Chapter 683: The Launch of the Antitrust Investigation

The Instagram outage on July 26 turned out to be a blessing in disguise.

Despite the media's varied reactions, from complex emotions to mockery and ridicule of Simon's apparent favoritism towards his "trophy" protégée, the result was a massive increase in Instagram's exposure in mainstream media. This surge in visibility led to a sharp increase in user registrations over the following days.

From its launch at 9 a.m. on July 22 to 9 a.m. on July 29, Instagram's registered user base reached 3.79 million, far surpassing the company's initial one-week target of one million users.

Additionally, Instagram's rapid popularity directly boosted the sales of digital cameras. For instance, TinkoBell's iCam series saw a 46% increase in week-over-week sales, skyrocketing from 150,000 units to a record-breaking 220,000 units in just one week. Many retailers even faced rare stock shortages due to insufficient inventory.

Simon specifically emailed Egret's top executives to reiterate the importance of the product ecosystem using this example.

However, Instagram's success also brought about a minor side effect.

On Friday, July 29, at 10 a.m. Eastern Time, the U.S. Department of Justice (DOJ) held a press conference to announce the launch of an antitrust investigation into three companies within the Westeros system: Cisco, AOL, and Egret.

During the Q&A session, Instagram was mentioned as evidence of the Westeros system's monopolization of internet resources.

Simon, who was in New York, watched the entire 40-minute DOJ press conference and had already reviewed the 60-page investigation document in advance.

The DOJ's antitrust investigation targeted several key issues, including Egret's use of its market dominance in network services to bundle software sales, the monopolistic restrictions of the IE browser on internet interfaces, AOL's alleged use of exclusive agreements to monopolize the market, AOL's discriminatory practices against small businesses in network support, and Cisco's collusion with AOL and Egret to set internet standards that stifled competition.

Attorney General Janet Reno told the media that the goal of this antitrust investigation was to prevent the "Cisco-AOL-Egret" trio from monopolizing internet industry resources.

To achieve this, the DOJ might force Westeros to relinquish its multiple equity structures in Cisco and AOL, prevent interlocking directorships between the companies' executives, and potentially break up some of their business segments.

In the early days of Cisco and AOL's IPOs, to promote communication and keep power within the Westeros system, Simon had executives from these companies serve on each other's boards. This move now seemed somewhat miscalculated.

With growing calls for an antitrust investigation from the federal government and the media, Simon had already instructed Tim Berners-Lee, John Chambers, and Steve Case to step down from each other's boards.

By "revisiting old issues," the DOJ had effectively achieved one of its antitrust objectives in advance.

After the morning press conference, the Westeros system quickly responded to the antitrust investigation.

Egret's portal published a headline article, reiterating the Westeros system's significant contributions to the federal internet industry by creating web technology standards. Without Egret's generous opening of fundamental web patents, the current internet industry boom wouldn't have occurred. The Westeros system had no intention of monopolizing the market; the close cooperation of the three companies was merely to promote the internet industry's development.

The article also warned that the DOJ's investigation might hinder the industry's growth and dampen the enthusiasm of innovators in new technology fields.

The capital market, always the most sensitive, had already shown signs of concern.

For over a week, as rumors of the DOJ's antitrust investigation spread, the stock prices of Cisco and AOL, both public companies, began to fall.

Half an hour into the Friday morning press conference, Cisco and AOL's stock prices had dropped by 3.1% and 2.3%, respectively, wiping out over $3 billion in market value. By day's end, both stocks were expected to fall more than 5%.

Simon had anticipated this scenario.

Since June, Cersei Capital's hedge fund, Cersei Fund Management, had gradually reduced its long positions in Cisco and AOL, even conducting a massive dividend payout in early July to shrink the fund's size back to under $3 billion.

However, Simon didn't switch to short positions.

To avoid taxes, a significant portion of the dividend payout was transferred to a newly established sub-fund under BlackRock Asset Management, intended for continued investment in tech stocks.

Over the next few years, the overall trend for tech stocks in the U.S. market was expected to be upward. Despite the antitrust concerns, Cisco and AOL's stock prices were likely to experience ongoing volatility, making them prime targets for speculative short-term hedge funds.

Simon, inherently inclined towards non-speculative long-term investments, didn't plan to participate in this roller-coaster game.

The scaled-down Cersei Fund Management would continue to focus on long positions in tech stocks, avoiding the contentious Cisco and AOL. Instead, it would target Microsoft, Intel, Oracle, and Sun Microsystems, companies not under antitrust scrutiny, as well as traditional companies like General Electric and Berkshire Hathaway, poised to soar with the coming U.S. stock market bull cycle.

While addressing the media, Cisco, AOL, and Egret began expanding their legal teams to handle the ensuing investigations and lawsuits.

Expecting a protracted antitrust investigation, Simon didn't dwell on it much.

After watching the DOJ press conference live with James Rebold and others at Westeros Company headquarters in Manhattan and briefly discussing follow-up strategies, Simon moved on to his day's work.

First on the agenda was the North American box office data from the past week.

Simon was more concerned about this than the antitrust investigation.

In fact, most of the public wasn't overly concerned with the DOJ's antitrust investigation into the Westeros system's three companies. They might read about it in the newspaper and discuss it casually.

In contrast, Daenerys Entertainment's "God Watching a Movie" campaign had a more significant impact.

Thanks to the ongoing promotion of this concept, the North American weekly box office from July 22 to July 28 reached $187 million, a 19% increase from the previous week's $156 million. With an average ticket price of $4.2, this translated to an additional 7 million moviegoers.

