|Bid||34.05 x 100000|
|Ask||34.08 x 100000|
|Day's range||34.00 - 34.18|
|52-week range||25.85 - 41.53|
|Beta (5Y monthly)||0.43|
|PE ratio (TTM)||18.18|
|Forward dividend & yield||N/A (N/A)|
|1y target est||N/A|
(Bloomberg) -- Last March, months before the meltdown at WeWork, Masayoshi Son worked through the prospects for another one of his favorite portfolio companies -- a startup from India called Oyo. In a spacious conference hall at his Tokyo headquarters, the Japanese billionaire huddled with lieutenants from the startup and his own SoftBank Group Corp. to brainstorm strategy. He figured Oyo had the potential to disrupt both the staid hotel business and short-term apartment rentals in Japan, according to people in the room.One bullet point scribbled on a floor-to-ceiling whiteboard, in particular, caught Son’s eye: a target of one million rooms within a year. In a burst of enthusiasm, he had everyone sign off on the goals right on the whiteboard, scrawling signatures under the words “BINDING” in all caps, according to a copy seen by Bloomberg News and the people present.Today, the Oyo unit handling apartments has about 7,500 rooms, less than 1% of the whiteboard target. Son’s aspirations turned out to be an example of dramatic overreach, part of a year in which the Japanese investor’s reputation was battered by troubles at WeWork and Uber Technologies Inc.The shortfall, which hasn’t been reported before, signals more trouble ahead for SoftBank and one of its most highly touted investments. Perhaps more concerning, the episode reveals a fundamental flaw in SoftBank’s investment strategy: Pumping billions into startups and pushing them toward outsized growth often undermines promising businesses. With its chaotic rush to expand in Japan, Oyo infuriated potential partners, alienated workers and jeopardized its reputation with local customers, according to interviews with more than two dozen of them. One incensed local customer went so far as to set up an Oyo Life Victims Association account on Twitter. Similar frustrations have been voiced by customers and hotels in India and other overseas markets.The troubles are so pronounced Son faced questions about Oyo during his earnings briefing in Tokyo last week. He conceded there have been “some conflicts with hotel owners,” but said that is normal in such businesses and overall the performance is good. “Oyo is a wonderful company,” he said.SoftBank declined to comment on the startup’s internal issues and practices beyond Son’s comments, but said it believes the company can have a sustainable expansion in Japan with good corporate governance.Oyo, founded by 26-year-old Ritesh Agarwal, has drawn particular attention in SoftBank’s portfolio of startups because of its similarities to WeWork. Both are trying to change traditional real estate businesses with technology. Both have charismatic young founders. Now, skeptics say Oyo could also fall short, further undermining Son’s grand ideas about technology investing.“Oyo is a WeWork in the making,” says Santosh Rao, head of research at New York-based Manhattan Venture Partners. “They need to slow down and pull back.”Oyo says patience is in order. In an interview, Agarwal argues his company is bringing new concepts to a business in need of fresh thinking, especially in markets like Japan. He acknowledges “teething issues” that are to be expected for a fast-growing, innovative startup and defended the use of ambitious goals.“Leaders at Oyo aspire for ambitious targets which act as directional north stars for building for scale,” he said. “From our shareholders perspective, they have said – you have a good business plan, you have continued operating as per your business plan, please keep delivering against that.”SoftBank is the largest outside shareholder at the company, whose backers also include Sequoia India and Airbnb Inc.The last thing Son needs now is another big mistake. He wants to raise capital for a successor to his $100 billion Vision Fund, but potential backers have been spooked by WeWork and Uber, as he conceded last week. At the same time, activist Paul Singer has taken a stake in SoftBank, advocating for changes to boost its share price including a buyback and more transparency.“Son needs to focus on rebuilding his reputation,” says Atul Goyal, senior analyst at Jefferies Group. “If Oyo blows up, that won’t be easy.”Agarwal got the idea for Oyo after roaming around India on a shoestring budget, witnessing first-hand the opportunity to bring order to the anarchic industry. At 19, he set up a reservation website and began working with small hoteliers on service, design and standardized accouterments like bedding and toiletries to draw more travelers. Oyo took 25% of sales.In India, the concept took off. The reassurance of basic quality fostered trust with customers and brought in extra revenue. Enamored of the idea and Agarwal, Son invested in 2015, two years after founding.But as SoftBank started the original $100 billion Vision Fund in 2017 and Son invested in the world’s biggest startups, he began to stoke Agarwal’s dreams with money and ambition, according to people directly involved. Son poured about $1.5 billion into the company and encouraged the young founder to try to become the world’s largest hotel operator by room count. That would mean surpassing Marriott International Inc., founded in 1927.The business model that worked so well in India wasn’t an obvious fit for markets like the U.S. and Europe, which already had well-established hotel chains and largely predictable quality. Yet Agarwal slogged ahead overseas, even buying a few properties outright, including the Hooters Casino Hotel in Las Vegas.Japan was supposed to be like a second home. Son is a local hero and SoftBank’s brand is ubiquitous: It operates one of the largest wireless carriers, runs the leading web portal and owns the Fukuoka SoftBank Hawks, which have won five of the last six baseball championships. SoftBank set up joint ventures through two subsidiaries to promote Oyo’s local business.That support fueled Oyo’s confidence as it entered Japan in early 2019. Agarwal decided to push into both its traditional hotels business and a newer operation called Oyo Life, which offers furnished apartments without the typical hassles of security deposits or guarantors. With Son’s enthusiastic backing at the March meeting, Agarwal and his team set the audacious goal of becoming the biggest operator in both businesses -- in one year.“Many entrepreneurs want to do a land grab, and it’s often the right thing to do, but you have to balance between your desire and ability to do it,” says Ben Narasin, venture partner at New Enterprise Associates Inc., which isn’t involved with Oyo.There were missteps at Oyo from the start. The Japan hotel team, led by a transplant from India named Prasun Choudhary, figured they could get to as many as 75,000 rooms in the first year, which would put them ahead of the Apa Hotels chain in the No. 1 spot. But they took as their starting point an inflated addressable market of 1.6 million rooms based on numbers from the local tourism authority: They included campgrounds, bed-and-breakfasts and pay-by-the-hour love hotels, which weren’t part of Oyo’s business plan, according to people involved at the time.Oyo Life, the apartment rentals business led by another Indian lieutenant called Kavikrut (who like many Indians goes by one name), set the goal of 1 million rooms in part because it was a stunning, round number that would exceed the capacity of the Japan market leader, the people said. That was the target that caught Son’s attention in March.To reach their goals, the two lieutenants began hiring furiously. Human resources staff conducted as many as 15 interviews a day, making offers to many the same day, people involved said. At job hunting events, prospects would get recruited on the spot, sometimes signing hand-written offer letters. Oyo Hotels surged to more than 580 people, while Oyo Life added 300, the company said.“Oyo believes that building a highly-motivated local team and strong management leadership is an important strategy for launching and succeeding in a new market,” Choudhary said in an interview. “This team is what has made it possible for us to partner with over 190 hotels.”But Oyo’s technology wasn’t ready. In the first three months after launch, the hotel operation double booked rooms because it had failed to integrate with local travel agencies, according to Oyo and former employees. Staff in India entered reservations made in Japanese manually, introducing errors. Some hotel owners found their rates reduced to just pennies by inscrutable algorithms. When they complained, the fix would take days because pricing was controlled in India, according to former employees.At the same time, Oyo Life workers struggled to keep track of keys they received from landlords because of software created in India. One tenant interviewed by Bloomberg spent the night in his car outside of his new apartment because he was given a wrong code for a lock box containing the keys. Even though it was during working hours, no one was manning the help lines at the company, he said. Two other customers interviewed by Bloomberg also had trouble getting into their apartments.“Oyo operated like they were driving a Ferrari, instead of a hatchback,” said Taito Ito, executive officer at Japan Accommodation and Lodging Foundation, a hotel industry group handling about a dozen complaints against the company from its members. “It’s difficult to see this business going anywhere in Japan.”There were some satisfied customers, including one Oyo Life user who raved about the convenience of getting an apartment via an app and raking in points by paying rent with a credit card.Despite the rocky start, Agarwal landed a starring role in July at SoftBank World, an annual event Son hosts in Tokyo. On stage in front of hundreds of the Japanese company’s suppliers and customers, Agarwal explained how Oyo is using data to beat the competition. Its algorithms can evaluate properties in under five days, compared with months for traditional hotels, he said. Artificial intelligence helps Oyo predict what kind of interior design can boost demand -- like pictures of Marilyn Monroe -- and adjust prices more than 43,000 times a minute.Beaming on stage, Son said it was only a matter of time before Oyo, the third-biggest hotel chain by room count, would surpass the established giants.