fortune--2020-09-09--U.S. unemployment decreased in August. For young Black women it rose to 27%

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! The Louisville Metro Police Department will be run by a Black woman for the first time, three women are likely running for mayor of NYC, and unemployment rates are improving—for everyone except young Black women. Have a reflective Wednesday.
– Jobs report. Unemployment is improving for nearly every group of Americans. The share of jobless Americans was down from 10.5% in July to 8.4% in August for adult women; from 13.5% to 12% for adult Black women; and from 8.3% to 6.9% for white men.
One of the only groups still seeing unemployment increase? Young Black women.
Black women between the ages of 20 and 24 faced an unemployment rate of 26.8% in August, up from 25.4% in July. (And recall: unemployment went down overall for Black women in that time frame, as it did for the general population.) The National Women’s Law Center crunched the numbers following the Bureau of Labor Statistics’ August jobs report last week.
Jasmine Tucker, director of research for the National Women’s Law Center, calls the trend “baffling.” “It’s just bananas,” she says. “Other than racism and sexism, I really don’t get it.”
Of course, those two factors are significant ones. Tucker speculates that young Black women are faring worse than their elders as the challenges of early-career work collide with institutional and systemic issues. When jobs are scarce, barriers to entry—like being able to take an unpaid internship or not—become even more significant. The type of jobs Black women in this age bracket tend to work—and how those industries have been affected by the pandemic—may also be a factor. “Black women are facing the double whammy of racism and sexism and the triple whammy of this pandemic,” says Tucker. “They can’t break in and they’re already behind their white peers in terms of experience.”
This trajectory for young Black women echoes unemployment numbers from May, just a few months into the pandemic. At that time, unemployment for Black women as a whole ticked up while total unemployment declined.
That Black women overall are now part of the economy’s upward trajectory is an encouraging sign—as long as young Black women aren’t left behind.
“This is going to affect long-term career prospects, long-term finances, whether they can have kids,” says Tucker of the consequences of this economic downturn for young workers. “This is going to have reverberations.”
Emma Hinchliffe
emma.hinchliffe@fortune.com
@_emmahinchliffe
ALSO IN THE HEADLINES
- DOJ and E. Jean. The Justice Department intervened Tuesday night in the lawsuit writer E. Jean Carroll brought against President Trump, in which she alleged that he defamed her after she said he raped her in the 1990s (he has denied that allegation.). In a highly unusual move, government lawyers are now seeking to represent the President. New York Times
- Chief of police. Yvette Gentry retired from the Louisville Metro Police Department six years ago, but as the department reels from its officers' killing of Breonna Taylor, Gentry is returning as interim chief of police. She will be the first Black woman to lead the department.In an emotional speech, Gentry said that the "city is at a point of reckoning that only truth can bring us out of." Courier-Journal
- Opposition action. Maria Kolesnikova, one of three leading opposition figures in Belarus fighting against President Alexander Lukashenko, was detained by the Belarus government at the country's border with Ukraine. Colleagues of Kolesnikova's say she tore up her passport to prevent the government from expelling her to the neighboring country. CNN
- Running mates. President Obama joined Sen. Kamala Harris for a campaign video in which the pair discuss their shared running mate, Joe Biden. The video is the first time during this race that the former President has appeared alongside the current vice presidential nominee. NBC News
MOVERS AND SHAKERS: Netflix promoted VP of local language originals Bela Bajaria to VP, global TV; the shakeup included the departure of longtime Netflix exec and VP, original content Cindy Holland. Goldman Sachs managing director Katherine Jollon Colsher succeeds Janet Cowell as CEO of nonprofit Girls Who Invest. Unity added Spelman College president Mary Schmidt Campbell to its board of directors. GetUpside hired Kristen Thiede as chief people officer. Semihandmade hired Galerie Media Group president Beth Fuchs Brenner as its president.
IN CASE YOU MISSED IT
- Next in NYC. Three women from New York City Mayor Bill de Blasio's administration are expected to run to succeed him in the position. Kathryn Garcia resigned as the city's sanitation commissioner yesterday and is set to join a race that includes former counsel to the mayor Maya Wiley and former head of the city's Department of Veterans’ Services Loree K. Sutton. New York Times
- Slam dunk. Tina Charles has an Olympic gold medal and 11 national championships—but the star athlete hasn't yet clinched a WNBA championship. A longtime player for the Connecticut Sun, she moved to the New York Liberty with the hope of earning the award there; the team's financial woes interfered with that plan. Now Charles is part of the reigning champion Washington Mystics, where she plans to work for the milestone even though she's been unable to play this season with a medical exemption because of a high risk for coronavirus complications. New York Times
- She Se Puede. Last week, actors America Ferrera and Eva Longoria, activists Carmen Perez and Mónica Ramírez, and other influential Latinas founded She Se Puede, a new media platform for Latinas. America Ferrera and Stephanie Valencia of Equis Research spoke to Fortune about how a lifestyle site can help with their ultimate goal: turning out the Latina vote in November and beyond. Fortune
ON MY RADAR
How Mina Kimes turned her passion for football into a profession LA Times
Investigations at Essence find no evidence of abusive work culture New York Times
How Maine turned on Susan Collins Slate
PARTING WORDS
"If we looked at marriage as a real team, you want your teammate to be a winner—you want LeBron."
-Michelle Obama, discussing marriage on The Michelle Obama Podcast


fortune--2020-09-09--Mastercard launches digital currency kit for central banks

Pfizer ’ s CEO is still hopeful for COVID vaccine progress by October—and says a sense of purpose is fueling @

In the 10 years since Bitcoin came on the financial scene, central banks have quietly been dabbling in digital currencies of their own. Now, Mastercard has unveiled a tool designed to simulate how those currencies would work in the real world.
The payments giant announced the project on Wednesday morning, calling it the Central Bank Digital Currencies Testing Platform—a bland title to be sure, but one likely to find favor with cautious central bankers.
For central banks, including the Federal Reserve, a purely digital currency—one not linked to coins or paper bills—would represent a step beyond the existing system of electronic money transfer. A central bank could, for instance, distribute money directly to consumers without relying on commercial banks as intermediary.
State-backed digital money also offers the potential for greater efficiency in payments and money transfers, letting merchants settle deals instantly, and avoid the current patchwork of banks and clearing houses, which can take days.
Mastercard’s platform—or “sandbox” in tech parlance—will let central banks issue digital versions of their currency in a controlled environment, and test how those currencies plug into existing bank and payment networks, and to see if they are practical for consumers to buy goods and services.
In an interview with Fortune, Mastercard EVP Raj Dhamodharan said the company is already working with a number of central banks, and that it is inviting various third parties, from banks to tech companies, to join its testing platform.
The Mastercard initiative comes at a time of growing interest in digital currency among central banks. A 2018 survey by the International Monetary Fund, cited by the Wall Street Journal, found government bankers are experimenting with the technology as a way to lower costs and to blunt the rise of private cryptocurrencies like Bitcoin. A more recent survey by the Bank for International Settlements found that 80% of the world’s central banks are engaged in some form of digital currency research.
The advent of state-backed digital currencies is also fraught with geopolitical significance. The People’s Bank of China is on the cusp of launching a digital yuan, which many believe will help China weaken the influence of the greenback in global trade. Meanwhile, the outgoing governor of the Bank of England, Mark Carney, speculated last year that a group of companies could back a new digital currency to challenge the dollar’s role as the preeminent reserve currency.
Not to be outdone, a consortium of companies led by Facebook is working on a new form of digital money called Libra, which is pegged to traditional currencies, and could offer the social network’s billions of users a new way to shop and pay.
Projects like Libra and, especially, the digital yuan also pose significant privacy risks, as the networks on which the currencies travel can also track who is spending money and where.
According to Dhamodharan, Mastercard is sensitive to privacy issues and is building its testing kit to reflect that. He declined to provide any details about the software Mastercard is using to deploy its test network, other than to say it involves blockchain—the same technology on which Bitcoin is built.
More must-read finance coverage from Fortune:


fortune--2020-09-10--Climate change threatens “unprecedented disruption” to the U.S. financial system

