fortune--2020-07-22--How a quiet co-pay rule change could mean massive drug cost increases

The COVID-19 pandemic has hit those with chronic diseases especially hard. According to its most recent weekly summary, the Centers for Disease Control and Prevention estimates that 91% of patients hospitalized with the disease have at least one underlying medical condition.
Patients with chronic diseases face an additional burden due to a Department of Health and Human Services (HHS) rule that took effect last week curtailing co-pay assistance—financial aid in the form of co-pay coupon cards from drug manufacturers that millions of Americans rely on to help pay for their prescription medications.
HHS recently finalized its annual regulation called the Notice of Benefit and Payment Parameters for 2021 (NBPP 2021), which expressly allows health insurers to adopt “co-pay accumulator adjustment programs” (CAAP). These programs can prohibit co-pay assistance from counting toward patients’ deductibles and maximum out-of-pocket limits. For many patients, this policy means that once their co-pay assistance runs out, they are back in the position of not being able to afford their medication.
Patients’ pain is health insurers’ gain: CAAPs essentially allow insurers to double the amount of money they receive in deductibles, earning these funds first through drugmaker co-pay assistance, and then from the patient directly.
Health insurers argue that co-pay accumulator adjustment programs incentivize patients to shift to less expensive generic alternatives. Yet this perspective overlooks how around 87% of medications for which co-pay assistance is available have no generic substitute. When co-pay assistance runs out and no generic substitute is available, many patients subject to co-pay accumulator adjustment programs simply stop taking their needed medications.
According to one study of patients with cancer, nearly half of patients abandon their prescriptions when out-of-pocket costs reach $2,000. Nonadherence to prescription drugs accounts for 10% of hospitalizations and 125,000 deaths each year. CAAPs threaten to worsen health outcomes for millions of patients in the middle of a pandemic.
Consider the story of Kristen Catton, a part-time nurse case manager from Columbus. Catton has multiple sclerosis, which she’s long managed with medications—paid for by co-pay assistance—that allow her to function in her daily life. In May 2018, she discovered that her insurer adopted a CAAP that required her to pay $3,600 per month for her prescription drugs until she met her $8,800 deductible. As a result, she’s had to consider rationing her medication.
Adding to the confusion, CAAPs are often advertised under misleading names, such as “Coupon Adjustment: Benefit Plan Protection Program,” “Out of Pocket Protection Program,” and “Specialty Co-pay Card Program.” Many patients don’t know about the change in their benefits until they get a massive charge at the prescription counter when their co-pay assistance runs out.
The NBPP 2021 co-pay accumulator provision is not only the wrong move during a pandemic, but it also may result in health plans violating the Patient Protection and Affordable Care Act (ACA). The ACA established maximum out-of-pocket limits on plan enrollees’ cost sharing responsibilities. The ACA defines cost sharing to include “any expenditure required by or on behalf of” a patient. Co-pay assistance is provided on behalf of a patient, and therefore, should be counted toward the limit. With CAAPs, health plans collect both the co-pay assistance and the full amount of out-of-pocket costs from patients. In doing so, they may exceed the ACA’s maximum out-of-pocket limit, thereby violating the law.
Patients with chronic diseases already have more than enough to worry about managing their conditions and avoiding exposure to COVID-19. CAAPs add insult to their injury. To protect the most vulnerable during this pandemic and encourage compliance with the ACA, HHS must reverse its regulation, and instead, limit these financially devastating accumulator adjustment programs.
Terry Wilcox is cofounder and executive director of Patients Rising.
Stacey Worthy is counsel to Aimed Alliance and a partner at DCBA Law & Policy.


fortune--2020-07-22--Spotify soars after forging licensing deal with Universal Music Group

Banks can now hold Bitcoin : Behind the OCC ’ s big decision and why it matters

Spotify Technology SA jumped as much as 8.4% after signing a new licensing deal with Universal Music Group, the world’s biggest record company, which will help the streaming giant roll out new features.
The multiyear agreement will “foster groundbreaking new features providing value for artists and great experiences for music fans,” the companies said in a statement Wednesday. Financial terms of the deal weren’t disclosed.
The announcement reassured investors worried about Spotify’s sometimes-tense relationship with music labels. Access to their catalogs provides the lifeblood of its streaming service. Spotify also is seeking ways to better connect artists with fans — potentially opening up new sources of revenue — and working closely with labels is key to that.
A Spotify marketing program called Marquee, which was launched in a test form last year, has been used by artists such as the Weeknd and John Legend to promote their work. Universal was a key early supporter of Marquee, Spotify Chief Executive Officer Daniel Ek said in the statement.
As part of the pact, Vivendi SA-controlled Universal will “deepen its leading role as an early adopter of future products and provide valuable feedback to Spotify’s development team,” the companies said.
Spotify climbed as much as $23.29 to $299.67 on Wednesday in New York. The stock has nearly doubled this year, fueled in part by a push into new areas, such as original podcasts.
–With assistance from Kamaron Leach.


fortune--2020-07-22--Biden campaign teases new video with Barack Obama where the former President and VP criticize Trump’

Biden campaign teases new video with Barack Obama where the former President and VP criticize Trump’s COVID response

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With about 100 days until the presidential election, presumptive Democratic nominee Joe Biden is once again leaning on a familiar name to boost his appeal among groups of voters seeking a return to pre-pandemic comfort: President Barack Obama.
On Thursday, the pair will release a long-form, socially distanced but in-person, video conversation, called “44 + 46,” set to be distributed on their respective social media platforms. A preview of the video shows the two arriving at Barack Obama’s office in Washington, D.C., while wearing masks to discuss President Donald Trump’s response to the coronavirus crisis.
The preview displays Biden criticizing Trump for “his inability to get a sense of what people are going through” and to “relate in any way.”
“One of the things that I have always known about you, Joe, it’s the reason why I wanted you to be my Vice President and the reason why you were so effective: It all starts with being able to relate,” Obama responds to Biden.
While President Obama has actively fundraised and stumped for his former VP, this video marks the first time the pair have met face-to-face publicly during this election cycle.
The Biden campaign has long hinged on restoring the milder days of the Obama administration, when presidential controversies involved tan suits instead of mass allegations of sexual misconduct or suggestions that Americans inject disinfectant to prevent COVID-19. Even during the Democratic primary debates, before the threat of a deadly pandemic swept the country, Biden frequently referenced Obama and his connections to the former President.
Obama’s presence as a surrogate in what has become a mostly digital campaign is a key pillar of success for the 77-year-old candidate who has been uniquely able to coalesce former Democratic competitors—Pete Buttigieg, Kamala Harris, Bernie Sanders, Beto O’Rourke, and more—to act as stand-ins for himself and present a united Democratic front in spite of differences in political leanings.
In 2016, about 13% of Trump supporters said they voted for Obama in 2012, and about 4.4 million Obama voters just stayed home. A disproportionate number of these voters live in swing states, making the Obama-Trump voter a pivotal group for Biden to win back.
“If you can sit down with a family, and see your own family and the struggles that you’ve gone through or your parents went through or your kids are going through, if you can connect those struggles to somebody else’s struggles, then you’re going to work hard for them. And that’s always what’s motivated you to get into public service,” Obama said about Biden in the preview video.
Obama still enjoys massive favorability in the United States: A YouGov survey ranks him as the second most popular Democrat just behind former President Jimmy Carter, with 56% of respondents saying they have a positive opinion of him.
During an election where Biden is polling ahead by nearly 10 points but lacks voter enthusiasm, there’s a fear that Democrats won’t show up at the polls this November. Utilizing the popularity of Obama, who inspired record turnout during his election, is one way the Biden campaign hopes to mitigate that threat.


fortune--2020-07-22--It’s getting harder to tell state-sponsored hackers and cybercriminals apart

