fortune--2020-07-23--Some employers have illegally fired workers who refuse to sign COVID liability waivers

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After spending a May day preparing her classroom to reopen for preschoolers, Ana Aguilar was informed that the tots would not have to wear face masks when they came back. What’s more, she had to sign a form agreeing not to sue the school if she caught COVID-19 or suffered any injury from it while working there.
Other teachers signed the form distributed by the Montessori Schools of Irvine, but Aguilar said she felt uncomfortable, although it stipulated that staff members would be masked. At 23, she has a compromised immune system and was also worried that she could pass the coronavirus on to her fiancé and other family members.
Aguilar refused to sign, and a week later she was fired. “They said it was my choice to sign the paper, but it wasn’t really my choice,” said Aguilar, who’s currently jobless and receiving $276 a week in unemployment benefits. “I felt so bullied.”
As employers in California and across the country ask employees to return to the workplace, many have considered and some are requiring employees to sign similar waivers, employment lawyers say. And many employees, mostly lower-wage and minority workers in essential jobs, are calling lawyers to complain about the waivers.
“These are illegal agreements that are totally unfair to workers,” said Christian Schreiber, a San Francisco lawyer who represents Aguilar and other employees.
The California State Legislature last year passed a law, AB-51, prohibiting employers from requiring employees or job applicants to sign away their right to pursue legal claims or benefits under state law. The law, which also prohibits firing any employee for refusing to sign, is being challenged in court by business groups.
Only a few employers have forced employees to sign liability waivers, at least partly because these waivers likely would be held unenforceable by courts, lawyers who represent employers say.
“Courts don’t recognize them because of the unequal bargaining power between employers and employees,” said Isaac Mamaysky, a partner at the Potomac Law Group in New York City. “With so many unemployed, people would sign just about anything to get a job.”
Another reason they are considered unenforceable: Workers who get sick or injured on the job generally are compensated through state workers’ compensation systems rather than through the courts, and state laws don’t allow employers to force employees to sign away their right to pursue workers’ comp claims, Mamaysky said.
Companies may have the right to require nonemployees working on their premises to sign COVID waivers. When the New York Stock Exchange reopened in late May, it made floor traders sign a form clearing the exchange of liability if they contracted COVID-19. That was legally permissible because the traders were not exchange employees, an NYSE spokesman said. He declined to say whether any traders have become infected with the virus.
The Las Vegas-based restaurant chain Nacho Daddy, which did require employees to surrender their right to sue over COVID-19, reportedly fired some who refused. Following negative media coverage, Nacho Daddy removed the language that waived legal rights and instead had employees agree to follow safety rules such as masking and social distancing. The company did not respond to a request for comment.
Having employees agree to comply with safety rules is a more common and legally acceptable approach than waivers.
“I suggest my clients go to this reasonable middle ground: Here’s what we promise to you, here’s what we want you to promise to us,” said David Barron, an employment lawyer with Cozen O’Connor in Houston.
Business groups hope Senate Majority Leader Mitch McConnell will make liability waivers unnecessary. He has proposed a Senate bill with broad liability protection for employers for five years against a range of coronavirus-related claims, and says he won’t back any COVID relief bill that doesn’t include such protections. President Donald Trump has said he supports the liability protection.
At least 10 states already have enacted laws providing some form of immunity for businesses from lawsuits brought by employees and others who contract COVID-19. Similar bills are pending in about 10 more states, according to the National Employment Law Project. The California Assembly is considering a liability protection bill for public K-12 schools.
Federal legislation to provide COVID liability relief for employers should protect only those that follow applicable health and safety guidelines, said John Abegg, executive vice president of the U.S. Chamber Institute for Legal Reform, which supports McConnell’s proposal.
But even if McConnell is able to overcome Democratic opposition and pass liability protection as part of a new pandemic economic relief bill, that still wouldn’t shield employers from lawsuits claiming gross negligence or reckless or intentional conduct in failing to implement COVID-19 safety precautions.
Across the country, hospitals and nursing homes, as well as companies like McDonald’s, Walmart and Safeway, have been hit with wrongful death lawsuits filed by families of employees who died from the virus. They typically cite egregious conduct that goes beyond ordinary negligence, potentially erasing any statutory liability relief.
Nearly 50 COVID-related lawsuits have been filed relating to conditions of employment, including exposure to the coronavirus or the lack of protective equipment, according to data collected by the law firm Hunton Andrews Kurth.
In many states, alleging intentional misconduct also may allow workers harmed by COVID-19, and their families, to file lawsuits rather than go through the workers’ compensation system, and thus seek bigger damage awards.
For instance, a suit filed in Alameda County Superior Court in June by the widow of a longtime employee of Safeway’s distribution center in Tracy, California, alleged that the company had concealed a COVID-19 outbreak from workers and informed them that personal protective equipment was not recommended, contrary to guidelines from federal and state authorities.
“I don’t know of any jurisdiction that would allow a waiver against intentional misconduct,” said Louis DiLorenzo, head of the labor and employment practice for Bond Schoeneck & King in New York, who represents employers. “That would encourage misconduct.”
Worker advocates argue that lawsuits like the one against Safeway should be encouraged—rather than blocked by waivers or immunity laws—to bring to light serious public safety problems. Cases against McDonald’s in Oakland and Chicago—in which workers claimed the restaurants had created a “public nuisance” by not taking steps to adequately protect workers and customers from COVID-19—resulted in court orders in late June for those McDonald’s restaurants to implement safety measures such as masks, social distancing, and temperature checks.
“A very tiny number of cases are being filed by workers, and those cases are valuable,” said Hugh Baran, a staff lawyer at the National Employment Law Project. “These are the kinds of claims we should want workers to bring.”
Schreiber said he contacted the Montessori school about Aguilar’s firing, and it offered to reinstate her without having her sign the waiver. But Aguilar declined, saying the school was putting teachers at risk by not requiring pupils to wear masks. The school then offered her six weeks of severance pay, which she is considering.
By refusing to sign the waiver or accept her job back, she said, she was standing up for all the teachers at the school, many of whom have children and can’t afford to lose their job.
“I liked my job and I needed the paycheck,” Aguilar said. “But making you sign these papers is telling you that whatever happens, they really don’t care.”
This story was produced by KHN (Kaiser Health News), which publishes California Healthline, an editorially independent service of the California Health Care Foundation. KHN is not affiliated with Kaiser Permanente.


fortune--2020-07-23--Winning the peace: Lessons from history for a post-coronavirus economic recovery

These big companies have cut the most daily ad dollars during the Facebook boycott

The French have a phrase for it—“les trente glorieuses.” The German term is “wirtschaftswunder,” or economic miracle, and the Italian is similar, “il miracolo economico.” In the United States, it’s just the “good old days.” Whatever the term, it recalls the decades after World War II, in which strong economic growth—4% annually in the United States, 5% in Western Europe, and 8% in Japan from 1950–70—spread prosperity widely. Truly, these countries can be said to have “won the peace.”
As the world considers how to rebuild once COVID-19 becomes less of a threat, the lessons of history can be pertinent. For a start, let us note that there were no postwar miracles. Success came from actions taken by international institutions, government, and business. All three sectors pulled in the same direction—toward greater openness and higher productivity.
While COVID-19-wracked 2020 is not war-torn 1950, a similar kind of cohesive effort is essential. In this article, we look at the role of international organizations and the public sector. In our next one, running later this week, we’ll consider the private sector.
Reshape globalization
Global problems need global attention, something that postwar leaders recognized. Then, the emphasis was on liberalizing the trade in goods. Today, the priority needs to be on trade in services, which is growing much faster, and the flow of data faster still. Global institutions need to be modernized to meet this dynamic.
A dozen technologies could create $33 trillion in value by 2025 and foster the next generation of inclusive growth. Among them: the Internet of things, advanced robotics, genomics, energy storage, and renewable energy. For these to advance, global agreements that enable the flow of data and services, including standards on digital taxation, privacy, and security, need to be developed. Without a global framework, regulation will be fragmented, which raises costs and irritation—as ongoing disputes over digital taxes and privacy prove.
This could be done through existing institutions, such as the World Trade Organization (the successor to GATT, the postwar trade entity). But it may make sense to start from scratch, given the distinctive issues involved. In either case, it is essential to protect intellectual property, which, as Abraham Lincoln said, “adds the fuel of interest to the fire of genius.” Second, an international agency can adapt best practices from national governments, such as Britain, Denmark, and South Korea, who all get high marks for delivering digital services while safeguarding their citizens’ rights to privacy and access to their own information. Think of it as GATT for the 21st century.
Renew the public sector
In many countries, distrust of established institutions is rising. To increase trust, governments need to show that they are serious about adapting postwar social policies to the present-day realities of more insecure work, higher housing costs, and greater economic polarization. Yet social policies related to work, unemployment, and income support have not changed nearly as much as the circumstances around them. For example, more could be done to address the needs of temporary and gig workers.
Governments in Australia, France, Georgia, and Massachusetts, are considering or have passed legislation that extends unemployment insurance to independent contractors. Others allow recipients to continue to receive benefits if they are working part-time or starting a business. Governments from Germany to Nebraska to Minneapolis are changing zoning laws to encourage denser and cheaper housing. Making benefits portable—that is, attached to individuals, rather than workplaces—is another option. New York State’s Black Car Fund provides workers’ compensation, paid for by a fare surcharge, for livery and ride-share drivers. These are just some of the many ideas that countries and states are experimenting with; we cite them to illustrate that there are many different options to learn from. The role of government is to identify the best ideas, test them, and then expand (or discard) them.
There can be no inclusive growth without economic growth. That means productivity has to grow, too—as it did strongly after the war, but weakly of late in most advanced economies. There are proven “catch up” approaches, such as cutting red tape that impedes business formation (and dissolution) and liberalizing labor markets. The other way to boost productivity is to “push the frontier” of innovation and technology; this requires supportive regulation. The evidence is clear that industries in which competition is robust see higher productivity growth. In addition to enforcing antitrust law, then, governments need to reconsider policies that suppress competition, such as subsidies that favor incumbents or licensing requirements that keep out new entrants.
The recent history of Sweden shows the benefits of strong pro-competition policy. In the early 1990s, slow-growing Sweden faced an economic crisis. So it deregulated product markets; broke up cartels; opened the economy to foreign investment; and encouraged entrepreneurship. And it worked. From 1995 to 2011, Sweden recorded the highest productivity growth among all developed countries; economic growth accelerated, and private-sector employment and individual incomes grew strongly.
Finally, postwar governments invested in people by broadening access to health care. Today, too, investing in health is an investment in growth, with an estimated return of $2 to $4 for every dollar spent. In advanced economies, the economic benefit comes from the possibility of creating a longer, healthier middle age: Think of 65 as the new 55. Beyond the obvious benefits to individuals, this would allow more people to work longer and more productively. In the United States alone, delayed retirement could add 675 million work hours per week. That is important in the context of slow labor force growth.
Interventions that provide the most benefit at low cost include smoking cessation, weight management, road safety, lower back pain management, and the use of antihypertensives and statins. Expensive? Maybe not. The McKinsey Global Institute estimates that improving “health care delivery efficiency could more than pay for the additional spending required.” The COVID-19 crisis has shown the direct connection between health and the economy and provides an important moment to reset priorities.
Next: Reimagining the social contract between the private and public sectors
Kevin Sneader is the global managing partner of McKinsey & Co., where Shubham Singhal is a senior partner.