“In three months, he will become the world’s biggest hotel king,” Son said at the time. “This would be a first in human history.”Unbeknownst to the crowd, Agarwal and Son were in talks about an unprecedented deal at the time. To increase his stake in Oyo, the young founder would borrow $2 billion to buy out some of his earlier investors. To reassure banks including Mizuho Financial Group Inc. to lend the money, Son personally guaranteed those loans, a highly unusual arrangement. The deal would double Oyo’s valuation to $10 billion.Just weeks later, in early August, it became clear Oyo’s hotel business in Japan was falling far short of its targets. Agarwal told Choudhary to start firing under-performing staff, according to a message reviewed by Bloomberg News. But top management didn’t realize at first that labor laws in Japan prohibit such layoffs, according to former HR staff.Oyo had begun hiring before it set up all its operations, so many employees joined under temporary contracts through an outside recruiter with a plan of making them full-time after six months. When that time came, Oyo tried to cut salaries for a number of them as much as 50%, according to former employees and copies of documents seen by Bloomberg News.Alarmed by worker complaints, SoftBank sent its own compliance staff into Oyo for a week-long internal audit, the people said. In the end, Agarwal’s management withdrew the low-ball offers and said the revisions were an administrative mistake. Oyo says it wasn’t downsizing and was only making a fair assessment of staff. Choudhary acknowledges that, at first, Oyo thought it could manage performance in Japan like it has in the rest of the world.Several former Oyo Life employees, who declined to be named because they signed confidentiality agreements, described a chaotic, disorganized work environment. The company poached executives from top-tier consulting and technology firms who excelled at inspirational talk, but had little understanding of real estate and even less patience for the industry’s slow-moving ways, the people said. One of them said the real estate industry just doesn’t run on startup time.The push for growth hurt Oyo’s relationship with suppliers too. In one instance, the company placed a 100 million yen ($910,000) furniture order with Japanese maker Takumi Otsuka, clinching the deal with a handshake. A month later, Oyo canceled even though the manufacturer had already set up a dedicated line and began production, according to staff from Oyo.Oyo denied the cancellation of any confirmed orders, but acknowledged there were lapses in communication in its early dealings with Takumi Otsuka. Oyo says the two companies now share a healthy business relationship and the furniture maker remains one of its valuable suppliers. Takumi Otsuka declined to comment.In October, with Oyo Hotels short of its original targets, the company mobilized support staff to do sales. It launched Project Yukichi, named after a famed educator whose face is on the 10,000 yen bill, with the goal of that many new rooms a month. The workers, already struggling to keep up with complaints from hotel owners, were told they are also responsible for producing 30 new sales leads a month, according to former employees and company presentations. The “OYOpreneurs,” as they were called, got a three-day training session from Bain & Co. to get them up to speed, the people said.With so much energy focused on sales, customer service suffered. One Oyo Life tenant told Bloomberg News he moved into his room to find bed sheets and covers, but no bed or mattress to put them on. After facing a prospect of sleeping on the floor for a week, he hauled over a futon from his parent’s house.Yutaro Kondo, a 25-year-old entrepreneur, paid 86,000 yen for a 21-square-meter studio about an hour by train from central Tokyo. While a premium to similar listings, the contract covered internet access, all utilities and the last month free of rent. But he didn’t have heat for weeks so he moved out in December. Shortly after, he got a bill for the month that was supposed to be free.“The simplicity they offered is attractive to a lot of young people,” Kondo said. “I feel pretty disappointed they didn’t deliver on that promise.”Hotel owners are unhappy too, especially with disputes over money. Oyo aimed to increase business for its partners by dropping rates at first and then increasing the price as occupancy went up. To help ease the pain, it guaranteed owners a minimum level of revenue provided they met certain criteria. Instead, a number of hotels found the payments fell short and the company unwilling to make up the difference.Oyo acknowledged such disputes and said that in some cases hotels failed to fulfill their contractual obligations. Still, it said it decided to pay in full to mend relations. One SoftBank executive said there were troubles between Oyo and about 40 hotels out of about 200, emphasizing many hotel owners are satisfied.“Employees are exhausted from dealing with Oyo,” said Shingo Ozaki, who manages Hamakan Hotel on the southwestern island of Kyushu, which is considering ending its relationship with the startup.Oyo said it is continuously working to improve software and it launched a call center that in the past month handled 1,700 tickets from partners and guests.Late last year, after the debacle at WeWork, Son overhauled his approach to startups. At a gathering of portfolio companies in California, he cautioned founders that they need to have a strategy for profitability and that growth couldn’t be the sole target. Agarwal was in attendance.But any changes may be too late for Oyo in Japan. In December, news leaked out that SoftBank’s Yahoo Japan sold its stake in Oyo Life, liquidating the partnership without any explanation. In Japan, the hotel room count has stalled at little over 5,000, with just over 300 new rooms added in December.Oyo disclosed this week that revenue increased more than four-fold to $951 million for the fiscal year ending in March 2019, while losses surged six-fold to $335 million.“Entrepreneurship is a game where you have to learn to crawl, then walk and only then to jog and run,” said Narasin of NEA. “Skipping steps can be dangerous.”At least some hotels are giving up, tired of the troubles they’ve had with Oyo. Shoji Sato, president of the company that runs an Oyo affiliate called Sawara Kita Hotel, said the company didn’t pay revenue guaranteed for January after reducing room prices to draw more customers. He said Oyo workers often ignore his inquiries or are slow to respond too. Oyo said there is no delay in payment because the January cycle closes in mid-February.“I believed in Oyo after the salesman showed me a brochure with details about SoftBank. SoftBank is led by Masayoshi Son, who is very famous and popular in Japan,” says Sato. “Now we want to end the relationship. I am angry, of course, of course.”(Updates with financial results in fourth from last paragraph)\--With assistance from Saritha Rai and Kurumi Mori.To contact the reporters on this story: Pavel Alpeyev in Tokyo at email@example.com;Takahiko Hyuga in Tokyo at firstname.lastname@example.orgTo contact the editors responsible for this story: Edwin Chan at email@example.com, Peter ElstromFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world threatened by trade wars. Sign up here. The fight between the U.S. and Europe over Chinese technology is threatening to split the transatlantic military alliance, and tensions were ratcheted up another notch on Sunday by the U.S. ambassador to Germany.Ambassador Richard Grenell tweeted that President Donald Trump had instructed him to “make clear that any nation who chooses to use an untrustworthy 5G vendor” risks jeopardizing intelligence and sharing with the U.S. “at the highest level.”The comment on Twitter seemed specifically aimed at Huawei Technologies Co., although Grenell didn’t mention the Chinese company by name. Grenell said Trump had delivered the order while aboard Air Force One, the presidential jet.With the U.S. defense establishment identifying China as its No. 1 priority, a bi-partisan delegation headed by Secretary of State Michael Pompeo and House Speaker Nancy Pelosi rammed home their concerns about the use of equipment from Huawei at the Munich Security Conference over the weekend.The officials warned that installing Huawei kit could undermine cooperation with U.S. allies as Trump’s hardball trade tactics started to infect his administration’s relationships on defense.“Republicans and Democrats agree on this,” said Republican Senator Lindsey Graham of South Carolina, a close ally of Trump. “If you go down the Huawei road you are going to burn a lot of bridges.”European leaders have been hunkering down amid the Huawei storm as they try to maintain their critical relations with both sides in the U.S.-China trade war. Pelosi’s intervention on Friday signaled that they shouldn’t pin their hopes on the problem blowing over if the Democrats win back the White House in December.Structural TensionsThe atmosphere at the high-level gathering of security officials was an improvement on last year, when Vice President Mike Pence and German Chancellor Angela Merkel clashed. But the structural tensions between the U.S. and Europe were if anything greater: Europe’s exports to China have become a critical plank in its economic model and the Chinese have threatened retaliation on European companies if the bloc follows Trump in banning one of its flagship technology companies.The U.S. was on the defensive throughout, because their strong-arm tactics have conspicuously failed to bring the Europeans into line: the EU stopped short of an outright ban on Huawei in its guidelines for 5G communication technology. Even the U.K., which has been energetically courting the White House as it begins life outside the EU, opted to use Huawei kit.“We have a tech Cold War right now that’s on display right here and Europe wants no part in it,” said Ian Bremmer, president and founder of political risk consultancy Eurasia Group. “There’s never been such a rift with how Americans and Europeans define the security threat as right now.”That rift may have sweeping consequences as the western powers struggle to come to terms with the technological prowess China has developed since Xi Jinping in 2015 unveiled a 10-year plan to take the lead in industries like communications, I.T. and artificial intelligence. Huawei has become a lightning rod for the U.S.’s wider insecurities.“If you don’t understand the threat and we don’t do something about it, at the end of the day, it could compromise what is the most successful military alliance in history: NATO,” Defense Secretary Mark Esper said in Munich.Europeans are already feeling uneasy about the state of NATO.Opening the conference in the Bavarian capital, German President Frank-Walter Steinmeier accused the Trump administration of rejecting “the very concept” of an international community. “Every country, it believes, should look after itself and put its own interests before all others,” he said.French President Emmanuel Macron, who has said that NATO is undergoing “brain death,” said Saturday that Europe needs to build up its own capacity as a strategic power.Since Trump took office, he’s tried to end the Iran nuclear deal, withdrawn from the Paris Climate Accord, and repeatedly threatened the EU with tariffs. So Pompeo’s claim that talk of the demise of the transatlantic relationship is “grossly over-exaggerated” was met with skepticism.Hours later, U.S. Energy Secretary Dan Brouillette was crowing that U.S. sanctions have managed to scupper a $6 billion project to link Germany and Russia with a new Baltic gas pipeline, Nord Stream 2.For Europe, caught between the U.S. and its global rivals, the situation may yet get worse.While Trump often touts his relationship with Xi, competition between the countries has only deepened since they signed their “phase-one” trade deal last month. The U.S. a week ago charged members of China’s military over one of the biggest data thefts in American history and on Thursday charged Huawei with racketeering to engage in intellectual property theft.And the coronavirus outbreak adds an extra element of uncertainty to the global political outlook -- a disease originating in China is threatening to weaken the global economy in the run-up to a U.S. election.“The potential for this to get much uglier in a short period of time is real,” said Bremmer.(Updates with Grenell comments)\--With assistance from Patrick Donahue.To contact the reporters on this story: Glen Carey in Washington at firstname.lastname@example.org;Nick Wadhams in Washington at email@example.com;Henry Meyer in Munich at firstname.lastname@example.orgTo contact the editors responsible for this story: Ben Sills at email@example.com, Iain RogersFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The accounts were hacked through a third-party platform, a spokesperson for the social media platform said in an emailed statement, without giving further details. "As soon as we were made aware of the issue, we locked the compromised accounts and are working closely with our partners to restore them," the Twitter spokesperson said. A spokesperson for the IOC separately said that the IOC was investigating the potential breach.
