Good morning. President Trump signed an executive order this week aimed at making it easier to include alternative assets in retirement funds, which has long been a dream of private fund managers. Danielle Kaye digs into the risks — for both consumers and the private asset industry. And ahead of a verdict on remedies in the Google search antitrust case, which is expected this month, Marty Swant talks with the Mozilla C.E.O. Laura Chambers about how one of the proposed fixes could pose an existential threat to the nonprofit. (Was this newsletter forwarded to you? Sign up here.)
Private equity clears a way to 401(k)sThe private equity industry, facing a slowdown in exits and fizzling returns, has long coveted a $12.2 trillion pool of money: retirement savings. Now it is one step closer to managing some of the funds in Americans’ 401(k)s and related plans. President Trump signed an executive order on Thursday that clears a path for plan managers to add private equity and other alternative assets to retirement savings accounts. The administration’s stance “marks a major step forward in modernizing the retirement plans of everyday savers,” Jaime Magyera, the head of BlackRock’s retirement business, said in a statement to DealBook. (BlackRock, the world’s largest asset manager, earlier this summer announced a big push to include private equity and private credit in its retirement plans.) Taking private assets mainstream would mark a notable shift: Private market investments, while not technically barred from 401(k) plans, are riskier than publicly traded stocks and bonds. They have traditionally been seen as unfit for defined contribution plans. Consumer groups, lawmakers and some investment advisers have raised alarm about the potential harm to everyday investors. Those concerns have been front and center. But observers say the private asset industry, which has lobbied hard for the opening, could also expose itself to risks. Trump’s much-anticipated order does not change policy. But it directs the Labor Department, which oversees retirement plans, to re-evaluate its fiduciary guidelines and clarify its position on the proper process when offering funds that include alternative assets. Notably, the cryptocurrency and real estate industries are also poised to benefit. Proponents say the order expands investment opportunities for retirees. It might make some plan sponsors realize that these assets “can be part of a prudent asset allocation of a 401(k) plan,” Erin Cho, a partner in the law firm Mayer Brown’s employment and benefits practice, told DealBook. Retirement plans are a big pot of money. Private asset managers have long traded institutional money — think pension funds and endowments. But now, “the institutional market is kind of mature and saturated,” Steve Kaplan, a professor of finance and entrepreneurship at the University of Chicago Booth School of Business, told DealBook. Exits have been slow and new money isn’t flowing in. “If they want to grow, they have to find money somewhere else,” Kaplan added. The trillions of dollars in employee retirement plans is an appealing choice. But how risky are private assets for investors? Lawmakers including Senator Elizabeth Warren, as well as consumer groups and some investment advisers, have called private investments illiquid and opaque. Their top concerns:
Asset managers and plan sponsors could be on the hook, too. Employers and plan administrators have a legal duty to act in the best interests of employees. “If these new investments don’t live up to their promise, asset managers could face lawsuits and regulatory heat,” Marc Pinto, the global head of private credit for Moody’s Ratings, said in a statement to DealBook. Aside from legal liability, critics say reputations in the industry could be in jeopardy if 401(k)s suffer. As retail investors turn to private assets, “you can see the veil all of a sudden being thrown back,” Benjamin Schiffrin, the director of securities policy for Better Markets, an advocacy group that pushes for financial reform, told DealBook. Moody’s has warned about riskier assets and lending, with big implications for fund managers. When firms manage money for retail investors, such as retirement accounts, they face pressure to spend money more quickly than when managing money for large institutional investors that can afford to wait for the best deals. As a result, “some managers may be tempted to compromise underwriting standards or stretch into riskier assets,” Moody’s analysts wrote in June. The analysts also stressed that private funds could lose the higher returns that have long set them apart. If fund managers shift strategies to better serve retail investors’ needs — for example, by disclosing more information or allowing them to trade more frequently — private markets might increasingly start to look like public ones, Moody’s analysts noted. Still, the industry is playing down the risks to both investors and fund managers. “I see this as more of an opportunity than a major concern or risk,” Edmund Murphy, Empower’s C.E.O., told DealBook. Empower, the second-largest retirement plan provider in the country, is partnering with Apollo and other asset managers to open private market investing to retirement plans. Murphy said that diversification — such as, including more than just private equity and private capital in retirement accounts — would help ensure retirees can access funds. And he said that while reputational risk is always a consideration, Empower’s asset management partners have a reputation for “strong performance.”
