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Apple CEO, Tim Cook, testifies before the Senate Homeland Security and Governmental Affairs Committee’s Investigati

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The U.S. Department of Justice sued Apple on Thursday, accusing it of using the iPhone’s market power to cut off rivals, kicking off a multiyear process involving hundreds of lawyers and threatening Apple’s “walled garden” business model.

If the DOJ wins, it could seek a range of changes to Apple’s business, and U.S. officials didn’t rule out the possibility that Apple could face “structural remedies” or be broken up.

If Apple’s arguments prevail, a court could rule that its estimated 64% of U.S. smartphone share isn’t a monopoly, or that its conduct wasn’t illegal, giving Apple new tools to fight off future regulation.

But before any of that happens, we’ll likely see years of legal wrangling, during which Apple will be forced to defend its business in public, distract its executives with legal meetings, produce internal documents for the government and potentially face bad headlines that could hurt its brand or image.

The DOJ’s lawsuit still needs to be assigned to a judge. In the short term, Apple could ask for a change of trial location away from New Jersey, and it will likely ask to dismiss the case entirely.

DOJ antitrust chief Kanter: Our concerns are with Apple telling others what they can or can't do

All these steps take varying amounts of time, and it’s realistic the trial will be scheduled for 2025, and the appeal won’t wrap up until 2027, depending on which judge is assigned the case, said William Kovacic, director of the Competition Law Center at George Washington University.

Often, companies accused of antitrust violations like Apple like to drag out the trial, said John Newman, a professor of law at the University of Miami and a former DOJ attorney.

“In general, defendants love to drag their heels forever,” Newman said. “Is the judge going to go with what the defendant proposes, which is inevitably years and years, tons and tons of discovery? Drag it out forever? Or they can actually step up and try to control that?” he continued.

For example, Google was sued by the DOJ in a similar case in October 2020, and it took nearly three years before it went to trial. Remedies haven’t been decided and it hasn’t gone through appeals. The DOJ case against Apple was inspired by a historic case against Microsoft filed in 1998. It went to trial later that year and an appeal was decided by 2001.

A potential distraction

Like the Microsoft trial, the Justice Department lawsuit against Apple is attempting to erect a new landmark decision for antitrust in the U.S., mostly by focusing on Apple’s entire ecosystem, not just a product, and whether how it functions represents anti-competitive conduct.

In a statement provided to CNBC on Thursday, Apple said that the lawsuit “threatens who we are” and that it could hurt its ability to make competitive tech products.

Apple provides more details about why it doesn’t like this kind of litigation in its SEC filings. The company says that when laws and regulations change, including antitrust litigation, it has to spend money to comply. “Imposed” changes can hurt customer demand, according to the filing, and when laws or regulations change, it creates uncertainty for Apple.

Another challenge for Apple may be that a big, public trial like this one competes for executive time and attention, and more decisions inside Apple may have to go through legal review before going forward.

Companies facing antitrust cases often need to loop employees who have nothing to do with trials into meetings, to sort through company documents, or help guide how the company will present evidence or technical arguments, Kovacic, a former FTC commissioner, said.

“In past major antitrust cases, the real danger for the company is that the focus of attention becomes winning the antitrust lawsuits instead of winning customers and doing your job,” Kovacic said. “It slows you down. It’s a real drag.”

For Apple, it’s not just the DOJ suit, but also new regulations in Europe, and investigations in other countries around the world that it has to deal with.

The U.S. government hasn’t said what it wants Apple to do to fix its allegations, but its initial filing on Thursday left the matter open, with a broad request for overall remedy.

One possibility includes forcing Apple to open the iPhone to third-party stores like it has in Europe. Many of the DOJ’s other allegations, like Apple’s alleged restrictions on third-party smartwatches and “super apps” don’t have close recent parallels in other countries or markets. The DOJ could also find remedies that aim to reorient the entire technology industry or future products.

“If and when this thing gets to trial, I would expect that it will not just be about smartphones, even though that’s the core of the story. This is really a case about the future of smart devices,” Newman said.

Apple may, as it has in the past, choose to preemptively make changes or tweaks to targeted products to head off additional scrutiny. For example, in January, Apple partially opened its App Store to cloud gaming services, one of the key kinds of competitors that the Justice Department alleged that Apple cuts off.