(Bloomberg) -- Facebook Inc. is trying to clarify how it will handle a new wrinkle in the world of digital political advertising: politicians paying influencers to post on social media platforms like Instagram, which it owns.In the past, political entities were technically barred from offering money for posts, which has become a common practice for marketers. But Facebook is changing its policy after a New York Times report this week about how Michael Bloomberg’s presidential campaign is paying Instagram creators to make and distribute posts making him “look cool.”(Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.)A company spokeswoman said Facebook has heard from multiple campaigns about the subject, and wanted it to be easy for users to identify paid political speech, whether it was direct advertising or branded content. “Branded content is different from advertising, but in either case we believe it’s important people know when they’re seeing paid content on our platforms,” the spokeswoman said.Now Facebook is stepping up enforcement of rules — which had been inconsistent — requiring influencers to use Facebook’s tool to tag paid posts with a prominent disclaimer. It said Friday it will require users who worked with the Bloomberg campaign to retroactively add these disclaimers to branded posts the campaign sponsored. “The campaign was explicitly clear that these posts were ads and sponsored content,” said Sabrina Singh, a Bloomberg campaign spokeswoman. “We went above and beyond to follow Instagram’s rules and the text of the post clearly shows that these are the campaign’s paid ads.” Facebook will now require political candidates buying branded content to register as political advertisers with the company. Unlike other political ads, branded posts won't end up in Facebook's ad archive unless the politician also pays Facebook to promote the posts. Elizabeth Warren criticized Facebook for creating a new loophole. "Refusing to catalogue paid political ads because the Bloomberg campaign found a workaround means there will be less transparency for the content he is paying to promote. Mike Bloomberg cannot be allowed to buy an election with zero accountability," she wrote on Twitter. The emergence of political branded content is a reminder of how hard companies have to work to keep up with the changing landscape of political speech. These posts, also known as sponsored content — or, if you must, “sponcon” — have pushed the boundaries of advertising for the last half-decade or so. As individual users on Instagram, Google’s YouTube, Amazon.com Inc.’s Twitch and other platforms amassed large audiences, marketers began seeing them as a viable alternative to standard advertising. Influencers now regularly tout products in their posts. Regulators have complained for years that they often do so without explaining that they’re being paid. In 2017, the Federal Trade Commission sent dozens of letters to influencers and marketers requiring them to disclose any “material connection” that someone pitching a product had to advertisers. The commission is currently reviewing its endorsement policies, with an eye toward social media. “We may need new rules for tech platforms and for companies that pay influencers to promote products,” FTC commissioner Rohit Chopra wrote on Twitter this week. While Bloomberg’s campaign has drawn unprecedented attention to political branded content, he isn’t the first politician to fall for the charms of social media influencers. And as more money pours into political advertising in coming months, there will likely be candidates and other political entities willing to explore any potential advantage. Gil Eyal, the chief executive of Hypr, a company that helps marketers find influencers for sponsored content deals, said he’s noticed a recent wave of interest from political entities. “We’ve had a lot of inquiries about how we can do this,” he said. He declined to name anyone who had contacted him, and said they’ve turned down the proposals. “We truthfully say this isn’t our forte,” he said. “I think they underestimate how hard this is to do.” Main Street One, a New York-based startup, has been pitching Democratic and progressive organizations on influencer campaigns for months as a way to drown out online disinformation. It has run several such experiments. Late last year, it helped run an influencer campaign promoting Cory Booker funded by United We Win, a Democratic super PAC. This sparked a debate among influencers about whether accepting money from politicians was appropriate, and whether doing so would be bad for their personal brands. Curtis Hougland, Main Street One’s chief executive officer, said the group doesn’t always pay influencers for posting — it’s also seeking out volunteers. But those it does pay can get as much as $500 per post. Finding the right influencers, he said, is a side-door way to effectively target messages. The company might pay more, he said, for posts from someone whose followers are clustered in a particular geographic region, or who fall into some other demographic they’re trying to reach. The response has been mixed, said Hougland, with some potential clients concerned that the risk of such campaigns outweigh the benefits. In his view, mobilizing left-leaning social media influencers is the best way to reach voters in a distracted and messy online media environment. “Can we live with that risk tolerance?” he said. “I think by being less precious we can be more effective.” (Updates with comments from Bloomberg campaign in the sixth paragraph.)\--With assistance from Mark Niquette.To contact the author of this story: Joshua Brustein in New York at firstname.lastname@example.orgTo contact the editor responsible for this story: Molly Schuetz at email@example.com, Andrew PollackFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- As smartphone sales have slowed in recent years, designers have been looking to reinvent the category. But Motorola’s new $1,500 Razr shows there’s a long way to go before flagship devices like the iPhone are disrupted.The Razr is the third foldable Android phone launched by a big-name brand in recent months. The first attempts from Samsung and Huawei transformed into tablets, whereas the Razr is more of a foldable phone. Its 6.2-inch screen shuts into a small square, about half the size of an iPhone 11 Pro Max, and it benefits from deep nostalgia for the original Razr flip phone that defined the pre-iPhone era in the U.S.Novelty and portability are pluses, but that’s not enough for a $1,500 handset. As solid as it feels when shut, it’s decidedly flimsy in the hand when opened up. The foldable screen — which Motorola stresses is built to withstand daily use — feels like it might work well for several months, but not for years. Smartphone buyers increasingly expect their devices to last as long as four years, especially the most expensive models. The Razr doesn’t immediately convince that it can hold up over time.Even if durability wasn’t a concern, Motorola’s Razr suffers from compromised specifications. Its 2,510mAh battery is behind the times for a device of its size, its camera underwhelms, the Android 9 Pie operating system is not the latest and its Qualcomm 700-series Snapdragon processor isn’t top of the line despite the phone’s premium price.Samsung launched the Galaxy Z Flip on Tuesday with a similar square shape, but its inner display is larger at 6.7 inches and has a glass rather than plastic screen. In the hand, Samsung’s offering feels more refined and reliable. With a better processor, bigger battery and a price more than $100 less, the Z Flip instantly vaults ahead of the Razr.As early users of the Moto Razr have noted, the phone makes a slight, unnerving cracking sound when opened and closed. That’s something users will need to get used to. If you rub your finger along the plastic inner display, you’ll feel lumps that are part of the phone’s mechanism. Motorola says that’s normal, but it’s another something you’ll need to get used to. The upper part of the screen feels more solid when pressed than the bottom half, and the entire panel is a fingerprint magnet. The elongated screen also hampers ergonomics when trying to type something on the keyboard.The good news about the display is that its two creases can only really be seen when the screen is off. That’s a step forward from Samsung’s 2019 Galaxy Fold. Moreover, like the Fold and the Z Flip, the Razr’s screen is protected from scratches and accidental fumbles in a way that a device that doesn’t fold inward is not.Motorola’s experimentation with foldable touchscreen technology is commendable, and making it happen inside a device that closes up into a cute square is equally impressive. There’s an undeniable tactile appeal to answering and ending calls by opening and slamming a phone shut, but it’s not of huge importance in an era when most people jump directly to Twitter, TikTok or their texts.The Razr simply feels too flimsy and compromised. Its trade-offs are far too high for anyone to make the switch from an iPhone, Samsung or even one of Motorola’s own, more conventional smartphones.Foldable phones certainly have their benefits, but at this point they’re like expensive weekend cars: something additional to your daily driver and not yet essential to most people. Smartphone makers are making fast strides toward ironing out the impracticalities and compromises, and once they do, there’ll be plenty of people ready to buy in. But Motorola’s revived Razr isn’t the product to mark that inflection point.To contact the author of this story: Mark Gurman in Los Angeles at firstname.lastname@example.orgTo contact the editor responsible for this story: Vlad Savov at email@example.comFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The most concerning ads on social media are not necessarily false but rather those “posing as articles,” says Vivek Shah, who runs J2 Global, an advertising and media company that owns sites including Mashable, IGN, and PCMag.
(Bloomberg) -- Facebook Inc.’s German unit was handed a fine of 51,000 euros ($55,500) for failing to properly nominate a data protection officer for its local office, a penalty privacy regulators said should still serve as a “warning” to others.While the punishment seems tiny for the social network giant, it targets the German unit and not the “billion-dollar parent company,” the data protection authority in Hamburg, Germany, said in its 2019 annual report published on Thursday.“This case should be a clear warning to all other companies: naming a data protection officer and telling the regulator about it are duties,” which the data protection authority takes seriously, the watchdog said in the report. “Even smaller violations like these can lead to substantial penalties.”The penalty was levied under the European Union’s new privacy rules, which took effect in May 2018. The General Data Protection Regulation, or GDPR, gives EU data protection authorities for the first time equal powers to fine companies as much as 4% of global annual sales for the most serious violations of people’s personal data.Facebook’s “careful and professional handling of the violation” has helped avoid an even higher fine, the watchdog said. The company “immediately” stopped the violation and called for a data protection officer “which was simply not communicated,” the report said.The case questions whether “in addition to the Information and Data Protection Commissioner, the German Facebook entity also has to report the contact details of our data protection officer to the Hamburg” regulator, Facebook said in an emailed statement.“This question is discussed controversially, but we have decided to accept the fine,” it said.It’s not the first time the social media giant has been targeted by Europe’s data privacy watchdogs. It’s among the long list of U.S. companies probed by the Irish data protection commission, that also includes Google, Apple Inc. and Twitter Inc.. A case concerning Facebook’s WhatsApp is slated to be among the first to be concluded.(Updates with Facebook comment in sixth paragraph)To contact the reporter on this story: Stephanie Bodoni in Luxembourg at firstname.lastname@example.orgTo contact the editors responsible for this story: Anthony Aarons at email@example.com, Peter ChapmanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The wireless industry scrapped its biggest annual showcase after the coronavirus outbreak sparked an exodus of participants, roiling telecom companies just as they’re preparing to roll out new 5G services.It’s the first time in MWC Barcelona’s 33-year history that organizers have called off the event, which draws more than 100,000 participants from across the world to check out the latest innovations, pitch to investors and do deals.“The global concern regarding the coronavirus outbreak, travel concern and other circumstances, make it impossible” to hold the event, John Hoffman, chief executive officer of conference organizer GSMA, said in a statement to Bloomberg News.The list of big-name attendees started to crumble on Feb. 7, when Swedish wireless equipment maker Ericsson AB pulled out, saying it couldn’t ensure the safety of staff and customers. As others pulled the plug -- from Sony Corp. to Nokia Oyj, Vodafone Group Plc and Deutsche Telekom AG -- it became harder for those remaining to justify their presence.Bloomberg News reported earlier that GSMA could announce the cancellation as soon as Wednesday, after a meeting of members. As of Tuesday, the death toll in China from the virus rose to 1,113, and confirmed cases on the mainland have reached 44,653.MWC was due to run from Feb. 24 to Feb. 27. GSMA had stepped up sanitary precautions to reassure visitors -- advising against handshakes, introducing body temperature scanners and a protocol for changing microphones, and restricting entry to recent arrivals from China. Some delegations had replaced Chinese staff with colleagues from other countries or sent their China representatives ahead of time to avoid being barred.Who’ll Pay?Every year, telecom heavyweights use MWC and the oceans of publicity that come with it to generate marketing buzz around their latest wares. A big focus this year was going to be fifth-generation mobile services, and now several companies will need to reschedule launch events. Chipmaking giant Intel had planned to announce products for 5G networks and will hold an unveiling another time, according to a person familiar with its plans. Motorola was gearing up to showcase new 5G phones.The smartphone industry is trying to fire up stalled growth with the promise of higher data speeds and faster responsiveness. Smartphone shipments have been declining since 2016.The decision to scrap MWC entirely was a difficult one, and it’s not clear who will shoulder the costs -- the participants or GSMA. The industry’s biggest players often spend tens of millions of dollars to exhibit at the show. Ericsson’s absence alone left a gap bigger than a standard American football field in the conference halls.GSMA funds much of its budget from the event, charging 799 euros ($872) for a basic admissions pass.BarcelonaMWC is also important to the city of Barcelona, Spain’s second-largest city, as well as to many of the smaller companies that wouldn’t otherwise have access to such a large audience of mobile carriers and consumers. Large national contingents from Turkey to South Korea take to the show to encourage deal-making and inward investment.The regional government of Catalonia had been in touch with the conference organizers and said it saw no need to cancel events like MWC, Alba Verges, head of the Catalan government health department, said at a press conference in Barcelona.South Korea’s LG Electronics Inc. was among the first to rethink its participation, pointing out last week that most health experts had advised against “needlessly” exposing hundreds of employees to international travel.The global spread of the coronavirus has decimated other conferences, like Singapore’s annual airshow, which lost scores of corporate attendees but went ahead as planned on a smaller scale. Formula One confirmed it is postponing this year’s Chinese Grand Prix racing event due to the coronavirus outbreak, the Liberty Media Corp.