fortune--2020-07-23--160 million Americans would get a second stimulus check as soon as August under Republican plan

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The 160 million Americans who got stimulus checks earlier this year would get another payment as soon as next month under a plan being negotiated by Treasury Secretary Steven Mnuchin and Senate Majority Leader Mitch McConnell.
“Our proposal is the exact same provision as last time,” Mnuchin told reporters Thursday as he and congressional Republicans work to finalize a series of stimulus bills that will form the counteroffer to a plan from Democrats.
That would mean:
Individuals earning up to $75,000 would receive a $1,200 payment for themselves and $500 for their dependent children
Couples earning up to $150,000 would also qualify
The payment amounts phase down for singles earning up to $99,000 or $198,000 as a couple.
Using the same parameters as the last round of stimulus payments would mean that the Internal Revenue Service could quickly deliver the money to people’s bank accounts and mailboxes. The IRS prioritized getting direct deposit information for households earlier this year, so the agency could deliver millions of electronic payments and not be slowed down by mailing paper checks.
The plan would see the U.S. Treasury shovel approximately $300 billion more into the economy in the coming weeks. The payments would arrive as unemployment claims tick up and economists worry that households could struggle to cover expenses later in the year.
This plan wouldn’t necessarily immediately help the millions of eligible Americans who haven’t yet received their first stimulus checks because they aren’t required to file a tax return or are a recipient of a federal benefit program, such as Social Security. There are as many as 12 million homeless, long-term unemployed and other very low-income individuals who haven’t received their payments yet, according to an estimate from the Center on Budget and Policy Priorities from June.
IRS Commissioner Chuck Rettig has disputed the 12 million figure, but is asking the public to tell people who may be eligible but haven’t received a payment to submit their bank account or address to the IRS by mid-October.
The payment plan, which is part of a broader stimulus package addressing unemployment benefits, school funding and money for local governments, is currently being negotiated in Congress and could be approved by early August.
The proposal would require support from Democrats, who have also backed another round of stimulus payments. A House plan calls for increasing the payments for children to $1,200 and expanding the eligibility rules for several groups, including adult dependents and U.S. citizens who are married to immigrants.


fortune--2020-07-23--A tale of tradeoffs for a new type of coronavirus test

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Good afternoon, readers.
I’m juggling a few things, so I’m afraid I’ll have to leave you with a short one. But I wanted to highlight a story by my colleague David Meyer on a new type of coronavirus test that’s been deployed in France.
Traditional COVID tests—not the blood tests for antibodies, but the ones for an active case of the disease—aren’t exactly fun. You get to have a swab shoved deep into your nose to collect a sample. That sample then has to be sent to a lab where it’s run through a machine that can conduct so-called PCR chain tests, analyzed, and then sent back.
The turnaround times are far from ideal during a surge in American cases. COVID diagnostics are a time-consuming process weighed down by logistics issues and supply chain constraints. But a new platform being built by the Hospital La Croix-Rousse (HCL) in Lyon, France could potentially return results in mere minutes.
The hospital’s research chief compares the process to a classic breathalyzer test—fitting given that COVID is a largely respiratory illness. “The machine will register the molecules in the exhaled air and then detects the traces of the sickness,” said Christian George in an interview with Reuters.
Just one problem: The machine involved is a beast that weighs in at 350 pounds and costs close to half a million dollars.
It’s a tale of tradeoffs. Versatility, timeliness, accuracy, and cost can have inverse relationships.
Read on for the day’s news.
Sy Mukherjee
sayak.mukherjee@fortune.com
@the_sy_guy
DIGITAL HEALTH
Lasers, but for COVID. Speaking of intriguing COVID technologies, FierceBiotech reports on Adarza Biosystems' efforts to use lasers, light, and reflective coating to detect various kinds of coronavirus antibodies. The science is pretty wonky but fascinating. But Adarza's main pitch is that it can be used to detect a wider swath antigens (those pesky proteins associated with an infection which protective antibodies latch on to) that other types of COVID-19 antibody tests cannot. (FierceBiotech)
INDICATIONS
Roche earnings hit by pandemic. Swiss drug giant Roche on Thursday reported a fall in net profits for the first half of 2020 compared to the same period one year ago (to the tune of $630 million by current exchange rates). And the company is pointing the finger at lingering problems from the global pandemic, including travel restrictions, canceled patient visits to hospitals, and consumer reticence to physically visit pharmacies to get their prescriptions. (MarketWatch)
THE BIG PICTURE
4 million. The U.S. creeped up on 4 million confirmed coronavirus cases across the nation on Thursday, according to Johns Hopkins. That's nearly double the number of reported cases in Brazil, and more than triple the number in India (the latter nation has more than four times the population of the United States). Case counts don't paint the full picture, as readers have pointed out, but they are a leading indicator of what might happen to hospital capacity and the number of deaths in the coming weeks and months. (Johns Hopkins)
REQUIRED READING
33 states have instituted COVID quarantines, by Jeff John Roberts
How the pandemic is threatening the U.S. dollar, by Veta Chan
4 ways businesses can adapt to a changing supply chain environment, by Anne Sraders
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fortune--2020-07-23--Josh Hartnett and writer-director Daniel Roby on making ‘Most Wanted’ and the ‘importance of free pr

Josh Hartnett and writer-director Daniel Roby on making ‘Most Wanted’ and the ‘importance of free press’

In December 2006, filmmaker Daniel Roby came across a newspaper article referencing an undercover operation—the subject of a 1989 investigation by Canadian journalist Victor Malarek—that got a man entangled in a drug deal, which in turn landed him in a Thai prison.
The case, which Roby hadn’t heard about prior to that, was being used to illustrate a point about how lies and cover-ups can be perpetuated among members of law enforcement.
“I was shocked by the whole thing,” Roby tells Fortune, adding that he proceeded to extensively research the case over the next year, speaking with Malarek, along with Alain Olivier—the man at the center of the case—and attending court hearings for a lawsuit filed by Olivier against Royal Canadian Mounted Police agents.
That research resulted in Roby’s latest film—Most Wanted, available via video-on-demand Friday. The movie stars Josh Hartnett as Malarek and Antoine Olivier Pilon as Daniel Léger, the character based on Olivier, and also includes Jim Gaffigan and Amanda Crew (Silicon Valley) in its cast.
Josh Hartnett stars as Canadian journalist Victor Malarek in “Most Wanted.” Saban Films
Roby’s script was ready a couple of years after he completed his research, but it took some time to get the film off the ground. Before finally shooting the film in 2018, Roby lost and replaced an investor, had to do some recasting, and ended up having to work with a smaller budget than originally planned.
“I want to work with passionate filmmakers who are making projects that are their babies—that they really care about. Not a job that they’re doing for money, but a job that they’re doing because they feel compelled to do it,” Hartnett, who received the script five years ago, tells Fortune. “Daniel’s definitely one of those directors.”
To accommodate his budget shortfalls, Roby, who wanted to keep his script intact, turned to a more handheld approach and opted against using additional set lights. The latter approach was aided by the fact that cinematographer Ronald Plante had just returned from shooting HBO’s Sharp Objects with director Jean-Marc Vallée, who also leans toward working with natural or available light.
“I could do more takes with actors, and more angles, and improvise stuff, and play with the scenes more than just wait, sitting around for relighting of every angle that takes up half your day,” says Roby, who adds that he’d also been looking for an opportunity to do some handheld shooting for a film.
“What that allowed him was a lot of time to experiment with us,” says Hartnett, who credits Roby’s filmmaking choices with being able to explore his own role more deeply and find the right “blend” for the character. “He trusted me to bring in a pretty strong characterization and then to sort of find the moments that were going to be most human…and the moments that were going to be the most heroic.”
Writer-director Daniel Roby working on the set of “Most Wanted.” Laurent Guérin
The real-life Malarek, whose book Gut Instinct helped provide some insights, was also available to Hartnett as he took on the role. While in the initial stages of discussing the project with Roby, the actor went up to Toronto for a brief trip, where he met the journalist, who then took him around to everything from the Globe and Mail office to his favorite sandwich shop, while also sharing personal details like family albums. They met a couple more times before filming began as well.
“He loves to talk,” says Hartnett, calling Malarek a “great resource.”
Adds Hartnett: “When it came to filming, he took a step back, which was very gracious and the right thing to do. And we were able to make the honest version of what was happening at the time.”
Malarek does have one small cameo in the film, though Roby points out he was only on set for one day, which “wasn’t a Josh day. So Josh didn’t feel observed by the real Malarek.”
Roby was thrilled with his cast as a whole, calling Gaffigan a “gift” and saying he was lucky to have a “wonderful experienced actress” like Crew on board, even though she only shot scenes for a handful of days.
“I felt like [Gaffigan’s character, Glen Picker] needed to be really charming very quickly and then switch to being very scary and unpredictable. For a long time, I thought probably a comedian would be perfect to play somebody like that,” he says.
“He was a really incredible surprise, and so much fun, obviously, to work with. You would just have to try to stop laughing during that day and just at one point say, ‘Can we just do the scenes? Roll camera!’ because everybody’s just laughing all day,” Roby recalls.
Antoine Olivier Pilon as Daniel Léger (left) and Jim Gaffigan as Glen Picker in “Most Wanted.” Saban Films
For Hartnett, who was drawn into Most Wanted by Roby’s enthusiasm, passion, and “encyclopedic knowledge” of the case, being part of the film matches his overall philosophy about the types of projects he wants to take on. In his view, smaller budgets allow for telling stories like this, and he ultimately hopes audiences watching the film will see “that there’s a real need for well-funded investigative journalism, and there’s a need for believing in facts.”
The actor, who only learned about the case after getting involved in the project, also expressed how surprised he was by the fact that he’d never heard of it.
“That a citizen of a country could be sent overseas with money from that government to perpetrate a crime that wasn’t real and then be arrested by the authorities in that country and then put on death row essentially, and the government would disavow it, is a big story, right?” he says. “I grew up in Minnesota…Canada isn’t that far away, and this story never seeped across the border.
“This reaffirmed something that I already knew—that these abuses of power can happen anywhere,” he adds.
Roby agrees, saying that while he wants audiences to enjoy the “thriller aspect” of the film, he hopes they also see how easy it is for abuses of power to occur—even when they start with someone simply trying to cover up a small mistake.
“It’s just realizing the importance of free press as a counter power in our democracy,” he says, adding that he himself wasn’t completely “conscious” of that before deciding to make the film. “I hope people get a reminder of how important that is.”
Most Wanted is available to watch via VOD, starting July 24.


