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Big Tech Was Their Enemy, Until Partisanship Fractured the Battle Plans

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WASHINGTON — For all the divisions in Washington, one issue that had united Republicans and Democrats in recent years was their animus toward the power of the biggest tech companies.

That bipartisanship was supposed to come together this week in a landmark House report that caps a 15-month investigation into the practices of Amazon, Apple, Facebook and Google. The report was set to feature recommendations from lawmakers to rein in the companies, including the most sweeping changes to U.S. antitrust laws in half a century.

But over the past few days, support for the recommendations has split largely along party lines, said five people familiar with the talks, who were not authorized to speak publicly because the discussions are private.

On Monday, the Democratic staff on the House Judiciary Committee delayed the report’s release because they were unable to gain Republican support. Representative Jim Jordan of Ohio, the top Republican on the committee, has asked his colleagues not to endorse the Democratic-led report, said two people with knowledge of the discussions. And Representative Ken Buck, a Republican of Colorado, has circulated a separate report — titled “The Third Way” — that pushes back against some of the Democrats’ legislative recommendations, according to a copy obtained by The New York Times.

The Republicans’ chief objections to the report are that some of the legislative proposals against the tech giants could hamper other businesses and impede economic growth, said four people with knowledge of the situation. Several Republicans were also frustrated that the report didn’t address claims of anti-conservative bias from the tech platforms. Mr. Buck said in “The Third Way” that some of the recommendations were “a nonstarter for conservatives.”

The partisan bickering has cast a cloud over what would be Congress’s most aggressive act to curtail the power of technology companies since Microsoft stood trial on antitrust claims two decades ago. And while the House report may still be released this week, it is likely to lose some of its force if Democrats, led by Representative David Cicilline of Rhode Island, the chairman of the antitrust subcommittee, are unable to gain many signatures from Republican members.

The turmoil gives Amazon, Apple, Facebook and Google a reprieve, even if only temporarily. The House committee was expected to accuse them of rising to the top of the global economy by gobbling up nascent rivals, bullying businesses that needed them to reach users and reducing competition across the economy, said three people familiar with the report.

The report was also expected to kick off other actions against the tech giants. The Justice Department has been working to file an antitrust complaint against Google, followed by separate suits against the internet search giant from state attorneys general.

Mr. Cicilline declined to comment. Russell Dye, a spokesman for Mr. Jordan, also declined to comment.

“I agree with Chairman Cicilline that big tech has acted anti-competitively,” Mr. Buck said in a statement. But, he added, “with a problem this significant, I’m not surprised that there’s a variety of legislative options.”

The House Judiciary Committee began its investigation into the four tech giants in June 2019 with bipartisan support. The committee interviewed hundreds of rivals and business clients of the platforms, such as third-party sellers on Amazon and developers who distribute their apps through Apple’s App Store.

In July, the chief executives of the tech behemoths — Jeff Bezos of Amazon, Tim Cook of Apple, Mark Zuckerberg of Facebook and Sundar Pichai of Google — testified in a hearing with the committee to defend their companies. Republican and Democratic lawmakers directed sharp questions at the chief executives, repeatedly interrupting and talking over them.

But the bipartisanship has eroded. Mr. Jordan, who became the committee’s top Republican this year, has been publicly skeptical of the investigation. He spent much of his time in the July hearing attacking the chief executives for their platforms’ alleged bias against conservatives, straying from the session’s stated focus of antitrust laws and Silicon Valley’s market power.

Last week, the committee’s Democratic staff made its draft report available to all members of the committee who wanted to review it, said a person with knowledge of the proceedings. The lawmakers were not allowed to take a copy of the draft with them, the person said.

On Friday, staff received new evidence about Facebook’s 2012 acquisition of Instagram to include in the report, which also delayed it, according to a person familiar with the investigation.

Mr. Jordan now has no plans to sign on to the Democrats’ report, one person said. His reluctance to endorse the report may cause other Republicans on the committee to withhold their signatures.

Mr. Buck shared his separate report, “The Third Way,” in recent days. It supports several recommendations made by the committee’s Democrats, including giving more resources to federal antitrust agencies and making limited legislative changes to empower enforcement of antitrust laws. But it pushes back against other proposals, like not allowing companies online to compete on platforms they operate, calling it a “thinly veiled call to break up Big Tech firms,” according to the draft obtained by The Times.

Mr. Jordan’s office was not involved in the drafting process for Mr. Buck’s “Third Way,” said a person familiar with the matter. The document was reported earlier by Politico.

