fortune--2020-09-24--U.S. policies created the border and drug crises—and can end them

What would you risk for a better life?
That’s a question Central Americans have been grappling with for decades. Most have two choices. They can head north in search of that better life in the U.S. Or they can seek economic opportunity in the only industries thriving in the region—organized crime and narcotics trafficking.
U.S. policies are largely to blame for this dysfunction. For over a century, the U.S. government has supported Central American neocolonial dictatorships, whose rampant corruption has destroyed local economies. For example, the U.S. last year sent more than $162 million in aid to Honduras, whose dubiously elected President the U.S. Attorney’s Office for the Southern District of New York has connected to drug trafficking.
The good news is that better U.S. policy—one that more directly engages our Central American neighbors—can help solve these crises.
Consider the dramatic uptick in the number of adults and children, particularly from Guatemala, Honduras, and El Salvador, seeking asylum at our southwestern border. People from these three countries accounted for more than seven of every 10 apprehensions at the U.S.-Mexico border in fiscal year 2019.
Drugs, a gun, a wire cutter, and a scale. Nick Quested
Some Americans perceive these migrants as threats to national security. But as we have learned over the past two years while traversing Central America to film our new documentary, Blood on the Wall, nothing could be further from the truth.
The individuals we met didn’t leave the only homes they’d ever known by choice. They fled to avoid rape, injury, or death at the hands of violent gangs, in hopes of finding better economic opportunities and safety in the U.S.
This was certainly true for Ludy, a 17-year-old young woman from Honduras who made the trek north with her boyfriend. It was true for Sara, too, who traveled on foot from Guatemala to the U.S. with her grandchildren and her daughter Charol.
Much of the violence they’re fleeing stems from the international drug trade. Mexico is the leading source of heroin and methamphetamine for the American market. It’s also the chief distributor of cocaine—much of which is produced in South and Central America—and the top foreign source of marijuana.
Drug cartels and street gangs have supplanted the government in some regions. Their frequent clashes with one another—as well as rampant government corruption—have destroyed any semblance of justice across large swaths of Latin America.
We spent days with drug traffickers and gunmen like Rafa, a hit man for the Sinaloa Cartel. He and his colleagues aren’t sociopaths. They’re people born into impossible circumstances. The drug trade is one of the only realistic ways to support their families and put food on the table.
A Sinaloa Cartel member cleans guns. Nick Quested
American policies have failed people on both sides of the border. Stricter border enforcement, such as the Trump administration’s “zero tolerance” policy toward undocumented immigrants, has only compounded the suffering of those fleeing Central America.
And the decades-long war on drugs has done little to curb Americans’ insatiable demand for illicit substances. Almost 71,000 Americans died from overdoses last year. Nor has it diminished the power or ruthlessness of the cartels. There were 34,500 murders in Mexico last year—the highest total on record. The vast majority are drug-related and go unsolved.
Legalizing drugs or liberalizing U.S. immigration policy wouldn’t sufficiently address the drug and migrant crises. Legalization may create a demand bubble before tax and regulatory policies, along with health services, can catch up. Relaxing U.S. immigration policy could incentivize human smugglers to step up their operations, in a bid to maintain profits, as penalties—and per capita fees—decrease.
The only way to sustainably solve these crises is to improve living conditions in Central America and Mexico, so people don’t feel compelled to flee or join the drug trade in the first place. That will require nothing short of a Mexican and Central American Marshall Plan, not unlike the American effort to rebuild Europe in the wake of World War II, and a sincere effort to eliminate corruption by kleptocratic politicians.
No child dreams of fleeing north in a migrant caravan, growing up to become a cartel hit man, or collecting “rent” for a street gang. People take these desperate actions only when they have no other options.
American policy helped create this tragic situation. It’s time we commit the resources to end it.
Nick Quested (left) with a Sinaloa Cartel worker. Nick Quested
Sebastian Junger is an Academy Award–nominated director, bestselling author, and journalist.
Nick Quested is an Emmy Award–winning filmmaker and DuPont Award winner.
Their documentary Blood on the Wall will premiere on National Geographic on Sept. 30.


fortune--2020-09-23--Where the 4 major coronavirus vaccine candidates currently stand

