently don’t believe him.


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


But the prospects for success are unclear. The first Vision Fund scored wins with huge investments in Uber, Didi Chuxing and other tech businesses. But other big technology-focused funds have emerged as competitors, and some start-ups that SoftBank has invested in have not emerged as game-changers.

For years, Mr. Epstein’s only notable client was Mr. Wexner, the retail magnate who controls L Brands, the parent company of Victoria’s Secret. But the NYT describes the ways that the financier took advantage of the billionaire’s wealth to finance a lavish lifestyle — one now alleged to have included sexual abuse of underage girls.

Their relationship began in the late 1980s. Mr. Epstein had a thin résumé — a college dropout whose work experience was teaching high school math and briefly working at Bear Stearns — but he persuaded Mr. Wexner to let him manage his money.

Mr. Epstein began to dominate his client’s life. He oversaw the construction of a 316-foot yacht for Mr. Wexner, for instance, and served as an M.C. at parties for the retail executive.

Crucially, Mr. Wexner gave his financial adviser power of attorney in 1991, giving Mr. Epstein the ability to borrow money, hire people, and buy and sell properties on his behalf.

“That document gave Mr. Epstein unmatched authority over Mr. Wexner’s financial affairs — and it corresponded to a period in which Mr. Epstein came to control or own valuable assets that previously belonged to Mr. Wexner or his companies,” the NYT reports. That included Mr. Wexner’s Manhattan mansion and a Boeing 727 previously owned by L Brands.

Mr. Epstein may have earned over $200 million from the relationship, the WSJ reported, citing estimates by people familiar with the arrangement.

It took years for Mr. Wexner to sever ties to the financier. Only in 2008 — after the authorities charged Mr. Epstein with molesting a minor, and well after a model accused him of assaulting her under the guise of being a Victoria’s Secret talent scout — did the relationship officially end.

More: Mr. Epstein’s ties to President Bill Clinton reportedly began as early as 1993, and included visits to the White House and meetings with administration officials.

China is reviving talks to create a free-trade zone across Asia and lower tariffs on huge swaths of goods from around the world. It’s all an effort to find new markets for its products as it battles with the U.S., Keith Bradsher of the NYT reports.

• “China this week formally restarted its efforts to create a free-trade zone across the Asia-Pacific region, with an unlikely goal of striking a deal by November,” Mr. Bradsher writes.

• “China has also been in long-running talks with Japan and South Korea on a trilateral trade partnership,” though a trade battle between Tokyo and Seoul makes that unlikely.

• And Beijing “is unilaterally reducing its own tariffs on a broad range of goods from all over the world, even as it puts higher retaliatory tariffs on American-made goods.”

• “At stake is the health of the Chinese economy,” Mr. Bradsher writes. “Last week China reported that its growth slowed to its most sluggish pace in nearly three decades, in part because the trade war with the Trump administration has begun to hit its crucial export sector.”

The deal is a bet against President Trump’s efforts to roll back emissions standards to 37 miles per gallon. The administration is trying to force California to comply with its forthcoming federal standards, but the state has pledged to take the fight to the Supreme Court if necessary.

Other companies may be poised to join the pact, despite opposition from Washington. An unnamed executive at a big automaker told the NYT that the deal offered enough concessions to make it attractive. And Margo Oge, a former E.P.A. official, said she expected G.M. and Toyota to sign on.

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