Antitrust laws last underwent a major alteration nearly 50 years ago, when new rules were enacted around merger reviews. The Hart-Scott-Rodino Act of 1976 required companies to notify the Federal Trade Commission and Justice Department — the main antitrust enforcement agencies — of large mergers. Those laws are now regarded by tech’s critics as insufficient in accounting for the companies’ power to quickly expand across new markets and kill off young competitors.

William Kovacic, former chairman of the Federal Trade Commission, said the House Judiciary Committee’s antitrust report “has the potential to be the most influential study of its kind since the 1970s.” He added, “It could lead to really big changes, but any changes would come slowly.”

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Two Companies Restart Virus Trials in U.S. After Safety Pauses

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Late-stage coronavirus vaccine trials run by AstraZeneca and Johnson & Johnson have resumed in the United States after the companies said on Friday that serious illnesses in a few volunteers appeared not to be related to the vaccines.

Federal health regulators gave AstraZeneca the green light after a six-week pause, concluding there was no evidence that the experimental vaccine had directly caused the neurological side effects reported in two participants. The AstraZeneca news was first reported by The Wall Street Journal.

Johnson & Johnson said that its trial, which had been on pause for 11 days, would restart after learning that a “serious medical event” in one study volunteer had “no clear cause.” In an interview, the company’s chief scientific officer, Dr. Paul Stoffels, said that no one at the company knew if the volunteer had received the placebo or the vaccine, in order to preserve the integrity of the trial.

An F.D.A. spokesperson declined to comment on the trial restarts.

Dr. Luciana Borio, a former acting chief scientist at the Food and Drug Administration, welcomed the announcements, citing the urgent need for multiple vaccines to remain in the race for a product that could protect the global population from the coronavirus, which has already killed more than a million people worldwide.

“The demand for safe and effective Covid vaccines exceeds any single manufacturer’s production capacity,” Dr. Borio said. “We really need several in the field.”

AstraZeneca and Johnson & Johnson are two of the four companies now in late-stage clinical trials in the United States for experimental coronavirus vaccines. Both companies are using adenoviruses, which typically cause harmless colds. The adenovirus is engineered so that it can chauffeur a coronavirus gene into human cells.

Their two high-profile competitors, Moderna and Pfizer — also in advanced trials — are instead using a technology based on genetic material known as mRNA. Delivered into human cells, the mRNA prompts the production of coronavirus proteins, triggering an immune response.

AstraZeneca moved swiftly into clinical trials, enrolling thousands of volunteers for its vaccine trials around the world in countries including Brazil, India, South Africa and Britain. A large, late-stage trial kicked off in the United States at the end of August. But all of the trials were halted days later, on Sept. 6. A volunteer who had received the vaccine in the United Kingdom reportedly experienced symptoms of transverse myelitis, or inflammation of the spinal cord, triggering a global pause to the company’s efforts.

The incident drew some concern among experts, who noted that a similar adverse neurological event, reported months ago, had occurred in another vaccinated volunteer. Although this earlier event prompted its own pause in AstraZeneca’s trials, an independent safety board ultimately determined it was unrelated to the vaccine, allowing studies to resume.

After the second AstraZeneca halt in September, trials abroad rapidly restarted in most countries. But the American hiatus persisted, with few details released as to why.

“I think this points to the rigor of the F.D.A. review process — they don’t want to rush things when it comes to safety and it takes time to gather the data, review the evidence and come to a decision,” said Mark Slifka, a vaccine expert at Oregon Health and Science University in Portland.

The six-week timeline might sound slow in the context of the pandemic. But it suggests the agency “made this a high priority for review and discussion but without cutting corners,” Dr. Slifka said.

Johnson & Johnson started its Phase 3 trial on 60,000 volunteers in September. On Oct. 12, the company announced its own trial pause, citing concerns that an illness had happened in one of its volunteers as well. The company has kept mostly quiet about the details of the incident.

“There are many possible factors that could have caused the event,” the company said. “Based on the information gathered to date and the input of independent experts, the company has found no evidence that the vaccine candidate caused the event.”

Adverse events are not uncommon in large-scale vaccine trials. In some cases, they are caused by a vaccine. But investigations usually reveal that they’re coincidental — a simple matter of chance.

Now that the trials are resuming, Dr. Borio said, changes may need to be made “to augment safety measures,” at least in the case of AstraZeneca, which, for instance, will likely need to monitor its volunteers for milder neurological symptoms, now that there’s precedent.

Based on recent events, “it seems there was no safety concern” with the two neurological episodes, said Dr. Maricar Malinis, an infectious disease expert at Yale University. The trial’s restart, she emphasized, should be considered good news and an indication that regulators did their due diligence.

