Posts Tagged ‘Google’

Antitrust Examining Google Dominance on Web Advertising

December 11, 2017

Move comes after Israel’s Artimedia files complaint against search giant

Nati Tucker Dec 11, 2017 6:56 AM

File photo: The Google logo is seen on a door at the company's office in Tel Aviv January 26, 2011.

File photo: The Google logo is seen on a door at the company’s office in Tel Aviv January 26, 2011. Baz Ratner / Reuters

For the first time ever, Google has come into the crosshairs of Israel’s Antitrust Authority, which has begun examining the implications of its dominance of the internet advertising market as a possible restraint of trade.

The authority, which confirmed it has begun looking into the matter, has until now refrained from doing so because it never received an official complaint nor has it found any indication that the law was violated. As a result, Google has never been declared a monopoly nor have any restraints been placed on its ad business.

Now, however, Artimedia, an Israeli platform for video advertising has filed a complaint.

According to the complaint, which was filed by attorney Uri Baram, deals specifically with banner ads on the internet. Artimedia, which like Google didn’t confirm the report, claims that Google online-advertising services “illustrate Google’s tremendous conglomerate power, which extends across the digital advertising continuum in all its forms.”

“[It] sheds light on Google’s varied and sophisticated ways of exploiting its status to push competition away,” the complaint says.

Consumers know Google best as a search engine as well as for its Youtube videos, email services, Android operating system and Waze navigation service. But a key part of its business is selling advertising through online exchanges.

Its dominance is particularly strong in so-called programmatic ads, which are bought automatically through an online exchange that matches advertisers with the demographics they are seeking. When a Web page is being loaded and has the space for an ad on it, information that’s been gathered about both the user and the kind of Web page being loaded is sent back and forth to an ad exchange. The space gets auctioned off to the highest bidder, all in the space of milliseconds without the user experiencing any delay in uploading the page.

Google operates two services – one called Google Display Network, and another called DoubleClick for Publishers, which offers a technical service of helping Web publishers manage their ad inventories and upload ads.

In principle, DFP operates independently and offers ads from GDN and rival services, like Sikendo and Positive Mobile, but Artimedia asserts that DFP gives preference to GDN “in a malicious and sophisticated way.” Rivals can’t access from DFP all the information they need to manage ad inventory.

In June, the European Union fined Google a record 2.4 billion euros ($2.7 billion) in the first of three investigations into the company’s dominance in searches and smartphones. The ruling opens the door for further regulatory actions against more crucial parts of Google’s business, including online ad buying.

Nati Tucker
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Ford to Move Electric Car Production to Mexico, Tags U.S. Plant for Driverless Car — GM’s Waymo Being Tested

December 7, 2017

Auto maker plans to convert suburban Detroit factory into manufacturing hub for future driverless vehicles

Ford Motor Co. plans to produce a future electric car in Mexico rather than make it in the U.S., reversing plans announced in January to make its Flat Rock, Mich., assembly plant near Detroit its main electric-vehicle production site.

Instead, Ford will convert that suburban Detroit factory into a manufacturing hub for future driverless vehicles, a top company official said. And it plans to create a dedicated assembly line for electric vehicles at its plant in Cuautitlan, Mexico, with production slated to begin in 2020.

The auto maker in January had said it would spend $700 million on its Flat Rock, Mich., assembly plant near Detroit, to serve as its main electric-vehicle production site.

Moving electric-vehicle production to Mexico will likely improve the business case for battery-electric vehicles by producing them in a lower-cost country. Electric vehicles remain a niche vehicle and most auto companies lose significant amounts of money on each one they build.

The move could be risky, however, as President Donald Trump has in the past criticized auto makers for making vehicles in Mexico and shipping them to the U.S. Ford earlier this year canceled plans for a new factory in Mexico amid pressure from Mr. Trump.


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Redirecting electric-vehicle production south of the border is about more than shaving costs. The move will make room for the Flat Rock factory to serve as Ford’s “center of excellence” for autonomous vehicles, Ford President of Global Markets Jim Farley said in an interview.

Ford will boost investment in that plant to $900 million, from $700 million originally planned. The investment will result in 850 new jobs, up from the 700 jobs Ford pegged previously under the original electric-vehicle plan for Flat Rock.

The move comes as the Trump administration presses for changes to the North American Free Trade Agreement that could make it more costly for auto makers to import vehicles built in Mexico. The auto industry is lobbying against proposals from U.S. trade negotiators that would require half the content of an imported vehicle to have U.S. content to sidestep tariffs.

Mr. Farley said it is too early to say whether the outcome of the Nafta negotiations would affect the plan. He also declined to forecast the profit or revenue outlook for driverless cars, which the company expects to launch in 2021.

In the interview, Mr. Farley sought to clarify Ford’s autonomous-vehicle strategy, which is seen by analysts as lagging General Motors Co. He said Ford will target its driverless vehicles to commercial customers, such as construction companies and delivery firms, a market he believes other auto makers and tech companies are overlooking.

While Ford is the nation’s No. 2 auto maker by sales, behind GM, it dominates sales to commercial customers, who need pickup trucks and vans to haul goods and equipment. Mr. Farley said Ford has experience in engineering police cars and other commercial vehicles that are operated 20 hours a day and rack up high mileage.

