The Numbers Are Still Amazing. So Why Are People So Pessimistic?

On the one hand, the numbers look good. Unemployment is 3.7 percent. Interest rates are going up, but they’re still historically low. And more people are starting businesses and keeping them afloat than we’ve seen in decades. 

So why are people so pessimistic, even among groups you might imagine would be more sanguine? Case in point: Two separate surveys reveal small business owners aren’t feeling particularly enthusiastic about the near future. 

According to the National Federation of Independent Business, optimism among entrepreneurs fell again in November for the third consecutive month due to worry over slowing economic growth and slowing sales. Meanwhile, the Kauffman Foundation’s recent national survey found that most entrepreneurs think that the Trump administration is doing more for large corporations than for small businesses. 

Next month, the 2020 presidential campaign season will begin in earnest, and so these takes on the economy will start to become more than academic. If people ultimately vote with their pocketbooks, and if entrepreneurs vote with an eye toward whether the climate will likely benefit their businesses, that could mean more upheaval in Washington.

Here’s what else I’m reading today:

One of these things is not like the others: Netflix, Spotify, and your car

Let this sink in: Volvo recently launched a car subscription service nationwide in Germany, with monthly prices ranging from €498 to €929 ($564 to $1,052). Ford already offers subscriptions in San Francisco and Los Angeles starting at $405 per month. The idea is to make cars feasible for young drivers who don’t want to make long-term investments (or can’t afford them). 
Stefan Nicola, Bloomberg Businesweek

Shark Tank is a decade old and still inspirational

Shark Tank’s tenth year was packed with memorable moments. One particularly emotional pitch involving sibling co-founders pitching their late father’s invention caused the Sharks–and plenty of viewers–to cry. In a special Shark Week episode, the Sharks actually swam with real sharks (and we had to see Kevin O’Leary in a tuxedo-printed wetsuit). Time to relive the top seven moments from the show’s standout year. 
Emily Canal, Inc.

Why it’s always smart to double-check your email settings

Does the mere mention of a Reply All button send you into a nervous breakdown? Probably, if you work for the state government of Utah–where 22,000 employees were subjected to a hilariously inadvertent reply-all-pocalypse on Friday. The situation quickly spiraled, with people using the Reply All function to advise everyone else to, uh, stop replying all. We’ve been using email for decades and we still can’t get Reply All right. 
Julie Turkewitz, The New York Times

With investors like these, who needs enemies?

It’s well-documented that women and minority entrepreneurs receive a dismally small portion of available venture capital. A new report from Morgan Stanley reveals a new–and depressing–explanation as to why: most investors believe they’re getting enough money already.
Kimberly Weisul, Inc.

Silicon Valley could soon be a little more normal

For more than 50 years, we’ve been able to trust in a maxim: computing power would double roughly every two years, because the number of transistors that could fit on a microchip woud double at that rate. And it worked–until recently, when it didn’t. That means that the era of hyperfast innovation in Silicon Valley might be at an end, and that the tech industry could ultimately reach the point where it’s sort of like every other industry, growing perhaps, but at much more down to earth rate.
Jeff Bercovici, Inc.
 

Australia competition watchdog flags concerns over tech firms' use of user data

FILE PHOTO – A 3D printed Facebook logo is seen in front of displayed cyber code in this illustration taken March 22, 2016. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) – Australia’s competition regulator on Monday outlined concerns about the ability of social media companies like Facebook Inc and Alphabet Inc’s Google to monetize content and the extent to which consumer data is used for targeted advertising.

“The inquiry has also considered important questions about the range and reliability of news available via Google and Facebook,” the Australian Competition and Consumer Commission (ACCC) said in a statement.

Australia’s parliament passed a bill on Thursday to force tech firms such as Google, Facebook and Apple Inc to give police access to encrypted data, the most far-reaching such requirements imposed by a Western country.

Reporting by Devika Syamnath in Bengaluru; Editing by Peter Cooney

Huawei CFO seeks bail on health concerns; Canada wants her in jail

TORONTO/BEIJING (Reuters) – A top executive of China’s Huawei Technologies Co Ltd [HWT.UL] argued that she should be released on bail while awaiting an extradition hearing, citing fears for her health while incarcerated in Canada along with other factors, court documents showed on Sunday.