How the Best Workplaces in Manufacturing have risen to the COVID-19 challenge

A number of different reports were published this week, all once again outlining the devastating consequences of climate change (more on those below.) But the one that offers perhaps the brightest glimmer of hope is a landmark report from a federal regulator on the systemic risk climate change poses to the U.S. financial markets.
Bear with me.
The report, prepared by an advisory panel to the U.S. Commodity Futures Trading Commission (CFTC), notes that the physical impacts of climate change are already having an adverse effect on material assets in the U.S.—see the wildfires torching the West coast and the hurricanes flooding the East.
The 196-page report also warns that action taken to mitigate these effects—such as pursuing a carbon neutral economy—”may also” impact major segments of the economy.
“Both physical and transition risks could give rise to systemic and sub-systemic financial shocks, potentially causing unprecedented disruption in the proper functioning of financial markets and institutions,” it warns.
So where’s the good news? Well, the good news is that the report was commissioned and written at all. Its publication marks the most substantial review a U.S. federal agency has conducted on the risk of climate change poses to the financial system. And money is a powerful motivator.
Recognizing the economic imperative for adopting sustainable practices is already de rigeur in business. It’s been over a year since the Business Roundtable made its historic shift to endorse “stakeholder capitalism,” in which time myriad companies have published manifestos for achieving “net zero.”
Whether those plans are carried through relies a lot on whether the financial incentives are there to support them. ESG investing is beginning to boom, but the CFTC report hints a more structured ecosystem for green investment is on the horizon in the U.S.
There are some caveats. Although the report is endorsed by all 35 of the CFTC’s members, which includes the likes of Goldman Sachs, Citigroup and JP Morgan, some have said it requires more research. Even the CFTC is reluctant to embrace the report it commissioned—publishing it with a disclaimer that the report does “not necessarily reflect” the views of the CFTC nor the federal government.
Such institutional reluctance to accept the realities of climate change is one reason why the U.S. has lagged so far behind the EU in developing a carbon pricing scheme—something the report says is the primary prerequisite for saving the U.S. financial system from disaster.
Eamon Barrett
eamon.barrett@fortune.com
CARBON COPY
The climate crisis continues
According to a report from United in Science, a subgroup of the UN, the COVID-19 pandemic has not slowed the pace of climate change. "While emissions fell during the peak of the pandemic confinement measures, they have already mostly recovered to within 5 per cent of the same period in 2019 and are likely to increase further," UN Secretary General António Guterres wrote in a foreword. Guterres calls for governments to treat the pandemic as a chance for change, rather than returning to business as usual.
Population collapse
Wildlife populations have collapsed an average 68% over the past 50 years, according to WWF, which released its biennial Living Planet report this week. WWF has monitored 200,000 populations of animal since 1970, documenting their accelerating decline. According to the report—based on the monitoring of 20,000 animal populations—70% of the collapse has been caused by human activity.
Dammed
Water levels along the lower Mekong have dipped to a record low for the second year running. The Mekong springs in Tibet and courses through six countries, including China, before entering the sea in south Vietnam and is an economic lifeline for some 220 million people. Below average rainfall is part of the reason why the river has run so low, but a bigger issue is China damming the upper Mekong to create hydropower plants—an accusation Beijing has frequently disputed.
IN CASE YOU MISSED IT
Why meat could be top of mind for voters in the upcoming election by Paul Shapiro
Tesla’s stock has plunged 34% in one week by Danielle Abril
Europe relies on foreign raw materials to power its green and digital future. Now it wants to mine them at home by David Meyer
Bill Gates–backed EV battery startup to go public using Wall Street’s latest buzzy trick by Aaron Pressman
Trump has long wanted to kill a Russia-Germany natural gas pipeline. Navalny’s poisoning could do it for him by David Meyer
Closing number
1.2 billion
According to the Institute for Economics and Peace, a non-profit Australian think tank, up to 1.2 billion people across 31 countries are at risk of being displaced by climate change over the next 30 years. Worldwide, the U.S. has suffered the highest number of natural disasters over the past 30 years—704—but Pakistan has the most people at risk of becoming climate refugees, with 220 million people in danger of being displaced.


fortune--2020-09-10--How Trump’s TikTok ban pushed China’s most independent tech billionaire closer to Beijing

This is the web version of Eastworld, Fortune’s newsletter focused on business and technology in Asia. Subscribe here to get future editions in your inbox.
The clock is ticking for TikTok, the wildly popular short-video app, and the founder of its parent company, 38-year-old Chinese billionaire Zhang Yiming.
Zhang, a programming prodigy, has long been regarded as China’s most independent, if elusive, tech tycoon. Unlike Alibaba Group’s flamboyant founder Jack Ma, Zhang shuns the limelight, rarely travels abroad, and is not a member of China’s ruling Communist Party.
Last year, when TikTok ran into a political scrape in India, Zhang turned down an invitation to meet with Chinese government leaders offering help, according to Reuters. Instead, he sent mid-level emissaries to assure the solicitous officials his company would sort things on its own.
But now Donald Trump is pushing Zhang into Beijing’s protective embrace.
TikTok’s Trump troubles began Aug. 1, when the president abruptly announced that he intended to ban the app from conducting business in the United States on the grounds that it hoovers up the personal data of millions of Americans. White House officials warned that the app posed a national security threat because, if ordered to do so, TikTok’s parent company, Beijing-based ByteDance, would surrender that data to China’s communist rulers.
TikTok dismissed that suggestion as absurd. Never mind that its primary content is teenage dance videos. Spokespeople stressed that the company was an independent U.S. subsidiary with an American CEO and chief information security officer and servers in Virginia. “We have no higher priority than promoting a safe and secure app experience for our users,” a spokesperson said. “We have never provided user data to the Chinese government, nor would we do so if asked.”
Trump budged, but barely. On Aug. 3, he announced that he would allow TikTok to continue operating in the U.S. if ByteDance could sell the company to American investors by Sept. 15—and, he added, he expected the U.S. Treasury to get a cut of the sale.
TikTok responded by beginning negotiations with potential buyers, the most likely of included Oracle and a rival alliance of Microsoft and Walmart. At the same time, the company filed a federal lawsuit against the ban.
Later in August, Trump signed two executive orders that ultimately extended the deadline for a sale to Nov. 12, just after the U.S. presidential election. Now, Bytedance is reportedly in talks with the U.S. government to avoid a full sale of TikTok’s U.S. operations.
My colleague Adam Lashinsky has opined eloquently in Data Sheet about the shameful and inexplicable eagerness of American companies, who have long complained about China’s brazen theft of American intellectual property, to cash in on a thinly veiled political shakedown. At the very least, a forced sale would compensate Zhang for the business he built. Prices for a potential deal have ranged from $20 billion to $50 billion. But getting a deal of that magnitude done, even by the extended deadline, will be a monumental endeavor.
In China, Zhang has been attacked online as a traitor for even contemplating the possibility of “selling out” to foreigners. Some have compared him unfavorably to Ren Zhengfei, CEO of China’s largest telecommunications manufacturer Huawei, who’s struck a defiant tone in the face of U.S. pressure.
And, if Zhang’s situation weren’t complicated enough, on Aug. 28, the Chinese government stepped into the fray by announcing it had updated and expanded export controls to artificial intelligence technology, a move many experts said could force the sale of TikTok in a form that would make the company far less attractive to buyers—or possibly prevent the sale entirely.
Ostensibly, Beijing’s announcement sends a message to Washington that it will stand up for private Chinese companies. “We want to show all other countries that this is what the Chinese government will do if you bully any of our companies,” a Chinese government source told Reuters.
But it is increasingly evident to Zhang and other Chinese entrepreneurs that there is no one to save them from bullying by their own government. Two days after China’s announcement on export controls, ByteDance issued a contrite pledge to “strictly follow” the new rules.
Paul Triolo, head of Eurasia Group geo-technology practice, shares his insights on U.S.-China tech tensions in this week’s Eastworld Spotlight video conversation. Paul, who is co-author of a fascinating recent report on the “Geopolitics of Semiconductors,” argues that the Trump administration’s latest round of restrictions on the export U.S. chip manufacturing technology is accelerating the division of global technology supply chains into “red chains” and “blue chains”—and pose a potentially existential threat to Huawei.
One other note. In few hours, I’ll host an online conversation with three distinguished Chinese researchers about the global race to develop a vaccine for COVID-19. It’s free, and there is still time to sign up and join us here.
More Eastworld news below.
Clay Chandler
Clay Chandler
clay.chandler@fortune.com
This edition of Eastworld was curated and produced by Grady McGregor. Reach him at grady.mcgregor@fortune.com.
Eastworld news
Biden's Beijing fallout
U.S. Democratic presidential candidate Joe Biden helped open up China to the world. Now, he promises to reform global alliances in a bid to forcefully challenge China’s alleged human rights abuses. “Mr. Biden’s 20-year road from wary optimism to condemnation—while still straining for some cooperation—is emblematic of the arc of U.S.-China relations,” the New York Times writes.
A 'Made in India' vaccine
India is known as the ‘pharmacy of the world’ for its massive generic drug industry, and the country is set up to potentially manufacture billions of doses of a COVID-19 vaccine. But India is also hoping that COVID-19 will be a breakout for its own vaccine development efforts. This week, Fortune’s Naomi Xu Elegant dives into India’s drive to produce a made-in-India vaccine and whether the country’s research and development vaccine efforts will be able to catch up with its drug manufacturing capabilities. Fortune
China’s Clean Network
On Tuesday, Chinese Foreign Minister Wang Yi announced that China will launch a new initiative to set global data security standards. The policy appears to be a direct rebuke to the U.S.’s Clean Network initiative, which U.S. Secretary of State Mike Pompeo launched in August to encourage countries around the world to rid their software and hardware networks of Chinese technology. In a press conference, Wang stressed the importance in developing global data standards, as opposed to those focused on keeping out countries like China, and promoted ideas like cyber-sovereignty, which would give countries full control over their own data. Wall Street Journal
Motherly love
In The New Yorker’s cover story this week, writer Jiayang Fan tells a powerful narrative about what it is like to be the subject of cyber-attacks in Chinese state media while attempting to tend to her ailing mother in a New York nursing home amid a pandemic. Fan’s piece is heartfelt and devastating, and she weaves her own immigration story to the U.S. and her relationship with her mother with what it means to be high-profile Chinese-American journalist who is critical of the Chinese government. New Yorker
Fleeing China
The two remaining Australian journalists in China fled the country this week after Chinese state security agents raided their homes and demanded that they answer questions about Cheng Lei, an Australian national who worked for Chinese state media before Chinese authorities detained her in August. On Wednesday, China suggested the confrontations with the journalists may have been a tit-for-tat measure and accused Australia of raiding the homes of four Chinese journalists in Australia in June. The two Australian reporters wrote about their experiences fleeing China—here's Bill Birtles for the Australian Broadcasting Corporation and Mike Smith for the Australian Financial Review.
Fairytale gone wrong
The 2020 remake of Disney's Mulan, a Chinese legend adapted into a popular cartoon in the 1990s, was supposed to give Disney a chance to create a blockbuster that would be a major hit in both the U.S. and China. That still may be possible, but the movie’s rollout this week has hit some snags. First, activists in Hong Kong reignited a call for a boycott of the movie due to the star’s stated support of Hong Kong police during the city’s protest movement. Now, movie watchers are criticizing Disney for including state security forces in China's western Xinjiang province in the film's credits. The U.S. has sanctioned public security officials in Xinjiang for interning and suppressing its Uyghur population. CNN
Coronavirus by country
India
In recording roughly 90,000 new cases per day this week, India is now averaging more COVID-19 infections everyday than China has recorded altogether since the outbreak of the pandemic. This week's tallies bring India's caseload to nearly 4.4 million cases, second only to the U.S.’s 6.4 million. Even with such spread, the country doesn’t appear to have the appetite for further restrictions after months of country-wide lockdowns in March and April failed to contain the virus and led to a record 24% contraction of India’s economy. As the Financial Times notes this week, Indian television channels have diverted public attention away from the country’s woes with coronavirus (and escalating tensions with China) to focus on the mysterious death of a Bollywood star. Financial Times
Markets and movers
Nongfu – The Chinese water bottle giant’s Hong Kong IPO this week briefly made its founder Zhong Shanshan the richest man in China. After Nongfu’s successful debut, Zhong is now worth an estimated $50.1 billion. Fortune
Reliance Retail – The retail arm of the Indian conglomerate Reliance Industries raised $1.02 billion from U.S. private equity firm Silver Lake, which will take a 1.75% stake in the venture. Silver Lake also has a 2.1% stake in Jio Platforms, Reliance’s digital subsidiary. Deal Street Asia
Yum China – The Chinese food retailer, which operates KFC, Taco Bell, and Pizza hut in China, raised $2.2 billion in its Hong Kong debut on Thursday. Shares for the company, which has been listed in New York since 2016, fell by more than 4% on Thursday. CNBC
SMIC – The Chinese chipmaker’s stocks tumbled 22% in Hong Kong on Monday amid reports that the U.S. may add it to its entity list and cut it off from critical chipmaking equipment. Fortune
Final figure
70%
President Trump continues to implore U.S. firms to leave China, but U.S. companies seem intent on staying put. This week, the American Chamber of Commerce in Shanghai released a survey that said more than 70% of companies that manufacture in China do not have plans to shift production outside the country and just 3.7% of the companies said that they will shift some production from China to the U.S. Mark Gilbraith, a consultant with PWC in Shanghai, said in a statement that American businesses are hoping to stay out of the politics and want to see the U.S. and China "resolve their outstanding issues quickly." Fortune