“We have a very deep understanding of how the vehicle ages in these very high-mile circumstances,” he said. “When we say `built Ford tough,’ that applies to” autonomous vehicles.

Ford is under pressure to catch up to Waymo, the self-driving vehicle unit of Google-parent Alphabet Inc., and GM’s Cruise Automation, which have been expanding fleets of autonomous test vehicles with the goal of offering rides to paying customers.

Image result for Waymo, photos


Ford will test a self-driving vehicle business model next year in a yet-to-be named city that involves moving things as well as people, Mr. Farley said.

He said the vehicle will be built starting in 2021 at the Flat Rock factory and serve as a “platform” that customers could customize, such as different configurations for handling hot and cold food deliveries. Initially, Ford will likely own and operate the fleet, Mr. Farley said.

Write to Mike Colias at and Tim Higgins at

Apple, Facebook find something to praise China for amid Internet clampdown — “The Chinese government … doing a fabulous job on that.”

December 5, 2017

WUZHEN, CHINA (REUTERS) – Top executives at Apple Inc and Facebook Inc managed to find something to praise Beijing for at an Internet conference in China this week, even as its Communist Party rulers ban Western social media and stamp on online dissent.

China’s World Internet Conference attracted the heads of Google and Apple for the first time to hear China vow to open up its Internet – just as long as it can guard cyberspace in the same way it guards its borders.

The tacit endorsement of the event by top US tech executives comes as China introduces strict new rules on censorship and data storage, causing headaches for foreign tech firms permitted to do business in China and signalling that restrictions banning others are unlikely to be lifted any time soon.

“I’d compliment the Chinese government in terms of leadership on using data,” Facebook vice-president Vaughan Smith said on Tuesday (Dec 5), citing government bodies such as the Cyberspace Administration of China (CAC) and Ministry of Industry and Information Technology (MIIT).

“The Chinese government, the CAC and MIIT are doing a fabulous job on that.”

Facebook and Google are not accessible in China behind the country’s Great Firewall, along with major Western news outlets and social media sites, while Apple is subject to strict censorship. The US firm removed dozens of popular messaging and virtual private network (VPN) apps from its China App Store this year to comply with government requests.

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“The theme of this conference, developing a digital economy for openness and shared benefits, is a vision we at Apple share,” Apple chief executive Tim Cook said on Sunday. The audience cheered him twice – once when he reached the podium, and again when he bowed.

China cracks down on any sign of online criticism of the government which it sees as a threat to social stability and one-party rule.

Some embassies, business groups and foreign firms steer clear of the highly choreographed Internet event, analysts say, because of the perceived propaganda.

But diplomacy seemed to rule the day at the conference, held in the ancient scenic city of Wuzhen in the eastern province of Zhejiang, and neither Smith nor Cook addressed issues of censorship or cyber regulation.

Cook has made frequent trips to China over the past year, as the firm has looked to revive sales in the market and make a push into services that require working with local partners on data storage.

“Companies that have sent high-level delegations to this conference in Wuzhen in the past have often done so because there is some type of significant issue with their access to the market,” said an industry source familiar with the event who declined to be identified due to the sensitivity of the matter.

At the event itself, conference guests were treated to a bubble of uncensored Internet in hotels, including access to Google, Facebook and foreign news outlets with specialised codes handed out to guests.

In discussions on topics such as artificial intelligence and tech innovation, overseas executives generally skirted the topic of regulation, though it surfaced at times.

“More people come to Facebook than are in China,” said Facebook’s Smith at a talk on digital economy on Tuesday. “(But) I realise not everyone in the room is familiar with Facebook.”

Jack Ma, chairman of China’s Alibaba Group Holding Ltd which owns Hong Kong’s South China Morning Post, said that foreign tech firms wishing to enter the China market should abide by its laws.

“(Foreign companies) are determined to come. Follow the rules and laws and if you’re unhappy, leave,” said Ma. “This is not a market (where) you can come and go.”


Vietnam Wants to Control Social Media? Too Late.

November 30, 2017

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HO CHI MINH CITY, Vietnam — When access to Facebook’s Messenger app went intermittent throughout Vietnam on Nov. 4 — an unusual occurrence, even in this repressive state — netizens were thrown for a loop. “Has it happened already?” some of my Facebook friends asked.

Messenger was on the fritz in other countries as well, and earlier that day Typhoon Damrey had hit Vietnam’s central coast, hard. Yet some of my friends were attributing the service disruption to something else: a cybersecurity bill that had made headlines the day before.

The bill was released for public consultation in June but only garnered wide attention recently, when as the National Assembly was reconvening, the Chamber of Commerce stated its objections. The proposed law requires foreign tech giants like Google, Facebook and Skype to set up offices and data servers in Vietnam. Although the National Assembly isn’t expected to vote on the bill until mid-2018, the prospect of it has already sparked fear among internet users, the business community and even some lawmakers.

The government cites growing concerns over cybersecurity and fake news as reasons to exert more control over social-media platforms. But internet access has also served as an outlet for political activism and exposés denouncing corruption and government misconduct.

Vietnam has one of the highest rates of social-media usage among countries with comparable per capita incomes. There are about 52 million Facebook active accounts here, for a population of about 96 million. Google and YouTube also are very popular.