fortune--2020-07-23--A breathalyzer for the coronavirus gives instant results, but don’t expect a widespread rollout

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A French hospital has become the latest organization to announce promising developments in rapid COVID-19 testing—but don’t expect a speedy rollout of the technology it’s testing.
The Hospital La Croix-Rousse in Lyon is testing a machine in which patients breathe into a tube and get their coronavirus results within seconds. The trial has already been running for three months, and the hospital hopes to have the machine fully in use by the end of the year.
“It’s the same principle as a classic breathalyzer test,” Christian George, research chief at the hospital’s National Center of Scientific Research, told Reuters. “The machine will register the molecules in the exhaled air and then detects the traces of the sickness.”
However, the machine in question is not quite like your standard handheld breathalyzer.
For a start, the Vocus PTR-TOF—a cutting-edge mass spectrometer produced by Switzerland’s Tofwerk—weighs around 350 pounds and costs $460,000.
“These instruments are usually used in atmospheric science to measure clean air. That’s why they are so sensitive,” Tofwerk CEO Marc Gonin told Fortune on Thursday. Now the Vocus PTR-TOF is being tried out in a variety of other applications, ranging from the detection of oil-well emissions to the identification of fentanyl in lab samples.
“Anything that can be sniffed by a dog can be measured with our instruments,” said Gonin. “Dogs can sniff diseases and explosives. We are trying to do this.”
According to Gonin, one aim of the trial is to see what level of sensitivity is needed to get instant COVID-19 test results. The Lyon researchers are using the most high-end version of the machine, which has the greatest sensitivity. The cheapest version of the machine weighs around 110 lbs and costs $230,000.
So could the same kind of technology be made significantly smaller and cheaper for the purposes of a widespread rollout?
“It is possible to make it smaller, but it is not possible to make it smaller [while] keeping the same performance,” said Gonin. “These instruments are extremely performant right now. There is, of course, the hope that we don’t need all this full performance, and we can switch to a smaller, more compact, and less expensive instrument. It’s very difficult to say.”
Crucially, he added, “such an instrument is only useful if you can [get results] earlier than any other method.”
The breathalyzer method is certainly quicker than the other COVID-19 testing methods in use today—whether we’re talking about the extremely unpleasant nasal-swab test that is most widely deployed or the saliva-based tests that offer less discomfort but still take hours or even days for results to be returned (though that could soon be reduced to 30 minutes).
But some researchers, such as those at Virginia Tech who have devised a new droplet-testing system involving nanotechnology and laser beams, now claim to be able to get the test-to-results time down to mere minutes.


fortune--2020-07-23--Facebook adds $100 million to landmark facial recognition settlement payout

Facebook has agreed to pay a total of $650 million in a landmark class action lawsuit over the company’s unauthorized use of facial recognition, a new court filing shows.
The filing represents a revised settlement that increases the total payout by $100 million and comes after a federal judge balked at the original proposal on the grounds it did not adequately punish Facebook.
The settlement covers any Facebook user in Illinois whose picture appeared on the site after 2011. According to the new document, those users can each expect to receive between $200 and $400 depending on how many people file a claim.
The case represents one of the biggest payouts for privacy violations to date, and contrasts sharply with other settlements such as that for the notorious data breach at Equifax—for which victims are expected to received almost nothing.
The Facebook lawsuit came about as a result of a unique state law in Illinois, which obliges companies to get permission before using facial recognition technology on their customers.
The law has ensnared not just Facebook, but also the likes of Google and photo service Shutterfly. The companies had insisted in court that the law did not apply to their activities, and lobbied the Illinois legislature to rule they were exempt, but these efforts fell short.
The final Facebook settlement is likely to be approved later this year, meaning Illinois residents will be poised to collect a payout in 2021.
The judge overseeing the settlement rejected the initial proposal in June on the grounds that the Illinois law provides penalties of $5,000, meaning Facebook could have been obliged to pay $47 billion—an amount far exceeding what the company agreed to pay under the settlement.
“We are focused on settling as it is in the best interest of our community and our shareholders to move past this matter,” said a Facebook spokesperson.
Edelson PC, the law firm representing the plaintiffs, declined to comment on the revised deal.
This story has been updated to include Facebook’s comment.
More must-read finance coverage from Fortune:


fortune--2020-07-23--Is it safe to return to day care? 7 experts weigh in

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Parenting is hard. Parenting while monitoring children cooped up at home is even harder. According to a Stanford study, 42% of the U.S. labor force are working full-time from home, and 26% are required to leave their homes for work.
When businesses began closing their doors, most day-care centers had to follow. But now that many states are reopening, working parents, especially mothers who took on the majority of childcare work during the lockdown, may have the option to get the support they need. While young children are not exactly reliable when it comes to following social distancing and safety recommendations, the reality is that parents need outside help.
As the American Association of Pediatrics likes to remind us, kids are not just little adults. While scientists have learned a lot about how COVID-19 spreads among adults, more research must be done before we fully understand what the virus means for children. The available research suggests that young children are less likely to get infected and spread the virus. One large study, however, recently revealed that children over 10 years old are equally as effective at infection and spreading the virus as adults are.
So what to do with the approximately 10 million children in the U.S. under the age of 5 who attend day care each year?
To help parents understand their options, Fortune asked public health and medical experts around the country to weigh in. There is no absolute right or wrong answer, but here’s where the professionals agree: There will always be some risk involved.
Their responses have been edited for length and clarity.
Dr. Robert Johnson, dean of the Rutgers New Jersey Medical School: “I think the biggest issue that parents need to be concerned about is the program itself. They need to make sure that the day care’s activities are intentional and keep kids socially distanced. Kids naturally run to each other and hug each other and all those types of things. The staff should be reminding kids to wash their hands often and making sure they’re doing it properly. Parents should also make sure their day care has a plan of action for kids who come in with symptoms. I have lots of reservations about congregating kids, but many parents have to get back to work, and so we’ll have to do the best we can.”
Dr. Norman Beatty, professor at the University of Florida College of Medicine: “More research is definitely needed to confirm these findings, but we have to remember the risk is still not zero for our children. The two most important questions to ask yourself:
1. How at risk is my household?
2. Does the childcare facility have an established plan in place to protect children and staff from the spread of COVID-19?
“This should help you make a decision whether or not you may feel comfortable sending your child to day care.”
Dr. Hugh Mighty, dean of Howard University’s College of Medicine: “For children, especially those in the pre-K through early school ages, we should understand the risks. The data now suggests that these children do have risks of becoming infected and passing the virus on to others. There is also some early evidence that in a small number of children there may be some longer-lasting impacts, even to asymptomatic children themselves. Ideally, social distancing and masks would be great, but highly impractical for this age group.
“The decision to return to day care should be driven by knowledge of the risk both to the child as well as to anyone in a household. This should be balanced by the need to meet essential family challenges. For example, for hourly workers who must maintain their jobs in order to take care of the family, it may be an acceptable risk and indeed a necessity. Many day-care centers and schools will make decisions based on the local environment and public health guidelines.”
Nicolette Louissaint, executive director of Healthcare Ready in Washington, D.C.: “The age of the child matters as we are learning more about COVID. We should be considering whatever we know about preventing COVID-19 infection in pediatric populations, the ability to allow for sufficient physical distancing, disinfection and sanitation measures in the facility, as well as whatever symptom monitoring and testing plans are in place for day-care staff. Those sorts of bits of information are very critical for parents to continue to learn, as well as a plan for how long they would like to keep their child in day care.
“I think this is the type of conversation that we should continue to have in the weeks and months to come as we have more information and plans are made. We are still learning a lot about this virus and the ways in which we can protect ourselves and our children. And so we need to make sure we’re continuing to learn more and continuing to ask these questions, as there may be more information or better recommendations available at a later date.”
Dr. Lindsay Thompson, medical director of the Pediatric Research Hub at the University of Florida: “The majority of children without underlying illnesses don’t get severely sick from COVID-19, which is reassuring, and they benefit from the education and socialization of day-care settings.
“Some day-care centers have even remained open throughout the COVID-19 pandemic, and so far, anecdotally, they have remained the safe, nurturing second home for young children that they have always been. However, every day-care center needs to have strict policies like keeping children home with any signs of infection, and every location needs to stay in close contact with local health departments to best understand what the area rates of COVID are.
“I recommend asking for their procedures ahead of time. These should include frequent deep cleanings of all areas in the facility, the adoption of a small group or cohort of children that go through the day together, limiting exposures. These “pods” lend themselves to staggered drop-offs and pickup times. Ideally, not only do we want to reduce the chance of a child getting sick, but we want to limit cases in the whole community, so following these guidelines carefully can limit community spread significantly.
“Staying home, if possible, is the safest for COVID, but the risks need to be weighed against the developmental needs of the child and the realities of work for the parents. Every family situation also needs to be considered. If an elderly grandparent lives with the family, the family needs to consider that the child could bring the virus home.”
Dr. Stephanie Miles-Richardson, program director in the Morehouse School of Medicine: “Because everyone is at risk for getting COVID-19 if they are exposed to the virus, the question posed is really regarding the risk-benefit analysis of x—with x being day care, the public parks, laundry, etc. Thus, the question is actually: What is my risk-benefit analysis of x? Individuals must compare the risk of the action (e.g., sending my kids to day care) to the potential benefits of the action (e.g., having childcare so I can go to work). The reason that there are no straightforward answers to the questions is because analyzing the risk is dependent on human factors including personal circumstances and options.
“Regardless of the outcome of the personal risk-benefit analysis, the three W’s can help to reduce the risk of exposure to the coronavirus that causes COVID-19: Wear a face covering; wash your hands; and watch your distance.”
Dr. James H. Diaz, program director in the LSU School of Public Health: “The CDC advises parents to make sure the day care adheres to their recommendations, such as maintaining an adequate ratio of staff to children to ensure safety. Childcare programs that remain open during the COVID-19 pandemic should address these additional considerations:
Implement social distancing strategies
Intensify cleaning and disinfection efforts
Modify drop-off and pickup procedures
Implement screening procedures upon arrival
“Care programs should also plan ahead and have a roster of substitute caregivers who can fill in if your staff members get sick or have to stay home to care for sick family members.
“When feasible, staff members and older children should wear face coverings within the facility. Cloth face coverings should not be put on babies and children under age 2 because of the danger of suffocation.”


fortune--2020-07-23--Taylor Swift announces surprise album, ‘Folklore,’ which was recorded ‘in isolation’

While in isolation, Taylor Swift has created a new album and is releasing it Friday.
The pop star made the surprise announcement Thursday on Instagram. “Folklore,” her eighth record, comes less than a year after she dropped “Lover.”
“Most of the things I had planned this summer didn’t end up happening, but there is something I hadn’t planned on that DID happen. And that thing is my 8th studio album, folklore. Surprise,” she wrote. “Tonight at midnight I’ll be releasing my entire brand new album of songs I’ve poured all of my whims, dreams, fears, and musings into. I wrote and recorded this music in isolation.”
Swift says the standard edition will include 16 tracks and the album will feature Bon Iver, Aaron Dessner of The National and frequent collaborator Jack Antonoff.
“Before this year I probably would’ve overthought when to release this music at the ‘perfect’ time, but the times we’re living in keep reminding me that nothing is guaranteed. My gut is telling me that if you make something you love, you should just put it out into the world. That’s the side of uncertainty I can get on board with,” Swift wrote.
She also said that the music video for the song “Cardigan” will premiere at midnight Eastern. She says because of the coronavirus pandemic, they took extra safety precautions while filming.
“The entire shoot was overseen by a medical inspector, everyone wore masks, stayed away from each other, and I even did my own hair, makeup, and styling,” Swift wrote, ending the post with a laughing emoji.


fortune--2020-07-23--Twitter reports record user growth, while considering some subscription options

Twitter Inc. reported a second straight quarter of record user growth as people joined the service for news and entertainment during the global coronavirus outbreak, but its advertising business was hammered amid a global marketing retraction as businesses pulled back on spending.
Twitter reported 186 million daily users for the period ended June 30, a 34% jump over the quarter a year earlier, and its largest year-over-year increase since first reporting the metric in 2016. Users jumped 24% in the first quarter, a record at that time. Shares gained about 3% as the market opened.
But second-quarter sales declined 19% to $683.4 million compared with a year earlier, the San Francisco-based social-media company said Thursday in a statement. Analysts, on average, projected $704.6 million, according to data compiled by Bloomberg.
The company said it’s exploring additional business lines, including a possible subscription offering, as a way to supplement advertising, which makes up more than 82% of total revenue.
Twitter also acknowledged a high-profile hack of its service earlier this month, calling the incident “disappointing” and saying it’s “working with law enforcement as they conduct their investigations.” Hackers used phishing techniques against company employees to gain access to at least 130 accounts, including for some famous users such as Joe Biden, Jeff Bezos and Elon Musk, and sent tweets asking for Bitcoin.
“We understand our responsibilities and are committed to earning the trust of all of our stakeholders with our every action, including how we address this security issue,” Twitter Chief Executive Officer Jack Dorsey said in the statement and in a letter to shareholders. He opened a call with analysts by personally apologizing.
Twitter added 20 million new daily users over the quarter. The growth was “primarily driven by external factors, such as continued shelter-in-place requirements for many people, and increased global conversation around the Covid-19 pandemic and other current events,” the company said in the letter to shareholders.
Despite the increase in users, Twitter said advertising revenue fell 23%, including 25% in the U.S., with many companies pulling back on spending given the global pandemic. The company also saw a drop from late May to mid-June “when many brands slowed or paused spend in reaction to U.S civil unrest.”
Twitter’s stock has gained 15% to $36.94 this year, bouncing back from a low of $22 in March.
Twitter didn’t give a forecast for the third quarter or share any advertising updates for July. Thousands of advertisers have cut or lowered spending on Facebook Inc. to protest hate speech on the platform and the company’s content policies. Many buyers have extended those cutbacks to all social media.
Twitter executives dodged a number of questions from analysts about the impact of the boycott on the company’s business. “We’re here to talk about Q2 so I’ll focus on what we saw in the last quarter,” Chief Financial Officer Ned Segal said when asked about July advertising trends. He said ad revenue was down 15% over the last three weeks of June, better than the 27% decline the company saw in the last three weeks of March at the beginning of the pandemic.
Segal also said Twitter is optimistic that ad growth will continue to improve given the return of events like live sports, which typically drive consumers to the service. Major League Baseball starts its shortened season on Thursday, and the National Basketball Association is also set to resume this month.
Snap Inc. earlier this week reported better-than-expected revenue for the quarter, but warned its advertising business could be hurt by the economic effects of the virus moving forward. Analysts project Facebook’s revenue will increase just 2% year over year when it reports earnings next week, compared to about 18% growth in the first quarter.
Twitter said its effort to find “additional potential revenue product opportunities” is in the early stages. “We do not expect any revenue attributable to these opportunities in 2020, you may see tests or hear us talk more about them as our work progresses,” the company said in the letter.
“These are really just ideas right now,” Segal said, adding that Twitter is thinking about commerce and subscriptions for people who use the service.
Dorsey said the company is also considering a business related to “managing paywalls” — and that it will likely test some of these business lines later this year. Any subscription would need to “complement” Twitter’s advertising business, Dorsey said. “We have a really high bar for when we would ask consumers to pay for aspects of Twitter,” he added. “We are in the very, very early phases of exploring.”
Twitter reported a net loss of $1.2 billion in the quarter, though credits most of that loss to a $1.1 billion deferred tax asset allowance. Excluding that tax expense, Twitter said its adjusted loss was $127 million, or 16 cents a share. Analysts, on average, estimated a loss of 1 cent.


fortune--2020-07-23--Who will Bill Ackman’s blank check company buy?

