Articles from January 29, 2023

How these Black female entrepreneurs make money pursuing passions
Comment

When Anima Iris CEO and MBA student Wilglory Tanjong began making luxury handbags in February 2020, she did not expect Beyoncé to be wearing one of her purses a year and a half later.

Anima Iris handbags are made by a team of seven artisans in Senegal. Tanjong told CNBC MakeIt that in her plans for the company’s future, “most importantly, I want us to really remain made in Africa.”

Tanjong is not the only one whose side hustle has become a lucrative business. Helena Faustin, who runs the popular food blog That Nurse Can Cook, makes $117,000 a year cooking Jamaican food out of her home’s kitchen.

As a first-generation Jamaican American, Faustin said she was “surrounded by a plethora of Caribbean influence.” She developed a passion for cooking from a young age and learned how to cook by watching her mother.

Her advice for aspiring entrepreneurs? “If you have a talent, harness that talent, learn as much as you can from it, and monetize that thing.”

Domonique Brown, an artist and founder of DomoINK, monetized her talent by creating a $267,000 art, apparel and home decor business. Having grown up not seeing imagery of other Black women in stores, Brown intends for the brand to be “a representation of those who are always underrepresented.”

“You can bring your own seat to the table,” she said, “or you can make your own table.”

Like Brown, Paulana Lamonier turned her passion into a business designed with Black Americans in mind. Lamonier said her business, Black People Will Swim, is a “call to action” to make the swimming space more inclusive. Its mission is “to smash the stereotype that Black people don’t swim.”

Black People Will Swim conducts swimming lessons on Long Island and is trying to raise enough funds to build its own swimming facility. Lamonier hopes Black People Will Swim will allow “Black and brown people to see themselves and see that it’s possible.”

Watch the video to learn more about how these Black female entrepreneurs are building wealth.

Sign up now: Get smarter about your money and career with our weekly newsletter

Don’t miss:

https://www.cnbc.com/2022/11/13/professional-truck-driver-clarissa-rankin-brings-in-144k-a-year.html

Bringing in $144,000 a year as a female truck driver

The companies where workers are most likely to become founders
Comment

You always have to start somewhere. In the case of many a successful startup founder, that means working a day job before they’re ready to strike out and start their own new business.

So, where are the best places to work for future founders? Multiple big-name companies top the list, according to a new report from small-business lending platform OnDeck, which examined large U.S. companies with high rates of former employees launching their own businesses.

Those big names include like management consulting giant Bain & Company, financial services behemoth Goldman Sachs and even Twitter, the social media platform recently acquired by Elon Musk.

Boston-based Bain tops the list with 8.13% of former employees going on to become founders, the highest of any company in OnDeck’s analysis. Notable alumni of Bain & Co. who went on to entrepreneurial success include Zynga founder Mark Pincus and Intuit co-founder Scott Cook.

Here’s the top five:

  1. Bain & Company: 8.13% of former employees have gone on to found their own business.
  2. Oliver Wyman: 7.93%
  3. McKinsey & Company: 7.75%
  4. Strategy&: 7.44%
  5. Universal Music Group: 7.39%

To determine its rankings, OnDeck started with a list of the 100 biggest employers in each state, based on data from job-search website Zippia. OnDeck then analyzed the LinkedIn profiles of more than 228,000 employees who had previously worked at those companies across the U.S. to determine how many had gone on to launch their own businesses as either a sole founder or co-founder.

The top four companies on OnDeck’s list all hail from the consulting world, which isn’t surprising: Consultants at those companies are often tasked with helping clients hone their management and business strategies.

Should they ultimately decide to put those skills to work for their own startup, their connections to investors and other deep-pocketed clients can give them a leg up when accessing the funding necessary to launch and grow a new venture.

Twitter is the list’s highest-ranked tech firm, with 6.17% of former employees going on to launch their own business. Having a big-name tech company on your resume is one way to get the attention of potential investors, and you’ll meet other talented tech workers who you can potentially hire down the road.

Some of the tech workers who left — whether by layoff or choice — amid Musk’s takeover of Twitter are already launching microblogging rivals, like Spill. The company’s history of producing entrepreneurs even goes back to its own founders: Jack Dorsey launched payments platform Square and Evan Williams founded Medium, both after Twitter.

