Paycheck Protection Program Closes to Most Applicants

Four weeks before its scheduled end, the federal government’s signature aid effort for small business ravaged by the pandemic — the Paycheck Protection Program — ran out of funding on Tuesday afternoon and stopped accepting most new applications.

Congress allocated $292 billion to fund the program’s most recent round of loans. Nearly all of that money has now been exhausted, the Small Business Administration, which runs the program, told lenders and their trade groups on Tuesday. (An earlier version of this item misstated that the actions it described occurred Wednesday.)

While many had predicted that the program would run out of funds before its May 31 application deadline, the exact timing came as a surprise to many lenders.

“It is our understanding that lenders are now getting a message through the portal that loans cannot be originated,” the National Association of Government Guaranteed Lenders, a trade group, wrote in an alert to its members Tuesday evening. “The P.P.P. general fund is closed to new applications.”

Some money — around $8 billion — is still available through a set-aside for community financial institutions, which generally focus on lending to businesses run by women, minorities and other underserved communities. Those lenders will be allowed to process applications until that money runs out, according to the trade group’s alert.

Representatives from the Small Business Administration did not immediately respond to a request for comment.

Some money also remains available for lenders to finish processing pending applications, according to a lender who was on a call with S.B.A. officials on Tuesday.

Since its creation last year, the Paycheck Protection Program has disbursed $780 billion in forgivable loans to fund 10.7 million applications, according to the latest government data. Congress renewed the program in December’s relief bill, expanding the pool of eligible applicants and allowing the hardest-hit businesses to return for a second loan.

Lawmakers in March extended the program’s deadline to May, but they have shown little enthusiasm for adding significantly more money to its coffers. With vaccination rates increasing and pandemic restrictions easing, Congress’s focus on large-scale relief effort for small businesses has waned.

The government’s recent efforts have been focused on the most devastated industries. Two new grant programs run by the Small Business Administration — for businesses in the live-events and restaurant industries — began accepting applications in recent weeks, though no grants have yet been awarded.

Last May, Epic Games was making plans to circumvent Apple’s and Google’s app store rules and ultimately sue them in cases that could reshape the entire app economy and have profound ripple effects on antitrust investigations around the world.

Epic’s chief operating officer, Daniel Vogel, sent other executives an email raising a concern: Epic must persuade Apple and Google to give in to its demands for looser rules, he wrote, “without us looking like the baddies.”

Apple and Google, Mr. Vogel warned, “will treat this as an existential threat.” To prepare, Epic formed a public relations and marketing plan to get the public behind its campaign against the tech giants.

Apple seized on that plan in a federal courtroom in Oakland, Calif., on Tuesday, the second day of what is expected to be a three-week trial stemming from Epic’s claims that Apple relies on its control of its App Store to unfairly squeeze money out of other companies.

Judge Yvonne Gonzales Rogers of California’s Northern District, who will decide the case, also asked Epic’s chief executive, Tim Sweeney, a series of pointed questions about its potential consequences. She asked whether he had any understanding of the economics of other types of apps, including food, maps, GPS, weather, dating or instant messaging.

“So you don’t have any idea how what you are asking for would impact any of the developers who engage in those other categories of apps, is that right?” the judge asked.

“I personally do not,” Mr. Sweeney said, in his second day on the witness stand.

Apple’s lawyers argued that Epic had attacked App Store fees to shore up a slowing business. Gross revenue on Fortnite, Epic’s flagship video game, shrank in the last three quarters of 2019 compared with 2018, according to an Epic presentation to its board of directors about its plan to fight Apple. The presentation was disclosed in court on Tuesday, along with the executive’s emails.

Under questioning from Apple’s lawyers, Mr. Sweeney said Epic’s own game store was not expected to turn a profit until at least 2024.

Epic’s lawyers said the lawsuit was not just about Epic and Fortnite but about fairness for all apps that must use Apple’s App Store to reach consumers.

“Our contention in this case is that all apps are at issue,” said Katherine Forrest, a lawyer at Cravath, Swaine & Moore.