fortune--2020-09-10--How the Best Workplaces in Manufacturing have risen to the COVID-19 challenge

Pelosi to Britain : ‘ No chance ’ of a U.S. trade deal if you jeopardize the Good Friday accord

Arthrex and Stryker routinely compete in the field of medical devices. But during the global outbreak of COVID-19, these two companies have been on the same side of the fight. Both specialty manufacturers have stood out for safeguarding employees during the pandemic, as well as for making generous donations of medical equipment to those on the front lines.
Given the way the two companies have cared for their people and the wider community, it’s no wonder that both Stryker and Arthrex earned spots on the 2020 list of the Best Workplaces in Manufacturing & Production. Fortune just published this list, based on employee survey research from Great Place to Work, the global authority on workplace culture.
We asked leaders from the two companies about their high-trust, inclusive workplace cultures and how they’ve responded to the coronavirus crisis. From Arthrex, which is based in Naples, Fla., we interviewed Kathy Sparrow, senior vice president of human resources. From Kalamazoo-based Stryker, we interviewed Katy Fink, vice president and chief human resources officer.
The interviews have been edited for length and clarity.
Great Place to Work: Can you share a story that captures your company culture?
Kathy Sparrow of Arthrex: It’s especially rewarding to hear the stories of how our programs, such as the Arthrex Manufacturing Apprentice Program and other professional learning offerings, have positively impacted employees and made dreams a reality. Jackie Callejas Morejon is a CNC Swiss machine operator at Arthrex Manufacturing Inc. East in Ave Maria, Fla. When she was growing up, Jackie had always wanted to attend medical school and become a doctor. Unfortunately, her family couldn’t afford to pay her tuition and expenses.
Jackie started working for Arthrex in 2012 in the packaging department. Immediately noticing her strong work ethic and drive for continuous education, Jackie’s supervisor provided her with a path of learning and development opportunities for CNC machining, and her career continues to blossom. She’s now a full-fledged machinist working full-time in the high-volume Swiss machining department.
Jackie takes the Arthrex mission to heart. She says that her dream of becoming a doctor and helping people wasn’t possible at the time, but now she feels like a doctor and is so proud to be part of helping people.
Katy Fink of Stryker: It’s not uncommon to hear stories showcasing our employees’ commitment to our mission and values, and this did not change during the pandemic. For instance, a team at our Medical division came together to develop a low-cost, readily available bed to ship to hospitals quickly as caregivers faced the unprecedented need for additional equipment as they worked on the front lines of the COVID-19 crisis.
In response to the need, our employees created the Emergency Relief Bed in seven days, and we supported their efforts every step of the way. We value the innovative and caring spirit of our employees and appreciate all they do to meet the needs of our customers.
We donated more than 22,500 Emergency Relief Bed Kits to Project C.U.R.E., a nonprofit organization that collects and distributes medical equipment and supplies to hospitals and clinics throughout the developing world. The kits included the bed frame, mattress, and IV pole. We also donated 6,000 replacement mattresses.
How has the COVID-19 pandemic affected your operations? How have you kept your employees physically safe?
Sparrow: As an essential health care service provider, Arthrex has maintained all business operations throughout the pandemic, so it was crucial to immediately institute several precautionary measures and protocols to ensure the safest working environment possible.
At the onset of the pandemic, we established a COVID task force comprising company leaders representing key areas of the business, including human resources, operations, environmental health and safety, legal, corporate communications, and the Arthrex Medical Center. One of the first courses of action was to make a significant investment in Synexis Microbial Reduction Systems, a high-tech workplace disinfectant technology, which is proven to kill airborne and surface bacteria and viruses in buildings, using a low level of dry gaseous hydrogen peroxide. These state-of-the-art systems were installed in Arthrex facilities around the world.
Additional precautionary measures that have been implemented include mandatory masks inside all Arthrex facilities, wellness checkpoints at all building entrances with daily temperature screenings, free COVID-19 testing and medical guidance from the Arthrex Medical Center, a contact-tracing program, cleaning protocols that meet or exceed CDC guidelines, enforcing physical distancing guidelines in cafeterias and other common areas, and rotational work-from-home schedules for employees whose job functions permit them to work remotely.
Fink: When the pandemic began, we formed a Coronavirus Action Team that led the implementation of new policies and guidance on personal protective equipment, physical distancing, and travel restrictions. We developed a phased approach to returning to work that is driven by data and input from medical experts. And we developed policies to make sure that our staff meets the safety requirements of our customers and hospitals when essential product support is needed.
We also quickly developed new ways to engage and train our customers on the safe and effective use of products through virtual training. While this has been a challenging situation for all of us, this time has also given us the opportunity to reevaluate and develop new ways of working and collaborating with each other and our customers.
Kathy, your team at Arthrex has taken some notable steps amid the COVID-19 epidemic to take care of your people in terms of financial and emotional well-being. Can you tell us about those initiatives, the thinking behind them, and their impact?
Sparrow: During these uncertain times, we have been reminded of what makes the Arthrex culture so unique. While our employees were rising to the challenge, keeping production levels high and demonstrating exceptional dedication and team spirit in fulfilling our mission of “Helping Surgeons Treat Their Patients Better,” we recognized the personal and economic impact the pandemic was having on them, and we were committed to providing the innovative programs and resources they needed to take care of themselves and their families.
Arthrex employees receive an annual discretionary bonus in July at our fiscal-year end. We made the decision to pay 50% of that bonus three months early in April (with the remaining 50% paid on time in July) in order to help offset any unexpected financial issues such as a spouse being laid off or increased childcare expenses. President and founder Reinhold Schmieding announced this decision, providing a motivating and inspirational message of appreciation to employees for their contributions and reiterating his commitment to taking care of the Arthrex family first.
Additionally, Arthrex implemented an emergency 14-day COVID-19 paid leave benefit for employees who were under mandatory quarantine from a health care provider and for employees who were classified as high risk by the Centers for Disease Control (CDC). Childcare became a significant issue with schools moving to distance learning and day-care centers closing. We worked closely to support employees with childcare issues, offering a variety of leave options and developing an internal referral network of available childcare providers, Childcare Connection, which is published on our employee intranet.
Morgan Goldsmith, a Stryker customer engagement innovations manager and a registered nurse, not only volunteered to care for patients amid the COVID-19 pandemic but also worked to create a Stryker policy allowing employees who retain their clinical licenses to serve in the field with company support. Great Place to Work
You and your team shared a moving story of your employee Morgan Goldsmith. Morgan, a Stryker customer engagement innovations manager and a registered nurse, not only volunteered to care for patients amid the COVID-19 pandemic but also worked to create a Stryker policy allowing employees who retain their clinical licenses to serve in the field with company support. You now allow U.S. employees who are licensed health care professionals to receive paid leave and maintain their medical benefits if they choose to serve during a crisis. What does Morgan’s efforts say about your culture? And have others taken advantage of the new policy?
Fink: Morgan’s story is a great illustration of how we are united around and driven to fulfill our mission of making health care better. She answered that call to rejoin the front lines to offer her skills even though it required some personal sacrifices. Morgan’s story is also a good example of how, even as a large company, we are a family. Her Stryker family supported her and encouraged her during her time on the front lines.
Kathy, Arthrex manufactured and donated PPE to health care professionals and first responders on the front line in your community. Can you tell us more about these efforts?
Sparrow: We continue to manufacture high-quality, reusable face shields and protection hoods at Arthrex’s manufacturing facility in Ave Maria, Fla. The protection hoods, made of transparent plexiglass, are designed to protect health care professionals during procedures, including intubation. Intubation is the process of inserting a tube through a patient’s mouth into their airway. The tube is an essential step in placing patients on a ventilator, a standard treatment for patients with severe cases of COVID-19. Arthrex’s protection hoods allow clinicians access to intubate the patient while decreasing their exposure to germs and viruses, including COVID-19. Once the patient is intubated, the hood is removed, disinfected and ready for the next patient.
Since the onset of the pandemic, Arthrex has manufactured and donated thousands of face shields and protection hoods to date. Arthrex has donated to health systems, ambulatory surgery centers, physician and dentist offices, assisted living and long-term-care facilities, and first responders. Additionally, as schools prepare for students to return, Arthrex is donating thousands of face shields to school systems across our region to help protect teachers and school staff as they welcome students back to the classroom.
Arthrex will continue manufacturing the face shields and protection hoods for as long as needed during this unprecedented time.
An Arthrex employee manufactures a face shield at a company facility in Ave Maria, Fla. Arthrex has manufactured and donated thousands of face shields and protection hoods during the COVID-19 pandemic. Mike Moreland (courtesy of Great Place to Work)
Katy, what is the connection between Stryker’s high-trust culture and the way you’ve responded to the COVID-19 crisis?
Fink: Challenging times such as the pandemic tests your organization and its values. We’ve been fortunate to know that although we’ve had to change the way we do things, we’ve been able to lean on the strength of our culture. Having one that is approachable and encourages open communication fosters engagement, even in a time when virtual interactions are more the norm.
Our employees continue to produce remarkable results, keeping customers and their patients at the heart of everything we do.
Another manufacturing company making a difference
It’s not just medical device manufacturers that have met the moment of the pandemic in inspiring ways. Consider this story from another Best Workplaces for Manufacturing list winner, Landscape Forms. The Kalamazoo-based company makes furnishings for outdoor spaces, such as outdoor learning areas at schools. But it shifted gears once COVID-19 hit. Here’s what the company told Great Place to Work:
“Landscape Forms is proud of our overall response to the COVID-19 Pandemic, which included paying all our manufacturing team members during a five-week state mandated shutdown. This decision allowed our people to avoid the unemployment line and gave them the opportunity to say yes to a partnership with another local manufacturer to assemble emergency relief beds for hotspots all over the U.S. We are extremely proud of how our team members served the national community and how we lived our core values during unprecedented uncertainty and historic levels of economic and civic turbulence.”
See the full lists: the 10 Best Large Workplaces in Manufacturing and Production and the 15 Best Small and Medium Workplaces in Manufacturing and Production.
For information from Great Place to Work on how great workplace cultures are responding to the COVID-19 pandemic and related economic impacts, click here.
Ed Frauenheim is the senior director of content at Great Place to Work. He is coauthor of A Great Place to Work For All.