Before the pauses, both companies had indicated they would likely submit their vaccines for emergency authorization from the F.D.A. within a few months’ time — perhaps even by the year’s end. It remains unclear how much these plans have now been thrown into flux in the wake of trial delays. Results from AstraZeneca’s late-stage trials are still expected later this year, according to the statement.

Dr. Stoffels of Johnson & Johnson said that the pause would not push the company’s timetable much. “We have the ability to catch up,” he said. “But if there is a delay, it’s in the one or two week time frame.”

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In Trump Donations, Big Tax Write-Offs and Claims That Don’t Always Add Up

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In President Trump’s telling, he is a committed philanthropist with strong ties to many charities. “If you don’t give back, you’re never ever going to be fulfilled in life,” he wrote in “Trump 101: The Way to Success,” published at the height of his “Apprentice” fame.

And according to his tax records, he has given back at least $130 million since 2005, his second year as a reality TV star.

But the long-hidden tax records, obtained by The New York Times, show that Mr. Trump did not have to reach into his wallet for most of that giving. The vast bulk of his charitable tax deductions, $119.3 million worth, came from simply agreeing not to develop land — in several cases, after he had shelved development plans.

Three of the agreements involved what are known as conservation easements — a maneuver, popular among wealthy Americans, that typically allows a landowner to keep a property’s title and receive a tax deduction equal to its appraised value. In the fourth land deal, Mr. Trump donated property for a state park.

The New York attorney general is investigating whether the appraisals on two of Mr. Trump’s easement donations were improperly inflated to win larger tax breaks, according to court filings.

Mr. Trump’s pronouncements of philanthropic largess have been broadly discredited by reporting, most notably in The Washington Post, that found he had exaggerated, or simply never made, an array of claimed contributions. His own charitable foundation shut down in 2018 amid allegations of self-dealing to benefit Mr. Trump, his businesses and his campaign.

But the tax data examined by The Times lends new authority and far greater precision to those findings. The records, encompassing his reported philanthropic activity through 2017, reveal not only its exact dimensions; they show that much of his charity has come when he was under duress — facing damage to his reputation or big tax bills in years of high income.

Of the $7.5 million in business and personal cash contributions reported to the Internal Revenue Service since 2005, more than 40 percent — $3.2 million — came starting in 2015, when Mr. Trump’s philanthropy fell under scrutiny after he announced his White House bid. In 2017, his first year in office, he declared $1.9 million in cash gifts. In 2014, by contrast, he contributed $81,499.

And his first two land-easement donations were made in what the tax records show was a period of significant taxable income — 2005 and 2006, prime time for his reality TV fame.

The president’s Trump Organization biography says he is “involved with numerous civic and charitable organizations.” When he announced his campaign in 2015, he said he had given more than $102 million to charity over the previous five years.

While it is possible that he chose not to report some of his giving, his tax records for 2010 to 2014 reflect far less than he claimed — $735,238 in cash and $26.8 million in land easements and other noncash gifts. Six months into the campaign, in December 2015, another easement, valued at $21.1 million, was completed.

In response to questions from The Times, Amanda Miller, a spokeswoman for the Trump Organization, said: “President Trump gives money privately. It’s impossible to know how much he’s given over the years.”

The tax information analyzed by The Times includes annual totals for business and individual giving but lists only certain corporate donations.

The single largest cash donation he reported for his businesses, made to his own foundation, was the $400,000 he received in 2011 for being roasted on Comedy Central. In 2014, his Virginia winery contributed a glass sculpture valued at $73,600 to a small historical society in Pennsylvania. And in 2016, another one of his companies gave $30,000 to the American Hotel & Lodging Education Foundation.

ImageMr. Trump donated $400,000 from a Comedy Central special to his foundation, which later shut down after accusations of self-dealing.
Credit…Andrew H. Walker/Getty Images

Even without the details of Mr. Trump’s individual giving, The Times was able to identify public philanthropic promises that appear either to have been exaggerated or to have never materialized. In each case, the size of his pledge exceeded what he told the I.R.S. he had given in a particular year.

In 2009, for example, he agreed to rent his Seven Springs estate in Westchester County, N.Y., to the Libyan dictator Col. Muammar el-Qaddafi, who hoped to stay in a tent on the grounds during a meeting of the United Nations General Assembly.

Though the plans fell apart when local residents objected, Colonel Qaddafi made a payment of $150,000, which Mr. Trump told CNN in 2011 that he had given to charity. His 2009 tax returns, however, reported only $22,796 in business and personal cash gifts.