Epic is not asking for a payout if it wins the trial; it is seeking relief in the form of changes to App Store rules. Epic has asked Apple to allow app developers to use other methods to collect payments and open their own app stores within their apps.

Apple has countered that these demands would raise a world of new issues, including making iPhones less secure.

On Tuesday afternoon, Benjamin Simon, founder of Yoga Buddhi, which makes the Down Dog Yoga app, testified about his company’s problems with Apple’s policies. Mr. Simon said that he had to charge more for subscriptions on the App Store to make up for the 30 percent fee that Apple charged him, and that Apple’s rules prevented him from promoting inside his app a cheaper price that is available on the web.

Mr. Simon said Apple warned app developers against speaking out about its policies in guidelines for getting their apps approved. “‘If you run to the press and trash us, it never helps,’” he said. “That was in the guidelines.”

The S&P 500 retreated from near-record territory on Tuesday, led by a decline in big technology companies, but recovered its worst losses to end the day down 0.7 percent.

Apple, the largest company in the index, fell 3.5 percent, and several other large companies — Microsoft, Amazon, Alphabet and Tesla — dropped by more than 1.5 percent. The tech-heavy Nasdaq composite fell 1.9 percent.

Adding to the volatility on Tuesday were comments by Treasury Secretary Janet L. Yellen, who said higher interest rates might be needed to keep the economy from overheating as the Biden administration ramps up spending. Stock investors are wary of higher interest rates that would make equities less attractive and also could dampen corporate profits as the economy recovers from the pandemic.

Although the Treasury secretary has no role in interest rate setting and yields on government bonds, which tend to rise when interest rates are hiked, were little changed on Tuesday, the publication of Ms. Yellen’s comments helped pushed stock indexes lower.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” Ms. Yellen said in prerecorded comments at an event hosted by The Atlantic when asked if the economy could handle the kind of robust spending that the Biden administration is proposing.

Analysts stressed that the market was due for breather. The S&P 500 rose more than 5.2 percent last month, notching a series of record highs, and even after Tuesday’s decline it remained up more than 10 percent in 2021.

The Stoxx Europe 600 fell 1.4 percent, while the FTSE 100 in Britain gave up earlier gains to drop about 0.7 percent.

Oil prices bucked the trend. Brent crude gained 2 percent, to $68.88 a barrel. It has not closed above $70 barrel since late 2018. West Texas Intermediate also rose sharply.

A chip maker’s troubles

• Infineon, a big producer of semiconductors in Germany, reported “booming” demand for chips as it posted strong quarterly results. But the company warned of continuing supply chain problems and its shares fell.

• “Demand greatly exceeds supply for the majority of applications,” said the chief executive, Reinhard Ploss, in a statement. Even though its plants are running at “full speed,” he continued, the company still faced supply chain bottlenecks. “We are doing everything we can to provide our customers with the best possible support in this situation.”

Saudi Aramco earnings

• The world’s largest oil producer, Saudi Aramco, reported a 30 percent rise in net income in the first quarter compared with the same period a year ago.

• The company is joining other energy producers that reported strong earnings this quarter as oil prices continued their recovery from last year’s collapse.

• “The momentum provided by the global economic recovery has strengthened energy markets,” Aramco’s chief executive, Amin H. Nasser, said in a statement. “Given the positive signs for energy demand in 2021, there are more reasons to be optimistic that better days are coming.”

In the clearest sign yet that theaters are softening their stance toward Netflix, Cinemark, the country’s third-largest chain, announced on Tuesday that it would show the streaming service’s upcoming zombie flick, “Army of the Dead” from director Zack Snyder, in more than 250 of its theaters on May 14, a week before the film will become available online.

The movie will also open in a smattering of regional chains like Harkins Theatres, Landmark Theatres and Alamo Drafthouse, bringing its total theater count to about 600 — the largest theatrical release yet for a Netflix film.