The world ’ s biggest hedge fund is working from tents in the forest during the COVID pandemic

A coronavirus vaccine won’t be a silver bullet against the COVID pandemic, but public health experts say it’s an important step that could start the process of a return to normalcy. And four companies (alongside their partners) are vying for first-to-market entry with late-stage trials underway.
Firms ranging from pharmaceutical giants to startup biotechs—in the U.S. and abroad—are all part of this race. But the regulatory process can be a labyrinth, and the fundamental question of scientific accuracy for a vaccine that will ostensibly be distributed to hundreds of millions of people is critical.
“The FDA will not authorize or approve a vaccine we won’t be confident in giving to our families,” said Food and Drug Administration (FDA) commissioner Stephen Hahn during a U.S. Senate hearing on Wednesday.
Hahn emphasized the role of science in the development process as the agency has come under scrutiny for potentially lax standards for a vaccine. Multiple outlets reported the FDA was slated to release stricter guidance in the face of public criticism and an uncertain public.
That should have an impact on where the various companies developing these vaccines stand.
Pfizer/BioNTech
Pfizer has been among the most optimistic companies in the COVID vaccine scuffle.
The American drug giant has been working with German biotech BioNTech to create a candidate. According to CEO Albert Bourla of Pfizer, they remain confident that they’ll have a good idea, at the very least, whether or not their treatment works this fall.
“I think by the end of October we have a very good chance to know if the vaccine works or not,” Bourla said during a virtual panel discussion with Fortune earlier this month.
This gets to what FDA commissioner Hahn said during his testimony on Wednesday—the need for large-scale trials to establish safety and efficacy. But there’s a caveat here: Hahn has also said that the agency may consider an emergency use authorization, which differs from a full-on approval and has lower standards, depending on the data submitted by drug makers. The reported upcoming guidance for such authorizations could lift that standard. An emergency authorization may potentially be achieved sometime this fall even if a full approval isn’t.
Currently, Pfizer may be the first one to know, at the very least, whether its COVID vaccine works, according to Bloomberg. The clinical study includes some 44,000 people.
Moderna
Moderna sparked some big buzz earlier this summer with its COVID vaccine candidate, mRNA-1273. It would be the upstart biotech’s first approved drug ever if it were to cross the regulatory finish line.
The company’s science is interesting. To put it simply, “mRNA technology” literally re-engineers the biology of cells to fight off various diseases. Moderna has had its share of skeptics since none of its drugs, and the technology which make them possible, have paid off in real life to date. But developing an effective COVID vaccine could reverse that narrative.
Moderna began its phase 3 clinical trials in collaboration with the National Institutes of Health (NIH) and the Biomedical Advanced Research and Development Authority (BARDA) in late July. Moderna is in the process of enrolling some 30,000 participants in its trial. CEO Stephane Bancel told CNBC last week that it expects to have enough data to know whether or not the vaccine is effective by November.
Johnson & Johnson
The COVID vaccine being developed by Johnson & Johnson’s pharmaceutical arm, Janssen, just entered into phase 3 trials on Wednesday, the company said. While initial results from those trials will take several months to produce, the drug itself has a key difference from its competitors.
J&J’s vaccine is a single-dose, rather than multi-dose like the Pfizer and Moderna candidates. And the trial announced on Wednesday is massive in scope. It will encompass 60,000 participants across at least eight countries including the U.S., South Africa, and Brazil.
Success in drug development is usually dictated by the first-to-market advantage. But simplicity of use—one shot, rather than two—during a pandemic could give J&J a leg up.
AstraZeneca and Oxford
British drug giant AstraZeneca teamed up with educational giant University of Oxford for its own coronavirus vaccine candidate, AZD1222. That process hit a road block recently with a clinical trial pause spurred by a study participant who developed a serious side effect.
AstraZeneca CEO Pascal Soriot was still optimistic after that turn of events. This is just an inherent risk in drug development, after all.
The sunny outlook, for now, seems to have been prescient. On September 13, U.K. health authorities recommended that the study resume. However, its status in America and several other countries’ trials is still shaky. On Wednesday, U.S. Department of Health and Human Services (HHS) secretary Alex Azar said it was still on hold.