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The U.S. Justice Department dropped an indictment Tuesday on two Chinese nationals, charging them with hacking hundreds of companies, governments, non-profits, political dissidents and human rights activists around the world.
The two defendants, 34-year-old Li Xiaoyu and 33-year-old Dong Jiazhi, are alleged to have stolen terabytes of data, including trade secrets and intellectual property, from individuals and organizations across the U.S., Europe, and Asia. In recent months, the pair allegedly targeted firms engaged in COVID-19 vaccine-related research as well as pro-democracy demonstrators in Hong Kong.
In addition to spying on behalf of the Chinese government, Li and Dong are accused of having conducted cybercriminal schemes for their own personal gain. In one instance, the two allegedly extorted a company by threatening to release its software unless it paid a cryptocurrency ransom.
The indictment draws a troubling trend into sharp relief: Many governments will turn a blind eye to cybercrime as long as the perpetrators target foreigners and agree, otherwise, to do the government’s bidding. “China has now taken its place, alongside Russia, Iran and North Korea, in that shameful club of nations that provide a safe haven for cyber criminals in exchange for those criminals being ‘on call’ to work for the benefit of the state,” said Assistant Attorney General for National Security John C. Demers in a statement accompanying the indictment.
Ben Read, senior manager of threat intelligence analysis at Mandiant, the forensic investigations division of cybersecurity firm FireEye, said the cybercriminal-as-spy contractor relationship has multiple benefits for countries that engage in it. The setup allows spy agencies to “access a wider array of talent, while also providing some deniability” about their activities, he said.
The practice is widespread in various, mostly authoritarian, parts of the world. Russia is known to employ the services of its criminal underground when it suits the Kremlin, despite officials’ protestations to the contrary. The hackers who breached Yahoo some years ago moonlighted for Russia’s Federal Security Service, successor to the KGB. North Korea has long blended the roles of its cybercriminal-spies.
The actions of crooks and of secret agents are getting harder to separate. As John Carlin, former U.S. Assistant Attorney General for National Security during the Obama administration, put it in an interview with 60 Minutes, covered by Axios, last year: “Increasingly, you cannot tell which is which when it comes to the criminal and the intelligence agency. So one day, the same crook may be doing something purely to make a buck. But that same crook may be directed by a trained intelligence operative using the same tools and techniques to steal information from them for the goals of the state.”
Loose affiliations with rogues help regimes achieve their ends. This is, increasingly, the realpolitik of the Internet.
Robert Hackett
Twitter: @rhhackett
Email: robert.hackett@fortune.com
THREATS
See you anon. Twitter is stepping up its crackdown on disinformation and harassment campaigns by banning thousands of accounts connected to QAnon, an absurd conspiracy theory involving President Trump, a satanic cabal of pedophiles, and the so-called Deep State. The company suspended 7,000 affiliated accounts in recent weeks, and has taken actions—eliminating follow, search, and trending recommendations—affecting another 150,000 accounts, per an NBC News report.
Must be something in the water. At least two cyberattacks targeted since-repaired Israeli water treatment plants in June, officials with the country's Water Authority said. The intrusions followed a similar, initial incident in April, which foreign intelligence officials interviewed by the Washington Post attributed to Israel's arch-adversary Iran. Meanwhile, Iran reportedly executed an alleged spy it believes helped the U.S. kill Revolutionary Guard Gen. Qassem Soleimani in a drone strike earlier this year, according to state TV.
Contact highs. Ireland and Germany are celebrating early adoption successes of their contract-tracing apps; however, it remains to be seen whether the hi-tech solutions will be effective in curbing the coronavirus pandemic's spread. Google, on the other hand, is coming under fire for requiring people to grant its Android-based contact tracing software access to people's location. A spokesperson assured critics that the technology relies on Bluetooth, not GPS data.
The Deportment of Homeland Scrutiny. The U.S. government is sticking by its decision to install tactical forces in Portland to protect federal property, despite calls to leave from the city's mayor. Employees in the Department of Homeland Security are worried the decision to deploy will destroy the agency's reputation, BuzzFeed reports. Meanwhile, the Washington Post reports that the agency's power has expanded as it authorizes personnel to collect information on protestors who threaten to damage or destroy public memorials and statues, even if those monuments are not on federal land.
From the Department of Corrections: Yesterday's Data Sheet newsletter contained an error in its comparison of Toyota and Tesla's annual sales. Toyota's global sales were 10.74 million, not 2.4 million (U.S. only). We regret the error.
Grandaddy, what did you do during the Cold War?
ACCESS GRANTED
Pervasive data collection by the global marketing industry has other uses besides advertising. A team of researchers from the Mississippi State University tracked the movement of cellphones around Russian military sites and foreign embassies using commercial GPS location data sourced from apps, like games, weather, and other services, reports the Wall Street Journal. The experiment demonstrates the potency of "open source" intelligence while raising thorny questions about privacy and national security.
In 2019, a group of Americans was observing the cellphone signals coming from military sites across Eastern Europe. At one of the locations, the Nyonoksa Missile Test Site in northern Russia, the group identified 48 mobile devices present on Aug. 9, one day after a mysterious radiation spike there generated international headlines and widespread speculation that a Russian missile test had gone wrong.
FORTUNE RECON
Extra $600 unemployment benefit likely to expire before the next stimulus bill passes By Lance Lambert
We don’t have enough of the air filters capable of stopping the coronavirus By David Z. Morris
Slack board member and former Goldman Sachs executive launches a career development startup with her daughter By Emma Hinchliffe
What ‘Lights Out’ gets wrong about GE By Gary Sheffer
LinkedIn is the latest in a long line of companies to lay off workers during the coronavirus pandemic By Jonathan Vanian
There are now just 4 Black CEOs in the Fortune 500 as Tapestry boss resigns By Phil Wahba
ONE MORE THING
A grenade-wielding gunman held 13 people hostage on a bus in the city of Lutsk, Ukraine, for more than 12 hours on Tuesday. The man agreed to surrender only after Ukrainian President Volodymyr Zelenskiy met a bizarre demand: Post a video on Facebook that endorsed a 2005 film, Earthlings, starring Joaquin Phoenix. Afterward, Ukraine's interior minister Arsen Avakov said the movie "is good" and "you don't have to be so fucked up" to like it, according to Russia's Pravda newspaper.
You cannot make this stuff up.


fortune--2020-07-22--Ackman on the hunt for ‘mature unicorns’ following $4 billion blank-check IPO

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Large, venture-backed businesses that haven’t gone public yet be advised: billionaire investor Bill Ackman now has at least $4 billion in his back pocket ready to put toward a bumper acquisition.
Ackman’s blank-check company — the latest in a slew of special purpose acquisition companies that have hit the market in recent months — sold 200 million units for $20 apiece, according to a statement. Pershing Square Tontine Holdings Ltd., backed by Ackman’s Pershing Square Capital Management, is set to begin trading Wednesday on the New York Stock Exchange.
Funds associated with Ackman’s investment firm have committed to deploy as much as $3 billion more to the vehicle, bringing the total funding as high as $7 billion, according to filings with the U.S. Securities and Exchange Commission.
Listings by SPACs have reached an all-time high, with more than $13.5 billion raised this year on U.S. exchanges, according to data compiled by Bloomberg. Billionaires, private equity firms, former C-suite executives and dealmakers have all joined the party.
Martin E. Franklin, a founder of Jarden Corp., is working with investment banks on a blank-check company. Former Citigroup Inc. banker Michael Klein has filed for his fourth SPAC while his second — Churchill Capital Corp. II — is in merger talks with Topgolf International Inc., Bloomberg News has reported.
Gores, Burkle
This month there have been 12 filings for SPACs in the U.S., the data show, and the pace is picking up. Since just last Friday, that’s included one each backed by Bow Capital Management’s Vivek Ranadive, Ron Burkle of Yucaipa Cos., Gores Group founder Alec Gores and telecommunications pioneer Craig McCaw.
A SPAC, in which a pool of capital is raised with the intention to later acquire a business and take it public, is Ackman’s latest push into a private equity-like strategy, diversifying from his activist hedge fund roots.
Pershing Square Capital invested $500 million at $50 a share in developer Howard Hughes Corp. at the beginning of the coronavirus pandemic. It also reported positions in Blackstone Group Inc. and Park Hotels & Resorts Inc. during the first quarter.
Ackman’s record on blank-check companies predates the current wave.
An earlier SPAC backed by Pershing Square, Justice Holdings Ltd., raised $1.44 billion in a 2011 listing in London. Justice Holdings merged with Burger King Worldwide Inc. in 2012 and, in a dealwith 3G Capital Inc., brought the fast-food chain back to the public market. Burger King later merged with Tim Hortons Inc., creating Restaurant Brands International Inc.
‘Mature Unicorns’
Ackman’s new SPAC hasn’t specified which sectors it will focus on. However, the company’s filings have singled out “mature unicorns” as being of particular interest, referring to private companies valued at $1 billion or more.
Pershing Square Tontine also said it would target large IPO candidates, private equity-backed companies in need of capital, private companies worth more than $10 billion and family-owned businesses.
The SPAC had earlier marketed 150 million units, aiming to raise $3 billion. The units include one share and a warrant for one-ninth of a share, plus a warrant that comes with special restrictions.
The offering was led by Citigroup, Jefferies Financial Group Inc. and UBS Group AG. Pershing Square Tontine’s shares are expected to trade under the symbol PSTH.


fortune--2020-07-22--‘Trump troops’ in U.S. cities: What the law says about their rights—and yours

Federal agents in military uniforms have recently snatched U.S. citizens off the streets of Portland, Ore., and driven them away in unmarked vans. President Trump, who claims such tactics are necessary to restore law and order, has vowed to carry out similar measures in other U.S. cities.
The incidents—including the beating of a Navy veteran who questioned the agents’ authority—have triggered alarm from critics across the political spectrum. They have raised questions about the identity of the “Trump troops,” as some are calling them, and the legal justification for their presence. Here is a plain English overview of this new style of federal law enforcement.
Who are the federal “troops” in Portland?
The law enforcement units in question have appeared in Army-style camouflage with no identification other than a simple “Police” label on their outfits. It turns out they are special units of the Customs and Border Patrol, an agency under the control of the Department of Homeland Security.
The 100 or so agents are drawn from three separate paramilitary units of the Border Patrol. One is the Border Patrol Tactical Unit (BORTAC), a SWAT-team-style unit that is normally tasked with fighting drug cartels. The other two units involved are called Border Patrol Search, Trauma, and Rescue, and a Special Response team.
Why are the Border Patrol units patrolling Portland, Ore.?
Acting Secretary of Homeland Security Chad Wolf sent them to protect “monuments, memorials, and statues“—an apparent response to protests in Portland that have occasionally turned violent.
Skeptics, including former FBI Director James Comey, say President Trump’s real purpose in deploying these federal agents is to gin up television images of chaos and conflict—images that can support his claim that Americans need to choose a “law and order” President in November’s election.
Trump critics also note that the recent incidents in Portland are akin to what the President did in Lafayette Park in Washington, D.C., in early June. On that occasion, Trump used federal agents—including riot control officers from the Bureau of Prisons—to tear-gas peaceful protesters in order to arrange a photo op.
Are the actions of these federal agents even legal?
Hard to say. In the case of the June incident in Washington, legal scholars noted the President had broad powers owing to the capital’s status as a federal district.
In Portland, where the mayor and governor are in charge, Trump’s actions are harder to justify given that there are few federal spaces in the city. Those include U.S. courthouses and a handful of monuments. But many of the actions of the Border Patrol—including pulling people into roving unmarked vans—have taken place miles from such locations.
The Border Patrol, however, enjoys special powers related to its duty to protect the homeland. These include conducting searches and arrests that would otherwise be unconstitutional. The scope of this special power is enhanced because of the so-called 100-mile rule, which gives them jurisdiction within 100 miles of any border—including the Pacific Ocean.
What about the uniforms? Don’t these “troops” have to identify themselves?
No. There is no law saying federal agents have to wear badges with their names or agencies. Meanwhile, those who have defended the events in Portland—including the Wall Street Journal—say that requiring the agents to identify themselves could lead activists to “dox” or otherwise harass them. (This claim is questionable given that ordinary police officers across the country must identify themselves.)
Meanwhile, Democratic lawmakers have proposed a bill that would require federal agents to identify themselves, but given the partisan atmosphere on Capitol Hill, it is unlikely to pass.
It is also possible that pressure from the Pentagon—where Defense Secretary Mark Esper is reportedly concerned that Trump’s law enforcement tactics could damage perceptions of the military—could change how the federal agents are deployed.
Will “Trump troops” turn up in other U.S. cities?
The President vowed on Monday to send federal units to other cities run by “liberal Democrats.” Those potential destinations include Chicago, New York, Baltimore, Philadelphia, and Detroit.
His pledge brought furious reactions from mayors and governors, however, who have vowed to resist such moves. Meanwhile, the ACLU has filed a lawsuit over the recent federal actions in Portland, which could present a legal obstacle to Trump’s tactics.
The expanded use of “Trump troops” may also come down to a political calculation by the President over whether the controversial tactic serves to help him in the polls.


