fortune--2020-12-09--To try and secure a U.S. trade deal, U.K. says it will drop EU tariffs linked to Boeing and Airbus d

To try and secure a U.S. trade deal, U.K. says it will drop EU tariffs linked to Boeing and Airbus dispute

The U.K. government said it will drop the tariffs that the EU had imposed on $4 billion of U.S. goods, part of the long-running dispute over illegal aid to aircraft manufacturers Boeing Co. and Airbus SE.
The move is designed to reduce trade tensions with the U.S. and “show that the U.K. is serious about reaching a negotiated outcome,” the Department for International Trade said in a statement. Britain will set its own tariff policy when it completes its split from the EU at year-end.
The EU announced the tariffs, which target various Boeing models and products including spirits, nuts and tractors, in November as part of a tit-for-tat escalation against the U.S. — which itself imposed levies on $7.5 billion of EU products in 2019. British exports ranging from Scotch whisky to biscuits to clotted cream have suffered from the duties.
Britain is “showing the U.S. we are serious about ending a dispute that benefits neither country,” International Trade Secretary Liz Truss said in the statement. “We want to de-escalate the conflict.”
The U.K. said it will continue to impose tariffs in retaliation to levies placed on Britain’s steel industry by the U.S. Those duties target a long list of U.S. items, including steel and aluminum products, plus a range of other goods like textiles and foods.
Britain’s move is “good news” for aviation in both the U.S. and U.K., Boeing said.
“This suspension of harmful tariffs allows us to work with the U.K. as a global commercial aviation hub and offers continued support for our employees in Puget Sound and Charleston,” the Chicago-based company said in a statement. “We support a level playing field with free and fair competition across aviation.”
Boeing is uprooting the 787 Dreamliner program from a storied manufacturing hub north of Seattle and shifting the work to a non-union plant in South Carolina amid slumping sales of wide-body jetliners.
A spokesman for U.S. Trade Representative Robert Lighthizer didn’t immediately respond to a request for comment.
The U.K. has in recent months engaged in its own discussions with the Trump administration about finding a resolution to the aircraft dispute and has been pushing hard for the U.S. to lift tariffs on Scotch whisky in particular. But because of Airbus’ significant presence in France and Germany any real deal is likely to have to involve the EU.
The bloc’s trade commissioner, Valdis Dombrovskis, last week said the U.S. and Europe were engaged in intense negotiations. He added that “it’s possible” that both sides will reach an agreement by Jan. 20 governing aid to Boeing and Airbus. He reiterated an offer to remove EU retaliatory tariffs on $4 billion of American goods if the U.S. does the same for its duties on $7.5 billion of European products.
Stephen Vaughn, who served as Lighthizer’s right-hand man until last year, said the U.K.’s move was helpful from a U.S. perspective and a sign of goodwill. It also would put pressure on the EU, he said.
“It’s very encouraging to see that the U.K. and U.S. are making progress on these negotiations,” Vaughn said.
British Prime Minister Boris Johnson is trying to build up ties with President-elect Joe Biden, with the U.S.’s incoming leader warning that any U.S.-U.K. trade deal would be contingent on Johnson protecting the Northern Ireland peace settlement as part of the U.K.’s exit from the European Union.
Johnson took a step to delivering what Biden asked for on Tuesday when he backed down on his plan to rip up parts of the Brexit withdrawal treaty relating to trade with Northern Ireland. British officials hope the latest olive branch on tariffs will further ease the path for trade negotiations with Biden’s team.
But Tuesday’s move also comes amid broader questions over how much power the U.K. retains post-Brexit to legally impose tariffs in cases that pre-date its exit from the EU. In the case of the Airbus-Boeing dispute, the U.K. insists it has kept that power.
When the EU rolled out the retaliatory tariffs on Nov. 10, it did so on behalf of the current 27 members of the bloc. The U.S. has behind closed doors also indicated that it believed the U.K. would not retain the legal power to impose retaliatory tariffs, according to one person close to the discussions.
Many business interests on both sides of the Atlantic are eager to see an end to the tariffs but none more so than the liquor industry.
Move Applauded
In a statement, the Distilled Spirits Council of the U.S. applauded the U.K.’s move not to apply retaliatory tariffs on U.S. rum, brandy and vodka. It also urged the U.S. to “intensify” its efforts to reach a settlement in the Boeing-Airbus dispute.
“This is a hopeful sign that a resolution to the debilitating tariffs on U.S. and U.K. spirits may be in reach,” the group said.
Since 2018, bourbon whiskey and its Scotch relative have been caught up in various trans-Atlantic tariffs aimed at applying pressure on key political constituencies. The EU targeted bourbon in large part because it is a product of the red state of Kentucky, home to Senate Majority Leader Mitch McConnell.
–With assistance from Brendan Case.


fortune--2020-12-09--Vaccines make CFOs more optimistic

Vaccines make CFOs more optimistic

Stimulus update : Everything to know about the bipartisan $ 300 unemployment benefit plan

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Good morning.
The emergence of a vaccine is making habitually cautious CFOs more optimistic about the outlook for the U.S. economy next year. That’s my reading of Deloitte’s quarterly CFO Signals survey—the most reliable tracking of CFO sentiment I know of.
The percentage of CFOs rating the North American economy as “good” or “very good” rose to 18% in the latest survey from 7% a quarter earlier. That puts North America ahead of Europe, where only 5% of respondents rate the current economy as “good” or “very good,” but well behind China, where 47% see it as “good” or “very good.”
Looking a year out, a full 59% of CFOs expect the U.S. economy to be better. A majority (58%) expect the S&P 500 will be higher by the end of next year, and a similar majority (60%) believe the ten-year bond yield will stay below 2%.
A majority of the CFOs also are hopeful that a new administration in the U.S. will lead to a more rigorous response to the pandemic, a new stimulus package, and a bipartisan infrastructure bill. Let’s hope they are right, on all counts. You can read the full report later this morning here.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Climate catastrophe
The world is heading for a disastrous 3°C average temperature rise from preindustrial levels, well above the 2°C limit countries said they'd stick to under the Paris Agreement. According to U.N. researchers, greenhouse gas emissions reached a new record last year, and last month was the hottest November on record. "The levels of ambition in the Paris Agreement still must be roughly tripled for the 2C pathway and increased at least fivefold for the 1.5C pathway," they wrote. Reuters
Shell resignations
Several clean-energy executives at Shell have quit ahead of the oil giant's announcement of its energy-transition strategy. The departures appear to be partly linked to internal tension over the pace of change—one source told the Financial Times: "People are really questioning if there will be any change at all…Part of the frustration is that you see the potential, but the mindset isn’t there among senior leaders for anything radical." FT
Vaccine data
AstraZeneca and the University of Oxford have become the first coronavirus vaccine developer to publish their full data in a peer-reviewed scientific journal. The data confirms that their vaccine (a cheaper and easier-to-deploy alternative to vaccines from Pfizer/BioNTech and Moderna) is 70% effective overall. However, it still doesn't definitively show how effective the vaccine is with patients over the age of 55. Washington Post
Battery breakthrough
The Bill-Gates-backed battery startup QuantumScape says it will be able to power cheap, long-range electric vehicles within four years. The company, which is also backed by German auto giant Volkswagen, says its lithium-metal batteries can be repeatedly recharged without degrading, and also charged very quickly. Fortune
AROUND THE WATER COOLER
Google disquiet
Google management reportedly tried to calm internal ructions over its firing of AI ethicist Timnit Gebru with a discussion that was broadcast to employees in its A.I. division and the Black Googler Network. Gebru was fired after co-authoring a research paper on bias in A.I. Some workers were unhappy that they couldn't ask questions directly to the senior management having the discussion. Business Insider
Failing health
Fortune's Erika Fry spoke with AMN Healthcare CEO Susan Salka about the worsening shortage of health care workers in this pandemic. Salka: "The sheer numbers are enormous. In terms of the number of open positions that we have for nurses, they are roughly four times the levels that we saw during the first phase of the pandemic. Then it was pretty much all just ICU and COVID-related; now it's that plus just normal positions that can't get filled." Fortune
Texan Musk
Elon Musk has moved to Texas, where Tesla's new factory is being built. The move comes with tax advantages, plus he foresees "some reduction in the influence of Silicon Valley." Musk says California has become complacent with its innovators. (No word yet as to whether Grimes, the artist mother of Musk's youngest child, is also going Texan.) Wall Street Journal
European standoff
Bloomberg has a good explainer about the EU's budget standoff between Poland and Hungary on one side, and everyone else on the other. It's about the linking of EU funds to the rule of law (a shaky business in Warsaw and Budapest these days.) From the piece: "The two countries have been emboldened by years of EU threats being backed up by little action. Yet they are still reliant on Brussels largesse, and neither Hungary nor bigger Poland can realistically afford to leave the EU." Bloomberg
This edition of CEO Daily was edited by David Meyer.