President Trump widens his trade war. Staggering tariffs went into effect for about 90 countries on Thursday. Countries scrambled to secure better terms, and Brazil and India, two of the hardest hit countries, said they would strengthen their trade ties. The White House weighs selling shares of Fannie Mae and Freddie Mac. More than a decade after the government bailed out the mortgage giants, President Trump is looking for a stock-market exit. The Trump administration has asked executives at the nation’s biggest banks to devise plans to sell shares of Fannie and Freddie on the stock market by the end of the year, according to people briefed on the discussions. Trump fills a void at the Fed. If confirmed by the Senate, Stephen Miran, the chair of the president’s Council of Economic Advisers, will fill the seat on the Fed board that was vacated by Adriana D. Kugler, who unexpectedly resigned last week. That term expires Jan. 31, but Miran would get a key vote on interest rate policy. … And creates a new opening at the I.R.S. Trump removed the I.R.S. chief, Billy Long, two months after he was confirmed. Treasury Secretary Scott Bessent will serve as acting commissioner until a permanent replacement takes office. Wall Street remains focused on the Fed’s next leader. Jay Powell’s term as chair expires in May 2026. Trump’s short list of potential appointees is said to include Christopher Waller, an existing Fed governor and Trump appointee; Kevin Hassett, the director of the National Economic Council, and Kevin Warsh, a former Fed official; James Bullard, a former St. Louis Fed president; and Marc Sumerlin, a former economic adviser to President George W. Bush. More big deals: A little over a year after agreeing to the deal, Skydance closed its acquisition of Paramount. The N.F.L. and ESPN deepened ties. OpenAI is said to be planning a stock sale at a $500 billion valuation. And the space company Firefly launched a successful I.P.O. Could a fix for Google’s search monopoly inadvertently hurt browsers?
It’s been more than a year since Judge Amit P. Mehta of the U.S. District Court of the District of Columbia declared Google a monopolist in internet search, and remedies are finally expected this month. One of the proposed remedies, unwinding Google’s default search deals, could be disastrous for not just Google, but also the browser maker Mozilla. Nearly all of Mozilla’s U.S. revenue comes from a deal with Google that makes its search engine default in the Firefox browser. Since Firefox debuted in 2004, Mozilla and Google have entered into multiple search agreements — with Mozilla briefly switching to Yahoo from 2014 to 2017. Though Firefox has around 27 million U.S. users (more than 200 million globally), it runs on the last independent browser engine. Almost every other browser relies on technology from Google or Apple, but Mozilla operates its own browser engine, called Gecko — and that gives it a critical seat at the table for setting privacy and accessibility standards. Marty Swant, a DealBook contributor who has covered technology and advertising for 10 years, talked with Mozilla’s C.E.O., Laura Chambers, about how the antitrust remedies could inadvertently limit browser competition — just as artificial intelligence is creating new potential privacy issues. The interview has been condensed and edited for clarity. What’s at stake with the remedies outcome? It’s hard to overstate how important this is. If those contracts were to go away, it would inhibit our ability to have an independent browser and also to run our independent browser engine. Google, for example, has Chromium, the browser engine that most browsers are built on. They have Chrome, which is the browser that most people use. And now they have Gemini as well. With Firefox, you get to choose which search engine you want to use on your browser; which large language model you would like to use for different use cases. We have incredibly high standards of privacy, so you have a choice that is very privacy-centric. So it’s really about giving users the ability not to get locked into big tech systems where they lose a ton of choice and they get shackled in ways they don’t even realize. What’s Mozilla’s alternative proposal? We’ve asked for something really simple, which is easy to enact and still very much in the spirit of the overall case: just a carveout for independent browsers that allows them to continue search contracts with Google. Let’s not solve for search competition but inadvertently hurt browser competition. That’s the big risk right now. During the trial, Perplexity and OpenAI talked about how not having their own browser has made it harder to collect as much data. Can Mozilla build a strong A.I. browser without harvesting user data? It’s very easy to say, “We need the data,” but that’s a little lazy. There are privacy-enhancing technologies, there’s better data solutions that still get high performance, but without that sort of gratuitous use and sharing of data that has unfortunately become too much of the norm and the standard on the internet. As things are now, the payments from Google make up between 80 percent and 85 percent of Mozilla’s revenue. If search contracts go away, can Mozilla survive? It’s important to note that those are U.S. revenues. We have global revenues as well and the case is just the U.S. market. That’s why we’ve been investing in the healthy growth of the advertising business. It was actually flat growth for a few years. This year, we’re on track for 11 percent growth in that business, and that’s really just by optimizing and doing what we can do better, not by releasing the privacy controls. We could easily get all that money back if we released all the privacy controls, but we will not do that. We’ve got a big plan, but I don’t want to undersell how significant a bad ruling would be on Mozilla and on our ability to keep fighting the good fight for the internet. Quiz: Apple pays
President Trump this week got a little closer to his long-held dream of a made-in-America iPhone. The tech giant vowed on Wednesday to make an additional $100 billion of investment in the U.S. on top of the $500 billion it promised in February (an announcement it made the same day Trump threatened to impose a 100 percent tariff on foreign semiconductors — except for companies who invest and build in the U.S.). But a little closer is not the same thing as close. China has been Apple’s manufacturing base for decades. And while the company has recently started shifting some production to Vietnam, Thailand and India, an internal analysis from its operations team found that making devices in the U.S. would be impossible, two people familiar with the study told The Times’s Tripp Mickle in May. Wayne Lam, an analyst with TechInsights, a market research firm, said an iPhone, which currently costs between about $600 and $1,200, would cost how much if it could be made in America? A. Between $600 and $1,200 B. $2,000 or more C. About $3,000 D. At least $5,000 We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times. Thanks for reading! We’ll see you Monday. We’d like your feedback. Please email thoughts and suggestions to dealbook@nytimes.com. Quiz answer: B.
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