-owned firm said in a Twitter post on Wednesday.(Updates with information on abandoned product launches by Intel and Motorola in seventh paragraph.)\--With assistance from Thomas Seal, Niveditha Ravi, Saritha Rai, Debby Wu, Ian King, Gao Yuan, Mark Gurman, Scott Moritz, Rodrigo Orihuela, Angelina Rascouet and Loni Prinsloo.To contact the reporter on this story: Nate Lanxon in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Tom Giles at email@example.com, Rob GolumFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Republican and Democratic senators urged Jerome Powell to defend the independence of the Federal Reserve, a bipartisan show of support after President Donald Trump renewed his public assault on the U.S. central bank and its chairman.“Stay independent. I think you’re doing a great job,” Louisiana Republican John Kennedy told Powell on Wednesday during testimony before the Senate Banking Committee. “Call them like you see them.”The encouragement, echoed by other senators including South Dakota Republican Mike Rounds and Virginia Democrat Mark Warner, follows repeated Trump criticism and comes a day before the panel’s hearing for the president’s latest picks for the central bank’s Board of Governors.Lawmakers will consider nominations for Christopher Waller, currently the head of research at the St. Louis Fed, and Judy Shelton, who was an economic adviser to Trump’s campaign. Shelton has been criticized for lacking political independence, including by Democratic presidential candidate Elizabeth Warren, who sits on the panel.Read more: Warren Blasts Fed Nominee Shelton for ‘Radical Statements’Richard Shelby of Alabama, a senior Republican on the Senate panel, told reporters Wednesday he would like to support Shelton because she is the president’s choice, but will reserve judgment until after the hearing.Trump has been hammering Powell and the Fed for well over a year. During testimony on Tuesday, House Financial Services Committee Chairwoman Maxine Waters said that the president had tweeted criticism of the central bank more than 100 times since picking Powell to lead the institution.Another missive landed a short while later, blaming the Fed chief for the stock market’s morning slippage.Asked by Representative Al Lawson of Florida if he had a reaction to the comment, Powell demurred.“My colleagues and I are completely focused on using our tools to support the American people, to support the achievement of our goals,” Powell said in his House testimony. “That’s really all we’re focused on.”To contact the reporter on this story: Max Reyes in Washington at firstname.lastname@example.orgTo contact the editors responsible for this story: Alister Bull at email@example.com, Jeff KearnsFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Facebook, YouTube, Twitter and TikTok will have to reveal users’ identities if Indian government agencies ask them to, according to the country’s controversial new rules for social media companies and messaging apps expected to be published later this month.The requirement comes as governments around the world are trying to hold social media companies more accountable for the content that circulates on their platforms, whether it’s fake news, child porn, racist invective or terrorism-related content. India’s new guidelines go further than most other countries’ by requiring blanket cooperation with government inquiries, no warrant or judicial order required.India proposed these guidelines in Dec. 2018 and asked for public comment. The Internet and Mobile Association of India, a trade group that counts Facebook Inc., Amazon.com Inc. and Alphabet Inc.’s Google among its members, responded that the requirements “would be a violation of the right to privacy recognized by the Supreme Court.”But the Ministry of Electronics and Information Technology is expected to publish the new rules later this month without major changes, according to a government official familiar with the matter.“The guidelines for intermediaries are under process,” said N.N. Kaul, the media adviser to the minister of electronics & information technology. “We cannot comment on the guidelines or changes till they are published.”The provisions in the earlier draft had required platforms such as Google’s YouTube or ByteDance Inc.’s TikTok, Facebook or its Instagram and WhatsApp apps, to help the government trace the origins of a post within 72 hours of a request. The companies would also have to preserve their records for at least 180 days to aid government investigators, establish a brick-and-mortar operation within India and appoint both a grievance officer to deal with user complaints and a government liaison. The Ministry is still finalizing the language and content.The rules cover all social media and messaging apps with more than 5 million users. India, with 1.3 billion people, has about 500 million internet users. It isn’t clear whether the identities of foreign users would be subject to the Indian government’s inquiries.Law enforcement agencies around the world have been frustrated by tech companies that have refused to identify users, unlock devices or generally cooperate with government investigations, particularly in cases relating to terrorism.In India, where the internet -- and fake news -- are still relatively new phenomenon, a false report of rampant child abduction and organ harvesting circulated widely via WhatsApp, leading to mob violence and over three dozen fatal lynchings in 2017 and 2018.WhatsApp refused a request from the government to reveal the origins of the rumors, citing its promise of privacy and end-to-end encryption for its 400 million Indian users. It instead offered to fund research into preventing the spread of fake news and mounted a public education campaign in the country, its biggest global market.WhatsApp will “not compromise on security because that would make people less safe,” it said in a statement Wednesday, adding its global user base had reached over 2 billion. “For even more protection, we work with top security experts, employ industry leading technology to stop misuse as well as provide controls and ways to report issues — without sacrificing privacy.”At the same time, tech companies and civil rights groups say the new rules are an invitation to abuse and censorship, as well as a burdensome requirement on new and growing companies.In an open letter to India’s IT minister Ravi Shankar Prasad, executives from Mozilla Corp., GitHub Inc. and Cloudflare Inc. said the guidelines could lead to “automated censorship” and “increase surveillance.“ In order to be able to trace the originator of content, platforms would basically be required to surveil their users, undermine encryption, and harm the fundamental right to privacy of Indian users, they said.Companies such as Mozilla or Wikipedia wouldn’t fall under the new rules, the government official said. Browsers, operating systems, and online repositories of knowledge, software development platforms, are all exempt. Only social media platforms and messaging apps will be covered.To contact the reporter on this story: Saritha Rai in Bangalore at firstname.lastname@example.orgTo contact the editors responsible for this story: Edwin Chan at email@example.com, Janet Paskin, Abhay SinghFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Achmad Zaky spoke with unusual candor after taking the stage in Jakarta that October afternoon. People stopped chattering and lowered their phones when he began recounting the decade he spent building one of Indonesia’s most successful startups. What none of the hundreds in the cavernous hall knew then: it was his last big public act as chief executive of Bukalapak.com.Unbeknownst to the crowd, the 33-year-old self-taught computer whiz was on his way out. After a series of failed experiments and missteps -- including an abortive attempt to go toe-to-toe with Alibaba-backed rivals -- Zaky had lost his board’s confidence that he could lead a vastly expanded company into its next phase of growth. Just months away from ceding the reins of the $2.5 billion e-commerce outfit he built from the ground up, he spent much of the speech reflecting on his decade-long stewardship.“I’m not smarter than you. My success rate is maybe 10%,” he told the now-silent audience. “Back then, I was an engineer focusing on the product,” he added. As the company grew, “I was thinking I have to be a leader.”Yet some of his backers had doubts Zaky was the right person to lead Bukalapak given its current complexity, people familiar with the matter said. That may surprise industry observers for whom Zaky’s name had become synonymous with Indonesian e-commerce. He acquired something akin to folk hero status because, unlike many fellow founders, the self-effacing executive from a Java village made it big without Ivy League degrees or billions from the likes of SoftBank Group Corp.His departure in January sent a signal to Southeast Asia’s largest startups, which unlike Silicon Valley remains largely founder-driven. From Grab’s Anthony Tan and Tan Hooi Ling to Tokopedia’s William Tanuwijaya, they rode a funding boom fueled by a mobile explosion to create some of the world’s largest tech startups. But they also burned enormous amounts of cash in pursuit of growth. Now that economic uncertainty is squeezing funding and WeWork’s epitomized the perils of placing expansion above profitability, the time has come for corporate mavens to take the reins, some argue.“It’s the coming-of-age” of Southeast Asia’s tech scene, said Paul Santos, managing partner at Singapore’s Wavemaker Partners. “It’s the end of an era of unbridled ambition and hopefully the beginning of a period of sustainable growth.”Read more: Indonesia’s Newest Unicorn Now Wants to Take on the Big BoysZaky is only the second founder-CEO to leave a Southeast Asian unicorn, following Gojek’s Nadiem Makarim, who became Indonesia’s education minister. While the former’s departure seemed sudden, it was the culmination of a gradual separation, the people said, asking not to be identified discussing internal matters.Some of Zaky’s decisions rankled investors. Bukalapak -- which means “open a stall” -- succeeded by becoming the go-to bazaar for shoppers seeking bargains. But a few years ago, in his zeal to bring more mom-and-pop stores into the network, Zaky pushed too hard for ever-lower prices, disrupting market pricing and upsetting some consumer brands, they said.Later, as Bukalapak expanded, Zaky grew ambitious and tried to take on rivals like SoftBank-backed Tokopedia and Alibaba Group Holding Ltd.’s Lazada by flogging pricier goods. Bukalapak backtracked when it realized it was getting too far away from its roots. Then in 2019, he incensed followers of popular Indonesian President Joko Widodo after tweeting that the government was spending too little on R&D and suggested a new leader might beef up the budget: UninstallBukalapak becoming a trending topic on Twitter.Discussions about a changing of the guard began long before that. Zaky had talked with his board about wanting to pursue his passion of helping young entrepreneurs. But that coincided with increasing pressure for the startup to turn a profit, one reason why it announced 10% job cuts. Directors felt that, while Zaky had been instrumental in Bukalapak’s early days, the company had outgrown him and proposed bringing on an experienced executive. In December, the board appointed a successor in Rachmat Kaimuddin, a former director of finance and planning at PT Bank Bukopin that Zaky himself and a co-founder recommended.“As startup capital raising and profitability come under pressure, we should expect to see more CEO exits. Not just for under-performance, but for other reasons that were ignored under hyper-growth,” said Suresh Shankar, founder and CEO of Singapore-based Crayon Data. “Travis-like (behavioral), Adam-like (financial engineering) or Moonves (CBS, alleged sexual misbehavior) exits will become more common. Sometimes one of these causes or the other will be used as the excuse, to make company under-performance seem more palatable.”Unlike Uber’s Travis Kalanick, Adam Neumann of WeWork or CBS’s Leslie Moonves (who denied allegations of impropriety), Zaky leaves Bukalapak with his reputation largely intact. He will remain an adviser to Bukalapak while chairing his own foundation to support startups.Read more: Indonesia’s Newest Startup Unicorn Taps Mom-and-Pop StoresBorn in central Java in 1986 to school teachers, Zaky got his first PC (an Intel 486) from his uncle at the age of 10 -- the only one in his village. By the time he got to high school, he was competing in national competitions, and eventually enrolled in the prestigious Bandung Institute of Technology. There, he met Nugroho Herucahyono, with whom he started Bukalapak in his dorm room. College friend Fajrin Rasyid left Boston Consulting Group to join them in 2011.By the end of the first year, they’d run out of money and considered throwing in the towel. Then a chance meeting with Japanese venture capitalist Takeshi Ebihara revived the startup (Zaky tagged along with a friend to a meeting.) To his surprise, Ebihara offered to invest in Bukalapak. He also provided early guidance to the founding team.One of the lessons was the importance of control. Zaky was cautious about raising too much money to avoid dilution. While Tokopedia and Grab raised billions, Bukalapak raised less than $500 million from investors including PT Elang Mahkota Teknologi, better known as Emtek, Singaporean sovereign fund GIC Pte and Jack Ma’s Ant Financial.