Discovery and deposition

Government lawyers will request internal, confidential Apple documents to bolster their case in a process called discovery. Apple’s business partners may also get requests to show the government their own confidential documents. Generally, companies fear discovery, because it’s unclear what will turn up, and Apple is particularly secretive about its internal documentation and strategy.

Documents unearthed through discovery are often posted publicly during the trial, exposing private deliberations.

The government will likely move to depose Apple’s executives, including CEO Tim Cook, or even call them to the witness stand during the trial. Cook took the stand during a recent antitrust trial against Epic Games, for example.

But executive depositions or testimony can still be risky for technology companies, especially if executives cannot control their egos — former Microsoft CEO Bill Gates was famously petulant and showed utter contempt for the process during a videotaped deposition by David Boies in 1998 that was played during the trial.

“A lesson that the Gates deposition experience taught is that if you’re a CEO, there is a real art and skill to doing a good deposition,” Kovacic said. “It requires you to suppress some of your ‘Master of the Universe’ impulses for the sake of doing a good job, and in this case, listening very carefully to the coaching of your lawyers.”

Apple and the DOJ could also come to a settlement, where Apple makes some changes and the government drops the suit before further discovery or depositions. However, there are no public signs of reconciliation.

Apple declined to comment on Thursday when asked if there had been settlement talks.

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How TikTok’s rise sparked a short-form video race

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How TikTok’s rise sparked a short-form video race

TikTok’s grip on the short-form video market is tightening, and the world’s biggest tech platforms are racing to catch up.

Since launching globally in 2016, ByteDance-owned TikTok has amassed over 1.12 billion monthly active users worldwide, according to Backlinko. American users spend an average of 108 minutes per day on the app, according to Apptoptia.

TikTok’s success has reshaped the social media landscape, forcing competitors like Meta and Google to pivot their strategies around short-form video. But so far, experts say that none have matched TikTok’s algorithmic precision.

“It is the center of the internet for young people,” said Jasmine Enberg, vice president and principal analyst at Emarketer. “It’s where they go for entertainment, news, trends, even shopping. TikTok sets the tone for everyone else.”

Platforms like Meta‘s Instagram Reels and Google’s YouTube Shorts have expanded aggressively, launching new features, creator tools and even considering separate apps just to compete. Microsoft-owned LinkedIn, traditionally a professional networking site, is the latest to experiment with TikTok-style feeds. But with TikTok continuing to evolve, adding features like e-commerce integrations and longer videos, the question remains whether rivals can keep up.

“I’m scrolling every single day. I doom scroll all the time,” said TikTok content creator Alyssa McKay.

But there may a dark side to this growth.

As short-form content consumption soars, experts warn about shrinking attention spans and rising mental-health concerns, particularly among younger users. Researchers like Dr. Yann Poncin, associate professor at the Child Study Center at Yale University, point to disrupted sleep patterns and increased anxiety levels tied to endless scrolling habits.

“Infinite scrolling and short-form video are designed to capture your attention in short bursts,” Dr. Poncin said. “In the past, entertainment was about taking you on a journey through a show or story. Now, it’s about locking you in for just a few seconds, just enough to feed you the next thing the algorithm knows you’ll like.”

Despite sky-high engagement, monetizing short videos remains an uphill battle. Unlike long-form YouTube content, where ads can be inserted throughout, short clips offer limited space for advertisers. Creators, too, are feeling the squeeze.

“It’s never been easier to go viral,” said Enberg. “But it’s never been harder to turn that virality into a sustainable business.”

Last year, TikTok generated an estimated $23.6 billion in ad revenues, according to Oberlo, but even with this growth, many creators still make just a few dollars per million views. YouTube Shorts pays roughly four cents per 1,000 views, which is less than its long-form counterpart. Meanwhile, Instagram has leaned into brand partnerships and emerging tools like “Trial Reels,” which allow creators to experiment with content by initially sharing videos only with non-followers, giving them a low-risk way to test new formats or ideas before deciding whether to share with their full audience. But Meta told CNBC that monetizing Reels remains a work in progress.

While lawmakers scrutinize TikTok’s Chinese ownership and explore potential bans, competitors see a window of opportunity. Meta and YouTube are poised to capture up to 50% of reallocated ad dollars if TikTok faces restrictions in the U.S., according to eMarketer.

Watch the video to understand how TikTok’s rise sparked a short form video race.