If you work on Wall Street, you can connect with potential investors who could back future ventures. This was the case for billionaire Jeff Bezos, who left his job at Wall Street hedge fund D.E. Shaw in 1994 to move to Seattle and launch an e-commerce business that became Amazon, OnDeck noted.

Goldman Sachs leads the way among financial services companies on OnDeck’s rankings, with 5.92% of former employees becoming founders. Those notable alumni include private equity billionaire Robert Smith, the founder and CEO of Vista Equity Partners, and Coinbase co-founder Fred Ehrsam.

By focusing primarily on large companies, OnDeck’s report doesn’t provide a comprehensive list. Working at a startup before launching one yourself can offer invaluable experience in what it takes to get a new business off the ground.

Indeed, entrepreneurs like Y Combinator’s Michael Seibel advise aspiring founders to first work for other startups in their industry of interest before striking out on their own.

Sign up now: Get smarter about your money and career with our weekly newsletter

Don’t miss:

The 3 biggest reasons startups failed in 2022, according to a poll of almost 500 founders

Startup funding has tanked over the past year—and recession fears are to blame

I quit my $35K job to grow my side hustle — now it brings in $141 million a year

Americans plan to spend nearly $26 billion this Valentine’s Day
Comment

They say “love don’t cost a thing,” but Americans seem ready to spend cash to show their affection this Valentine’s Day.

Whether it’s on chocolate hearts or romantic dinners, Americans are planning to spend $25.9 billion on Valentine’s Day this year, according to an annual survey from the National Retail Federation. That number is up from $23.9 billion last year and marks the second-highest year for spending since NRF began tracking in 2004.

Just over half of respondents say they plan to celebrate Valentine’s Day, the survey found, and not all of them will spend money to do so. But if you are planning to show your affection with a gift or experience, “never go into debt for love,” financial expert Pattie Ehsaei tells CNBC Make It.

Better known as TikTok’s “Duchess of Decorum,” Ehsaei uses her more than 20 years of experience in legal and financial services to deliver advice on money, careers and social etiquette. Not going into debt for love is her “No. 1 financial rule for relationships.” 

Here’s a look at how much consumers are planning to spend this Valentine’s Day, and what it will go toward.

Millennials plan to spend around $300 on Valentine’s Day

If money could buy love, millennials might have the most successful romantic relationships. Those ages 35 to 44 plan to spend an average of $336 to celebrate Valentine’s Day, the most of any adult age group surveyed. 

They’re followed by consumers ages 25 to 34 who plan to spend an average of $238. Both groups are well above the $193 overall average among individuals who will spend money on Valentine’s Day.

A lot has changed over the years, but classics such as chocolate still appear to be in fashion, with candy and greeting cards leading the rankings for what consumers will purchase for the holiday.

Of those who say they’re spending money, here’s what they’ll be buying:

  • Candy: 57%
  • Greeting cards: 40%
  • Flowers: 37%
  • An evening out: 32%
  • Jewelry: 21%
  • Gift cards: 20%
  • Clothing: 19%

Gifts your partner will love and your budget will appreciate

Some consumers may be buying more than just chocolate and flowers. Valentine’s Day was the most popular day to get engaged in 2020, according to wedding planning website Wedding Wire.

When it comes to shopping for an engagement ring, though, you’ll definitely want to plan ahead. The average engagement ring cost $6,000 in 2021, according to The Knot 2021 Jewelry and Engagement Study.

Couples planning to get engaged should have an honest conversation about finances before someone pops the question, Ehsaei says.

“This conversation is to ensure that both parties are on the same page around spending expectations and limitations, including the engagement, which eliminates awkwardness and guessing,” she says.

And if things are tight, Ehsaei encourages looking for cheaper alternatives.

“Don’t buy a natural diamond engagement ring,” she says, recommending lab-grown diamonds or moissanite as budget-friendly alternatives that will still impress your partner. “That money can be utilized for so many other things, like a down payment for a home, paying off debt or savings.”

There are cheaper alternatives for other gifts as well. Instead of sending fresh roses, try dried ones, Ehsaei says. “Dry roses cost less than half [the price of fresh roses] and last for months, sometimes years.”

If you’re making a dinner reservation, check out coupon sites such as Groupon for Valentine’s Day deals.