Like China, Vietnam hoped to rein in the internet from the outset. It, too, tried to block Facebook, in 2009, by ordering major local service providers not to carry it. But the government didn’t dare set up a firewall outright, for fear of driving away internet business and e-commerce; it permitted certain sites instead of blocking them outright as China had, banking that it could coax them into collaborating as needed. On occasion, the Vietnamese government has asked local service providers to remove certain sites from their list of known hosts, but that is easy enough to skirt by changing domain names.

China built its online infrastructure with control foremost in mind; the system it developed is now more countrywide intranet than internet. Vietnam’s more mild approach has bred a hybrid infrastructure that keeps developing and adapting faster than the government’s ability to regulate and control it.

One difference is that China is a much larger country, and the domestic market’s economy of scale allowed alternative indigenous platforms, like Weibo or WeChat, to develop. Not so in Vietnam: This country simply doesn’t have the financial or political wherewithal to match big-time Silicon Valley. YouTube and Facebook now account for two-thirds of the domestic digital media market.

The government has at best been able to block Facebook at sensitive moments, such as when President Barack Obama visited Vietnam in May 2016 or during local protests over an environmental disaster. But only for a time, because tech-savvy Vietnamese internet users have always been able to find workarounds.

In 2015, Nguyen Tan Dung, then the prime minister of Vietnam, said that it was impossible to ban social media and that the government should instead use such platforms to spread its own message. After Mr. Dung fell out of political favor in 2016, the Vietnamese government continued to tolerate Facebook while trying to police information published online.

In an effort to seem responsive to the public’s concerns, in 2015 the government set up official Facebook pages to stream news conferences after cabinet meetings and announce new policies and regulations. At the same time, it has deployed groups known as “public opinion shapers” to spread its own views and defend the state against detractors, or what it calls “hostile forces.”

Earlier this year, the information ministry issued a circular asking websites, social media and mobile applications with more than one million users in Vietnam to “collaborate” with the authorities and remove “ill-intended and toxic” content, ranging from ads for contraband merchandise or protected wildlife to state secrets. The ministry also asked Google to take down 2,300 YouTube clips it said defamed Vietnamese leaders; Google complied in part, removing nearly 1,500.

Perhaps emboldened by this measure of success, and by increasing repression of the internet in other Southeast Asian states, the authorities want to go further still. But it’s too late for that. The bill currently being discussed, which appears to be modeled after legislation China adopted earlier this year, will only backfire.

In August, President Tran Dai Quang — who once headed the Ministry of Public Security, the bill’s main proponent — stated the need “to prevent news sites and blogs with bad and dangerous content” partly because online campaigns “undermined the prestige of the leaders of the party and the state.” Yet the proposed law itself may hurt the prestige of the state even more.

As some legal experts have pointed out, the bill is too broad, notably because it goes beyond cybersecurity to lapse into actual control over content. Facebook and Google have also argued that there are ample mechanisms already in place to flag and remove content that violates local laws; and so there is no need to store data locally, which their systems were not designed for anyway.

Vietnam routinely draws international criticism for its poor record on human rights, especially free speech — for strictly controlling print, radio and television news, and for muzzling blogglers. Passing this internet bill would hardly help its reputation. The law would also fly in the face of Vietnam’s commitments to various trade agreements, including under the World Trade Organization, and would likely unnerve foreign investors.

In November, Vietnam celebrated the 20th anniversary of the internet’s arrival in the country. Blocking ever-popular social media platforms now would seem like a retrograde move — and to a time of fuller controls that never even was. It would also most certainly trigger a popular backlash.

The government sees the internet as a source of instability, but regulating it more strictly may be a source of instability as well — and even in an authoritarian state like Vietnam, some measure of popular support is crucial to a regime’s longevity.

Social media being used to ruin democracies including Philippines

November 29, 2017
Social media are increasingly being used to prop up repressive regimes and undermine democracies worldwide, according to a digital diplomacy expert. File

MANILA, Philippines — There is an increasing worldwide pattern of social media use to aid repressive regimes and undermine democracy, a digital diplomacy expert said Wednesday.

Damien Spry, a digital diplomacy researcher and consultant based in Hong Kong, said things had greatly changed since the “bliss” spawned by the Arab Spring which made people see YouTube, Facebook and Twitter as vehicles that could strengthen civil society and the public sphere.

“Maybe they weren’t wrong then, but things are different now. Social media has achieved pariah status. Like Saturn, the internet revolution is devouring its children,” Spry wrote in a commentary on the Interpreter, an online publication of the Lowy Institute which is an independent, nonpartisan think tank based in Sydney, Australia.

Spry said that Freedom House’s latest Freedom on the Net report detailed declines in internet freedom for the past seven years.

Other reports have also catalogued the breadth, variety and impact of social media manipulation in different countries including the Philippines through the use of paid and unpaid online agents and automated accounts (bots) that would post, share, like, quote and re-post content to influence politics.

In its 2017 Freedom on the Net report, Freedom House discussed how an army of social media commentators were paid to manipulate the information landscape in the Philippines to support President Rodrigo Duterte.

Freedom House said that there was an increase in reports of commentators being paid to manipulate social media information from June 2016 to May 2017.