fortune--2020-12-09--Chevron grapples with a new oil reality

Chevron grapples with a new oil reality

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Of the businesses most hurt by the pandemic, Chevron is near the top. Oil prices plummeted earlier this year after it became clear that the world’s economy—and all the commuting, trucking, and shipping that fuels it—would go into lockdown.
To make matters worse, the energy industry had been pursuing a two-decades-long expansion in fracking. It didn’t matter that many experts had predicted that the world had reached or was near reaching “peak oil,” the point at which global oil production reaches a zenith and would then start to drop because of a shift to more sustainable energy sources.
Interviewed on Fortune’s Leadership Next podcast, Chevron CEO Michael Wirth acknowledged the current difficulties in the oil patch. But he argued that oil would play a major role in the global economy for the foreseeable future.
“Oil is an enormous part of the energy economy today and will be for a long, long time to come,” Wirth said.
Still, Chevron, which pumps oil everywhere from Texas to Nigeria to Kazakhstan, has tried to weather the current slump by cutting thousands of jobs and by reducing planned spending by billions of dollars over the next few years. In the past 12 months, the company has written down the value of its energy fields by nearly $16 billion, an admission that there won’t be a quick turnaround.
The complexity of Chevron’s situation, and that of its rivals, is compounded by a global reckoning over climate change. Nearly 190 countries have signed the Paris Agreement, a plan to reduce carbon emissions. Meanwhile, the United Nations is pushing countries to achieve net-zero carbon emissions by 2050. Both plans would require countries to make a dramatic shift to renewable energy and forgo oil and natural gas.
Wirth said that Chevron and the rest of the energy industry can nevertheless play a big role by shifting more of its focus to green energy. He pointed to an existing Chevron project in Australia that involves taking carbon dioxide emissions and storing them underground, and another that transforms methane from dairy cow manure into natural gas.
But achieving any meaningful reduction in carbon emissions will require additional tools, and Chevron, Wirth said, is investing in several carbon-free technologies including nuclear fusion and hydrogen. Yet even if countries achieve their carbon goals, he added, fossil fuels will still be part of the energy mix.
“I think we’re going to need a lot of technologies and solutions that don’t exist today to actually take carbon out of the atmosphere to get to net zero,” Wirth said. “Because the reality is there will still be carbon emissions in the system as we get to 2050, under any scenario.”
Correction: An earlier version of this article incorrectly defined “peak oil”. It’s the point of maximum oil production, not maximum oil consumption.


fortune--2020-12-09--Investors turn bullish on vaccine hopes, IPO mania, and stimulus talks

This is the web version of Bull Sheet, a no-nonsense daily newsletter on what’s happening in the markets. Sign up to get it delivered free to your inbox.
Good morning, Bull Sheeters. It’s a risk-on day as stimulus talks and vaccine progress lift investor sentiment from Tokyo to New York.
We also have a big stock market debut today. DoorDash begins trading in a few hours, and the bidding so far has been fierce. The IPO share price is above 100 bucks, the Wall Street Journal reports, citing sources in the know.
Let’s see where else investors are putting their cash.
Markets update
Asia
The major Asia indexes are mostly higher in afternoon trading with Japan’s Nikkei up 1.2%, continuing its impressive run. Investors are cheering a $708 billion stimulus package to revive Japan’s COVID-hit economy.
are mostly higher in afternoon trading with Japan’s up continuing its impressive run. Investors are cheering a stimulus package to revive Japan’s COVID-hit economy. SoftBank was up 5.6% on news the tech conglomerate/investment group is mulling a plan to quietly buy up shares and go private, Bloomberg reports, citing sources.
on news the tech conglomerate/investment group is mulling a plan to quietly buy up shares and go private, Bloomberg reports, citing sources. Here’s good news for automakers. Car sales in China, the world’s biggest market, climbed again in November, further evidence the two-year slump is over.
Europe
The European bourses are bouncing back this morning with the Stoxx Europe 600 up 0.4% at the open.
are bouncing back this morning with the up at the open. Dinner in Brussels. Boris Johnson heads to Belgium in a few hours for a dinner date with Ursula von der Leyen to see if the two can salvage post- Brexit trade negotiations .
heads to Belgium in a few hours for a dinner date with to see if the two can salvage post- . Meanwhile, Britain resumes its national COVID vaccination program, a rollout that went smoothly yesterday. Americans could be next in line.
program, a rollout that went smoothly yesterday. Americans could be next in line. The Wirecard scandal has claimed yet another scalp as Deutsche Bank’s head of accounting stepped aside as prosecutors in Munich step up their investigation into the insolvent payments company.
U.S.
U.S. futures are a touch higher after the S&P 500 and Nasdaq finished Tuesday again in record territory despite little progress on reaching a deal on a $908 billion (or larger) stimulus package. But the fact the two sides are still negotiating is a good sign, the markets reckon.
are a touch higher after the and finished Tuesday again in record territory despite little progress on reaching a deal on a (or larger) stimulus package. But the fact the two sides are still negotiating is a good sign, the markets reckon. Tesla shares closed 1.3% higher yesterday after it emerged the EV maker would tap the capital markets for a third time this year, hoping to raise close to $5 billion in a share-sale.
higher yesterday after it emerged the EV maker would tap the capital markets for a third time this year, hoping to raise close to in a share-sale. Apple shares are flat in pre-market trading, suggesting investors aren’t blown over by its new $550 headphones. Why so expensive? They go over your ears so it’s less likely you’ll keep misplacing them, a lá the AirPods.
Elsewhere
Gold is down, trading below $1,870/ounce .
is down, trading below . The dollar’s slide continues today.
slide continues today. Crude is up, with Brent futures trading above $49/barrel .
is up, with futures trading above . Hold onto your hats, Bitcoin bulls. The virtual currency is down 6.3%, trading below $18,000.
***
A view from the C-suite
When will the wider economy catch up to the stock markets? It’s a question that’s been top-of-mind since equities started their impressive comeback in April, even as the global economy sputtered and wheezed.
We’ve seen GDP climb back, but it’s been an incredibly uneven recovery, and economic output is still well behind pre-pandemic levels.
So, it’s particularly timely to get a check-in with the finance chiefs at the world’s biggest companies. Deloitte’s quarterly CFO Signals survey—which we’ve covered in this space before—shows an improved outlook as we head into 2021. Even those downers in Europe see better times in 2021.
The most bullish subset of CFOs can be found in China where nearly half (47%) say the economy is “good now,” and 60% say it will be even better a year from now. CFOs in North America have a similarly rosy outlook, as the graphic above shows. But those same CFOs are concerned about the first half of 2021 as stimulus talks continue to bog down and they maintain cautious optimism about the speed of the vaccine rollout.
The survey was conducted in mid-November when the S&P was trading around 3,500. (It closed at 3,702 yesterday). At that mid-November level, nearly 60% of survey respondents expected the benchmark to climb further by the year-end. But here’s the thing—”80% also say it is overvalued.”
80%!
Given the mid-November timing, just as Joe Biden was being named President-elect, the CFOs reflected on policy matters, too. They have a big wish list for Washington. “As a new administration takes over, CFOs overwhelmingly support a new stimulus package, infrastructure investment, de-escalating US-China trade tensions, less protectionist trade, and the federal government leading a COVID-19 response,” the report reads.
“Although there are industry differences, CFOs’ hopes for Washington center largely on improved bipartisanship and cooperation in getting important things done, and on unifying the country with more ‘moderation,’ ‘transparency,’ and ‘decency.'”
Let’s hope Washington is listening.
***
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
Share price hacked. Cybersecurity specialists FireEye disclosed yesterday it had been hacked by a sophisticated "nation with top-tier offensive capabilities," sending its shares bombing lower. It's down nearly 8% in pre-market trading this morning.
"A new kind of gold rush." What's the value of a brand's lapsed trademarks—names like Aunt Jemima, Uncle Ben and Eskimo Pie? All three brand names are now defunct as consumer goods companies face a reckoning from activists pushing for more racially sensitive branding. But those names may not go away, Fortune's Beth Kowitt reports. There's a cottage industry bidding for such trademarks. "Trademark abandonment," says one bidder, is "a new kind of gold rush."
Some of these stories require a subscription to access. There is a discount offer for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.
Market candy
Tangled up in red
Bob Dylan fans no doubt noticed the news this week that the songwriter had sold his massive music catalog to Universal Music Group in a deal speculated to run around $300 million. Fortune's Geoff Colvin looks into whether the deal's timing could have been the brainchild of his accountants. If the sale were to close this month it would be safe from any prospective capital gains tax-hike being mulled by President-elect Joe Biden. "Bottom line: The tax on a deal like Dylan’s could almost double if it doesn’t get done by New Year’s Eve," Colvin writes.


fortune--2020-12-09--UAE says China’s state-backed COVID-19 vaccine is 86% effective

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A Chinese COVID-19 vaccine appears to have crossed the finish line—at least in the United Arab Emirates (UAE).
On Wednesday, the UAE said a vaccine candidate from Chinese state-owned Sinopharm was 86% effective in protecting against COVID-19 infections based on data analysis from 31,000 volunteers, according to the UAE’s state-owned media outlet The National. The UAE has now officially registered the vaccine for public use, according to the report, and will begin widespread distribution to its population this week.
Eighty-six percent efficacy is just behind the rates reported by front-runners Pfizer and Moderna, who say their jabs stop 94% and 95% of COVID-19 infections, respectively.
The UAE’s approval of Sinopharm’s vaccine will “lead the way to comprehensively protecting the population and responsibly opening the economy,” the UAE’s Ministry of Health and Prevention told The National on Wednesday. The successful trials mark a “major step toward combating the global pandemic,” the health ministry said.
Sinopharm had tested two different vaccine candidates in the UAE that were both based on deploying inactivated forms of the virus to fight infections. In the announcement, the UAE indicated it has opted for one of the two candidates—a vaccine originally developed by the Beijing Institute of Biological Products, rather than the one made by the Wuhan Institute of Biological Products.
Sinopharm did not respond to Fortune’s request for comment.
Neither the UAE nor Sinopharm have yet to publish the Phase III trial data, and it is unclear if, or when, other countries would approve Sinopharm’s candidate based on data from UAE trials. Sinopharm has filed an application to distribute its vaccines in China, but the government has yet to respond to the request.
While Sinopharm awaits approval to distribute its vaccines to the general population, the Chinese government has been deploying Sinopharm’s vaccine to high-risk groups since July as part of the country’s controversial emergency use program. Scientists have cautioned against deploying vaccines before the conclusion of Phase III trials, but Sinopharm recently said over 1 million people in China had been injected with its vaccines outside of trials.
The UAE’s approval and rapid deployment of Sinopharm’s vaccine may reflect how quickly it has adopted China’s standards in the COVID-19 vaccine development process. In September, the UAE authorized its own emergency use program and distributed Sinopharm’s vaccines to high-risk groups before the conclusion of Phase III trials.
While experts have raised questions over Sinopharm distributing unproved vaccines, the company has distinct advantages over rivals in rolling out its vaccine. First, its inactivated virus technology means that its vaccine will likely be more accessible to lower- and middle-income countries. Sinopharm’s vaccines can be stored and shipped at normal refrigeration temperatures (2 to 8 degrees Celsius), whereas vaccine candidates from U.S. vaccine makers Pfizer and Moderna require expensive subzero cold-chain networks for distribution.
Second, the company says it will have the capacity to produce 1 billion doses of its candidate in 2021 and has established a large cohort of international partners via clinical trials. The company is testing its candidates in Bahrain, Morocco, and Peru, and claimed in September that it had made agreements for clinical trials in at least seven other countries.
“[Sinopharm’s] large scale rollout [via China’s emergency use program] also means that there is already a large distribution system, which has already been stress-tested,” Nicholas Thomas, a vaccine expert and health governance professor at the City University of Hong Kong, told Fortune this week. “This is a major advantage in the future distribution.”