Last year, when the pandemic was raging and the majority of theater chains were closed, Netflix and Cinemark tested the release strategy in a handful of theaters with three Netflix films: “Ma Rainey’s Black Bottom,” “Midnight Sky” and “The Christmas Chronicles 2.” The results were encouraging enough for them to try a wider release at a time when the majority of the country’s theaters have reopened.

“Zack Snyder fans will love seeing the action in an immersive, cinematic environment with larger-than-life sight and sound technology,” Justin McDaniel, Cinemark’s senior vice president of global content strategy, said in a statement.

“We are thrilled to offer consumers the opportunity to watch this highly anticipated film in theaters and on Netflix,” Netflix’s head of distribution, Spencer Klein, said in a statement.

“Army of the Dead” stars Dave Bautista (“Guardians of the Galaxy”) and centers on a group of mercenaries who travel to Las Vegas to pull off a casino heist in the middle of a zombie apocalypse.

While neither company would say whether this was part of a larger agreement involving more films, the two did say they “anticipate there will be more to come.”

The pandemic forced theaters and studios to re-evaluate how movies are distributed in theaters and on streaming platforms. Traditionally, theaters pushed for an exclusive 72-day window between when a film was released and when it could become available for at-home viewing, whether through streaming or video-on-demand services. But so many movies debuted in the home because of the pandemic, and audiences have become used to having that option, forcing Hollywood to adjust to a new reality.

Gap Inc., the retailer that owns its namesake chain, Banana Republic and Old Navy, said on Tuesday that it would sell its high-end Intermix string of stores and website to a private-equity firm as it focuses on its core brands.

Intermix, which has 31 stores, will be purchased by Altamont Capital Partners for an undisclosed price, according to a statement. Gap, which is based in San Francisco, acquired Intermix for $130 million at the end of 2012 with plans to expand it, though the chain stood apart from the rest of the retailer’s chains with its mix of established and emerging designer goods. Intermix had 32 boutiques at the time of the 2012 acquisition.

The exit follows Gap’s sale in April of Janie and Jack, an expensive children’s retailer with more than 100 locations, to Go Global Retail. Gap acquired Janie and Jack in 2019.

Sally Gilligan, head of strategy for Gap, said in the Tuesday release that the sales “demonstrate how we are prioritizing our strategic focus and resources behind the growth and potential of Old Navy, Gap, Banana Republic and Athleta.”

Two broad coalitions of companies and executives released letters on Tuesday calling for expanded voting access in Texas, wading into the debate over Republican legislators’ proposed new restrictions on balloting after weeks of relative silence.

One letter came from a group of large corporations, including Hewlett-Packard, Microsoft, Unilever, Salesforce, Patagonia and Sodexo, as well as local companies and chambers of commerce, and represents the first major coordinated effort among businesses in Texas to take action against the voting proposals.

The letter, under the banner of a new group called Fair Elections Texas, stops short of criticizing the two voting bills that are now advancing through the state’s Republican-controlled Legislature, but opposes “any changes that would restrict eligible voters’ access to the ballot.”

A separate letter, organized by a breakway faction of 100 executives from the Greater Houston Partnership, and also released on Tuesday , goes further. It directly criticizes the proposed legislation and equates the efforts with “voter suppression.”

Together, the letters signify a sudden shift in how the business community approaches the voting bills in Texas.

Corporations across the country find themselves at the center of a swirling partisan debate over voting rights. With Republicans in almost every state advancing legislation that would make it harder for some people to vote, companies are under pressure from both sides. Democratic activists, along with many mainstream business leaders, are calling on corporations to oppose the new laws. At the same time, a growing chorus of senior Republicans is telling corporate America to keep quiet.

Pandora, the world’s biggest jeweler by volume, said on Tuesday that it will no longer use mined diamonds for any new designs, and is switching to man-made stones produced in laboratories instead.

The Copenhagen-based company said it would release its first collection to use synthetic stones in Britain this year before turning to other markets in 2022. The range of rings, bangles and earrings will feature stones from 0.15 to 1 carat in size. Pandora’s chief executive, Alexander Lacik, said in a statement Tuesday that diamonds should be affordable as well as sustainable.