“News reports citing individuals involved said the commenters, which they characterized as part of a ‘keyboard army,’ could earn at least P500 ($10) a day operating fake social media accounts supporting President Rodrigo Duterte or attacking his detractors,” Freedom House said.

The report also noted that overall internet freedom in the country slightly worsened during the covered period.

There were also technical attacks targeting media groups such as the Philippine Center for Investigative Journalism and the National Union of Journalists of the Philippines from June last year to May, according to Freedom House.

One of the bases of the Freedom House Report was an Oxford University study which found that the Duterte campaign spent around P10 million to hire trolls who would spread propaganda material online.

The study said that Duterte’s team of 400 to 500 cyber troops posted nationalistic and pro-government comments and harassed online dissenters.

According to Spry, these are just some of the main tactics used in manipulating information found on the internet.

He said that manipulators would feign grassroots support (astroturfing), smear opponents and disrupt online campaigns through distractions.

“The use of bots greatly amplifies impact: one human user can direct hundreds of bots to automatically generate thousands of posts and comments,” he wrote.

READ: Palace disowns deleted PCOO video promoting martial law

The large amount of content and interactions, Spry said, would push it to the top of the pile and would make it more likely to appear on social media feeds of others.

A common tactic in countering an anti-government hashtag campaign is by promoting alternative hashtags or by posting nonsense using the critical hashtag, he noted.

Spry said that some of the countries affected by this were Sudan through its “Cyber Jihadists,” the Philippines with its “keyboard army,” Turkey through its 6,000 trolls and Mexico with its 75,000 automated accounts known as ‘Peñabots.’


Google Tells Russia It Doesn’t Discriminate Against Sputnik and RT in Its Search Results

November 28, 2017

By Reuters

November 27, 2017

Google does not change its search algorithm to re-rank individual websites, it said in a letter to Russia’s communications watchdog, after Moscow expressed concerns the search engine might discriminate against Russian media.

The Roskomnadzor watchdog said earlier this month it would seek clarification from Alphabet Inc’s Google over whether it intentionally placed articles from Russian news websites Sputnik and Russia Today lower in search results.

Responding to a question about Sputnik articles at a conference earlier in November, Alphabet (GOOGL, +1.47%) Executive Chairman Eric Schmidt said Google was working to give less prominence to “those kinds of websites” as opposed to delisting them.

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That prompted complaints from Russian authorities, with Roskomnadzor saying last week it would take action against Google if it discriminated against Russian media.

Read: Russia Vows Retaliation Against Google If Sputnik, RT Get Lower Search Rankings

“We’d like to inform you that by speaking about ranking of web-sources, including the websites of Russia Today and Sputnik, Dr. Eric Schmidt was referring to Google’s ongoing efforts to improve search quality,” Google said in a letter posted on Roskomnadzor’s website.

“We don’t change our algorithm to re-rank,” it added.

A Google spokeswoman confirmed the letter had been sent by the company but provided no further comment.

Read: Google Got Caught Secretly Recording Android Users’ Location Data. But Who Blew the Whistle?

The Russian government funds Sputnik and Russia Today.

U.S. intelligence agencies have said both websites spread misinformation and published stories that were negative towards Hillary Clinton during the 2016 U.S. presidential election.

Uber Breach and Response Draw Global Government Scrutiny

November 23, 2017

Senator criticizes ‘inexplicable delay’ in announcing the breach, while the FTC and several countries are looking into the issue

An FTC spokesman said the agency is “closely evaluating the serious issues raised.”
An FTC spokesman said the agency is “closely evaluating the serious issues raised.” PHOTO: ERIC RISBERG/ASSOCIATED PRESS

Government officials world-wide said they would look at Uber Technologies Inc.’s handling of a major data breach last year.

Uber said Tuesday that it paid hackers $100,000 in an effort to conceal a data breach that affected 57 million accounts. In addition to the names, emails and phone numbers of riders, about 600,000 U.S. drivers’ license numbers were accessed, Uber said.

A Federal Trade Commission spokesman said the agency is “closely evaluating the serious issues raised,” while Sen. Richard Blumenthal (D., Conn) said on Twitter that the Senate Commerce Committee should hold a hearing to “demand Uber explain their outrageous breach—and inexplicable delay in informing its consumers and drivers.”

San Francisco-based Uber said it would notify owners of the affected accounts in coming days. It fired its chief security officer and a deputy for their role in the breach and covering it up, and Chief Executive Dara Khosrowshahi apologized.

At least three European government agencies are looking into Uber’s handling of the breach, and the New York State Attorney General’s office has opened an investigation.

Uber said in a statement that “we’ve been in touch with several state attorney general offices and the FTC to discuss this issue, and we stand ready to cooperate with them going forward.”

New Mexico’s Attorney General said in a letter to Uber that the company’s reaction to the breach was “gravely concerning” and requested that the company provide more information within 10 days.

Britain’s Information Commissioner’s Office will assess what steps Uber would need to take to better comply with data-protection requirements.
Britain’s Information Commissioner’s Office will assess what steps Uber would need to take to better comply with data-protection requirements. PHOTO: SIMON DAWSON/REUTERS

Uber hasn’t disclosed a geographic breakdown of the compromised accounts. Uber said Wednesday it was in the process of notifying regulatory and government authorities about the breach. “We expect to have ongoing discussions with them,” an Uber spokesman said. “Until we complete that process we aren’t in a position to get into any more details.”

