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Forget Antitrust Laws. To Limit Tech, Some Say a New Regulator Is Needed.

For decades, America’s antitrust laws — originally designed to curb the power of 19th-century corporate giants in railroads, oil and steel — have been hailed as “the Magna Carta of free enterprise” and have proved remarkably durable and adaptable.

But even as the Justice Department filed an antitrust suit against Google on Tuesday for unlawfully maintaining a monopoly in search and search advertising, a growing number of legal experts and economists have started questioning whether traditional antitrust is up to the task of addressing the competitive concerns raised by today’s digital behemoths. Further help, they said, is needed.

Antitrust cases typically proceed at the stately pace of the courts, with trials and appeals that can drag on for years. Those delays, the legal experts and economists said, would give Google, Facebook, Amazon and Apple a free hand to become even more entrenched in the markets they dominate.

A more rapid-response approach is required, they said. One solution: a specialist regulator that would focus on the major tech companies. It would establish and enforce a set of basic rules of conduct, which would include not allowing the companies to favor their own services, exclude competitors or acquire emerging rivals and require them to permit competitors access to their platforms and data on reasonable terms.

The British government has already said it would create a digital markets unit, with calls for a Big Tech regulator to also be introduced in the European Union and in Australia. In the United States, recommendations for a digital markets regulator have also been made in expert reports and in congressional testimony. It could be a separate agency or perhaps a digital division inside the Federal Trade Commission.

Significantly, the leading proponents of this path in the United States are mainstream antitrust experts and economists rather than break-’em-up firebrands. Jason Furman, a professor at Harvard University and chair of the Council of Economic Advisers in the Obama administration, led an advisory group to the British government that recommended the creation of a digital markets unit in 2019.

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Breaking up the big tech companies, Mr. Furman said, is a bad idea because that would risk losing some of the consumer benefits these digital utilities undeniably deliver. A regulator is necessary to police digital markets and the behavior of the tech giants, he said.

“I’m a small ‘c’ conservative, and I’m not a fan of regulation generally,” Mr. Furman said. “But it’s needed in this space.”

Regulators that focus on specific sectors of the economy are common in the United States. For financial markets, there is the Securities and Exchange Commission; for airlines, the Federal Aviation Administration; for pharmaceuticals, the Food and Drug Administration; for telecommunications, the Federal Communications Commission; and so on.

There is also precedent for picking out a handful of big companies for special treatment. In banking, the biggest banks with the most customers and loans are classified as “systemically important financial institutions” and subject to more stringent scrutiny.

Several supporters of a new tech regulator were officials in the Obama administration, which was known for being friendly to Silicon Valley. But the advocates said that experience — as well as the conservative, pro-big business drift of court rulings in recent years — left them frustrated with antitrust law as the only way to restrain the growing market power and conduct of the big tech companies.

“The mechanism of antitrust is not working to protect competition,” said Fiona Scott Morton, an official in the Justice Department’s antitrust division in the Obama administration, who is an economist at the Yale University School of Management. “So let’s do something else — use a different tool.”

Ms. Scott Morton led an expert panel on antitrust in a report last year on digital platforms by the Stigler Center at the University of Chicago’s Booth School of Business. The report recommended the creation of a regulatory authority. (Ms. Scott Morton has been a forceful critic of Google, but also a consultant to Apple and Amazon.)

Such a regulatory approach carries the risk of government’s meddling in a fast-moving industry that could hobble innovation, some antitrust experts warned. While antitrust law reacts to alleged anticompetitive behavior and can thus be slow, that shortcoming is preferable to prescriptive government rules and regulations, they said.

“I’m very uncomfortable with the regulatory path, especially if it means things like getting government approval for product changes,” said Herbert Hovenkamp, a professor at the University of Pennsylvania Law School. “The history of regulation shows that it is an innovation killer.”

A. Douglas Melamed, a former general counsel of Intel and a former antitrust official in the Justice Department, shared that concern. But Mr. Melamed, a member of the expert panel for the Stigler Center report, said the tech giants did pose a competition problem.

“I think regulation might make sense if it is narrowly focused, not running the industry,” said Mr. Melamed, who is a professor at Stanford Law School.

The last major antitrust action against a big technology company was the landmark Microsoft case in the 1990s. The case began with a suit filed in 1994 by the Federal Trade Commission and a simultaneous consent decree.

The Justice Department and several states later picked up the pursuit, investigated anew, filed suit and conducted an exhaustive trial. Microsoft was found to have repeatedly violated the nation’s antitrust laws, and the company then reached a settlement with the government, which a federal court approved in 2002.

In the Microsoft case, the antitrust legal process worked, in its way. Yet its impact is still debated. Without the suit and years of scrutiny, some observers said, Microsoft could have throttled the rise of Google.

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Credit…Stephen Crowley/The New York Times

But others said the technological shift toward the internet and away from the personal computer meant that Microsoft had lost the gatekeeper power it once held. Technology, not antitrust, they insisted, opened the door to competition.

Triumph or not, the Microsoft case was two decades ago. Proponents of a new regulator said antitrust law was ill suited by itself to restraining today’s faster-moving digital giants. In the internet economy, they said, the forces that reinforce and expand the power of a market leader — called network effects — are stronger and more rapid than in the personal computer era.

“Antitrust is not a fully adequate tool to deal with the companies that dominate these markets,” said Gene Kimmelman, who was on the Stigler Center panel and a co-author of a recent report by the Shorenstein Center at Harvard that called for the creation of a “digital platform agency” in America.

Another argument for the regulatory option is that competition concerns now span four companies, not just one. Apple, Amazon, Facebook and Google are in different markets, including search, online advertising, e-commerce and social networks. Bringing separate antitrust cases against them would most likely be beyond the resources of the government.

“When the competition issues are larger than a single firm, regulation might be the better tool to use,” said Andrew I. Gavil, a law professor at Howard University.

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Google Antitrust Fight Thrusts Low-Key C.E.O. Into the Line of Fire

OAKLAND, Calif. — When Sundar Pichai succeeded Larry Page as the head of Google’s parent company in December, he was handed a bag of problems: Shareholders had sued the company, Alphabet, over big financial packages handed to executives accused of misconduct. An admired office culture was fraying. Most of all, antitrust regulators were circling.

On Tuesday, the Justice Department accused Google of being “a monopoly gatekeeper of the internet,” one that uses anticompetitive tactics to protect and strengthen its dominant hold over web search and search advertising.

Google, which has generated vast profits through a recession, a pandemic and earlier investigations by government regulators on five continents, now faces the first truly existential crisis in its 22-year history.

The company’s founders, Mr. Page and Sergey Brin, have left the defense to the soft-spoken Mr. Pichai, who has worked his way up the ranks over 16 years with a reputation for being a conscientious caretaker rather than an impassioned entrepreneur.

Mr. Pichai, a former product manager, may seem an unlikely candidate to lead his company’s fight with the federal government. But if the tech industry’s bumptious history with antitrust enforcement is any lesson, a caretaker who has reluctantly stepped into the spotlight might be preferable to a charismatic leader born to it.

Mr. Pichai, 48, is expected to make the case — as he has for some time — that the company is not a monopoly even though it has a 92 percent global market share of internet searches. Google is good for the country, so goes the corporate message, and has been a humble economic engine — not a predatory job killer.

“He has to come off as an individual who is trying to do the right thing not only for his company but broader society,” said Paul Vaaler, a business and law professor at the University of Minnesota. “If he comes off as evasive, petulant and a smart aleck, this is going to be a killer in front of the court and the court of public opinion.”

Google declined to make Mr. Pichai available for an interview. In an email to employees on Tuesday, he urged Google employees to stay focused on their work so that users will continue to use its products not because they have to but because they want to.

“Scrutiny is nothing new for Google, and we look forward to presenting our case,” Mr. Pichai wrote. “I’ve had Googlers ask me how they can help, and my answer is simple: Keep doing what you’re doing.”