fortune--2020-09-10--COVID-19 vaccine still on track for later this year despite trial pause, AstraZeneca CEO says

AstraZeneca’s COVID-19 vaccine is still on track to be ready for approval by the end of the year, despite a pause in clinical trials, the result of one volunteer in the testing program developing a serious medical condition, the company’s chief executive said Thursday.
Pascal Soriot, AstraZeneca’s CEO, said that if the trial is allowed to resume shortly, the company should still be ready to submit its vaccine to regulators for approval by year’s end, with widespread distribution beginning in the early part of 2021.
“It depends on the outcome of the review,” he said. “If the review allows us to restart, I think we are on track to have a set of data to submit [to regulators] before the end of the year,” he said.
AstraZeneca, which is developing a vaccine with researchers from the University of Oxford, is considered a front-runner in the race to deliver a COVID-19 inoculation that could help bring the global coronavirus pandemic to an end. The vaccine is currently undergoing late-stage human testing in the U.S., the U.K., Brazil, India, and South Africa.
But the pause in clinical trials may mean other companies are able to get their vaccine candidates approved first. Pfizer CEO Albert Bourla told Fortune on Wednesday that he remains optimistic there will be enough clinical trial data to know if the vaccine his company is developing is effective by the end of October.
Another vaccine, from the U.S. biotech company Moderna, is also undergoing large-scale clinical trials in the U.S., and may be ready for possible regulatory approval this year.
It is likely that several different vaccines will be necessary to immunize billions of people around the world.
Soriot, speaking at an event hosted by British publication Tortoise Media, said he had little insight into whether the trial would be cleared to resume, or how long the pause would last. Those decisions rest with an independent review board—made up of experts from different disciplines—that is investigating whether a serious medical condition experienced by one of the trial participants in the U.K. is likely linked to the vaccination.
“I do realize that people have lots of questions, and believe me I would like to have answers,” Soriot said. “But we have to be patient, and we have to do the right thing and follow the process.”
He said tests are being carried out to determine exactly why the person became ill. Several news organizations, citing people familiar with the case, reported that the person has a suspected case of transverse myelitis, an inflammation of the spinal cord that can be caused by an overactive immune response resulting from a vaccination.
Not the first time
Soriot said this diagnosis has not been confirmed. The company said Wednesday that the vaccine trials had also been paused once before, earlier in the summer, after one of the trial volunteers developed neurological symptoms. These were determined to be related to an undiagnosed case of multiple sclerosis unrelated to the vaccination, and the trials were allowed to resume, the company said.
The CEO said such testing pauses were the norm, not the exception, in clinical trials. He said this was especially true for vaccines, which are tested on healthy people, and therefore have a higher safety threshold for adverse side effects than medicines that are designed to treat people who are already ill.
Soriot said that if the trial is allowed to resume, there should be enough data soon to know if the vaccine is effective. “The answer will only come as the trials continue,” he said. “Does it protect people for a period of time? We should know that before the end of the year.”
He also said that even if AstraZeneca’s vaccine is approved this year, it would take time to distribute enough doses to vaccinate the entire world’s population. “Yes, I think we could still have a vaccine [by the start of 2021], but…we won’t have a lot of vaccine, of course, because you then have to scale up the manufacturing and distribution,” he said.
He said this was true despite AstraZeneca’s producing hundreds of millions of doses of the vaccine in parallel with the ongoing late-stage clinical trials.
Lives over profits
Various governments and international funding bodies have given AstraZeneca billions of dollars to fund this effort. The company has committed to not profiting from the vaccine until the coronavirus pandemic has been declared over.
Soriot bristled at suggestions AstraZeneca had not been transparent in not announcing the current clinical trial pause. The pause only became public because the health news site Stat broke the story on Tuesday. “When you conduct a clinical trial, you inform the regulators,” he said. “You don’t make big announcements in the press. This is a scientific process. You don’t hide anything, but you work with professionals—people with expertise.” He said as soon as the clinical trial was paused Oxford and AstraZeneca informed the appropriate government regulatory agencies in each country where trials were taking place.
He also defended rules that protect pharmaceutical companies from legal liability related to their development of a COVID-19 vaccine. Under U.S. law, companies working on a vaccine in response to a pandemic have immunity from lawsuits. In Europe, various governments have indemnified the companies against any legal costs.
Soriot said that in a pandemic, when billions of people are going to receive a vaccine, such rules were necessary to protect companies from being swamped with potentially frivolous lawsuits. “Otherwise no one would ever develop a vaccine,” he said.


fortune--2020-09-10--Pfizer’s Albert Bourla: Vaccine efforts are improving Big Pharma’s reputation