What will the biggest ever blank-check company acquire?
That’ll be a topic of endless fascination in coming months after hedge funder Bill Ackman raised the largest ever blank-check company on Tuesday, with $4 billion in capital for Pershing Square Tontine Holdings. It began trading on the New York Stock Exchange on Wednesday.
A quick refresher: So-called blank-check companies, or Special Purpose Acquisition Companies, are effectively holding companies that find a business over the course of two years or so and take it public via merger. Rather than betting on the financials of a company itself, investors are, in a way, betting that the founders of the SPAC have the investing acumen to identify an attractive target.
More importantly in this case, the amount that blank-check companies raise is a fraction of the full value of the company they take public—a major reason to keep track of the tontine. At $4 billion, there are only so many possible acquirees.
So who will the tontine buy? In a Bloomberg TV interview Wednesday, Ackman gave some hints. He said the company’s target universe likely includes about 150 private companies valued at over $10 billion, with the top third clearing his quality threshold. He ruled out so-called pure technology companies that are speculative, a category in which he puts Alphabet’s self-driving car unit, Waymo.
“Basically, we’re in a unicorn mating dance and we want to marry a very attractive unicorn on the other side that meets our characteristics,” he told Bloomberg TV. While the company does not have to be currently profitable, he says, “We’re looking for a simple, predictable free cash flow-generative company, very high barriers to entry with minimal exposure to…extrinsic risks we can’t control.”
Ackman’s raise comes as Airbnb CEO Brian Chesky confirmed the company was approached about a merger with a so-called blank-check company, though Chesky added, “We’re looking at everything.” (When asked about Airbnb, Ackman said, “We would certainly take a look at Airbnb. I’ve always admired the business.”) Another venture-backed startup, Hims, which provides healthcare products for men, is also reportedly considering going public via a SPAC in a deal that could value it at over $1 billion.
All in all, it’s been a bang-up year for SPACs. Some 48 have raised $18.6 billion so far this year, vastly eclipsing the total figure of $13.6 billion raised in all of 2019, according to SPACInsider. And they haven’t rested on their laurels.
That said, a SPAC isn’t guaranteed to find an acquiree.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- Investors led by General Atlantic and Sequoia are in early talks to acquire a majority stake in TikTok from Beijing-based ByteDance, per reports. Read more.
- Encoded Therapeutics, a South San Francisco-based precision gene therapy company, raised $135 million in Series D funding. GV led the round and was joined by investors including Matrix Capital Management, ARCH Venture Partners, Illumina Ventures, RTW Investments, Boxer Capital, Nolan Capital, HBM Genomics, Menlo Ventures, Meritech Capital, Farallon Capital Management, and Softbank Vision Fund 2.
- AB Tasty, a New York-based customer experience company, raised $40 million in funding. Credit Mutuel Innovation led the round and was joined by investors including Korelya Capital, Omnes, Partech and XAnge. Read more.
- Wave.tv, a sports media startup, raised $32 million in equity and debt funding during its Series A. CoVenture and GPS Partners led the round. Read more.
- Sidecar Health, a Los Angeles-based digital health company for consumers to shop around for services, raised $20 million. Cathay Innovation led the round and was joined by investors including Comcast Ventures, Kauffman Fellows and Anne Wojcicki (co-founder and CEO of 23andMe).
- Sea Machines Robotics, a Boston-based developer of autonomous systems for ocean-going vessels and workboats, raised $15 million. Investors included Huntington Ingalls Industries.
- CalypsoAI, a Washington, D.C.-based cybersecurity provider for artificial intelligence, raised $13 million in Series A funding. Paladin Capital Group led the round and was joined by investors including Frontline Ventures, 8VC, Lightspeed Venture Partners, Lockheed Martin Ventures, Manta Ray Ventures, and Pallas Ventures.
- OrthoFX, a San Francisco-based orthodontic and teeth straightening service, raised $13 million in funding. Signalfire led the round.
- Shelf Engine, a Seattle-based firm for stocking store shelves for supermarkets and groceries, raised $12 million. Initialized and GGV led the round and were joined by Foundation Capital, Bain Capital, 1984 and Correlation Ventures. Read more.
- StuffThatWorks, a Tel Aviv-based patient community platform, raised $9 million in seed funding. Investors included Bessemer Venture Partners, 83North, and Ofek Ventures.
- Kudo, a New York-based multilingual web conferencing platform, raised $6 million in seed funding. Felicis Ventures' Niki Pezeshki led the round and was joined by investors including Global Founders Group, ID8 Investments and Advancit Capital.
- The Helper Bees, an Austin-based home care company, raised $6 million in Series A funding. Silverton Partners led the round and was joined by investors including Austin Impact Capital, and Techstars.
- Safehub, a San Francisco-based platform for building earthquake damage information, raised $5 million in seed funding. Fusion Fund and Ubiquity Ventures co-led the round and were Bolt, Promus Ventures, Blackhorn Ventures, Maschmeyer Group Ventures, and Team Builder Ventures.
- Grid Raster, a Mountainview, Calif.-based provider of cloud-based platforms that powers AR/VR/MR experiences, raised $2.5 million in funding. Blackhorn Ventures led the round and was joined by investors including MaC Venture Capital and Exfinity Venture Partners.
- Quorum, a Dublin-based mobile chat startup, raised $2 million in seed funding. Adjacent and LocalGlobe led the round and were joined by investors including Amaranthine and Y Combinator.
PRIVATE EQUITY
- Sumeru Equity Partners invested $100 million in Ceros, a New York-bsed cloud-based design platform.
- KPS Capital Partners agreed to acquire AM General, a South Bend, In.-based maker of specialized vehicles for military and commercial customers, from an affiliate of MacAndrews & Forbes. Financial terms weren't disclosed.
- GHK Capital Partners acquired Hasa, a California-based manufacturer and distributor of water treatment chemicals. Financial terms weren't disclosed.
- Digital Colony delivered a bid for bankrupt Brazilian carrier Oi SA’s mobile unit, per Reuters. Financial terms weren't disclosed. Read more.
OTHERS
- Nvidia is reportedly interested in SoftBank Group's chip company Arm Holdings, per Bloomberg. Read more.
IPOS
- Vasta Platform, a Brazilian K-12 school curriculum provider, plans to raise $306 million in an offering of 18.6 million shares priced between $15.50 to $17.50. Cogna backs the firm. It plans to list on the Nasdaq as “VSTA.” Read more.
- Nurix Therapeutics, a San Francisco-based developer of targeted protein modulation drugs, plans to raise $193 million in an offering of 11 million shares priced between $17 to $18. Foresite Capital led the round, and was joined by investors including Bain Capital Life Sciences, Boxer Capital (Tavistock Group), EcoR1 Capital, Redmile Group, Wellington Management Company, The Column Group and Third Rock Ventures.
- Annexon, a South San Francisco, Calif.-based clinical-stage company developing therapies for classical complement-mediated disorders, plans to raise $194 million in an offering of 12.5 million shares priced between $15 to $16. Redmile Group led the round and was joined by investors including BlackRock, Deerfield Management Company, Eventide Asset Management, Farallon Capital Management, Janus Henderson Investors and Logos Capital.
- Montrose Environmental Group, ae Irvine, Calif.-based provider of environmental assessment, raised $150 million in an offering of 10 million shares priced at $15.It posted revenue of $233.9 million in 2019 and a loss of $23.6 million. Oaktree (17.2% pre-offering), CTEH Holdings (8.7%) and Yukon Environmental (8.4%) back the firm. It plans to list on the NYSE as “MEG.” Read more.
- Inozyme Pharma, a Boston-based biotech, plans to raise $104 million in an offering of 6.5 million shares priced at $16. Longitude Ventures Partners (14.3% pre-offering), Novo Holdings (14.3%), and NEA (14.3%) back the firm. It plans to list on the Nasdaq as “INZY.” Read more.
PEOPLE
- Trinity Hunt Partners promoted John Martin to senior associate.


fortune--2020-07-23--When rationing a coronavirus vaccine, pharma must keep these 3 ethical considerations in mind

There will be a first vaccine approved. There will be a first vaccine made available commercially. The pharmaceutical industry will do its thing, and we have good reason to expect success from an unprecedented research effort. However, there is a place where we don’t want pharma to do what it usually does, and that is to decide who gets that first vaccine.
While we’ve heard that pharma’s normal behavior has been suspended in pursuit of a vaccine for COVID-19, we have already seen rumblings of business as usual in the procurement and pricing of remdesivir. Should the first person to be vaccinated for SARS-CoV-2 be the one with the most exclusive credit card, or the most influential government? Should they be among the most vulnerable or the most critical frontline workers?
With these questions in mind, companies should take the following considerations into account for the rationing of a potential coronavirus vaccine.
The first consideration is over who pharma companies should rely on to make decisions about vaccine rationing. If pharma leaders knew the world would only ever get 100 million doses of vaccine, the best response would be to efficiently manage their resources. Eradication would be about management of outbreaks at their source, in which case pharma leaders might decide to delegate that decision to a World Health Organization (WHO)-type body, with a remit to intervene where necessary.
But such a strategy would run into challenges in global and local politics. Already, in the U.S., three groups—the National Academy of Medicine, a nonprofit; the Advisory Committee on Immunization Practices, which works within and advises policy for the Centers for Disease Control and Prevention; and Operation Warp Speed, a government program dedicated to fast-tracking coronavirus vaccine development—have disagreed about how the U.S. should decide who gets a vaccine first. In the face of such confusion, and antagonism to the WHO, the company making those first 100 million doses will face a unique challenge in deciding who to follow.
Second, companies must consider who can safely be given the vaccine. Because of potential risks, the first vaccine’s initial application may be limited with vulnerable populations. We’ve seen before that there are many unknowns about a vaccine even after it is approved for widespread use. Decisions taken in haste can lead to safety issues, which could damage society’s belief in vaccines in general, and the global response to this pandemic specifically.
The third ethical consideration is how to distribute the vaccine among countries. The decision cannot be based on traditional parameters of willingness or ability to pay. Even if we assume that governments are acting with the best of intentions, allocating doses on a first-come, first-served basis or pricing the vaccine to limit demand will create inequality in how it’s allocated worldwide.
COVAXX, a division of United Biomedical that is developing a COVID-19 vaccine and offers an antibody test, has created an independent prioritization panel to set criteria for any deals done for the first 100 million vaccine doses. (My company, IDEA Pharma, is advising COVAXX.) If companies cannot rely on help from governments or international organizations—as is clearly the case with COVID-19—they must instead establish their own guidelines.
Such a panel must meet a few requirements. It should have adequate diversity of opinion. The panel should not base its decisions on ethnicity or race—but it also cannot ignore the influence those factors will have on demand. The group should not have a singleminded focus on ethics; that should be balanced with economic, anthropological, virological, epidemiological, public health, and political considerations.
During the debate over Obamacare in the U.S., we saw the emergence of the term “death panels,” so we know how controversial and uncomfortable discussions over the rationing of care can be. But ration we must. Eventually, the first 100 million doses will lead to 7 billion protected lives. But someone will be patient No. 1.
We should hope that all other manufacturers adopt similar committees. Pharma’s reputation may be saved by the warp-speed development we’re currently seeing, but also perhaps by the slow, intentional reflection of a “life panel.”
Mike Rea is CEO of IDEA Pharma.


