fortune--2020-12-10--The Facebook and Google antitrust suits are a warning shot for all corporate giants—not just Big Tec

The Facebook and Google antitrust suits are a warning shot for all corporate giants—not just Big Tech

This week’s antitrust lawsuit against Facebook by the Federal Trade Commission and a coalition of states, along with the Justice Department’s October suit against Google, represent more than an attack on Big Tech. Together, they’re a concrete sign of a major rethink of antitrust law.
Since the Reagan administration, government antitrust enforcers have largely viewed the Sherman Act—the government’s main legal basis for antitrust cases—through the lens of economics and market efficiency. If a monopolist doesn’t hurt consumers by charging higher prices and reducing output, there isn’t any reason to deem its actions illegal.
Those days may be over. The rise of large, networked enterprises such as Google, Facebook, and Amazon, which derive their power by amassing huge numbers of customers via telecom networks, as well as the recognition that globalization has exacerbated income disparities and depressed wages for ordinary Americans, have changed how a new group of young legal scholars view antitrust law. Instead of focusing on market efficiency, they are focused on market fairness. The so-called hipster trustbusters maintain that antitrust law should not only consider consumer welfare as measured by efficiency, price, and output, but should take into account how new industry structures create powerful economic actors that stifle upstart competitors and wield unprecedented political power.
The Facebook suit exemplifies how quickly the legal and intellectual landscape is changing. It seeks to reverse Facebook’s acquisitions of photo-sharing service Instagram and messaging provider WhatsApp—mergers that the FTC approved less than a decade ago. And New York State Attorney General Letitia James may as well have been reading from the hipster hymnal at a press conference Wednesday when she laid out the state plaintiffs’ rationale. “Instead of competing on the merits, Facebook used its power to suppress competition so it could take advantage of users and make billions by converting personal data into a cash cow,” James said.
This new approach has major implications for how companies must think about their approach to mergers and acquisitions as well as the deals they make with suppliers and distributors. Until now, companies were free to believe their actions were legal as long as they could argue that they made the market more efficient and didn’t hurt consumers through higher prices. The Google and Facebook suits may very well represent a throwback to the “big is bad” approach to antitrust law reminiscent of the 1970s and 1960s.
The signs in the language of the Google suit itself are particularly clear. The Department of Justice does not argue that Google price gouges consumers, because it can’t—Internet search is free. Instead, it argues that consumers are hurt because the search giant’s dominance keeps out of the market new players that might offer higher-quality search services, services that might offer, for instance, more privacy protection. In other words, Google’s very bigness makes it bad.
‘Big is bad’ is back
The “big is bad” approach burst onto the legal academic scene a couple of years ago, principally through a Yale Law Journal article by Lina Khan, a London-born academic who got her law degree in 2017 after graduating from Williams College in 2010. Now 31, Khan is on the law faculty at Columbia University, has counseled FTC commissioner and Democrat Rohit Chopra—rumored to covet the FTC chairman position under President-elect Biden—and the House Judiciary Committee’s Subcommittee on Antitrust, Commercial, and Administrative Law. Khan’s Yale screed argued that Amazon’s bigness made it bad and a potential target for antitrust prosecution because its power kept other potential competitors out of e-commerce markets.
Up against the hipsters are antitrust experts who have adopted the “consumer welfare” standard for evaluating antitrust law developed 40 years ago by the late Robert Bork, the onetime Supreme Court nominee who followed the Chicago school of economics. Championed nowadays by Virginia’s conservative George Mason University law school (named after Supreme Court Justice Antonin Scalia, which until a 2016 name change was known by the unfortunate acronym “ASSLaw”), the Bork approach uses economic analysis to bring logical reasoning to antitrust legal decisions.
Until then, a company hit by an antitrust suit was at the whim of a judge who may or may not buy into whatever theory of competition the plaintiff or defendant presents. Bork adherents are horrified by the hipsters, who, they say, will turn back the clock and use antitrust laws to solve a host of vague social ills that the law is ill prepared to address.
The debate raging within the antitrust legal community may have influenced the timing and structure of the Google suit. DOJ antitrust attorneys were said to disagree among themselves over the basis for a lawsuit and felt pressured by Attorney General William Barr to file prematurely, according to an August report by the Wall Street Journal. When former Google chairman Eric Schmidt argued that Google became dominant simply because it was excellent, he was channeling Bork. “American antitrust law is designed to promote innovation and help consumers, not tilt the playing field in favor of particular competitors,” Google said in its official response.
An old law, a new challenge for CEOs
Central to the problem with antitrust enforcement is that the 1890 Sherman Act upon which the law is based is so vague as to be thought by some as unconstitutional. It simply makes it illegal to monopolize or attempt to monopolize “any part of the trade or commerce” between the states or with foreign countries. Much like enforcement of the Constitution itself, the law has been interpreted through a series of Supreme Court cases, with Congress occasionally passing laws that prohibit or permit specific business practices depending on the politics of the day. It’s not unusual for Congress to pass a law allowing a practice, such as letting wholesalers dictate retail prices, then declare it illegal a few years later.
For CEOs, hipster antitrust raises serious strategic issues. Should the philosophy take hold under a Biden administration, companies could be forced to rethink whether or not to merge, make acquisitions, or strike deals with distributors and retailers to distribute their products and services. Abandoning the consumer welfare standard could force companies to take into account income inequality and wages as well as the effect on small or nascent businesses.
According to a blog post and law review article by a group of George Mason academics rebutting Khan’s analysis, some hipsters want to return to the DOJ guidelines of 1968 that justified blocking mergers with a combined market share of only 8%. Enforcement would be based upon “firm size, without regard for effect on consumers, making presumptively unlawful broad categories of mergers and acquisitions,” the post said.
Companies could be forced to provide documentation on how a merger or acquisition might affect wages, wage growth, and even political power. That would presumably drive up the legal costs of any merger or acquisition and lead to the abandonment of many transactions. Companies might have to document whether or not an acquisition would staunch competition in a nascent market. The DOJ has already sued to block Visa’s proposed $5.3 billion acquisition of Plaid, which provides infrastructure for financial apps, because it might hurt growth of that new market, according to the Wall Street Journal.
For tech companies, hipster enforcement will be particularly problematic. Most of these companies—Facebook, Amazon, Google—become better at what they do because they thrive on network effects. Just like a phone company, the more people who use them, the more useful they become to the consumers who are their customers. The more people on Facebook, the more people want to sign up, because the more likely it is for them to find long lost friends or make new ones. The more stuff Amazon can sell and deliver, the stronger it gets as more and more consumers find it useful for shopping.
Finding a middle ground
A middle ground is more likely. Whether nor not a company is too big isn’t the issue, but whether or not that bigness enables it to set the rules of competition, collude, and quash competitors. Antitrust enforcers could consider not just whether consumers pay higher or lower prices but whether the competitive dynamic of an industry is being controlled by one, or a handful, of players. Antitrust authorities could take into account whether a merger or acquisition—such as Facebook’s purchase of Instagram or Google’s purchase of the ad server DoubleClick—is likely to reduce competition in the long run. Authorities could look more closely at the “freemium” business model of tech firms to determine whether giving away a product for free may produce other negative consequences, such as reducing quality or innovation.
Greater regulation of behavior that was once considered illegal, such as cutting off retailers that discount manufacturers’ prices, could be revived. Regulators could force tech companies to submit detailed plans on consumer privacy before allowing them to make new acquisitions or gain approval for entering new markets such as payments or cryptocurrency. U.S. authorities could adopt the thinking of the European Union, which has been particularly aggressive against Big Tech and which has increasingly become the gold standard for antitrust enforcement outside the U.S.
The FTC’s Chopra—advised by Khan—supports some of these ideas. In his dissent to the FTC’s October vote allowing Mylan’s $12 billion acquisition of Pfizer’s generic drug business, Chopra focused on how the merger would change the structure of the market and exacerbate the risk of collusion by creating the world’s biggest generic drug company. “Typically, collusion is easier to pull off when a market has only a few big players, since coordination is more difficult with more actors,” he said.
The FTC failed to closely examine the executives’ motivations for the merger, Chopra said, citing ongoing price fixing allegations against Rajiv Malik, Mylan’s current president and future board member and top executive of the merged firm. “Despite the obvious alarm bells raised by Mr. Malik’s planned role in the merged firm, the Commission’s analysis does not discuss his involvement in the ongoing price fixing…or his future plans for the company,” Chopra said.
“Unless we change our approach, anticompetitive mergers in the pharmaceutical industry will continue unabated, and we will suffer for it,” Chopra concluded. The same may be said of any industry. And the government now seems prepared to put new changes into practice against Big Tech.
Janet Guyon is a former Europe editor at Fortune. She was recently a Global Law Fellow at New York Law School, studying antitrust law.


fortune--2020-12-10--Environmental policy is labor policy, and Biden must make that clear

DoorDash soared in its IPO debut .
Now it ’ s Airbnb ’ s turn to test the markets