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
Pfizer CEO Albert Bourla told CEOs assembled by Fortune and McKinsey yesterday that there is a “more than 60% chance” his company will know by the end of October whether its vaccine works. Pfizer has already vaccinated some 26,000 people in its Phase III trials, and company modeling shows the results should be in by the end of next month.
Bourla spoke on the day he and CEOs of other pharma companies published full page ads in The New York Times and The Wall Street Journal pledging not to deploy a vaccine until scientific studies were complete—an effort to show vaccine timing will be driven by science, not politics. Bourla acknowledged that the late October date, coming right before the election, created the perception of political involvement, which could undermine confidence in the vaccine. “I feel that every day. Many times, I thought, ‘if it could just be a week later…’ But we need to stay the course. If the results come faster, it is better for society.”
The CEO discussion focused on the importance of purpose in business, and Bourla offered the vaccine as an example. “I was amazed by how quickly my organization moved, and I think it was only because of the purpose,” he said. He noted Moderna was the first company to put its vaccine into clinical trials, and Pfizer started two months later. Yet both started Phase III trials on the same day. That kind of fast action “is not what you expect from a big, monolithic, goliath company like Pfizer. I was surprised we were able to do that. The only reason we were able to do that is because we gave them one purpose: Go back and calculate how many people will die if you don’t do it this fall.”
Bourla said the vaccine effort is improving the reputation of his industry, which was in the dumps before the pandemic “not only because of bad players, but also because of us. For years, for example, the CEOs of Pfizer were speaking of how much money we made from Lipitor instead of pointing out how many hundreds of millions of lives were saved by Lipitor. We did it to ourselves.”
Other CEOs who participated in the discussion included Darius Adamczyk of Honeywell, Deanna Mulligan of Guardian Life, John Visentin of Xerox, Stan Bergman of Henry Schein, Doug Peterson of S&P, Penny Pennington of Edward Jones, John Driscoll of Care Centrix and Basheer Janjua of Calculi. All agreed that the role of purpose in business is on the rise. “We know that people who feel purpose at work are four times more engaged,” said McKinsey’s Bruce Simpson. “There is really good science behind this. And in a world where 70% of the workforce is not engaged, that’s a huge uptick, in multiple dimensions.”
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Data doom
The Irish privacy watchdog has told Facebook it will probably have to stop transferring Europeans' personal data to the U.S., following court rulings that (possibly) destroyed the legal basis for it doing so. Whether or not Facebook manages to drag out the case further, it's a big blow for Big Tech's European aspirations. Fortune
TikTok sale
China's ByteDance is reportedly talking to the Trump administration about sidestepping a forced sale of TikTok's U.S. operations. "People familiar with the matter" say ByteDance is hoping to get away with some sort of restructuring that involves a U.S. tech partner securing TikTok's data and perhaps taking a minority stake. Wall Street Journal
LVMH and Tiffany
LVMH Moët Hennessy Louis Vuitton announced yesterday that it was pulling out of its planned $16 billion takeover of Tiffany & Company, thanks to a request from the French government to delay the closing, plus the pandemic's effect on the luxury industry. Now Tiffany is suing LVMH in an attempt to force the deal through. New York Times
Brexit kerfuffle
The U.K.'s attempt to skirt the Brexit Withdrawal Agreement that it ratified this year—an attempt the government freely admits would break international law—has led the EU to consider legal action. Meanwhile, over in the U.S., House Speaker Nancy Pelosi has warned that the move would mean there's "absolutely no chance" of a U.S.-U.K. trade deal materializing, if peace in Northern Ireland is threatened. Fortune
AROUND THE WATER COOLER
Trump and coronavirus
President Trump knowingly underplayed the threat posed by COVID-19 in his communications with the American public, the president told legendary journalist Bob Woodward. Woodward has a new book out, making it clear that Trump was fully briefed and aware of the coronavirus's threat in late January, before he spent months holding campaign rallies and claiming that it was no more harmful than the seasonal flu. Fortune
BP wind
BP, keen to reinvent itself as the fossil-fuel industry faces major change, has taken its first step into offshore wind power. The oil giant will pay $1.1 billion for a half-stake in two U.S. projects being run by Norway's Equinor. "This is an important early step in the delivery of our new strategy," said BP CEO Bernard Looney. Financial Times
Skinny stimulus
The U.S. Senate will today vote on a scaled-back, $500 billion stimulus package proposed by the Republicans. The package is the result of the two sides' inability to agree on the extent of bipartisan package (the Democrats wants $2.2 trillion; the White House $1.3 trillion.) The "skinny stimulus" package would, if passed, provide $250 billion for another round of Paycheck Protection Program loans, over $100 billion for schools, and over $50 billion for COVID-19 testing and vaccine development. Fortune
Apple mask
Apple has made a Face Mask (Apple's capitalization) for its own corporate and retail employees. The device can be reused up to five times, and features three layers for filtering incoming and outgoing particles. Fortune
This edition of CEO Daily was edited by David Meyer.


fortune--2020-09-10--Nearly half of open board seats went to women in 2019. Only 23% were filled by people of color

Good morning, Broadsheet readers! The Williams sisters’ legacy is clear at the U.S. Open, the Academy Awards releases new diversity requirements, and progress on board diversity in 2019 wasn’t evenly distributed. Have a lovely Thursday.
– Leaps and bounds. The movement to create gender diversity on boards of directors is one that has seen marked success in the past decade, including in 2019, when 44% of new appointees to Fortune 500 directorships were women, according to an annual report by Heidrick and Struggles released this week.
But the progress companies have made in choosing qualified women for their boards is tempered by the outright failure of those same companies to prioritize racial diversity in their governance. While new appointments in 2019 came close to gender parity, businesses were far from achieving racial representation last year. For the past three years, the share of new board seats filled by nonwhite candidates has remained stalled at 23%. Between 2018 and 2019, the percentage of new board members who were Black fell from 11% to 10%.
The executive search firm notes this failure in stark terms in its report: “Racial or ethnic, nationality, and age diversity improvements have been disappointing with little progress to report anywhere in the world.”
The firm’s survey covers 467 total director seats filled in 2019. And, of course, these numbers only cover new appointments. It’s harder to move the needle on overall board composition, as existing directors stay in their positions; women held 27% of board seats in the Fortune 500 last year, compared to 44% of new openings.
As societal attention remains fixed on racial justice, decision-makers are “finding they can do much better” in building businesses that reflect the communities they serve, Heidrick and Struggles’ report says.
The good news? Other trends highlighted in the report hint that progress may be on the horizon. While companies still overwhelmingly prefer board candidates with prior public board experience—72% of this year’s new picks had that record—they’re slowly accepting different kinds of leaders. Directors with CEO experience—a requirement that has shut out many female and nonwhite candidates—made up 50% of new board members last year, down from 60% the year prior.
Emma Hinchliffe
emma.hinchliffe@fortune.com
@_emmahinchliffe
ALSO IN THE HEADLINES
- Penney for your thoughts. J.C. Penney, led by CEO Jill Soltau, found two buyers: mall operators Simon Property Group and Brookfield Property Partners. The two companies will pay $300 million in cash and assume $500 million in debt, valuing the retailer at $1.75 billion and avoiding a total liquidation of the business. New York Times
- Open legacy. Naomi Osaka's recent victories at the U.S. Open mean that she will advance to at least her sixth match, setting her up for, potentially, the final—and allowing her to wear all seven face masks featuring the names of Black people killed by police. For more on the U.S. Open, read this Washington Post piece about Serena and Venus Williams' legacy on the courts: the record 13 Black women who played in this year's tournament.
- Rich get richer. The Forbes 400 list of the 400 richest people in the United States includes 56 women—who are collectively worth $452 billion, more than the $430 billion the same number of women were worth last year. The $22 billion gain is mostly thanks to MacKenzie Scott and Alice Walton of the Walmart family. Forbes
- Running through setback. Athlete Caster Semenya lost her appeal in Swiss court over World Athletics guidelines requiring her to reduce her natural level of testosterone to compete in track and field. Semenya plans to shift her focus to the 200 meter race, a competition where the requirement does not apply. "[I] refuse to let World Athletics drug me or stop me from being who I am," she said after the ruling. CNN
MOVERS AND SHAKERS: Citigroup merged its marketing and branding divisions, promoting chief brand officer Carla Hassan to chief marketing officer; Jennifer Breithaupt, CMO for Citi's global consumer bank, resigned. NBCUniversal moved Universal Studio Group chairman Bonnie Hammer to vice chairman of NBCUniversal and promoted Universal TV president Pearlena Igbokwe to Hammer's former role. Refinery29 hired Simone Oliver, a member of Facebook and Instagram's global media partnerships teams, as global editor-in-chief. Wayfair hired Walmart SVP of U.S. technology Fiona Tan as global head of customer and supplier technology. The Metropolitan Museum of Art hired Patricia Marroquin Norby to be its first associate curator of Native American art. The Interstate Natural Gas Association of America hired Ogilvy Government Relations' Amy Andryszak as president and CEO. IPG Mediabrands hired Hermon Ghermay as global chief culture officer. The Drone Racing League hired Houlihan Lawrence CMO Anne Marie Gianutsos in the same role. Francis Hondal, president of loyalty and engagement at Mastercard, joins the board of directors at Equitable Holdings.
IN CASE YOU MISSED IT
- Campaign sitter. New Zealand Prime Minister Jacinda Ardern is beginning her reelection tour in the Waikato district, staying with her parents in Morrinsville, where she grew up. The prime minister says she chose to start at home so her "folks" could help out with her 2-year-old, Neve. Seeking the grandparents' childcare help is just the "realities of the road," Ardern says. Guardian
- Lights, camera, action. The Academy of Motion Picture Arts & Sciences shared new details about the diversity requirements films will have to meet to qualify for the best picture category. Movies hoping to earn the top award in 2024 and beyond will need to meet a few different standards, one of which is to cast at least one actor from an underrepresented racial group in a lead or "significant supporting" role. New York Times
- SCOTUS on abortion. Just a few months after a victory for abortion rights at the Supreme Court, the Court is set to hear another case on the issue. Food and Drug Administration v. American College of Obstetricians and Gynecologists will make a decision about access to medication abortion. Vox
ON MY RADAR
Gloria Steinem is nowhere near done with being an activist New York Times
Gucci heir alleges childhood sexual abuse New York Times
Mara Brock Akil inks overall Netflix deal Hollywood Reporter
Instagram is coming for your sock drawer New York Times
PARTING WORDS
"It’s our right to be creative and do anything we want."
-Chloe Bailey of Chloe x Halle


fortune--2020-09-10--‘A real uphill battle:’ Why China will struggle to counter U.S.’s attack on Huawei