fortune--2020-09-23--5 cheap electric cars to buy until Tesla delivers on its $25,000 promise

Tesla’s Battery Day on Tuesday was a showcase of things to come—most important, cheaper things to come. CEO Elon Musk’s electric car company presented innovations that it says will let it create, within three years, a competitive electric car that costs just $25,000. Investors did not love the long-term promise, and Musk has failed to meet his promises often enough to justify skepticism. So you may be waiting longer than three years for a truly low-budget Tesla.
The good news is there are already some relatively affordable EVs available, and we’ve put together a list of the five least expensive. The bad news is that none have a 2020 sticker price anywhere close to $25,000, and all the least expensive EVs come with significant tradeoffs. Tesla is focused on batteries because they’re currently a big portion of EV cost, and that’s also why most cheaper EVs suffer from short ranges: They’re cheaper primarily because they have smaller batteries.
While reviewing this list, it’s worth remembering that the real ownership cost for EVs is significantly lower than for gas-burning cars. With fewer moving parts, EVs break down less, and in most places, plug-in electricity is cheaper per mile than gas. Analysts at Loup Ventures—a pro-EV investment fund—estimated that Tesla Model 3 owners would save nearly $9,000 on fuel and maintenance over five years compared with drivers of a Toyota Camry, which uses gasoline.
Finally, we’re only including vehicles available commercially in the U.S. (with one semi-exception), and all prices are for the car’s base model. That means you would wind up paying more for extras. Further complicating the picture is that cars from many automakers will still get you federal tax credits of up to $7,500, but GM and Tesla models do not qualify, so the effective price advantage of the cheapest cars on our list is even larger than it appears.
5. Chevy Bolt: $36,620
Chevy’s respected answer to the Model 3 has a very solid range of 259 miles and a fast-charging option. On the downside, you get an interior that multiple testers described as “cheap” and a design that’s not going to catch anyone’s attention. Other than a Tesla, though, this is the most practical semi-affordable EV out there.
4. Tesla Model 3: $35,000
With 220 miles of range and acceleration of 0–60 in 5.6 seconds, the standard Model 3 ticks all the boxes at a moderate price. But its checkered history also helps explain why markets were underwhelmed by Tesla’s promises of a $25,000 car in three years.
In 2016, Elon Musk promised that the Model 3 would be available for as little as $35,000, helping trigger a flood of preorders that arguably kick-started Tesla’s hype train. But the cheapest Model 3 didn’t become a reality until early 2019, after more expensive Model 3s had been available for more than a year and a half. And even now, the car is not easy to buy at the advertised price, presumably because it’s not very profitable to Tesla. Like the best stuff at In-N-Out Burger, the base Model 3 is on Tesla’s secret menu: You have to call a sales representative directly to order one.
3. Hyundai Ioniq Electric: $33,045
Like some other Hyundai products, the Ioniq is a bit of a dark horse. With a base range of 170 miles and solid fast charging, you’ll probably only suffer moderate range anxiety. “Moderate” would also apply to nearly every other feature of the car, from a ho-hum design to middling performance, though its safety and driver-aid features, including pedestrian detection and collision avoidance, have been praised. So if you’re just looking for a reasonably priced four-door hatchback/sedan that happens to run on batteries, the Ioniq might be the one.
2. Nissan Leaf: $32,535
The Leaf has been around for nearly a decade, but many reviewers still think the base model cuts a few too many corners to hit a lower price point. It has a range of just 150 miles, usable but relatively paltry by 2020 standards. Its entertainment package is underwhelming, and its interior is, to quote Car and Driver, “a sea of black plastic.” On the plus side, though it looks tiny from the outside, the Leaf has been praised for offering loads of storage space within.
1. Mini Cooper SE: $30,750
The EV your mother warned you about, for better and for worse. The Mini SE’s price tag involves some major tradeoffs, above all a range of just 110 miles and an uncomfortable interior. But the base model is feature-rich and well built.
And range isn’t everything: The SE apparently lives up to the Mini legacy by being deliriously fun to drive. With the same motor as the BMW i3S, it packs 181 horsepower, significantly more than the base Leaf (147 hp) or Ioniq (134 hp) while pushing far less weight. As a result, critics say its road grip is “ferocious.” So as long as you’re doing doughnuts in the parking lot instead of heading for the Grand Canyon, you can have a lot of fun over 110 miles. And with full incentives, the SE almost hits Tesla’s $25,000 target, without the wait.
Bonus Round: Changli New Energy Mini Electric Car for Adults: $1,200 (with battery)
Though we’ve limited this list to mainstream manufacturers, we must make one exception. No, that’s not a joke or a typo—this is a working electric car that can be ordered for $1,200 directly from a Chinese factory through Alibaba (though you’ll have to jump through some import hoops).
Though severely underpowered and with an apparently untrustworthy speedometer, the NEMECA “actually feels like a car,” according to Jalopnik’s Jason Torchinsky, who not only bought the pocket-change vehicle, but even allowed his own child to ride in the back seat. In addition to the core feature of actually moving under its own power (unlike, say, a Nikola), the NEMECA features a working radio, fans and defrosters, a dome light, and, most stunning of all to Torchinsky, a backup camera. Unfortunately, its toylike body almost certainly makes it illegal to drive on many U.S. public roads—but hey, sometimes you make sacrifices for a great deal.