fortune--2020-12-09--A 2,000-person Royal Caribbean cruise to nowhere didn’t end well

A Royal Caribbean Cruises Ltd. ship is back in Singapore on what was meant to be day three of a four-day cruise to nowhere after a positive COVID-19 case was identified on board early Wednesday.
About 2,000 passengers aboard the Quantum of the Seas vessel were informed of the development by the ship’s captain over the public announcement system at about 2:45 a.m. local time. The passenger who tested positive was isolated while officials traced their contacts.
Around 8 a.m., the captain told passengers that one passenger felt unwell and tested positive for COVID. All those found to have contact with the person have been tested and quarantined. Other passengers were told to stay in their staterooms. Once contact tracing has been completed, they will be allowed to disembark, but it’s unclear how long that will take. Passengers will also have to take a rapid COVID test to leave the ship.
“We know this isn’t exactly how you planned to spend your cruise, and we are terribly sorry,” a note sent to passengers on Wednesday read. “Again, this is for your benefit and to ensure all guests remain healthy and well.” The captain, in an announcement over the ship’s loudspeaker, said an update would be provided at 11 a.m.
The news is another set back for Singapore, a tiny island nation whose economy relies heavily on the tourist dollar. Just last month a highly anticipated air travel bubble between Singapore and Hong Kong that would have replaced quarantine with COVID testing was scrapped due to rising case numbers in Hong Kong.
Royal Caribbean International and Genting Cruise Lines have been running cruises to nowhere — voyages that depart and arrive back in the same destination after a stint sailing around offshore — as the city state aims to bolster its tourism sector and give residents an outlet for their wanderlust. The positive case is a blow to that push, with reporters invited on board the Quantum of the Seas to experience the new initiative.
Smoking, Free Phone Calls
It comes as other countries struggle to revive and reinvent their tourism sectors for the COVID era. Japan has had to rein in an initiative that encouraged residents to travel domestically after tourist areas saw an uptick in virus infections. In Europe, the resumption of vacation travel in summer is thought to have fanned the current second wave.
Stringent protocols for cruise operators and passengers to permit the Singapore pilot voyages were established. These included testing of crew and passengers, increased sanitization and fresh air circulation measures. Cruises were also required to sail at a reduced passenger capacity of 50%.
Ultimately, those proved insufficient to combat a virus that’s now infected more than 68 million people globally and taken the lives of almost 1.6 million.
Royal Caribbean in its note to passengers said that free phone service would be provided in order to help people adjust their travel plans. People are also being allowed to smoke in their bathrooms, even though this is normally prohibited. The cruise, almost at full capacity, has a large number of families on board with small children.
Five 1.5 liter bottles of water have been left outside staterooms and breakfast was delivered between 8:30 a.m. and 9:30 a.m., according to a Bloomberg reporter who is on board. Passengers are being urged to be patient and wait for updates. Some that have rooms with balconies are standing outside to try to get better internet access.
“All impacted guests will receive a refund in the form of an onboard credit for the day missed,” Royal Caribbean said in its note to guests. “Additionally, we will provide you with a future cruise credit for the value of one day’s worth of cruise fare paid to be used on a future sailing. We are dedicated to maintaining your well-being and making the next few days relaxing and enjoyable.”
Those who had booked on another cruise that was to depart Thursday can cancel and will receive a refund credit.
With international travel all but off limits, Singapore has been trying to come up with ways to stimulate its domestic economy. On offer are daycations at hotels plus luxury overnight camping at Changi Airport, and the government has launched a domestic tourism campaign, with S$320 million ($240 million) in credits set aside to encourage residents to support local businesses. The S$100 vouchers, which have been sent to all Singaporeans aged 18 and above, can be used for attractions, hotel stays and tours.


fortune--2020-12-09--U.S. plan to vaccinate most Americans by summer depends on AstraZeneca and J&J

The U.S. government’s plan to vaccinate most Americans by next summer rests heavily on two COVID-19 shots that U.S. regulators won’t get a chance to rule on until early in 2021.
AstraZeneca Plc and Johnson & Johnson together would provide 150 million to 200 million shots in the first quarter, said Moncef Slaoui, chief scientific officer of Operation Warp Speed. This could immunize 110 million to 150 million people, if the doses are evenly split between J&J’s single-dose vaccine and Astra’s two-dose regimen.
That’s on top of vaccines from Pfizer Inc. and Moderna Inc., from whom the U.S. has ordered enough doses for 100 million people combined.
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Slaoui detailed the plan in response to criticism that the U.S. left itself exposed by declining to order more doses from New York-based Pfizer, whose vaccine is likely to be authorized for emergency use in the coming days. At the White House’s vaccine summit Tuesday, Slaoui defended the strategy of spreading bets among vaccine makers relying on different technologies. The goal: Ensure the plan wasn’t hindered by any individual clinical failure, manufacturing delay, or poor execution by management, he said.
“Already with this portfolio, I feel confident that we can cover the U.S. population within the first half of 2021,” Slaoui said at the Milken Institute’s Future of Health summit. Later at the White House meeting, Slaoui specified that every person who wanted a vaccine would get access by June.
The U.S. has an agreement for 100 million doses of the Pfizer-BioNTech SE two-dose vaccine regimen, enough for 50 million people. Both shots are needed to provide full immunity. The New York Times and the Washington Post reported Monday that Pfizer had offered an additional 100 million doses to the U.S., which declined.
Scott Gottlieb, the former Food and Drug Administration chief who now sits on Pfizer’s board, said Tuesday on CNBC that the offer remained on the table even after Pfizer released data showing the vaccine was highly effective in a clinical trial. Eventually, other countries took their place in line ahead of the U.S., and now Pfizer’s home nation would have to wait until late summer to get more doses.
Without more Pfizer vaccines for the time being, estimates for when the U.S. can reach herd immunity could be at risk unless the U.S. can get more doses elsewhere, Morgan Stanley analyst Matthew Harrison said in a research note. Harrison had been modeling vaccinations reaching a tipping point by mid-2021.
Earlier Talks
In earlier negotiations with the U.S., Pfizer didn’t guarantee that it would be able to deliver an additional 100 million doses in a specified time frame, according to a White House official who asked not to be identified discussing private information.
The parties remain in talks about the U.S. exercising an option to purchase additional doses, the official said. Pfizer declined to comment on negotiations with the government.
During the White House summit on Tuesday, President Donald Trump raised the specter of invoking the Defense Production Act — which allows the president to require companies to prioritize contracts deemed essential for national security — if the U.S. struggles to obtain the vaccine for its citizens.
However, with more Pfizer doses unavailable for the short run, based on current agreements, the U.S. needs AstraZeneca and J&J to present data to the FDA that shows their vaccines are effective and safe.
J&J Trial
Currently, J&J has recruited more than 35,000 healthy participants to a late-stage clinical trial, for which it hopes to enroll 60,000 people.
Slaoui expects interim data from the trial to read out in early January, though J&J executives have said they expect to report such data toward the end of the month. Warp Speed’s chief scientist added at the White House event that he anticipates J&J’s shot will get a green-light from U.S. regulators in late January or early February.
The U.S. has thus far secured enough doses for 100 million people.
Meanwhile, AstraZeneca and the University of Oxford’s U.S.-based clinical trial has recruited 17,000 participants out of its 40,000-person target, and won’t read out until late-January or early-February, with the potential for an emergency-use authorization coming toward the end of February or early March, according to Slaoui.
Outside the U.S.
Astra and Oxford have a separate trial underway outside the U.S., which has reported more moderate efficacy than the shots from Pfizer and Moderna. The U.S. has reached a deal for 300 million doses of the Astra-Oxford vaccine, which also requires a shot-plus-booster regimen.
Because they use a different technology, AstraZeneca and J&J could scale up manufacturing much more quickly than Pfizer and Moderna, Slaoui said.
A third group of vaccines, one by Novavax Inc. and the other by Sanofi and GlaxoSmithKline Plc, could be authorized in the spring for use in April or May, he said. “Those can also produce hundreds of millions of doses,” Slaoui said.
Moderna Agreement
If all of those candidates somehow fall short, the U.S. still has an an additional option for supply from Moderna, whose vaccine is awaiting authorization from the FDA later this month.
Moderna’s original supply agreement with the U.S. for 100 million doses allows for the government to order 400 million more, according to Moderna spokesman Ray Jordan. A price of $16.50 per dose has already been agreed upon and no new negotiation is required.
Specific opt-in and delivery dates for the option agreements — which can be reached in four 100 million-dose tranches — haven’t been disclosed, said Jordan.
Any additional Moderna shot orders from the U.S. would be fulfilled by plants in New Hampshire and Massachusetts, and the U.S. would be get priority from output from those plants, Jordan said. A separate plant in Switzerland is being used to supply doses for Europe, he said.
Given the timing of the manufacturing scale-up, most of any additional U.S. supply wouldn’t be delivered before the second quarter of 2021.
However, in a note to clients on Tuesday, Morgan Stanley’s Harrison said that the U.S. government’s opt-in period would begin after the Moderna vaccine gains emergency clearance.
“We believe the U.S. government can move quickly,” he wrote. And that if the U.S. does exercise its options, Moderna “could provide the vast majority of doses to the U.S.”
One potential hurdle would be whether Moderna could secure enough raw materials to make all those vaccines, he said. Slaoui said at the Milken Institute event that Operation Warp Speed had anticipated that hurdle, and was currently aiding the various vaccine-makers in acquiring such materials.