fortune--2020-07-22--Fox’s baseball triple-header is coming Saturday—and the advertising inventory has been snapped up

Fox Corp. begins its baseball season with its first-ever triple-header on Saturday — nine hours of games on the Fox broadcast network.
The advertising inventory is sold out, according to Seth Winter, Fox’s head of sports sales, and that includes a fourth “nightcap” game that airs at 9 p.m. New York time on the company’s Fox Sports 1 cable channel.
“Our baseball inventory 10 days ago just shot off the shelf when people realized that we could put a product on the field,” Winter said in an interview.
The spread of the Covid-19 virus and the suspension of live sports in March jarred the ad market and prompted a lot of dire predictions. But advertisers’ response to the return of games is proving to be its own surprise, according to Winter.
In the past, baseball ad spending would be spread out over months, with as little as 60% of the inventory snapped up at the beginning of the season. As of now, 90% of the virus-shortened regular season is sold, according to Winter.
“We just had a tsunami of investment,” he said.
Baseball, which returns Thursday night with a 60-game season, could benefit from the pent-up demand of sports fans who have been stuck at home with little to do but watch TV. Other returning sports, including Nascar and Major League Soccer, have seen an initial bump in audiences.
Audience ratings for eight preseason baseball games aired on regional sports networks last weekend were more than double those of spring-training games played earlier in the year, according to Home Team Sports, a Fox division that sells ads on those networks. Some seats in the empty stadiums were filled with cardboard cutouts of fans paid for by baseball lovers.
The national baseball advertising market amounted to $584 million last year, according to Kantar Media. Fox is the largest player thanks to a lineup that includes a league championship and the World Series.
Sticking Around
The network convinced most of its sponsors to stick with their spending plans after sports went on hiatus. A few advertisers that asked for their money back have returned, Winter said. Newcomers are paying about 10% more than they would have had they bought in earlier.
The network is seeing higher spending by technology companies, including makers of products for kids who will be attending school online in the fall. Spending by mortgage companies is also up, as Americans take advantage of low interest rates.
Because of the shortened season, fans will get to see more games at convenient local times and more classic rivalries, like the New York Yankees and Boston Red Sox, according to Michael Mulvihill, head of strategy at Fox Sports.
Still, the broadcaster had to adjust its programming lineup. Last month, the company sold its U.S. Golf Association broadcast rights at a loss to Comcast Corp.’s NBC, in part because rescheduled tournaments bumped up against football in the fall.
Football, a huge business for Fox, remains a problem. The National Football League might cancel its preseason games, and whether college matchups return is still up in the air. Some collegiate conferences have already canceled games.
“We know we’re going to have football, we know we’re going to have a season — what that looks like remains to be seen,” Winter said. “I expect football to be sold out regardless of the breadth and scope of the season.”
Not everyone is convinced the return of sports will be a home run.
Audiences may not want a full day of sports, preferring instead to spend time outside in the summer, according to Raghu Kodige, chief product officer of Alphonso, a media research firm. Fans may also not take shortened seasons seriously.
“These will not be ‘normal’ baseball and basketball seasons,” he said.


fortune--2020-07-22--Microsoft could face EU antitrust showdown as Slack complains about Teams bundling

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Before Google caught the attention of the European Commission’s competition division, Microsoft was the Big Bad tech company of the EU antitrust world. But over the past seven years, the software giant has managed to stay in the commission’s good books.
That may be over now. On Wednesday, Slack Technologies filed a formal complaint with the EU antitrust regulator, claiming Microsoft was illegally abusing its market dominance to stymie competitors—namely, Slack.
As before, the issue is one of Microsoft’s “bundling” newer software with a popular product that lots of people already use.
In the late 1990s and early 2000s, it was Microsoft’s bundling of the Windows Media Player streaming tool with Windows that caused ructions; Microsoft ended up having to pay a record-breaking fine and produce a Media Player–free version of Windows. Then it was the bundling of Internet Explorer with Windows—Microsoft was forced to let Windows users choose from a variety of browsers when first firing up the operating system.
Now the alleged problem is Microsoft’s bundling of its Teams enterprise chat service with its Office suite.
Slack has long complained that Microsoft Teams copies Slack’s own service, and has previously gone so far as to highlight apparent similarities between Microsoft’s Teams marketing and Slack’s own promotional videos.
According to a Wednesday statement from Slack, however, Microsoft is also trying to use its market-dominant Office suite to ram Teams down customers’ throats by “force installing it for millions, blocking its removal, and hiding the true cost to enterprise customers.”
“We’re confident that we win on the merits of our product, but we can’t ignore illegal behavior that deprives customers of access to the tools and solutions they want,” Slack policy chief Jonathan Prince said in the statement. “Slack threatens Microsoft’s hold on business email, the cornerstone of Office, which means Slack threatens Microsoft’s lock on enterprise software.”
Slack general counsel David Schellhase also raised the specter of the EU’s Internet Explorer case, saying in the statement that “Microsoft is reverting to past behavior. They created a weak, copycat product and tied it to their dominant Office product, force installing it and blocking its removal, a carbon copy of their illegal behavior during the ‘browser wars.’”
Microsoft has been providing Teams since 2017, and over the past three years it appears to have heavily overtaken Slack. Teams also received a boost amid the coronavirus pandemic. In April, Microsoft said it had more than 75 million daily active users, which was a 70% boost over March’s figures.
Slack has not given an update on its daily active user numbers since October last year and now says only that it has more than 12 million users (the tally it publicized then).
“With COVID-19, the market has embraced Teams in record numbers while Slack suffered from its absence of video-conferencing,” Microsoft said in an emailed statement. “We’re committed to offering customers not only the best of new innovation, but a wide variety of choice in how they purchase and use the product. We look forward to providing additional information to the European Commission and answering any questions they may have.”
Now it’s over to the Commission, which will have to study Slack’s complaint and decide whether or not to open an investigation. The Commission has not significantly sparred with Microsoft since it last fined the company $730 million in 2013 for failing to comply with its browser-choice commitments.
This article was updated to include Microsoft’s statement.


fortune--2020-07-22--The executive who led Carta’s gender-pay gap study is suing over gender discrimination