The U.S. in August introduced new rules that forbid foreign chipmakers that rely on U.S. technology from selling any chips to Chinese telecom manufacturer Huawei Technologies without obtaining a special license.
The sanctions will further starve Huawei of critical semiconductors. Just this week, Samsung Electronics and South Korean memory chipmaker SK hynix reportedly acknowledged that they will be ceasing their supply of semiconductors to Huawei on Sept. 15, the same day the new U.S. rule takes effect.
The new U.S. mandate means Huawei’s supply chain has gone from being “restricted” to “almost totally shut off,” particularly in regards to advanced semiconductor technology, said Paul Triolo, geo-technology practice head at the political risk consultancy Eurasia Group, focusing on global technology policy, cybersecurity, Internet governance, and emerging areas such as A.I. and fintech. He is also a China Digital Economy Fellow at the Washington, D.C., think tank New America.
Beijing has taken steps to strengthen its domestic semiconductor industry, but the restrictions against Huawei mean China faces an “uphill battle” to “wean [itself] off of U.S. technology” in manufacturing chips, Triolo said.
“This is a global industry that’s taken 20 or 30 years to develop,” he said. “It’s just really hard for China and Chinese companies to re-create these global value chains that took so long to develop.”
In a Eastworld Spotlight conversation with Fortune‘s Clay Chandler on Tuesday, Triolo talked about Huawei’s ability to keep up manufacturing with dwindling stockpiles of semiconductors, the company’s chances of survival, and the supply chain battle between the U.S. and China. The conversation below has been edited for length and clarity.
Fortune: The U.S. has set a Sept. 15 deadline on shipping semiconductors made with American technology to Huawei. How long can Huawei last before exhausting its stockpile of high-speed chips?
Paul Triolo: The ability of Huawei to last with those stockpiles depends on the product line. With smartphones, for example, Huawei was at one point producing over 250 million smartphones per year. They were using a lot of semiconductors that are key to smartphones’ advanced features. I think one estimate is that they’ll only be able to produce 50 million phones next year, so there’s a huge drop. They’ll run out of those advanced semiconductors probably sometime early next year because the volume is so high. For 5G base stations, they might be able to last a little bit longer because the volume there isn’t as high.
But at some point, the big issue is that they can’t compete internationally. When the initial entity list action happened, Google was not allowed to provide Google mobility services [to Huawei]. So right away nobody wanted to buy a [Huawei] handset outside of China, particularly in places like Europe, because they couldn’t get Gmail and YouTube and all the other things they were used to. So Huawei’s handset sales were already under stress from the software side; now, of course, you have the hardware part of it.
Is there a risk that this is so disruptive it could threaten Huawei’s existence as a company?
Yes, I think definitely that’s the case. The company has been able to get around this [restriction] initially by redesigning their base stations and some of their other products. But there’s no real alternative once the U.S. has basically restricted [chipmakers’] ability to produce these cutting-edge semiconductors [for Huawei].
For example, the leading Chinese domestic foundry, [Semiconductor Manufacturing International Corporation], is just not at the same level. They’re two or three generations behind leaders like [Taiwan Semiconductor Manufacturing Company], Samsung, and Intel. And the U.S. has acted to cut off their ability to acquire advanced lithography equipment, for example, so [SMIC can’t] move to more advanced nodes in semiconductor manufacturing. Huawei has nowhere to turn here. There’s no domestic champion that’s going to come to Huawei’s rescue on the semiconductor side. So that’s existential.
The company, in my sense, is going to have to reorganize, potentially spin off parts of the company. They’re still competitive, of course, in things like software and cloud services. But all those things still require semiconductors at some level. So all parts of their business are eventually going to be affected.
For the U.S. to exploit this technological monopoly and threaten the existence of a $100 billion company feels almost like going for the nuclear option. What options does Beijing have to counteract this threat?
Senior leaders in Beijing are sort of trying to run the clock out…hoping that if they got a change of administration in November, some of these policies would be reexamined under a Biden administration. So they’re being very careful and disciplined in responding.
On the other hand, they’re taking a lot of steps domestically to shore up the industry. Already there’s a huge national [integrated circuit] investment fund, which has been providing subsidies to Chinese semiconductor companies. In May there was a big announcement of the new infrastructure initiative, which is designed to focus on 5G and mobile edge computing to encourage domestic companies to take part in that. They’ve been beefing up the Star Market in Shanghai, the high-tech [stock] market, encouraging semiconductor companies to list on that. They’ve changed some of the [initial public offering] requirements and are trying to get companies in China to raise funding through both the Star market and the Hong Kong stock exchanges.
The problem is these are tough technologies to master. It’s not really a function so much of funding as it is of talent and technology know-how. That’s going to take time. Certainly China has come a long way in the last five years, in terms of design and manufacturing of semiconductors. But this is a global industry that’s taken 20 or 30 years to develop some of the division of labor. And it’s just really hard for China and Chinese companies to re-create these global value chains that took so long to develop, and cutting-edge things in the software services side or in the semiconductor manufacturing side. So China [is facing] a real uphill battle.
Let’s talk about global technology supply chains. In a recent report, you foresee the emergence of a “red chain” and “blue chain.” What do you mean by that?
We’re seeing it as a result of the recent series of U.S. government policies—the attempt to really force countries and companies to choose sides in this U.S.-China conflict. We’ve seen this very clearly, for example, with this new clean initiative that the Trump administration is pursuing. In August, [Secretary of State Michael Pompeo] announced an expansion of this so-called clean network, which really includes things like 5G [and] cloud services. Now it includes mobile application stores. And you know, “clean” means really free of Chinese technology.
We saw this initially with Huawei, which was a path that the U.S. followed over the last two years to convince allies, in particular in Europe and in Asia, to exclude Huawei from their 5G network rollouts. Initially, that looked like it wasn’t going to gain a lot of traction. But over the last two years, over the last year in particular, it’s gotten traction in part because the U.S. has also implemented these other restrictions on Huawei, passing doubt over the ability of the company to succeed in those markets.
Going forward, the clean initiative has really expanded into every part of the technology stack. That really is an attempt to sort of force the world into either the “blue supply chain,” which is the U.S. and other Western democracies in Europe and in Asia. And a “red supply chain,” one that China would lead.
This story is part of Eastworld Spotlight, a series of conversations on matters of business, tech, and finance with executives, experts, entrepreneurs, and investors in Asia. Subscribe to Fortune’s Eastworld newsletter to get them in your inbox.


fortune--2020-09-10--Time is running out for Big Tech’s monetization of Europeans’ personal data

A slow-motion train wreck has been unfolding over the past half-decade in the wonkish but fundamental field of data privacy, as one Facebook user’s crusade against U.S. surveillance practices has slowly closed off the American tech industry’s legal options for importing European users’ personal information.
Now it looks like the moment of impact is finally about to arrive, leaving Big Tech unable to process European users’ data in the U.S.
Facebook said Wednesday that the Irish privacy regulator (which governs all of Facebook’s European activities) has “suggested” it will no longer be able to use the legal mechanism it currently uses to make Europe-to-U.S. transfers of personal data—that is, any data that can be connected with an identifiable person in Europe, from names and email addresses to photos and comments.
This followed a Wall Street Journal report that said the watchdog had hit Facebook with “a preliminary order to suspend data transfers to the U.S. about its EU users.”
The EU’s top court ruled a couple of months ago that the legal mechanism, known as “standard contractual clauses” or SCCs, is in principle legally valid. However, it said the use of SCCs can be invalidated by privacy regulators in cases where Europeans’ data is made vulnerable by sending it to a country without good privacy protections.
It was always clear that this was likely to affect transfers to the U.S., because the same ruling—by the Court of Justice of the EU (CJEU)—struck down a separate, specifically U.S.-EU arrangement called Privacy Shield, which gave companies a simpler and cheaper way to keep their transatlantic transfers legal.
The court’s reasoning was that U.S. surveillance laws make it impossible for Big Tech to keep Europeans’ data out of the hands of U.S. intelligence agencies. The same problem applies whatever legal mechanism companies are using for those transfers.
“Far-reaching effect”
“The Irish Data Protection Commission has commenced an inquiry into Facebook controlled EU-U.S. data transfers, and has suggested that SCCs cannot in practice be used for EU-U.S. data transfers,” Facebook’s chief lobbyist, the former U.K. deputy prime minister Nick Clegg, wrote in a Wednesday blog post. “While this approach is subject to further process, if followed, it could have a far-reaching effect on businesses that rely on SCCs and on the online services many people and businesses rely on.”
Clegg argued that “a lack of safe, secure and legal international data transfers would damage the economy and hamper the growth of data-driven businesses in the EU,” because they will no longer be able to use U.S.-based cloud providers to process their customers’ data.
He even suggested the end of U.S.-oriented SCCs would impact email platforms that service European universities and hospitals. This is a questionable claim, because EU privacy law allows data transfers to anywhere as long as they are “necessary” to fulfill the contract between the user and provider—and the processing of emails is pretty fundamental for an email service.
The dilemma for a company such as Facebook is that its users want to socialize with one another online, but the tracking of their online activities and compilation of their marketing profiles are arguably not strictly necessary for making that happen—crucial as they may be for Facebook’s ad-fueled bottom line.
However, that doesn’t mean Facebook isn’t at least trying to invoke “necessity” as yet another legal basis for its EU-U.S. personal-data transfers (the fourth, after its current use of SCCs and its previous reliance on Privacy Shield and its also-struck-down predecessor agreement, Safe Harbor).
Max Schrems, the young Austrian lawyer whose legal quest to protect his Facebook data from U.S. spies led to the CJEU’s cancellation of Safe Harbor and Privacy Shield, revealed Facebook’s invocation of “necessity” on Thursday, when he published legal correspondence between his lawyers and Facebook’s.
In an emailed statement, Schrems noted that the Irish watchdog’s long-running investigation into Facebook’s processing of his data is currently focusing only on the validity of Facebook’s SCCs. He said this meant the regulator was “again only investigating one slice of the problem.”
“Facebook seems to want the DPC to only focus on the SCCs as well, so that they can just pull out the next legal basis at the end of this third round of the procedure. This legal edition of ‘whac-a-mole’ has been ongoing for seven years now,” Schrems said. “I therefore suspect that the alleged order against Facebook is another useless step that will not solve the issue fully.”
Fortune has reached out to the Irish Data Protection Commission for comment, but has so far received none.
“Privacy Shield Plus”
Whether or not Facebook manages to drag out its own investigation for another few years, if the Irish Data Protection Commission has “suggested that SCCs cannot in practice be used for EU-U.S. data transfers” (Clegg’s words) then that really would be a blow for Big Tech.
The “necessity” argument may be clutching at straws for companies that, as many do, use their customers’ data for other purposes than the core services they provide. Facebook’s (and its peers’) one remaining hope would be the striking of a third U.S.-EU data-sharing deal, to replace Privacy Shield.
In his Wednesday post, Clegg welcomed the fact that the EU and U.S. sides are both trying to make a “Privacy Shield Plus” (again, his words) happen. “These efforts will need to recognize that EU Member States and the U.S. are both democracies that share common values and the rule of law, are deeply culturally, socially and commercially interconnected, and have very similar data surveillance powers and practices,” he wrote.
But the two trading partners don’t have similar data-protection laws. If they did, the European Commission could easily decide the U.S. privacy regime is “adequate” (as it has with Canada and Japan) and American companies wouldn’t need to be scrambling for other legal bases to underpin their data transfers.
The fact remains that the U.S. has no federal data-privacy law outside of the medical arena; its intelligence agencies retain broad discretion to spy on the communications of foreigners; and Europeans have no meaningful way to complain about that spying in the U.S.
Unless all this changes, it’s deeply unlikely that a “Privacy Shield Plus” could fly—and, after two humiliations at the CJEU over Privacy Shield and Safe Harbor, the Commission is unlikely to support a deal that isn’t legally watertight. As EU Justice Commissioner Didier Reynders said less than a week ago, there will be “no quick fix” on this front.
All of which suggests that the moment of truth is finally almost here—and not only for U.S. tech firms, but also for those in countries such as China, which are keen to use Europeans’ personal data but have invasive surveillance practices to contend with back home.