fortune--2020-12-10--Airbnb gets $47 billion market value in blockbuster IPO

Airbnb, within hours of DoorDash nearly doubling in its trading debut, priced its initial public offering above a marketed range to raise about $3.5 billion, according to people familiar with the matter.
The home-rental company’s IPO — anticipated for years by eager investors — tops DoorDash’s $3.37 billion offering as a flurry of consumer-facing web-based companies going public this month continues. Airbnb’s listing adds to what was already a record year for IPOs, with more than $163 billion raised on U.S. exchanges, according to data compiled by Bloomberg.
Airbnb and its investors are selling about 52 million shares Wednesday for $68 each after marketing them for $56 to $60 each, said the people, who asked not to be identified because the information wasn’t public yet. At that price, Airbnb has a fully diluted value of about $47 billion, which includes employee stock options and restricted stock units.
A representative for Airbnb declined to comment.
Other companies lined up for IPOs this month include video-game company Roblox, installment loans provider Affirm and ContextLogic, the parent of online discount retailer Wish.
San Francisco-based Airbnb had seen a bounce back in domestic bookings since the early days of the pandemic crushed demand.
Morgan Stanley and Goldman Sachs Group Inc. are leading the IPO. Shares of Airbnb are expected to begin trading Thursday on the Nasdaq Global Select Market under the symbol ABNB.


fortune--2020-12-10--Will Facebook have to spin off WhatsApp and Instagram? Unlikely

In a landmark day for antitrust law, 46 states and the Federal Trade Commission sued Facebook for allegedly smothering competition. The lawsuits are a bombshell for the tech industry—most notably for what the FTC is seeking: an order to break up Facebook into separate companies.
Specifically, the agency wants Facebook to divest assets “including, but not
limited to, Instagram and/or WhatsApp.” This would mean Facebook shareholders may come to own three companies not one, while consumers could see two new firms take control of their data.
Such a move would mean a colossal shake-up of the social media landscape—if it ever happens in the first place. And that may be a long shot.
While regulators frequently require companies to divest business units, these orders typically occur in the context of proposed mergers. A prominent recent example is when the Justice Department required pharma giant Bayer to sell $9 billion worth of assets, including seed units, as a condition of acquiring Monsanto.
The Facebook situation is different as it concerns acquisitions the company made nearly a decade ago (Instagram) and six years ago (WhatsApp)—a point that Facebook was quick to point out.
“Now, many years later, with seemingly no regard for settled law or the consequences to innovation and investment, the agency is saying it got it wrong and wants a do-over,” said Facebook in a statement.
But while Facebook suggests it’s unfair for the FTC to try to reverse acquisitions it tacitly approved in the past, there’s no legal obstacle to prevent the agency from doing so, according to Charlotte Slaiman, a former FTC lawyer who now works at the nonprofit public interest organization, Public Knowledge.
Slaiman says the issue is whether Facebook has behaved anticompetitively, and if it has then the FTC can propose whatever remedies it views as necessary to fix the problem.
“They’ve presented a strong case and could win this,” says Slaiman of the government lawsuits, but adds that the question of remedies is far down the road.
Meanwhile, there are only a handful of precedents involving courts ordering the breakup of companies. The most famous recent example is when a federal judge ordered Microsoft in 2000 to be broken up into two firms—one controlling Windows, and another that would own all of Microsoft’s other businesses. An appeals court reversed that order, however, and accepted a series of less drastic remedies.
The other prominent breakup case involved AT&T. In 1974, the Justice Department sought an order requiring the phone giant to divest its equipment subsidiary, Western Electric. Sensing it was going to lose, AT&T proposed its own breakup arrangement that resulted in the company being split into various units in 1982.
The AT&T arrangement came about in the wake of numerous investigations by Congress—a process that Slaiman says should be followed in the case of Facebook. She praised recent antitrust inquiries by congressional committees, which she believes helped lay the groundwork for this week’s lawsuits.
This still leaves the question of whether the FTC will actually succeed in forcing Facebook to divest WhatsApp and Instagram to a competitor, or to spin them off as independent companies.
Slaiman was reluctant to make a prediction, but she did say it will likely be years before we know the outcome. She noted that, when it comes to companies seeking merger approvals, the firms are typically eager to provide documents to the government as quickly as possible. But in the case of Facebook, which hates the idea of spinning off its prize assets, the company is likely to find every way to slow-roll the process.
The bottom line is that it appears unlikely Facebook will have to divest WhatsApp and Instagram anytime soon, if ever. But if Congress keeps up the pressure on Big Tech, it’s possible Facebook will propose a more modest solution of its own to address the monopoly concerns raised in the lawsuits.


fortune--2020-12-09--The USPS is still in big trouble under Biden

Celebrities tweeted about it, politicians campaigned on it, friends on Instagram posted about it, and some even wore it on T-shirts. It was the rallying cry of late 2020: #SaveThePostOffice.
But as the initial chaos surrounding the presidential election begins to dissipate, President Donald Trump’s election-fraud lawsuits get thrown out of court, and President-elect Joe Biden’s transition team takes over the news cycle, that public fervor for the United States Postal Service has fallen to the wayside.
It makes sense. Biden, who raised campaign dollars on his plan to keep the post office from privatizing and to supply it with adequate funding, will soon be in power.
The problem, in many American eyes, is solved. Mission accomplished, right?
“I see the comments on news stories about the USPS,” said Mark Dimondstein, president of the American Postal Workers Union. “They’re all exploding with misinformation. The public thinks that the postmaster general [Louis DeJoy] is going to go away when Trump does because they’re so closely linked.”
But, said Dimondstein, “the common wisdom is wrong.”
In reality, Biden does not get to nominate or fire the postmaster general—that’s up to the USPS Board of Governors, the majority of whom are Republican.
It’s easy to understand the confusion because the inner workings of the Postal Service are just that: confusing.
It’s a semi-governmental agency that runs like a business but functions like a public service. It’s politicized but supposed to be apolitical, and there have been a number of large restructurings of the post office in the past 50 years. Until 1970, postmaster general was a cabinet position, nominated by the President, but the power shifted away from the White House in Nixon’s Postal Reorganization Act as an attempt to depoliticize the job.
And so DeJoy, who has told Congress that he would like to privatize parts of the USPS and who made changes with the intent to slow mail delivery, will remain at the helm of the post office for the foreseeable future.
Ahead of the election, DeJoy instituted changes to eliminate overtime distribution and sorting, resulting in unprecedented slowdowns of mail and package delivery.
Data obtained by the American Postal Workers Union, which represents about 200,000 postal workers, shows that nearly 20% of all work by mail handlers, city carriers, and postal drivers is done in overtime. There were no plans to hire more employees to make up for the cut in hours. After significant public and political pressure, DeJoy said that he would suspend the slowdown until after the election but not permanently.
Without the attention that was heaped upon the USPS in the lead-up to the election, union officials worry that he’ll be able to make changes one again, but this time they’ll fly under the radar.
“The post office has to have enough staff and hire enough workers to serve the people. If you don’t have enough people and hours of work to make sure that there is prompt service, that puts us into a downward spiral,” said Dimondstein.
It’s not just slowdowns. A lack of business-class mail and the quarantine of thousands of postal workers because of COVID-19 have led to a significant loss in revenue for the already ailing postal service. In the fourth quarter, USPS reported that it had lost $9 billion for the full year, despite an increase in package volume. Sales were up $73.1 billion from $71.1 billion in 2019, but first-class mail and marketing mail sales fell to $37.7 billion from $40.8 billion last year.
The gap between revenue and reported losses was also the result of expenses that the U.S. government imposes on the postal service and which other businesses don’t face, like the pre-funding of retiree health care pensions well into the future.
The law, passed in 2006 with the support of the George W. Bush administration, required USPS to pre-fund employee retiree health benefits years into the future. Typically, companies that pay pensions do so as the cost arises and aren’t required to set aside money in advance. No other federal agency bears this burden, and critics call the law “draconian,” claiming that it was created with the intention of leading the postal service toward privatization. Pension funding accounted for an estimated 80% to 90% of the agency’s losses before the pandemic, said officials.
Still, DeJoy blamed the postal service’s business model for the loss and called for future cuts. “The postal service has had a systemic imbalance between revenues and costs for more than a decade,” he said.
Dimondstein does see a way forward without future cuts or privatization, but it’s a slow way forward and requires the postal service to retain the political capital and popularity it currently enjoys.
Congress could overturn the parts of the 2006 Postal Accountability and Enhancement Act that require the pre-funding of pensions.
Earlier this year, Congress passed a bill that did just that along relatively bipartisan lines, but it got stuck in the Republican-controlled Senate. As this session of Congress comes to an end, so does the un-passed bill. But Diamondstein has hope that it will be reintroduced next year and the Senate will be more agreeable this time around.
And while Biden is unable to pick a postmaster general, he does get to appoint the nine governors who serve on the board of the USPS for seven-year terms. There are currently only five members serving, which means that Biden can nominate four new governors right away. The remaining five members will see their terms expire over the course of his administration, freeing up more room for his nominees. Those serving on the board are permitted to select a new postmaster general.
The postal service is also still holding out hope that Congress will include emergency funding for the agency in its next stimulus package. It’s asking for $25 billion.
Previously, DeJoy agreed to take a $10 billion loan from the U.S. Treasury in lieu of a bailout. In exchange for the loan, the postal service agreed to hand over proprietary information about 10 of its most lucrative contracts with third-party shippers like Amazon, FedEx, and UPS. The postal service works with these shippers to deliver “last mile” deliveries, sometimes at slightly discounted rates, a practice that Trump has long derided, especially when it pertains to Amazon.
The loan also requires the USPS to deliver the Treasury with monthly and quarterly financial and volume reports. The Treasury has also attempted to use the loan negotiations to gain control of personnel decisions, third-party contract approvals, package prices, and union negotiation strategies but eventually settled for receiving proprietary information.
It is unlikely that Janet Yellen’s Treasury will attach these caveats to any future loans.
The USPS is the most well-liked government agency in the country, according to Pew, with a 91% favorability rating. Another poll found that 92% of American voters said they supported direct financial aid for USPS as part of the next coronavirus relief bill.
The USPS is the only universal provider of mail service and has been a low-cost anchor for the mailing industry, helping to keep private mail service rates down. A recent analysis by the Institute for Policy Studies found that without the USPS, 70 million more Americans would have to pay hefty surcharges for deliveries.
“Look, I wish Congress had dealt with this head-on last March when they had the opportunity to, but instead the can got kicked down the road,” said Dimondstein. “We’re certainly concerned. We don’t want the public to take their eye off the prize, and we’re going to continue to try to be as public and loud as we can in our views so that they don’t.”