The FTC has the authority to examine Uber’s cybersecurity efforts and its response to the breach, including any communication, or lack thereof, with the public.

The commission has undertaken at least preliminary investigations, and sometimes very detailed probes, of this nature during past large-scale hacks, looking at whether a hacked company had reasonable data protection practices in place that were in line with industry best practices. The FTC also has examined how companies have responded to any known security weaknesses before a breach took place.

The FTC has pursued enforcement actions when it believed companies weren’t vigilant in following appropriate safeguards.

In September, the FTC said it was investigating a breach at Equifax Inc .

Britain’s Information Commissioner’s Office, which oversees data protection in the country, said it would assess how the breach affected people in the U.K. and what steps Uber would need to take to better comply with data-protection requirements. The office has the power to fine Uber, up to £500,000 ($665,000), for any wrongdoing.

“Deliberately concealing breaches from regulators and citizens could attract higher fines for companies,” said James Dipple-Johnstone, the British agency’s deputy commissioner, in a statement.

In addition to Britain—where Uber also faces a separate legal challenge over drivers’ compensation and a potential ban on operating in London—Italian and Dutch authorities said they also planned to evaluate how Uber handled the data breach.

“We are dismayed by the poor transparency shown towards users, which we intend to investigate,” said Antonello Soro, the Italian Data Protection Authority’s president, in a statement.

A spokesman for the data protection agency in the Netherlands, where Uber bases its European operations, said the agency would examine the reports of the data breach.

Most EU-member authorities don’t currently have the power to impose fines on companies in the case of personal data breaches. This will change under a new regulation taking effect in May 2018.

The National Privacy Commission of the Philippines said it has summoned Uber to a Nov. 23 meeting to discuss the incident and to comply with the formal breach notification procedure under the Data Privacy Act of 2012.

The coverup is another challenge for Uber, which is valued at $68 billion. Mr. Khosrowshahi has tried to bring stability after a year of controversies that took place under CEO Travis Kalanick.

Mr. Khosrowshahi has inherited several federal probes of the company over programs targeting rivals and regulators, as a well as a possible violation of the Foreign Corrupt Practices Act.

Uber is in a heated legal battle with Google parent Alphabet Inc., which filed suit in February alleging the company stole trade secrets related to self-driving cars. And it is trying to recover from claims by a former female engineer that management ignored complaints from her and other women of sexism and harassment.

The company has said it is cooperating with federal regulators in their investigations. It disputes the allegations made by Alphabet and is contesting the lawsuit.

Write to Stu Woo at


Takeovers Roar to Life as Companies Hear Footsteps From Tech Giants

November 20, 2017

Corporate deals hit a near-record $200 billion this month as CEOs battle Amazon, Facebook, Google and others

Investment bankers have gotten used to being asked by worried retail-industry chief executives to pitch takeover ideas aimed at fending off Inc.

Now the fear has spread to media, health care and many other sectors, where CEOs dread the breathtaking competitive advancements made by not just Amazon but also Facebook Inc., Alphabet Inc.’s Google and Netflix Inc.

The result is an explosion of mergers and acquisitions. So far this month, about $200 billion of deals have been announced in the U.S., according to Dealogic. November is on pace to be the second-biggest deal-making month since the firm began tracking them in 1995.

Three recent deals, either under discussion or awaiting approval, show in especially dramatic fashion the impact of Amazon and other technology giants on M&A activity.

CVS Health Corp. could reach a definitive agreement by the end of November to buy Aetna Inc. for more than $66 billion, uniting two businesses with little operational overlap, according to people familiar with the timing.

The possibility that Amazon could enter the pharmacy business jolted CVS executives toward buying a health insurer, which could help CVS make better use of its retail space, people familiar with the matter said. The drugstore operator could sell insurance, draw blood and provide other services that Amazon can’t easily replicate.

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AT&T Inc.’s planned purchase of Time Warner Inc. for about $85 billion would combine a huge but slowing mobile-phone business and the DirecTV satellite-television operation with a content machine that includes Time Warner, the owner of CNN and HBO.

Randall Stephenson, AT&T’s chief executive, said the point of the AT&T-Time Warner deal is to create a bulwark against Facebook and Google, which have built “incredibly strong” positions in the advertising market. “That’s what this is about,” he said at an event sponsored by the New York Times.

In a statement to The Wall Street Journal, he added: “Tech companies are spending billions creating content and distributing it directly to consumers.” AT&T’s planned purchase “gives Time Warner the opportunity to do the same, across multiple platforms and with ad-supported models that cost consumers less.”

Here comes Netflix

Walt Disney Co.’s expression of interest in a big chunk of 21st Century Fox Inc.’s assets was prompted in part by the success of Netflix, the fast-growing streaming video company, according to people familiar with the situation. Fox has a stock-market value of about $57 billion.

Disney’s cable channels are under pressure from cord-cutting. In August, the company announced it will launch two online subscription streaming services with sports, movies and TV programming directly to consumers. Disney said it would yank its future movies from Netflix.

In the fall, Disney approached Fox about a potential deal that would provide Disney with more content and distribution assets to better compete against Netflix. (Fox and News Corp, the Journal’s parent, share common ownership.)