“I want to make sure I have a large stake, like Mark Zuckerberg,” Zaky said in an interview in 2016 at Bukalapak’s offices in Jakarta, decorated with replicas of bird cages to convey the Asian bazaar aesthetic and slogans like “Get Sh*t Done.”Read more: Southeast Asia’s Internet Economy to Top $100 Billion This YearZaky’s and Makarim’s exits now presage a trend. “‘It’s not about you’,” Makarim wrote in his farewell email.In his own parting memo, Zaky counted professionalizing his company among his achievements. He recounted an incident in its early days when the website went down for days and no one was bothered. By mid-2019, when the company had 2 million mom-and-pop store partners and agents and more than 70 million active users, Bukalapak had executives to run finance, strategy and operations.“I remember our early years when our management style was still ‘dormitory’ style,” he wrote. “Over time, our management has become more modern.”\--With assistance from Harry Suhartono.To contact the reporter on this story: Yoolim Lee in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Peter Elstrom at email@example.com, Edwin ChanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Opposition leader Juan Guaido staged a chaotic return to Venezuela after another international trip in which he tried to garner world leaders’ support to unseat President Nicolas Maduro.The head of the opposition-controlled National Assembly landed on Tuesday in Caracas, where Maduro’s loyalists clashed with opposition lawmakers who were there to greet him. He was swarmed by them after passing through customs and immigration, and was able to leave the airport without being arrested for violating a government travel ban. Guaido had also defied that ban last year without suffering repercussions on his re-entry to Venezuela.“This is a cowardly dictatorship, I defied them and we entered Venezuela,” Guaido said at a rally in a public square in eastern Caracas. “They don’t accept their destiny. They are alone, isolated, they represent no one.”His return caps an international tour that featured stops in Davos and Washington, where he met President Donald Trump. Guaido was publicly embraced by Trump during his State-of-the-Union address last week, in which the U.S. leader promised that “Maduro’s grip of tyranny will be smashed and broken.”Guaido has struggled to translate that support into concrete gains against a regime that remains solidly entrenched. Last April, he tried to lead an uprising against the government which failed after most of the armed forces refused to join. Yet Maduro has refrained from arresting him, possibly fearing an escalation of sanctions against his government.Why Venezuela Has Two Presidents, One Thorny Standoff: QuickTakeGuaido said journalists were attacked Tuesday. Earlier, security forces stopped buses taking National Assembly members to the airport. Opposition lawmaker Delsa Solorzano said on Twitter that legislator Deyalitza Aray was released after being briefly detained while trying to reach the airport.Guaido’s uncle Juan Jose Marquez, who accompanied him on the flight, was reported missing following the leader’s arrival at the Caracas’ airport, according to the opposition’s press office. Venezuela’s information ministry declined to comment on Marquez’s disappearance.Journalists said they were beaten and chased by Maduro supporters while at the airport. Inside the terminal, government supporters protested against the U.S. government’s decision last week to sanction state-owned airline Conviasa.“The escalation of violence is very serious,” Guaido said at the eastern Caracas rally. “Today there were irregular groups backed by agents of the dictatorship.”Though he promised important announcements, Guaido’s speech Tuesday night focused on stirring supporters. He vowed domestic and international action to keep the pressure on Maduro, and said multilateral entities had agreed to create a “Venezuela Fund” when a transition of power takes place.What Broke Venezuela’s Economy and What Could Fix It: QuickTakeForeign TripsIn mid-January, Guaido traveled to Bogota with the support of Colombian President Ivan Duque. Subsequently, Guaido attended the World Economic Forum in Davos, met with French President Emmanuel Macron in Paris, and Canadian Prime Minister Justin Trudeau in Ottawa, among others.Before leaving the U.S., he met with U.S. House Speaker Nancy Pelosi and Organization of American States Secretary-General Luis Almagro.Venezuela’s socialist leader struck a defiant tone in his response to Guaido’s U.S. trip.“Donald Trump: you can’t beat Venezuela, nobody can smash or break Venezuela,” Maduro said in a speech following Guaido’s meeting at the White House. “Madness has taken over Donald Trump’s policy against Venezuela.”After Venezuela’s 2018 elections widely regarded as rigged, Guaido, in his capacity as president of the National Assembly, invoked Venezuela’s charter to launch an interim government in January 2019 and rapidly won international recognition after Maduro began a new six-year term.While Maduro had threatened to arrest Guaido for months, a Trump official warned Feb. 5 that Venezuela‘s regime would see very significant consequences if there is any harm to opposition leader upon his return.(Adds details on legislator’s release, disappearance of Guaido’s uncle starting in the sixth graph.)\--With assistance from Nicolle Yapur, Fabiola Zerpa and Jose Orozco.To contact the reporters on this story: Patricia Laya in Caracas at firstname.lastname@example.org;Alex Vasquez in Caracas Office at email@example.comTo contact the editors responsible for this story: Daniel Cancel at firstname.lastname@example.org, Robert Jameson, Walter BrandimarteFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- U.K. pub company Stonegate’s announcement on its debt refinancing plans stunned traders who had bet heavily that the firm’s credit insurance would soon prove worthless.Stonegate, which runs over 700 bars across the U.K. -- including the Slug and Lettuce, Walkabout and Yates’ chains -- said on Wednesday that it will use an existing funding vehicle to guarantee at least some of the new notes and loans it plans to offer. It’s expected to sell 1.35 billion pounds ($1.74 billion) of bonds for its owner TDR Capital’s acquisition of rival U.K. pub chain EI Group Plc, possibly as early as this month.The company’s credit-default swaps subsequently jumped as high as 250 basis points, up from around 80 on Tuesday, according to people familiar with the matter. Traders had expected Stonegate to use a new funding unit to back the forthcoming issuance, thereby rendering almost $300 million of credit default swaps worthless because they would be left with no debt to insure.A company representative declined to comment.The cost of insuring Stonegate’s existing debt against losses more than doubled on Wednesday to 200 basis points at 3.30pm in London, according to ICE Data Services. The contracts had previously plummeted 75% over the past year. “Seeing a company explicitly reference CDS in a press release or cleansing statement is pretty unprecedented in European High Yield,” Steven Hunter, CEO and founder of high-yield analytics firm 9Fin Ltd, told Bloomberg News.The company had previously said it was 90% certain that it would issue the debt out of a new vehicle, according to management’s comments on an investor call reported by CreditSights analysts last month.Barclays Plc, Goldman Sachs Group Inc., Lloyds Banking Group Plc and Nomura Holdings Inc. are arranging the upcoming buyout financing after having provided bridge loan financing. Barclays is acting as agent and arranger, according to the bond documents.CDS MarketCredit derivatives that fell out of favor after the financial crisis are returning to vogue as default rates rise and high-profile failures pay out for shortsellers. Last year buyers of credit insurance received windfalls from contracts linked to French retailer Rallye SA and U.K. travel company Thomas Cook.CreditSights analysts had recommended taking profits on selling Stonegate’s five-year credit protection last month, saying there wasn’t certainty about the issuing structure of the new bonds.“With CDS at all-time tights, a CDS sucker punch from the company’s bankers cannot be entirely ruled out,” the CreditSights analysts wrote in last month’s note. “The game is still very much on.”To contact the reporters on this story: Katie Linsell in London at email@example.com;Laura Benitez in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Vivianne Rodrigues at email@example.com, Bruce DouglasFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Follow Bloomberg on Telegram for all the investment news and analysis you need.The Galaxy Z Flip isn’t Samsung Electronics Co.’s first foldable device, but it’s the first to carry the Z designation, which the company is dedicating exclusively to foldables.Announced at an event in San Francisco on Feb. 11, the Z Flip is going on sale on Valentine’s Day at a price of $1,380. It’s shaping up to be the most refined and complete foldable phone to date, and though its price remains high, it is actually the most affordable foldable from a big-name manufacturer. In the space of a few months, Samsung has shrunk both the size and price of the $1,980 Galaxy Fold into a compact square device, and it’s decided the foldable category has earned a distinct division in its phone portfolio.“With the Z Series, we are adopting a new naming convention for our foldable portfolio that shows our commitment to expanding the category to offer a variety of experiences,” a Samsung spokesperson told Bloomberg News in Seoul. “We chose ‘Z’ for this series because it intuitively communicates the idea of a fold while delivering a dynamic, youthful feel.”Galaxy V would have been even more evocative of the Z Flip’s profile, but alas, Samsung already used that letter on a forgettable phone back in 2014.Read more: Samsung Bets on Big Camera Upgrade in Galaxy S20, Unveils Z Flip\--With assistance from Mark Gurman.To contact the reporter on this story: Sohee Kim in Seoul at firstname.lastname@example.orgTo contact the editors responsible for this story: Edwin Chan at email@example.com, Vlad SavovFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Twitter Inc. expanded efforts to protect the U.S. census, saying Tuesday it will tweak search results for census-related terms to prompt users to visit the U.S. Census Bureau website.The social-media company also said it will continue to prohibit posts containing false or misleading information about how to participate in the national survey -- a policy that also applies to election-related misinformation.Twitter and Facebook Inc. have been criticized for their slow response to disinformation campaigns in the past. While the companies don’t want to be held responsible for everything their users post, they have more recently agreed to apply stricter scrutiny to election-related posts, preventing those that lie about the time or place for voting, for instance. Lawmakers and civil rights groups have pressured the platforms to step up oversight of the census because it’s ripe for foreign government manipulation due to the implication the results could have on future elections around the country.Facecbook said in December that it would extend its misinformation policies to the census, a nationwide survey conducted every decade that determines how many seats in the House of Representatives each state receives and how federal funding is allocated. It also will be used this year to redraw state and local voting districts.In addition to prohibiting false information, Twitter will prominently link to the Census Bureau website when people search for questions related to the survey, the company said in a blog post. That means users can get information directly from the federal government, rather than relying on those posting on Twitter for information.Twitter has taken a similar approach to searches about the coronavirus, prompting users to visit the website of the U.S. Centers for Disease Control and Prevention. Facebook is doing something along the same lines. Both companies have also recently announced policies for manipulated media in an effort to get ahead of possible misinformation in the form of deepfake videos or edited photographs.It remains to be seen how effectively Twitter applies its policy. Messages can spread quickly on social media sites before the companies have time to apply their policies.(Updates with details on coronavirus policy in the sixth paragraph.)\--With assistance from Kurt Wagner.To contact the reporter on this story: Eric Newcomer in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Molly Schuetz at email@example.com, Andrew PollackFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Federal Reserve Chairman Jerome Powell said the U.S. central bank is keeping a close eye on fallout from the deadly coronavirus outbreak in China, singling it out among risks threatening the U.S. and world economy.“In particular, we are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy,” Powell said in remarks before U.S. lawmakers Tuesday.Powell stopped short of saying the outbreak had changed the Fed’s baseline outlook for the U.S. economy, or the expectation among many members of the Federal Open Market Committee that rates will remain on hold this year. U.S. equities climbed as investors digested the latest views from the Fed chair and Treasuries slipped.“The FOMC believes that the current stance of monetary policy will support continued economic growth, a strong labor market and inflation returning to the committee’s symmetric 2% objective,” Powell said. “As long as incoming information about the economy remains broadly consistent with this outlook, the current stance of monetary policy will likely remain appropriate.”Coronavirus, which has killed more than 1,000 people, has prompted the world’s largest-known quarantine effort and slowed large portions of China’s economy, disrupting travel and commerce worldwide.Powell faced questions from lawmakers of the House Financial Services Committee about the potential impact of the virus on the U.S. economy.“We know that there will be some, very likely be some effects on the United States,” he said, adding that the question for the Fed is whether they’ll be “persistent” and “material.”