fortune--2020-12-09--Stimulus update: Why the White House’s $916 billion proposal won’t fly

For the latest information on the ongoing stimulus negotiations, please check out our coverage here
For months, members of both parties have pushed for the next stimulus package to include enhanced jobless benefits for the more than 19 million Americans still on state unemployment rolls.
That explains why some Democratic leaders were frustrated Tuesday when Treasury Secretary Steve Mnuchin unveiled the White House’s $916 billion stimulus plan—which did not include weekly enhanced unemployment payments.
While the White House’s new $916 billion proposal includes $160 billion for state and local funding (a key Democrat ask), liability protection for businesses (a Republican wish), and even $600 per person stimulus checks, it notably doesn’t include any enhanced unemployment insurance and provides only $40 billion for extending Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) that are set to expire this year. By contrast, the $908 billion bipartisan deal proposed last week would provide for $300 per week enhanced unemployment benefits.
Though the inclusion of stimulus checks has been gaining in popularity on both sides of the aisle, the White House bill as-is is a nonstarter.
House Speaker Nancy Pelosi quickly dismissed the White House deal, declaring “the President’s proposal starts by cutting the unemployment insurance proposal being discussed by bipartisan Members of the House and Senate from $180 billion to $40 billion. That is unacceptable,” she said in a joint statement with Sen. Chuck Schumer following the release of the White House’s proposal. They added the deal “must not be allowed to obstruct” the current bipartisan talks, and that “cutting unemployment to the extent [Mnuchin] has is…not going to get much support among any Democrats,” Schumer told reporters Wednesday.
The Treasury Department did not respond to Fortune’s request for comment about the White House’s latest offer.
Indeed, while the inclusion of stimulus checks would be welcomed in many corners, when compared to funding for things like enhanced unemployment, such “blanketed” checks are less critical to the economy, some economists and analysts say.
“The first priority is, bottom line, those households who don’t have a job, don’t have any savings,” Mark Zandi, chief economist at Moody’s Analytics, recently told Fortune.
Meanwhile Michelle Meyer, head of U.S. economics at Bank of America, adds, “Unemployment insurance is critical, and not just the dollar amount but the various programs. At the end of the year, the pandemic unemployment programs are set to expire. Those are the ones that expand eligibility to self-employed and gig workers,” she recently told Fortune.
A spokesman for Mitch McConnell did not respond to Fortune‘s request for comment on whether the senator supports the White House deal.


fortune--2020-12-09--Tom Siebel, CEO of C3.ai, discusses failure and the future after his company’s soaring IPO

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Nine out of 10 companies fail when implementing artificial intelligence software, says Tom Siebel, the billionaire founder and chief executive of C3.ai. And in that failure Siebel has found opportunity.
C3, which sells software that enables large companies to implement and manage large A.I. applications, saw its shares soar more than 150% in their first day of trading on the New York Stock Exchange Wednesday. The company raised $651 million in the initial public offering that saw the business valued at more than $10 billion.
“Virtually every one of our customers failed one, two, or three times” trying to build their own A.I. systems, Siebel told Fortune hours after the IPO. He says this is the same pattern he had seen earlier in his career, first selling database software in the 1980s at Oracle, and later building Siebel Systems, the sales-force automation and customer relationship software company he sold to Oracle for $5.85 billion in 2005. “History doesn’t repeat itself, but it sure rhymes,” he says. “These companies try a few times. They fire the CIO, and then they get serious and get the job done.”
C3, which Siebel founded in 2009, saw its revenues leap 71% to $157 million in the 12 months through April 2020. But the company’s expenses, particularly its research and development costs and its sales and marketing spending, are growing even faster. As a result, the company lost $70 million in the same period.
“We are building a structurally profitable, structurally cash positive business,” Siebel says. But, he notes, investing in the company’s growth means that it will continue to lose money on an operating basis for the next few years. He says that the cash flow should turn positive three to four years from now and that the business should be able to generate profit margins in excess of 20% in the long run.
The company has about 50-odd customers but generates a large portion of its sales, 44%, from just three of them: oil services firm Baker Hughes, French energy company Engie, and industrial equipment maker Caterpillar. Siebel says that the firm is rapidly diversifying and that he knows of at least 50 additional customers the company was working on closing in the next six months.
The CEO says he sees the biggest market for A.I. software in health care, where he predicts it will help usher in a revolution in personalized medicine, helping doctors to determine which patients are most likely to develop certain diseases and intervene earlier to prevent them. He says it will also help with more targeted treatments for cancer and other conditions.
Siebel, who is nothing if not outspoken, says the incoming Biden administration should set guidelines for A.I. companies, particularly around A.I. ethics. “There are many cases where A.I. is being used, particularly by social media, to, I think, enormous social detriment,” he says. He points to mental health issues in young people that are caused or exacerbated by social media as well as political polarization and disinformation as areas where the government should step in and regulate technology. He also says regulation is needed on how companies could use personally identifiable information in training A.I software.
He urges the incoming Biden administration to commit more resources to using A.I. in military and intelligence applications, particularly in light of China’s multiyear, multibillion-dollar investment in these technologies. “Make no mistake, we’re at war with China in artificial intelligence,” he says.
C3.ai has major contracts with the U.S. Air Force, for which it has built a system that predicts when aircraft parts will need to be replaced, helping the force keep more of its planes ready to fly, as well as with Raytheon, a major defense contractor. And while providing A.I. systems to the U.S. military has proved controversial for some tech companies—with Google pulling out of the Pentagon’s Project Maven in 2018 following an uproar among its employees—Siebel says C3 has no issue providing A.I. technology to the U.S. military, so long as a human remains “in the loop” in any system the company helps deploy. “We’re proud to serve democratic governments and governments that support human rights and individual liberty, and we will continue to do so,” he says.
And while some A.I. researchers have also objected to providing systems to oil companies that continue to extract hydrocarbons, Siebel tells Fortune he has no problem providing A.I. software to large energy companies to help them become more efficient. “What we’re doing for some of the largest utilities in the world, and some of the largest oil and gas companies in the world, is that we’re allowing them to reinvent themselves,” he says. “To help them convert themselves to safe energy, secure energy, lower-cost energy, and much, much higher reliability clean energy.”
In general, Siebel says, A.I. ethics is too important to delegate to an A.I. ethics officer or an A.I. ethics department. “That’s just a cop-out,” he says. “The CEO needs to own this, the whole management team needs to own this, and the board.”
This story has been updated to correct the exchange on which C3.ai’s shares are traded.