FILE PHOTO: Meng Wanzhou, Executive Board Director of the Chinese technology giant Huawei, attends a session of the VTB Capital Investment Forum “Russia Calling!” in Moscow, Russia October 2, 2014. Picture taken October 2, 2014. REUTERS/Alexander Bibik

Huawei Chief Financial Officer Meng Wanzhou is fighting to be released on bail after she was arrested on Dec. 1 in Vancouver at the request of the United States.

Meng, 46, faces U.S. accusations that she misled multinational banks about Huawei’s control of a company operating in Iran. This deception put the banks at risk of violating U.S. sanctions and incurring severe penalties, court documents said.

China has criticized her detention and demanded her immediate release. The arrest has roiled global markets as investors worried it could torpedo attempts to thaw trade tensions between Washington and Beijing.

In a sworn affidavit, Meng, the daughter of Huawei’s founder, said she is innocent of the allegations and will contest them at trial in the United States if she is surrendered there.

Meng said she was taken to a hospital for treatment for hypertension after being detained. She cited hypertension as a factor in a bail application seeking her release pending an extradition hearing. She also said she has longstanding ties to Vancouver dating back at least 15 years, as well as significant property holdings in the city.

Her family also sought leave to remain in Vancouver if she was granted bail, according to the court documents, with her husband saying he plans to bring the couple’s daughter to Vancouver to attend school during the proceedings.

Earlier on Sunday, China’s foreign ministry summoned the U.S. ambassador to lodge a “strong protest” over the arrest, and said the United States should withdraw its arrest warrant.

Chinese Vice Foreign Minister Le Yucheng told U.S. ambassador Terry Branstad that the United States had made an “unreasonable demand” on Canada to detain Meng while she was passing through Vancouver, China’s Foreign Ministry said.

“The actions of the U.S. seriously violated the lawful and legitimate rights of the Chinese citizen, and by their nature were extremely nasty,” Le told Branstad. He made similar comments to Canada’s ambassador the night before.

China strongly urges the United States to pay attention to China’s solemn and just position and withdraw the arrest warrant on Meng, Le added.

“China will respond further depending on U.S. actions,” he said, without elaborating.

Le also told the Canadian ambassador on Saturday there would be severe consequences if it did not immediately release Meng.

The United States has been looking since at least 2016 into whether Huawei shipped U.S.-origin products to Iran and other countries in violation of U.S. export and sanctions laws, Reuters reported in April.

In the Canadian court documents released on Sunday, Huawei said its Iran operations were “in strict compliance with applicable laws, regulations and sanctions” of the United Nations, United States and European Union.

In a company presentation from 2013 that was released with the Canadian court documents, Huawei said it communicated with U.S. government agencies on a “day-to-day” basis to obtain what it called “professional guidance” on trade compliance.

Companies are barred from using the U.S. financial system to funnel goods and services to sanctioned entities.

U.S. Senator Marco Rubio said on Sunday he would “100 percent absolutely” introduce a measure in the new Congress that would ban Chinese telecom companies from doing business in the United States.

FILE PHOTO: Meng Wanzhou, Huawei Technologies Co Ltd’s chief financial officer (CFO), is seen in this undated handout photo obtained by Reuters December 6, 2018. Huawei/Handout via REUTERS

“We have to understand Chinese companies are not like American companies. OK. We can’t even get Apple to crack an iPhone for us in a terrorist investigation,” he told CBS “Face the Nation.”

“When the Chinese ask a telecom company, we want you to turn over all the data you’ve gathered in the country you’re operating in, they will do it. No court order. Nothing like that. They will just do it. They have to. We need to understand that.”

Rubio was a strong critic of China’s ZTE Corp, which pleaded guilty in 2017 to violating U.S. laws that restrict the sale of American-made technology to Iran.