President-elect Joe Biden’s ambitious climate agenda reflects an ideological shift within the Democratic Party. Rather than centering proposed climate action around carbon pricing and other cost-centric policies, Biden’s $2 trillion proposal considers a more benefits-centric approach. Among them: the labor force.
“When I think of climate change, the word I think about is ‘jobs,’” Biden said during a speech in July announcing the plan. “Good-paying union jobs that’ll put Americans to work.”
The country could certainly benefit from an influx of job opportunities right now. The pandemic has significantly increased levels of long-term unemployment, with the Bureau of Labor Statistics reporting that 3.7 million Americans in November were categorized as “permanent job losers”—an increase of 2.5 million since February. A more-green economy could revamp industries and create new ones powered by clean energy, the incoming administration and environmental advocates say.
Biden contends his plan could “create more than 10 million well-paying jobs,” ranging from public transit operators to skilled construction laborers, reshaping supply chains and the manufacturing sector in the process.
“There’s over 100 million units of residential housing in the United States,” said Bracken Hendricks, cofounder of Evergreen Action, the climate advocacy nonprofit founded by former campaign staffers of Washington Gov. Jay Inslee. “Over the next decade, we need to electrify them. We need to solarize them. We need to insulate them. We need to enable them with building management systems for temperature and lighting control for greater efficiency, new low-flow [water] fixtures, Energy Star appliances.”
Hendricks added: “Essentially, what you’re talking about is trillions of dollars of new capital investment into retooling the productive capacity of the U.S. economy.”
The full scope of Biden’s $2 trillion climate proposal won’t pass in a Republican-controlled Senate, should the Democrats fail to win two runoff elections in Georgia next month. But even if they do win, the comprehensive package would likely be filibustered by the opposition party—and Democrats, despite some bold threats, don’t seem likely to end the controversial Senate practice. But Biden will still have options through executive action—rejoining the Paris accords, among other measures—and piecemeal legislation that tackles climate issues on a smaller scale. Some bills could even have Republican support: Infrastructure investment enjoys bipartisan popularity, but it stalled under President Trump. A Biden bill could promote construction of electric-vehicle charging stations and allocate more funds to high-speed rail.
Despite general congressional Republican opposition to ambitious climate policy, a large majority of Americans on both sides favor expanding solar panel farms (92%) and wind turbine farms (85%), according to the Pew Research Center. And 77% of Americans agree that developing renewable energy should be prioritized over fossil fuels. Favor in these investments also tends to increase when paired with a broader economic recovery package.
“For instance, integrating clean-energy investments and climate-related responses into a COVID recovery package makes the COVID recovery package more popular,” said Matto Mildenberger, a professor of political science at UC–Santa Barbara who researches the political drivers of climate policy inaction. “So there’s a real sense the American public wants the government to be walking and chewing gum at the same time right now. And it’s politically advantageous to build climate policymaking into economic policymaking and vice versa.”
Part of Americans’ desire to move away from a fossil-fuel-based economy may be that some of its industries have been unforgiving to workers as of late. The coal industry, which Trump in a signature campaign promise pledged to restore, was already in decline as it competed with lower-cost natural gas—but a wave of bankruptcies, intensified by the pandemic, has left workers anxious over promised pensions and health care benefits. In the past five years, multiple coal corporations paid executives millions in bonuses months before declaring bankruptcy, only to seek concessions from union employees and retirees to mitigate the costs.
Not all labor unions are inherently in favor of progressive climate policy, though. There is a divide in organized labor between wanting to protect jobs and transition to a green economy. The United Mine Workers, on the topic of coal, has historically opposed climate action. Yet the union has repeatedly emphasized its acknowledgment of climate change and that humans have contributed to it. “It’s real…and it needs to be dealt with,” said Cecil Roberts, president of the United Mine Workers of America, in a September 2019 speech to the National Press Club. The union supported a 2010 climate bill that would have, among other measures, funneled money into the development of technology that captures carbon dioxide expelled by coal-fired power plants. It passed in the House but stalled in the Democratic-majority Senate.
The progressive branch of the Democratic Party now wants to enact a sweeping Green New Deal, but Roberts believes the legislation is an existential threat to the coal industry. “I don’t think a good starting point for Democrats is eliminating union jobs,” Roberts said at the time. The message was clear: Climate change is real, but any proposal to fix it must account for coal workers.
Like many occupations, mining is a particular skill set, honed over time. Some workers may already possess the skills or education needed to transition to newly created clean-energy jobs, but others won’t. Even if they did, they might be in the later stages of their career, preparing for retirement rather than new career training.
“It’s really important to affirm that concerns over job dislocation and economic transition in the current economy and with the current social safety net are very real and well-founded,” Hendricks said. “We have a frayed social safety net in the United States, and the historic commitment in the last 20, 30 years to industries and communities and transition hasn’t been what it needed to be.”
Biden, so far, appears to have an awareness that jobs will be crucial to generating support for his ideas. He pledged in his climate plan to secure pension and health care benefits for coal miners and their families, as well as to create a Task Force on Coal and Power Plant Communities. The task force, he said, would leverage the “unique assets” of each community to create new high-paying union jobs and training programs.
“Certainly Biden has brought along workers and labor unions in his climate plan in a way that previous Democratic political coalitions have not been able to do here in the United States,” said Mildenberger.
“That aspect of climate politics should be appreciated and confronted head-on,” he added. “It may not be possible to preserve every job that exists right now—just as it’s not possible to preserve every business that exists right now—but an appropriate climate package needs to be responsive to that reality and ensure that workers are not being left behind.”


fortune--2020-12-10--U.K. startup’s breakthrough could aid quantum computers in the hunt for exotic materials

A small U.K. startup has developed an algorithm that significantly reduces the level of quantum computing power needed to run a calculation that could pave the way for the development of exotic new materials.
Scientists from the company, Phasecraft, along with researchers from the University of Bristol, showed that an important problem from quantum physics—one that is too difficult to solve on today’s supercomputers—could be within the reach of quantum computers within three years, given current rates at which the technology is developing. That is much sooner than most experts had previously forecast.
Quantum computers are machines that harness the peculiar properties of quantum physics to run their calculations. This makes them potentially much more powerful than today’s fastest supercomputers.
Many companies are beginning to experiment with quantum computers, which are being offered through cloud computing interfaces from companies such as IBM, Honeywell, and Google, as well as a number of startups. But so far, most businesses have only run proof-of-concept projects on these machines, which are not yet powerful enough to simulate many complex systems, such as the modeling of subatomic or molecular level interactions.
Last year, Google claimed it had achieved a milestone called “quantum supremacy,” using a quantum computer to run a calculation that a conventional computer could not crunch in a reasonable time span. Last week, a group of Chinese researchers said they had achieved a similar breakthrough using a different kind of quantum computer.
“Toy problems”
But in both cases, the particular problems that the quantum computers solved were what John Morton, a Phasecraft cofounder and professor of quantum physics at University College London, calls “toy problems”—calculations formulated solely to show that the quantum computer could do something a regular supercomputer can’t. They weren’t problems with clear implications for real world applications, such as figuring out how to create more efficient fertilizer manufacturing processes or better batteries.
What Phasecraft shows in a peer-reviewed paper published today in the academic journal Physical Review B, published by the American Physical Society, is different. It involves a problem called the Fermi-Hubbard model, which describes the behavior of a class of subatomic particles known as fermions—a group that includes electrons—as they hop around within a solid. Being able to compute this model is an important step toward creating materials that will exhibit superconducting properties without the need to keep them at ultra-freezing temperatures. But doing so for a system with more than a few tens of particle positions is beyond the reach of today’s conventional supercomputers.
The Phasecraft researchers proved that a kind of algorithm that combines quantum and classical elements could be used to solve the Fermi-Hubbard model for a large solid using a quantum computer with about 8,000 gates, a term that refers to the number of logical operations a quantum computer can perform. That is a tenth of the number of quantum gates that were previously thought necessary to solve the model.
“Their work suggests that surprisingly low-depth circuits could provide useful information about this model, making it more accessible to realistic quantum hardware,” Andrew Childs, a computer scientist at the University of Maryland, said of the research.
Existing quantum computers already have enough quantum processing units—known as qubits—to in theory perform this number of logical operations, but so far scientists have not figured out how to build circuits of that size. Google’s quantum supremacy experiment, which it performed on its 54-qubit Sycamore quantum processor, used a circuit consisting of 430 two-qubit gates and 1,113 single qubit gates.
IBM has already announced its plans to have a 1,000-qubit quantum computer available by 2023. With a quantum computer of that size, it is possible scientists will be able to build a circuit with enough gates to solve the Fermi-Hubbard model using the algorithm Phasecraft demonstrated. “We think it is plausible to do exciting things in the next two- to three-year period,” Ashley Montanaro, one of Phasecraft’s cofounders and directors, as well as a quantum computer researcher at the University of Bristol, said.
Funding deal
Phasecraft, which has partnerships with Rigetti, a California-based startup building quantum computers, and Google, is focused on working with materials science and chemical companies to design quantum algorithms that will allow them to start solving complex problems using quantum computers.
The startup, which currently employs about 10 people, also announced on Thursday that it has received $5 million in seed funding in a financing round led by LocalGlobe, a London venture capital firm, with participation from Episode 1, another London venture firm specializing in early stage investment. Ian Hogarth, the former cofounder of concert discovery app Songkick and now a prominent angel and seed investor, is joining Phasecraft’s board as chairperson.
The new investment brings the total Phasecraft has raised, in both venture funding and research grants, since its founding in 2018, to $7.4 million. The company had received prior funding from the UCL Technology Fund and Parkwalk Advisors and grants from Innovate UK.


fortune--2020-12-10--DoorDash soared in its IPO debut. Now it’s Airbnb’s turn to test the markets