fortune--2020-12-09--Airbnb’s IPO: 6 key things to know

Airbnb’s IPO: 6 key things to know

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Airbnb’s long-awaited debut as a publicly traded company is expected this week, following a tumultuous year in which its home rental service’s business was hit hard by the coronavirus pandemic.
The company, led by CEO and cofounder Brian Chesky, confidentially filed for its IPO in August, just three months after cutting 2,000 employees as a result of a pandemic-related slowdown in rentals. But while recent documents filed with the Securities and Exchange Commission show just how much Airbnb’s business was impacted, it also showed some recovery.
Here are some key things to know about Airbnb’s IPO.
When is Airbnb’s IPO?
Airbnb’s IPO took place on Dec. 9, and its shares began trading on Dec. 10. The company had initially announced its plans to go public in September, following a number of big debuts by tech companies like Zoom, Pinterest, Uber, Lyft.
What are the IPO shares priced at?
Airbnb sold 50 million shares on Wednesday at a reported price of $68 each, valuing the company at $47 billion. That’s up from the price range it had previously set of $56 to $60, which would’ve valued the company at up to $42 billion. Last week, based on strong investor appetite, the company raised the initial price range of $44 to $50.
On its first day of trading Thursday, Airbnb’s stock debuted on the Nasdaq at $148 per share and then jumped to $160—representing a 135% increase from its IPO. That gives the company a valuation of $100 billion.
How did Airbnb fare during the pandemic?
The pandemic created a major slowdown in Airbnb’s business, but the company seems to have survived the worst of it.
During the height of the pandemic, in the second quarter, a large number of cancellations and slow bookings created a massive loss in revenue. Airbnb’s $334.78 million in revenue was down 72% year over year. During the same quarter, the company’s losses widened to $575.6 million, up from a loss of $297.4 million during the same period the year prior.
Airbnb initially responded to the pandemic by cutting costs. It cut 25% of its workforce, reduced marketing expenses, cut 2020 bonuses, and reduced executive salaries for six months.
By May, the company said it had started to see customers return for local getaways and for working remotely. As a result, the company reported a $219.3 million third-quarter profit, down from $266.7 million it made during the same period in 2019.
What was Airbnb’s business like before COVID?
Prior to the pandemic, Airbnb’s revenue was rapidly growing, but so were its losses. Its revenue rose from $2.6 billion in 2017, to $3.7 billion in 2018, and $4.8 billion in 2019.
But losses widened from $70 million in 2017 to $674.3 million in 2019.
The company had 54 million active customers in 2019 and 247 million guest arrivals. It also said that 84% of its revenue came from customers who had rented on its service within the past year, up from 82% the previous year— showing that the service is getting better at retaining customers.
What challenges are ahead?
Airbnb’s biggest challenge is the coronavirus, which continues to keep people at home. Some hosts and prospective hosts are also opting to not list their accommodations on the service.
Meanwhile, city governments frequently tweak their restrictions on rentals that impact whether the company can host guests there.
Beyond COVID-19, the company has also struggled with safety issues, including guests hosting unauthorized parties that have become violent. After two shootings at parties in California left people dead and injured, the company added new rules in an effort to improve safety.
What is Airbnb’s ticker?
Airbnb will trade on Nasdaq under the ticker symbol ABNB.


fortune--2020-12-09--Facebook sued by FTC and states over antitrust

U.S. antitrust officials and a coalition of a states sued Facebook for allegedly abusing its dominance to crush competition, the second time in less than two months the government has brought a monopoly case against an American technology giant.
The Federal Trade Commission and state attorneys general led by New York filed antitrust complaints against Facebook Wednesday, alleging conduct that thwarted competition from rivals in order to protect its monopoly. The FTC lawsuit seeks a court order unwinding Facebook’s acquisition of Instagram and WhatsApp.
The case represents the biggest regulatory attack against Facebook in the company’s history. If the FTC and the states are ultimately successful in proving Facebook violated antitrust laws, a judge could order the breakup of the company, including separating its main social media platform from Instagram and WhatsApp.
Facebok shares fell as much as 3.7% on the news.
“Personal social networking is central to the lives of millions of Americans,” said Ian Conner, Director of the FTC’s Bureau of Competition. “Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition. Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.”
Facebook has squashed or hindered what the company saw as potential threats, said New York Attorney General Lettitia James during an online press conference.
Facebook used “vast amounts of money” to acquire companies that could potentially threaten it’s dominance, particularly Instagram and WhatsApp, she said. The effort was meant to “squeeze every bit of oxygen out of the room.”
Facebook became a prime target for President Donald Trump in the last two months of his administration. Last week, he threatened to veto the annual U.S. defense authorization bill unless Congress adds a rider to abolish the law that protects technology companies, including Facebook, from liability over most content posted by users. The demand followed months of attacks by Trump and other Republicans, who claim the technology platforms suppress conservative views.
Facebook and its tech peers are facing a groundswell of bipartisan antagonism over their control of digital commerce and their ability to influence what users watch and read.
The Facebook case comes on the heels of the Justice Department’s October complaint against Alphabet’s Google for allegedly abusing its monopoly in internet search by using exclusive distribution agreements with phone manufacturers to lock out competitors from the market. Together, the Google and Facebook actions mark the most significant monopoly cases filed in the U.S. since the Justice Department sued Microsoft Corp. in 1998.
It will be up to Biden’s Justice Department to carry the Google case forward, while the Facebook case will fall to whomever Biden picks as FTC chairman if Joe Simons, who was appointed by Trump, leaves the agency.
The investigations into the companies began in the summer of 2019 after the FTC and the Justice Department agreed on a plan to divide up scrutiny of Facebook, Google, Amazon.com Inc. and Apple Inc. A House report released in October following a 16-month investigation determined the four companies are abusing their market power as gatekeepers over the digital economy.
Their dominance is showing no signs of letting up. At the end of October, Facebook reported better-than-projected sales in the third quarter of $21.5 billion. The results showed that an advertising boycott over the summer had little impact and that Facebook remains the primary place for small and medium-sized business owners to reach customers.
The FTC said Facebook violated antitrust laws by buying Instagram in 2012 and WhatsApp in 2014, two acquisitions that the agency said were intended to eliminate emerging competition against the company. The FTC investigated and approved both deals when they were announced.
According to the House antitrust report, Facebook Chief Executive Officer Mark Zuckerberg said in a message to a colleague that “Instagram can hurt us meaningfully without becoming a huge business.” When Facebook’s chief financial officer asked if the goal of buying Instagram was to “neutralize a potential competitor,” Zuckerberg responded that was a motivation for the deal.
Facebook has long denied it’s a threat to competition. Zuckerberg told Congress in July that the company faces intense competition around the world and is constantly innovating to develop products users will like and to avoid falling behind.
Instagram’s success was far from guaranteed, he told lawmakers. It was Facebook’s investments in the company that made it successful, he said.
“With hindsight it probably looks like obvious that Instagram would have reached the scale that it has today, but at the time it was far from obvious,” he told Representative Jerrold Nadler, the New York Democrat who chairs the Judiciary Committee. “This has been an American success story.”
The Facebook complaint is the most significant antitrust action under Simons’s tenure since he took over the agency in 2018. Last year, Simons reached a $5 billion settlement with Facebook for privacy infractions, an agreement that was widely criticized by privacy advocates, Democratic lawmakers and the agency’s two Democratic commissioners for not securing changes in the way Facebook operates.
The FTC is taking on Facebook just as it’s coming off a stinging loss in a monopoly case brought against Qualcomm Inc. A federal appeals court in August ruled in favor of the chipmaker and reversed a lower-court decision that the company abused its dominant position in the market for cellphone chips.


fortune--2020-12-09--The hacker ‘ceasefire’ with hospitals is over—and that should terrify us

In the early days of the pandemic, cyber hackers hinted at a sort of honor code among thieves. Prominent hacking groups like Maze declared that no attacks would be launched against medical organizations until “the stabilization of the situation with the virus.” Other hackers offered free decoder keys if a hospital was inadvertently impacted by a ransomware attack.
If this purported ceasefire was ever real, it is now a distant memory. In an unprecedented joint bulletin, the FBI, Department of Homeland Security (DHS), and Department of Health and Human Services recently warned of a “credible” and “imminent” ransomware attack against U.S. hospital networks.
Hospitals may not seem like ideal targets for cyberattackers, but two factors are making them more valuable and vulnerable than ever. The first is that COVID-19 hospitalizations are spiking as never before. Earlier this week, the U.S. exceeded 100,000 daily hospitalizations due to COVID, breaking a series of earlier records—including those that were set in April during the pandemic’s first wave.
At the same time, hospital systems have expanded dramatically. In the past decade there have been more than 680 mergers of hospital systems, creating sprawling networks that span hundreds of hospitals and tens of thousands of physicians. The goal of this industry consolidation was undoubtedly efficiency. Yet increased connectivity across disparate IT systems has introduced a systemic risk to a vital piece of our nation’s infrastructure.
If a ransomware attack disabled the operations of dozens of hospitals at this moment of maximum vulnerability, the impact would be profound. As health care workers fight heroically against one invisible enemy, we must not be blindsided by another shadowy foe.
Given the stakes, hospitals need to confront this risk head-on.
First, recognize the epidemic of ransomware. Ransomware attacks have doubled in just the past three months. And hospitals in particular have become the new soft targets, with more than 80 publicly reported ransomware attacks thus far in 2020.
In addition, hackers are utilizing a new, more vicious form of attack called “double extortion.” Rather than simply encrypting and holding your data hostage, attackers are also threatening to release reams of sensitive data publicly. This double whammy has greatly increased the leverage of attackers and the pressure on hospital management teams. To date, the health care sector has lagged other industries like finance and energy in making greater investments in their cyber resilience. Recognizing and internalizing this new ransomware threat, and its potential potency, is a critical first step.
Second, back up your data. Every organization needs a multilayered system of defense that includes security measures to prevent breaches by connected devices; network segmentation, which allows network administrators to control the flow of traffic across networks; and relentless efforts to find and fix software vulnerabilities. To combat ransomware, however, backups are a critical line of defense—especially for a hospital system that is the guardian of sensitive, personal information. An organization that is able to rapidly restore or recreate its data is far better positioned to fend off demands for ransom.
The specific form of backup—whether it’s an offline system, or the emerging “immutable” technology that relies on Write Once, Read Many (WORM) formatting, which stores files in a way that can’t be altered—is less important than the fact that a sound system exists. And wherever possible, encrypt your data both in transit and at rest.
Third, pressure test your ransom philosophy. Frustrated by the growing number of organizations that are paying ransoms, the U.S. Treasury issued an advisory opinion last month reinforcing the potential penalties for doing so. Ransom payments are effectively funding hackers’ R&D for more sophisticated forms of attack. Any organization that feels coerced into paying a ransom should, at a minimum, analyze the potential risks of sanctions, especially if Bitcoin payments eventually find their way to a terrorist organization.
Now is the time for hospital networks to revisit their incident response plans and build stronger relationships with law enforcement, the Cybersecurity and Infrastructure Security Agency at DHS, and information sharing and analysis centers (nonprofit organizations that offer resources on cyber threats). In addition, hospitals need to test their business continuity plans against multiple scenarios arising from a widespread IT outage.
Cyber threats are no longer confined to the digital realm. Instead, they have dire implications for hospitals and vaccine research labs that are critical to saving lives. As hackers increasingly target our nation’s health care infrastructure, the potential consequences have morphed from the loss of data to the loss of life.
With forecasts for a bleak COVID winter before us, our hospitals, and their leadership teams, need to step up to protect us all.
Peter J. Beshar is general counsel of Marsh & McLennan and has testified before Congress on cybersecurity multiple times.
Jane Holl Lute served as deputy secretary of homeland security from 2009 to 2013 and is on the board of the Center for Internet Security.