Few executives have faced a challenge like this, and the most iconic figures in the technology industry have wilted under the glare of antitrust scrutiny.

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Credit…Stephen Crowley/The New York Times

Bill Gates, who was chief executive of Microsoft in the last big technology antitrust case brought by the Justice Department two decades ago, came across as combative and evasive in depositions, reinforcing the view that the company was a win-at-all-costs bully. Mr. Gates said last year that the lawsuit had been such a “distraction” that he “screwed up” the transition to mobile phone software and ceded the market to Google.

Mr. Page dealt with impending antitrust scrutiny with detachment, spending his time on futuristic technology projects instead of huddling with lawyers. Even as the European Union handed down three fines against Google for anticompetitive practices, Mr. Page barely addressed the matter publicly.

On a conference call with reporters on Tuesday, officials at the Justice Department declined to reveal whether they had spoken to Mr. Page during its investigation.

In its complaint, the Justice Department, along with 11 states, said Google had foreclosed competition in the search market by striking deals with handset manufacturers, including Apple, and mobile carriers to block rivals from competing effectively.

“For the sake of American consumers, advertisers and all companies now reliant on the internet economy, the time has come to stop Google’s anticompetitive conduct and restore competition,” the complaint said.

Google said that the case was “deeply flawed” and that the Justice Department was relying on “dubious antitrust arguments.”

Google is also the target of an antitrust inquiry by state attorneys general looking into its advertising technology and web search. And Europe continues to investigate the company over its data collection even after the three fines since 2017, totaling nearly $10 billion.

At Mr. Pichai’s side are senior executives who are also inclined to strike an accommodating tone. He has surrounded himself with other serious, buttoned-up career Google managers who bring a lot of boring to the table.

The point person for handling the case is Kent Walker, Google’s chief legal officer and head of global affairs. Though Mr. Walker, who worked at the Justice Department as an assistant U.S. attorney and joined Google in 2006, oversees many of the company’s messiest issues, he rarely makes headlines — a testament, current and former colleagues said, to his lawyerly pragmatism.

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Google has appointed Halimah DeLaine Prado as its new general counsel. A 14-year veteran of the company’s legal department, Ms. Prado was most recently a vice president overseeing the global team that advised Google on products including advertising, cloud computing, search, YouTube and hardware. While Ms. Prado doesn’t have a background in antitrust, she has been at Google since 2006 and is, by now, well versed in competition law.

The company is expected to rely heavily on its high-priced law firms to help manage the battle, including Wilson Sonsini Goodrich & Rosati, a top Silicon Valley firm, and Williams & Connolly, which has defended Google in other competition law cases.

Wilson Sonsini has represented Google from the company’s inception and helped it defend itself in a Federal Trade Commission investigation into its search business. In 2013, the agency chose not to bring charges.

Regardless of the legal argument for prosecuting Google as a monopoly, the case may shape the public perception of the company long after it has been resolved.

Until now, Google’s public posture has been a shrug. Mr. Pichai has said that the antitrust scrutiny is nothing new and that, if anything, the company welcomes the look into its business practices. Google has argued that it competes in rapidly changing markets, and that its dominance can evaporate quickly with the emergence of new rivals.

“Google operates in highly competitive and dynamic global markets, in which prices are free or falling and products are constantly improving,” Mr. Pichai said in his opening remarks to a House antitrust panel in July. “Google’s continued success is not guaranteed.”

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Credit…Pool photo by Graeme Jennings

Mr. Pichai is familiar with the machinations of antitrust proceedings. In 2009, when he was a vice president of product management, he lobbied the European competition authorities to take action on Microsoft’s Internet Explorer web browser.

“We are confident that more competition in this space will mean greater innovation on the web and a better user experience for people everywhere,” Mr. Pichai wrote in a blog post at the time, sentiments that search rivals say about Google today.

But shortly after he became Google’s chief executive in 2015, Mr. Pichai displayed his tendency for pragmatism when he buried the hatchet with Microsoft. The two companies agreed to stop complaining to regulators about each other.

Early in his tenure running Google, Mr. Pichai was reluctant to press its case in Washington — a job that one of his predecessors, Eric Schmidt, had reveled in. Mr. Schmidt, a big donor in Democratic politics, was a frequent visitor to the White House during the Obama presidency and served on the President’s Council of Advisors on Science and Technology.

In 2018, Google declined to send Mr. Pichai to testify at a Senate Intelligence Committee hearing on Russian interference in the 2016 presidential election. Annoyed senators left an empty seat for the company’s representative next to executives from Facebook and Twitter. (Mr. Page was also invited to testify, but there was never any expectation from people within the company that he would.)

Since then, Mr. Pichai has made frequent trips to Washington, testified at other congressional hearings and held meetings with President Trump.

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Microsoft’s long battle with the government has also influenced how Google plans to wage its antitrust fight. Many Google executives believe Microsoft was too combative with the Justice Department, bringing the company to a standstill.

For most of the last decade, even as Google has dealt with antitrust investigations in the United States and Europe, the company has continued expanding into new businesses and acquire companies, such as the fitness tracker maker Fitbit last year.

Now the bill for that growth may have come due. And like it or not, it has been left to Mr. Pichai. Mr. Page, who is a year younger than Mr. Pichai and who Forbes says is worth $65 billion, is pursuing other interests.

Mr. Pichai “hasn’t had to deal with anything of this magnitude,” said Michael Cusumano, a professor and deputy dean at the Massachusetts Institute of Technology’s Sloan School of Management. “He has to face the government. He has no choice.”

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Oil Industry Turns to Mergers and Acquisitions to Survive

HOUSTON — The once mighty oil and gas industry is flailing, desperately trying to survive a pandemic that has sharply reduced demand for its products.

Most companies have cut back drilling, laid off workers and written off assets. Now some are seeking out merger and acquisition targets to reduce costs. ConocoPhillips announced on Monday that it was acquiring Concho Resources for $9.7 billion, the biggest deal in the industry since oil prices collapsed in March.

The acquisition, days after the completion of Chevron’s takeover of Noble Energy, would create one of the country’s biggest shale drillers and signals an accelerating industry consolidation as oil prices languish around $40 a barrel, just above the levels many businesses need to break even. Just last month Devon Energy said it would buy WPX Energy for $2.6 billion.

But many investors are not sure such deal making will be enough to protect the industry from a sharp decline. The share prices of ConocoPhillips and Concho closed down by about 3 percent on Monday. The big problem is that the fortunes of oil companies are fundamentally tied to oil and natural gas prices, which remain stubbornly low. Few experts expect a full recovery of oil demand before 2022, and some analysts have gone so far as to declare that oil demand might have peaked in 2019 and could slide in the years to come as the popularity of electric cars grows.

“There’s a lot more red ink than there is black gold,” said Michael Lynch, president of Strategic Energy and Economic Research, who periodically advises the Organization of the Petroleum Exporting Countries. “Companies are trying to hunker down and weather the storm. Most people don’t think the oil price will recover for a couple of years.”

More than 50 North American oil and gas companies with debts totaling more than $50 billion have sought bankruptcy protection this year. Among the casualties was Chesapeake Energy, a shale pioneer based in Oklahoma City. More failures could come in the next two years as companies are required to repay tens of billions of dollars in debt.

Oil companies are facing daunting uncertainties, particularly as concerns over climate change mount and governments impose tougher regulations to reduce greenhouse gas emissions caused by the burning of fossil fuels. Small companies fear a crackdown on methane leaks and tightening regulations, especially if former Vice President Joseph R. Biden Jr. becomes president and Democrats take control of the Senate.

European oil companies have already begun pivoting away from oil and gas, plotting investments in renewable energy like wind and solar to attract new investors. While those companies have had limited success so far, American companies have for the most part stuck with their traditional businesses. They have adapted to low oil and gas prices by slashing investments by 30 percent or more. The oil and gas rig count has dropped by 569 since last fall, to only 282 operating across the country.