This is the web version of Term Sheet, a daily newsletter on the biggest deals and dealmakers. Sign up to get it delivered free to your inbox.
December is shaping up to be a bang-up month for IPO debuts.
Shares of food-delivery company DoorDash soared 86% Wednesday, closing at $190 apiece after the company raised some $3.4 billion in its offering.
Here’s a taste of just how big those numbers are: On a fully-diluted basis, the company is valued at an eye-popping $72 billion. Even on a non-diluted basis, the company nabs a $60 billion plus price tag—pushing its valuation far above competitor Grubhub (valued at $6.6 billion) and puts it in the universe of companies like COVID-19 vaccine maker Moderna ($62 billion) and General Motors ($63 billion).
It’s an enormous win for the company’s private market shareholders, including SoftBank and Sequoia Capital, who funded the company through its last private valuation of $18 billion.
DoorDash wasn’t alone in its IPO surge, though. On the same day, Microsoft-backed cloud infrastructure company C3.ai jumped 120% in its debut.
Will Airbnb follow in their footsteps in its debut today? So far, the numbers are running in the right direction for the home-sharing startup that has shown investors a stunning rebound from its pandemic lows. (Box CEO Aaron Levie went as far as dubbing it a “perfect market hedge” via Twitter. “If you believe the vaccine is coming quickly, people want to travel again. If you don’t believe it’s coming quickly, people want to work remotely in different locations longer.”)
The company priced its IPO at $68 a share, raising $3.5 billion, markedly above the price range Airbnb first set earlier this month: $44 to $50 a share. And while the company’s revenues may not be back from pre-pandemic times, the valuation cements its comeback—at least in investor’s eyes. In the most severe stay-at-home stretches of the pandemic, the company shaved its valuation down to $18 billion from $31 billion before the crisis hit. At the IPO price, Airbnb would be valued at $47 billion.
While the question for DoorDash is how it will fare after the pandemic, a key issue for Airbnb is precisely the opposite. What happens if the pandemic drags on longer than expected or governments strengthen lock-down orders?
RETROACTIVELY SPLITTING AN M&A DEAL: Facebooks’ $1 billion acquisition of Instagram is now hailed as dealmaking magic, bringing new life to the social media company. Now state and federal regulators say the 2012 deal, along with the acquisition of Whatsapp for $19 billion in 2014, should be unwound. That comes as the U.S. Federal Trade Commission and almost every state in the nation filed a lawsuit accusing Facebook of buying rivals only to stifle competition. Read more.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- Pico, a New York-based quant trading tech provider, raised $135 million in Series C funding. Intel Capital invested and was joined by investors including EDBI and CreditEase Fintech Investment Fund.
- LeanTaaS, a Santa Clara, Calif.-based patient and healthcare provider tech company, raised $130 million in Series D funding. Insight Partners led the round and was joined by investors including Goldman Sachs.
- Reneo Pharmaceuticals, San Diego, Calif.-based clinical stage pharmaceutical company focused on genetic mitochondrial diseases, raised $95 million in Series B funding. Novo Ventures and Abingworth co-led the round and were joined by investors including New Enterprise Associates, RiverVest Venture Partners, Pappas Capital, and Lundbeckfonden Ventures, as well as Rock Springs Capital, Aisling Capital, and Amzak Health.
- Hibob, a New York and London-based human resources software maker, raised $70 million in Series B funding. SEEK and Israel Growth Partners led the round.
- Bitso, a Mexico City-based crypto trading platform, raised $62 million in Series B funding. Investors included Kaszek Ventures and QED Investors. Coinbase Ventures and Pantera Capital also joined the round.
- CallRail, an Atlanta-based marketing and analytics platform, raised $56 million from existing investors Sageview Capital and Leaders Fund.
- Cambridge Quantum Computing, a Cambridge, U.K.-based quantum computing company, raised $45 million. Investors included Honeywell Ventures, IBM Ventures, JSR Corporation, Serendipity Capital, Alvarium Investments and Talipot Holdings.
- Cleo, a London-based financial assistant designed for Gen-Z, raised $44 million in Series B funding. EQT Ventures led the round and was joined by investors including Balderton Capital, LocalGlobe, and SBI.
- Elation Health, a San Francisco-based primary care management software maker, raised $40 million. Generation Investment Management led the round and was joined by investors including Threshold Ventures and Kapor Capital
- At-Bay, a San Francisco-based insurance company, raised $34 million in Series C funding. Qumra Capital led the round and was joined by investors including M12.
- Graphiant, a Palo Alto, Calif.-based computer networking company, raised $33.5 million in Series A funding. Sequoia Capital and Two Bear Capital led the round and were joined by Atlantic Bridge.
- Fairmarkit, a Boston, Mass.-based market for goods and services for large enterprises, raised $30 million in Series B funding. GGV Capital and Insight Partners co-led the round.
- Nēsos, a San Francisco-based startup seeking to treat rheumatoid arthritis using electrical fields, raised $16.5 million in funding led by Mayfield Fund.
- Parallel Domain, a Palo Alto, Calif.-based synthetic data generation platform, raised $11 million in Series A funding. Foundry Group led the round and was joined by investors including Calibrate Ventures, Costanoa Ventures, Ubiquity Ventures, and Toyota AI Ventures.
- Contractbook, a Copenhagen-based legal tech automation company, raised $9.4 million in Series A funding. Bessemer Venture Partners led the round and was joined by investors including Gradient Ventures.
- Clockworks Analytics, a Somerville, Mass.-based maker of a cloud-based building analytics platform, raised $8 million in funding. Carom Growth Partners and Evans Capital Management led the round and were joined by Schneider Electric.
- Papercup, a London-based startup using A.I. to translate voices into other languages, raised £8 million ($10.5 million) in funding. LocalGlobe and Sands Capital Ventures led the round and were joined by investors including Sky, GMG Ventures, Entrepreneur First, and BDMI.
- UbiQD, a Los Alamos, N.M.-based materials company serving agriculture, clean energy, and security markets, today raised $7 million in Series A funding. Scout Ventures and Keiretsu Forum led the round and were joined by investors including Sun Mountain Capital, Epic Ventures, Plug and Play Ventures, and Arcview Collective Fund.
- Streetbees, a London-based market research firm, raised an additional $6.7 million from TempoCap.
- Bigger Games, an Istanbul-based gaming startup, raised $6 million in seed funding. Index Ventures led the round. Read more.
- Candu, a San Francisco-based developer of a no-code web builder, raised $5 million in seed funding. Two Sigma Ventures led the round and was joined by CRV.
- Workera, a Palo Alto, Calif.-based skills assessment maker, raised $5 million in seed funding. Owl Ventures and AI Fund led the round and were joined by Plug and Play Ventures.
- CarDr.com, a Chicago-based vehicle inspection company, raised $5 million from Red Fort Capital.
- Smartvid.io, a Cambridge, Mass.-based construction safety company using A.I., raised $5 million in funding. Investors include Sony Innovation Fund and IA Capital Group, as well as prior investors Building Ventures, Companyon Ventures and Converge.
- Ava, a San Francisco-based maker of a live captioning solution for accessibility, raised $4.5 million. Initialized Capital and Khosla Ventures led the round.
- NOW Insurance, a Houston-based insurance platform for business owners and professionals, raised $1.3 million in additional seed funding led by The MFO Group.
PRIVATE EQUITY
- Platinum Equity agreed to acquire Ingram Micro, an Irvine, Calif.-based provider of technology services and solutions, from HNA Group division, HNA Technology, for about $7.2 billion.
- Thoma Bravo invested in Venafi, a Salt Lake City-based provider of network security, valuing the company at $1.2 billion. Existing investors, TCV and Foundation Capital, will remain shareholders.
- Summit Partners invested a €50 million ($61 million) in Solactive, a Frankfurt-based indices and index provider to financial companies. Financial terms weren't disclosed.
- American Pacific Group and Northstar Capital acquired Fresche Solutions, a Montreal-based provider of IT software and services.
- Aurora Capital Partners invested in Premier Roofing, a Denver, Colo.-based roofing company. Financial terms weren't disclosed.
- Banneker Partners invested in Versaterm Public Safety, an Ottawa, Canada-based provider of software to first responder public safety agencies. Financial terms weren't disclosed.
- Fortis Solutions Group, a portfolio company of Main Post Partners, acquired Kala Packaging, an Orem Ut.-based maker of pressure sensitive labels and flexible packaging. Financial terms weren't disclosed.
- J.F. Lehman & Company acquired CodeMettle, an Atlanta, Ga.-based developer of custom software development and proprietary software solutions. Financial terms weren't disclosed.
- Main Post Partners invested in Duke Cannon, a Minneapolis-based men’s grooming company. Financial terms weren't disclosed.
- New Capital Partners invested in Healthfuse, a Milwaukee, Wi.-based healthcare vendor management company. Financial terms weren't disclosed.
EXITS
- Berkshire Partners recapitalized and acquired a stake in Foodchain ID, a Deerfield, Ill.-based food testing and safety company, from Paine Schwartz Partners. Financial terms weren't disclosed.
- Instructure, backed by Thoma Bravo, agreed to acquire Certica Solutions, a Wakefield, Mass.-based K12 assessment and analytics company backed by New Harbor Capital. Financial terms weren't disclosed.
- SK Capital Partners agreed to acquire Ipackchem Group, a Paris-based provider of sustainability-oriented barrier packaging, from Sagard. Financial terms weren't disclosed.
- New Relic (NYSE: NEWR) agreed to acquire Pixie Labs, a London-based machine intelligence observability company backed by GV and Benchmark. Financial terms weren't disclosed.
- CarGurus (Nasdaq: CARG) acquired a 51% interest in CarOffer, a Plano, Tx.-based car selling platform, valuing it at about $275M, with the ability to buy the remaining equity interest in the company over the next three years. Financial terms weren't disclosed.
OTHER
- GlobalWafers will acquire Siltronic, a German silicon wafer maker, for €3.8 billion ($4.5 billion).
- AT&T (NYSE: T) plans to sell Crunchyroll, its anime video unit, to Sony Corp.’s Funimation Global Group for $1.2 billion.
- CANDRIAM and its sister affiliate New York Life Investments Alternatives acquired a minority stake in Kartesia, a European private markets investor. Financial terms weren't disclosed.
IPOs
- Hydrofarm Holdings Group, a Petaluma, Calif.-based provider of hydroponics and yard equipment, raised more than previously expected: $173 million in an offering of 8.7 million shares priced at $20 apiece. Read more.
- Nanobiotix, a French biotech developing cancer therapies, says it now plans to raise $91 million in an offering of 6.5 million shares priced between $13.50 to $14.50. Read more.
- BioAtla, a San Diego, Calif.-based biotech developing therapies for solid tumor cancers, says it plans to raise $150 million by offering 9.4 million shares priced between $15 to $17. Backers include Pfizer Ventures, Soleus Private Equity, and HBM Healthcare Investments. Read more.
- Midwest Holding, a Lincoln, Ne.-based life insurance company, plans to raise $72 million. Read more.
SPAC
- Carney Technology Acquisition II, a SPAC targeting the tech industry formed by former Brocade Communications CEO David Roberson, raised $350 million.
- RMG Acquisition II, a SPAC formed by Riverside Management Corp.’s James Carpenter and former Carlyle executive Robert Mancini, raised $300 million.
FFS
- Prudential Financial, the life insurer, launched a new $300 million venture firm. Read more.
- Ten Coves Capital, a Connecticut-based private equity firm focused on fintechs, spun out of Napier Park Global Capital with two growth funds from Napier managing $325 million total.
- Rally Ventures, a venture firm, closed its fourth fund with $250 million.
- Upper90, a New York-based debt and equity provider to e-commerce, enterprise, and fintechs, raised $195 million.
PEOPLE
- Flybridge, a venture firm, named Anna Palmer as a general partner.