fortune--2020-12-09--DoorDash CEO Tony Xu on the company’s long-awaited IPO

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DoorDash made a highly anticipated debut on Wall Street Wednesday, following a year of unexpectedly strong growth fueled by the coronavirus pandemic.
The food delivery company reportedly raised $3.4 billion after boosting the price of the shares sold in the IPO to $102, up from a range of $90 to $95.
The company’s shares began trading midday Wednesday on the New York Stock Exchange under the symbol DASH.
“I’m feeling great,” Tony Xu said before trading began. “I’m super grateful for all the hard work by everybody over the past seven years inside our walls…and very excited about the future.”
The company joins other tech companies that made their public debuts this year, including video conferencing tech company Zoom, cloud-storage firm Snowflake, and data analytics business Palantir. Home rental service Airbnb is expected to IPO later this week.
DoorDash’s IPO comes as consumers and restaurants have increasingly depended on food delivery during the pandemic, which has tripled DoorDash’s year-over-year revenue during the first nine months of the year.
Xu spoke to Fortune on Wednesday. His answers have been edited for length and clarity.
Fortune: What did you learn about investor appetite during the roadshow?
Xu: We saw there was significantly more demand than the stock that we can actually issue and allocate. It was really a reflection of the strength of the underlying business. Those fundamentals that we outline are revealed in our S-1, and especially similar cohort economic information gave people the look under the hood and may have surprised them. It’s contrary to some of the narrative that I think has been written about this industry before.
On the other hand, it was a reflection of their excitement for the future. DoorDash, having built the largest on-demand audience for food, certainly has the opportunity now to go beyond food, and we are with our launches into categories like convenience and grocery. Having built the largest local logistics network that serves 390,000 restaurants, I think people get really excited by what that could become in the future.
What are your plans for the funds raised?
As I’ve said internally to the company about all financings—and this is just a financing—is that you don’t have to spend it all at once. In fact, the only investments that we’re making today are distributions from our Main Street Strong initiative.
It’s a $200 million pledge we made about a month and a half ago, over five years investing in our merchants and in our Dashers [the company’s term for the contractors who deliver for the company]. Twelve million dollars are rewards, from $500 up to $20,000, for Dashers who’ve been with us and have completed over 5,000 deliveries. We’re distributing $10 million to the merchants to make sure that they can survive winter, one of the most challenging parts of the pandemic.
While we were adding new use cases, we’re building more products like in-store pickup and DoorDash for Work serving offices, which I think will come back once we come out of the pandemic. We’re building more products on our platform to supplement what we already have like DoorDash Storefront [software that gives restaurants the ability to create their own online stores] and DoorDash Drive [the company’s white-label delivery software that it licenses to other businesses with delivery operations]. And we’re looking at opportunities to grow geographically.
What has it been like holding an IPO during the pandemic?
Well, it’s a lot of starts and stops. We started our planning process to being a public business a year and a half ago. Obviously nobody was contemplating a pandemic.
When the pandemic struck in late February/early March, we put the plans for the IPO on the shelf. We sprinted into action, solving problems for our audiences, distributing tens of millions of units of PPE, cutting commissions by 50% for restaurants, and investing in the community by giving hundreds of thousands of health care workers free deliveries.
Once we kind of got a little bit more wind underneath us in the summer, we brought the plans for the IPO back off the shelf.
The process has certainly been a journey. It’s been tumultuous.
What are the biggest priorities ahead?
We have a lot on our plate. We have to keep focusing on just building a better product experience. We have to improve our selection of restaurants. We have to improve the delivery quality itself. We have to make our service more affordable. We have to make our system more efficient. That’s the main thing.
We’re so early in the opportunity just in food. Only 10% of the restaurant industry is doing delivery today. Ninety percent is still happening through a phone call, a curbside pickup, a drive-thru order. Increasingly those physical experiences are becoming digitized into e-commerce experiences, and we’re helping [restaurants] make that transition. That’s just a massive opportunity.
We’re entering other categories we believe that we can bring everything in your city to you in minutes, not hours or days. And we’re evaluating opportunities to launch in new geographies.


fortune--2020-12-09--DoorDash shares soar 80% after IPO

DoorDash shares soar 80% after IPO

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DoorDash’s stock smashed expectations during its first day of public trading on Wednesday, soaring more than 84% by midday.
Initially priced at $102 in the IPO, the company’s shares began trading at $182 before quickly jumping to $188.50. That gives the delivery business a market value of nearly $60 billion.
“It’s a big day. It’s a big milestone,” Tony Xu, DoorDash CEO, said ahead of trading on Wednesday. “But it’s one day, and I’m much more concerned about the long run and how we’re going to continue chasing excellence…because that’s how we got to today in the first place.”
The company raised $3.37 billion in its IPO after selling 33 million shares. It had initially priced its IPO shares at $90 to $95, but it raised the price based on strong investor appetite.
DoorDash said the money from the IPO will be used to fund its continued expansion.
“Wow is the right word to sum it up,” said Mark Shmulik, analyst at brokerage firm AB Bernstein. “This surpassed even the most bullish expectations we got when we did our own surveys.”
Shmulik said the stock pop likely is a reaction to the information about the amount of money the company makes on each order that DoorDash revealed in the documents it filed ahead of its initial public offering. DoorDash is the first food delivery company to disclose that level of detail, giving analysts and investors a better understanding about whether food delivery can be profitable.
Tom White, analyst at investment banking firm D.A. Davidson, said he hadn’t expected to see such a large stock pop on DoorDash’s first day of trading. “It was clear there was going to be demand for the listing given that they raised the range,” he said. But “it’s a pretty explosive first day.”
DoorDash experienced massive growth this year after the coronavirus pandemic shut down cities nationwide and fueled demand for delivery services. The company’s revenue more than tripled to $1.9 billion during the first nine months of 2020 and produced the company’s first profitable quarter in the past two years.
But DoorDash’s growth, though accelerated by the pandemic, was already trending upward. In 2019 the company had $885 million in revenue, a 204% increase from the $291 million during the year prior. At the same time its losses grew from $207 million in 2018 to $668 million in 2019.
DoorDash has been expanding into new categories. In April, for example, it announced partnerships with regional U.S. convenience stores to deliver household items like Advil, cereal, and ice cream. It also recently partnered with Sam’s Club Pharmacy, which will use DoorDash’s white-label software for its own prescription delivery service.
The big gain in DoorDash’s share price on Wednesday comes with somewhat of a dark cloud. It implies that DoorDash could have sold its IPO shares at a higher price, raising more money in the process—meaning it left hundreds of millions of dollars on the table.


fortune--2020-12-09--Google’s ouster of a top A.I. researcher may have come down to this