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Carta, the buzzy unicorn that helps other startups manage their equity and ownership, is well known for its paper advocating for the closing of the gender wealth gap in Silicon Valley.
On Tuesday, the woman who oversaw the publication of that paper sued the company, alleging gender discrimination. Emily Kramer, the former vice president of marketing at the company valued at $3.1 billion, accused it of paying her less than her male coworkers and alleged wrongful termination.
Carta, which is seeking to rival giants such as the Nasdaq exchange with a private share trading platform, has raised from the likes of Andreessen Horowitz and ridden the wave of private companies staying away from public markets. It provides shareholder management software to startups including Robinhood. And it began publishing an annual report on gender-based startup equity in 2018. The study has revealed largely expected gaps: In 2019, women represented 13% of startup founders, yet own just 7% of founder equity, per the report.
But, alleges Kramer, Carta was not putting its study to practice within its own company.
“It’s become increasingly clear that ‘mission-driven’ Silicon Valley companies are often built on hypocritical lies, but as my lawsuit alleges, Carta takes this to an entirely new level,” Kramer wrote in a Medium post. The lawsuit alleged that Kramer’s time at the company, she faced “increasingly hostile, sexist harassment in response to her complaints of sex discrimination.”
Carta CEO Henry Ward, the lawsuit alleged, repeatedly called Kramer an “asshole” during a one-on-one meeting, adding that “no one likes you” and that Kramer had gotten a “pass” as she was a woman. The document also states that while Kramer called for greater diversity within Carta, the company made little effort to change hiring practices.
Carta has not yet responded to a request for comment.
Rise of the robots: Investors often say the coronavirus is “accelerating” existing trends—and boosting interest in the one towards automation (fun fact: This month, fast food chain White Castle partnered with startup Miso Robotics to introduce a burger-grilling robot in its Chicago-area restaurants starting in September).
On Tuesday, Dexterity, a robotics startup that makes industrial robotics software, announced that it had $56.2 million in debt and venture funding since inception from investors including Kleiner Perkins, Lightspeed Venture Partners, Obvious Ventures, and Pacific West Bank. Most recently, the company’s tech has been used to pack baked goods for brands like Sara Lee. Read more.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- Hippo, the Palo Alto-based home insurance company, raised $150 million in Series E funding, valuing its business at $1.5 billion. Investors included FinTLV, Ribbit Capital, Dragoneer and Innovius Capital.
- Innovium, a San Jose, Calif.-based a leading provider of switch silicon solutions for cloud and edge data centers, raised $170 million in funding. Investors including Premji Invest, DFJ Growth, funds and accounts managed by BlackRock, Greylock, Capricorn, WRVI, Qualcomm Ventures, Redline, S-Cubed Capital and DAG.
- Misfits Market, a New York-based food delivery service, raised $85 million in Series B funding. Valor Equity Partners led the round and was joined by investors including Greenoaks Capital, Third Kind Venture Capital, and Sound Ventures.
- Scalable Capital, a Munich-based investing startup, raised €50 million ($58 million). Investors included BlackRock, HV Holtzbrinck Ventures and Tengelmann Ventures. Read more.
- Olema Oncology, a San Francisco-based biopharmaceutical company developing therapies for women’s cancers, raised $54 million in Series B funding. BVF Partners, Logos Capital and Janus Henderson Investors co-led the round and were joined by investors including Cormorant Asset Management, RA Capital Management, Wellington Management Company, Surveyor Capital, Venrock Healthcare Capital Partners, and Foresite Capital.
- Forge Biologics, a Columbus, Oh.-based viral vector gene therapy company, raised $40 million in Series A funding. Xontogeny led the round and was joined by investors including Drive Capital.
- Chowbus, a Chicago-based food delivery app specific to Asian restaurants and grocery stores, raised $33 million in Series A funding. Altos Ventures and Left Lane Capital led the round and were joined by investors including Hyde Park Angels, Fika Ventures, FJ Labs, and Silicon Valley Bank.
- Elevation Oncology, a cancer drug biotech startup, raised $32.5 million in Series A funding. Aisling Capital led the round and was joined by investors including Vertex Ventures HC, Qiming Venture Partners USA, Driehaus Capital Management, and BVF Partners. Read more.
- Branch, an Ohio-based startup that bundles home and auto insurance, raised a $24 million in Series A funding. Greycroft and HSCM Bermuda co-led the round and were joined by investors including SignalFire, SCOR Global P&C, and Elefund.
- Tasso, a Seattle-based company with an at-home blood-testing kit, raised $17 million in Series A funding. Hambrecht Ducera Growth Ventures led the round and was joined by investors including Foresite Capital, Merck Global Health Innovation Fund, Vertical Venture Partners, Techstars, and Cedars-Sina.
- Tubulis, a Munich-based firm developing antibody-drug conjugates, raised €10.7 million ($12.3 million) in Series A funding. BioMedPartners and High-Tech Gründerfonds co-led the round and were joined by Seventure Partners, coparion, Bayern Kapital, and OCCIDENT..
- CurvaFix, a Bellevue, Wash.based developer of medical devices to repair fractures in curved bones, raised $10.8 million in Series B funding. Sectoral Asset Management led the round and was joined by investors including Delta Dental Washington Seed Fund.
- Cooks Venture, a New York-based startup raising heirloom chickens, raised $10 million in Series A funding. SJF Ventures and Cultivian Sandbox led the round.
- ODILO, a Spanish learning services startup, raised $10 million. Swanlaab Venture Factory led the round and was joined by investors including Endeavor Catalyst and CDTI alongside current investors KIBO VC, JME VC and Active VP.
- Meemo, a San Francisco-based social financial application, raised $10 million in funding. Investors include Saama Capital, Greycroft, monashees and Sierra Ventures.
- Episode Six, an Austin-based financial technology provider, raised $7 million in Series A funding. HSBC led the round and was joined by investors including Mastercard and SBI Investment Co.
- Solfácil, a Brazilian solar fintech, raised $4 million Reducing electricity bills once and for all, with no upfront investment and in a sustainable manner. This was the value proposition that led Valor Capital Group to invest in
- Angle Health, a San Francisco-based health insurance carrier, raised $4 million in seed funding. Blumberg Capital led the round and was joined by investors including Y Combinator, Correlation Ventures, TSVC, and Liquid 2 Ventures..
- Mercado Labs, a Dallas-based supply chain platform maker, raised $2.5 million. Investors included Supply Chain Ventures, LiveOak Venture Partners, Schematic Ventures, Story Ventures, and Amplifier.
- Dance, a Berlin-based e-bike subscription company founded by creators of - SoundCloud and Jimdo, raised an undisclosed amount of funding. Investors include BlueYard, Ilkka Paananen (SuperCell founder), Jeannette zu Fürstenberg (La Famiglia VC founding partner), and Kevin P. Ryan (AlleyCorp founder). Read more.
PRIVATE EQUITY
- SK Capital Partners invested in Techmer PM, a Clinton, Tenn.-based designer and producer of engineered compounds and color and additive concentrates for the plastics and fiber industries. Financial terms weren't disclosed.
- Dedalus Group, majority-owned by Ardian, agreed to acquire HealthCare Software Solutions from DXC Technology Company (NYSE:DXC). Financial terms weren't disclosed.
- Bain Capital, PAG, and Blackstone are among bidders for a majority stake in the wealth and advisory business of Edelweiss Financial Services, an Indian firm, per Bloomberg. Read more.
- Rubis Terminal, a joint venture between I Squared Capital and Rubis, agreed to acquire TEPSA, a European storer of bulk liquids. Financial terms weren't disclosed.
- HealthEdge Software, backed by Blackstone, acquired The Burgess Group, an Alexandria, Va.-based healthcare payments software company. Financial terms weren't disclosed.
- SRR Holdings, a portfolio company of Industrial Opportunity Partners, acquired the assets of Southern CaseArts, a Bessemer, Ala.-based manufacturer of merchandising cases for the grocery and convenience store industries. Financial terms weren't disclosed.
- Olde Thompson, a portfolio company of Kainos Capital, acquired Gel Spice, a New Jersey-based importer and manufacturer of spices, seasoning, and bakery ingredients. Financial terms weren't disclosed.
- PCF Insurance, a portfolio company of HGGC, acquired four regional brokerages: First Fidelity Brokerage in a New York City; Horizon Insurance in Bradenton, Fla.; Moulton Insurance in Western Massachusetts, and Avidity Insurance in Overland Park, Kan. Financial terms weren't disclosed.
- The Riverside Company invested in Buildout, a Chicago-based commercial real estate brokerage software maker. Financial terms weren't disclosed.
OTHERS
- Perceptyx, backed by TCV, acquired the Employee Insights business of Kantar, a data, insights, and consulting company. Financial terms weren't disclosed.
- Royal Philips NV (NYSE: PHG), an Amsterdam-based white goods maker, has reached out to rivals including Haier Group and Midea to gauge interest in acquiring its home appliance unit, which could fetch as much as $4 billion, per Bloomberg. Read more.
- Prysmian (MI:PRY) agreed to acquire EHC Global, a Canadian components manufacturer, for C$130 million ($97 million). Read more.
- Saudi Arabia’s Othiam Investments family plans to offer shares of its malls via IPO in an deal that could value the business at $2 billion, per Bloomberg. Read more.
- SoftBank Group is seeking to sell Treasure Data, its data-and-device-management unit, for about $1 billion, per Bloomberg. Read more.
- Walmart revived plans to sell a majority stake in Asda, a U.K. supermarket chain. Read more.
IPOS
- Pershing Square Tontine Holdings, a New York-based SPAC founded by Bill Ackman, raised $4 billion in an offering of 200 million units priced at $20 apiece. Read more.
- Lufax, a Shanghai-based online wealth management platform backed by Ping An Insurance Group, is seeking a U.S. initial public offering as early as this year, per Reuters. Read more.
- Jamf, a Minneapolis-based Apple device management company, raised $468 million in an offering of 18 million shares priced at $26. It posted revenue of $204 million in 2019 and a loss of $32.6 million. Vista Equity backs the firm. It plans to list on the Nasdaq as “JAMF.” Read more.
- ARYA Sciences Acquisition III, a New York-based blank check company focused on healthcare, filed to raise up to $125 million. Perceptive Advisors backs the firm. Read more.
- 4D Molecular Therapeutics, an Emeryville, Calif.-based biotech focused on gene therapies, withdrew its $100 million IPO. It posted revenue of $14.1 million and a loss of $9.5 million in 2018. Viking Global(16%), Pfizer (11.8%), and Repleon(7.3%) back the firm.It plans to list on the Nasdaq as “DDDD.” Read more.
F+FS
- J.F. Lehman & Company closed its fifth fund with $1.35 billion in commitments.
- Shamrock Capital closed Shamrock Capital Content Fund with $400 million in committed capital.
PEOPLE
- ABS Capital Partners added Bion Ludwig as venture partner. Bion was previously a co-Founder and partner of Savano Capital Partners.
- AE Industrial Partners added Dr. Laurence Vigeant-Langlois as a managing director.


fortune--2020-07-22--A look at the high-tech camera feature that could raise iPhone prices

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Photography on smartphones has been getting better and better, but ultimately the laws of physics start to play a limiting factor. With phonemakers trying to keep their devices thin and light, it’s hard to cram a decent-sized zoom lens into the body.
But in the past year or two, the industry figured out a new trick to allow for a much larger zoom lens. And usually reliable Apple analyst Ming-Chi Kuo of TF International Securities says it’s coming to the iPhone now, too. Kuo, who has connections with Apple suppliers in Asia, says the Apple version of the technology is still a few years away, however, likely arriving in 2022 iPhones. The big new feature rumored for this year’s iPhone is the addition of superfast 5G wireless connectivity.
To improve the phone camera, the basic trick is to turn the zoom lens sideways and place it inside the body of the phone, instead of protruding straight out of the back. To bring the image into the lens, the phone has a prism to reflect light into the lens at an angle. It’s the same principle enabling a submarine skipper to use a periscope to see what’s happening on the ocean’s surface.
The result, as seen in a few phones such as the Samsung Galaxy S20 Ultra and Huawei P30 Pro, is the ability to zoom in on a subject from afar and still take a sharp picture.
The lens in the current iPhone 11 Pro’s camera can zoom in two times optically and can get as close as 10X by using digital software tricks that make the picture a bit blurrier. By contrast, the Galaxy S20 Ultra has a periscope lens that can zoom in like an optical lens 10X quite sharply and then use digital tricks to zoom in 100X with some blurriness.
The results can be amazing. Here is a set of pictures that I shot on the S20 Ultra ranging from no zoom at all all the way to 100X. As you can see, up to 30X the picture quality is quite good with sharp details. At 50X and 100X, the edges start to blur, but you can still make out the picture well.
Taken with the Galaxy S20 Ultra with no zoom. Aaron Pressman—Fortune
Taken at 10X zoom. Aaron Pressman—Fortune
Taken at 30X zoom. Aaron Pressman—Fortune
Taken at 100X zoom. Aaron Pressman—Fortune
The new ability doesn’t come cheap, however. The Ultra starts at $1,400, 27% more than even Apple’s most expensive model, the iPhone 11 Pro Max. When the iPhone with a periscope zoom lens arrives on the market, expect a commensurate price jump.