fortune--2020-12-10--The current Congress has been the least productive in decades, a warning sign for Biden if the Senat

The current Congress has been the least productive in decades, a warning sign for Biden if the Senate stays red

It’s become apparent that President-elect Joe Biden will have his work cut out for him if the U.S. Senate remains in Republican control next year. Whether it’s obstructing the most ambitious aspects of Biden’s agenda or striking down his preferred judicial appointments, a GOP-held chamber led by Majority Leader Mitch McConnell is capable of impeding many of the incoming President’s best-laid plans.
Recent history shows just how little a divided government can achieve when political gridlock gets in the way. The current 116th U.S. Congress—featuring a Republican-led Senate and a Democratic-held House of Representatives—has been the least productive in at least half a century, according to GovTrack data cited by S&P Global Market Intelligence.
As of Dec. 4, the current U.S. legislature had passed only 194 bills that were then signed into law by President Trump, the fewest of any Congress recorded in GovTrack’s database going back to 1973. By comparison, the previous least-productive legislature, the 112th Congress (2011–13)—which had a Democratic-led Senate and a GOP-held House—passed 284 bills into law, 90 more than the current version has managed.
Both of those historically unproductive bodies put the 80th Congress—famously dubbed the “Do-Nothing Congress” by President Harry Truman in 1948—to shame, and speak to an era of political polarization in which bipartisan cooperation has proved increasingly rare. In recent cases in which control of Congress’s two chambers has been split between Republicans and Democrats, that schism—and the resulting political gridlock—has been on full display.
The 111th Congress (2009–11), which featured Democratic majorities in both the House and Senate, united behind a newly elected President Obama to pass 385 bills into law, according to GovTrack data. But the following three sessions of Congress during the Obama administration were some of the least productive on record, as Republicans gradually increased their influence on Capitol Hill. The aforementioned 112th Congress and the following 113th Congress (296 bills passed into law) featured a GOP-controlled House, while the 114th Congress (329 bills passed) saw both chambers in Republican hands.
Republicans maintained full control of the 115th Congress, which united behind President Trump to pass 443 bills into law, before Democrats took back control of the House in the current 116th Congress.
In his time as vice president—a role that doubles as president of the U.S. Senate—Biden witnessed firsthand the gridlock that marked the final six years of the Obama administration. Some in the President-elect’s camp have touted the former senator’s long history on Capitol Hill—and his previous working relationship with McConnell—in expressing confidence that he can cooperate with congressional Republicans to advance his agenda.
Still, recent history shows that such bipartisan cooperation is easier to aspire to than actually bring to fruition, and the Trump era has only deepened the political divides that have made compromise on Capitol Hill an all-too-rare occurrence. That’s amplified the importance of the upcoming runoff election for Georgia’s two Senate seats, to be held on Jan. 5. If Democratic challengers Jon Ossoff and Raphael Warnock manage to unseat Republicans David Perdue and Kelly Loeffler, respectively, it would swing control of the Senate—and both chambers of Congress—back to the Democrats.
That would provide Biden with a united Congress far more likely to enact the most ambitious parts of his agenda. Otherwise, a Senate led by Mitch McConnell lies in wait, able—and all too likely—to thwart the President’s designs.


fortune--2020-12-10--Twitch announces new rules to curb sexual harassment

This is the web version of The Broadsheet, a daily newsletter for and about the world’s most powerful women. Sign up to get it delivered free to your inbox.
Good morning, Broadsheet readers! State attorneys general sue Facebook in an antitrust case, Kamala Harris changes the cultural perception of the “stepmom,” and Twitch moves to crack down on sexual harassment. Have a thoughtful Thursday.
– Twitch switch. Twitch, the massively popular livestreaming platform used by gamers and others, is the latest tech titan to try to curb sexual harassment and hate speech among its users. On Wednesday, the company (which is owned by Amazon) revealed a new set of guidelines that will, among other things, ban “lewd or repeated comments about anyone’s physical appearance and expressly prohibit the sending of unsolicited links to nudity,” reports the New York Times. Violators will be fined, suspended, or banned.
While Twitter and Facebook tend to get more media coverage around harassment and misinformation, Twitch is worth your attention. The platform is on a lockdown-fueled rocket ride of growth, with an average of 26.5 million daily viewers, up from 17.5 million at the beginning of 2020, according to the NYT.
And, as anyone who followed the Gamergate drama of yore will recall, sexual harassment in the gaming community is a serious problem. As recently as June of this year, more than 70 people, most of whom are women, levied allegations of sexism, sexual harassment, and sexual assault against prominent gamers and executives in the industry. (For anyone who missed it, I recommend reading up on that story; I suspect it flew under the radar for many amid the COVID crisis and outrage over the killing of George Floyd this spring.)
Of course, as Twitter’s repeated efforts to control the abuse on its platform illustrate, creating a policy and actually achieving a harassment-free environment are two very different things. One possible flaw in the Twitch guidelines: streamers themselves are generally the ones responsible for enforcing the rules among their viewers.
Kristen Bellstrom
kristen.bellstrom@fortune.com
@kayelbee
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- About face. State attorneys general and the Federal Trade Commission filed a long-anticipated and major lawsuit against Facebook yesterday, alleging that the tech giant has quashed competitors and violated antitrust regulations. New York Attorney General Tish James said that the company has "used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users." Facebook didn't immediately respond to the suit. New York Times
- Staffing up. Fortune's Erika Fry spoke to Susan Salka, the CEO of AMN Healthcare, the United States' largest health care staffing company. Salka talks about shortages of health care workers and working alongside hospitals throughout the pandemic. Fortune
- Inside Fort Hood. After investigating the death of soldier Vanessa Guillen, who was sexually harassed before she was killed, the U.S. Army fired or suspended 14 people connected to "a pattern of sexual assault, harassment, suicides and murder" at Fort Hood. CBS News
- Family first. Vice President-elect Kamala Harris, with her husband Doug Emhoff and his two children, is putting stepparents and "families you choose" in the national spotlight—alongside the Bidens and their family. "When kids are growing up now, they're going to think of the word 'stepmom' and they're going to think of the vice president of the United States and the first lady," says Beth McDonough, who runs the blog The Inclusive Stepmom. NPR
MOVERS AND SHAKERS: Mellody Hobson, already a Starbucks board director, is now its board chair. The Meredith Corporation promoted Catherine Levene to National Media Group president; promoted chief business and data officer Alysia Borsa to president of Meredith Digital; and hired Amanda Dameron as chief digital content officer. The Ohio State University named Ayanna Howard dean of the College of Engineering. American Airlines promoted managing director and assistant treasurer Meghan Montana to VP and treasurer. BNP Paribas CIB Americas named Claudine Gallagher head of human resources.
IN CASE YOU MISSED IT
- Adios, Pre-Textos. Spanish-language publisher Pre-Textos is criticizing the team behind poet Louise Glück, the recent winner of the Nobel Prize in Literature, after they selected a new publisher for her translated works in the language a month after her Nobel win. Pre-Textos says that it published seven of Glück's books when she was "almost completely unknown" to Spanish-language readers and should be able to publish her work now that she has won global acclaim. New York Times
- Locker room walk. Vanderbilt's women's basketball team has announced that its players won't leave the locker room for the National Anthem this season, in a move meant to mourn and protest racial injustice in the United States. The college athletes follow the lead of the WNBA, whose players have been at the forefront of the Black Lives Matter movement. ESPN
- Pump it. The breast pump Medela is still found in hospitals nationwide and helped make the breast pump common throughout the U.S. But the brand has fallen behind competitors, many of which new mothers now turn to instead of the category originator. Bloomberg
ON MY RADAR
How AOC showed politicians the power of live-streaming Fortune
Goldman Sachs and Morgan Stanley are ready to share more diversity data Bloomberg
Work-from-home scheme targeting Latinas netted $7 million, U.S. says New York Times
PARTING WORDS
"I do beg them: Pick the biggest screen they can find, please!"
-Director Patty Jenkins, to viewers, on Wonder Woman: 1984 being released via streaming on HBO Max


fortune--2020-12-10--Facebook’s antitrust lawsuit: What the giant would look like without Instagram, WhatsApp