Oil companies are hoarding cash and renegotiating contracts with service companies that drill and complete wells. Rig rental rates are down roughly 10 percent, pressuring the companies that do the field work. More than 100,000 American oil workers have lost their jobs in recent months.

ConocoPhillips, the largest American independent oil company, has been something of an outlier, recently raising its dividend and buying back shares. Nevertheless, ConocoPhillips’s stock price has dropped by roughly half so far this year.

The company is a major producer in the Bakken shale field of North Dakota and the Eagle Ford shale field in South Texas. By acquiring Concho, it will become a major player in the world’s most lucrative shale field, the Permian Basin, which straddles West Texas and New Mexico.

With Concho’s 550,000 acres in the Permian, ConocoPhillips will more than triple its 170,000-acre position in the basin, which became the world’s most productive oil field last year.

Concho is little known outside Texas but became a major oil producer after it bought RSP Permian for $9.5 billion in 2018. Concho produced more than 300,000 barrels in the second quarter.

“Together ConocoPhillips and Concho will have unmatched scale and quality,” said Ryan M. Lance, ConocoPhillips’s chairman and chief executive, referring to their joint balance sheet, resource reserves and personnel.

The deal would help make ConocoPhillips one of the largest players in the Permian, putting it in the same league as companies that are much bigger than it over all.

“The combination is remarkable,” said Robert Clarke, a vice president and oil analyst at Wood Mackenzie, a research and consulting firm. “Just in regards to scale, ConocoPhillips is adding enough Permian production to nip at the heels of ExxonMobil’s massive program.”

As the shale industry grew over the last decade or so, many smaller companies poured billions of dollars into the Permian and other parts of the country. Now, the process appears to be headed in the opposite direction as the industry retrenches and becomes smaller.

Investment in U.S. shale oil has dropped to an estimated $45 billion this year from roughly $100 billion annually in 2018 and 2019, according to the International Energy Agency. In its annual report released this month, the Paris-based organization said a shakeout was underway.

“The influence of large players is set to grow as acreage is consolidated by larger industry players, and the focus on growth is set to be supplanted over time by a focus on returns,” the report said. “The exuberance and breakneck growth of the early years may be replaced by something a little steadier.”

American oil production fell to 11.2 million barrels a day in September from 13 million at the beginning of the year. The Energy Department expects production to fall an additional 200,000 barrels a day by mid-2021 as companies drill fewer new wells to replace older ones.

The industry has no choice but to cut back. Americans drove 12.3 percent fewer miles in August than they did a year earlier, according to the Transportation Department.

Globally, daily oil consumption was down more than 6 percent in September from a year earlier, according to the Energy Department. Oil production continues to outpace demand, keeping inventory levels high and prices low.

And the pandemic is not yet under control in many parts of the world. If sustained, the recent increase in coronavirus infections in the United States, Europe and elsewhere could reduce demand for oil and gas even further in the coming months.

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Berkshire Hathaway Says Blue Chip Law Firm Aided Fraud

FRANKFURT — Berkshire Hathaway may have found a way to get back some of the hundreds of millions of dollars it lost after buying a seemingly solid German pipe maker that turned out to be on the verge of going bust.

The conglomerate, led by Warren E. Buffett, is suing Jones Day, the law firm that represented the owners of the pipe maker when it was sold to a Berkshire Hathaway subsidiary in 2017. The lawsuit, filed late last month, accuses Jones Day of helping to trick Berkshire Hathaway into paying five times what the German company was worth.

There is not much chance that Berkshire Hathaway will recover any money from the sellers of the pipe maker, Wilhelm Schulz, which was named for its founder. The shareholders have declared bankruptcy and are facing a criminal investigation in Germany. But Jones Day is a prominent international law firm with deeper pockets.

The attempt to collect damages from Jones Day is an unexpected twist in the saga of Wilhelm Schulz, which is based in Krefeld, a city north of Düsseldorf. If the suit is successful, it will be at least a small consolation to Berkshire Hathaway shareholders after the company lost $23.3 billion in the first half of 2020. (Profits rebounded in the later part of the period, however.)

“The fraudulent transaction would never have occurred without Jones Day’s substantial assistance,” according to the lawsuit, filed in U.S. District Court in Houston on behalf of Precision Castparts, a Berkshire Hathaway subsidiary that makes components for aircraft. The lawsuit accuses Jones Day of withholding documents that would have exposed Wilhelm Schulz’s perilous financial state and calls the firm a “co-conspirator” in a “massive fraud.”

Ulrich Brauer, the partner in charge of Jones Day’s office in Düsseldorf, said the firm would not comment on a pending case.

Jones Day lawyers in Houston and Düsseldorf handled the sale of Wilhelm Schulz, which specializes in pipes for the oil and gas industries. Jones Day also represented the owners, who included Wolfgang Schulz, the son of the founder, when the case went before an arbitration panel in New York.

The panel found in April that Mr. Schulz and other managers had used false sales invoices, computer hacks and phantom customers to make Wilhelm Schulz look healthier than it was and hoodwink Precision Castparts into paying a grossly inflated price. The deal was a rare misstep for the organization run by Mr. Buffett, who is considered one of the savviest investors in the world.

The arbitrators awarded 643 million euros ($756 million) in damages to Precision Castparts, which is based in Portland, Ore. That is the difference between the €800 million that Precision Castparts paid for Wilhelm Schulz and its estimated true value of €157 million. The arbitrators’ decision was upheld in July by the U.S. District Court for the Southern District of New York.

Because the holding company controlled by Mr. Schulz is in insolvency proceedings, “it is unclear if it will pay even a fraction of the damages it caused,” according to the lawsuit on behalf of Precision Castparts, which says Jones Day should pay the arbitrators’ award instead.

German prosecutors are pursuing a criminal investigation of Mr. Schulz and others involved in the deal but have not filed any charges. A spokesman for the Düsseldorf state’s attorney’s office, citing German privacy laws, said he could not divulge any information about potential suspects. Mr. Schulz has denied wrongdoing.

Normally a law firm’s communications with clients would be considered privileged, offering a degree of protection to Jones Day. The firm has asked a Texas court to seal the case on those grounds.

But Precision Castparts argues that lawyer-client confidentiality cannot be used to cover up fraud under German or United States law.

In addition, the claims against Jones Day are based on files discovered in Wilhelm Schulz offices after the acquisition, according to the lawsuit. Finders keepers, in other words.

The suit was filed on Precision Castparts’ behalf by Reid Collins & Tsai in Austin, Texas, a law firm that specializes in suing other law firms.

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Credit…Scott Morgan/Reuters

The text of the lawsuit against Jones Day has been partly redacted while a Texas judge decides whether the firm is entitled to keep some information confidential. But the central allegation is clear: that Jones Day was aware of information that would have revealed Wilhelm Schulz’s dire financial condition, but failed to disclose it to Precision Castparts.

For example, Schulz had fallen behind on repaying a €325 million loan from Commerzbank. In return for a bridge loan, the bank negotiated new terms that gave it the right to take control of Schulz if the company defaulted.

Wilhelm Schulz “was the corporate equivalent of a house about to go into foreclosure,” the lawsuit says. But Precision Castparts never knew about the revised loan agreement because Jones Day withheld it, the lawsuit contends.

Jones Day also did not disclose a report by the consulting firm KPMG, commissioned by Schulz, which concluded that the company faced an “imminent liquidity crisis,” according to the lawsuit. Nor, the suit says, did Jones Day inform Precision Castparts that a German lawyer had warned Wilhelm Schulz managers that they were legally obligated to declare bankruptcy.

“Had Precision known the truth,” the lawsuit says, “it would have never acquired the Schulz subsidiaries.”

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Chevron’s Purchase Could Unlock Israel’s Natural Gas Bonanza

Chevron, the American oil giant, wrapped up the acquisition on Monday of a relatively small Houston-based company called Noble Energy, paying about $4 billion.

Until recently, the deal would have been unlikely, if not unthinkable — because what distinguishes Noble is the large natural gas business it has built in the eastern Mediterranean Sea, especially in Israel, an area that major oil companies had until now avoided.