When you’re shopping for your significant other, “you don’t have to spend a lot of money to be romantic,” Ehsaei says. If you plan to exchange gifts with your partner, try deciding on a budget together, she suggests.

That way, “no one ‘overspends’ and [it takes] the anxiety out of how big a gift should be.”

Sign up now: Get smarter about your money and career with our weekly newsletter

Don’t miss: Here’s the No. 1 phrase used in successful relationships, say psychologists who studied 40,000 couples

How a 26-year-old making $130,000 a year in Philadelphia spends his money

These are the most welcoming places in the world for 2023
Comment

This year’s annual Booking.com Traveler Review Awards included a list of the most welcoming places in the world for 2023.

To rank the regions, Booking.com used a pool of over 240 million verified customer reviews from their site.

Destinations were chosen based on factors like the number of reviews for friendly hospitality, and the amount of rental properties and hotels in the region.

This year’s most welcoming places in the world span five continents.

Most welcoming places in the world 2023

  • La Rioja, Spain
  • Epirus, Greece
  • Oberösterreich, Austria
  • County Down, U.K.
  • Mures, Romania
  • Marlborough, New Zealand
  • Ninh Binh, Vietnam
  • Limon, Costa Rica
  • Newfoundland & Labrador, Canada
  • North Dakota, U.S.

One of the most welcoming places in the world is La Rioja, Spain. It lies in the north of the country and is one of Spain’s biggest and best wine destinations, according to Lonely Planet.

La Rioja is also known for its religious architecture, including the UNESCO World Heritage Suso and Yuso monasteries in San Millán de la Cogolla.

The only U.S. destination to make the list is North Dakota. According to the U.S. News and World Report, the midwestern state ranks no. 14 in the overall rankings of the best states in the United States.

North Dakota is known for its Badlands, an area of the state that is now part of the 70,000-acre Theodore Roosevelt National Park and is famous for the rough terrain that makes it a “bad land to travel,” according to the National Park Service.

Limon, Costa Rica also made this year’s list. Costa Rica is one of the happiest places in the world, according to the World Happiness Report.

Limon is considered to be one of the most pristine and lush regions of Costa Rica. Despite this, the city remains one of the least traveled regions in the country.

Sign up now: Get smarter about your money and career with our weekly newsletter

Don’t miss:

Japan has the No. 1 most powerful passport in the world for 2023—see where the U.S. lands on the list

Lisbon and Mexico City are on travelers’ wish lists for 2023: These are the top 10 trending vacation destinations

Death of Tyre Nichols revives calls in Congress for policing reforms
Comment

Protesters rally against the fatal police assault of Tyre Nichols, outside of the Coleman A. Young Municipal Center in Detroit, Michigan, on January 27, 2023. – The US city of Memphis released January 27, 2023 graphic video footage depicting the fatal police assault of a 29-year-old Black man, as cities nationwide braced for a night of protests against police brutality. Five Memphis officers, also all Black, were charged with second-degree murder in the beating of Tyre Nichols, who died in hospital on January 10 three days after being stopped on suspicion of reckless driving. (Photo by JEFF KOWALSKY / AFP) (Photo by JEFF KOWALSKY/AFP via Getty Images)

Jeff Kowalsky | Afp | Getty Images

After officials in Memphis released graphic footage Friday depicting the death of Tyre Nichols, a 29-year-old Black man, at the hands of police, members of Congress said Sunday they need to revive their effort to pass substantial police reforms.

The five officers involved in the deadly encounter were charged with murder, kidnapping, assault and other charges on Thursday. All five officers were dismissed from the police department, and the specialized policing unit they were a part of was disbanded Saturday.

Police reform talks fell apart in Congress in 2021 after lawmakers failed to strike a bipartisan deal. Senate Judiciary Committee Chair Dick Durbin, D-Ill., said Sunday that while passing those reforms would be “the right starting point,” it is ultimately “not enough.”

Durbin said that while he knows law enforcement officers risk their lives for Americans every day, many of these same officers are engaging in “horrible conduct” that needs to be changed for the better.

“What we saw on the streets of Memphis was just inhumane, horrible,” he told ABC’s “This Week.” “I don’t know what created this rage in these police officers that they would congratulate themselves for beating a man to death. But that is literally what happened.”