fortune--2020-09-10--The EU is considering legal action against U.K. over Brexit breaches

The European Union is studying the possibility of legal action against the U.K. over Prime Minister Boris Johnson’s plans to breach the agreement governing Britain’s withdrawal from the bloc, according to a document seen by Bloomberg.
The EU may have a case to seek legal remedies under the divorce agreement even before controversial provisions in the U.K. internal-market bill are passed by Parliament and would have a clear justification once the bill becomes law, according to the bloc’s preliminary analysis of the U.K. legislation. The pound erased gains from earlier in the session after the news.
Johnson is facing a backlash from the EU and from within his own ruling Conservative Party after his government said it is ready to break its commitments to the EU over the Irish border. With negotiations over a future trade deal already deadlocked over how to handle state aid rules and fishing quotas, the controversy is fueling concern there may be no agreement by the year-end deadline, triggering a raft of tariffs on trade between the U.K. and the world’s biggest single market.
“A no-deal is becoming more likely every day, everyone can see that,” Manfred Weber, head of the main center-right group in the European Parliament, said Thursday in an interview with Germany’s DLF radio. “We have the feeling that Britain wants a hard Brexit for ideological reasons and as Europeans we need to prepare for the worst.”
While the latest negotiating round is due to conclude Thursday in London, the two sides will also hold an emergency high-level meeting to address the issue. European Commission President Ursula von der Leyen said she is “very concerned” and warned that Johnson’s move “undermines trust.”
Charles Michel, president of the EU leaders’ council, added that it “does not create the confidence we need to build our future relationship.”
It also prompted a warning from across the Atlantic, with House Speaker Nancy Pelosi saying there would be “absolutely no chance” of a U.K.-US trade agreement if Johnson’s actions threatened peace in Northern Ireland.
A number of Conservative lawmakers and grandees have also weighed in with their concerns over Johnson’s preparedness to break international law.
“If we lose our reputation for honoring the promises we make, we will have lost something beyond price that may never be regained,” former Tory Prime Minister John Major said.
‘Clear Breach’
Johnson’s office said the proposed law creates a “safety net” and removes “ambiguities” in the text of the withdrawal agreement.
The U.K. Internal Market Bill, published earlier on Wednesday, would allow ministers to override parts of last year’s Brexit agreement to ensure companies in Northern Ireland have “unfettered access” to the U.K. internal market, potentially throwing up obstacles to trade with the rest of the island of Ireland. That would be a “clear breach of substantive provisions” of the withdrawal agreement, according to the draft working paper prepared by the EU and circulated to member states.
The EU paper highlights that the proposed U.K. legislation explicitly allows some provisions to take effect even if they are incompatible with the U.K.’s international commitments under the withdrawal agreement.
The document concludes that a breach of those obligations “would open the way to the legal remedies available under the withdrawal agreement.”
Once the U.K. transition period draws to a close at the end of this year, the EU could also trigger the dispute settlement mechanism under the withdrawal agreement, which could ultimately result in financial sanctions, according to the paper.


fortune--2020-09-10--Global markets dip as investors again sour on tech stocks

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Good morning. Nasdaq’s nifty bounce yesterday, its biggest gains since April, seems like a distant memory as markets turn negative once again on Thursday. Nasdaq futures suggest roughly one-third of yesterday’s gains will evaporate at the opening bell. What else is on tap? A big ECB meeting, jobless claims numbers and a largely meaningless Senate vote on a “skinny” stimulus spending package.
Let’s check in on the action.
Markets update
Asia
The major Asia indexes are mixed in afternoon trading, with Japan’s Nikkei leading the way, up nearly 0.9% .
are mixed in afternoon trading, with Japan’s leading the way, up nearly . Yum China , the parent company of KFC, Taco Bell and Pizza Hut in China, had a rough Hong Kong trading debut today, with shares down more than 4% at one point.
, the parent company of KFC, Taco Bell and Pizza Hut in China, had a rough Hong Kong trading debut today, with shares down more than at one point. Is TikTok owner ByteDance trying to engineer a plan B? The Wall Street Journal reports that ByteDance is in negotiations with the U.S. government on a possible work-around where it avoids a full sale of the U.S. division of the popular video-sharing platform.
Europe
The European bourses were mostly up at the open, before falling. Brexit concerns continue to spook investors with the FTSE , down 0.5% an hour into the trading session, the biggest laggard.
were mostly up at the open, before falling. Brexit concerns continue to spook investors with the , down an hour into the trading session, the biggest laggard. Speaking of the divorce proceedings… Post-Brexit negotiations are going about as poorly as you could imagine with the EU now pondering a fresh round of legal action against the U.K. Meanwhile, investors have gotten an ugly early glimpse of divorcee-Britain as money pours out of U.K. equities and away from the British pound . Woe Britania.
are going about as poorly as you could imagine with the now pondering a fresh round of legal action against the U.K. Meanwhile, investors have gotten an ugly early glimpse of divorcee-Britain as money pours out of and away from the . Woe Britania. With the euro gaining strength and Euro Zone economic output fragile, the ECB will reveal today its latest plan to keep the post-pandemic recovery on track. Expect a lot of words to tamp down the rising euro.
U.S.
U.S. futures have been losing ground all morning. That’s after tech stocks led an impressive rebound on Wednesday, pushing the Nasdaq up 2.7% .
have been losing ground all morning. That’s after tech stocks led an impressive rebound on Wednesday, pushing the up . Where will tech stocks go from here? The market pros are encouraged by the buy-the-dip bounce-back yesterday, but, they say, the real test comes today. As I type, it’s not looking good.
bounce-back yesterday, but, they say, the real test comes today. As I type, it’s not looking good. The Senate today votes on a “skinny” $500 billion stimulus package, which is unlikely to proceed much further through Congress.
today votes on a “skinny” package, which is unlikely to proceed much further through Congress. Jobless claims come out before the bell with economists predicting that roughly 850,000 Americans will have filed for unemployment benefits in the past week.
Elsewhere
Gold is down, trading above $1,950/ounce .
is down, trading above . The dollar is flat.
is flat. Crude is down, with Brent trading above $40/barrel.
***
The i-word
Yesterday in this space, I talked about the demise of value stocks. A refresher: value stocks underperform in periods of stagnant economic growth and low inflation. That makes sense. Value stocks, which are underpriced relative to the sales, profits (and don’t forget dividends) they generate, perform better in a period of stable economic growth with no shocks (i.e, pandemics).
And value stocks have been relatively weak over the past decade coinciding with a period of low inflation. In fact, inflation has been wimpy since the Reagan years.
However, there have been a number of economists predicting lately that prices won’t stay down for much longer. They often cite the trillions in fiscal spending and super-loose monetary policy that have deluged the economy with cheap credit. The latest such prediction comes from economists at Berenberg Bank, who write in an investor note today, “we conclude that the 40-year trend of declining inflation has likely run its course.”
But there’s a catch. “We expect underlying inflation to rise gradually on trend over the course of this decade after a final dip over the next six to 12 months,” the authors continue. In other words: don’t horde up on gold just yet; prices will fall before they climb again.
Here’s Berenberg’s chart showing the trend line for core inflation for G7 economies perking up.
UBS economist Paul Donavan explains that one of the factors holding back inflation in the short term is CPI. “Consumer prices are understating inflation more than producer prices at the moment,” he says. “There are plenty of relative price moves, as demand patterns shift and supply chains are disrupted, but this remains a lower inflation world.”
Inflation won’t begin to return to normal levels (of at least 2%) until the labor market improves. So, in a way, the return of meaningful inflation should be celebrated. It’s a sign we’re returning to full(er) employment and economic growth.
But rising inflation will come with a cost to the weak. “Countries and companies that looked shaky even before the pandemic; suffered very badly during the downturn; and/or are hit by the lasting structural shifts caused or accentuated by COVID-19, will eventually face serious problems from rising financing costs,” the authors write. “This may well include Italy and, possibly, even the U.S.”
A reminder: you never want the fiscal health of your country to be compared with that of Italy.
***
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
Political dividing lines. The economy and America's social unrest are emerging as the two leading factors in the minds of voters with a little over two months before Election Day. Fortune's crack analytics team polled nearly 2,500 American adults and discovered which candidate gets the edge on the economy and which candidate gets the nod on healing the divisiveness in America. The poll results are here.
October surprise. Is there any chance a COVID-19 vaccine could be ready for distribution by this autumn? Pfizer CEO Albert Bourla yesterday said "yes" in a virtual panel discussion moderated by Fortune CEO Alan Murray. Here's why Bourla is so confident.
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Market candy
$255,000
That's the price tag (in Italy, anyhow, where it's carrying a €216,000 sticker) of the new Maserati 630-horsepower MC20, which Fiat Chrysler is hoping will revive its fortunes in the luxury car market. The MC20 is a bella macchina.