Facebook was slapped with a big antitrust lawsuit on Wednesday detailing the company’s aggressive behavior that squashed competition.
The Federal Trade Commission and 46 states say that for years the company engaged in anticompetitive behaviors to obtain and retain monopoly power, according to the lawsuit filed in a federal court on Wednesday. Facebook allegedly tried to neutralize potential future threats when it snapped up Instagram and WhatsApp and failed to buy Twitter and Snapchat, the lawsuit claims. The company, not surprisingly, pushed back hard and said it violated no laws.
Included in the lawsuit’s remedies is a call to break up Facebook. While analysts think anything is possible, they suspect that Facebook will more likely be forced to change some its behaviors rather than divest Instagram and WhatsApp (and Fortune’s Jeff John Roberts agrees) .
Ron Josey, an analyst at investment banking firm JMP Securities, says a forced divestiture would set an “interesting” precedent for other Big Tech companies. And Brent Thill, an analyst at investment banking firm Jefferies, called the lawsuit a “witch hunt.”
“It’s going to be a giant stink fest on the sidelines,” Thill said. “The game is going to go on, and nothing is going to change.”
But for argument sake, let’s say antitrust regulators succeed in their push for a breakup. What would Facebook look like without Instagram and WhatsApp?
“What you’re left with is a business that has 2.7 billion monthly active users and 1.8 billion daily active users,” Josey said. “So it’s not small.”
But losing Instagram would mean losing the engine responsible for most of Facebook’s recent growth in both users and revenue. Digital marketing research firm eMarketer estimates that Instagram will generate $22.5 billion in revenue in 2020, a year-over-year increase of 38%. By comparison, Facebook’s core app is expected to grow 22% to $33.4 billion this year, according to eMarketer.
And analysts suspect that Instagram is likely responsible for a large portion of the monthly active users on Facebook’s family of apps, which in the third quarter grew by 14% year-over-year (monthly active users on Facebook’s main app only grew by 12%).
“There’s no question Instagram is a massive engine” for the company, Thill said.
Losing WhatsApp is a little less of a concern for Facebook, Josey said, as the service is still in its early days of figuring out how to make money. But WhatsApp does represent another massive set of users—more than 2 billion worldwide. The service has also been beefing up its e-commerce offerings, most recently adding the ability for people to fill a digital cart and send the order to a participating business.
Bottom line: Facebook would be fine, but it would lose its shiny toys that help it grow.
Danielle Abril
@DanielleDigest
danielle.abril@fortune.com
NEWSWORTHY
COVID misinformation. While we’re on the topic of Facebook, the social network removed at least nine pages that were pushing misinformation about the coronavirus, the flu vaccine, and other health topics to their millions of followers, according to The Washington Post. Facebook made the move following a flag from researchers at the public policy think tank German Marshall Fund.
Ethical dilemma. Google plans to investigate the ousting of one of its top A.I. researchers, Timnit Gebru, according to Axios. Last week, Gebru said she was fired for criticizing the company for its failure to commit to diversity. Sundar Pichai, CEO of Google’s parent company Alphabet, sent out an internal memo on Wednesday apologizing for how the company handled Gebru and announcing the investigation.
Political policy changes. Google and YouTube both announced new policies related to political content on the services. Google plans to lift its political ad ban on Thursday, according to several media reports. The company implemented the ban on Nov. 3, after which it paused more than 5 million political ads. Meanwhile, YouTube is cracking down on videos, uploaded Wednesday and beyond, that claim widespread fraud or errors impacted the 2020 U.S. Presidential Election. Better late than never!
Play nice, gamers. Twitch, the Amazon-owned streaming service popular among gamers, announced new rules for hateful conduct and sexual harassment on Wednesday. Users won’t be allowed to repeatedly comment on a person’s perceived attractiveness if it is unwelcome, for example. They also can’t make lewd or explicit comments about a person’s sexuality or physical appearance nor send unsolicited links to nudes. Attacks on people based on their caste, color, and immigration status will no longer be allowed. And Twitch prohibited the display of the Confederate flag. Changes will take effect Jan. 22.
Big Brother was watching. Apple and Google are banning data broker X-Mode Social after learning that the company provided data of unsuspecting app users to U.S. government contractors. The companies notified app developers about the ban and told them they have to remove X-Mode’s data tracking software from their apps or risk being banned themselves.
Things that go boom. Elon Musk had warned there was only a one-in-three chance that everything would go as planned in the highest flight test yet of SpaceX's shiny Starship rocket prototype. The rocket successfully took off and flew to a height of eight miles. But the landing was a RUD, or "rapid unscheduled disassembly,” Musk noted in a Tweet. That's aeronautics talk for a fiery crash.
FOOD FOR THOUGHT
Microsoft CEO Satya Nadella and Harvard professor Marco Iansiti penned an opinion piece for Wired on Wednesday in which they suggest the tech industry needs to unite around a common cause: Democratizing tech tools and knowledge for “citizen developers,” or innovators outside the tech industry. The authors go as far as to say the tech industry will have “failed” if companies are the only beneficiaries of tech at the end of the decade.
“Success in this moment of unprecedented turbulence will require us to think boldly and move beyond traditional approaches. The current crisis demands innovation across both public and private sectors, and across every geographic and social community. This calls not only for developing individual skills, but also for providing an architecture to ensure that the necessary tools, data, and technology are broadly accessible and made available across traditionally isolated groups and geographies. The importance of technology and innovation is hardly a new idea. But it is people’s widespread and intense use of tech and tools that is the crucial ingredient,” Nadella and Iansiti write.
IN CASE YOU MISSED IT
Airbnb’s IPO: 6 key things to know By Danielle Abril
Google’s ouster of a top A.I. researcher may have come down to this By Jeremy Kahn
DoorDash CEO Tony Xu on the company’s long-awaited IPO By Danielle Abril
The hacker ‘ceasefire’ with hospitals is over—and that should terrify us By Peter J. Beshar and Jane Holl Lute
DoorDash shares soar 80% after IPO By Danielle Abril
Lessons from HBO Max’s streaming surprise By Geoff Colvin
A cybersecurity agenda for the Biden administration By Samuel J. Palmisano and Kiersten E. Todt
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
In case you missed the oddball news this week, I’d like to turn your attention to an unlikely pairing: KFC and Lifetime. Oh, and UberEats also is in on the affair.
Lifetime and KFC are promoting what they’re calling a “steamy” holiday 15-minute mini-movie called A Recipe For Seduction. The film, which premieres on Lifetime at noon E.T. on Sunday, stars Mario Lopez as Colonel Harland Sanders and comes complete with an exclusive offer from UberEats. KFC lovers who order at least $20 of food on the app will get six free extra crispy tenders Sunday through Saturday.
The year 2020 is truly strange. But if you need a distraction from the chaos, Mario Lopez and some fried chicken isn’t too shabby, methinks.


fortune--2020-12-11--Hopes of a Brexit trade deal flash red, sending stocks and sterling lower

Google ’ s ouster of a top A.I .
researcher may have come down to this

European Commission President Ursula von der Leyen warned that a no-deal split with the U.K. is the likeliest outcome on Dec. 31 as last-ditch talks to try to reach a deal before Sunday continue in Brussels.
Prime Minister Boris Johnson’s pleas for European Union leaders to step in and salvage the faltering trade negotiations were frustrated as summit talks overran on Thursday night, pushing Brexit to the fringes. On Friday, von der Leyen spent just 10 minutes briefing government leaders on the subject.
On Thursday, Johnson warned U.K. businesses and the public to prepare for the “strong possibility” of a no-deal split. Both sides have said they will continue discussions until Sunday, but officials concede that, without fresh political direction, the negotiating teams will have little to talk about.
Norway May Close Waters to U.K., EU
Norway may close its waters to fishing vessels from the EU and U.K. if a deal isn’t reached with the Nordic country by the start of next year, Norwegian news agency NTB reported, citing Fisheries and Seafood Minister Odd Emil Ingebrigtsen.
Negotiations are delayed due to the Brexit talks and it isn’t a given that deals will be finalized by the end of the year. Norway also can’t expect its vessels to have access to EU or U.K. economic zones before agreements are in place.
Macron: We’re Still Looking for Deal
Emmanuel Macron said, amid “rumors, fire and counter-fires,” he still wants a deal that “respects our British friends.”
The French president dodged a question on whether his wish to see French fishermen continuing to fish in U.K. waters after a no deal was an attempt to “have his cake and eat it too” — an expression used by Johnson in describing his own views on Brexit.
“I am asking for the butter to be well weighed, because I am not giving up my share too,” Macron responded, repeating that the EU had “one principle: standing united.”
Von der Leyen Stresses U.K. Sovereignty
Ursula von der Leyen used her press conference after the EU summit to focus on the bloc’s negotiating positions rather than warn they’re heading for no deal, a sign perhaps that they’re not quite at the end of the road yet.
On the so-called level playing field for fair competition — the biggest obstacle to an agreement — she emphasized British “sovereignty,” the key U.K. demand.
Under the EU’s proposal rejected by Johnson’s government, “the U.K. would remain free — sovereign if you wish — to decide what they want to do,” she said. “We would adapt the conditions for access to our market according to the decision of the U.K. and this would apply vice-versa.”
She also indicated it may not be a clear deal or no deal at the weekend. “We will decide on Sunday whether we have conditions for an agreement or not,” she said.
U.K. Slow to Recognize Trade-Offs
David Lidington, who served as Prime Minister Theresa May’s de facto deputy, said the U.K. has been slow to recognize and explain that any deal will require trade-offs.
“We are wanting privileged access — tariff-free, quota-free — to this very important market of the EU, by far our biggest trading partner anywhere in the world, and they are going to demand a price,” he told Bloomberg Television’s Francine Lacqua.
Lidington said he hoped Johnson will strike a deal and that, if the prime minister did secure one, he would be able to get parliamentary approval for it.
BOE Warns of Possible Disruption
The Bank of England said it can’t rule out market volatility or some disruption to financial services in the event of a no-deal Brexit, but said Britain’s banks are strong enough to weather such an outcome.
Speaking after the BOE published its latest health check of the banking system, Governor Andrew Bailey said the institution had done a huge amount of work to prepare for any form of Brexit. But he cautioned that the EU hadn’t matched those preparations in every respect.
Brexit Road Testing Starts
Part of the main motorway to Dover and the Channel Tunnel will be closed overnight on Friday as officials install a new movable barrier.
The contraflow system is designed keep traffic flowing in the event of Brexit-related disruption.
Johnson has “Lost the Plot,” Labour Says
Lisa Nandy, foreign affairs spokeswoman for the U.K.’s opposition Labour Party, said Johnson’s government has “lost the plot” over the Brexit talks and urged the prime minister to agree a deal with the EU.
“The government’s position is now that it’s intolerable to accept tariffs and quotas, so they want to leave on terms that immediately introduce tariffs and quotas,” Nandy told BBC Radio. “It just seems absolutely absurd.”


fortune--2020-12-11--Europe goes all in on its net-zero pledge, backing tough new emissions targets —but not without a fi

Europe goes all in on its net-zero pledge, backing tough new emissions targets —but not without a fight