Chevron’s move is the latest milestone in a remarkable shift in perceptions about a relatively new region for the petroleum industry in the eastern Mediterranean. Once a dead sea for the oil industry, this area, reaching from the Nile Delta in Egypt up to Israel and Lebanon and around Cyprus, has come alive with exploration vessels, drilling rigs and production platforms in recent years thanks to a series of large natural gas discoveries.

Those finds are drawing major oil companies into the area, attracted not only by the prospect of further undiscovered resources but by improving relations between Israel and its former foes Egypt and Jordan.

“This is an area that looks as if it could have the resource quality and the scale to become a pretty significant energy province,” said Mike Wirth, Chevron’s chief executive, in an interview.

International oil giants previously steered clear of Israel, partly, it has been assumed, to avoid alienating large Arab oil producers like Saudi Arabia. The move by Chevron, which this week edged ahead of Exxon Mobil to become America’s largest oil company by market value, indicates that the days when Persian Gulf states bristle about business with Israel may be over. Recently, the United Arab Emirates and Bahrain established relations with Israel with apparent Saudi blessing.

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Credit…Toru Hanai/Reuters

“It is opening up the Israeli market to the world,” Nati Birenboim, a former Israeli energy official who is now a consultant, said of Chevron’s arrival. “Everyone knows when they bought Noble, they bought Israel.”

There are no guarantees that recent progress on energy and other fronts won’t face setbacks. Longstanding differences between Israel and its neighbors are not forgotten; expansionist moves by Turkey and its president, Recep Tayyip Erdogan, to claim some of the underwater riches have alarmed its NATO allies and recently prompted the United States to deploy a massive Navy ship at a base it shares with Greece.

More than 20 years ago, Noble helped put the region on the energy industry’s map. Delek Drilling, an Israeli firm, brought the company to Israel to hunt for petroleum. The partnership, which began in 1999, has produced major natural gas finds that not only reduced Israel’s dependence on imported coal and oil but turned Israel — with some helpful nudging from American diplomats — into an exporter with long-term contracts worth an estimated $25 billion to help power the neighboring economies of Jordan and Egypt.

“I think what Chevron sees is the opportunity” to buy into “massive natural gas resources located in the center of a region with a lot of demand,” said Yossi Abu, Delek’s chief executive and now Chevron’s partner, in an interview.

Along with the drilling sites off the coast of Israel, a major discovery called the Zohr gas field, found by the Italian energy company Eni in Egyptian waters in 2015, has drawn development in the area. Total, the French oil firm, and Eni have even extended the hunt into the sea off strife-torn Lebanon — although the first well the partners drilled, this year, turned out to be a dry hole.

From a geological point of view, the eastern Mediterranean has what oil giants like Chevron are looking for: very large volumes of gas, which many in the industry view as likely to have a better future than oil as climate change concerns grow.

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Credit…Tamir Kalifa for The New York Times

“It is a very attractive region,” said Wayne Ackerman, a former executive at Royal Dutch Shell and an adviser on gas to Saudi Aramco, who has studied the area’s geology. “I am convinced there will be more discoveries there,” added Mr. Ackerman, who now heads gas research at Rapidan Energy Group, a consulting firm.

The energy business has been shaken by plummeting demand during the coronavirus pandemic and worries about the viability of fossil fuels. But the resources that these big fields hold are unlikely to be left in the ground, because they are already earning substantial revenues by powering the economies of Israel and its neighbors. Some of the fields in the region, including the largest Israeli field, in which Chevron now holds a nearly 40 percent stake, could also be expanded relatively cheaply for exports.

“Gas is an important part of any future energy transition scenario,” Mr. Wirth said. “Proximity to growing markets with demand is a real advantage for a gas resource.”

What Chevron is buying in Noble — very cheaply, because Noble’s shares had been pummeled by the pandemic and worries about the company’s high debt and the industry’s future — is a combination of a profitable regional gas business and the opportunity to expand to serve markets farther afield. Noble also has substantial shale-drilling properties in the United States and some production in Equatorial Guinea in central West Africa.

Mr. Abu of Delek said he thought the American company would bring the capital, technology and marketing clout to allow further expansion of the gas fields as well as new exploration. Delek and Noble, along with Royal Dutch Shell, also share a large find off Cyprus, called Aphrodite, that they have so far not succeeded in developing.

The riches lurking beneath the region’s waters have brought their share of problems.

Turkey has so far been unable to benefit from the prospecting because the gas fields are in zones claimed by other countries under the U.N. Law of the Sea Convention. It has responded by muscle-flexing: In recent months, Mr. Erdogan has sent vessels to drill in waters around Cyprus, including in territory that the island’s government has already awarded to companies like Eni and Total.

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“It’s quite a novel way of applying pressure,” said Robert Morris, an analyst at Wood Mackenzie, an energy research firm.

Tensions rose in August when a Greek warship collided with a Turkish warship that was escorting a survey vessel. Greece called it an accident; Turkey described it as a provocation. France, Greece, Cyprus and Italy later took part in military exercises involving ships and planes off the Cypriot coast.

Turkey is not a signatory to the Law of the Sea, and says its neighbors have divided the waters unfairly.

“Their aim,” Mr. Erdogan said in a recent magazine interview, “was to confine our country — which has the longest shore in the Mediterranean — to coastline where only fishing with a rod is possible.”

Turkey’s actions have slowed exploration work around Cyprus — as has the coronavirus pandemic.

The wider region, though, is likely to continue to attract interest and investment, analysts say.

“There are just a few places in the world where you can get into large gas assets,” said Gerald Kepes, an independent energy consultant who has worked in Egypt. “These are what big companies are made for.”

Despite Turkey’s efforts, the lure of gaining access to relatively cheap energy has pushed former foes like Egypt, Israel and Jordan more toward cooperation than discord.

Mr. Wirth said recent developments suggested that the region was an “area where we can expect to see regional ties improve in the coming years,” a trend likely to promote economic growth and, consequently, demand for gas.

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Credit…Amir Cohen/Reuters

If such trends continue, there is even the possibility of exporting natural gas to countries in the Persian Gulf, like Saudi Arabia, that are rich in oil but poor in gas needed for electric power and industry. There is also a longer-term hope: that gas from the region can help ease Europe’s dependence on energy imports from Russia.

“I think when you’ve got a large, low-cost resource base like this proximate to large economies, we will find ways to move the gas to market in a manner that’s competitive,” Mr. Wirth said on a call with analysts.

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House Lawmakers Condemn Big Tech’s ‘Monopoly Power’ and Urge Their Breakups

WASHINGTON — House lawmakers who spent the last 16 months investigating the practices of the world’s largest technology companies said on Tuesday that Amazon, Apple, Facebook and Google had exercised and abused their monopoly power and called for the most sweeping changes to antitrust laws in half a century.

In a 449-page report that was presented by the House Judiciary Committee’s Democratic leadership, lawmakers said the four companies had turned from “scrappy” start-ups into “the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.” The lawmakers said the companies had abused their dominant positions, setting and often dictating prices and rules for commerce, search, advertising, social networking and publishing.

To amend the inequities, the lawmakers recommended restoring competition by effectively breaking up the companies, emboldening the agencies that police market concentration and throwing up hurdles for the companies to acquire start-ups. They also proposed reforming antitrust laws, in the biggest potential shift since the Hart-Scott-Rodino Act of 1976 created stronger reviews of big mergers.

“Our investigation leaves no doubt that there is a clear and compelling need for Congress and the antitrust enforcement agencies to take action that restores competition, improves innovation and safeguards our democracy,” Jerrold Nadler, Democrat of New York and chairman of the judiciary committee, and David Cicilline, Democrat of Rhode Island and chairman of the antitrust subcommittee, said in a joint statement.

The House report is the most significant government effort to check the world’s largest tech companies since the government sued Microsoft for antitrust violations in the 1990s. It offers lawmakers a deeply researched road map for turning criticism of Silicon Valley’s influence into concrete actions.