fortune--2020-09-23--A.I. algorithms had to change when COVID-19 changed consumer behavior

During the past few years, many consumer-focused businesses have used artificial intelligence to help increase sales. The technology, for example, can more successfully suggest products that online shoppers end up buying.
But once the COVID-19 pandemic hit, A.I. systems had to be overhauled. The software, it turns out, had never been trained with data reflecting a drastic upheaval in consumer behavior caused by the virus and therefore couldn’t adjust to the new reality.
“A.I. is actually a living and breathing engine,” Lan Guan, managing director of applied intelligence at Accenture, said on Wednesday during an online discussion about A.I. organized by Fortune.
Many companies using A.I. these days are learning the hard way. It’s just one of the wrinkles of using a technology that is only as good as the data fed into it.
Clothing retailer Stitch Fix saw huge shifts in the preferences of its customers, many of whom were forced to work from home during the pandemic, said Tatsiana Maskalevich, the company’s director of data science. In just one example of that shift last quarter: Sales of athleisure like yoga pants, tights, and leggings surged 350%.
At Stitch Fix, A.I. helps recommend clothing to thousands of human stylists who ultimately decide which items to send to customers. The dramatic shift in what shoppers wanted due to the pandemic meant that those stylists had to better anticipate customers’ taste in clothing because the algorithms were out of the loop.
“Having humans there and having that personal connection helped us to really bring our clients along,” Maskalevich explained during Fortune’s event.
At Facebook, A.I. systems that translate posts into different languages were suddenly hit by unfamiliar terminology during the pandemic, Joelle Pineau, co-managing director of A.I. research at the social media company and a computer science professor at McGill University, said.
“The language of COVID is a new language for many of us,” Pineau said. “A machine-translation system did not have these terms before, so we really had to stretch what our A.I. systems were able to do to adapt very quickly to this new realty.”


fortune--2020-09-23--California to ban new gasoline cars by 2035, a first in U.S.