Durbin added that he would not rule out a federal investigation into the entire Memphis Police Department following Nichols’ death.

Rep. Jim Jordan, R-Ohio, said he thinks that while there is reform that can happen, no amount of legislature could account for the “evil” and “lack of respect for human life” that he saw in the footage. He said he does not believe those five officers represent the vast majority of law enforcement.

“We’ll look at what we think makes sense to help this, to make sure they have the proper training, but no amount of training is going to change what we saw in that video,” Jordan told NBC’s “Meet the Press” Sunday.

Some policing reforms were already in place in Memphis at the time of Nichols’ death, including a requirement for officers to de-escalate situations where they saw others using excessive force. Ben Crump, the attorney representing Nichols’ family, said Sunday he thinks the culture of policing is to blame, as it has normalized the use of extreme force.

“Just as much those officers are responsible for the death of Tyre Nichols, so is the implicit bias police culture that exists in America,” Crump told ABC’s “This Week.”

Crump said he thinks this culture will only begin to change if federal police reforms are implemented. Without them, he said, “We’re going to continue to see these hashtags proliferate.”

While reforms and training can have an impact, another effective deterrent to this behavior is when officers around the country see what will happen to them if they engage in this kind of violence, said Jason Armstrong, former Ferguson, Missouri, police chief. Armstrong led the Ferguson police force after it was overhauled following the fatal shooting of Michael Brown in 2014.

Armstrong said since the five officers were fired and charged, officers are seeing that this behavior is not going to be tolerated. He said for some officers, it doesn’t matter if they are wearing body cameras or if there are witnesses, they are still going to resort to violence and that culture is what needs to be rooted out.

“Unfortunately, violence is what was natural for these individuals in this instance,” Armstrong told ABC’s “This Week” Sunday. “And that’s where we have to do a better job as law enforcement leaders, is identifying these individuals that are inside our organizations and our police departments and getting them out of the profession before something like this happens.”

Side hustle selling printables can bring in thousands a month in passive income
Comment

There are many ways to make money on the side. You can sell your creative services like video editing or rapping. You can work at conferences. You can tutor. These are pretty social hustles, though, and if you’re more of an introvert, spending your off-time interacting with others can be draining.

Luckily, there are plenty of side gigs that don’t call for much human interaction. One of them is selling printable items people buy online and download then print on their own. Etsy is rife with printable sellers and is one possible site on which to sell them.

Jen Glantz, founder of Bridesmaid for Hire and the creator of the Monday Pick-Me-Up and Odd Jobs newsletter, recommends perusing the site to get some ideas of what you can make. Type “printables” into an Etsy search, for example, and you’ll find ADHD planners, wedding planners, habit trackers, budget trackers, to-do lists, chore charts for kids, letter sound worksheets, bill trackers, vision boards, mindfulness journals and more.

Plus, “downloads are things that you don’t have to be super talented to make,” says Glantz. Once you have an idea, start building them in free design sites like Canva.com, with graphic design tools like Adobe Illustrator or even with Microsoft Excel. Some can be as simple as a Word document with the heading “Perfect Vacation Ideas.” Then turn them into PDFs and start building your shop.

Rachel Jiminez opened her Etsy store in 2019 and sells hundreds of printables ranging from Christmas scavenger hunts to digital planners. In 2021, she brought in nearly $160,000 in passive income from it.

To figure out what to sell, Jiminez recommends using tactics like best SEO practices. She herself will come up with an idea then will use sites like trends.google.com and trends.pinterest.com to see how many people are searching for it or what they’re looking for around it. In the case of her Christmas products, she looked up Elf on a Shelf to see if people are looking for Elf on a Shelf ideas, a letter from the elf, etc.

She also recommends considering your own interests, events in your life or the seasons. February might be a good time for Valentine’s ideas, April might be a good month for Easter-based ideas, and so on. Think of the communities you’re part of, too, and consider how you can serve them. Are you a fitness instructor who knows fellow instructors might be looking for exercise regime ideas? Are you a babysitter who knows others might need game ideas for their kids?

Jiminez perfected her Etsy-selling skills after taking Julie Berninger’s course about opening an Etsy store for printables. Berninger opened her store in 2017 and now sells bachelorette party activity lists, among other products. She herself brings in about $1,000 per month in passive income from the site.