The report is 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 search giant from state attorneys general. Antitrust investigations of Amazon, Apple and Facebook are also underway at the Justice Department, the Federal Trade Commission and four dozen state attorneys general.

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But the House antitrust subcommittee split along party lines on how to remedy and corral the power of the tech companies, pointing to an uphill battle for Congress to curtail them.

Democrats proposed legal changes that could substantially restructure Facebook, Google, Amazon and Apple. They said Congress should consider making it illegal for the tech giants to provide preferential treatment to their own products, as Google does in search results. They suggested breaking up the companies in “structural separations” and forbidding them from operating in similar businesses to those they were already dominant in. They also recommended adding to antitrust laws, including clearer rules that could block the tech giants’ attempts to buy other companies.

Some Republicans agreed with proposals to bolster funding for antitrust enforcement agencies, but balked at calls for Congress to intervene in restructuring the companies and their business models. Others have refused to endorse any of the Democrats’ findings.

Rep. Jim Jordan of Ohio, the top Republican on the committee, said that the report was “partisan” and that the committee had not tackled conservatives’ anecdotal allegations that the online platforms were biased against their views. In a letter to Mr. Nadler, Mr. Jordan said that ignoring the topic “ultimately discredits the draft report’s findings.”

Rep. Ken Buck, a Republican of Colorado, joined three other Republican lawmakers in releasing a separate report in recent days — titled “The Third Way” — outlining their mixed reception of the Democrats’ proposals.

“I agree with about 330 pages of the majority’s report,” Mr. Buck said. But he said he could not agree with recommendations to embolden consumer lawsuits and the breakup of companies, calling them “the nuclear option.”

The House Judiciary Committee began its investigation into the four tech giants in June 2019, interviewing hundreds of rivals and business clients of the platforms. In July, the tech chief executives — Jeff Bezos of Amazon, Tim Cook of Apple, Mark Zuckerberg of Facebook and Sundar Pichai of Google — testified in a hearing to defend their companies.

The four companies, which have a combined market value of more than $5 trillion, largely operate in different digital businesses. But the report revealed monopoly abuses across them.

Amazon, Apple, Facebook and Google had roles as “gatekeepers” in common and controlled prices and the distribution of goods and services, the report said. That made third-party businesses — like app developers on Apple’s App Store and sellers on Amazon’s marketplace — beholden to the companies’ demands, the report said. The word monopoly appeared in the report nearly 120 times.

“With no restrictions of tech companies to own and compete on their own platforms, which are the only options for so many small businesses, it takes away any real sense of competition,” said Rep. Pramila Jayapal, a Democrat of Washington, who has been a vocal critic of Amazon.

Even without full bipartisan support, the report sets important groundwork, said Gene Kimmelman, a former senior antitrust official at the Justice Department. He said the breakup of AT&T in the 1980s was supported by policies set forth by Congress. Tuesday’s report, he said, was “the foundation for legislation and regulation that enables antitrust cases against Google, Facebook and others to actually break markets open to more competition.”

Google disputed the findings and said its free service had been a boon to consumers. “Google’s free products like Search, Maps and Gmail help millions of Americans,” the company said in a statement, “and we’ve invested billions of dollars in research and development to build and improve them. We compete fairly in a fast-moving and highly competitive industry.”

Amazon said the committee’s recommendations could end up harming small businesses and consumers.

“The flawed thinking would have the primary effect of forcing millions of independent retailers out of online stores, thereby depriving these small businesses of one of the fastest and most profitable ways available to reach customers,” Amazon said in a blog post. “Far from enhancing competition, these uninformed notions would instead reduce it.”

Apple “vehemently disagrees with the conclusions in this staff report,” the company said in a statement. “The App Store has enabled new markets, new services and new products that were unimaginable a dozen years ago, and developers have been primary beneficiaries of this ecosystem,” the company said.

Facebook disagreed that its mergers with Instagram and WhatsApp were anticompetitive. “We compete with a wide variety of services with millions, even billions, of people using them,” the company said in a statement. “Acquisitions are part of every industry, and just one way we innovate new technologies to deliver more value to people.”

The report devoted most attention to Google and Amazon, then Apple and Facebook, based on the number of pages devoted to them.

Google holds a monopoly in search and search advertising, the report said. The company used anti-competitive tactics, such as adding information without permission from third-party providers like Yelp, to improve the quality of features within its search results, lawmakers added.

Amazon’s market power was spread across several industries, the report found. The committee focused on the company’s conduct in online commerce, where it sells products that compete with independent merchants who use its platform. The report said Amazon promoted its own smart-home products ahead of those of other makers, and also dealt unfairly with open source software developers in its cloud computing business.

In total, about 2.3 million third-party sellers do business on the Amazon marketplace worldwide, the report said, and 37 percent of them relied on the site as their sole source of income — essentially making them hostage to Amazon’s shifting tactics.

The lawmakers also concluded that Apple had a monopoly on the apps marketplace for iPhones and iPads, forcing all developers to go through it to reach users of those devices. That setup has enabled Apple to take a 30 percent cut of many apps’ sales. That fee, the subcommittee found, has led to higher prices for consumers.

Facebook’s monopoly power over social networking was also “firmly entrenched,” the report said. The company had taken steps, like acquiring new competitors or copying their features, to maintain that power, the lawmakers found. In particular, they said, after Facebook acquired the photo-sharing site Instagram in 2012, the social network’s executives had gone to great lengths to stop the service from overtaking its main product.

“It was collusion, but within an internal monopoly,” a former high-level Instagram employee told the committee during its investigation. “If you own two social media utilities, they should not be allowed to shore each other up. It’s unclear to me why this should not be illegal.”

Reporting was contributed by Daisuke Wakabayashi, Mike Isaac, Jack Nicas and Steve Lohr.

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TikTok Deal Exposes a Security Gap, and a Missing China Strategy

WASHINGTON — President Trump has declared victory in his latest confrontation with China, saying that he headed off a looming national security threat by forcing the sale of the social media app sensation TikTok to a consortium of American, European and — though he does not say so — Chinese owners.

But it is far from clear from the details released so far that Mr. Trump’s deal resolves the deeper TikTok security problem — which has less to do with who owns the company and more with who writes the code and the algorithms. The code and algorithms are the magic sauce that Beijing now says, citing its own national security concerns, may not be exported to to a foreign adversary.

And the deal certainly doesn’t resolve the broader problem in the expanding technology wars between Washington and Beijing: how the United States government should deal with the foreign apps that are now, for the first time, becoming deeply embedded on the screens of Americans’ smartphones, and thus in the daily fabric of American digital life.

TikTok illuminated the scope of the new competition. The United States wants to have it all. It seeks to reap the benefits of a global internet yet limit its citizens to made-in America products, ensuring that the data that flows through American networks is “clean.” In fact, the State Department has begun what it calls “the clean network initiative,” making sure that data is not tainted by adversaries, starting with China.

“This is a really hard problem and bashing TikTok is not a China strategy,” Amy Zegart, a senior fellow at the Hoover Institution and Stanford’s Freeman-Spogli Institute. “China has a multi-prong strategy to win the tech race,” she said. “It invests in American technology, steals intellectual property and now develops its own technology that is coming into the U.S.,’’ as TikTok did with remarkable success in just two years.

“We don’t have to guess what their intentions,” she said. “They have written what their intentions are, and it’s called ‘Made in China 2025,’” the country’s strategy of becoming a peer competitor of the United States in all major technological arenas in the next five years. “And yet we think we can counter this by banning an app. The forest is on fire, and we are spraying a garden hose on a bush.”

If American politicians seem to be behind on this one, perhaps it is because technological progress has once again outpaced the political debate. On Capitol Hill, the China problem many politicians still fume about is cheap Chinese goods, ignoring the fact that China’s labor is no longer inexpensive. Others call for crackdowns on intellectual property theft, a problem that George W. Bush tried to tackle with his Chinese counterpart in the Great Hall of the People 15 years ago, and that Barack Obama and President Xi Jinping, then new as China’s president, declared they had solved five years ago.

