Top Hat & Thimble - August 2025
Welcome to NextGen Competition’s newsletter, delivering insider insights on antitrust battles, industry shakeups, AI trends, and more.
Congratulations, you are now an Intel shareholder! Welcome to the Socialist Republic of America.
Exhibit one: The administration is undermining the dynamic, competitive capitalism that has historically been America's strength.
This administration thinks it is better than markets at allocating capital and choosing winners in the marketplace. As the Financial Times writes:
Trump’s arbitrary interventions in the economy are more redolent of the ways that despotic regimes, such as Russia or China, operate rather than the traditional practices of the global champion of free markets.
One example of this is President Trump strong-arming Intel into giving up a 10% equity stake in the company. The administration did this by holding hostage funding to incentivize the reshoring of advanced computer chips that Congress mandated in the bipartisan CHIPS Act. As James Surowiecki argues, the government owning a piece of a major corporation like Intel is profoundly damaging to the principles of a market economy. It undermines the government’s role to set broad, fair rules for the entire market, not to act as a proprietor with a vested financial interest in the success of one competitor over others.
And President Trump has said, this is just the start.
Whose bingo card had the United States adopting the corrupt state-led economic model of China and Russia?
Exhibit two: The administration is undermining the legal framework underpinning market rules.
The administration is allowing TikTok to operate illegally in the United States. The Protecting Americans from Foreign Adversary Controlled Applications Act, which passed with broad bipartisan support, mandates that ByteDance divest TikTok's U.S. operations or face a ban. The deadline imposed by the law to do this was upheld by the Supreme Court in January 2025.
President Trump, via executive orders, has extended the deadline three times. This effectively grants Oracle, Apple, and Alphabet/Google permission to ignore the law! As Vice Chairman of the Senate Select Committee on Intelligence, Mark R. Warner (D-VA) says:
“Once again, the Trump administration is flouting the law and ignoring its own national security findings about the risks posed by a PRC-controlled TikTok. An executive order can’t sidestep the law, but that’s exactly what the president is trying to do.”
Finally, as I write in my op-ed for The Well News, antitrust enforcement has also been corrupted. Decisions are now being made by political appointees and lobbyists with no antitrust expertise against the advice of the administration's own experts. Trillion-dollar corporations like Alphabet, Meta, Microsoft, Apple, and Amazon seek to neutralize antitrust enforcers' competition concerns with campaign checks, shallow commitments to invest in America, and well-connected lobbyists. Pay-to-play antitrust enforcement creates incredible uncertainty for all companies looking to expand through acquisitions and hurts American consumers.
Where are the Republicans who believe in capitalism, freedom, and the rule of law that underpins both?
As always, thank you for reading and your support.
With regards,
Sumit Sharma
Executive Director
NextGen Competition
Apple Bets on an Authoritarian State
This week, the Digital Progress Institute (DPI) hosted Financial Times reporter Patrick McGee to discuss his book, Apple in China: The Capture of the World’s Greatest Company. The book, which tells the story of corporate capture by an authoritarian regime, is a stark warning to anyone cheering Washington’s move to take equity stakes in private firms like Intel.
McGee shows how a pursuit of “efficiency” turned into dependence on a state-directed system. Apple’s manufacturing success in China created political entanglements and turned a brand that once celebrated “rebels” and “troublemakers” into a company that now complies with a belligerent regime that can shape its fate. The book has quickly become required reading for everyone on the team!
The New York Times’ Hannah Beech said it best in her review:
China may have enabled Apple to become one of the most profitable companies in the world, but the exploitation goes both ways: This is not just a story of China making Apple, but of Apple making China. Given Xi’s authoritarian hold on power, what began as a feat of manufacturing has troubling consequences for the entire world.
There’s no shortage of reasons to be worried about Apple and its quest to become a global monopoly. From its walled garden to monopoly rents, it’s time for accountability. Thanks DPI for the invite!