One thing to keep in mind if you’re diving in: Etsy seller fees. It costs 20 cents for each item you list, plus a 6.5% transaction fee on every sale you make.

With the right market, though, you could stand to make money. “I bought media kit templates off there. I’ve bought Instagram archive circles off of there,” says Glantz. “Things that I could have created on my own but I liked them and I bought them.”

Check out:

9 in-demand side hustles that can be done from home—and how much they pay

These 4 lucrative side hustles dominated 2022—and they require less than 20 hours of work per week

Earn extra cash with these 11 lucrative side hustles, says millionaire—some can pay up to $3,000/month

Sign up now: Get smarter about your money and career with our weekly newsletter

How your side hustles could actually be hurting you

Here are 8 things rich people do differently that make them ‘ultra wealthy’
Comment

It took me 20 years of trial and error before I achieved a multimillion-dollar net worth. Now, at 64, I draw income from the 18 companies I started and the 12,000 apartment units I own.

But I wish I had known sooner how ultra wealthy people think about money. I’ve built relationships with many millionaires over the course of my investing career, and have spent years observing their habits.

Here’s what they do differently:

1. They don’t diversify their investments right away.

It’s generally good practice to diversify your portfolio by investing in a mix of different stocks, funds and other investments.

But as the wealthiest people build their net worth, they often go all-in on their own projects, and then diversify as they start earning more.

Elon Musk, for example, bet the $22 million he made selling his first company, an online business directory called Zip2, entirely on his next business, an online banking service called X.com.

After X.com merged with PayPal, he made $180 million off PayPal’s sale to eBay. That gave him the cash to invest in Tesla, SpaceX and other ventures.

2. They know that debt is for businesses, not people.

As I built my net worth, I did not accumulate debt on non-essential purchases like designer clothes or luxurious homes.

Even if I could afford the bills, I didn’t want to waste money paying interest. Instead, I wanted to put everything I was earning into generating more money. For me, that putting my income into my business.

I also paid cash for my homes, and I have never accumulated interest on a credit card.

In some cases, if you’re trying to build a business, debt can help you earn money by giving you access to income-generating assets sooner rather than later.

3. Homeownership isn’t always their first investment.

You might think that buying a primary residence is The American Dream, but it is rarely what you see the wealthy go for first.

In my opinion, homeownership doesn’t always see the same return on investment as other places you can put your money. I own three homes, but I didn’t purchase them until I was able to buy them in cash.

4. Instead, cash-flow real estate is the place to protect and grow money.

On the flip side, cash-flow real estate — commercial real estate where you are making a monthly profit off of rent after your mortgage payments, property taxes and maintenance — is a great way to grow your money.

You can make passive income off ownership of these properties, and it is often easier to sell them than a primary residence. When you sell a primary residence, you have to find a buyer who can envision themselves living there. When you sell a profitable rental property, you only have to find a buyer who wants to make a profit.

5. They always buy in bulk.

The wealthy are willing to spend more on each purchase in order to get a better price per unit and save time spent on repeating useless activities. 

This can apply to a business — the rich may contract to buy bulk supplies or equipment — or to you personal life. When I can, I buy everything without an expiration date in bulk.

6. They invest in their network.

I have never had someone invest in me that didn’t know me. And most of the real estate I own today was purchased from sellers who picked me over other qualified buyers because we had existing relationships, and they had confidence in my ability to close.

The more someone gets to know you, the more they will trust you and believe in your talents and skills. This leads to better opportunities, speedier decision-making and higher margins.

So invest time and resources into making and maintaining the right connections.  

7. They are never content.

One of my friends, a serial CEO, has worked with some of the wealthiest people in the world.

I once asked him what they had in common, and he said: “None of them were ever satisfied with what they had already accomplished, but instead focused on the next thing that could be accomplished.”

The wealthy are never satisfied with their previous achievements. They believe they can always achieve more. This helps them think big about future business ideas, inventions, investments and other wealth multipliers.

8. They don’t waste time trying to do everything themselves.

The wealthy know that time is the only truly scarce resource. You can’t buy more of it.

So they maximize their time by letting go of the need for control every small detail of their business or portfolio, and learn to effectively outsource and delegate to good, smart people who will trade their time for money.