Of course, they didn’t. China shifted its hacking operations from units of the People’s Liberation Army — some indicted by the Justice Department — to the Ministry of State Security. In recent days, the F.B.I. has warned of broader surveillance and theft operations on American campuses, much of it aimed at coronavirus vaccines.

TikTok presented an entirely new problem, one that most policymakers in the United States had not contemplated before.

For the first time, a genuine Chinese app — not a knockoff of something invented in the United States or Europe — captured the hearts of American teenagers and millennials. On one level, it was harmless: TikTok is mostly jammed with one-minute dance videos. By many measures, it was a bigger parenting problem than a national security problem. Whatever it was, it clearly wasn’t on Washington’s radar the way that the expansion of China’s nuclear arsenal, or its actions in the South China Sea, dominate the China debate.

Yet as Brad Smith, the president of Microsoft, which competed with Oracle to buy TikTok’s operations in the United States, noted, “there is a potential threat.” To make TikTok tick, the company collects vast amounts of data on Americans’ viewing habits. And the same algorithm that picks your next dance video could, in the future, pick a political video. (There is already more than a whiff of political content on the app.)

Like Oracle, Microsoft would have taken over the storage of all data on Americans, keeping it in the United States. (TikTok currently has a major data server in Virginia, but backs up data in Singapore.) But Microsoft’s bid went further: It would have owned the source code and algorithms from the first day of the acquisition, and over the course of a year moved their development entirely to the United States, with engineers vetted for “insider threats.”

So far, at least, Oracle has not declared how it would handle that issue. Nor did President Trump in his announcement of the deal. Until they do, it will be impossible to know if Mr. Trump has achieved his objective: preventing Chinese engineers, perhaps under the influence of the state, from manipulating the code in ways that could censor, or manipulate, what American users see.

“If Oracle is providing hosting with the majority of engineering and operations staying with ByteDance, then the only effect of this deal was to swing billions of dollars of cloud revenue,” said Alex Stamos, who runs the Stanford Internet Observatory. “The details of the deal will really matter, and so far the public has not been provided with enough information to have an educated opinion.”

Without that issue resolved, it is unclear how Mr. Trump could declare that the security issues are solved, much less how he could say that the new entity “will have nothing to do with China.”

The longer-run issue, however, is that there will be more TikToks, companies around the world that develop apps that Americans love — or see as a hedge against their own government. Already, many Americans use encryption apps, like Telegram, that are based outside the United States, so that the United States would have a more difficult time issuing subpoenas for the content. Attorney General William P. Barr has already called for greater scrutiny — and perhaps abolition — of any such app that does not allow the United States a legal “back door.”

It seems unlikely that any administration — Democrat or Republican — could actually succeed at banning foreign apps whose code they found suspicious or difficult to access. It would be as problematic to enforce as Prohibition, which lasted 14 years in the United States before it was repealed, by constitutional amendment.

But the bigger issue is that the movement to ban Chinese apps — the next target is WeChat, which was going to be cut off by executive order on Sunday until a federal judge intervened, at least temporarily — defeats the original intent of the internet. And that was to create a global communications network, unrestrained by national borders.

“The vision for a single, interconnected network around the globe is long gone,” Jason Healey, a senior research scholar at Columbia University’s School for International and Public Affairs and an expert on cyber conflict. “All we can do now is try to steer toward optimal fragmentation.”

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Trump Approves Deal Between Oracle and TikTok

WASHINGTON — President Trump said on Saturday that he had approved a deal between the Chinese-owned social media app TikTok and major American companies, an agreement that will delay the U.S. government’s threat to block the popular app in the United States over national security concerns.

The deal, which must still gain formal U.S. approval, would create a new U.S.-based company, TikTok Global, in which Oracle, an American software maker, and Walmart would own 20 percent, placing more equity in the service into the hands of American companies and investors.

While the structure falls short of an all-out sale of TikTok, it is still a concession by ByteDance, TikTok’s Chinese owner — one that has apparently satisfied the administration’s concerns about China’s ability to harness data from users of the app. The Commerce Department, which planned to bar TikTok from U.S. app stores as of midnight Sunday, said that it would delay that plan for one week.

The deal capped weeks of drama over the fate of TikTok that underscored how much relations between the United States and China have deteriorated, with their race for technological superiority and their mutual suspicions extending to a social media platform known for silly video clips and a trendsetting, mostly young user base of 100 million people in the United States.

Mr. Trump has increasingly taken aim at Chinese technology, including TikTok and WeChat, saying companies and apps with ties to China pose a threat to American national security and threatening to ban them from the United States. The situation intensified in early August, when Mr. Trump issued an executive order essentially mandating that ByteDance strike a deal to sell TikTok’s U.S. operations by Sept. 20, or cease some commercial operations. A second executive order set a later deadline for ByteDance to fully divest from the product.

That decree prompted top officials, including Treasury Secretary Steven Mnuchin, to inject the U.S. government into private-sector discussions about a deal to transfer some control of TikTok to an American company.

The orders pushed ByteDance to hasten discussions that had already been underway with potential bidders about TikTok’s ownership structure. Microsoft, Walmart and Oracle were among those that entered talks about acquiring TikTok’s U.S. business.

“Threatening TikTok has been the most prominent step so far in a U.S. trajectory toward technology decoupling” with China, said Paul Gallant, an analyst at Cowen and Company. “I think it puts everybody in the U.S. tech sector on notice that they need to scrutinize even their seemingly innocuous connections to China.”

Mr. Trump had previously said he would not be satisfied with a deal where ByteDance retained a majority stake in the company.

Under the agreement, ByteDance and its investors, which include the U.S.-based General Atlantic, Coatue Management and Sequoia Capital, would transfer some of their equity control into TikTok Global.

Still, exactly who would control the new entity remained unclear. Two people familiar with the matter said ByteDance would hold an 80 percent stake in TikTok Global. But because ByteDance is partly owned by non-Chinese investors, those investors would become indirect owners of TikTok Global, bumping up the U.S.-ownership stake and allowing the Trump administration to claim that the majority of the company is owned by Americans.

TikTok Global’s ownership would be made up of 53 percent American investors, a person familiar with the matter said, including the 20 percent stake held by Oracle and Walmart and existing American investments in ByteDance. A group of additional ByteDance investors — most of them based in Europe — would control 11 percent of the service, one of the people familiar with the discussions said. Chinese investors, primarily the ByteDance founder Zhang Yiming and its employees, would hold the rest, or about 36 percent.

“I have given the deal my blessing,” Mr. Trump told reporters outside the White House on Saturday. “If they get it done that’s great, if they don’t that’s fine too.”

In a statement, Monica Crowley, a spokeswoman for the Treasury Department, said that the president had reviewed the deal, but that the administration’s formal approval was still pending.

“Approval of the transaction is subject to a closing with Oracle and Walmart and necessary documentation and conditions to be approved by Cfius” she said, referring to the Committee on Foreign Investment in the United States, the national security panel overseen by Mr. Mnuchin that is reviewing the transaction.

Prominent senators of both parties have argued that a full sale of TikTok was necessary to ensure American security. But in his remarks outside the White House Saturday, the president suggested that the deal would fully address his administration’s national security concerns, saying that the “security will be 100 percent” and that the new companies would use a separate cloud from its Chinese parent.

He also incorrectly claimed that the new company would “have nothing to do with China.” Chinese investors will retain a substantial portion of the new company’s stake.

“It’ll be a brand-new company,” Mr. Trump said. “It will have nothing to do with any outside land, any outside country.”

The deal appears to come with strings attached. Mr. Trump had previously argued that the United States Treasury should receive a “very big proportion” of the sale price of any deal, but later acknowledged that there was no mechanism for the government to do that.

On Saturday, Mr. Trump said that deal would involve “about a $5 billion contribution toward education,” without specifying who precisely would be making the investment, or what the investment would be used for.

