Mark Zuckerberg's next FTC fight could be tougher

Good morning. 🏛️ Former special counsel Robert Mueller says Russia is still trying to sabotage American democracy. "They’re doing it as we sit here," he told lawmakers.

• Breaking overnight: Jeffrey Epstein was found injuredin his New York City jail cell last night with marks on his neck.

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Moving the Market: Mark Zuckerberg says the Federal Trade Commission has opened an antitrust investigation into Facebook, news that comes one day after the Justice Department announced its own plans to review all the major tech companies for antitrust violations.

• The big picture: The antitrust crackdown will be the next great battle in the war between Washington and Silicon Valley. It could result in new limits for the tech giants or leave an open runway for future growth.

• The battle will require the tech execs to mobilize lawyers, lobbyists and PR teams to convince regulators, legislators and the media that their companies do not harm consumers or stifle competition.

What's next: When the time comes, Facebook will talk up its competitors and tout its own investments in American innovation, job growth and small businesses. This month's testimony from Matt Perault, Facebook's public policy director, is essentially the outline.

• Get familiar with "market definitions." As Axios' Scott Rosenberg wrote back in May, the tech giants' legal fate "will hang on how judges and regulators define their markets."

• For example, Facebook's share of the domestic "social media" market is larger than its share of the domestic "messaging" market, which includes everyone from Apple to Snapchat to AT&T.

• And on that note, look for the tech giants to define market share in global rather than domestic terms. That could prove convincing due to the growing concerns over China's technological prowess.

For now, Facebook has closed the door on its fight with the FTC over privacy. The commission's new oversight measures, which I outlined yesterday, will force the company to be more accountable for its actions but will not fundamentally change its business.

• Speaking to employees, Zuckerberg said the measures create "a completely new standard" for privacy — andindeed they do. CNBC's Jim Cramer goes so far as to call them "invasive."

The Mood in Menlo: In the last 24 hours, Facebook was fined $5 billion by the FTC, forced to give $100 million to the SEC, subjected to new privacy oversight measures and forced to announce that it is the subject of a federal antitrust probe. ... And then shares jumped.

• The numbers: Facebook added $16.9 billion in revenue and grew its user base to 1.59 billion daily and 2.41 billion monthly active users. Earnings were up to $1.99 per share, beating estimates.

• Those gains more than offset the $2 billion that Facebook said it had set aside — on top of $3 billion it set aside last quarter — to pay off the $5 billion fine to the FTC.

The big picture: Facebook won. The company is too big, too powerful and too essential to users and advertisers to be hindered by regulators — or, at least, by these regulators.

🇺🇸 Talk of the Trail 🇺🇸

"Facebook should fear a Democratic win in 2020," Politico's Nancy Scola writes. "Democratic anger over Facebook... is the most potent sign yet of the peril Silicon Valley faces if the party regains full power in Washington."

• What's next: "Investigations could become more intrusive, and the online industry could face punishments that have never realistically been on the table."

Big in the Bay, big in the Beltway: Treasury Secretary Steven Mnuchin says he and President Donald Trump have found no national security concerns about Google's work in China, "a rebuke of claims made by billionaire investor and Facebook board member Peter Thiel," WSJ's Bowdeya Tweh reports.

• "The president and I did diligence on this issue. We’re not aware of any areas where Google is working with the Chinese government in any way that raises concerns,” Mnuchin told CNBC, adding that he and the president recently met with Google chief Sundar Pichai to address Thiel’s concerns.

Market Links

• Masa Son looks to Goldman, Apple for next fund (WSJ)

• Reed Hastings launches a mobile-only plan in India (TC)

• Jeff Bezos brings Prime Video to Oculus VR sets (Variety)

• Arianna Huffington plans to resign from Uber's board (CNBC)

• Jeff Zucker seeks $300,000 for 2020 debate ads (Variety)

Talk of the telcos: "The Justice Department is poised to approve T-Mobile’s merger with Sprint under a plan designed to create a new wireless carrier by handing assets to satellite-TV provider Dish Network," WSJ's Drew FitzGerald, Sarah Krouse and Brent Kendall report.

• The deal gives "the satellite-TV company nine million Sprint cellphone customers, new wireless spectrum and the ability to operate on T-Mobile’s network during a seven-year transition period."

The big picture: "The deal, which would require Dish to offer cellphone service to consumers, is intended to maintain competition by creating a fourth national wireless player. ... However, the satellite-TV provider would be dwarfed by the others in terms of both subscribers and revenue."

Talk of Tinseltown: Randall Stephenson says the forthcoming HBO Max streaming service will include live sports and news, an addition that could give AT&T's WarnerMedia an edge against competitors like Netflix.

• “Ultimately HBO Max will have live elements: unique live sports and premium sports,” Stephenson told investors yesterday. “Those are going to be really, really important elements for HBO Max. The same with news.”

• Stephenson did not say which sports Max might offer, though he cited the company's existing deals with the MLB, NBA and NCAA.

• As for news, it's reasonable to assume that HBO Max would find a way to incorporate new or existing programming from CNN.

Meanwhile, WarnerMedia was AT&T's fastest-growing division in the second quarter, posting $8.35 billion in revenue — despite a small drop in subscribers for HBO, DirecTV and DirecTV Now.

• Bonus: Stephenson also addressed AT&T's war with CBS over carriage fees: "We sent what I’d say was a reasonable and fair offer over five days ago and it’s been crickets. We haven’t heard anything."

🏀 What next: Speaking of sports, Steve Ballmer seems to be as fired up over Kawhi Leonard, Paul George and the Los Angeles Clippers as he was over developers at Microsoft.

• Bonus: Twitter has noticed that L.A.'s new power duos have the same jersey numbers as the city's area codes. Leonard and George are 213, Anthony Davis and LeBron James are 323.

See you tomorrow.