Reporting by Ben Blanchard in Beijing and Julie Gordon; Additional reporting by Denny Thomas and Anna Mehler Paperny in Toronto, Nick Brown in New York, and Doina Chiacu, Chris Sanders and Karen Freifeld in Washington and Steve Stecklow; Editing by Lisa Shumaker and David Gregorio

Slack Hires Goldman Sachs to Lead Its IPO Planned for 2019, Report Says

Slack hired investment bank Goldman Sachs as the lead underwriter for its highly anticipated initial public offering, Reuters reported Friday.

Slack is talking with investment banks to help underwrite an IPO, which could end up valuing the chat and workplace-collaboration software maker as high as $10 billion, Reuters said, citing unnamed sources.

In August, Slack raised $427 million in a private round of financing led by General Atlantic and Dragoneer. At the time, the investment valued the company at more than $7 billion. The company has raised a total of $1.2 billion in seven funding rounds since 2010, according to Crunchbase, which tracks financing rounds of private companies.

Last month, Stewart Butterfield, Slack’s co-founder and CEO, told Fortune that the company had “no specific timeline for an IPO,” although he also said that “We’ve been on a path to public company readiness for several years now and we’re continuing on that path.”

Slack offers a popular work-collaboration platform that allows co-workers to chat and message each other. The nine-year-old company now has more than 8 million active users, although Butterfield said in the Fortune interview that the actual number could be well above that.

The market for technology IPOs had been sluggish for several years before picking up somewhat in 2018. So far in 2018, 188 companies have gone public on U.S. exchanges, up from 160 in all of 2017. Around 40 of the IPOs this year were tech startups, including Sonos, Dropbox, and SurveyMonkey.

2019 is expected to bring bigger names to the IPO market, not just Slack, but also Uber, Lyft, and Airbnb. On Thursday, Lyft confidentially filed paperwork with the Securities and Exchange Commission for its planned IPO.

U.S. accuses Huawei CFO of Iran sanctions cover-up

VANCOUVER/LONDON (Reuters) – Huawei Technologies Co Ltd’s chief financial officer faces U.S. accusations that she covered up her company’s links to a firm that tried to sell equipment to Iran despite sanctions, a Canadian prosecutor said on Friday, arguing against giving her bail while she awaits extradition.

The case against Meng Wanzhou, who is also the daughter of the founder of Huawei, stems from a 2013 Reuters report here about the company’s close ties to Hong Kong-based Skycom Tech Co Ltd, which attempted to sell U.S. equipment to Iran despite U.S. and European Union bans, the prosecutor told a Vancouver court.

U.S. prosecutors argue that Meng was not truthful to banks who asked her about links between the two firms, the court heard on Friday. If extradited to the United States, Meng would face charges of conspiracy to defraud multiple financial institutions, the court heard, with a maximum sentence of 30 years for each charge.

Meng, 46, was arrested in Canada on Dec. 1 at the request of the United States. The arrest was on the same day that U.S. President Donald Trump met in Argentina with China’s Xi Jinping to look for ways to resolve an escalating trade war between the world’s two largest economies.

The news of her arrest has roiled stock markets and drawn condemnation from Chinese authorities, although Trump and his top economic advisers have downplayed its importance to trade talks after the two leaders agreed to a truce.

A spokesman for Huawei had no immediate comment on the case against Meng on Friday. The company has said it complies with all applicable export control and sanctions laws and other regulations.

Friday’s court hearing is intended to decide on whether Meng can post bail or if she is a flight risk and should be kept in detention.

The prosecutor opposed bail, arguing that Meng was a high flight risk with few ties to Vancouver and that her family’s wealth would mean than even a multi-million-dollar surety would not weigh heavily should she breach conditions.

Meng’s lawyer, David Martin, said her prominence made it unlikely she would breach any court orders.

“You can trust her,” he said. Fleeing “would humiliate and embarrass her father, whom she loves,” he argued.

Huawei CFO Meng Wanzhou, who was arrested on an extradition warrant, appears at her B.C. Supreme Court bail hearing in a drawing in Vancouver, British Columbia, Canada December 7, 2018. REUTERS/Jane Wolsak

The United States has 60 days to make a formal extradition request, which a Canadian judge will weigh to determine whether the case against Meng is strong enough. Then it is up to Canada’s justice minister to decide whether to extradite her.