“We’re going to be setting up a very large fund for the education of American youths, and that will be great, that’s their contribution that I’ve been asking for,” he said.

The details of the arrangement would depend on whether TikTok followed through with its plan to go public on American markets in about a year, a person with knowledge of the deal said.

ByteDance, in a statement in Chinese on its Toutiao news aggregator app, said Sunday that it had been unaware of the $5 billion contribution it would supposedly be making.

“We are also hearing for the first time about the $5 billion education fund from the news,” the statement said. “The company has always been committed to investing in the educational sector.”

The deal constitutes a victory for Oracle, which is a close corporate ally of the president and his administration. Its top executives worked on Mr. Trump’s transition team, have supported his policy initiatives and have donated more than $150,000 to his re-election campaign.

Its founder, Larry Ellison, and Walmart’s chief executive, Doug McMillon, twice spoke with Mr. Trump about the deal on Friday, said a person familiar with the matter.

In a statement, Safra Catz, Oracle’s chief executive, said the company was “100 percent confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok’s American users and users throughout the world.”

Walmart said in a statement that it was “excited about our potential investment in and commercial agreements” with TikTok Global. It said Mr. McMillon would serve on the company’s board.

Lawmakers critical of China’s influence over technology have expressed skepticism about any deal. A group of Republican senators, led by Marco Rubio of Florida, said in a letter on Wednesday that a “trusted partnership deal” was “insufficient in achieving the goals of protecting Americans and U.S. interests.”

Senator Mark Warner, Democrat of Virginia, said in a speech this past week that scrutiny of technology companies must be done “honestly.” And he said that the “haphazard actions on TikTok fail that test and will only invite retaliation against American companies.”

It remains to be seen if China will try to block a transaction involving one of its most successful tech exports.

The race toward a deal was complicated last month after Beijing introduced new restrictions that appeared to essentially ban the sale of TikTok’s valuable video recommendation algorithm without a license, making an outright acquisition of TikTok by an American company harder to pull off.

In addition to targeting TikTok, the administration said on Friday that it would force companies like Apple and Google to remove WeChat, a popular messaging platform owned by Tencent Holdings, from their app stores starting Sunday night. It will also prohibit companies from providing hosting or content delivery services to the app, potentially slowing it down substantially or disabling it outright.

While Beijing has long banned American social media services, this is the first time that Washington has threatened to respond in kind. The United States has for decades embraced an open, largely unregulated vision of the internet. But in recent years, concerns about national security and geopolitics have led officials to bar Chinese technology from the networks, and now smartphones, used by Americans.

On Saturday, a federal judge heard arguments from lawyers representing WeChat users in the United States who have sued to block the ban. She indicated she would decide whether to issue an injunction before the ban goes into effect.

Ana Swanson and David McCabe reported from Washington, and Erin Griffith from San Francisco. Lauren Hirsch contributed reporting from New York, and Raymond Zhong from Taipei, Taiwan.

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TikTok’s Proposed Deal Under Review by Trump Administration

WASHINGTON — After more than six weeks, two White House executive orders, new Chinese regulations and multiple bidders, a deal for the social media app TikTok has boiled down to one main strategy: mitigation.

TikTok, which is owned by the Chinese internet company ByteDance, said on Monday that it had offered a proposal to the Treasury Department that aimed to address the Trump administration’s concerns that the app could give the Chinese government access to sensitive data.

The proposal is far from an outright sale of TikTok’s U.S. operations, as President Trump suggested in an Aug. 6 executive order. Instead, ByteDance designed a proposal to alleviate the pressure it was facing from China and the United States and to mollify all sides. Specifically, it structured the deal to satisfy some of Mr. Trump’s concerns while dodging new Chinese regulations that could allow Beijing to block an outright sale of TikTok, people with knowledge of the discussions said.

Under the terms, TikTok would bring on Oracle, a business software firm that is close with the White House, as a “trusted technology partner.” That role could involve Oracle’s handling TikTok user data not just in the United States but also around the world, one person familiar with the matter said.

Oracle would also most likely gain a stake in TikTok, one person with knowledge of the proposal said. While the size of any Oracle investment in TikTok was unclear, Oracle would not be the app’s outright owner, another person said. And TikTok would also not transfer ownership of its valuable recommendation algorithm to Oracle, one person said. Beijing has essentially forbidden such a move.

The exact ownership structure for TikTok was still being debated, but some of ByteDance’s current investors are expected to be shareholders of the app, the people added. The deal would give U.S.-based investors voting control over TikTok, even though they may not own a majority of its shares, one person added. Such an arrangement could address concerns from the Committee on Foreign Investment in the United States, which scrutinizes investments with a foreign entity and makes a distinction between control and ownership of U.S.-based companies.

TikTok would also establish its headquarters in the United States. (It currently has offices in Los Angeles.) With discussions still underway, it’s possible that central details could still change.

The proposal now hinges on gaining the support of Mr. Trump, who previously said he was willing to ban TikTok if the app’s U.S. operations were not sold by a Sept. 20 deadline set by his executive order. Mr. Trump’s advisers, including Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross, seem inclined to accept the kind of deal that ByteDance has offered, people familiar with their thinking said.

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Credit…Ng Han Guan/Associated Press

Mr. Mnuchin and Mr. Ross, who are both playing a prominent role in reviewing ByteDance’s proposal, have come to favor a solution that would reduce national security and data risks by moving some of TikTok’s key operations out of China, rather than killing the company outright, those people said. There are few strong voices in the administration speaking out against such a deal, with the trade adviser Peter Navarro, a China hawk and one of TikTok’s more vocal critics, playing a minimal role in recent discussions.

ByteDance’s carefully designed proposal and the shifting views of Mr. Trump’s advisers indicate how they are more willing to compromise to mitigate an increasingly fractious situation over a video app that is beloved by American teenagers and influencers. On Sunday, ByteDance rejected a deal from Microsoft, in which Microsoft had proposed essentially taking over control of TikTok’s algorithm.

“This way D.C. is happy, Beijing’s happy with no algorithm being sold, and ByteDance and TikTok, along with Oracle, all have smiles on their faces,” said Daniel Ives, a technology analyst at Wedbush Securities. “This is a very tight balancing act for ByteDance because they’re trying to, by the thread of a needle, keep their company as a stand-alone.”

In its statement on Monday, TikTok said the proposal that was in front of the Treasury Department would “enable us to continue supporting our community of 100 million people in the U.S. who love TikTok for connection and entertainment.” Oracle confirmed that it was “part of the proposal submitted by ByteDance to the Treasury Department,” but declined to elaborate.

Mr. Mnuchin described on CNBC on Monday how Oracle would be a “trusted technology partner” for TikTok and said the software company had made “many representations for national security issues.” The White House declined to comment, and the Department of Commerce did not immediately respond to a request for comment.

Other parties may still be interested in participating in a deal. Walmart, which had been working on a TikTok bid with Microsoft, said on Sunday in a statement that it “continues to have an interest in a TikTok investment and continues discussions with ByteDance leadership and other interested parties.”

In China, state media reports said on Monday that ByteDance would not sell TikTok in full to Oracle or any other bidders, suggesting that the company’s valuable algorithm would not trade hands. Last month, Beijing issued regulations that effectively said ByteDance would need a license to sell its technology to an American suitor.

At a regularly scheduled news briefing on Monday, Wang Wenbin, a spokesman for China’s Foreign Ministry, also criticized the American treatment of TikTok.

“TikTok has been rounded up and hunted in the United States, in a classic example of a government-coerced transaction,” Mr. Wang said. “This fully lays bare certain American politicians’ true intentions to seize by force, as well as the ugly face of economic bullying.”

Mr. Trump, who delights in being unpredictable, has a history of surprise decisions in his dealings with China. In recent years, he announced tariffs on hundreds of billions of dollars of products during a trade war and pardoned Chinese companies like ZTE at the request of China’s president, Xi Jinping.