Grant Cardone is the CEO of Cardone Capital, bestselling author of “The 10X Rule” and founder of The 10X Movement and The 10X Growth Conference. He owns and operates seven privately held companies and an over $4 billion portfolio of multifamily projects. Follow him on Twitter @GrantCardone.

Don’t miss:

I quit my $35K job to grow my side hustle — now it brings in $141 million a year

3 predictions if Supreme Court rules against student loan forgiveness
Comment

Bloomberg Creative | Bloomberg Creative Photos | Getty Images

‘Historically large’ hike in delinquencies and defaults

U.S. Department of Education Undersecretary James Kvaal said in a recent court filing that if the government isn’t allowed to provide debt relief, there could be a “historically large increase in the amount of federal student loan delinquency and defaults as a result of the COVID-19 pandemic.”

Despite student loan borrowers being offered forbearances during previous natural disasters, Kvaal wrote, default rates still skyrocketed when payments resumed.

The pandemic-era relief policy pausing federal student loan payments has been in effect since March 2020, and payments aren’t scheduled to resume until after the litigation over the president’s plan is resolved or at the end of August — whichever comes sooner.

″[T]he one-time student loan debt relief program was intended to avoid” skyrocketing default rates, Kvaal added.

President Biden: 22 million people have signed on for student debt relief

The borrowers most in jeopardy of defaulting are those for whom Biden’s student loan forgiveness plan would have wiped out their balance entirely, Kvaal said.

The administration estimated its policy would do so for around 18 million people.

“These student loan borrowers had the reasonable expectation and belief that they would not have to make additional payments on their federal student loans,” Kvaal said. “This belief may well stop them from making payments even if the Department is prevented from effectuating debt relief.”

‘Severe’ political consequences

Astra Taylor

Source: Isabella De Maddalena

Restarting federal student loan payments without delivering forgiveness would lead to “severe” political consequences for Democrats, said Astra Taylor, co-founder of the Debt Collective, a union for debtors.

“[Biden] will be launching his 2024 reelection campaign as America’s debt collector,” she said.

If the “ultra-conservative U.S. Supreme Court” blocks the president’s plan, Taylor said, Biden must explore other legal ways to deliver relief to borrowers.

She pointed to the possibility of the president using a different law to justify his plan, such as the Higher Education Act of 1965, which states that the Education Department can “enforce, pay, compromise, waive, or release any right, title, claim, lien” related to federal student loans.

Currently, the Biden administration is using the Heroes Act of 2003 to argue that it has the authority to cancel student debt.

That law allows the Education Department to make modifications to federal student loan programs during national emergencies. Critics accuse the administration of using the coronavirus pandemic to fulfill a campaign promise and say the relief is not targeted to those who have suffered financially because of Covid.

Another path the president could take would be to try to indefinitely extend the pandemic-era pause on federal student loan payments, said higher education expert Mark Kantrowitz.

That move, Kantrowitz said, is “more likely to survive legal challenge.”

‘A disastrous blow to Black Americans’

The country’s $1.7 trillion student loan crisis has hit Black Americans especially hard.

Black student loan borrowers owe $7,400 more, on average, at graduation than their white peers, a Brookings Institution report found.

That inequity only gets worse with time: Black college students owe, on average, more than $52,000 four years after graduation, compared with around $28,000 for the average white graduate.

If Biden’s student loan forgiveness fell through, it would be a “disastrous blow to Black Americans,” said Wisdom Cole, national director of the youth and college division at the NAACP.

“The racial wealth gap will widen, and the vicious cycle of economic inequality will continue,” Cole said. “If our leaders truly believe that Black lives matter, they should understand that failure is not an option.”

DOJ’s antitrust case against Google is ambitious but risky
Comment

CEO of Alphabet and Google Sundar Pichai in Warsaw, Poland on March 29, 2022.

Mateusz Wlodarczyk | Nurphoto | Getty Images

The Department of Justice’s latest challenge to Google’s tech empire is an ambitious swing at the company with the potential to rearrange the digital advertising market. But alongside the possibility of great reward comes significant risk in seeking to push the boundaries of antitrust law.

“DOJ is going big or going home here,” said Daniel Francis, who teaches antitrust at NYU School of Law and previously worked as deputy director of the Federal Trade Commission’s Bureau of Competition, where he worked on the agency’s monopoly case against Facebook.