fortune--2020-07-22--Facebook’s Messenger will allow users to unlock the app with their fingerprints and faces

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Facebook Messenger is releasing a new privacy setting that allows users to apply their mobile device’s authentication processes, like Face ID and fingerprint ID, to the Messenger app.
The new security feature, called App Lock, will be part of a new privacy settings section in the app that allows users to more easily mute stories, select audiences for the stories they post, and block other users. The debut of App Lock provides another layer of protection so others can’t access any personal information or chats inside the app without additional authentication, especially in cases where users lend out or lose their phones. Facebook said users’ facial information and fingerprints will not be transmitted to or stored by the service.
The feature is available on the iPhone and iPad starting Wednesday and is expected to roll out to Android devices in the next few months.
The news comes as Facebook works to continuously beef up user privacy for its family of apps, which includes Messenger, Instagram, and WhatsApp. For years the company has struggled with user privacy, which has led to a number of data breaches and scandals, including the 2016 Cambridge Analytica debacle that led to a $5 billion fine from the Federal Trade Commission. Since then, as part of the FTC deal and to avoid future issues, the company has been rolling out additional security and transparency tools.
Facebook Messenger will make it possible to use Touch ID or facial recognition to access the app on mobile devices. Facebook
Late last year, the company introduced new privacy settings for Instagram that allowed users to control who can send them direct messages. On Monday, Facebook announced that it will start asking users in Brazil for permission to utilize their data as part of Lei Geral de Proteção de Dados, the country’s new data protection law.
In addition to the new authentication options released on Wednesday, Facebook said it’s working on several other privacy controls for Messenger. The company said it will begin testing those features in “upcoming months.”
Facebook said it plans to give users control of who can message or call them through the app, who is sent to their requests folder, and who won’t have the ability to message or call them. Facebook also plans to test a feature that will blur images appearing in messages in their requests folder. The feature, which already exists on Instagram and WhatsApp, will give users the choice to view an image from someone they may not know.


fortune--2020-07-22--U.S. government secures 100 million doses of Pfizer, BioNTech vaccine for $2 billion

U.S. health officials agreed pay $1.95 billion for 100 million doses of a vaccine made by Pfizer Inc. and BioNTech SE, the latest step in an effort to fight the coronavirus pandemic.
The companies will receive payment upon the receipt of the doses, following regulatory authorization or approval, according to a statement. The government also can acquire up to an additional 500 million doses.
Nations around the world have begun ordering vaccines that are still being tested as part of their efforts to try to blunt the impact of the pandemic that’s roiled economies and killed more than 600,000 people since the beginning of the year. The U.S. has already ordered experimental shots developed by the University of Oxford and AstraZeneca Plc.
The vaccine would be available to the American people for free, according to the government.
Pfizer shares rose more than 5% in pre-market trading. BioNTech climbed about 7%.


fortune--2020-07-22--Tapestry’s interim CEO is 36th female chief executive in Fortune 500

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Good morning, Broadsheet readers! A slew of famous names bring a women’s soccer team to southern California, RBG’s law school classmates had interesting careers of their own, and Tapestry gets a new CEO, the 36th female Fortune 500 chief executive. Have a wonderful Wednesday.
– 36. The Black Lives Matter protests in recent months have put a glaring spotlight on the underrepresentation of Black executives at the top of Fortune 500 companies. As of yesterday morning, there were five. As of today, there are four, after Tapestry CEO Jide Zeitlin stepped down.
Tapestry, the parent company of luxury brands like Coach and Kate Spade, said his departure was due to unspecified “personal reasons.” Later, the Wall Street Journal reported that the company’s board had launched an investigation into Zeitlin’s personal behavior after a woman accused him of posing as a photographer in 2007 to lure her into a romantic relationship. In a statement to the WSJ, Zeitlin admitted to photographing and engaging in a relationship with the woman, saying, “I felt compelled to resign today because I do not want to create a distraction for Tapestry, a company I care deeply about.”
Zeitlin’s departure is reminiscent of the height of the #MeToo movement when male executives lost their jobs amid claims of sexual misconduct and abuse of power. The case also recalls that moment in the not-so-distant past in that a female executive will replace him, at least on an interim basis.
Joanne Crevoiserat, Tapestry’s CFO since early 2019, is its new CEO. The circumstances of Zeitlin’s exit will color the management shake-up, but her appointment is worth acknowledging in its own right.
My colleague Phil Wahba writes that Crevoiserat is a respected former operations chief at Abercrombie & Fitch. She joined Abercrombie in 2014 as CFO before assuming the COO job in 2017. Before Abercrombie, she held senior management roles at Kohl’s and Walmart.
Tapestry’s management change yesterday also saw director Susan Kropf take over for Zeitlin as board chair and Andrea Shaw Resnick, Tapestry’s global head of investor relations and corporate communications, replace Crevoiserat as interim CFO.
Crevoiserat’s new role gives the Fortune 500 36 female CEOs, one off the record high reached earlier this year. While we cheer the uptick of that number, it remains woefully low and continues to come with a giant caveat, highlighted by the effect of Zeitlin’s troubled departure on racial diversity among this powerful group of chief executives: none of the 36 women are Black.
Claire Zillman
claire.zillman@fortune.com
@clairezillman
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Score! A National Women's Soccer League team will arrive in southern California in 2022 thanks to an unusual group of owners: actors Natalie Portman, Eva Longoria, and Jennifer Garner; soccer stars Mia Hamm and Abby Wambach; venture capitalist Kara Nortman; and 2-year-old Olympia Ohanian, listed as an owner alongside her parents Serena Williams and Alexis Ohanian. Guardian
- They've got plans for this. Sen. Elizabeth Warren and Gov. Gretchen Whitmer both have op-eds in the NYT this week, Warren with her current plan to fight the coronavirus crisis and Whitmer with a plea for a nationwide mask mandate, or to "mask up, America."
- The gender gap. The equity-management startup Carta is known for its report about the gender gap in startup equity, conducted with the investment collective #Angels. Now, Carta's former VP of marketing Emily Kramer, who shepherded that research, has sued her former employer for gender discrimination. Carta has declined to comment. Bloomberg
- Forerunner fund. Kirsten Green's Forerunner Ventures raised a new $500 million fund, closed during the pandemic. That's a 39% increase from the $360 million the firm raised in 2018. Fortune
MOVERS AND SHAKERS: The Walt Disney Company "cut ties" with ABC News SVP of talent relations and business affairs Barbara Fedida after an investigation into racist remarks she made at work.
IN CASE YOU MISSED IT
- Reviewing reviews. Facebook will now tie workforce diversity to performance reviews for its executives. Chief diversity officer Maxine Williams says the new rule affects VPs responsible for units of a certain, unspecified size. CNBC
- Class of '59. Supreme Court Justice Ruth Bader Ginsburg is, of course, the best-known member the Harvard Law class of 1959 (even if she technically graduated from Columbia). But what about the other nine women in her class, who were memorably depicted in On the Basis of Sex, the movie about Ginsburg's life? Learn their stories, from Judge Carol Brosnahan who has sat on the bench for 40 years to the classmate who dropped out, only to return to law school two decades later. Slate
- A Merkelous recovery. German Chancellor Angela Merkel led the EU to a coronavirus recovery deal issuing $860 million of joint debt to member states. "We have come up with a response to the biggest crisis the EU has faced," Merkel says. Fortune
- Not a game. The video game company Ubisoft is accused of mishandling or ignoring widespread allegations of sexual harassment within the family-run business. "Ubisoft has fallen short in its obligation to guarantee a safe and inclusive workplace environment for its employees," the company said in a statement. Bloomberg
ON MY RADAR
Michigan judge denies release of teenage girl who was jailed after not doing homework NBC News
Republican congressman accosts AOC on her way to work The Cut
Joe Biden says four African American women are under consideration as his running mate Washington Post
Greta Thunberg gives €1m award money to climate groups Guardian
PARTING WORDS
"If we could predict the future, we could all be rich."
-Irina Blok, who pitched the face mask product Face Blok on Shark Tank in 2009


fortune--2020-07-23--Will Ferrell and iHeartMedia announce first comedy podcasts for Big Money Players Network

China ’ s Star market has outperformed nearly every global exchange—but will it last ?