Microsoft’s “Digital Escorts,” Vendor Lock-in, and a Single Point of Failure
ProPublica reports that Microsoft used engineers based in China to help support Defense Department cloud systems, relying on U.S. “digital escorts” who often lacked the expertise to police what those engineers were doing. After the reporting, the Pentagon issued a formal letter of concern citing a “breach of trust,” opened an investigation, and Microsoft said China-based staff would no longer work on DoD projects.
But DoD’s leverage over Microsoft is limited because so much of the agencies’ systems depend on Microsoft. The American Prospect documented how the DoD was forced to upgrade to Microsoft’s E5 productivity just to gain simple security updates. It’s called vendor lock-in, and has forced the government’s most powerful agency to “bow down to its tech master in Redmond.” When one vendor controls the software and the cloud, the buyer not only has fewer levers to push for accountability, but companies like Microsoft know how to take full advantage by limiting interoperability with other vendors.
This is exactly the risk NextGen has warned about as Microsoft seeks more control over cloud, AI, and content pipelines. And the ultimate fix isn’t a press release and “formal letter” outlining a customer’s displeasure. A true fix requires the government using its procurement power to insist on greater interoperability among systems which would allow it to mix and match systems from different vendors - tailoring its systems to match the DoDs unique needs. The Federal Government has the buying power to make these changes, but it requires the DoD and other agencies to build critical in-house expertise to manage these systems internally—and leadership with a long term vision. Unfortunately the current administration is getting rid of expertise, not building it.
Fresh Off the Press: Pay-to-Play Antitrust
In The Well News, Sumit argues that President Trump’s Justice Department is gutting competition law by sidelining career experts and letting lobbyists and political appointees call the shots. He points to the HPE-Juniper approval over staff objections, the firing of senior antitrust deputies, and the sudden reversal in the AmEx GBT–CWT case as part of a pattern that rewards lobbyists closely connected to the attorney general over consumers and competition.
He urges Congress to use the Tunney Act and bipartisan oversight to restore the rule of law.
Pay-to-play antitrust enforcement and political interference also creates incredible uncertainty for all companies looking to expand via acquisitions, and hurts U.S. consumers. Congress foresaw this danger. The Tunney Act requires federal courts to review antitrust settlements to ensure they serve the public interest and not private interests.
Other Competition News
Headlines from the past month you might have missed:
Big Tech Flattery Continues: We kicked off the month with a blatant show of Big Tech flattery, as Apple CEO Tim Cook gifted President Trump a gold and glass sculpture in the White House. Axios reports that the “the gold bauble is the latest lavish gift presented to Trump in an attempt to curry favor with the president this year, raising both ethical and legal concerns.”
Big Tech executives also joined President Trump for dinner last week in a scene reminiscent of Trump’s inauguration. According to the Financial Times, the invite list included “Microsoft chief executive Satya Nadella and other CEOs including OpenAI’s Sam Altman, Google’s Sundar Pichai and Apple’s Tim Cook.”
Columnist Rana Foroohar also appeared on CNN to warn that economic inequality and populism are setting the stage for Trump’s authoritarianism and that silence from the business community is enabling it.
Public Patience with AI is Wearing Thin: More people distrust Big Tech, and being forced to interact with AI through its platforms is accelerating the backlash, according to Martin Hart-Landsberg. In Monthly Review, he explains why that skepticism is justified and sees organized pushback as a way to curb platform power:
The most organized opposition to the unchecked use of AI systems currently comes from unions, especially those representing journalists, graphic designers, script writers, and actors, with some important victories to their credit. But given the rapid introduction of AI systems in a variety of public and private workplaces, almost always because employers hope to lower labor costs at worker expense, it shouldn’t be long before many other unions will be forced to expand their bargaining agenda to seek controls over the use of AI. Given community sentiments, this should bring new possibilities for unions to explore the benefits of pursuing a strategy of bargaining for the common good.