The DOJ’s antitrust chief Jonathan Kanter has indicated he’s comfortable with taking risks, often saying in public remarks that it’s important to bring cases that seek to challenge current conventions in antitrust law. He said he prefers more permanent remedies like breakups compared to promises to change behavior. That sentiment comes through in the DOJ’s request in its latest lawsuit for the court to force Google to spin off parts of its ad business.

Antitrust experts say the Justice Department paints a compelling story about the ways Google allegedly used acquisitions and exclusionary strategies to fend off rivals and maintain monopoly power in the digital advertising space. It’s one that, if the government gets its way, would break apart a business that’s generated more than $50 billion in revenue for Google in the last quarter, potentially opening up an entire market in which Google is currently one of the most important players.

But, they warn, the government will face significant challenges in proving its case in a court system that progressive antitrust enforcers and many lawmakers believe has taken on a myopic view of the scope of antitrust law, especially when it comes to digital markets.

“If they prove the violations they allege, they’re going to get a remedy that’s going to shake up the market,” said Doug Melamed, a scholar-in-residence at Stanford Law School who served at the Antitrust Division, including as acting assistant attorney general, from 1996-2001 during the landmark case against Microsoft. “But it’s not obvious they’re going to win this case.”

Challenges and strengths

Experts interviewed for this article said the DOJ will face the challenge of charting relatively underexplored areas of antitrust law in proving to the court that Google’s conduct violated the law and harmed competition without benefitting consumers. Though that’s a tall order, it could come with a huge upside if the agency succeeds, possibly expanding the scope of antitrust law for digital monopoly cases to come.

“All antitrust cases are an uphill battle for plaintiffs, thanks to 40 years of case law,” said Rebecca Haw Allensworth, an antitrust professor at Vanderbilt Law School. “This one’s no exception.”

But, Allensworth added, the government’s challenges may be different than those in many other antitrust cases.

“Usually the difficulty, especially in cases involving platforms, is market definition,” she said. In this case, the government argued the relevant market is publisher ad servers, ad exchanges, and advertiser ad networks — the three sides of the advertising stack Google has its hand in, which the DOJ said it’s leveraged to box out rivals. “And here, I think that that is relatively straightforward for the DOJ.”

“One way to look at the latest complaint is that it is the newest and most complete draft of a critique that antitrust agencies in the U.S. and abroad have been building against Google for over a decade,” William Kovacic, who served on the Federal Trade Commission from 2006 to 2011 and is now a professor at George Washington Law, said in an email.

Google, for its part, has said the latest DOJ lawsuit “tries to rewrite history at the expense of publishers, advertisers and internet users.” It claims the government is trying to “pick winners and losers” and that its products have expanded options for publishers and advertisers.

Compared to the DOJ’s earlier lawsuit, which argued Google maintained its monopoly over search services through exclusionary contracts with phone manufacturers, this one advances more nontraditional theories of harm, according to Francis, the NYU Law professor and former FTC official. That also makes it more likely that Google will move to dismiss the case to at least narrow the claims it may have to fight later on — a move it did not take in the earlier suit, he added.

“This case breaks much more new ground and it articulates theories, or it seems to articulate theories, that are right out on the border of what existing antitrust prohibits,” Francis said. “And we’re going to find out, when all is said and done, where the boundaries of digital monopolization really lie.”

High risk, high reward?

CEO of Alphabet and Google Sundar Pichai in Warsaw, Poland on March 29, 2022.

Mateusz Wlodarczyk | Nurphoto | Getty Images

DOJ took a gamble with this case. But if it wins, the rewards could match the risk.

“In terms of the potential impact of the remedy, this could be a bigger case than Microsoft,” said Melamed.

Still, Francis cautioned, a court could order a less disruptive remedy, like paying damages if it finds the government was harmed as an advertising purchaser, or simply requiring Google to stop the allegedly illegal conduct, even if it rules in the DOJ’s favor.

Like all antitrust cases, this one is unlikely to be concluded anytime soon. Still, a key decision by the Justice Department could make it speedier than otherwise expected. The agency filed the case in the Eastern District of Virginia, which has gained a reputation as the “rocket docket” for its relatively efficient pace in moving cases along.