“It’s just too early to say,” Powell said.The Fed chief also responded to lawmakers on a range of issues including volatility in money markets, Libor, minimum wages, digital currency and community banking. He’s scheduled for a separate hearing before the Senate Banking Committee at 10 a.m. Wednesday as part of his semi-annual testimony to Congress.Fed officials have dialed up their concern over the coronavirus in public remarks in recent days. Vice Chairman Richard Clarida called it a “wild card” on Jan. 31. The Fed’s Semiannual Monetary Policy Report, released Feb. 7, said it was a “new risk” that could potentially interfere with trade, depress commodity prices and cause the U.S. dollar to appreciate.Some private-sector economists have been less cautious, marking down their estimates for first-quarter growth in the U.S., while investors are betting the Fed will respond with an interest rate cut later this year.Labor MarketIn his remarks and testimony, Powell provided a mostly positive picture of the U.S. economy -- which was dented but not significantly damaged by slower global growth and international trade disputes in 2019.“Economic activity increased at a moderate pace and the labor market strengthened further, as the economy appeared resilient to the global headwinds that had intensified last summer,” he said.“There’s nothing about this expansion that is unstable or unsustainable,” Powell said in response to a question about what could disrupt current economic strength. His comments followed data released last week showing U.S. employers added a better-than-expected 225,000 new jobs in January.Repo OperationsPowell said the central bank had been successful in containing a sudden September spike in overnight funding rates that briefly pushed the Fed’s benchmark lending rate to stray outside its target range.The central bank has conducted emergency lending into the market for repurchase agreements and, in October, began purchasing $60 billion a month in Treasury bills. The latter move has boosted bank reserves, allowing banks to feed money into the repo market in place of the Fed.“As our bill purchases continue to build reserves toward levels that maintain ample conditions, we intend to gradually transition away from the active use of repo operations,” he said. “We intend to slow our purchases to a pace that will allow our balance sheet to grow in line with trend demand for our liabilities.”Powell repeated his concerns over longer-term issues holding back growth in the U.S. economy.“Finding ways to boost labor force participation and productivity growth would benefit Americans and should remain a national priority,” he said.Federal BudgetHe also warned lawmakers the economy would need support from fiscal policy in the event of a downturn, and pressed them to put the federal budget on a sustainable path.The White House on Monday released President Donald Trump’s proposed 2021 federal budget, which included deficit spending of about $1 trillion. Trump has repeatedly criticized Powell for not lowering interest rates further. The attacks resumed Tuesday during Powell’s appearance before Congress with a tweet calling the current interest rate too high and pointing to a dip in theDow Jones Industrial Average during the testimony. That index subsequently erased declines and the broader S&P 500 gauge of U.S. stocks maintained gains.Coronavirus emerged as an economic threat in recent months just as the global outlook was beginning to brighten. Powell and his colleagues cut rates three times in 2019 to guard against the risks posed by trade tensions, slow global growth and below-target inflation. Since late last year, however, Fed officials have said monetary policy was in a good place and would remain unchanged unless their outlook for the economy changed materially.Completion of the China phase-one trade deal, Britain’s avoidance of a sudden, no-deal exit from the European Union and a slight improvement in global manufacturing data pointed to a more stable outlook for 2020 after a decidedly rocky 2019.“Some of the uncertainties around trade have diminished recently, but risks to the outlook remain,” Powell said.(Adds Trump tweet on Powell.)\--With assistance from Matthew Boesler, Steve Matthews and Ana Monteiro.To contact the reporters on this story: Christopher Condon in Washington at firstname.lastname@example.org;Max Reyes in Washington at email@example.comTo contact the editor responsible for this story: Margaret Collins at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Even on a gloomy Sunday, with skies threatening rain, the U.S. Courthouse on First Street in downtown Los Angeles is strikingly beautiful. The clouds and surrounding buildings reflect in its pleated glass sides, which look far airier in person than in photographs. By breaking up its plane, the pleats call attention to the Great Seal etched in the glass. The American flag reflects in their panes.Opened in 2016, it’s a civic building that makes you happy to see it. Reviewers on Google and Yelp, including a grumpy juror, give it good marks.Catesby Leigh, by contrast, calls it a “Borg Cube.” I can only assume he has never actually watched “Star Trek: The Next Generation.” Or maybe he’s too blinded by architectural theory to enjoy beauty that doesn’t conform.You probably haven't heard of Leigh. He’s a critic associated with the National Civic Art Society, a think tank that “endeavors to help architecture return to its pre-Modernist roots.” The society wants government buildings to re-adopt classical architectural styles: more domes and columns, less glass and steel. Its formerly obscure views are now enjoying the world’s largest megaphone.Last week, a draft executive order titled “Making Federal Buildings Beautiful Again” leaked to Architectural Record. (The Chicago Sun-Times obtained a copy and put it online.) The draft denounces modern architecture. It requires classical styles as the default architecture for all new federal buildings in the Washington D.C. area, including surrounding counties; for all federal buildings costing more than $50 million; and for all federal courthouses. It specifically forbids Brutalist and Deconstructionist styles. It establishes a President’s Committee for the Re-Beautification of Federal Architecture to revise the principles that guide federal architecture commissions.It calls for the General Services Administration to solicit public comment on new building designs while specifically excluding “artists, architects, engineers, art or architecture critics, members of the building industry or any other members of the public that are affiliated with any interest group or organization involved with the design, construction or otherwise directly affected by the construction or remodeling of the building.”You could see that requirement as avoiding conflicts of interest — or as excluding anyone who knows what they’re talking about.Architects and critics were apoplectic.Classical styles are fascistic, suggested Artnet News. The Guardian warned of “dictator chic.” The order would constitute “a complete constraint on freedom of expression,” an architect told the New York Times. Even a nuanced historical article in Archinect News concluded with a reference to Nazi architect Albert Speer. New York Times critic Michael Kimmelman rightly identified the draft as Twitter bait.The response demonstrates how, even when he’s barely involved, President Donald Trump manages to effectively troll snooty elites by giving voice to widely held popular grievances. A lot of government buildings are indeed ugly. No matter how hated, they rarely get torn down. But the draft order also demonstrates Trump’s propensity for ham-handed remedies that would do more harm than good.As creators, architects face an inherent problem. They can’t do their work without clients. Writers, painters, sculptors — these days even filmmakers — can find ways to follow their muse even if their creations have little or no market. Beyond building homes for themselves (or their mothers), architects have few options.Construction is expensive, it requires land, and it needs people who’ll use it. That’s the real-world conflict at the heart of Ayn Rand’s novel “The Fountainhead,” which lampooned the throwback styles and populist attitudes the draft order promotes.Federal commissions offer relative freedom for architectural ambitions. “Design must flow from the architectural profession to the Government and not vice versa,” declare the guidelines in place since 1962. Written by a young Daniel Patrick Moynihan, these design principles reflect the technocratic modernism of the Kennedy era — the deference to experts and belief in the new that landed a man on the moon but also razed urban neighborhoods to make way for Brutalist government centers.Under those guidelines, the architecture profession itself acts as the client. The result can be a masterpiece like L.A.’s new courthouse — or a monstrosity like the headquarters of the F.B.I., the J. Edgar Hoover Building, one of Trump’s pet peeves.By contrast, the advocates of classical architecture position themselves as the voice of the people. “For too long architectural elites and bureaucrats have derided the idea of beauty, blatantly ignored public opinions on style, and have quietly spent taxpayer money constructing ugly, expensive and inefficient buildings,” the National Civic Art Society’s chairman told the Times.But if architects can’t represent the public, who can? That’s the problem at the heart of any government building project. Whose taste should rule? What should the balance be between saving money and creating meaningful, attractive buildings? What role should the people who’ll work in the building have? What is the right form for the building’s specific use? For federal buildings outside the capital, what voice should locals have? Who speaks for the client when the client is everyone?These are political, not technical, questions. You can’t reason your way to the single right answer. You can only try to strike a sensible balance — which isn’t exactly the Trump way.In an editorial attacking the executive order, the Chicago Sun-Times evoked the city’s federal plaza designed by Ludwig Mies van der Rohe. Ordinary locals find it striking, part of Chicago’s heritage of beautiful architecture, including many modern buildings.Leigh, by contrast, says the plaza “raises serious issues of appropriateness” and is “far better suited to the high-end corporate world and its promotion of itself as culturally au courant.” (The building was au courant a half century ago.) Dictating that your idea of civic appropriateness is right for all buildings in all times and places shouldn’t be confused with speaking for the public.What looks “civic” depends on experience, not architectural theory. In Los Angeles, where I live, traditional civic buildings are not classical. They’re not even the Mission style popular elsewhere in the state. They’re Moderne ziggurats with Art Deco features, like the L.A. city hall, or midcentury modern structures like the Wilshire Federal Building in West L.A. They reflect the eras in which the city was rapidly expanding.Some, like these examples, are attractive and popular, others less so. But all of them represent the actual city and its history, not an outsider’s idea of civic ideals. The eco-conscious 21st-century beauty of the new federal courthouse fits appropriately in its dense urban setting. Columns and domes would not. Neither would the red tile roofs of Santa Barbara.However great it may be for the Lincoln Memorial, classicism itself is no guarantee of good civic architecture. Packing columns onto a hulking monstrosity like the Eisenhower (formerly Old) Executive Office Building does not make it beautiful. Historical, yes. Meaningful because of that history, sure. But not attractive or inspiring or representative of American ideals.The sweeping language of the draft order simply replaces one group of architectural theories with another, one set of insiders with an even smaller one. Preserving the high-handed attitudes it claims to oppose, it avoids the hard questions. Even on its own grounds, its judgments and prescriptions are suspect.This architectural tiff is an argument among intellectuals with ideas about the ought of the built environment, not citizens with experience of the is. It might make government buildings more uniform, but it wouldn’t make them better.To contact the author of this story: Virginia Postrel at email@example.comTo contact the editor responsible for this story: Katy Roberts at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Virginia Postrel is a Bloomberg Opinion columnist. She was the editor of Reason magazine and a columnist for the Wall Street Journal, the Atlantic, the New York Times and Forbes. Her next book, "The Fabric of Civilization: How Textiles Made the World," will be published in 2020.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Turkish President Recep Tayyip Erdogan has put NATO’s second-largest army on a collision course with Russian-backed forces loyal to Syrian President Bashar al-Assad to try to prevent the fall of Idlib province, Syria’s last rebel stronghold.The Turkish military ordered hundreds of tanks and armored cars dispatched to Idlib and struck about 170 targets in Syria in retaliation for attacks by Syrian forces that killed at least 12 Turkish soldiers in the northwestern province this month. Russia demanded a halt to attacks on Russian forces and their allies in the northwestern province, who’ve been conducting a months-long advance on the opposition bastion.Retaking Idlib would give Assad a major strategic victory, but it could give Turkey less of a say in postwar Syria, where it’s been backing rebels since the conflict began in 2011. The fighting there is straining the uneasy contract between Turkey and Russia in Syria, where the two regional powers have carved out areas of control.An agreement by Turkey, Russia and Iran three years ago choked off a planned offensive on Idlib and allowed for the stationing of Turkish troops there. But Syria and its foreign backers have come close to Idlib’s center as they take control of strategic highways, and are now poised to vanquish an opposition force made up of onetime al-Qaeda affiliates and Turkey-backed rebels.Raising the volatility, a key Erdogan ally said the Turkish president needs to review ties with Russia after the deaths of the Turkish soldiers by Moscow-backed Syrian troops.