“Our goal here is to be a viable player in the direct-to-consumer space, space that we all know is a very, very compelling space to be in,” Disney Chairman and CEO Robert Iger told analysts and investors this month.

The Disney-Fox talks stalled, but they appear to have unleashed a wider auction for Fox assets, including its movie studio and international unit. Those assets have drawn interest from Comcast Corp., Verizon Communications Inc., Sony Corp. and possibly other potential buyers, according to people close to the discussions.

Every M&A cycle looks different. The boom that crested in 2015 was largely defined by deals between direct competitors trying to gain scale and cut costs. Some firms wanted to lower their taxes by moving their headquarters outside the U.S. as part of a deal.

The number of deals that were agreed to and valued in the double-digit billions of dollars broke records. The signature deal of that era was the megamerger, such as Pfizer Inc.’s agreement to buy Allergan PLC for about $150 billion. The Obama administration later blocked the deal between the two drugmakers.

Before the financial crisis, leveraged buyouts dominated the deal environment. During the turn-of-the-century tech surge, companies rushed to make deals that were seen as offensive moves to launch them into new lines of business, like the ill-fated merger of AOL and Time Warner.

So far this year, the dollar volume of U.S. mergers totals $1.22 trillion, down 18% from the same period in 2016, according to Dealogic. Investment bankers attribute the decline largely to uncertainty surrounding federal antitrust and tax policy.

Big and bigger

The recent surge is a sign that other drivers of deal activity are now in control. Debt remains readily available and cheap, and high stock prices often go hand-in-hand with mergers and acquisitions. Shareholders have rewarded buyers in a number of recent deals, which tends to encourage more and is reminiscent of 2015.

The biggest deals in the current crop are every bit as big as those from the last boom. Earlier this month, Broadcom Ltd. launched an unsolicited offer for rival chip maker Qualcomm Inc. valued at $105 billion. It would be the biggest technology takeover ever. Qualcomm rejected the offer and said it undervalued the company.

It’s still hard for many companies to agree to a merger or takeover, let alone win approval from shareholders and regulators. Sprint Corp. and T-Mobile US Inc. recently abandoned their monthslong effort to combine the third- and fourth-largest wireless carriers in the U.S. Disagreements over control and other issues doomed the talks.

Time Warner shares have tumbled since the Journal reported that the Justice Department could sue to block the AT&T deal.

Still, interest in deal-making is strong and growing at many companies where competition from technology giants such as Amazon looms.

Those tech giants have done few big deals themselves lately, with the exception of Amazon’s purchase of Whole Foods Market Inc. in August for roughly $13 billion.

Containers of fresh pineapple sit on display at a Whole Foods Market February 22, 2007 in San Francisco, California. Whole Foods Market Inc. announced that it plans to purchase Wild Oats Market Inc. for an estimated $565 million in hopes of competing with larger food chains that have started to introduce organic and prepared foods to their inventories.

Investment bankers who advise grocery chains say they were flooded with phone calls after the Whole Foods deal was announced. Amazon’s ability to essentially enter the business overnight sent shivers through an industry already plagued by razor-thin profit margins. CEOs in other sectors wondered if theirs would be next. An Amazon spokesman declined to comment.

“I see it across nearly every industry,” says Steven Baronoff, Bank of America Merrill Lynch’s chairman of global M&A. “These companies are causing CEOs to realize that maybe their stand-alone, status-quo option is not as viable.”

Few analysts or investors saw it coming when the Journal reported in October that CVS was in talks to buy Aetna.

CVS has a vast network that includes more than 9,700 retail locations, more than 1,100 walk-in medical clinics and a pharmacy-benefit operation that serves as a middleman between drug companies and insurers. Aetna is one of the largest health insurers in the U.S.

Amazon looms

Fear of increasing competition from Amazon helped spur CVS to look far afield for a merger partner, according to people familiar with the matter.

Amazon wasn’t the only impetus. CVS sees Aetna as a way to reshape the retailer amid a broader shake-up of the health-care industry and bolster the combined company’s leverage in negotiations with drugmakers while giving it a precious stockpile of health data.

CVS had begun weighing a possible transaction with Aetna before a CNBC report suggested in May that Amazon was considering entering the pharmacy business, people familiar with the matter said.

As more shopping moves to Amazon and other online retailers, CVS already was wrestling with what to do with its stores. The possibility that Amazon could become a rival in CVS’s main business increased its desire for a deal that would diversify the company further and help repurpose its drugstores, the people said.

CVS’s board told management to size up the potential effect of Amazon’s entry into the pharmacy business and devise a counterattack, people familiar with the matter said. Separately, CVS’s marketing department and outside advisers considered whether a partnership with Amazon would make sense. That analysis concluded that an alliance was unlikely due to Amazon’s historical resistance to such deals.

Other parts of the health-care industry are feeling the heat from Amazon, too. Health-care services companies long thought they were largely immune to threats from Amazon, but the e-commerce company began adding such supplies to its website a few years ago.

Tongue depressors

After starting with low-margin surgical gloves, tongue depressors and other items, Amazon now sells the top 20 basics that every doctor or dentist needs, says Jim Forbes, vice chairman in investment banking at UBS Group AG.

He says some health-care services companies have begun to explore ways to diversify into different lines of business, including M&A deals, as a result of pressure from Amazon.