California will phase out sales of new, gasoline-powered cars by 2035 as part of its fight against climate change, Gov. Gavin Newsom announced — the first state to set an expiration date for the traditional automobile.
The move comes as California battles historic wildfires that Newsom has blamed squarely on global warming, with more than 3.6 million acres burned so far this year. It could prompt other states that have followed California’s climate and auto policies in the past to set similar goals.
Newsom cast the step, enshrined in an executive order he signed on the hood of an electric Ford Mustang Mach-E, as an economic opportunity as the state transitions away from fossil fuel production and consumption. He said 34 electric vehicle companies, including Tesla Inc. already operate in California, which accounts for about half of the nation’s EV market.
“The opportunity is limitless for the state of California to compete,” Newsom said in a televised press conference. “This is the next big global industry, and California wants to dominate it.”
Reaction from the auto industry was muted, with only Ford Motor Co. issuing a statement praising the step. General Motors Co. and Fiat Chrysler Automobiles NV deferred comment to their industry trade association, which said more needs to be done to increase consumer demand for electric vehicles. Newsom’s announcement had little impact on stocks of Detroit automakers.
“We agree with Governor Newsom that it’s time to take urgent action to address climate change,” Ford said in the statement. “That’s why we’re proud to stand with California in achieving meaningful green house gas emissions reductions in our vehicles.”
The executive order gives automakers 15 years to make the shift. It doesn’t specify whether the passenger cars sold by that date would be powered by batteries or hydrogen fuel cells — only that they have zero emissions. Sales of used gasoline-powered cars would still be allowed. The order also directs California regulators to ensure that all new medium- and heavy-duty trucks are zero-emission by 2045. The state has already set a goal of eliminating all net emissions from its economy by the same year.
Trump Battle
California, home to 40 million residents and the world’s fifth-largest economy, has for years forced automakers to sell zero-emission vehicles in the state or buy credits from companies that do. The state has also been locked in a legal battle with the federal government over the Trump administration’s efforts to lower future fuel mileage requirements for gas-powered cars.
Six automakers, including Ford, have voluntarily agreed to abide by California’s higher efficiency standards, and Newsom cited them Wednesday as proof that the industry can make the switch.
“They’re not willing to suffer a future of dirtier air, dirtier water and more climate disruption,” he said, adding that 15 countries have already set time-lines for phasing out cars with internal combustion engines. “If you’re an American manufacturer, how can you compete globally unless you’re in that business?”
The transition won’t be easy for the industry, said Jessica Caldwell, executive director of insights for the Edmunds auto information service. Many automakers, she said, have set electrification targets only to let them slide.
“This transition away from gas-powered vehicles is a major shift that won’t miraculously happen on New Years Day in 2035,” she said in an emailed statement. “To help encourage consumer buy-in there will likely need to be financial incentives to get more people willing to go electric.”
The Alliance for Automotive Innovation, which includes Ford, GM and Fiat Chrysler, said a coordinated effort toward electric vehicles is needed among federal and local governments, automakers, dealers and power providers, among others.
“Neither mandates nor bans build successful markets,” the group said. “Electrified vehicles account for less than 10% of new vehicle sales in California. While that is the best in the nation, much more needs to be done to increase consumer demand for Zero Emission Vehicles in order for California to reach its goals.”
Ford is investing $11.5 billion to electrify its lineup, including its top-selling F-150 pickup. Executive Chairman Bill Ford, whom Newsom praised in his remarks, was among the first Detroit executives to acknowledge the role gas-burning cars play in climate change.
GM Chairman Mary Barra has pledged to electrify the automaker’s entire lineup and is reviving the hulking Hummer brand with a 1,000-horsepower electric pickup. GM and Ford have each invested in electric vehicle startups, with GM this month announcing it’s taking an 11% stake in Nikola Corp. and Ford last year invested more than $500 million in Rivian Automotive Inc.
California’s move comes one day after China, the world’s largest auto market, announced plans to become carbon neutral by 2060. Daniel Sperling, a member of the California Air Resources Board, said automakers know zero-emission vehicles are the future, but Newsom’s deadline gives a clearer sense of the path forward.
“It’s really putting a stake in the ground and saying ‘This is what we’re going to do and how we are going to get there,’” said Sperling, who is also the founding director of the Institute of Transportation Studies at the University of California, Davis.
Sperling said the goal was doable but, a lot needs to happen. Falling battery and vehicle prices signal things are going in the right direction, he said.
“The first 50% is going to be fairly easy, relatively,” Sperling said. “The next 50% will be much harder.”