“For Erdogan, Idlib is existential,” Charles Lister, director of the Extremism and Counterterrorism Program at the Middle East Institute, said on Twitter. “As Turkey-Russia talks appear to have stalled or broken down, it’s hard not to imagine some form of Turkey pushback.”Turkey’s increasing military foray into Idlib is adding to the nation’s geopolitical risks, increasing pressure on markets.Turkish stocks and bonds plunged following reports of new Turkish fatalities on Monday. The benchmark Borsa Istanbul 100 Index closed down 2.2% on Monday, its biggest drop since October, and declined a further 0.5% Tuesday. The yield on 10-year government bonds surged 60 basis points to 11.27% in two days. The lira weakened 0.6% against the dollar on Tuesday, even after authorities curbed liquidity in the offshore market this week to deter short sellers.Read more: Erdogan Threatens to Force Syria to End Siege of Turk Troops Back-to-back talks with a Russian delegation in Ankara on Saturday and Monday yielded no tangible results, Turkish authorities said, adding that Erdogan and Russia’s Vladimir Putin may possibly meet to discuss the situation.While there are no plans so far for such a meeting, Kremlin spokesman Dmitry Peskov said, the situation “concerns the Kremlin.”“We haven’t hidden our concern that for a long time, these terrorist groups have felt quite at ease in the Idlib zone,” he said. “They do not just feel at ease, but also organize attacks and aggressive actions against both Syrians and our facilities” in Syria.In Ankara on Tuesday, Nationalist Movement Party leader Devlet Bahceli, a key Erdogan ally in parliament, said Turkey must review its ties with Russia after the deaths of the Turkish soldiers. Turkish and Russian interests in Syria don’t overlap, and Ankara “must plan on confronting Damascus if there is no other option left,” Bahceli said.The fighting in Idlib marks the lowest point in relations between Moscow and Ankara since the 2015 downing of a Russian warplane by Turkish fighter jets. It comes as Putin and Erdogan jostle for dominance in the Middle East and eastern Mediterranean, while operating within the rough boundaries of their difficult alliance.Erdogan last week threatened to break the siege of some Turkish outposts by Assad’s forces if they don’t withdraw by the end of February. It was unclear whether an artillery attack by Syrian government loyalists that killed five Turkish soldiers on Monday will force him to act sooner.The reprisal that followed struck three Syrian tanks, two artillery units and a military helicopter, and dozens of pro-Assad troops may have been killed, Turkey’s Defense Ministry said. It’s impossible to independently confirm casualties in Syria’s complex civil war.Erdogan met with military brass late Monday as armored vehicles were pouring across the border, and his office later said Turkey won’t be deterred in its efforts to prevent fighting in Idlib and a new refugee wave, the state-run Anadolu Agency reported.Read more: Syria Showdown Looms as Third Turkish Base Besieged in IdlibIdlib has an estimated population of about 3 million, including those who fled Aleppo, and they have nowhere to go but Turkey if chaos ensues. Turkey already shelters about 4 million Syrians, and says it can’t cope with the 1 million to 2 million more it estimates may flee toward its border if Idlib falls.Erdogan also fears that a new refugee exodus would diminish the chances of securing a meaningful role for rebels in future peace talks.(Updates with Moscow demanding halt to attacks on Russian, Syrian forces in second paragraph.)\--With assistance from Ilya Arkhipov.To contact the reporters on this story: Selcan Hacaoglu in Ankara at email@example.com;Firat Kozok in Ankara at firstname.lastname@example.orgTo contact the editors responsible for this story: Onur Ant at email@example.com, Amy Teibel, Mark WilliamsFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Amazon.com Inc. has asked the U.S. Court of Federal Claims to allow it to question President Donald Trump in its lawsuit challenging the loss of a highly lucrative cloud contract.In a court filing made public on Monday, Amazon asks to question Trump and top Pentagon leaders about their role in the Pentagon’s Joint Enterprise Defense Infrastructure, or JEDI, cloud contract that was awarded to Microsoft Corp. in October.Amazon is seeking evidence to show political interference cost the company the cloud deal. Among the leaders Amazon seeks to depose are Trump, former Defense Secretary James Mattis, Defense Secretary Mark Esper and Dana Deasy, the Pentagon’s chief information officer, as well as other individuals involved in the selection process, according to the Jan. 17 filing.Amazon faces an uphill battle to persuade a judge to order the president to participate in a deposition in this case, procurement experts said.“It is absurd to think that this President, at this point, would sit for a deposition or, for that matter, show respect for the legal system,” Steven Schooner, a professor at the George Washington University Law School, said in a statement.Amazon spokesman Drew Herdener said in a statement the company is seeking the additional evidence to preserve the public’s confidence in the procurement process. Rachel VanJohnson, a spokeswoman for the Defense Department’s Cloud Computing Program Office, said in a statement the Pentagon “strongly opposes” Amazon’s request to depose its senior officials because it would delay implementation of the technology program. The contract is worth up to $10 billion over a decade.The company’s cloud unit, Amazon Web Services, filed a lawsuit in November alleging the Defense Department failed to fairly judge its bid for the JEDI contract because Trump viewed Amazon Chief Executive Officer Jeff Bezos as his “political enemy.”Amazon’s lawsuit chronicles a laundry list of comments and actions by Trump and the Defense Department that it claims show the Pentagon bowed to political pressure when awarding the deal to Microsoft. In one case, Amazon cites claims in a book by Mattis’ former speechwriter, Guy Snodgrass, that Trump told Mattis in the summer of 2018 to “screw Amazon” by locking it out of the bid. Mattis has criticized the book.Amazon also mentions comments Trump made in July 2019 when he said he was looking “very seriously” at the cloud-computing contract, citing complaints from Microsoft, Oracle Corp. and International Business Machines Corp.Amazon Web Services is seeking additional material to present to the judge, including “facts not currently known or accessible to AWS demonstrating exactly how President Trump’s order to ‘screw Amazon’ was carried out during the decision-making process,” the company’s filing said.Also on Monday, Microsoft filed two separate motions asking the court to dismiss many of Amazon’s bias allegations and block the company from seeking additional evidence. Microsoft argued in court papers that it had won the JEDI procurement because it submitted a cheaper and “technically superior” bid and not because of political interference by Trump.“AWS has alleged zero facts-- nothing -- plausibly indicating any DOD official involved in the JEDI procurement, at any level, was actually influenced by the alleged anti-Bezos statements,” Microsoft wrote.The president has long criticized Bezos over everything from the shipping rates his company pays the U.S. Postal Service to his ownership of the Washington Post. In December 2015, Bezos joked on Twitter about wanting to send Trump to space.Deasy, the Pentagon’s chief information officer, has said that as far as he knows, no one from the White House reached out to any members of the JEDI cloud contract selection team.While no law prohibits a president from weighing in on a contract, federal agencies must choose vendors based on the technical criteria outlined in their requests for proposals, not opinions from politicians, according to procurement officials.In order to win Trump’s testimony in this case, Amazon would have to offer evidence that he followed up on his public comments about Amazon with private instructions to the officials running the procurement, said Charles Tiefer, a professor at the University of Baltimore School of Law.The judge could still grant Amazon permission to obtain more communications between the White House and the Pentagon about the contractwithout giving permission to conduct the depositions, Tiefer said.Letting a losing bidder depose a sitting president “may have not have been seen before,” Tiefer said. Yet “it’s far from impossible.”(Updates with Microsoft motion, starting in eleventh paragraph)\--With assistance from Daniel Seiden.To contact the reporter on this story: Naomi Nix in Washington at firstname.lastname@example.orgTo contact the editors responsible for this story: Sara Forden at email@example.com, Paula DwyerFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
It's been a pretty great week for Twitter, Inc. (NYSE:TWTR) shareholders, with its shares surging 14% to US$37.03 in...
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world threatened by trade wars. Sign up here. The Trump administration is changing a key exemption to America’s trade-remedy laws to make it easier to penalize about two dozen so-called developing countries including China, India and South Africa.The U.S. on Monday narrowed its internal list of developing and least-developed countries in order to reduce the threshold for triggering a U.S. investigation into whether nations are harming U.S. industries with unfairly subsidized exports, according to a U.S. Trade Representative notice.In doing so, the U.S. eliminated its special preferences for a list of self-declared developing countries that includes: Albania; Argentina; Armenia; Brazil; Bulgaria; China; Colombia; Costa Rica; Georgia; Hong Kong; India; Indonesia; Kazakhstan; the Kyrgyz Republic; Malaysia; Moldova; Montenegro; North Macedonia; Romania; Singapore; South Africa; South Korea; Thailand; Ukraine; and Vietnam.USTR said the decision to revise its developing country methodology for countervailing duty investigations was necessary because America’s previous guidance -- which dates back to 1998 -- “is now obsolete.”The development marks a noteworthy departure from two decades of American trade policy regarding developing nations that could result in more stringent penalties for some of the world’s top exporters.The move also reflects President Donald Trump’s frustration that large economies like China and India are permitted to receive preferential trade benefits as developing nations at the World Trade Organization.During his visit to Davos, Switzerland, last month Trump said the WTO hasn’t treated America fairly. “China is viewed as a developing nation. India is viewed as a developing nation. We’re not viewed as a developing nation. As far as I’m concerned, we’re a developing nation, too.”Here’s What It Means to Be a WTO Developing Country: QuickTakeThe goal of the WTO’s special preferences for developing nations is to help poorer countries reduce poverty, generate employment and integrate themselves into the global trading system.Under WTO rules, governments are required to terminate their countervailing duty investigations if the amount of foreign subsidy is de minimis, which is normally defined as less than 1% ad valorem.But WTO rules provide a different standard for so-called developing nations that requires investigators to terminate duty investigation if the amount of subsidy is less than 2% ad valorem.The Trump administration has sought to end these special preferences for nations that fall under certain categories, like those who are members of global economic clubs like the Group of 20, the OECD or who are classified as high-income nations by the World Bank.Last July, Trump issued an executive memo that asked U.S. Trade Representative Robert Lighthizer to determine whether there’s been “substantial progress” toward limiting the number of countries considered developing nations. The U.S. may act unilaterally if not, Trump said.Several of the de-listed countries in the USTR notice have already agreed to relinquish their developing-country rights in future trade negotiations, including Brazil, Singapore and South Korea.To contact the reporter on this story: Bryce Baschuk in Geneva at firstname.lastname@example.orgTo contact the editors responsible for this story: Brendan Murray at email@example.com, Ana MonteiroFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world threatened by trade wars. Sign up here. President Donald Trump released his annual budget Monday, proposing deep cuts to social programs but increases in defense and entitlement spending that would push the gross federal debt above $30 trillion over the next decade.The president’s $4.8 trillion spending plan, posted to the White House’s website Monday afternoon, would increase debt partly because of tax cuts and billions more in spending on defense.The budget is an election-year embodiment of many of the policy priorities Trump has championed over his first three years in office. Trump proposes continuing his effort to “rebuild” the U.S. military by investing heavily in defense spending -- $740.5 billion in the next fiscal year -- including the creation of Space Force. And the budget for NASA would increase 12% to help underwrite Trump’s proposed manned missions to the Moon and Mars.“I think people will be very impressed by it,” Trump said at an event Monday morning at the White House. “We’re not touching Medicare, we want to keep Medicare, we’re not touching Social Security, we’re making our country stronger again, we’re not decreasing Medicaid, but we’re doing a lot of things that are very good, including waste and fraud.”The budget includes significant changes to Medicaid and stringent new work requirements for safety net programs. The president calls for deep cuts to government programs he believes are unpopular with his base, slashing discretionary spending by 5% -- down to $590 billion -- in the coming year. That includes major reductions in foreign aid -- with the State Department and international programs cut 7.7% -- and the Environmental Protection Agency reduced by 26.5% next year.The annual budget produced by the White House reflects the policy aspirations of the incumbent administration but has no binding power, since federal spending is appropriated by Congress. Lawmakers aren’t expected to finish work on 2021 spending levels until after the November election. And the White House move to change two-year budget cap levels negotiated with Democrats last summer could make an eventual spending deal more difficult.Read More: Pentagon’s $705 Billion Budget Boosts Nuclear Weapons FundingDemocrats quickly took aim at Trump’s proposed cuts. “The budget is a statement of values and once again the President is showing just how little he values the good health, financial security and well-being of hard-working American families,” House Speaker Nancy Pelosi said in a statement Monday.Trump’s budget shows the president drifting further away from his campaign pledge to eliminate the U.S. national debt by the time he leaves office, even as he envisions discretionary spending shrinking to a mere 1.6% of GDP in 2030 -- about half its current level.U.S. debt has already risen $3 trillion during Trump’s first three years in office, and his plan calls for adding to the debt until 2035. The $30.5 trillion gross federal debt anticipated by 2030 -- up from $22.7 trillion this fiscal year -- would represent 84.6% of gross domestic product, down from 106.9% this year.Most Republican presidents have released budgets they say would balance the budget within a decade, though this is the third consecutive plan released by the White House that fails to reach that goal. Only once a budget is in surplus can the underlying debt be paid down.Still, Trump’s plan cuts spending below current levels, leading the deficit to decline to $966 billion next year and the deficit to shrink to 0.7% of GDP by 2030, according to the White House. That’s below the $1 trillion projected by the nonpartisan Congressional Budget Office under current policies.Russ Vought, the acting director of Trump’s Office of Management and Budget, blamed Democrats on Capitol Hill for Trump’s inability to balance the budget.