Saturday Night Live star Bowen Yang and comedian Matt Rogers are bringing their acclaimed podcast Las Culturistas to Big Money Players Network, a joint comedy podcast venture between Will Ferrell and iHeartMedia.
Las Culturistas joins five other new podcasts launching with the network, including a scripted talk show hosted by Grammy Award–winning singer Michael Bolton; a conspiracy theory–themed podcast hosted by Insecure and Bless This Mess star Langston Kerman; and a wellness-oriented show cohosted by Men in Black 4 and Sorry to Bother You star Kate Berlant and stand-up comic Jacqueline Novak.
Rounding out the offerings is Bald Talk from comedians Brian Huskey and Charlie Sanders, and True Romance with Carolina Barlow and Devin Leary, an exploration of modern love featuring fictionalized and historic love stories. Each of the new podcasts are slated to premiere on iHeartRadio and podcast apps at varying points this year.
Big Money Players Network was first announced last fall and aims to produce a mix of 10 scripted and unscripted shows by October 2021. Ferrell, who serves as executive producer, began working with iHeartMedia on the Ron Burgundy Podcast last year to revive his famous Anchorman character.
Now, as Ferrell tells Fortune, he’s looking to use his clout to spotlight up-and-coming voices. “The fun part for me is to use whatever currency I have in the entertainment business to back interesting voices that maybe wouldn’t have had a chance otherwise,” he says.
Ferrell, admittedly “not a podcast fanatic” prior to his Ron Burgundy experience, says he later started to realize the medium’s potential as a business venture and as a vehicle for artistic expression. “It became apparent to me what a great space it is for comedy. It’s so facile and versatile, everything from commentary, character-driven stuff, two people talking—whatever form you want,” he notes.
“Dare I say, it’s one of the few entertainment venues that’s still a light touch in terms of the COVID issue,” Ferrell adds. “It’s still something that can be executed without a lot of impact in that area.”
The podcast industry is still modest compared with other forms of audio entertainment, but it’s growing. Deloitte projects the podcast market will increase by 30%, surpassing $1 billion for the first time (recorded music, by contrast, is estimated to reach $21 billion; radio, $42 billion). The industry has seen significant investment of late from Spotify, which acquired podcast companies Gimlet and Parcast, as well as Bill Simmons’s The Ringer, and signed content deals with the likes of Warner Bros., Joe Rogan, and Barack and Michelle Obama’s production company.
As of June, iHeartMedia operates the second largest podcast publishing network by U.S. audience, according to podcast analytics firm Podtrac. With nearly 24.5 million unique monthly listeners, it falls just behind NPR’s monthly audience of 25 million. iHeartRadio currently publishes 411 shows actively, making it by far the most prolific publisher of the nation’s top 20 networks (second is Cumulus Media’s Westwood One, with 112 active shows).
Conal Byrne, president of iHeartRadio’s podcast network, says there is a misconception of any growing competition between his company and Spotify.
“There’s really two industries here that sometimes gets conflated,” he says. “Spotify is interested in driving subscribers with the podcast. Its goal is to exclusively window or paywall its platform so as to drive subscribers to the Spotify platform. We widely distribute every single episode of every single podcast we make.
“We do that because the bigger the audience, the more impressions, more sponsorships we can drive,” he adds. “That’s why you see the Will Ferrells.”
Byrne says Ferrell was eager to try out podcasting as a next chapter. “We talked about his ambition, and it made sense to not just develop and green-light an extra podcast or two,” Byrne says. “He had a long-term vision, and we decided to launch a joint venture, a standable new network.”
The goal for the network is to launch dozens of podcasts over the next several years, Byrne says, underlining Ferrell’s desire to springboard up-and-comers. Highlighting True Romance cohost Carolina Barlow, who is also the producer, writer, and cohost of the Ron Burgundy Podcast, Byrne says: “As we trap along with Will, it’s just a really cool thing he seems to be doing, to put a younger comedian on what is a huge platform.”


fortune--2020-07-23--Subscription boxes and meal kits are seeing a resurgence with shoppers stuck at home

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Subscription boxes are piling up at doorsteps as consumers increasingly shop from home and avoid brick-and-mortar stores since the outbreak of COVID-19 earlier this year.
Over the past four months, many U.S. consumers turned toward the direct-to-consumer subscription box market for the first time, with one in five people buying subscription boxes during this time frame to have products available to them during the pandemic, according to a new study from CouponFollow, an online hub for collecting coupon codes and promotions among major retailers.
CouponFollow surveyed more than 1,000 U.S. consumers, and more than half (51%) said they bought subscription boxes to try new products, while another 39% said they simply enjoy receiving products in the mail. Approximately 37% of respondents found subscription boxes “easier than shopping.”
“For many American consumers taken by surprise by the pandemic, the subscription box industry brought a sense of comfort and convenience that was highly sought-after immediately following massive shutdowns across the country,” says Marc Mezzacca, founder and CEO at CouponFollow. “It’s the first time in a long time Americans felt massive supply-chain issues in many sectors, especially around essentials. There was a heightened sense of fear around access to products, and consumers looked to other ways to get the goods they desired.”
Meal kits as well as subscriptions for clothing and skin care led the pack. The most popular subscription services are HelloFresh (21%), BarkBox (20%), Blue Apron (19%), Dollar Shave Club (18%), Stitch Fix (12%), and Ipsy (12%), the last of which is a cosmetics-focused subscription service sending out makeup and skin care samples. Beauty shoppers were found to save the most money on subscriptions, at an average of $20 per month. But consumers spend more money on prepared meals and meal kits than any other service (at $74 per box on average).
“My sense is that most people appreciated being able to trust that whatever they need will be delivered to their doorstep during the pandemic,” Mezzacca says.
Subscription boxes saw an initial surge in popularity in the 2010s, led especially by the likes of beauty service Birchbox and grooming supplier Harry’s. Over the past several years, the market has exploded with direct-to-consumer monthly subscriptions for everything from snacks to books to liquor to cannabis products. Some of these services have become hallmark success stories, like Unilever’s $1 billion purchase of Dollar Shave Club in 2016. But other startups have become a dime a dozen.
Mezzacca warns that subscription models of any kind face the battle of keeping subscribers interested and engaged with a product offering, as well as differentiating from similar services. Approximately one in five people indicated they plan to cancel their subscriptions due to COVID-19-related financial hardships, with 30% and 26% saying technology and clothing services will be the first to get cut, respectively.
“This suggests that people may still be a bit more selective about the ‘little luxuries’ they’ll choose to purchase in the short term,” Mezzacca explains. “There seems to be trendy subscription services that pop up and last in parallel with a certain trend, but often fade in the long term. What we’ve seen with some of the most successful, popular, and longer lasting subscription services is meeting a core need (or want) that is shared by many and ensuring a focused and unique value proposition (for example, Dollar Shave Club).”
Although brick-and-mortar stores have reopened to shoppers in many regions, retailers cannot welcome as many customers at once as they could before the pandemic in order to adhere to social distancing guidance. And some shoppers just might not feel comfortable or safe going out right now at all as new cases of COVID-19 continue to surge. So there might be more life in the subscription base for a while. CouponFollow said one in three respondents admitted they’re paying for boxes they don’t really use or need, but they will continue subscribing to try out new products anyway.
“There’s no question that the subscription box model itself is here to stay, but if a subscription service is not conveying continued value to the subscriber, eventually those customers will cancel their subscriptions,” Mezzacca says.


fortune--2020-07-23--The fight against fast fashion means buying fewer clothes—and this retailer encourages that

Fashion has a major waste problem, and this issue has become more timely than ever as brands scramble to find ways to unload their unsold items as a result of the economic slowdown.
Fashion brand Cuyana believes it is already several steps ahead of the industry when it comes to minimizing waste. The San Francisco label says it produces only what the retailer believes it can sell, resulting in a sell-through rate of 90%, an admirably high figure for the industry. To achieve this, the brand utilizes higher-quality materials to produce designs that are versatile, functional, and (perhaps most importantly) seasonless, making it easier for the brand to roll over excess product to the next quarter or even next year for a longer shelf life.
One of Cuyana’s most lauded qualities is the stronger fabrics used in its clothing compared to its competitors, most especially the durable but softer Pima cotton fibers grown exclusively in northern Peru. Pima cotton is estimated to be 50% longer lasting than standard cotton, and the brand has heavily invested in incorporating Pima cotton into its clothing pieces with the intention that these dresses, shirts, pants, and more will serve as core pieces to be mixed and matched and reused repeatedly in a customer’s day-to-day wardrobe.
With all of this in mind, Cuyana has launched the 100 Days, 50 Wears, 2 Pieces challenge, positing that a customer can successfully and sustainably style oneself through 100 days with just two of the Pima cotton pieces.
Fortune recently spoke with Cuyana’s cofounders, Karla Gallardo and Shilpa Shah, about their strategies for eliminating fashion waste during the pandemic.
The following interview has been lightly edited for clarity and brevity.
Cuyana’s cofounders Shilpa Shah (left) and Karla Gallardo. Courtesy of Cuyana
Fortune: Fast fashion, and the waste it has created, was already a huge problem in retail and for the environment well before the pandemic. Over the past several years, Cuyana has built a reputation for higher-quality clothing and accessories at mid-market prices. How does your company stand apart from other retailers in the industry when it comes to fashion waste?
Shah: Cuyana was founded around the idea of “fewer, better,” a philosophy grounded in buying versatile pieces that are made to last for the benefit of increased wearability and decreased waste. Unlike most brands, Cuyana encourages customers to buy less by buying better. Furthermore, our relationship with the product doesn’t end once it’s in our customer’s hands. We ensure that our pieces are worn as much as possible by inspiring new ways to keep our core pieces in rotation, as well as encouraging our customer to extend the product’s life through care instructions and care products.
Given that Cuyana is a fashion brand and clothing retailer, it might seem a bit counterintuitive to encourage consumers to buy fewer clothes, at least from a business standpoint? What inspired the launch of Cuyana’s 100 Days, 50 Wears, 2 Pieces initiative?
Gallardo: The initiative was designed to champion one of Cuyana’s hero materials—Pima cotton—for its quality, versatility, and longevity. With the right inspiration, information, and provocation from Cuyana, a customer can successfully and sustainably style themselves through 100 days with just two Pima pieces. Cuyana created this challenge because the average consumer buys 68 items of clothing per year, but wears each item only an average of seven times before it is discarded. It is no wonder why fashion is a major contributor to climate change.
We find that once a customer purchases their first Cuyana piece and experiences the quality and versatility firsthand, they are quite likely to become a loyal customer who comes back to us over time to build out their wardrobe. By consistently delivering on quality products that can be worn again and again, we are able to build a relationship with our customer and become a go-to source for essentials, which is a large opportunity. Gaining trust and, thus, overall share of wallet in the category of core essentials is always our goal, which is only achieved through staying true to our mission of designing quality products that last.
Amid the current economic downturn, retailers have taken a major hit to their sales streams. At the same time, consumers might be rethinking their purchasing habits, moving away from more cheap buys to favoring investment pieces. What has the pandemic been like for Cuyana?
Gallardo: Like many retailers, especially those who have closed their brick-and-mortar locations, Cuyana has seen a dip in sales with a slow and steady recovery. However, we have found that basics—an area in which Cuyana has a particularly strong presence—is as sought after as ever. Now more than ever, customers are looking for everyday staples that are comfortable, but elevated.
Additionally, we create products with the intent of providing pieces that will transition with our customers as their routines and lifestyles change. Our products marry beauty and functionality in innovative ways. For example, our three-in-one bag can fulfill the role of a clutch, wallet, and waist bag, and our backpack can be worn over the shoulder with a detachable strap. This type of versatility is how we define fewer, better: pieces that last by offering duality.
Cuyana says 1,300 backpacks were distributed to foster children heading back to school through H.E.A.R.T. Courtesy of Cuyana
Looking much further down the road, past the pandemic, what steps can retailers take to ensure a greater commitment to reuse and recycling and pivoting away from fast fashion?
Shah: We think that the pandemic and subsequent slower way of living have shed light on ways we can lead more sustainable lifestyles. A huge problem in the fashion industry is the waste created by brands overbuying inventory. Many brands are incentivized to overbuy relatively inexpensive inventory in order to capture every sale possible. Once they are no longer able to offload it through discounting, they end up simply throwing it away or incinerating it. We find it shocking that through these mechanisms, 60% of garments end up in incinerators or landfills within a year of being made.
Instead of participating in this practice, we buy as close to demand as possible to prevent overproduction, even if that means we sell out quickly on our limited-edition products. Because our business model is focused on core, seasonless styles, we are able to sell most products year-round, as opposed to having to exit (throw away) last season’s unsold items.
Finally, we have an ongoing partnership with H.E.A.R.T. [Helping Ease Abuse Related Trauma, part of the Violence Intervention Program], where we donate any unsold items to women in need. In 2019, we sold through 90% of the products we made, which is very high compared to the industry standard of 60% to 70%. We would encourage every retailer to take a hard look at this metric and find ways that make sense for them to reduce overstock inventory or exit products more sustainably through donation or recycling.