Kanter Drops the Mic: Former AAG for Antitrust Jonathan Kanter penned an op-ed for Financial Times this month on acqui-hires, calling out Big Tech’s bad habit of absorbing AI start-ups like a parasite and leaving an empty shell behind. There are so many good lines, but we especially love this one:
“Tech giants can quietly absorb innovative start-up teams — in effect neutralising nascent competitors — without ever encountering antitrust scrutiny.”
Last month, alongside Public Citizen and ten other public interest groups, we urged the Federal Trade Commission (FTC) to launch a full investigation into Meta’s investment in Scale AI, an effort we viewed as a deliberate ploy to exploit gray areas in traditional merger law. Read our full letter here.
Dubious Case, Legit Issue: Elon Musk is suing Apple and OpenAI over monopolistic claims. The lawsuit states:
"This is a tale of two monopolists joining forces to ensure their continued dominance in a world rapidly driven by the most powerful technology humanity has ever created: artificial intelligence."
Apple’s monopoly power deserves scrutiny, but we shouldn’t confuse this effort with meaningful reform, especially when you consider the source.
Deeply Concerning and Unsurprising: Public Citizen is out with a report with the bold fact: “The Trump administration has halted or withdrawn one third of targeted investigations into suspected misconduct and enforcement actions against technology corporations.”
David Dayen of The American Prospect did a deep dive on the report, stating:
“The report intimates that the tech industry is benefiting from a significant return on investment. Public Citizen estimates that the industry, as broadly defined in the report, spent $1.2 billion in “political influence” since the 2024 election cycle, including direct political spending ($863 million), payments to Trump’s own businesses ($222 million), lobbying ($76 million), and donations to Trump’s inaugural festivities ($25 million).
Big Tech flattery, indeed.
Clippy’s Back, and He’s Woke: Now the face of Big Tech protests, Clippy was resurrected by consumer rights advocate and YouTuber Louis Rossmann, who said:
“If you told Clippy that you were having a bad day, he wasn’t going to use that information to try and figure out which advertiser to sell you to, nor was he trying to steal your personal data or get you to purchase other Microsoft products. He had no ulterior motives,” Rossmann explained in the now viral video. “Clippy just wanted to help.”
Rossman is hoping Clippy will continue to catch on, and bring awareness to Big Tech’s behavior in the process.
Potential Peril Across the Pond: What would happen if a volatile U.S. leader decided to “weaponize” technology capabilities for Europe? Nothing good, according to Daniel Thomas of the BBC.
“‘Critical data would become inaccessible, websites would go dark, and essential state services like hospital IT systems would be thrown into chaos,’ says Robin Berjon, a digital governance specialist who advises EU policymakers.”
Europe would most surely face an uphill battle to achieve true “digital sovereignty,” but could make some strides with a “limited sovereign cloud” to protect government data, according to Zach Meyers, of the Centre on Regulation in Europe (CERRE).
The bigger problem: this administration keeps turning U.S. tech dominance into leverage, leaving allies exposed to platform lock-in and political whims. Instead of pressuring Europe to soften its guardrails, Washington should help allies diversify, back open standards, and stop giving Big Tech veto power.
Amnesty Joins the Fight: In the name of human rights, Amnesty International is calling on governments to “break up with Big Tech.” The fifty-three page briefing, aimed at curbing the influence of Google, Meta, Microsoft, Amazon, and Apple, which was unveiled last week, outlines the human rights harms that have occurred at the hands of Big Tech. Hannah Storey, the organization’s Advocacy and Policy Adviser on Technology and Human Rights, remarked:
“Addressing this dominance is critical, not only as a matter of market fairness but as a pressing human rights issue. Breaking up these tech oligarchies will help create an online environment that is fair and just. Failure to address Big Tech dominance can have serious consequences offline, as our investigations into Facebook’s role in the Tigray war in Ethiopia and the ethnic cleansing of the Rohingya in Myanmar have shown.”
Until next month! In the meantime, follow us on X and BlueSky for the latest on Big Tech, AI, and antitrust.