Now he will essentially have to be persuaded to accept the type of compromise that he previously rejected. This summer, TikTok and its investors pressed the administration to allow them to address any concerns over national security by reconfiguring their operations, including moving their headquarters and data storage out of China. But Mr. Trump said no.

It is possible that Mr. Trump will face criticism from China skeptics in both parties if he takes a deal that doesn’t sever TikTok from ByteDance entirely.

In a letter on Monday to Mr. Mnuchin, Senator Josh Hawley, Republican of Missouri, urged the government to reject ByteDance’s proposal. He said ByteDance “can still pursue a full sale of TikTok, its code and its algorithm” to an American company.

“Or perhaps, given constraints imposed by Chinese law, the only feasible way to maintain Americans’ security is to effectively ban the TikTok app in the United States altogether,” Mr. Hawley said.

David McCabe and Ana Swanson reported from Washington, and Erin Griffith from San Francisco. Raymond Zhong contributed reporting from Taipei, Taiwan.

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Oracle Chosen as TikTok’s Tech Partner, as Microsoft’s Bid Is Rejected

WASHINGTON — The Chinese owner of TikTok has chosen Oracle to be the app’s technology partner for its U.S. operations and has rejected an acquisition offer from Microsoft, according to Microsoft officials and other people involved in the negotiations, as time runs out on an executive order from President Trump threatening to ban the popular app unless its American operations are sold.

It was unclear whether TikTok’s choice of Oracle as a technology partner would mean that Oracle would also take a majority ownership stake of the social media app, the people involved in the negotiations said. Microsoft had been seen as the American technology company with the deepest pockets to buy TikTok’s U.S. operations from its parent company, ByteDance, and with the greatest ability to address national security concerns that led to Mr. Trump’s order.

“ByteDance let us know today they would not be selling TikTok’s U.S. operations to Microsoft,” Microsoft said in a statement. “We are confident our proposal would have been good for TikTok’s users, while protecting national security interests.”

ByteDance declined to comment. A spokeswoman for Oracle did not immediately respond to a request for comment.

The fast-moving series of events on Sunday came as the clock ticks down on the executive order from Mr. Trump, which said that TikTok essentially needed to strike a deal to sell its U.S. operations by Sept. 20 or risk being blocked in the United States. But sale talks had been in a holding pattern because China issued new regulations last month that would bar TikTok from transferring its technology to a foreign buyer without explicit permission from the Chinese government. And any resulting deal could still be a geopolitical piñata between the United States and China.

The Chinese regulations helped scuttle the bid by Microsoft. The software giant had said in August that it would insist on a series of protections that would essentially give it control of the computer code that TikTok uses for the American and many other English-speaking versions of the app.

Microsoft said the only way it could both protect the privacy of TikTok users in the United States and prevent Beijing from using the app as a venue for disinformation was to take over that computer code, and the algorithms that determine what videos are seen by the 100 million Americans who use it each month.

“We would have made significant changes to ensure the service met the highest standards for security, privacy, online safety and combating disinformation,” Microsoft said in its statement.

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Credit…Tom Brenner/Reuters

Oracle has said nothing publicly about what it would do with TikTok’s underlying technology, which is written by a Chinese engineering team in Beijing — and which Secretary of State Mike Pompeo has charged is answerable to Chinese intelligence agencies. That is a major concern of American intelligence agencies, led by the National Security Agency and United States Cyber Command, which warned internally that whoever controls the computer code could channel — or censor — a range of politically sensitive information to specific users.

ByteDance and TikTok have denied that they help the Chinese government.

TikTok has become the latest flash point between Washington and Beijing over the control of technology that affects American lives. The Trump administration had already banned the Chinese telecom giant Huawei from selling next-generation, or 5G, networks and equipment in the United States, citing the risk of a foreign power controlling the infrastructure on which all internet communications flow.

But TikTok took the battle in new directions. For the first time, the United States was trying to stop a Chinese cultural phenomenon, with an intense following among American teenagers and millennials, which carries with it the possibility of future influence.

Even if Oracle may try to close a deal, it is unclear whether Beijing would create new obstacles to the process. And election-year politics have hung over the negotiations from the start. Unlike many other technology companies, Oracle has cultivated close ties with the Trump administration. Its founder, Larry Ellison, hosted a fund-raiser for Mr. Trump this year, and its chief executive, Safra Catz, served on the president’s transition team and has frequently visited the White House.

Last month, Mr. Trump said he would support Oracle buying TikTok. He called Oracle a “great company” and said the firm, which specializes in enterprise software, could successfully run TikTok.

“I think that Oracle would be certainly somebody that could handle it,” he said.

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Credit…Rozette Rago for The New York Times

Along with Amazon, Oracle tried to win a $10 billion contract to run the Pentagon’s cloud services, one of the most hotly contested technology contracts issued by the Trump administration. Microsoft ultimately won that.

Oracle was also poised to provide the administration with a system earlier this year to help with a planned study that would have enabled the wide release of the malaria drug hydroxychloroquine to treat Covid-19. While doctors had warned the drug could have dangerous side effects, Mr. Trump had promoted its possible use to treat patients infected by the coronavirus.

Oracle’s relationship with the administration has drawn scrutiny. In August, a Department of Labor whistle-blower said that Mr. Trump’s labor secretary, Eugene Scalia, had intervened in a pay discrimination case involving the company.

On a call to discuss Oracle’s earnings last week, Ms. Catz preemptively told analysts that she and Mr. Ellison would not discuss reports about their bid for TikTok.

The rise of TikTok in the United States has been remarkably rapid; it has taken off in just the past two years. ByteDance, founded in 2012, has raised billions of dollars in funding, valuing it at $100 billion, according to PitchBook, which tracks private companies. Its investors include Tiger Global Management, KKR, NEA, SoftBank’s Vision Fund and GGV Capital.

In July, as pressure from the U.S. government escalated, ByteDance began discussions with investors to carve out TikTok.

But the deal quickly become a free-for-all with bids from various corporations and investment entities around the world and new demands from the U.S. and Chinese governments.

As the deal progressed, two of ByteDance’s largest backers, Sequoia Capital and General Atlantic, have sought to retain their holdings in its valuable subsidiary while saving TikTok from a ban in the United States. Both firms are represented on ByteDance’s board of directors.

In late August the firms teamed up with Oracle to bid against Microsoft. Microsoft, meanwhile, teamed up with Walmart to make its bid.

In an interview, Brad Smith, Microsoft’s president and chief legal officer, said that as he studied TikTok, it became evident that there were two distinct potential security threats.

The first was that Chinese authorities, using existing and new national security laws, could order TikTok to turn over user data. TikTok tracks everything that its hundreds of millions of users watch to funnel them more videos and other material. Given that users cannot opt out of that tracking, the only solution would be to move the data on Americans to servers that are solely in the United States, Mr. Smith said.

(TikTok currently uses a major server in Virginia, but backs up some of its data in Singapore, and there are questions about whether Chinese authorities could reach into any of those huge pools of user data.)

Microsoft would have located that data in the United States — and, in all likelihood, so would Oracle.

“Then Microsoft engineers began to see a second potential vulnerability: disinformation,” Mr. Smith said, one that has also been identified by Australian researchers. The only way to assure that TikTok’s Chinese engineers were not designing code and algorithms to affect what users saw, or did not see, would be for Microsoft to take over the code and the algorithms.

“We proposed to control the data sets and the algorithms from the day of the acquisition, including by moving source code for the algorithms to the United States,” Mr. Smith said.

Microsoft then would have worked over the course of a year with TikTok’s Chinese engineers so that it would vet any subsequent changes and make them reviewable by the U.S. government for security purposes before it was released into production, he said.

That is the approach favored by the National Security Agency and the Pentagon, according to intelligence officials. But it is exactly what the Chinese object to, which Beijing made clear in its new regulations last month.

David E. Sanger and David McCabe reported from Washington; Erin Griffith reported from San Francisco.