Lab-grown diamonds are physically, chemically and optically identical to mined diamonds, and proponents say that their production results in less environmental damage than traditional mining practices, and also doesn’t have the same associations with human rights abuses. Prices of man-made diamonds have fallen over the past two years after the miner De Beers started offering synthetic stones in 2018, and they are now up to 10 times cheaper than mined diamonds, according to a report by Bain & Company.

While mined diamonds went into about 50,000 Pandora pieces of jewelry out of a total of 85 million items made last year, meaning the shift required within the company supply chain will be negligible, the announcement by Pandora is the latest by a major industry player looking to address growing ethical concerns held by consumers about the jewelry business. The jeweler has already said it will only use recycled gold and silver beginning 2025.

Twitter plans to acquire the subscription service Scroll, the social media company announced on Tuesday, as it expands its plans for subscription offerings. The two companies declined to disclose the deal terms.

Scroll charges its users a fee to block advertising on participating news websites, then distributes a cut of its earnings to its partner publishers, which include USA Today, Vox and The Atlantic. Publishers can earn up to 50 percent more from the service than they do from advertising, Scroll contends. Twitter plans to integrate the service into its platform, and use its technology to build other subscription services.

“People come to Twitter every day to discover and read about what’s happening,” Mike Park, Twitter’s vice president for product, said in a blog post announcing the deal. “If Twitter is where so much of this conversation lives, it should be easier and simpler to read the content that drives it.”

In recent months, Twitter has begun to add paid subscriptions, and announced plans to introduce other subscriber features in the future.

In January, Twitter acquired Revue, a newsletter provider, and said it would take a 5 percent cut of subscription revenue. In February, the company revealed plans to introduce “Super Follows,” a feature that would allow Twitter users to place some of their content behind a pay wall. And this week, Twitter said it planned to add a ticketing feature to its audio chat, Spaces, so that hosts can charge listeners for entry into their discussions.

Twitter plans to supplement its advertising revenue with revenue from subscriptions, and has raced to add content like newsletters and audio chats that it thinks audiences will pay for. Its acquisition of Scroll will add journalism to that list.

“For every other platform, journalism is dispensable. If journalism were to disappear tomorrow their business would carry on much as before,” Tony Haile, Scroll’s chief executive, wrote in a blog post. “Twitter is the only large platform whose success is deeply intertwined with a sustainable journalism ecosystem.”

On Tuesday, Pfizer announced that its Covid vaccine brought in $3.5 billion in revenue in the first three months of this year, nearly a quarter of its total revenue. The vaccine was, far and away, Pfizer’s biggest source of revenue, report Rebecca Robbins and Peter S. Goodman of The New York Times.

The company did not disclose the profits it derived from the vaccine, but it reiterated its previous prediction that its profit margins on the vaccine would be in the high 20 percent range. That would translate into roughly $900 million in pretax vaccine profits in the first quarter.

Pfizer has been widely credited with developing an unproven technology that has saved an untold number of lives.

But the company’s vaccine is disproportionately reaching the world’s rich — an outcome, so far at least, at odds with its chief executive’s pledge to ensure that poorer countries “have the same access as the rest of the world” to a vaccine that is highly effective at preventing Covid-19.

As of mid-April, wealthy countries had secured more than 87 percent of the more than 700 million doses of Covid-19 vaccines dispensed worldwide, while poor countries had received only 0.2 percent, according to the World Health Organization. In wealthy countries, roughly one in four people has received a vaccine. In poor countries, the figure is one in 500.

Video

Today in the On Tech newsletter, Shira Ovide writes that nearly four years after Amazon agreed to a huge deal to buy Whole Foods and a year into a pandemic that played into the tech giant’s strengths, it’s worth asking two questions: Is Amazon losing in groceries? And why has one of the world’s most ambitious and inventive companies mostly been a follower rather than a leader in one of the biggest spending categories for Americans?