fortune--2020-07-23--Ann Taylor parent Ascena becomes latest retailer to seek bankruptcy protection

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The list of 2020 retail bankruptcies just got longer.
Ascena Retail Group, the operator of clothing chains Ann Taylor and Lane Bryant, filed for Chapter 11 bankruptcy on Thursday, as a business slowdown stemming from the coronavirus pandemic exacerbated existing problems for the retailer.
The company, based in Mahwah, N.J., operates nearly 3,000 stores, primarily at malls, and has been hurt by debt stemming from acquisitions and declining sales. Customers have lost interest in brands like Ann Taylor, which had long been popular with young women building an office wardrobe.
In 2015, Ascena had sought to turn itself into an apparel retail conglomerate, buying Ann Inc., parent of Ann Taylor and Loft, for $2 billion. The bet being that economies of scale and more clout with mall landlords could improve their financial performance. But the company ultimately doubled down on an area of retail that went on to shrivel: malls.
“Ascena has suffered more than some other apparel brands because too much of its business is in the murky middle ground of fashion. It delivers neither great value nor great fashionability,” Neil Saunders, managing director of GlobalData Retail, wrote in a research note. “That was a slow killer before the pandemic hit.”
As part of its bankruptcy plan, Ascena plans to close all of its Catherines stores and “a significant number” of Justice stores, but to ax only a “select” number of Ann Taylor, Loft, Lane Bryant, and Lou & Grey stores. Ascena will exit Canada and Mexico altogether. Earlier this year, it shut down its Dressbarn chain.
The company’s agreement with its creditors, subject to bankruptcy court approval, eliminates a big chunk of its debt, bringing it down to $1 billion.
Ascena joins a growing list of retailers that have filed for bankruptcy protection this year: Brooks Brothers, Neiman Marcus, J.C. Penney, J. Crew, and Stage Stores, among many others.
In Ascena’s fiscal third quarter, at the peak of the COVID-19 shutdowns, revenues fell 45%. In its most recent full fiscal year, Ascena saw revenue of $5.5 billion.


fortune--2020-07-23--Is the Apple App Store a monopoly?

Is the Apple App Store a monopoly?

This is the web version of Data Sheet, Fortune’s daily newsletter on the top tech news. To get it delivered daily to your in-box, sign up here.
Good morning. This is Fortune writer Aric Jenkins, filling in for Adam.
The eye-popping 30% fee that Apple charges developers to conduct sales through its App Store is fair and inline with other digital marketplaces like the Google Play Store, according to a study commissioned by… guess who?
That’s right. Apple is on the defense ahead of its Monday antitrust hearing in front of the House—which will also feature top executives from Google parent Alphabet, Amazon, and Facebook. Apple says the study, in which economists from Analysis Group to compare the App Store to peers like Google, Microsoft, Airbnb, and Uber, will provide data for CEO Tim Cook to cite in his testimony.
The base 30% rate that Apple charges for paid apps, in-app purchases, and the first 12 months of in-app subscriptions, the study found, matches the Amazon Appstore, Samsung Galaxy Store, Microsoft Store, and even video game marketplaces like Xbox, Playstation, and Nintendo. But there are some discrepancies (see the tables in this piece for a precise breakdown), such as Amazon charging only 20% for video streaming subscriptions, or game platform Steam dropping its percentage once sales exceed $10 million. And Apple and Google themselves lower in-app subscription fees down to 15% after the first year.
Why is Congress (plus the European Union!) so peeved at Apple in particular? Well, roughly 1.5 billion devices actively run Apple’s iOS, and the only way developers can get to them is through the Apple Store. Some with high standing—Netflix, Spotify, Amazon—have decided they aren’t going to pay that fee, and instead make customers sign up outside of the app. But other, much smaller developers are at the complete mercy of Apple. Without that brand recognition, they can’t bank on customers taking additional steps to purchase their products or services.
As if that wasn’t enough, Apple has been accused of promoting its apps over competing third-party ones, as well as over the company’s direct rivals.
“Yeah, yeah,” you might say. “Apple has every right to prioritize its own products on its own store.” And it’s a compelling argument. At the end of the day, Apple completely revolutionized the modern app marketplace. It leads to hundreds of billions of dollars in e-commerce, plus jobs and satisfied customers. Don’t like it? Buy or develop for an Android phone. And even then, you would be subject to the same principles, according to that Analysis Group study.
Just remember that analyst estimates pegged Apple’s take of App Store sales at $15 billion last year—roughly twice as much as its next largest rival, Google. And when Apple is the sole gatekeeper to that much money, it has little incentive to protect developers or everyday customers.
Is that a fair price to pay for access to one of the world’s most prized operating systems, and the devices that run on it? That’s the question Congress will start digging into on Monday.
Aric Jenkins
@aricwithan_a
aric.jenkins@fortune.com
This edition of Data Sheet was curated by Aaron Pressman.
NEWSWORTHY
The spider and the fly can’t make a deal. Struggling SoftBank Group has been seeking to raise cash to offset losses in investments like WeWork, but the latest rumor sounds a little hard to believe. Graphics chip giant Nvidia may be interested in buying SoftBank's chip unit, ARM, according to Bloomberg. Apple also got the pitch but had no interest. Data Sheet's favorite chip analyst (and spider wrangler extraordinaire), Bernstein's Stacy Rasgon, says the deal doesn't make a whole lot of sense, since Nvidia could just license ARM's chip designs if it wanted and ARM could lose a lot of business if it loses its independence.
Sign on the dotted line. The world of audio content keeps turning up the volume. Spotify announced a new deal with Universal Music Group, the world’s biggest record company, though it didn't say much about the financial terms. And Serial Productions, producer of the famed Serial podcast, was snapped up by the New York Times Co. for about $25 million, Variety reported. And I buried the lead: Taylor Swift is releasing a new album tonight online called Folklore.
Swabbing for justice. More than a million people who privately uploaded their DNA profiles to popular genealogy website GEDmatch didn't get the anonymity they expected. Hackers changed the privacy settings on all of their profiles to make their DNA records available for law enforcement searches. Verogen, which owns the database, says the privacy settings have been restored.
That roars so loud and thunders in the index. On Wall Street, earnings season is heating up. At Tesla, car sales were less important than reporting a fourth consecutive quarter of profits, making the electric carmaker eligible to be added to the S&P 500 (Sorry, Andrew). Tesla shares, which had already nearly quadrupled this year, were about unchanged in morning trading on Thursday. Microsoft saw revenue increase 13% to $38 billion, but that wasn't quite enough. Microsoft shares, previously up 34% this year, dropped 1% on Thursday morning. Twitter's key metric, average daily users, posted a healthy 12% increase to 186 million, even as its revenue declined 19% to $683 million. Shares of Twitter, up 15% in 2020, jumped 6%.
We daren't go a-hunting for fear of little men. Nevermind those large tech companies, what's happening among upstarts? Silver-haired hedge fund manager Bill Ackman on Wednesday launched a $4 billion blank check public company called Pershing Square Tontine Holdings with a goal of acquiring "mature unicorns," aka private tech companies with valuations over $1 billion. And Apple enterprise helper Jamf went public at $26 a share and promptly doubled in its Wednesday debut, though it closed at just over $39, a mere 51% gain.
One more from the Department of Corrections: Tuesday’s Data Sheet newsletter contained an error in its comparison of Toyota and Tesla’s annual sales. Toyota’s global sales were 10.74 million units, not 2.4 million units (U.S. only). We regret the error.
FOOD FOR THOUGHT
The debate over tech and China is multi-faceted and encompasses many companies. The U.S. military has banned the use of DJI drones, for example. Three New York Times reporters led by Paul Mozur delve into the DJI controversy following reports from two security firms about issues with DJI's Android app.
An icon of Chinese innovation, as well as a longtime security concern in the United States, DJI has struggled to allay worries about the safety of its drones, which shoot movies, guard power plants, count wildlife and assist military and the police. For years, it has responded repeatedly to reports of vulnerabilities with patches and has worked closely with the U. S. government to quash other fears.
Still, security researchers with Synacktiv said the pattern of problems in DJI’s code and its quickly implemented fixes, which suggested that the company was already aware of some of the problems but had not fixed them, were also reason for concern. “It is the mix of all of that which has made us suspicious,” said (Synacktiv engineer) Ms. Romand-Latapie. “It makes the application quite dangerous for the user if they are not aware of what the application is capable of doing.”
IN CASE YOU MISSED IT
Facebook’s Messenger will allow users to unlock the app with their fingerprints and faces By Danielle Abril
6 ways TikTok is countering political scrutiny—and a potential ban—in the U.S. By Naomi Xu Elegant
A look at the high-tech camera feature that could raise iPhone prices By Aaron Pressman
How researchers are tracking illegal ghost boats and the decline in flying squid By Katherine Dunn
Microsoft could face EU antitrust showdown as Slack complains about Teams bundling By David Meyer
Subscription boxes and meal kits are seeing a resurgence with shoppers stuck at home By Rachel King
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
In search of distractions from our pandemic times, some folks at Fortune spent the morning discussing Lillian Ross's epic 1950 profile of Ernest Hemingway from The New Yorker, which the magazine tweeted about this week. Well, less discussing and more being awed by the famed writer's hard-drinking ways. It's worth a read, if only to transport you to a wholly different era.
Aaron Pressman
@ampressman
aaron.pressman@fortune.com


fortune--2020-07-23--Bacardi’s ‘by women, for women’ vodka is a pandemic-era branding blunder