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Elon Musk’s xAI Holdings in talks to raise $20 billion, Bloomberg News reports

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Elon Musk's xAI Holdings in talks to raise  billion, Bloomberg News reports

The X logo appears on a phone, and the xAI logo is displayed on a laptop in Krakow, Poland, on April 1, 2025. (Photo by Klaudia Radecka/NurPhoto via Getty Images)

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Elon Musk‘s xAI Holdings is in discussions with investors to raise about $20 billion, Bloomberg News reported Friday, citing people familiar with the matter.

The funding would value the company at over $120 billion, according to the report.

Musk was looking to assign “proper value” to xAI, sources told CNBC’s David Faber earlier this month. The remarks were made during a call with xAI investors, sources familiar with the matter told Faber. The Tesla CEO at that time didn’t explicitly mention any upcoming funding round, but the sources suggested xAI was preparing for a substantial capital raise in the near future.

The funding amount could be more than $20 billion as the exact figure had not been decided, the Bloomberg report added.

Artificial intelligence startup xAI didn’t immediately respond to a CNBC request for comment outside of U.S. business hours.

Faber Report: Elon Musk held call with current xAI investors, sources say

The AI firm last month acquired X in an all-stock deal that valued xAI at $80 billion and the social media platform at $33 billion.

“xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent,” Musk said on X, announcing the deal. “This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.”

Read the full Bloomberg story here.

— CNBC’s Samantha Subin contributed to this report.

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Alphabet jumps 3% as search, advertising units show resilient growth

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Alphabet jumps 3% as search, advertising units show resilient growth

Alphabet CEO Sundar Pichai during the Google I/O developers conference in Mountain View, California, on May 10, 2023.

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Alphabet‘s stock gained 3% Friday after signaling strong growth in its search and advertising businesses amid a competitive artificial intelligence environment and uncertain macro backdrop.

GOOGL‘s pace of GenAI product roll-out is accelerating with multiple encouraging signals,” wrote Morgan Stanley‘s Brian Nowak. “Macro uncertainty still exists but we remain [overweight] given GOOGL’s still strong relative position and improving pace of GenAI enabled product roll-out.”

The search giant posted earnings of $2.81 per share on $90.23 billion in revenues. That topped the $89.12 billion in sales and $2.01 in EPS expected by LSEG analysts. Revenues grew 12% year-over-year and ahead of the 10% anticipated by Wall Street.

Net income rose 46% to $34.54 billion, or $2.81 per share. That’s up from $23.66 billion, or $1.89 per share, in the year-ago period. Alphabet said the figure included $8 billion in unrealized gains on its nonmarketable equity securities connected to its investment in a private company.

Adjusted earnings, excluding that gain, were $2.27 per share, according to LSEG, and topped analyst expectations.

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Alphabet shares have pulled back about 16% this year as it battles volatility spurred by mounting trade war fears and worries that President Donald Trump‘s tariffs could crush the global economy. That would make it more difficult for Alphabet to potentially acquire infrastructure for data centers powering AI models as it faces off against competitors such as OpenAI and Anthropic to develop largely language models.

During Thursday’s call with investors, Alphabet suggested that it’s too soon to tally the total impact of tariffs. However, Google’s business chief Philipp Schindler said that ending the de minimis trade exemption in May, which created a loophole benefitting many Chinese e-commerce retailers, could create a “slight headwind” for the company’s ads business, specifically in the Asia-Pacific region. The loophole allows shipments under $800 to come into the U.S. duty-free.

Despite this backdrop, Alphabet showed steady growth in its advertising and search business, reporting $66.89 billion in revenues for its advertising unit. That reflected 8.5% growth from the year-ago period. The company reported $8.93 billion in advertising revenue for its YouTube business, shy of an $8.97 billion estimate from StreetAccount.

Alphabet’s “Search and other” unit rose 9.8% to $50.7 billion, up from $46.16 billion last year. The company said that its AI Overviews tool used in its Google search results page has accumulated 1.5 billion monthly users from a billion in October.

Bank of America analyst Justin Post said that Wall Street is underestimating the upside potential and “monetization ramp” from this tool and cloud demand fueled by AI.

“The strong 1Q search performance, along with constructive comments on Gemini [large language model] performance and [AI Overviews] adoption could help alleviate some investor concerns on AI competition,” Post wrote in a note.

WATCH: Gemini delivering well for Google, says Check Capital’s Chris Ballard

Gemini delivering well for Google, says Check Capital's Chris Ballard

CNBC’s Jennifer Elias contributed to this report.

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