The European Union further strengthened its targets for cutting emissions on Friday—despite internal resistance from poorer countries within the union that threatened to scupper the deal.
The new goal is to cut 2030 emissions by at least 55%, the most ambitious target in the world and involving the bloc’s 27 members—excluding the U.K., which has its own target. The passing of that 2030 target—which was tabled as an amendment in September and only needed final approval—is part of the EU’s broader goal to reach net-zero emissions by 2050, which was laid out exactly one year ago as part of the union’s Green Deal.
Ursula von der Leyen, the president of the European Commission, tweeted that the target “puts us on a clear path towards climate neutrality in 2050.”
Great way to celebrate the first anniversary of our #EUGreenDeal!
#EUCO has endorsed our ambitious proposal for a new EU climate target.
Europe will reduce emissions by at least 55% by 2030.
It puts us on a clear path towards climate neutrality in 2050. — Ursula von der Leyen (@vonderleyen) December 11, 2020
But efforts to pass the new 2030 target also highlighted the growing rift within the union that mirrors larger divisions worldwide—between richer countries who want to push for more ambitious targets, and the EU’s poorer members in the east—Poland, Hungary, and the Czech Republic—who are still more dependent on coal-fired power.
All three of those countries had initially withheld their support Thursday for the deal, asking for more support from the bloc to help transition their economies. The deal was only passed on Friday morning after Poland, the last holdout, received further assurances of funding for the energy transition.
That division among member states is not just about emissions targets. Earlier this week, the European Commission adopted a €750 billion ($910 billion) post-pandemic recovery fund and a €1.8 trillion ($2.1 trillion) seven-year budget—but only after weeks of uncertainty, with threats from Brussels that Poland and Hungary could be cut off from the funds after they threatened to sink the deal. The governments of both countries had objected to rule-of-law stipulations for the funding. Poland and Hungary have both been under fire for moves to restrict the freedom of the press and for stacking the courts with government loyalists, shifts that have long been flagged as overtly undemocratic and violating the principles of the European Union.
Friday’s announcement of the target also comes ahead of this weekend’s climate summit, which marks the fifth anniversary of the signing of the landmark Paris Agreement.
Despite the pressures of the COVID-19 pandemic, this has been a landmark year for net-zero climate commitments by governments (and by companies), from Japan to Canada, although many of the details of how those targets will be achieved are still vague. The next country to watch is the U.S., with President-elect Joe Biden pledging to reenter the Paris Agreement when he takes office early next year, paving the way for the possibility of firmer U.S. emissions cuts.


fortune--2020-12-11--The business community is tackling diversity with new seriousness

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
Fortune and Refinitiv hosted a conversation yesterday about our new partnership to encourage companies to publicly report their diversity data. “ESG has been around for some time, and it is really strong in some areas, including climate,” said Refinitiv CEO David Craig. “But for a long time the S in ESG has been missing. We were surprised and shocked by the lack of ethnicity data that gets collected.”
PwC’s U.S. Chairman Tim Ryan told the group why he made the rare decision to release his company’s diversity data. “We wanted the self-imposed pressure to do better.” His recommendation to others: “Don’t be ashamed of your numbers. They are what they are. What’s important is progress.” The critical factor, said Crystal Ashby of the Executive Leadership Council, is that the “CEO has to be really clear where they stand on this issue.” You can access the Refinitiv tool here, and become part of this important movement.
Separately, Merck CEO Ken Frazier and IBM Executive Chair Ginni Rometty yesterday unveiled a major new effort, along with 35 other CEOs, to commit to train, hire and promote one million Black Americans over the next decade, with a special focus on those without a four-year college degree. The effort is evidence that the business community is tackling this issue with new seriousness.
And since it is Friday, some feedback. Lots of response to Monday’s post about the new Council for Inclusive Capitalism with the Vatican—not all of it supportive. OE wrote in:
“This partnership with an elitist anachronism like the Catholic Church seems to be an exercise in virtue signaling. Any projects it spawns likely will be self-defeating and harmful to the causes it attempts to further.”
But KK took a closer look and was more impressed:
“I read the specific pledges from each company and they are wonderful. I like the simplification by the Pope in ‘benefitting the planet and the people.’”
Meanwhile, the markets continue to party. Airbnb’s IPO stock jumped 135% in its first day of trading, giving the company a market cap of over $100 billion. That’s more than Marriott, Hilton and Hyatt combined.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Pfizer vaccine
With the FDA's vaccine advisors recommending Pfizer/BioNTech's COVID-19 vaccine for emergency use, Fortune's David Z. Morris goes through what you need to know about the vaccine: how effective it is; the side effects; cost; eligibility; availability; the allergic-reaction question; and how the thing works. Fortune
Ericsson vs Samsung
Ericsson has sued Samsung in the U.S. over alleged intellectual-property violations. The companies last clashed over patents eight years ago, in a case that saw Samsung cough up $650 million plus years of royalties. Now, Ericsson claims, Samsung has broken its commitment to negotiate and license patents on fair, reasonable and non-discriminatory terms. Reuters
European summit
U.K. Prime Minister Boris Johnson hoped EU national leaders might leap in and rescue post-Brexit trade negotiations at their last meeting of the year yesterday. But the leaders were too busy debating their budget (finally unblocked, in a way that partially caves in to Hungary and Poland over the rule of law) and new climate targets (at least 55% emissions cuts by 2030) all night long. The trade talks got a mere 15 minutes' discussion, at 8.30 a.m. Johnson warned yesterday that—you don't say—a no-deal is a "strong possibility." Bloomberg
Huawei and Uyghurs
The French soccer star Antoine Griezmann has resigned as a Huawei brand ambassador, over its alleged testing of facial-recognition software for use in monitoring the oppressed Uyghur minority. He Instagrammed: "Following strong suspicions that the Huawei company has contributed to the development of a ‘Uighur alert’ thanks to facial recognition software, I am announcing the immediate termination of my partnership with the company." Guardian
AROUND THE WATER COOLER
Xi control
The Wall Street Journal offers a deep dive into Chinese President Xi Jinping's push to bring the private sector to heel: "China’s most powerful leader in a generation wants even greater state control in the world’s second-largest economy, with private firms of all sizes expected to fall in line. The government is installing more Communist Party officials inside private firms, starving some of credit and demanding executives tailor their businesses to achieve state goals. In some cases, it is taking charge entirely of companies it regards as undisciplined." WSJ
Tesla shares
JP Morgan analysts see Tesla's shares as being "in our view and by virtually every conventional metric not only overvalued, but dramatically so." They added: "We do not believe Tesla will grow to approximate 2x the combined size of Toyota & VW at the same margin (or 1⁄2 the combined size at 4x the margin, or any of the other combinations of volume and margin that could be reverse engineered" to justify the current valuation. Fortune
Vaccine equality
The current coronavirus vaccination programs generally exclude women who are pregnant or breastfeeding, because the vaccine candidates were not clinically tested on these segments of the population. That somewhat undermines the idea of making sure that frontline workers get the shot early on, seeing as 70% of health-care workers are women. Washington Post
Environmental Biden
Most Americans support the expansion of renewable energy in the U.S., but getting political traction will likely depend on selling the job-creation aspects of the green revolution, as explained in this piece by Fortune's Aric Jenkins: "A more-green economy could revamp industries and create new ones powered by clean energy, the incoming administration and environmental advocates say." Fortune
This edition of CEO Daily was edited by David Meyer.


fortune--2020-12-11--Shopify is ready for the holiday season. Just don’t call it the ‘anti-Amazon’

Shopify, the tech platform that provides e-commerce infrastructure for brands of all sizes, is sometimes called the anti-Amazon for its approach to working with merchants—but that’s not a nickname the business relishes.
“I don’t consider us the anti-Amazon,” VP and general manager for Shopify Plus Loren Padelford says. “I think that’s a media narrative.”
But, Padelford allows, “we want merchants to be front and center. …That’s a worldview difference.”
Those merchant relationships are more critical than ever this month, during a holiday season that has tested retailers in new ways. More consumers are relying on online shopping to buy gifts for their friends and loved ones, including through the 1 million merchants who use Shopify.
Padelford joined Fortune Brainstorm, a podcast about how technology is changing our lives, where he spoke to Fortune’s Michal Lev-Ram and Brian O’Keefe about these changing consumer habits. Shopify’s technology supports everything from Fortune 500 retailer limited-edition launches to Rob Kardashian’s sock brand, putting the company at the center of every kind of shopping during this busy quarter.
While Shopify is working to support sales, tech startup Ohi is developing a new solution to get those purchases to consumers—also, of course, measured against Amazon. CEO Ben Jones founded the company that opens micro-warehouses to help small brands compete with the kind of fast shipping that has, thanks to Amazon, become standard throughout the retail industry.
Jones predicts that within two years, consumers are going to demand products they order online “in a matter of hours.” In a holiday season that follows months of headlines about slowdowns at the U.S. Postal Service, Ohi’s strategy is just as crucial to this year’s holiday season as e-commerce itself.
Fortune retail reporter Phil Wahba also joined the Fortune Brainstorm hosts to provide perspective on how major retailers are faring during this unusual Q4. For more insight into retail and technology, listen to the episode.