fortune--2020-09-10--Pelosi to Britain: ‘No chance’ of a U.S. trade deal if you jeopardize the Good Friday accord

House Speaker Nancy Pelosi said that the U.K. can forget about Congressional approval for a free-trade deal with the U.S. if Britain’s withdrawal from the European Union imperils an agreement that ended conflict in Northern Ireland.
U.K. Prime Minister Boris Johnson is facing a backlash from the EU and from within his own ruling Conservative Party after his government said it’s making plans to break its commitments to the bloc over the Irish border. Pelosi said that the U.K. must ensure the free flow of goods across the border, as agreed in Britain’s deal with the EU last year.
Last year’s accord gave Northern Ireland the same trade rules as the EU to avoid customs checks at the land border between Ireland and Northern Ireland, a key part of the Good Friday Agreement two decades go that ended years of bloodshed. A U.K. bill published on Wednesday would allow ministers to override parts of that accord.
“If the U.K. violates that international treaty and Brexit undermines the Good Friday accord, there will be absolutely no chance of a U.S.-U.K. trade agreement passing the Congress,” Pelosi, the nation’s top elected Democrat, said in a statement Wednesday.
In the U.S., while the power to negotiate trade deals is delegated to the president by Congress, agreements must later pass both chambers. Pelosi effectively controls the agenda in the lower house, where her party holds a majority, and used her leverage last year to hold up a new North American free-trade agreement to extract changes from Mexico. U.S. Trade Representative Robert Lighthizer and his U.K. counterpart began negotiations toward a trade deal in June.
The EU considers it has grounds for legal action against the U.K. over the plan, according to a document seen by Bloomberg. The EU judges it may have a case to seek legal remedies under the divorce agreement even before the U.K. internal-market bill is passed by Parliament and that it would have a clear justification once the bill becomes law, according to the EU’s preliminary analysis of the U.K. legislation.


fortune--2020-09-10--Disney’s ‘Mulan’ is set for a disappointing debut in the market it’s courted most

Dogged by political controversies and hit by piracy and negative reviews, Walt Disney Co.’s $200 million live-action remake “Mulan” is heading for a weak premiere Friday in China, one of its key target markets.
On Thursday, pre-sales for tickets stood at about 8.2 million yuan ($1.2 million), according to Maoyan Entertainment, which operates China’s largest online ticketing platform. That’s less than one-sixth of the opening day local box-office collections for “Tenet,” the Warner Bros. sci-fi thriller that started showing last week in the country.
Disney created “Mulan,” which is based on a Chinese folk song, partly to woo audiences in a country that, prior to the pandemic, had been set to overtake the U.S. as the world’s largest film market. But the film has now become a magnet for political attacks, including a boycott by Hong Kong’s pro-democracy activists unhappy with lead actress Liu Yifei’s support for the city’s police.
In the U.S., Disney itself has come under fire by China critics in Congress who faulted the entertainment giant for filming in Xinjiang, where the government has detained as many as 1 million ethnic Uighurs in camps called “voluntary education centers.” The region’s authorities were thanked in the movie’s credits.
Senator Tom Cotton, a Republican from Arkansas, slammed Disney on Twitter, saying the entertainment giant is “addicted to Chinese cash and will do just about anything to please the Communist Party.” Another Republican senator, Josh Hawley of Missouri, sent Disney Chief Executive Officer Bob Chapek a letter with nine questions, asking whether the company would donate any “Mulan” profits to “organizations dedicated to fighting human trafficking and other atrocities” in China.
Disney released the film in the U.S. Sept. 4 over its Disney+ service, where it’s available for a fee of $30. Downloads of Disney’s streaming app rose 68% to 890,000 over the weekend, a sign that “Mulan” helped drive demand in a market where cinemas are still not fully reopened.
The earlier showings in the U.S. also mean pirated copies have been available to Chinese willing to download them. The availability has also given watchers time to post reviews.
On Douban, China’s largest movie rating platform, there were already more than 35,000 comments on the film as of early Thursday. More than 70% of the posts were negative, while only 13% of the comments were positive.
“Would foreigners really pay $30 to watch this thing?” one user said. “It didn’t get the essence of Chinese culture,” said another.


fortune--2020-09-10--Where do tech stocks go from here?

Where do tech stocks go from here?

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Three days, down over 10%. With the tech-heavy Nasdaq having posted its fastest retreat from a high into a correction this week, investors in the high-flying tech stocks may well be thinking: What now?
Well, right back up it seems.
The Nasdaq closed 2.7% higher on Wednesday, while the S&P 500 and Dow posted similar rebounds, up 2% and 1.6% respectively.
If one thing is clear, the recent pullback was a flashing warning sign: tech had gotten too overheated, too fast. And valuations for some of the top names (think: Apple, Amazon, Microsoft, Alphabet, Tesla) had become extreme.
Indeed, Randy Frederick, Charles Schwab’s vice president of trading and derivatives, argues the latest tech correction can largely be chalked up to, “without a doubt, the fact that things had gotten very, very expensive.”
But that doesn’t mean those like Frederick think investors have become disenchanted with the pricey group of stocks. Even with the Nasdaq’s latest correction, the benchmark only shed roughly a month’s worth of gains, Frederick points out, and is still up over 60% from March. “That is not anything to be panicked about, it’s just reality that when things go for the moonshot, they’re going to come back down to earth at some point,” he says. “That does make things more affordable, [and] I think tech still has room to run.”
To wit, buyers appeared eager to jump back into tech names Wednesday. And historically, the returns for the Nasdaq following a rapid correction are mostly positive six to 12 months out.
Still, the big argument against tech stocks in recent months (that they’ve gotten far too expensive without the true fundamental growth to back them up) remains formidable. But others like LPL Financial’s Jeff Buchbinder actually believe tech stocks are “probably fairly valued overall.” Part of that argument is that the growthy tech stocks are well-positioned in this environment (read: work from home), and that “this recovery has exceeded our expectations, the earnings rebound has exceeded our expectations, and we think stocks including tech should end the year higher than where it is right now,” Buchbinder tells Fortune.
However, Schwab’s Frederick cautions it’s only been one day of a bounce, and he always recommends waiting for two “up” days in the markets following a selloff to jump back in. But “frankly, now [the tech stocks are] all more affordable than they were, of course they’re going to be even more attractive than they were four, five days ago,” he argues.
Meanwhile, Chris Zaccarelli, chief investment officer at Independent Advisor Alliances, wrote in a note Wednesday that “as long as the buy-the-dips mentality remains foremost in investors’ minds—and it will unless they are severely punished for it—then the bull market is likely to continue.”


fortune--2020-09-10--Trump says he won’t extend deadline for TikTok to arrange U.S. sale

President Donald Trump said he won’t extend his Sept. 15 deadline for ByteDance to sell the U.S. operations of its popular TikTok video-sharing app.
“We’ll either close up TikTok in this country for security reasons, or it will be sold,” Trump told reporters Thursday before boarding the presidential aircraft for a campaign trip to Michigan. “There will be no extension of the TikTok deadline.”
Administration officials had been considering whether to give more time to TikTok’s Chinese owner to arrange a sale of the app’s U.S. operations to an American buyer, though a decision hadn’t yet been presented to Trump, according to people familiar with the matter.
TikTok’s owner, Beijing-based ByteDance, is likely to miss Trump’s Sept. 15 deadline to strike a deal to divest its U.S. operations after new Chinese regulations complicated negotiations with bidders Microsoft Corp. and Oracle Corp., Bloomberg News reported Thursday.
TikTok is caught in a clash between the world’s two preeminent powers. Trump has ramped up his pressure campaign on China ahead of what promises to be a hotly contested presidential election in November. U.S. officials have criticized the app’s security and privacy practices, suggesting that user data collected through the app might be shared with the Chinese government.
Microsoft declined to comment. Oracle and TikTok didn’t immediately respond to requests for comments.
The real deadline for ByteDance to act remains an open question in the U.S. due to a confusing series of Trump statements and orders. While Trump has said he wants a deal by Sept. 15, the ban on TikTok’s U.S. operations that he signed last month in a bid to force a sale requires the company to act by Sept. 20.
Documentation implementing that ban, possibly under the authority of the International Emergency Economic Powers Act, which allows the president to regulate international commerce in response to any unusual threat to the country, is expected to be made public in the Federal Register around Sept. 20, Bloomberg reported Sept. 2.
A subsequent order issued by Trump on Aug. 14 on the recommendation of an interagency national security panel requires ByteDance to sell TikTok’s U.S. business within 90 days — giving it until after the Nov. 3 election — further clouded the timeline for a TikTok sale.
The parties are still racing to present a preliminary deal to the White House before this month’s deadline, though no agreement could be finalized before Beijing’s signoff. It’s also possible that ByteDance pulls out of a sale altogether if it determines it can’t satisfy both governments, the bidders and its own shareholders.