Carl’s Jr. has a cheeky, if-you-can’t-beat-them-join-them attitude about Amazon. The fast-food chain, owned by CKE Restaurants Holdings Inc., tweeted last month: “HEY @Amazon BUY US. Srsly. For real. Let’s do this. Let’s change the future of eating!! #AmazonBuyUs.”

There are no signs that Amazon is interested in acquiring Carl’s Jr.

–Sharon Terlep and Drew FitzGerald contributed to this article.

Image result for Carl's Jr., photos

Founders of Facebook and Google Really Had No Idea of The Consequences of Weaponized Social Media?

November 20, 2017

If our supersmart tech leaders knew a bit more about history or philosophy we wouldn’t be in the mess we’re in now

By John Naughton
The Guardian

donald trump peter thiel and tim cook at a meeting for tech bosses in trump tower new york
 Oh, the humanities: Donald Trump meeting PayPal co-founder Peter Thiel and Apple CEO Tim Cook in December last year. Photograph: Evan Vucci/AP

One of the biggest puzzles about our current predicament with fake news and the weaponisation of social media is why the folks who built this technology are so taken aback by what has happened. Exhibit A is the founder of Facebook, Mark Zuckerberg, whose political education I recently chronicled. But he’s not alone. In fact I’d say he is quite representative of many of the biggest movers and shakers in the tech world. We have a burgeoning genre of “OMG, what have we done?” angst coming from former Facebook and Google employees who have begun to realise that the cool stuff they worked on might have had, well, antisocial consequences.

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Put simply, what Google and Facebook have built is a pair of amazingly sophisticated, computer-driven engines for extracting users’ personal information and data trails, refining them for sale to advertisers in high-speed data-trading auctions that are entirely unregulated and opaque to everyone except the companies themselves.

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The purpose of this infrastructure was to enable companies to target people with carefully customised commercial messages and, as far as we know, they are pretty good at that. (Though some advertisers are beginning to wonder if these systems are quite as good as Google and Facebook claim.) And in doing this, Zuckerberg, Google co-founders Larry Page and Sergey Brin and co wrote themselves licences to print money and build insanely profitable companies.

It never seems to have occurred to them that their advertising engines could also be used to deliver precisely targeted ideological and political messages to voters. Hence the obvious question: how could such smart people be so stupid? The cynical answer is they knew about the potential dark side all along and didn’t care, because to acknowledge it might have undermined the aforementioned licences to print money. Which is another way of saying that most tech leaders are sociopaths. Personally I think that’s unlikely, although among their number are some very peculiar characters: one thinks, for example, of Paypal co-founder Peter Thiel – Trump’s favourite techie; and Travis Kalanick, the founder of Uber.

So what else could explain the astonishing naivety of the tech crowd? My hunch is it has something to do with their educational backgrounds. Take the Google co-founders. Sergey Brin studied mathematics and computer science. His partner, Larry Page, studied engineering and computer science. Zuckerberg dropped out of Harvard, where he was studying psychology and computer science, but seems to have been more interested in the latter.

Now mathematics, engineering and computer science are wonderful disciplines – intellectually demanding and fulfilling. And they are economically vital for any advanced society. But mastering them teaches students very little about society or history – or indeed about human nature. As a consequence, the new masters of our universe are people who are essentially only half-educated. They have had no exposure to the humanities or the social sciences, the academic disciplines that aim to provide some understanding of how society works, of history and of the roles that beliefs, philosophies, laws, norms, religion and customs play in the evolution of human culture.

We are now beginning to see the consequences of the dominance of this half-educated elite. As one perceptive observer Bob O’Donnell puts it, “a liberal arts major familiar with works like Alexis de Tocqueville’s Democracy in America, John Stuart Mill’s On Liberty, or even the work of ancient Greek historians, might have been able to recognise much sooner the potential for the ‘tyranny of the majority’ or other disconcerting sociological phenomena that are embedded into the very nature of today’s social media platforms. While seemingly democratic at a superficial level, a system in which the lack of structure means that all voices carry equal weight, and yet popularity, not experience or intelligence, actually drives influence, is clearly in need of more refinement and thought than it was first given.”

All of which brings to mind CP Snow’s famous Two Cultures lecture, delivered in Cambridge in 1959, in which he lamented the fact that the intellectual life of the whole of western society was scarred by the gap between the opposing cultures of science and engineering on the one hand, and the humanities on the other – with the latter holding the upper hand among contemporary ruling elites. Snow thought that this perverse dominance would deprive Britain of the intellectual capacity to thrive in the postwar world and he clearly longed to reverse it.

Snow passed away in 1980, but one wonders what he would have made of the new masters of our universe. One hopes that he might see it as a reminder of the old adage: be careful what you wish for – you might just get it.


Europe turns on Facebook, Google for digital tax revamp

November 19, 2017


BRUSSELS – They have revolutionised the way we live, but are US tech giants the new robber barons of the 21st century, banking billions in profit while short-changing the public by paying only a pittance in tax?

With public coffers still strained years after the worst of the debt crisis, EU leaders have agreed to tackle the question, spurred on by French President Emmanuel Macron who has slammed the likes of Google, Facebook and Apple as the “freeloaders of the modern world”.