Specific box office data showed:

After dominating the top five spots last week, Daenerys Entertainment relinquished the weekly box office crown.

Paramount's new Harrison Ford film, "Clear and Present Danger," topped the chart with $39.05 million in its opening week.

After several summer flops, Paramount finally had a hit.

Simon also felt relieved. Finally, a blockbuster unrelated to Daenerys Entertainment had emerged in 1994. This success could be used to counter claims that Daenerys monopolized Hollywood: "See, there's 'Clear and Present Danger.'"

Moreover, "Clear and Present Danger" would later be included in Daenerys Entertainment's quarterly and annual reports to show that the company still had competition in Hollywood.

This wasn't a trivial detail.

Many Western monopolistic companies list their competitors in their financial reports to demonstrate they don't monopolize the market. Even if the listed competitors are virtually unknown and hold minuscule market shares, this practice is necessary.

Following "Clear and Present Danger," the phenomenon "Forrest Gump" saw a remarkable 21% drop in its fourth week, earning $30.78 million. The film, hailed as a masterpiece by many fans, grossed $170.73 million in its first month.

Despite its $80 million production and marketing budget, "Forrest Gump" was already profitable for Daenerys Entertainment. As word-of-mouth continued to spread, its overseas box office performance was also impressive.

To allow North American acclaim to reach overseas markets, Simon had adopted a strategy of delayed releases in major foreign markets.

This strategy proved successful.

With staggered releases of one to two weeks, "Forrest Gump" had already surpassed $110 million in overseas box office revenue.

Ranking third was "Heat."

Despite its nearly three-hour runtime, the crime action film achieved a per-theater average of over $10,000 in its first week, grossing $22.93 million in seven days. The length limited daily showings, but the $11,000 per-theater average was more impressive than many blockbusters' $15,000 averages.

James Cameron's "True Lies" was fourth.

In its third week, the film earned $20.2 million, the largest drop of the week at 33%. For a pure commercial film facing strong competitors, this drop was quite respectable.

"True Lies" also crossed the $90 million mark with a cumulative gross of $91.63 million, officially surpassing its $90 million budget.

In its original version, "True Lies" had a budget of $115 million. This time, under Daenerys's strict cost control, the production budget was kept at $90 million with an additional $30 million for marketing.

With a projected domestic gross of $140-150 million, the film wouldn't break even. However, combined with overseas earnings, Daenerys and Fox, the co-producers, would still profit from theatrical distribution.

Quentin Tarantino's "Pulp Fiction" ranked fifth.

As a crime drama, "Pulp Fiction" and the crime action film "Heat" both received classic-level acclaim. Daenerys's marketing teams linked the two films under the "God Watching a Movie" campaign, promoting them as the two must-see crime films of the summer.

As a result, after exceeding expectations in its opening week, "Pulp Fiction" saw a modest 23% drop in its second week, earning $18.39 million and bringing its total to $42.36 million.

In two weeks,

 Highgate Films had recouped its $25 million production and marketing costs and started profiting.

The "God Watching a Movie" campaign also revived interest in other films like "The Dark Knight Rises" and "The Conjuring."

Ranking sixth, "The Dark Knight Rises" saw a 21% drop, earning $12.79 million for a total of $345.26 million, just $55 million shy of the $400 million mark.

Most films earning $12.79 million in a week would struggle to gross another $30-40 million, but "The Dark Knight Rises" still had two to three months of theatrical run left, making the $55 million target achievable.

Seventh-ranked "The Conjuring" earned $7.01 million, dropping 25%, with a total of $112.67 million.

The top seven films alone matched last week's $150 million total, with other releases contributing over $30 million, totaling $187 million. Although not the highest weekly gross of the summer, it was impressive for the season's end.

Quentin Tarantino's "Pulp Fiction" grossed $42.36 million in two weeks, with a modest 23% drop in its second week. Without strong competition, it had a good chance of joining the $100 million club.

Simon's favorite, "Heat," grossed $22.93 million in its first week, exceeding Daenerys's marketing team's expectations.

The film's continued word-of-mouth and limited showtimes due to its length meant that its box office trajectory could surpass "Pulp Fiction's."

With over $20 million in its first week, "Heat" had the potential to join the $100 million club, depending on its performance in the coming weeks.

Regardless, "Heat" was already a success.

In the new week starting July 29, three new films hit North American theaters: MGM's sci-fi thriller "Species," Warner Bros.' drama "Black Beauty," and Fox's romance "It Could Happen to You."

Natasha Henstridge's stunning debut in "Species" marked MGM's second summer release. Compared to other major studios releasing three to four new films, MGM's output remained limited. However, the box office success of "Speed" was a significant step in MGM's resurgence.

With a $30 million budget, "Species" wasn't cheap for MGM.

Despite lukewarm internal screenings, MGM released the film on 2,379 screens due to Simon's support.

Warner Bros.' "Black Beauty," a film about a noble purebred horse's life journey, received excellent reviews with an average score of 8. However, its niche subject limited its box office potential.

Fox's "It Could Happen to You," starring Nicolas Cage and Bridget Fonda, told a romantic story about a lottery ticket, appealing to many people's dreams of love and wealth.

Both leads came from Hollywood dynasties: Cage from the Coppola family and Fonda from the Fonda family. Their performances were solid, and the film's 7.1 average score was decent, positioning it as "Species'" main competitor.

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