In 2015, Mr. Trump promised to donate the earnings from his book “Crippled America: How to Make America Great Again.’’

“The profits of my book? I am giving them away to a lot of different — including the vets,” he said at a news conference.

Credit…Todd Heisler/The New York Times

The tax records show that Waxman Leavell Literary Agency, which represented Mr. Trump’s book, made two payments to him in 2015 and 2016, totaling roughly $4.5 million. In those years, Mr. Trump reported giving a total of $1.3 million in cash to charity.

Many wealthy individuals create their own foundations, often as a way to have greater control over their philanthropy. While Mr. Trump’s foundation, started in 1988, gave millions to charity before shutting down in 2018, most of it was other people’s money. Mr. Trump himself donated $5.4 million to the foundation, with the last contribution in 2008, according to the organization’s tax filings.

The vast bulk of the president’s philanthropy, though, has been the four land deals with conservation groups or the government.

His first easement donation, which yielded a tax deduction of $39.1 million in 2005, involved a parcel of land at his golf club in Bedminster, N.J.

Credit…Seth Wenig/Associated Press

The next year, he donated 436 acres of land for a state park in Westchester and Putnam Counties in New York after development plans ran up against tough regulatory restrictions. While the precise value of the easement is not clear, he reported noncash charitable contributions of $34 million that year.

Mr. Trump had bought the property in the 1990s for $2 million, according to numerous published reports. Today the property is overgrown and has few facilities or visitors.

The two most recent easement deductions are being examined by the New York attorney general, Letitia James, part of a broader investigation into whether the Trump Organization inflated the value of assets to get loans and tax benefits.

In 2014, after abandoning plans to develop an 11.5-acre property being used as a driving range at his Los Angeles golf club, Mr. Trump received a $25.1 million tax deduction for an easement agreement with a land conservancy. Few details of the inquiry into the deal have emerged.

Court papers shed more light on the other easement under investigation.

In late 2015, Mr. Trump got a $21.1 million tax break for 158.6 acres of land at the Seven Springs estate, after years of unsuccessful attempts to build a golf course on it.

Credit…Tony Cenicola/The New York Times

The attorney general’s court filing says that after Mr. Trump abandoned plans to develop Seven Springs, he asked Sheri Dillon, a tax lawyer at Morgan Lewis who had advised him in the past, to have the land appraised.

Ms. Dillon told Cushman & Wakefield, the firm that did the appraisal, that “the client blew up at her,” and she leaned on the appraisers to take steps that would push the value up, according to the court filing.

Several weeks ago, after months of delays, Mr. Trump’s son Eric gave a deposition in the case.

Mr. Trump has denied any wrongdoing. “President Trump was not involved in the appraisals mentioned, which were done by the most respected appraisal and brokerage company in the country,” said Ms. Miller, the Trump Organization spokeswoman.

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Guitar Center Prepares for Possible Bankruptcy

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Guitar Center has begun to prepare for a potential bankruptcy filing that could come as soon as next month, people with knowledge of the situation said. The retailer missed an interest payment of roughly $45 million earlier this month, setting off a 30-day grace period that could end in default, the people said.

The country’s largest retailer of musical instruments has reached out to creditors to discuss a plan that would involve the company filing for bankruptcy this year and emerging from it in early 2021, said the people, who requested anonymity because the talks are confidential. A spokesperson for Guitar Center did not respond to a request for comment.

It’s still possible that Guitar Center could avert bankruptcy, as it did earlier this year when it resolved a skipped interest payment in April with a distressed debt exchange. That led to a downgrade by the credit ratings agency Moody’s in May, which noted that the transaction did not “fundamentally change” the company’s “untenable” capital structure. It was the third cut in the company’s credit rating this year.

Guitar Center, whose roots go back to 1959, has nearly 300 stores nationwide. It is owned by private equity firm Ares Management, which acquired a majority stake in 2014 by converting some of the debt it owned in the retailer into equity. The retailer generated about $2.3 billion in sales its most recent fiscal year, according to Moody’s. It has about $1.3 billion in debt. Ares declined to comment.

For years, the company has struggled with the shift to online shopping and debt built up from a leveraged buyout by Bain Capital in 2007. There had been signs of a turnaround — it notched 10 consecutive quarters of sales growth through the end of February, one of the sources said — before the pandemic hit its business hard, as it has for much of the store-based retail industry.

If Guitar Center files for bankruptcy, it would follow the path of other retailers including J. Crew, Neiman Marcus and J.C. Penney, which were unable to withstand the impact of the downturn during the pandemic. Some, like Neiman Marcus, have already emerged from bankruptcy protection.

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