Good morning, Broadsheet readers! The Biden campaign proposes a $775 billion plan for caregivers, Planned Parenthood reckons with Margaret Sanger’s history, and Bacardi takes a misstep. Have a thoughtful Thursday.
– The Plume & Petal backpedal. Bacardi, Barcardi, Bacardi. Did you learn nothing from Bic’s ‘For Her’ pens and ‘lady’ Doritos?
The liquor company is under fire this week for its new Plume & Petal brand, a line of reduced-calorie and reduced-alcohol vodka products that were initially aimed specifically at women. As the Washington Post put it, that approach “went over as well as you’d expect.”
A tweet from Khushbu Shah, Food & Wine restaurant editor, helped ignite the backlash. “Ah yes just what I need in 2020! Gendered drinks with half the alcohol,” she wrote, attaching a public relations pitch that characterized Plume & Petal as “by women, for today’s modern woman, intended to be enjoyed with other women.”
Plume & Petal initially marketed itself as “spa-inspired;” its Instagram account, meanwhile, features only women, nearly all of them lounging by a pool.
Bacardi quickly backpedalled, saying it “was not proud of” the gendered language of the pitch. “[B]ut we are proud of the female creators behind this product—unfortunately, a rarity in this industry—and we are proud of this great tasting drink.”
It’s astonishing that Bacardi would get this so wrong. There’s a clear trend away from gendered anything these days—clothes, beauty products, pronouns. Other brands have publicly acknowledged their efforts to rid advertising of gendered stereotypes, which are known to have real-world effects on women.
What’s more, many women’s pandemic-era existence is wholly inconsistent with a spa-like experience. They may yearn for and find moments to relax and focus on self-care, but women worldwide are racked by ‘essential’ worker responsibilities, unemployment, and impossible childcare-work-from-home arrangements, not to mention the general sense of COVID-era unease.
Many brands have received high marks for their earnest attempts at pandemic advertising; their spots came off as authentic, if a bit corny. Plume & Petal is not that.
It is true that coronavirus lockdowns have seen consumers drink more liquor than beer. But again, this 40-proof vodka seems to miss the mark. Consumers these days are indulging in the hard stuff.
Claire Zillman
claire.zillman@fortune.com
@clairezillman
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- A caring proposal. The Biden campaign this week released a $775 billion plan to help parents and other caregivers. The proposal includes a bailout for childcare centers and funding for community health workers. New York Times
- An IMF WTF. The International Monetary Fund, led by Kristalina Georgieva, warned that the pandemic and its accompanying downturn threaten to "roll back gains in women's economic opportunities, widening gender gaps that persist despite 30 years of progress." CNN
- Turning the page. Hearst publishes several of the preeminent women's magazines in the United States, but Hearst Magazines leader Troy Young is now accused of fostering a toxic culture and making offensive and sexually-explicit comments. "Specific allegations raised by my detractors are either untrue, greatly exaggerated or taken out of context," he said in a statement. New York Times
- Quality time. Edith Cooper, Goldman Sachs' former HR chief and current board member of Slack and Etsy, has an unusual partner in her next venture: her daughter, Jordan Taylor. The duo co-founded a career development startup intended to bring executive-style coaching to younger professionals. Fortune
MOVERS AND SHAKERS: The New York Times named COO Meredith Kopit Levien CEO; she will be the organization's youngest-ever chief executive. Guru chief customer officer Anne Raimoldi joined Pateron's board of directors. Brex hired former Anchorage general counsel Katie Biber as chief legal officer.
IN CASE YOU MISSED IT
- Planned departure. Margaret Sanger paved the way for modern birth control, but, like many historical figures, was deeply flawed. Sanger strongly supported eugenics, and Planned Parenthood of Greater New York will remove her name from a clinic as a result. Washington Post
- Apology 101. The fallout over GOP Rep. Ted Yoho reportedly calling Rep. Alexandria Ocasio-Cortez a "f***ing bitch" continued yesterday, as Yoho issued an apology, of a kind, from the House floor. But the Florida congressman denied using those words and did not say Ocasio-Cortez's name in his remarks. "I will not teach my nieces and young people watching that this is an apology, and what they should learn to accept," she said. CNN
- A troubling flare-up. A new study finds that pregnant women who live near areas where gas flares are common were 50% more likely to give birth prematurely. Even more worrisome, these health outcomes fell entirely on Latina mothers. White mothers in the study did not face an increased risk of early birth. New York Times
ON MY RADAR
'I wish her well,' Trump says of Ghislaine Maxwell CNN
Their summer camp tried to be safe. Kids still got sick The Cut
Student debt forgiveness is a women's issue Gen
PARTING WORDS
"There’s no shame in admitting you are in trouble."
-Diane von Furstenberg on the business challenges facing her brand


fortune--2020-07-23--AT&T’s 5G prices come down as carriers get more competitive

The spread of superfast 5G wireless service is prompting carriers to get more competitive, at least for family plans.
On Thursday, AT&T, which had been limiting 5G to its highest-priced plans, added 5G access to its cheapest unlimited plan, which costs $140 per month for four lines. That comes a day after T-Mobile announced a new $100-per-month, four-line 5G plan, which costs $20 less than its previous cheapest plan. Verizon, the largest consumer carrier, has yet to react. Its cheapest plan with 5G is $180 per month for four lines.
AT&T and its rivals have been spending tens of billions of dollars to upgrade their networks to 5G, which ultimately promises to hit speeds 10 to 100 times faster than the average 4G LTE connection. Now comes the race to sign up customers. The price cuts come as 5G coverage is finally starting to reach more of the country. AT&T said on Thursday its regular 5G service is now available in almost 400 U.S. cities covering 200 million people. T-Mobile hit 200 million people covered with its regular 5G service back in December. And the price of a 5G phone is also coming down, with new models costing less than $600—including LG’s new Velvet 5G model and Samsung’s Galaxy A71—arriving in recent weeks.
“5G just won’t be a premium-tier type capability,” says AT&T executive vice president Andre Fuetsch, who is the chief technology officer of network services. “I think you’re going to see it open up and expand and become more attractive to a wider audience.”
T-Mobile’s deal also lets customers add a new 5G compatible phone, the Samsung Galaxy A71, for each line for an additional $5 per month (with a trade in of older phones).
“We’re bringing heat to the competition this summer,” T-Mobile CEO Mike Sievert quipped in a promotional video touting the new offer.
Still, the experience for customers won’t reach maximum 5G speeds in most places. The networks that T-Mobile and AT&T have rolled out widely offer speeds only slightly faster than 4G. Only in parts of a few dozen cities have the two carriers added the fastest type of 5G, which can reach speeds over 1 gigabit per second, fast enough to download a movie in a few seconds.
Verizon has so far launched only the fastest type of 5G, but only in parts of 35 cities. Verizon has often moved more cautiously than its rivals, and analysts expect it will likely follow with its own cheaper 5G plan in coming months.
A Fortune test of the three carriers’ 5G networks earlier this year found truly high-speed 5G spots to be few and far between.
While the COVID-19 pandemic has slowed some parts of the tech economy, wireless carriers have largely continued to expand their networks. Working outdoors on cell sites and antenna towers, crews have been able to distance themselves and keeping working despite the pandemic.
“The network build has continued to go quite well,” AT&T’s Fuetsch says.


fortune--2020-07-23--$100 per week? Republicans float cuts to weekly unemployment benefit; most Americans support keeping

$100 per week? Republicans float cuts to weekly unemployment benefit; most Americans support keeping it at $600

Democratic and Republican leaders on Capitol Hill are engaged in a debate for what to include in the next round of stimulus that is expected to exceed $1 trillion.
Among the ideas being discussed are another round of stimulus checks and an extension of the extra $600 weekly unemployment bonus, which will lapse at the end of the week unless extended. On Wednesday Republicans floated the idea of cutting the weekly unemployment benefit from $600 to $100.
As the debate ensues in Congress, Fortune and SurveyMonkey polled 2,802 U.S. adults between July 17 and 21* to see where Americans stand on the next stimulus bill.
The Fortune-SurveyMonkey poll finds 80% of U.S. adults support the federal government issuing a second round of stimulus checks. That’s up from 54% of U.S. adults who supported a second of stimulus checks back when Fortune-SurveyMonkey polled U.S. adults between May 20 and 26. That uptick in support since May could indicate growing pessimism as surging COVID-19 cases threaten to derail the economic recovery.
While issuing a second stimulus check has a majority of support in every demographic we measured, there is something of a political divide. Among Republicans, 67% support a second round of checks, compared to 92% of Democrats.
Meanwhile, 68% of U.S. adults support the federal government extending the extra $600 weekly federal unemployment benefit beyond its July expiration. However, the political divide on the $600 extending is greater than the divide on the second round of stimulus checks. Only 48% of Republicans support extending the $600 weekly federal unemployment benefit beyond July, versus 86% of Democrats.
Rank-and-file Republicans opposition to extending the extra $600 unemployment benefit, which is paid on top of state benefits is shared by their party leaders. Republicans in Congress are pushing for the $600 payment to be cut in order for it be extended past July. The reason? Around 7 in 10 Americans receiving unemployment benefits are earning more than they did at their job, which businesses and Republican leaders argue could deter workers from returning to work.
“We are paying a whole lot of people a lot more money to stay home and not work than they made on their jobs… and that is terrible,” Senator Ted Cruz (R-Texas) said Wednesday.
*Methodology: The Fortune-SurveyMonkey poll was conducted among a national sample of 2,802 adults in the U.S. between July 17-21. This survey’s modeled error estimate is plus or minus 3 percentage points. The findings have been weighted for age, race, sex, education, and geography.


fortune--2020-07-24--Europe wants the U.S. to immediately cancel its $7.5 billion tariff offensive. Here’s why

Airlines have been waiving change and cancel fees during the pandemic .
How long will that last ?