“What that signals to me is that, given the timeframe for antitrust litigation is notoriously slow, DOJ is doing everything that they can in their choice of venue to ensure that this litigation moves forward before technological and commercial changes make it obsolete,” Francis said.

He added that the judge who has been assigned the trial, Clinton appointee Leonie Brinkema, is regarded as smart and fair and has handled antitrust cases before, including one Francis litigated years ago.

“I could imagine that both sides will feel pretty good about having drawn Judge Brinkema as a fair, efficient and sophisticated judge who will move the case along in an expeditious way,” Francis said.

Still, there are hardly any judges who have experience with a case like this one, simply because there haven’t been that many digital monopolization cases decided in court.

 “So any judge who would be hearing this case is going to be confronting frontier issues of antitrust theory and principle,” Francis said.

Immediate impact

Outside of the courts, the case could have a more immediate impact in other ways.

“From the point of view of strategy, the case adds a major complication to Google’s defense by increasing the multiplicity and seriousness of public agency antitrust enforcement challenges,” said Kovacic, the former FTC commissioner. “The swarming of enforcement at home and abroad is forcing the company to defend itself in multiple fora in the US and in jurisdictions such as the EU and India.”

Regardless of outcomes, Kovacic said the sheer volume of lawsuits and regulation can create a distraction for top management and will likely lead Google to more carefully consider its actions.

“That can be a serious drag on company performance,” Kovacic wrote.

The suit could also lend credence to lawmakers’ efforts to legislate around digital ad markets. One proposal, the Competition and Transparency in Digital Advertising Act, would prohibit large companies like Google from owning more than one part of the digital advertising system, so it couldn’t own tools on both the buy and sell side as it currently does.

Importantly, the bill is sponsored by Sen. Mike Lee, R-Utah, the ranking member of the Senate Judiciary subcommittee on antitrust. Lee has remained skeptical of some other digital market antitrust reforms, but his leadership on this bill suggests there may be a broader group of Republicans willing to support this kind of measure.

“An antitrust lawsuit is good, but will take a long time and apply to only one company,” Lee tweeted following the DOJ’s announcement, saying he would soon reintroduce the measure. “We need to make sure competition works for everyone, and soon.”

Rep. Ken Buck, R-Colo., who has backed the House version of the bill, called the digital ad legislation “The most important bill we can move forward” in a recent interview with The Washington Post.

“This is clearly the blockbuster case so far from the DOJ antitrust division,” Francis said. “And I think it represents a flagship effort to establish new law on the borders of monopolization doctrine. And at the end of it — win, lose or draw — it’s really going to contribute to our understanding of what the Sherman Act actually prohibits in tech markets.”

Subscribe to CNBC on YouTube.

WATCH: Here’s why some experts are calling for a breakup of Big Tech after the House antitrust report

Here's why some experts are calling for a breakup of Big Tech after the House antitrust report

White House approves student loan forgiveness for 16 million people
Comment

Wirestock | Istock | Getty Images

The U.S. Department of Education has “fully approved” more than 16 million people for federal student loan forgiveness and sent their applications to loan servicers, the Biden administration announced Friday.

The administration gave a state-by-state breakdown of the number of borrowers who have applied and been approved for its sweeping debt relief program, which is on hold until the U.S. Supreme Court decides its fate.

In August, President Joe Biden announced that he’d forgive at least $10,000, and up to $20,000, in federal student loan debt for tens of millions of borrowers.

Within months, however, Republicans and conservative groups had brought at least six legal challenges against the plan. The Biden administration in November had to close its student loan forgiveness portal after a federal judge in Texas struck down its plan.

More from Personal Finance:
Tax filing season is here. How to get a faster refund
Gen Xers carry the most credit card debt, study shows
Here’s what it takes to get a near-perfect credit score

Still, more than 26 million people had applied for the relief while the application was open or have been deemed automatically eligible, according to the administration.

Biden administrations stops taking applications for student loan debt forgiveness

“These borrowers could be benefitting from the Administration’s program right now were it not for lawsuits brought by elected officials and special interests,” a White House fact sheet said.

The Supreme Court will hear arguments over the president’s plan on Feb. 28.

12

Copyright © 2023 Top News. All rights reserved.