fortune--2020-07-23--The EU passed the world’s largest green stimulus package—but is it green enough?

On Tuesday, leaders of the 27 European Union countries concluded a marathon 90-hour summit in which ministers hashed out the details of what is being touted as the world’s largest green stimulus package.
Over the course of four days, the EU members settled on both a seven-year budget and a special pandemic-recovery package that earmarks a collective $630 billion for spending against climate change. Despite the gruelling debate, the funding isn’t secure yet.
“Today we’ve taken a historic step, we all can be proud of. But other important steps remain. First and most important: to gain the support of the European Parliament. Nobody should take our European Union for granted,” European Commission President Ursula von der Leyen tweeted Tuesday.
The European Parliament, comprised of 705 representatives elected by vote in their home countries, is convening Thursday to debate the funding proposal and vote on its approval. The head of European Parliament, David Sassoli, has already indicated he will push amendments on the bill—such as reinstating funds cut from education and research.
Environmental campaigners have criticized other aspects of the proposal. For starters, the amount pledged is significantly lower than initially targeted. The amount of grants to be issued was cut from $570 billion to $450 billion, and some worry even the original amount wouldn’t be enough.
Research commissioned by the European Climate Foundation and conducted by EY found 1,000 “shovel ready” green projects supporting over 2 million jobs that could be funded with $231 billion. But reports from German consultancy Climate & Company, say meeting the EU’s emission goals will require around $3 trillion in investment over the next seven years. Goldman Sachs analysts estimate it will require $7 trillion by 2050.
(This could be an opportunity for private investment, which is already chasing green energy makers in Europe.)
Meanwhile the Just Transition Fund—a flagship financing tool designed to help countries transition from fossil fuels—had its capital slashed to $20 billion from a proposed $43 billion. One of the fund’s biggest beneficiaries will be Poland—the only EU member state that rejected the EU’s 2050 target for net-zero carbon emissions. Last Friday, Poland also set aside $33 million to buy coal and prop up the domestic mining industry.
More broadly, the budget is criticized for not being specific about what industries will be prohibited from financing. Bas Eickhout, a Dutch Green member of the European Parliament, told Reuters the deal should have pledged not to fund fossil fuels and been clear on how it would wean member states off of fossils.
“The fact that they didn’t do that, that says a lot,” Eickhout said.
More below.
Eamon Barrett
eamon.barrett@fortune.com
CARBON COPY
EPA
Documents released as part of a lawsuit brought by over 15 states against the U.S Environmental Protection Agency (EPA) show how a fossil fuel lobby group quickly convinced the Trump administration to reverse requirements on methane data collection. The lawsuit asserts the EPA bowed to the lobbyists first and then created a rationale second.
China flooding
China is suffering its worst flooding in decades, affecting some 37 million people along the Yangtze River Basin and causing $12.3 billion in damage. Song Lianchun, a meteorologist at China’s National Climate Center, said global warming was a contributing factor to the severity of this year’s floods. As rains continues to lash the country, state media has refuted “rumors” that the gargantuan Three Gorges Dam is at risk of breaking.
Biden plan
Presidential candidate Joe Biden announced a $2 trillion climate plan that aims to build green initiatives into a four-year economic recovery plan. The plan—more aggressive than one Biden pushed last year—includes achieving a carbon neutral electric grid by 2035, 15 years earlier than his previous deadline.
Voting action
BlackRock says it has placed 244 of its portfolio companies “on watch” for insufficient progress on climate change. In January, CEO Larry Fink pledged to use BlackRock’s weight as a shareholder to pressure companies on climate action. Of the 244 companies, BlackRock says it took voting action against 53 of them this year—mostly opposing the re-election of directors—and warned the remaining 191 firms they “risk voting action” next year.
Facebook
Here’s a read on how Facebook’s fact-checking policies allow posts denying climate change to escape scrutiny by labeling the content “opinion.” It’s another interesting angle in the contradiction between free speech and misinformation.
IN CASE YOU MISSED IT
What Chevron really gets from its $5 billion deal to buy Noble by Katherine Dunn
‘Lights Out’: A new book investigates how and when things fell apart at General Electric by Thomas Gryta and Ted Mann
How researchers are tracking illegal ghost boats and the decline in flying squid by Katherine Dunn
The mining industry in Peru is threatening one of the world’s great nature preserves by Manuel Bartra
Upstart electric-truck maker Rivian raises $2.5 billion in new backing by Aaron Pressman
Why Oprah, Natalie Portman, and Howard Schultz are betting big on plant-based milk brand Oatly by Beth Kowitt
CLOSING NUMBER
2.6 and 4.1
For over four decades, scientists have said greenhouse gas emissions could raise global temperatures by as much as 1.5 to 4.5 degrees Celsius above pre-industrial levels. New research has critically narrowed that bandwidth, to between 2.6 and 4.1 degrees Celsius—eliminating the previous "best case" scenario.


fortune--2020-07-23--China’s Star market has outperformed nearly every global exchange—but will it last?

The EU passed the world ’ s largest green stimulus package—but is it green enough ?