Chinese Foreign ministry spokesman Geng Shuang said on Friday that neither Canada nor the United States had provided China any evidence that Meng had broken any law in those two countries, and reiterated Beijing’s demand that she be released.

Chinese state media accused the United States of trying to “stifle” Huawei and curb its global expansion.

IRAN BUSINESS

The U.S. case against Meng involves Skycom, which had an office in Tehran and which Huawei has described as one of its “major local partners” in Iran.

In January 2013, Reuters reported that Skycom, which tried to sell embargoed Hewlett-Packard computer equipment to Iran’s largest mobile-phone operator, had much closer ties to Huawei and Meng than previously known.

Slideshow (9 Images)

In 2007, a management company controlled by Huawei’s parent company held all of Skycom’s shares. At the time, Meng served as the management firm’s company secretary. Meng also served on Skycom’s board between February 2008 and April 2009, according to Skycom records filed with Hong Kong’s Companies Registry.

Huawei used Skycom’s Tehran office to provide mobile network equipment to several major telecommunications companies in Iran, people familiar with the company’s operations have said. Two of the sources said that technically Skycom was controlled by Iranians to comply with local law but that it effectively was run by Huawei.

Huawei and Skycom were “the same,” a former Huawei employee who worked in Iran said on Friday.

A Huawei spokesman told Reuters in 2013: “Huawei has established a trade compliance system which is in line with industry best practices and our business in Iran is in full compliance with all applicable laws and regulations including those of the U.N. We also require our partners, such as Skycom, to make the same commitments.”

U.S. CASE

The United States has been looking since at least 2016 into whether Huawei violated U.S. sanctions against Iran, Reuters reported in April.

The case against Meng revolves around her response to banks, who asked her about Huawei’s links to Skycom in the wake of the 2013 Reuters report. U.S. prosecutors argue that Meng fraudulently said there was no link, the court heard on Friday.

U.S. investigators believe the misrepresentations induced the banks to provide services to Huawei despite the fact they were operating in sanctioned countries, Canadian court documents released on Friday showed.

The hearing did not name any banks, but sources told Reuters this week that the probe centered on whether Huawei had used HSBC Holdings (HSBA.L) to conduct illegal transactions. HSBC is not under investigation.

U.S. intelligence agencies have also alleged that Huawei is linked to China’s government and its equipment could contain “backdoors” for use by government spies. No evidence has been produced publicly and the firm has repeatedly denied the claims.

The probe of Huawei is similar to one that threatened the survival of China’s ZTE Corp (0763.HK) (000063.SZ), which pleaded guilty in 2017 to violating U.S. laws that restrict the sale of American-made technology to Iran. ZTE paid a $892 million penalty.

Reporting by Julie Gordon in Vancouver and Steve Stecklow in London; Additional reporting by Anna Mehler Paperny in Toronto, David Ljunggren in Ottawa, Karen Freifeld in New York, Ben Blanchard and Yilei Sun in Beijing, and Sijia Jiang in Hong Kong; Writing by Denny Thomas and Rosalba O’Brien; Editing by Muralikumar Anantharaman, Susan Thomas and Sonya Hepinstall

3 Ways to Address AI's More Frightening Implications

AI has vast potential. The technology is being touted as a solution to some of humanity’s most vexing problems, and rightly so. In China, where there aren’t enough radiologists to review the 1.4 billion annual CT scans for lung cancer, algorithms can accurately and efficiently diagnose patients.

Around the world, the next generation of automobiles will be driven quite literally by AI, and removing angry, distracted, or drunk humans from behind the wheel will likely make the road a far safer place. Still, for every positive AI implementation, there’s a downside just waiting to be uncovered.

One of the principal concerns about AI stems from its potential to spread misinformation. Social media platforms such as Facebook and Twitter are already having to deal with this practice, and they’ve taken to shutting down bots designed to spread hate speech and inflame public opinion.

According to Greg McBeth, head of revenue at Node.io, what’s currently an annoyance will only continue to escalate: “I believe there’s potential for an AI-driven misinformation crisis in our lifetime. AI can already convincingly manipulate images and video,” McBeth noted, citing as an example instances in which some actresses’ faces were superimposed onto inappropriate photos. Unfortunately, fake news is just the beginning.