fortune--2020-12-11--IPO exuberance aside, stocks are having a lousy week

This is the web version of Bull Sheet, a no-nonsense daily newsletter on what’s happening in the markets. Sign up to get it delivered free to your inbox.
Happy Friday, Bull Sheeters. It’s a risk-off day as stocks and futures slide across Asia, Europe and the U.S.
The IPO calendar is much lighter today after yesterday’s blockbuster Airbnb listing, a debut that values the home-rental platform at a staggering $100 billion.
Never mind that almost none of us can actually, you know, travel.
Let’s check in on what’s moving the markets.
Markets update
Asia
The major Asia indexes are mixed in afternoon trading with the Hang Seng leading the way, up 0.3% .
are mixed in afternoon trading with the leading the way, up . The Trump Administration’s order last month to limit Chinese listings is having a knock-on effect for index managers and ETF providers around the world, the Financial Times reports. In short, they may need to follow suit to stay in the good graces of the American markets authorities.
is having a knock-on effect for and around the world, the Financial Times reports. In short, they may need to follow suit to stay in the good graces of the American markets authorities. President-elect Joe Biden named a notorious China hawk, Katherine Tai, as his pick for the U.S.’s top trade representative.
Europe
The European bourses are in the red this morning with the Stoxx Europe 600 down 0.9% two hours into the trading session.
are in the red this morning with the down two hours into the trading session. Boris Johnson is warning businesses and the British public that a no-deal Brexit is now “a strong possibility.” The FTSE and pound sterling slumped further as investors worry about the economic uncertainty to come.
is warning businesses and the British public that a no-deal Brexit is now “a strong possibility.” The and slumped further as investors worry about the economic uncertainty to come. Climate hawks will be pleased with the news coming out of Brussels this morning. The EU trading bloc has set forth the 2030 goal of cutting emissions by at least 55% (from 1990 levels). Oh, and the traditional bickering forces of Europe have also managed to do something Washington cannot: reach an agreement on a €1.8 trillion ($2.2 trillion) COVID stimulus package.
U.S.
U.S. futures have been sliding all morning. That’s after tech stocks eked out a modest gain yesterday. The S&P 500 , meanwhile, has slumped the past two days as Washington is unable to make any progress on a second round of stimulus , and it’s on a week-by-week spending allowance to fund the federal government.
have been sliding all morning. That’s after tech stocks eked out a modest gain yesterday. The , meanwhile, has slumped the past two days as Washington is unable to make any progress on a , and it’s on a week-by-week spending allowance to fund the federal government. Like the morning after a blowout house party, all is quiet for Airbnb shares as I type; they’re totally flat in pre-market trading. The pandemic-battered home-rental platform now carries a market cap of more than $100 billion after yesterday’s monster debut.
shares as I type; they’re totally flat in pre-market trading. The pandemic-battered home-rental platform now carries a market cap of more than after yesterday’s monster debut. From the giddy to glum, we go… Investors don’t much care for labor market data, but your correspondent does. Yesterday, 947,000 workers filed for unemployment claims (on an adjusted basis, it was 853K), as layoffs continue to escalate. Bull Sheeters, I know, have a big heart. I know you won’t forget about those around us who are struggling during this Christmas period.
Elsewhere
Gold is flat, trading below $1,840/ounce .
is flat, trading below . The dollar is higher.
is higher. Crude is down, but Brent futures are trading above $50/barrel , a 9-month high.
is down, but futures are trading above , a 9-month high. Bitcoin continues to swing wildly. It’s down 3%, trading below $18,000.
***
By the numbers
120%
As we wrap up IPO week, let’s check in on the big new listings. DoorDash soared 85.8% in its debut session on Wednesday, raising $3.4 billion. Yesterday, it was Airbnb’s turn, closing a staggering 115% above its list price. C3.ai had an had an even more astounding debut, with shares jumping more than 150% at one point on its first day. In a year of epic bull rallies, it’s probably fitting that we’re closing out 2020 with a bit of IPO mania for tech stocks. What could go wrong?
-0.9%
We get November retail sales figures on Dec. 16, one of the final big data points for 2020 from which we can assess the health of the U.S. economy. Remember: consumer spending makes up about 70% of U.S. economic output. Goldman Sachs, for one, believes the numbers will be pretty weak, thanks to “a confluence of negative factors: waning fiscal support, pandemic-driven declines in mall traffic, and a high hurdle for sequential growth in e-commerce following outsized gains earlier in the year.” They forecast a -0.9% month-on-month decline. That doesn’t sound like much, but for a Christmas period, that’s downright awful. Congress’s inability to reach a deal on a new stimulus deal is a big culprit, Goldman says.
Postscript
I’ve been remiss in not sharing with you our winner for the Dow 30K contest.
A little refresher: back in mid-January, in the very first Bull Sheet newsletter, I asked readers to give me their best guesstimate for when the Dow Jones Industrial Average would top 30,000. (It was trading around 29,500 at the time.)
The emails then came streaming in, and, one reader after another told me the blue chip index would top 30K by the end of January, no problem. A few others said, February, book it! Another trickle said definitely by the end of Q1—let’s go with March.
These were truly bullish calls as, by then, COVID was a known risk for the markets.
One reader, J.U., hailing from Munich, stood out. He told me Sept. 15 would be the date. He was a bit ahead of the game; the actual landmark closing happened on Nov. 24. But he was far and away the closest.
Well done, J.U.!
***
Have a nice day, everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.
Today's reads
"Dramatically" overvalued. JP Morgan equities analyst Ryan Brinkman is no fan of Tesla. In a recent investor note, he upped his price target on the EV pioneer to no more than $90, saying it's just way too pricey. He's particularly concerned about the carmaker's bottom line. On cue, Tesla shares rose nearly 4% yesterday, closing at $627.
Power of the press. Chapeau! to New York Times columnist Nicholas Kristof. Thanks to Kristof's intrepid reported on the presence of all the seedy and even illegal content on Pornhub, the world's biggest credit card companies sprung to action. Mastercard and Visa yesterday agreed to block their customers from using credit cards on the platform.
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Market candy
The billionaires club
Brian Chesky had one of the best CEO interviews of the year yesterday. He was on air with Bloomberg's Emily Chang who informed him that the Airbnb stock had just opened at $139, leaving Chesky at a loss for words. He recovered a few moments later. And, by day's end, he was valued at a cool $11.2 billion.


fortune--2020-12-11--With key endorsement, Pfizer vaccine speeds toward FDA emergency approval

The first COVID-19 vaccine expected to be deployed in the U.S. won the backing of a panel of government advisers, a step that will likely help clear the way for emergency authorization by the Food and Drug Administration.
The committee of independent vaccine experts voted 17 to 4, with one abstention, that the benefits of the vaccine from Pfizer Inc. and BioNTech SE outweigh the risks for use in people ages 16 and older. The FDA doesn’t have to follow the recommendation, though often it does agree with its advisers.
An authorization could come from the FDA within days. That would open the gates for shots to be distributed across the U.S., in a massive undertaking that will put health-care workers and long-term care facility residents at the front of the line, and mark a first step toward ending a pandemic that has killed some 290,000 people in the U.S.
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Part of the panel’s discussion focused on whether there was enough data to support the vaccine’s use in 16 and 17 year olds, leaving some pediatricians on the advisory committee uncomfortable with voting in its favor. However, other members said data from older trial participants could be extrapolated to younger people.
Pfizer shares rose 2.4% in trading after the market close in New York. Germany-based BioNTech’s American depositary receipts gained 3%.
“We are pleased with the strong majority vote, and if the FDA issues an authorization, stand at the ready to bring this vaccine to people in the U.S. in an effort to help combat this devastating pandemic,” Pfizer Chief Executive Officer Albert Bourla said in a statement.
Clinical trial data submitted by the companies and confirmed by the FDA’s staff showed the vaccine was 95% effective and worked well regardless of age, gender, race, ethnicity or underlying conditions that cause people to be at high risk of severe COVID-19 symptoms.
There were eight virus cases within the group who received the shot and 162 in those who got a placebo, according to FDA staff. Pfizer enrolled almost 44,000 people in the trial.
Side effects of the shot were mild and developed more frequently in those age 55 and younger, with no signs of serious safety concerns based on two months of trial data, FDA staff found. After the second injection, fatigue and headache were among the most common reactions. The vaccine employs a technology called messenger RNA that’s never before been used in human vaccines.
States will make the final decisions about who gets inoculated first, though advisers to the Centers for Disease Control and Prevention have recommended health-care workers and long-term care facility residents be prioritized.
The U.K. approved Pfizer’s shot earlier this month, but said people with a significant history of allergies should not take it after two people suffered reactions. The FDA asked Pfizer to assess the reactions, including a severe form called anaphylaxis, as the shot is used in the U.S., Susan Wollersheim, a medical officer at the agency, said in a presentation to the panel. The agency is continuing to collect information and will monitor for reactions closely “as an important potential risk,” Wollersheim said.
Persistent Issue
Panel member Paul Offit, director of the Vaccine Education Center at Children’s Hospital of Philadelphia, suggested Pfizer study use of the vaccine in people with serious allergies as it moves toward seeking full FDA approval if it does get emergency authorization.
“This issue is not going to die until we have better data,” he said.
The government is prepared with a safety monitoring system that will go into place the first day of the immunization campaign, said Nancy Messonnier, director of the Centers for Disease Control and Prevention’s National Center for Immunization and Respiratory Diseases. The CDC is considering working with the National Academies of Sciences, Engineering and Medicine to evaluate safety issues that may arise when the vaccine is in use in the general population, she said.
Pfizer didn’t see any severe allergic reactions in its clinical trial, though the company is aware of the U.K. reports, said William Gruber, senior vice president of vaccine clinical research and development. Pfizer provided the FDA two months of post-vaccination safety data on clinical trial participants and will provide six months of such data when it applies for full approval of the shot.
Gruber said the company will apply for full FDA approval in April. Until Pfizer receives full approval, the agency still considers the vaccine experimental and does not allow the company to market the product.
The FDA has asked vaccine makers to continue studies comparing those who get the vaccine to those who get a placebo even after an emergency authorization is given so companies can seek full FDA approval. The request may be difficult to fulfill as trial participants become eligible for vaccines and want the protection instead of remaining in the trial.
Marion Gruber (no relation to Pfizer’s William Gruber), head of the FDA’s Office of Vaccines Research and Review, said the agency is open to other approaches to gathering more data on the vaccine to support full FDA approval.
There isn’t enough data on children younger than 16 to determine whether it will work in pediatric populations, FDA staff said. Data is also insufficient to make any determinations about pregnant, lactating or immuno-compromised people.
Pfizer’s Gruber said the company plans to submit data on 12- to 15-year-olds when it applies for full approval. Doran Fink, deputy director of the FDA’s clinical division of vaccines and related products applications, told agency advisers the agency expects development and toxicity data on use of the vaccine in pregnant animals later this month.
Those who do get vaccinated will still need to wear masks and practice social distancing to prevent spreading the disease. FDA staff said the shot prevents symptoms of COVID-19 but may not be as good at preventing infections that don’t show symptoms, meaning significant transmission would still be possible without basic health measures.
“We really as of right now do not have any evidence that it will have an impact on social life, on the epidemic,” said Patrick Moore, a panel member and head of the Cancer Virology Program at the University of Pittsburgh Cancer Institute.
The CDC will conduct observational studies as the vaccine is rolled out to the public to attempt to determine its effect on transmission, said Arnold Monto, chair of the panel, and an epidemiology professor at the University of Michigan School of Public Health.
‘Dramatic Success’
If the vaccine is cleared by the FDA, Gustave Perna, the general leading the vaccine rollout, said people would begin to get shots within 96 hours, though Health and Human Services Secretary Alex Azar has said it could occur within 24 hours. Between Pfizer and Moderna’s vaccines, a maximum of 20 million people in the U.S. are expected to have received one shot in the two-dose regimen by the end of the year.
The editors of the New England Journal of Medicine, which published the pivotal study of the vaccine Thursday, called the results a triumph that are impressive enough to hold up to any conceivable review.
“What appears to be a dramatic success for vaccination holds the promise of saving uncounted lives and giving us a pathway out of what has been a global disaster,” wrote Eric Rubin, editor-in-chief of the journal, and Dan Longo, the deputy editor.