This is the web version of Eastworld, Fortune’s newsletter focused on business and technology in Asia. Subscribe here to get future editions in your inbox.
The Star Market, China’s stock exchange for home-grown technology firms, marked its first birthday this week. As The Economist observes, the fledgling bourse has much to celebrate.
Star was launched by the Shanghai Stock Exchange on July 22, 2019 with firm backing from Chinese President Xi Jinping, who touted it as a rival to Nasdaq. Star debuted with 25 companies, registered record gains in its first day of trading, and is now home to 140 companies worth $400 billion in combined market value. The South China Morning Post reckons that since launch, Star has minted at least 13 yuan billionaires.
In the first half of this year, Star has raised $7 billion for companies in initial public offerings, outperforming the 30-year-old Shanghai main board; ChiNext, the tech-focused exchange launched in Shenzhen a decade ago; and, indeed, every other global exchange except Nasdaq.
And Star seems poised to widen that lead. On Monday, Ant Group, the fintech arm of Chinese e-commerce giant Alibaba Group Holding, confirmed plans for a dual listing on Star and the Hong Kong exchange. Ant was last valued at $150 billion in a private fundraising round in 2018, and several holders of the venture’s shares have since marked up the value of their investments. Ant hasn’t specified the timing or size of its IPO, but the offering could be the biggest IPO ever, eclipsing Saudi Aramco’s $26 billion debut last year.
Scores of other Chinese companies, many of them already listed in New York or Hong Kong, have expressed interest in initial or secondary listings via Star.
The Economist discerns two reasons for Star’s popularity among issuers. One is solid political support from Xi, who is seeking to direct capital to cutting-edge technologies—including semiconductors, high-tech sensors, and quantum computing—he deems crucial to the future development of China’s economy. To give listings on Star a boost, Beijing has loosened many restrictions that hobble the other Chinese exchanges—including an informal price cap of 23 times earnings and the 44% limit on first-day gains. Earlier this month, QuantumCTek, an information security firm, soared a record 924% in their first day of trading on Star.
A second factor is mounting tension between Washington and Beijing. The Trump administration vows sanctions against Chinese leaders, while U.S. lawmakers have passed legislation that would force U.S.-listed Chinese companies off American exchanges if they fail to match disclosure standards applied to U.S. firms.
Still, Star’s long-run prospects remain unclear. Fraser Howie, a veteran China markets watcher and author of Red Capital: The Fragile Financial Foundations of China’s Extraordinary Rise, notes that Star may prove vulnerable to problems that have bedeviled other mainland exchanges since the Shanghai exchange re-opened in 1990s as part of Deng Xiaoping’s economic reforms. Among those failings: lax disclosure rules, high volatility, a casino-like culture dominated by speculative retail investors, and a reluctance of regulators to delist underperforming firms.
In an essay this week in Japan’s Asian Financial Review Howie warns: “This looks all too similar to the China IPO patterns we have seen for decades, where trillions of yuan have chased new listings regardless of underlying corporate performance.”
Speaking of market reforms, former Morgan Stanley Asia chairman Stephen Roach argues in this week’s Eastworld Spotlight conversation that if Beijing were to press ahead with an agenda of restructuring uncompetitive state-owned enterprises, rolling back capital controls, and expanding the social safety net, the renminbi has a shot at supplanting the U.S. dollar as a global reserve currency. But he doesn’t think that will happen. His guess is that, in the wake of the coronavirus outbreak, China’s leaders are focused on short-term recovery rather than long-term reforms. Roach, who served as Morgan Stanley’s chief economist and now lectures at Yale University, warns that the dollar could be headed for a staggering 35% decline. He tips the euro as the world’s most undervalued major currency— and most likely alternative to the buck.
More Eastworld news below!
Clay Chandler
clay.chandler@fortune.com
This edition of Eastworld was curated and produced by Grady McGregor. Reach him at grady.mcgregor@fortune.com.
Eastworld news
A Houston problem
The U.S. government ordered China to close its consulate in Houston this week, a move that prompted Chinese officials to burn documents in the consulate’s courtyard before the Friday deadline to vacate the embassy. In explaining the closure, the U.S. State Department accused Chinese diplomats of stealing trade secrets and American scientific research, in addition to falsifying the documents of Chinese military officials in the U.S. China has refuted the allegations and vowed retaliation, which may include ordering the closure of U.S. consulates in China. Chinese state media sources have also argued that the U.S. made the move only to bolster U.S. President Donald Trump’s re-election chances. At this low point in U.S.-China relations, U.S. Secretary of State Mike Pompeo is set to give a policy speech on China on Thursday entitled “Communist China and the future of the free world.” New York Times
Alibaba’s India bet
Deteriorating Sino-Indian relations and a resultant backlash against Chinese technology firms in India may jeopardize Alibaba’s big bet in India. Since 2015, Alibaba has invested over $1 billion into India’s most valuable unicorn Paytm, a payments company valued at roughly $16 billion. Alibaba is the largest shareholder in Paytm with a nearly 40% stake, and its funding and training programs for the company have been essential to Paytm’s growth; it serves over 400 million users. However, India's government has proposed new regulations that would effectively block Chinese firms like Alibaba from major tech investments, even as American competition in India—from Google, Amazon, and Facebook—heats up. The Wire China
A tightrope in Hong Kong
A group of wealth managers in Hong Kong, including HSBC, UBS, and Credit Suisse, are evaluating whether their clients have ties to the city’s pro-democracy movement after Beijing imposed the national security law in the city, according to Reuters. These checks may make it more difficult for those with anti-government histories in Hong Kong to access banking services; in worst-case scenarios they may lose access altogether. Meanwhile, potential U.S. sanctions against individuals who enact Hong Kong's national security law are causing banks to similarly assess the accounts of mainland Chinese and Hong Kong officials. On the mainland, companies are also coming under increasing political pressure. In a speech to Chinese and foreign business executives on Wednesday, Chinese President Xi Jinping called on all companies operating in China to be more patriotic. Reuters
A dimming torch
The 2020 Tokyo Olympics were supposed to kick-off this week. Instead, the pandemic has forced Japan and the International Olympic Committee to postpone the games until the summer of 2021 in what may be a scaled-down affair in comparison to the original 2020 plans. The Japanese government invested over $12 billion to build new stadiums, trains, and other projects as it prepared to play host. That spending may unnecessary if fewer fans are allowed to attend the games. Faced with declining revenues and uncertainty about the potential for a vaccine, the event’s corporate sponsors may also be forced to pull out. Nikkei Asian Review
Coronavirus by country
Kazakhstan
Central Asia weathered the first few months of the pandemic with relatively low case numbers, but COVID-19 infections across the region have spiked in recent weeks and no country is getting hit worse than Kazakhstan. It has thus far recorded over 600 deaths and 76,000 cases—50,000 of which have come since the beginning of July. The jump has prompted the Kazakh government to reimpose lockdown measures that were first introduced in March and lifted in May. The situation has also sparked a strange war of words between Kazakhstan and China, neighboring countries that have long shared friendly relations. In early July, the Chinese embassy in Kazakhstan reported that an “unknown pneumonia” that was far deadlier than COVID-19 was killing scores of people in the country. Kazakh authorities refuted the report as not “corresponding with reality.” Analysts believe that the “unknown pneumonia” may have been undiagnosed cases of COVID-19, a sign that Kazakhstan's pandemic is far worse than official figures indicate. The Diplomat
Markets and movers
Ant Group – Alibaba’s financial technology subsidiary announced this week that it will seek a dual listing in Shanghai and Hong Kong by the end of the year. It's expected to be a blockbuster listing for the world's most valuable unicorn. Fortune
DiDi Chuxing – The Chinese ride-hailing giant announced on Wednesday that it is opening a new standalone ride-hailing service called Huaxiaozhu, which is targeted at younger consumers and will offer cheaper rides in comparison to its main platform. Deal Street Asia
Starbucks – With Luckin, Starbucks’ main challenger in China in shambles, the American coffeehouse chain announced on Tuesday a new partnership with Chinese tech giant Alibaba to place Starbucks’ offerings on more of the company’s digital platforms. CNBC
Flipkart – The Indian e-commerce company announced on Thursday that it will take a 100% stake in Walmart India's wholesale business and launch a new product called Flipkart Wholesale, a new digital marketplace. Walmart has had a controlling stake in Flipkart since 2016, and both companies said on Thursday that the move will further integrate their operations. Livemint
Morgan Stanley – The U.S. bank is blocking interns in China from remotely accessing the company’s private networks due to concerns about China’s strict cyber security rules and the network potentially being compromised. For now, Morgan Stanley is an outlier among American banks in China; other firms like Goldman Sachs and JPMorgan Chase are continuing to offer digital, remote internships in the country. Financial Times
Final figure
-3.3%
South Korea avoided large-scale lockdowns amid the pandemic, but its economy has plunged into recession anyway. On Thursday, the Bank of Korea announced that the country’s GDP fell 3.3% compared to the first quarter and was down 2.9% versus Q2 of 2019. The downturn is due to a significant drop in exports, which normally account for 40% of the country’s annual GDP; they were down 16% in June 2020 compared to 2019. Still, private consumption was up 1.4% in the second quarter, and South Korean officials are hoping that increased global demand in the latter half of 2020 will help pull the country out of its current recession. Fortune


fortune--2020-07-23--33 states have instituted post-travel COVID quarantines—posing a dilemma for executives

Subscription boxes and meal kits are seeing a resurgence with shoppers stuck at home

A corporate executive recently had a pressing question for employment lawyer Jonathan Segal. Could he go on a long-planned vacation to the Outer Banks of North Carolina?
The executive, it turned out, was less concerned about catching COVID than he was about what would happen when he returned to his home in Philadelphia. That’s because Pennsylvania has imposed a 14-day quarantine on those arriving from a growing number of other states—including North Carolina. The executive wondered whether his employer could prevent him from taking the trip, or if he’d have to avoid returning to the office afterward.
Segal, a partner at the firm Duane Morris, says he is receiving more and more such inquiries from executives concerned about legal—and ethical—issues tied to travel.
The issue is especially troublesome in the Northeast where a tristate alliance of New York, New Jersey and Connecticut have required many out-of-state visitors to either self-quarantine or furnish evidence of a negative COVID test. As of Wednesday, the list of states affected numbered 33 with several new states added and one state—Delaware—getting added again after being previously removed.
Meanwhile, it is not just states imposing quarantine rules on visitors. The City of Chicago has issued an order requiring such measures from those arriving from 17 states.
For now, all of these orders amount to advisories rather than formal laws and—aside from the occasional questionnaire for in-bound air travelers–there has been little in the way of enforcement. While the governor of Connecticut this week pledged to add a $1,000 fine for violators, the reality is most people can flout the orders with few repercussions beyond, perhaps, a guilty conscience.
For corporate leaders, however, the out-of-state quarantine orders can carry more consequences—especially as a growing number of offices begin to reopen. According to Segal, failure to abide by the orders could leave employers open to accusations of negligence in the event they experience an outbreak.
So far, though, it appears companies have been slow to issue formal policies. Employees at several well-known companies contacted by Fortune—including those at a tech giant and a financial firm—said they had not received any corporate guidance about travel.
For those that do implement COVID travel policies, there are several potential pitfalls. For instance, a company that outright forbids employees from traveling to states like Florida or Texas, which are suffering major outbreaks, could violate labor laws. That’s because states like New York and Colorado forbid employers from punishing workers for outside-of-work activity that is otherwise legal.
And as attorneys Joseph McNelis III and Samuel Haaz note in a blog post, companies must be wary of banning travel to destinations popular with those of a specific race or sexual orientation—doing so could be a violation of federal civil rights law.
There are also more subtle considerations for managers to consider as they decide how to respond to the mushrooming COVID quarantine rules. According to Segal, executives’ travel choices—and willingness to abide by quarantine rules—are important in terms of establishing a culture of safety in the workplace. He argues it is especially important for executives and HR managers to resist telling employees to abide by states’ COVID advisories, while ignoring them themselves.
“Those who draft policies must also comply with them: A double standard can create culture and health problems in the workplace,” he says.
As for the executive planning to visit the Outer Banks, his company adopted a policy requiring those who visited affected states to quarantine for 14 days—leading the executive to thank Segal for the legal advice but also to tell the lawyer he owed him a vacation.
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