In addition to faking images and videos, programmers with malicious intentions will use AI to commit other crimes, from the forging of financial documents that impact credit to the fabrication of phony evidence to produce wrongful convictions. In order to combat these efforts, we need to take the following steps.

1. Start the conversation now.

Advancements in AI are accelerating, and the use of the technology for nefarious purposes will as well. While news coverage seems to emphasize the revolutionary possibilities of AI, we must not shy away from the potential consequences. Earlier this year, Facebook’s Mark Zuckerberg warned that it could be a decade before AI is able to recognize the nuances that allow it to red flag hate speech or false information.

AI’s more nefarious uses could greatly outpace AI-based countermeasures. As a business leader, you can help guide this conversation. For instance, you could set up a roundtable discussion at an industry conference to share information and increase awareness of how AI may be used to spread misinformation — and where the tech comes up short in detecting it.

2. Create safeguards for defense.

Science fiction author Isaac Asimov thought up his three laws of robotics with android servants in mind. We still don’t have robots doing our household chores (not counting vacuums), but the laws have withstood the test of time.

To prevent AI from causing harm, the business community needs similar, universally accepted safeguards that apply to AI development. For instance, if you intend to use robots, you may be tempted to simplify the interface required to control them in order to make them more user-friendly for your employees. But be careful to balance those efforts with attention to cybersecurity. It’s imperative to address system vulnerabilities that could make it easier for hackers to gain access to your robot and network.

3. Arm citizens with AI education.

In order to mitigate the damages of misinformation, the business community needs to educate the public about what AI is capable of, both good and bad. Include educational resources on this subject on your blog, website, email newsletter, and social media accounts. Inform your customers about your use of AI and what safeguards or policies you have in place to prevent cyberattacks.

When people are aware of ways AI can be used maliciously, they’re more likely to recognize the red flags. For instance, if someone knows how to recognize signs that a Twitter account is potentially a political bot, they may think twice before retweeting something it shared.

On the other hand, when people are ignorant of AI’s misuse, they won’t hesitate to propagate misinformation. This needs to be a society-wide effort, but you can start by working with your team and your customers so they know what AI can do.

AI is responsible for exciting developments, but it’s a powerful tool that can be used to do harm as well. Ultimately, it’s impossible to prevent bad actors from developing AI for their own ill-intentioned purposes. But by taking these steps, business leaders can help minimize the impact of AI’s downsides.

Qualcomm says China comment will not revive NXP deal

(Reuters) – U.S. chipmaker Qualcomm Inc (QCOM.O) said on Monday it was not looking to revive its abandoned $44 billion acquisition of Dutch peer NXP Semiconductors NV (NXPI.O), a day after the White House said China would reconsider clearing a deal if it was attempted again.

Qualcomm, the world’s biggest smartphone-chip maker, walked away from its agreement to buy NXP in July, after failing to secure Chinese regulatory approval. The planned deal was first agreed between the two companies in October 2016.

Qualcomm, headquartered in San Diego, California, and NXP, based in Eindhoven, the Netherlands, needed China’s blessing for their deal because of their presence in that country.

After high-stakes talks on Saturday between U.S. President Donald Trump and Chinese President Xi Jinping in Argentina, the White House said in a statement that China was “open to approving the previously unapproved” deal for Qualcomm to acquire NXP “should it again be presented”.

But Qualcomm said there was no prospect for the acquisition to be revived.

“While we were grateful to learn of President Trump and President Xi’s comments about Qualcomm’s previously proposed acquisition of NXP, the deadline for that transaction has expired, which terminated the contemplated deal,” a Qualcomm representative said via email.

“Qualcomm considers the matter closed.”

NXP declined to comment.

On Monday, White House economic adviser Larry Kudlow told reporters that President Trump put the issue of the acquisition on the table in the talks with the Chinese president.

Kudlow added that the Chinese president’s openness to the deal was a sign of further cooperation on multiple issues, including corporate mergers. Xi’s reported comment could embolden some potential acquirers in the semiconductor space to explore transactions, corporate dealmakers said.