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The recent departure of a respected Google artificial intelligence researcher has raised questions about whether the company was trying to conceal ethical concerns over a key piece of A.I. technology.
The departure of the researcher, Timnit Gebru, came after Google had asked her to withdraw a research paper she had coauthored about the ethics of large language models. These models, created by sifting through huge libraries of text, help create search engines and digital assistants that can better understand and respond to users.
Google has declined to comment about Gebru’s departure, but it has referred reporters to an email to staff written by Jeff Dean, the senior vice president in charge of Google’s A.I. research division, that was leaked to the tech newsletter Platformer. In the email Dean said that the study in question, which Gebru had coauthored with four other Google scientists and a University of Washington researcher, didn’t meet the company’s standards.
That position, however, has been disputed by both Gebru and members of the A.I. ethics team she formerly co-led.
More than 5,300 people, including over 2,200 Google employees, have now signed an open letter protesting Google’s treatment of Gebru and demanding that the company explain itself.
On Wednesday, Sundar Pichai, Google’s chief executive officer, told staff he would investigate the circumstances under which Gebru left the company and would work to restore trust, according to a report from news service Axios, which obtained Pichai’s memo to Google employees.
But why might Google have been particularly upset with Gebru and her coauthors questioning the ethics of large language models? Well, as it turns out, Google has quite a lot invested in the success of this particular technology.
Beneath the hood of all large language models is a special kind of neural network, A.I. software loosely based on the human brain, that was pioneered by Google researchers in 2017. Called a Transformer, it has since been adopted industrywide for a variety of different uses in both language and vision tasks.
The statistical models that these large language algorithms build are enormous, taking in hundreds of millions, or even hundreds of billions, of variables. In this way, they get very good at being able to accurately predict a missing word in a sentence. But it turns out that along the way, they pick up other skills too, like being able to answer questions about a text, summarize key facts about a document, or figure out which pronoun refers to which person in a passage. These things sound simple, but previous language software had to be trained specifically for each one of these skills, and even then it often wasn’t that good.
The biggest of these large language models can do some other nifty things as well: GPT-3, a large language model created by San Francisco A.I. company OpenAI, encompasses some 175 billion variables and can write long passages of coherent text from a simple human prompt. So imagine writing just a headline and a first sentence for a blog post with GPT-3 then composing the rest. OpenAI has licensed GPT-3 to a number of technology startups, plus Microsoft, to power their own services, which include one company’s using the software to enable users to generate full emails from just a few bullet points.
Google has its own large language model, called BERT, that it has used to help power search results in several languages including English. Other companies are also using BERT to build their own language processing software.
BERT is optimized to run on Google’s own specialized A.I. computer processors, available exclusively to customers of its cloud computing service. So Google has a clear commercial incentive to encourage companies to use BERT. And, in general, all of the cloud computing providers are happy with the current trend toward large language models, because if a company wants to train and run one of its own, it must rent a lot of cloud computing time.
For instance, one study last year estimated that training BERT on Google’s cloud costs about $7,000. Sam Altman, the CEO of OpenAI, meanwhile, has implied that it cost many millions to train GPT-3.
And while the market for these large so-called Transformer language models is relatively small at the moment, it is poised to explode, according to Kjell Carlsson, an analyst at technology research firm Forrester. “Of all the recent A.I. developments, these large Transformer networks are the ones that are most important to the future of A.I. at the moment,” he says.
One reason is that the large language models make it far easier to build language processing tools, almost right out of the box. “With just a little bit of fine-tuning, you can have customized chatbots for everything and anything,” Carlsson says. More than that, the pretrained large language models can help write software, summarize text, or create frequently asked questions with their answers, he notes.
A widely cited 2017 report from market research firm Tractica forecast that NLP (natural language processing) software of all kinds would be a $22.3 billion annual market by 2025. And that analysis was made before large language models such as BERT and GPT-3 arrived on the scene. So this is the market opportunity that Gebru’s research criticized.
What exactly did Gebru and her colleagues say was wrong with large language models? Well, lots. For one thing, because they are trained on huge corpora of existing text, the systems tend to bake in a lot of existing human bias, particularly about gender and race. What’s more, the paper’s coauthors said, the models are so large and take in so much data, they are extremely difficult to audit and test, so some of this bias may go undetected.
The paper also pointed to the adverse environmental impact, in terms of carbon footprint, that training and running such large language models on electricity-hungry servers can have. It noted that BERT, Google’s own language model, produced, by one estimate, about 1,438 pounds of carbon dioxide, or about the amount of a roundtrip flight from New York to San Francisco.
The research also looked at the fact that money and effort spent on building ever larger language models took away from efforts to build systems that might actually “understand” language and learn more efficiently, in the way humans do.
Many of the criticisms of large language models made in the paper have been made previously. The Allen Institute for AI had published a paper looking at racist and biased language produced by GPT-2, the forerunner system to GPT-3.
In fact, the paper from OpenAI itself on GPT-3, which won an award for “best paper” at this year’s Neural Information Processing Systems Conference (NeurIPS), one of the A.I. research field’s most prestigious conferences, contained a meaty section outlining some of the same potential problems with bias and environmental harm that Gebru and her coauthors highlighted.
OpenAI, arguably, has as much—if not more—financial incentive to sugarcoat any faults in GPT-3. After all, GPT-3 is literally OpenAI’s only commercial product at the moment. Google was making hundreds of billions of dollars just fine before BERT came along.
But then again, OpenAI still functions more like a tech startup than the megacorporation that Google’s become. It may simply be that large corporations are, by their very nature, allergic to paying big salaries to people to publicly criticize their own technology and potentially jeopardize billion-dollar market opportunities.
This story has been updated to include reports that Google CEO Sundar Pichai has promised to investigate Gebru’s departure from the company.


fortune--2020-12-09--Get ready to return to a (very different) office

In this second edition of Worksheet, columnist S. Mitra Kalita explores what the post-pandemic office may look like.
There’s no going back to what was. The last nine months have forced a drastic reset of work, home and all points in between. The upheaval in commercial real estate allows companies to be pickier about their needs, from open windows to lower employee-to-bathroom ratios. An uncertain pandemic economy means expansion for some sectors and downsizing for others. And studies show that more than one-fifth of adults moved due to COVID or know someone who did; how this affects their desire or ability to commute remains another unknown.
“The location of the office space may not change much,” said Carmen Perkins, executive vice president of Civitas Commercial Real Estate Services LLC, based in Washington, D.C. “It’s the utilization of that space that changes.”
Post-pandemic offices will focus more singularly on creating and representing the culture of a company. That mission will drive physical spaces with more breakout rooms and gathering spots. It will dictate who comes to the office and why. Reasons to convene: onboarding, training, meetings, team-building and collaboration.
“We are the quintessential tech company. We have the most flexible work schedule, ambitious paternity and maternity programs, unlimited vacation,” rattled off Nick Romito, the founder and CEO of VTS, a commercial real-estate technology platform. “Even as liberal as we are to give people their flexibility, it’s still really hard. You invest all this time in building a really good team, those teams want to be together. Pushing ideas out of each other is really hard to do when you’re staring at a screen all day.”
Kalita goes on to explore four other surprising ways the ways we use office space is changing.
Let us know what you think of Worksheet, tell us what you’d like to read about in future columns, or share what challenges you’re facing at your own workplace. Reach us at smarterworking@fortune.com.
What else we're reading this week...
Nice "coatigan"
An exploration of WFH fashion including, yes, the "coatigan." According to one source the new definition of “work clothes” includes cashmere cardigans and joggers, headbands, and other cozy garments that fall somewhere in the “healthy in-between” of pajamas and blazers. (NYT)
Backgrounder
Why in the future your background check could include whether or not you've had the COVID vaccine. (CNBC)
Can't catch a break
What used to be a respite from the workday and a gathering spot has become something else entirely. “Usually there’s only one person in there at a time. If there is someone else, we don’t sit together, definitely 6 feet apart. To me it’s the same as eating by myself,” says one steel mill worker. (WSJ)
Marital benefits
If the pandemic is taking a toll on your relationship, here's a twist: some employers are covering couples therapy. (Seattle Times)
An American tragedy
Success is not happiness—and other lessons from Zappos founder Tony Hsieh's remarkable life and tragic death. (Forbes)


fortune--2020-12-09--Starbucks names Mellody Hobson as board chair in push to diversify company leadership

Starbucks named finance executive Mellody Hobson to lead its board as chair, making her one of the highest-profile Black directors in corporate America.
Hobson, co-chief executive officer of Ariel Investments, replaces Myron Ullman, who’s retiring. The transition will occur in March. Ullman was named chair and Hobson vice chair in 2018 when long-time Starbucks leader Howard Schultz stepped down from the coffee chain.
“Over nearly two decades, I have seen the company continue to elevate and transform its business—adapting to various market environments and evolving consumer trends,” Hobson said in a statement. “I look forward to working with the board and talented leadership team on accelerating our strategy, supporting our valued partners, and continuing to create significant value for all of our stakeholders.”
Hobson’s promotion comes at a time when the top ranks of the biggest U.S. companies are still largely dominated by White men. The representation of women and people of color in U.S. companies has come under increasing scrutiny this year, especially following calls for social justice after the death of George Floyd in May. As pressure mounts for companies to improve the diversity of their leadership ranks, a number have moved in recent months to add Black women to their boards—sometimes for the first time.
Only 15 companies have a female chair among S&P 500 companies where the director is not also the company CEO, according to Bloomberg data. None of those women are Black. Ursula Burns preceded Hobson as a pioneering Black female chair when she led Xerox’s board from 2010 to 2017.
In addition to her board seat at Starbucks and one at J.P. Morgan Chase, Hobson, 51, previously served as chair of DreamWorks Animation. At Ariel, Hobson oversees management, strategic planning and growth for areas other than research and portfolio management. Earlier this year, Princeton University said it would name a residential college for alumna Hobson, recognizing her donation for a project to be built at a site that once honored Woodrow Wilson.
Dambisa Moyo, an economist and author, said Hobson is “the best of our generation.” Moyo has praised Hobson for being an advocate of financial literacy, and the two women have appeared together at the Economic Club of Chicago.
Hobson is also a board member of Bloomberg Philanthropies, the philanthropic organization of Michael Bloomberg, the founder and majority owner of Bloomberg LP, which owns Bloomberg News.
Starbucks shares rose 0.5% to $101.74 at 10:22 a.m. in New York trading. The stock has gained about 16% in 2020.
The Seattle-based coffee chain has focused recently on expanding diversity in its ranks and improving race relations. The company said in October that it would link executive compensation to diversity targets, joining a growing number of companies this year putting financial incentives behind the efforts.
Bias training
The coffee chain has had a strained relationship at times with the Black community. In 2018, two Black men were arrested at a Philadelphia Starbucks for sitting in the restaurant without purchasing coffee, sparking protests and prompting the company to institute “unconscious bias” training for store managers. More recently, Starbucks faced a social-media backlash for reportedly banning employees from wearing Black Lives Matter apparel. The company subsequently created its own shirts in support of the movement.
Earlier this year, Starbucks joined the Board Diversity Action Alliance, which advocates for representation of racially and ethnically diverse corporate boards. As of September, Starbucks’ board is 46% people of color and 39% female, the company said.
The coffee chain’s most recent publicly disclosed racial data for all U.S. employees shows Black people are still underrepresented at the top ranks, with 3 out of 53 top executives and about 2% of managers identified as Black or African-American in the 2018 filing with the Equal Employment Opportunity Commission.