fortune--2020-12-11--Why Australia just canceled an order for 51 million doses of a COVID-19 vaccine

Australia canceled an order for 51 million doses of a COVID-19 vaccine being developed by CSL Ltd. and the University of Queensland after trials ran into difficulties.
The government said Friday it’s replacing most of the CSL doses with more purchases of other planned vaccines. Australia has ordered an extra 20 million shots being developed by the University of Oxford and AstraZeneca Plc, and 11 million more Novavax Inc. doses, the government said.
The CSL failure shows that despite the groundbreaking progress by Pfizer Inc. and Moderna Inc. in producing an inoculation, the path to a successful vaccine remains difficult. Australia’s government had already sought to spread that risk by ordering shots from Pfizer and BioNTech SE, Novavax and AstraZeneca.
Even without CSL’s doses, more than 140 million units of vaccines will be available in Australia, Health Minister Greg Hunt said. The country is home to about 26 million people. “This is one of the highest ratios of vaccine purchases and availability to population in the world,” Hunt said. “So we’re in a strong position.”
CSL said it would not progress to phase 2/3 clinical trials. It said a small component of the vaccine comes from the human immunodeficiency virus, or HIV, and while that posed no risk of infection, some trial participants had false positive tests for HIV.
The potential for this to happen was anticipated before the trial, and participants had been pre-warned, CSL said.
“It is generally agreed that significant changes would need to be made to well-established HIV testing procedures in the health-care setting to accommodate rollout of this vaccine,” the company said.
CSL shares fell 3.2% to A$291.78 at 12:37 p.m. in Sydney. The stock is up almost 6% this year.
Vaccines are proving key to reopening the world economy nine months into the worst pandemic in a generation. The U.K. and U.S. have approved the Pfizer shot, and other countries are scrambling to secure deals and authorize vaccines for public use.
For Australia, yet to sign off on any shot, a widely distributed inoculation would allow the country to ease some of the most restrictive border curbs in the world.
Professor Paul Young from the University of Queensland said that although it was possible to re-engineer the vaccine, the team didn’t have the luxury of time. “Doing so would set back development by another 12 or so months, and while this is a tough decision to take, the urgent need for a vaccine has to be everyone’s priority.”


fortune--2020-12-11--JP Morgan warns investors that Tesla stock is ‘dramatically’ overvalued in new report

To add or not to add, that is the question.
As investors anticipate Tesla’s December 21 addition to the S&P 500, investors who benchmark their performance against the index have a tough decision to make. As JP Morgan analysts wrote this week: “We have recently fielded a number of calls from long-only investors who are faced with or shortly will be faced with the decision of whether or not to buy Tesla shares.”
The bank’s answer?
“We recommend investors not weight Tesla shares in their portfolio in equal proportion to the S&P because Tesla shares are in our view and by virtually every conventional metric not only overvalued, but dramatically so.”
Tesla shares closed at $627 on Thursday. As the analysts led by Ryan Brinkman wrote, investors should “consider that in the two years since December 8, 2018 during which TSLA shares have risen +808% and during which analysts have on average increased their 12 month price targets by +451%, analysts have simultaneously lowered their estimates for Tesla EPS for 2020, 2021, 2022, 2023, and 2024.”
The contrarian JP Morgan take comes as other Wall Street banks have grown more bullish Tesla’s outlook. Last week Goldman Sachs upgraded the stock from neutral to buy, ratcheting up their 12-month price target from $455 to $780. As Fortune wrote, “Goldman’s analysts cited a few reasons for their change of heart. They believe EV adoption is accelerating due to battery prices falling faster than they had expected, combined with an increase in regulatory proposals to limit or ban the sale of internal combustion engines over the next few decades. As a result, the analysts ‘now expect EVs to comprise 18% of sales globally in 2030 and 29% in 2035 (with 50% adoption in 2035 in both the US and in Western Europe).'”
Wedbush analyst Dan Ives also upgraded the stock, sticking a “bull case” target of a $800-$1,000 on TSLA shares (his 12-month target, meanwhile, is below Goldman’s at $560).
Indeed, betting against Tesla has been a trying proposition in 2020. As Fortune‘s Aaron Pressman wrote recently, “Short sellers, including Enron-conquerer Jim Chanos, have lost so much money betting that Tesla’s stock price would collapse (it’s up almost eightfold this year) that Institutional Investor dubbed it the ‘widow-maker trade of 2020.’ By this month, the cumulative loss of shorters on Tesla exceeded $35 billion.”
And while a Biden Administration is anticipated to be a positive for Tesla and its ilk, the primary concern about the stock remains the fact that the company is overly reliant on a declining business of selling emissions credits, and that it simply cannot sell enough cars to justify its current market cap. As JP Morgan concluded: “We do not believe Tesla will grow to approximate 2x the combined size of Toyota & VW at the same margin (or 1⁄2 the combined size at 4x the margin, or any of the other combinations of volume and margin that could be reverse engineered” to justify the current valuation.
Which is why the bank has an “underweight” rating on the stock, with a price target of—yes you are reading this right—$90.


fortune--2020-12-11--‘Poorly designed and irresponsibly run’: PPP scrutiny mounts after SBA data dump

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In the wake of the court-ordered release of Paycheck Protection Program (PPP) data last week, scrutiny of the Trump administration’s management of the program continues to mount—with one government watchdog describing PPP as “poorly designed and irresponsibly run,” and criticizing it for prioritizing large corporations and well-connected interests at the expense of struggling small business owners.
The federal Small Business Administration (SBA)—which administers the $670 billion program alongside the Treasury Department—released detailed information last week on PPP loans valued at up to $150,000 after a successful Freedom of Information Act lawsuit filed by several news organizations.
As the government’s flagship pandemic-era business relief program, PPP distributed more than $520 billion in forgivable loans to more than 5 million American businesses before it expired in August, intending to help them maintain workers on their payroll during a time of severe economic distress.
But the taxpayer-funded program has faced criticism from its onset for a lack of transparency around how the Trump administration chose to allocate loans. Since Congress’s Government Accountability Office warned that PPP was at “significant risk” of fraud earlier this year, evidence has mounted of widespread misconduct involving the program, such as unqualified borrowers getting around the government’s lax vetting standards to receive loans.
There has also been ample scrutiny around loans that went to well-capitalized public companies while many mom-and-pop small businesses missed out on the relief they needed, as well as funds received by wealthy and well-connected entities.
The SBA’s release of the PPP loan data last week has only amplified the scrutiny, with more details coming to light about the program’s application and the beneficiaries of more than half a trillion dollars in taxpayer funds. The data dump showed that more than half of all PPP funds went to only 5% of recipients, while more than a quarter of all funds went to only 1% of borrowers.
With millions of small American businesses having shuttered due to the pandemic—and millions more in jeopardy as COVID-19 cases continue to rise across the country—PPP’s shortcomings have drawn the ire of critics at a time when Congress is considering rebooting the program as part of a new round of stimulus measure.
“Fundamentally, this program was poorly designed and irresponsibly run by the Trump administration,” Caroline Ciccone, executive director of nonpartisan government watchdog group Accountable.US said on a press call Thursday. In addition to having “missed the mark” by neglecting small business owners in favor of larger, wealthier, and better-connected corporate interests—including “rich celebrities” like Tom Brady and Jake Paul—Ciccone slammed the program’s “staggering” inefficiency, citing a recent MIT study that showed the program cost nearly $225,000 for each job that it saved.
Critics are also taking aim at PPP’s failure to equitably address the challenges faced by minority business owners, who have been disproportionately impacted by the pandemic and far more likely to have closed down. “The simple fact is that the relief so desperately needed by [Black and Latino communities] has not been getting there,” Ashley Harrington, federal advocacy director and a senior counsel at the Center for Responsible Lending, said on the press call.
Harrington noted how 95% of Black-owned and Latino-owned businesses are “non-employer firms,” meaning they have no employees beyond the business owners themselves. That dynamic hurt minority-owned businesses as far as PPP was concerned, since non-employer firms “were not even able to apply [for loans] during the first week of the program”—leaving them at a severe disadvantage as funds quickly dried up.
“The delay may have caused irreparable harm to countless small businesses that had to wait on the sideliness while large and well-connected firms were served—a clear failure to meet the objective of the PPP,” she said.
Small businesses may also have been hurt by the government’s decision to distribute PPP funds through large banks and other private lenders. Harrington said that arrangement incentivized those lenders to “make larger loans for larger firms” that would earn them larger origination fees. It also benefited businesses with existing relationships with those financial institutions, particularly since the Treasury Department “encouraged lenders to [work] with existing customers,” according to Ciccone.
While the government’s decision to funnel PPP funds through private lenders was meant to expedite the process of getting those loans out more quickly, Harrington said that emphasis on speed came “at the expense of getting things done equitably” for smaller, minority-owned businesses.
As lawmakers weigh additional coronavirus relief measures that could include a PPP revival, watchdogs say it’s imperative that the government institute a more transparent and accountable process in determining how that aid is deployed. Both Ciccone and Harrington said they take issue not with a historically ambitious small business relief program like PPP, but rather how it was managed and overseen.
“We all agree that small businesses need relief,” Ciccone said, adding that “it is not too late for Congress to work on major overhauls to small business lending” in advance of revitalizing PPP. “We can and we should take a really hard look at what happened over the course of the last eight months, and we should learn some lessons and fix those problems moving forward.”