“The Democrats on Capitol Hill have refused to consider the spending reforms the president has put forward,” Vought said Monday in an interview with Bloomberg Television.The Congressional Budget Office projects that without the policy changes Trump is advocating gross federal debt would rise to $36 trillion in 2030 from $24 trillion in 2020 -- substantially higher than the more than $30 trillion projected by the White House. Debt held by the public would rise from $18 trillion to $31 trillion.“He now leaves it to future presidents and congresses to achieve fiscal sanity,” said Bill Hoagland, a former Senate budget aide now with the Bipartisan Policy Center.‘Who the Hell Cares?’Trump has shown little of the traditional GOP concern about deficit spending. He dismissed concerns by some fiscal conservatives at a fundraiser in January in Florida.“Who the hell cares about the budget?” Trump said in a recording of the closed-door remarks obtained by the Washington Post. “We’re going to have a country.”The president’s plan anticipates significant savings through a series of cuts and changes to programs designed to assist the nation’s most vulnerable citizens.Those include: $135 billion in a drug pricing overhaul; $292 billion from adding a work requirement to welfare programs; $170 billion from changing student loan laws; and $266 billion from “site neutrality” rules that would have the government pay the same amount for medical services in hospitals and doctor’s offices.While the president has vowed he would not cut Social Security or Medicare, his budget envisions savings from the health care program by “eliminating wasteful federal spending” and other changes Democrats argue could ultimately decrease coverage or benefits.‘Thoughtful Reforms’“A lot of these are smart, thoughtful reforms. Many are bipartisan, and versions appeared in Obama budgets,” said Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget, a watchdog group. “A number of them would actually reduce costs or improve the situation for beneficiaries of the programs, as well the budget.”The proposals are already drawing criticism from Democrats, who said the president is looking to kick needy people off government assistance programs.“These deep cuts send a clear message to the American people about the Trump administration’s warped values and misplaced priorities,” said Representative Nita Lowey of New York, chairwoman of the House Appropriations Committee. “I look forward to working with my colleagues to reject this proposal and instead invest in America’s working families.”Perennial TargetsEach chapter of the budget released on Monday includes an outline of programs and projects the administration has deemed wasteful. The proposal targets many of the same areas Trump has sought to cut in years past: foreign aid, the EPA, and public broadcasting.The Commerce Department is targeted for one of the largest reductions -- more than 37% -- after a one-year surge to pay for this year’s decennial census. Trump has also zeroed-out funding for examining the creation of a permanent nuclear waste site at Nevada’s Yucca Mountain. Trump announced his plan to abandon the project in a tweet last week, in what was interpreted as a bid to court Nevada voters ahead of the 2020 election.The White House also anticipates saving $89 billion over the next decade by modifying retirement and health benefits for federal employees, and $91 billion by reforming the Postal Service.The administration isn’t proposing a special allocation of funds to combat the novel coronavirus, according to a senior administration official who requested anonymity to discuss the document before its release. The virus has led to more than 800 deaths worldwide and sparked quarantines of travelers coming from China, where the outbreak started.Proposed funding for the Centers for Disease Control and Prevention would be cut 10%, but the budget leaves untouched the $4 billion allocated for its work on infectious diseases.Some agencies get a boost under the president’s proposal, including NASA, whose spending would rise 12% in the coming year. That additional funding would be targeted toward the president’s goal of returning to the Moon by 2024, with the aim of later attempting a lunar launch of a manned spacecraft bound for Mars.Another of the president’s major priorities -- the border wall with Mexico -- would receive $2 billion in funding next year. That’s down from $8.6 billion requested a year ago, but the senior administration official said that with funding for 1,000 miles of wall already secured, the administration needed less in the upcoming year.Paid parental leave, a major priority of Ivanka Trump, the president’s daughter and senior adviser, would receive $21 billion in funding over the next decade. The White House has earmarked $45 billion for a program that would provide a tax credit for donations to state-based scholarships that allow students to attend private schools.The budget again includes $1 trillion for infrastructure spending, modeled on combining legislation proposed by GOP Senator John Barrasso of Wyoming with a $200 billion fund for “nationally significant projects.” The remainder of the funding would be secured through public-private partnerships and state and local spending, the official said. The White House would replenish the depleted Highway Trust Fund through cost savings in other areas of the budget.Rosy ProjectionsTrump’s budget also assumes that the economy will continue to get stronger. The outline projects the economy will grow 3.1% in the fourth quarter of 2020 compared with a year earlier, and then expand at a pace of 3% for the coming years, only cooling toward the end of the decade.The estimates are far more optimistic than those of most economists, and the administration failed to hit its own projections this year, despite surging stock markets. A recent Bloomberg News survey of 71 analysts anticipated U.S. GDP growth at 1.8% in 2020 and 1.9% in 2021.The senior administration official said the U.S. fell short of projections in 2019 because of Boeing Co.’s issues with the 737 MAX jet, the GM autoworkers strike, flooding in the Midwest, and investor uncertainty about trade deals with China, Mexico and Canada.The budget also forecasts the 10-year Treasury yield will average 2% in 2020 and grow more slowly than previously projected over the next decade, reducing the costs of interest payments. The administration official said the predictions were in line with outside analysts.The spending plan predicts Trump will succeed in passing his still-to-be-unveiled overhaul of the nation’s health-care system, banking $567 billion in savings over the next decade. Despite pledging to repeal Obamacare, the White House has yet to propose an alternative that has gained enough congressional support.The budget also assumes that lawmakers will extend the president’s tax cuts, which are set to expire in 2025, and that Trump will continue negotiating trade deals on better terms for the U.S. economy.Long OddsPresidential budget requests are typically treated as “dead on arrival” by Congress. But Trump’s willingness to circumvent Congress on budget matters -- including holding up foreign aid and diverting military construction funds to build his wall -- arguably make the blueprint more relevant.Still, many of the president’s proposed changes face long odds on Capitol Hill, where Democrats control the House and are unlikely to accept his cuts to social welfare programs. They’re also likely to insist on adhering to an existing spending agreement that sets defense spending for the coming year at $741 billion and non-defense spending at $635 billion.The fact that the White House proposal tears up the two-year budget caps deal inked by Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin last summer as part of a debt ceiling deal could presage an ugly showdown after the November elections.Congress isn’t expected to complete spending bills for fiscal 2021 which starts Oct. 1 until after the November election since Democrats have incentives to wait and see if they can unseat Trump. If Trump wins re-election, however, he’d have greater leverage to try to force House Democrats to accept his new proposed spending levels.To contact the reporters on this story: Justin Sink in Washington at firstname.lastname@example.org;Erik Wasson in Washington at email@example.comTo contact the editors responsible for this story: Alex Wayne at firstname.lastname@example.org, Joshua Gallu, Justin BlumFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Tech stocks have surged to start 2020, lifting the entire market to record highs. But one place you won't find much enthusiasm for the rally is on Twitter. There, you're more likely to read accounts spreading fake news about the coronavirus outbreak or mocking the valuation of Tesla Inc.'s meteoric stock. I have a theory about this: Many of Twitter's most influential voices rose to prominence in the aftermath of the financial crisis, and they carry the scars and skepticism of that era more than a decade later.Enthusiasm for the rally is easier to find on Reddit and TikTok, newer venues full of participants who may not remember the financial crisis or are more connected to Silicon Valley and the wealth it has generated during the past decade. For that reason, they may be in more in tune with what's driving markets.Let's step back and compare Twitter with some older media forms. On television, a news anchor -- and in the back ground, news editors and producers -- picks the top stories to highlight, shaping the daily conversation. The front page and editorial page of a newspaper function in a similar manner. On Twitter, however, the dialog is steered by its most influential voices, which can be identified as those accounts with the most followers and highest levels of engagement.Twitter's history is important to consider here: The platform had its most rapid user growth during the financial crisis and its aftermath. For people interested in financial markets and the economy, there was no better way to gain followers and to go viral than to tweet insightful, engaging or funny content related to the economic downturn and recovery. Out of this era emerged what's known as finance Twitter, or fintwit, powered by a core of influential users now in their 30s and 40s who were shaped by one or even two economic downturns (The first was the dot-com bust of 2000.)Now, when any asset class or investment starts to look bubbly, there's a litany of voices on Twitter influenced by the financial crisis ready to tweet charts showing parallels to past bubbles or making jokes along the lines of "this won't end well." This doesn't mean prices can't keep rising, but Twitter serves as a sort of informal heat check, dousing any excessive ebullience that people might be feeling.This is less likely to be the case on a popular forum on Reddit called /r/WallStreetBets. Founded in 2012 rather than in the immediate wake of the financial crisis, its initial purpose was for sophisticated investors to discuss high-risk, high-reward short-term trading strategies. Unlike on Twitter, there are fewer participants who are journalists or other members of the media. It's where headstrong traders can project confidence, say, by claiming they're continuing to buy call options on stocks that are going up and forcing others to hedge and make stocks go up still more. For a generation whose only market memories have been watching stocks such as Amazon.com Inc. and Facebook Inc. go up, why wouldn't they make the bull case?The upstart video-sharing platform TikTok may be an even more extreme version of this, with teens and college students who may not even remember the Facebook initial public offering, producing viral clips of how to make money by trading tech stocks in class, using the proceeds to pay off student loans.If every financial mania needs a new class of investor that doesn't have scars from whatever meltdowns came before, maybe the same thing applies to the media formats talking about those markets. To someone used to financial market coverage on Bloomberg, the Wall Street Journal or even Twitter, the idea of Gen Z college students making TikTok videos about their day-trading strategies may seem outrageous — or a serious bubble indicator.But someone who lived through the Great Depression may have felt the same way watching breathless coverage of the dot-com boom in the late 1990s on CNBC. This isn't to suggest CNBC is comparable to TikTok, but the channel was founded in 1989, several years into one of longest bull markets ever and almost a decade after the staginflationary 1970s ended. It rode the wave of cable television growth in the 1990s as the baby-boom generation was moving into its prime saving and investing years, and it became the hub for the speculative investors of that era. But it lacked institutional memory and the balanced skepticism of veterans who had lived through past bear markets.To the extent we have more bubble-like behavior in cryptocurrencies, cannabis stocks, Tesla or something else, these newer venues are worth paying attention to. They may lack the sophistication and skepticism of more mature mediums, but that lack of memory is often what's needed to thrive in emerging, speculative markets. They may also offer an early warning to those able to distinguish insightful enthusiasm from unhinged euphoria. To contact the author of this story: Conor Sen at email@example.comTo contact the editor responsible for this story: James Greiff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Conor Sen is a Bloomberg Opinion columnist. He is a portfolio manager for New River Investments in Atlanta and has been a contributor to the Atlantic and Business Insider.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.