“Although that acquisition cannot be resuscitated, Xi’s comment reveals in plain sight that Chinese antitrust policy is inherently politicized,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies in a blog post.

FILE PHOTO: A sign on the Qualcomm campus is seen, as chip maker Broadcom Ltd announced an unsolicited bid to buy peer Qualcomm Inc for $103 billion, in San Diego, California, U.S. November 6, 2017. REUTERS/Mike Blake

Qualcomm shares closed up 1.5 percent at $59.14 in New York on Monday, while NXP shares ended up 2.75 percent at $85.67.

Qualcomm and NXP did not lobby for the Trump administration to bring up the abandoned deal in its meeting with Xi and other Chinese officials on the sidelines of the G20 summit in Buenos Aires on Saturday, which was dominated by negotiations over trade tariffs, according to sources close to the companies.

The two companies were surprised to see that the terminated deal resurfaced as an issue, the sources added, requesting anonymity to discuss confidential deliberations. Qualcomm was given just an hour’s notice by the Trump administration about Xi’s comment on the NXP deal, and its inclusion in the White House statement, according to two of the sources.

The Trump administration had unsuccessfully lobbied the Chinese government earlier this year to give its blessing to the deal.

China’s foreign ministry declined to comment on Qualcomm during a regular media briefing on Monday.

Qualcomm had sought to purchase NXP because of its market position as a dominant supplier to the automotive market, as car makers add more chips to vehicles each year. Qualcomm is now focused on developing its own chips for the automotive market, according to one of the sources.

Qualcomm had to pay NXP a $2 billion fee to terminate the deal. To appease its shareholders, Qualcomm has also embarked on a $30 billion stock repurchase plan to return to them most of the money that would have been used for the NXP deal. It has spent more than $20 billion in share buybacks in the last 12 months. NXP has also announced its own $5 billion share buyback program.

DEALS ABANDONED

Several deals by semiconductor companies were put on ice after the Qualcomm/NXP deal fell through, simply because they had a footprint in China and required regulatory approval there. Now, chip companies may be more optimistic about their regulatory chances in China.

One example could be Xilinx Inc (XLNX.O), a U.S. provider of chips used in communications network gear and consumer electronics that has a big presence in China. Xilinx is currently vying to acquire Israeli chip maker Mellanox Technologies Ltd (MLNX.O) after it decided to run an auction to sell itself, according to people familiar with the matter. A successful acquisition of Mellanox could prove an important test of China’s appetite to approve such deals. A representative for Xilinx declined to comment. Mellanox did not immediately respond to requests for comment.

A more near-term test being watched by dealmakers is KLA-Tencor Corp (KLAC.O) pending acquisition of fellow semiconductor equipment maker, Israel’s Orbotech Ltd (ORBK.O). The $3.4 billion deal, announced in March, is still awaiting Chinese regulatory approval. KLA-Tencor’s CEO said on the company’s last earnings call that he expects the deal to close by year end.

Thus far, other high-profile mergers and acquisitions involving U.S. companies in other sectors have received Chinese approval. Last month, China approved United Technologies Corp’s (UTX.N) $30 billion purchase of aircraft parts maker Rockwell Collins Inc and Walt Disney Co’s (DIS.N) $71.3 billion deal to buy most of Twenty-First Century Fox’s (FOXA.O) entertainment assets.

Acquisitions of U.S. companies by Chinese companies, on the other hand, have been few and far between in the last year, after the Committee on Foreign Investment in the United States (CFIUS), a government panel that scrutinizes deals for potential national security risks, shot down more of these deals, such as Ant Financial’s plan to acquire U.S. money transfer company MoneyGram International Inc (MGI.O). U.S. lawmakers also passed reforms earlier this year that increased CFIUS’ scrutiny of deals.

Reporting by Liana B. Baker in New York and Kanishka Singh in Bengaluru; Aditional reporting by Greg Roumeliotis in New York, Michael Martina in Beijing and Jeff Mason in Washington, D.C.; editing by Diane Craft