The European Union is demanding that the U.S. immediately lift the tariffs it imposed last year in a 16-year aerospace-subsidies dispute.
The U.S. hit the EU with the tariffs—on products ranging from aircraft to clothing and cheese—last October, as punishment for the illegal subsidies some countries gave to the European plane-making consortium Airbus.
However, on Friday Airbus announced that the last of the subsidies, judged illegal by the World Trade Organization (WTO), had been removed via amendments to investment contracts with the Spanish and French governments. Now, the EU says it’s time for the U.S. to roll back its tariffs.
These are so-called repayable launch investment (RLI) contracts—essentially, advance payments for the launch of a new aircraft that are repaid with interest in the form of “royalties”, but only once a certain sales target is crossed. Airbus took these loans from France, Germany, Spain and the U.K.
This U.S. calls this “launch aid”; the EU calls it “success-sharing.”
In 2016, the WTO agreed with the U.S. and said the A350 loans were illegal subsidies that had lost Boeing hundreds of orders for its competing aircraft, including the 787, 777, 747 and 737. Two years later, the EU and Airbus said they would amend the RLI contracts to comply with the WTO ruling.
With the last of the amendments now out of the way, the EU wants immediate action from the U.S. on those tariffs.
The WTO allowed the U.S. to impose tariffs on up to $7.5 billion in EU goods, and the U.S. has been doing so in gradual stages. It is currently considering adding more EU goods to its tariff list, including things like trucks, chocolate and decaffeinated coffee.
“Arising from the compliance in the Airbus case, we insist that the United States lifts these unjustified tariffs immediately,” EU Trade Commissioner Phil Hogan said in a statement. “The EU has made specific proposals to reach a negotiated outcome to the long-running transatlantic civil aircraft disputes and remains open to work with the U.S. to agree a fair and balanced outcome, as well as on future disciplines for subsidies in the aircraft sector.”
The EU is not without its own weaponry in this dispute.
The WTO has also ruled that Boeing received illegal funding, which gives the EU the right to hit the U.S. with punitive tariffs. The only reason it hasn’t done so yet is that it’s waiting on a WTO arbitrator to specify the maximum amount of tariffs it can levy.
That decision is due in the coming weeks. The European Commission said Friday that, as soon as it knows the approved amount, it will impose tariffs on American imports. That is, unless the U.S. lifts its tariffs on EU imports first.
“In the absence of a settlement, the EU will be ready to fully avail itself of its own sanction rights,” said Hogan.
However, the U.S. claims that the EU can’t impose tariffs on it, because it has eliminated all the illegal subsidies it was giving Boeing. It said in May that the last of the subsidies—a Washington state tax break—had been removed, signaling full compliance with WTO rules.
“This step ensures that there is no valid basis for the EU to retaliate against any U.S. goods,” U.S. Trade Representative Robert Lighthizer said at the time.
Lighthizer’s office had not announced its next move at the time of writing.
The U.S.-EU subsidies dispute has been running since 2004, but under the Trump administration it has become part of a wider set of trade-related arguments.
The U.S. is currently threatening tariffs on French products, in retaliation for a French “digital tax” that will apply to the local revenues of American giants such as Amazon, Google and Facebook. It has also threatened tariffs on European cars, for multiple reasons, including a desire for a U.S.-EU trade deal and a bid to get the EU to crack down on Iran over its violation of the nuclear deal.
However, given that tariffs on imports are usually effectively paid by the consumers and businesses that buy those imports, it remains to be seen how such a move would play in a U.S. election year marked by pandemic-induced economic carnage.


fortune--2020-07-24--Airlines have been waiving change and cancel fees during the pandemic. How long will that last?

Europe wants the U.S. to immediately cancel its $ 7.5 billion tariff offensive .
Here ’ s why

As travel started to shut down in March, most major airlines were generous in waiving change and cancellation fees—even if the actual process of getting a credit or refund was arduous for many fliers.
Don’t expect that practice to last forever. Travelers still have a chance at scoring record-low fares, and frequent-flier miles and status should be safe through at least 2021. But surcharges for changing or canceling a ticket will eventually come back.
“Certainly, COVID-19 has ushered in new terrain when it comes to flex policies, with the big difference being that we don’t really have a set end date for something like this,” says Melissa Dohmen, senior manager of communications at travel fare aggregator Orbitz. “I think one could speculate that some version of flex policies will remain in effect at least through the end of the year for travel in the U.S. Internationally, we may see airlines curtail some of these policies sooner based on local conditions and their ability to mitigate the spread of the virus.”
Several of the top major domestic carriers are scheduled to see the deadline for waivers on fee changes on new tickets run up on July 31, even as new cases of COVID-19 continue to skyrocket across the United States, and it’s up in the air if carriers will extend this grace period.
Navigating these policies by carrier, by cabin, and even by original booking date is a time-intensive and byzantine process. Alaska Airlines, for example, is continuing to waive fees on changes to new tickets booked by July 31, 2020, for travel through June 30, 2021. But lower-priced “Saver” fares do not qualify for itinerary changes. Passengers can cancel the trip but receive only a credit for the value of the ticket.
American Airlines is offering a similar policy for future travel booked by the end of July, although passengers can make changes without penalty and push back travel to as late as Dec. 31, 2021. Customers are allowed to change their origin and destination cities as part of this offer.
United Airlines is a bit trickier: Any tickets purchased by July 31 can be canceled or changed without any fees. But if a passenger rebooks a flight, they will have to pay the fare difference between the original ticket and the new one, and they will not be issued a credit or refund if the new itinerary costs less than the original booking.
At Delta Air Lines, any tickets purchased by July 31 for future travel can be canceled or changed for up to a year from the date of purchase without any fees. But a Delta spokesperson told Fortune that the carrier is evaluating an extension of its change fee waiver.
JetBlue Airlines also originally had an end date set for July 31 but has since extended its no-fee offer for future changes to new and existing bookings, although fare differences may apply. Fliers now have through at least Sept. 8 for rebooking flights scheduled through the end of JetBlue’s current schedule, which for the time being runs through February 2021.
Orbitz recently launched a new search filter in response to COVID-19 that allows travelers to narrow flight search results to show only tickets with flexible change policies or no change fees. Moving forward, Dohmen says, travelers might be less inclined to purchase economy fares that are restrictive, opting instead to pay a little more for extra flexibility to change plans without penalty.
“I don’t know that anyone would have predicted in March—when the travel industry first started implementing flex policies in response to COVID-19—that they would still be in place throughout the summer,” Dohmen says. “So in many regards, I think the flexibility we’ve seen so far is a positive signal for travelers booking travel into the fall and beyond. That said, in the U.S., where we have seen conditions change from destination to destination and week to week, I do think this event will change how many travelers shop for flights.”
Regardless, airlines are desperate to get passengers in seats (even middle seats, despite social distancing guidance) to slow the bleeding of their bottom lines. Saniya Shah, CEO of Pilota, a venture-backed travel tech startup based in New York City, says airlines will keep these policies in place for the foreseeable future to encourage customers who are considering taking a flight to complete their bookings. However, Shah warns, airlines will likely continue to incrementally extend the timelines for altering a reservation rather than announce these decisions well in advance.
“Airlines are going to be lenient with these policies until an end to the pandemic is in sight,” Shah says. “Until then, people are going to be wary about flying, and unless they know that their ticket value is safe, they will be very hesitant to complete any bookings.”
There is still an incentive for travelers to book travel now with the assurance it won’t cost much, if anything, to change plans, advises Mike Taylor, senior and practice lead for travel intelligence at J.D. Power. “As volume and demand increase, it would be our assumption that the ‘cost’ of this incentive to the airlines will start to outweigh the value of the incentive in bookings.”
Taylor explains that change fees are major revenue generators for many airlines and, as such, would be hard to give up. J.D. Power research indicates that the costs and fees associated with an airline journey have the biggest impact on travelers’ satisfaction with an airline. Southwest, for example, ranks highly with consumers when factoring the value and cost of a ticket—not because the carrier’s fares are significantly cheaper than most other airlines, but because Southwest generally waives change fees and uses the absence of baggage fees as a marketing hook.
“If other airlines want to continue with fee waivers, it should have a positive effect on their passengers’ satisfaction,” Taylor says. “But this comes at a year-over-year revenue cost that would give most CFOs pause.”
When penalties do return, the onus will be back on passengers to dispute any fees they feel are unwarranted. There has always been some wiggle room, especially for citizens of the European Union and also passengers traveling on European carriers to and from the EU, where travelers’ rights are more protected by law.
There is also the usual fallback of travel insurance, sometimes provided by major credit cards but also through insurance providers. Before the arrival of COVID-19, however, travel insurance covering trips thwarted by a pandemic was about as common as home or renters insurance covering damage incurred by an earthquake. (West Coast residents will know this to mean nonexistent.)
“Most travel insurance policies came out with clauses that did not cover COVID-related issues back in March, especially the ‘cancel for any reason’ policies,” Shah says. “That is why it is really important for travelers to carefully read through their policies to understand what the limitations are for post-COVID travel, specifically as to whether canceled or affected trips will be covered, as well as whether their travel health plans will cover any COVID-related complications.”