As recently as March, five of the world’s top 10 valued companies were Silicon Valley behemoths: Apple, Google’s Alphabet, Microsoft, Amazon and Facebook. (Germany’s SAP was Europe’s biggest and 56th on the global list).

But tax rules today are designed for yesterday’s economy when US multinationals — such as General Motors, IBM or McDonald’s– entered countries loudly, with new factories, jobs and more taxes for the taking.

These firms had what tax specialists call “permanent establishment”when companies showed a clear physical presence measured and taxed through tangible, real-world assets.

But today in most EU nations, the US tech titans exist almost exclusively in the virtual world, their services piped through apps to smart phones and tablets from designers and data servers oceans away.

Ghost-like, Silicon Valley has turned Europe’s economies upside down, but often with just a skeleton staff and some office space in markets with millions of users or customers.

– Nation-less –

According to EU law, to operate across Europe, multinationals have almost total liberty to choose a home country of their choosing. Not surprisingly, they choose small, low tax nations such as Ireland, the Netherlands or Luxembourg.

Thus, it is through Ireland that Facebook draws its wealth from millions of accounts across Europe. There are 33 million accounts in France and 31 million in Germany, according to recent data.

While users enjoy the platform, Facebook tracks likes, comments and page views and sells the data to companies who then target consumers.

But unlike the economy of old, Facebook sells its data to French companies not from France but from a great, nation-less elsewhere, with no phone number, address or physical “presence” for a customer who probably cares little.

It is in states like Ireland, whose official tax rate of 12.5 percent is the lowest in Europe, that the giants have parked their EU headquarters and book profits from revenues made across the bloc.

Indeed, actual revenues from advertising are minimal in France and Germany, but at Facebook HQ Ireland they grew to 7.9 billion euros, even though the vast majority does not come from the tiny EU island-nation of a mere 2.5 million users.

Google follows the same pattern: in Germany in 2015, it had a little over 71 million users, in France just over 55 million. But in both nations, revenues are minimal.

Yet, in Ireland, where the number of search engine users is less than five million, revenues for Google-parent Alphabet reached 22.6 billion euros in 2015.

According to an analysis by Paul Tang, a specialist on tax issues at the European Parliament, France lost 741 million euros in tax revenue and Germany 889 million euros between 2013 and 2015 due to so-called “tax planning” by Google and Facebook.

– ‘No transparency’ –

The Organisation for Economic Cooperation and Development believes that such tax schemes cost governments around the world as much as $240 billion a year in lost revenue, according to a 2015 estimate.

“The actual activity of each company, including US tech giants, is not known,” said Manon Aubry, spokeswoman for the NGO Oxfam.

“Beyond the number of accounts or users in each country, it would be necessary to know in the case of Google for example, the amount of advertising sales in each country. We do not have it.”

For car-ride smartphone service Uber, “we need to know the number of rides, but we don’t have it,” she said.

“One of the first issues, therefore, is that of transparency: to rule that large companies publish data on activities and taxes paid in all the countries where they are present.”

To the European Commission, the digital shortfall on tax is clear. The effective tax rate on the profit of digital giants in the EU averages only nine percent, while that of traditional companies exceeds 20 percent, it said.

– Global, not EU, solution –

Member states now agree that the problem would be best addressed at the international level, in the G20 or by the OECD, in order to prevent a high-tech exodus from the EU.

Caught by surprise by the French initiative, the European Commission announced at the end of September that it will also propose solutions in 2018.

Ideally, Brussels agrees that there needs to be a major reform of international tax rules, which would establish a closer link between the way value is created and the place where it is taxed.

Without rejecting the French proposal, the commission wants to dust off an old project from 2011 — for a long time deadlocked because of the differences among the 28.

Relaunched in October 2016, the idea has one of the most cumbersome acronyms ever to come out of Brussels: the Common Consolidated Corporate Tax Base or CCCTB — an ambitious bid to consolidate a company’s tax base across the EU.

This draft legislation is currently being examined by the 28 EU member states and taxation of the digital economy could easily be included in the scope of the rules that may be adopted.

Under the plan, all multinationals operating in the EU with total sales of more than 750 million euros would be fixed at only one place of taxation, with one tax administration.

However, this tax would be distributed in all the countries where the company operates, and not according to the level of booked profit in each of these states, but according to the level of activity.

This level of activity in each member state would be measured using a combination of factors, including the number of employees, the importance of tangible assets (buildings, machinery, etc.) and sales.

French MEP Alain Lamassoure, co-rapporteur of the project, proposes to add a fourth idea: the volume of personal data collected and used by a digital platform wherever its services are used.

But in Europe, all is made infinitely more complicated since the adoption of new European legislation on tax matters requiring unanimity of the EU’s current 28 members.

In addition to these European proposals, the OECD is working on a global solution, which it must present to the G20 finance ministers at their next meeting in April in Washington.

This initiative would have the merit of including Europe as well as the United States, Japan and emerging countries.

Until last October, the United States had dragged its feet in efforts to better tax its national champions, but changed attitude. Specifically, it agreed to set up a working group with France in the OECD.

“The Americans are in the same situation as us: their own tax system is not adapted to the current economy and they too are experiencing very substantial revenue losses that must be compensated,” EU economics commissioner Pierre Moscovici said.

“Taxation of the US tech giants is a global problem and the answer should be as well.”