fortune--2020-09-23--How Nike hit its e-commerce goal 3 years early

Nike shares surged on Wednesday morning after the athletic gear company’s latest quarterly results made clear one thing: its e-commerce surge might have been helped by the COVID-19 outbreak, but it will be durable.
The company gave Wall Street a pleasant surprised late Tuesday when it said revenue in the first fiscal quarter, which ended August 31, was essentially flat despite many stores being closed early in the period, coming in at $10.6 billion. That was $1.5 billion more than investors expected, sending Nike shares up 10% on Wednesday.
That increase was fueled by an 83% jump in online sales, adding $900 million to the company’s top line. That means that e-commerce is now 30% of Nike’s sales, a mark it had previously expected to hit only in 2023.
To be sure, Nike’s digital surge got a big assist from the COVID-19 outbreak, which has pushed a big chunk of shopping online amid large-scale store closures. But Nike has helped itself by maintaining a steady stream of new products despite COVID-19-related supply chain upheaval, developing apps that go well beyond shopping to include things like athletic training, and building up its own stores as it shifts away from wholesalers like department stores.
“We can navigate, in fact we can thrive, in this environment thanks to our digital advantage and the full breadth of our global portfolio,” John Donohoe, a Silicon Valley veteran who became Nike CEO in January, told investors on a conference call. “The accelerated consumer shift toward digital is here to stay,” he added.
Of course, e-commerce can only thrive if people want a company’s products. In its last quarter, Nike introduced a new training shoe, the Air Zoom Tempo NEXT, focused on endurance and pace, to complement the earlier ZoomX Vaporfly NEXT model that was used by the professional athlete, Eliud Kipchoge, who broke the two-hour marathon barrier last year. That controversial shoe, which critics said gave runners an unfair advantage, generated a lot of headlines for Nike and bolstered its reputation for innovation.
Nike also launched a line of maternity clothing for runners, something Donahoe says is part of the company’s work to keep taking market share away from rivals in women’s athletic wear. And in a shot across Lululemon Athletica’s bow, Nike launched a new line of yoga wear. The company also benefited from its recently revamped Air Max 90 shoe.
While most brands have simply made their apps and e-commerce sites shopping tools, Nike has long understood that digital tools must do more than just support sales and have to insinuate themselves into customers’ lifestyles to really pay off. Otherwise, e-commerce growth often just means business going from one avenue to another, rather than growing the overall pie.
A few years ago, the sneaker maker launched its online NikePlus program, a membership program with tens of millions of members that has helped the company better understand each customer’s interests and shopping patterns, and ultimately sell them more of its products.
Nike is also benefiting wildly from tools like its Nike Training Club App and a running app that offers self-guided runs. Donahoe said more than half of the training club app members had done a workout using the app last quarter. That fosters loyalty with customers and keeps Nike top of mind—as well as filtering users to its commerce site.
“It’s the deeply connected authentic brands with scale that will win,” he said.
The staggering quarterly results also validated Nike’s long term strategy to reduce its reliance on wholesale customers like Macy’s and Kohl’s, and beef up its own e-commerce and stores business. That has meant equipping many stores to help fill online orders, something it stared before the pandemic: some 20% of revenue at such stores in the first quarter came from filling e-commerce orders, helping the company speed up delivery times and mitigate inventory build-up.
And lest anything think Nike is pulling back from physical retail even as its digital business explodes, the company said it’s full steam ahead with the new stores it was already planning to open, including two New York stores in the next two weeks, the CEO said.
Nike has bucked many of the trends that have rocked retail and consumer brands by anticipating where shoppers were heading—a trend it hopes to continue.
“We are accelerating what probably would have happened in the retail environment on a naturally in the next four years to five years,” said Donahoe.


fortune--2020-09-23--The Census is due in a week. What happens if it’s incomplete?

Amid congressional debate over a new Supreme Court justice and a second COVID stimulus package, Washington is faced with another divisive challenge: the race to complete the 2020 Census by its now-shortened deadline of Sept. 30.
The Census shouldn’t be a partisan issue. Many on both sides of the aisle recognize the importance of successfully completing the once-a-decade national headcount that determines the number of House seats, the apportionment of $1.5 trillion in federal funding, infrastructure planning, and so on. President Trump initially agreed with this, urging Congress in April to pass a 120-day extension on the legal deadlines in light of the growing public health crisis. But in July, the administration abruptly changed its stance, around the same time Trump issued a now-court-blocked memorandum to exclude undocumented immigrants from the apportionment count.
The Census deadline has since been cut short one month from the previously approved plan of Oct. 31. Recent Republican proposals for coronavirus relief included $448 million in funding for the Census but no additional time to conduct the survey. On Monday, the Inspector General’s office at the U.S. Department of Commerce—tasked with overseeing the Census Bureau—released a report stating “the accelerated schedule increases the risks to obtaining a complete and accurate 2020 Census.”
What happens if the Census doesn’t reach its target of reporting 99% of the population ahead of the deadline? According to the report, not even “senior Bureau officials know what will occur.” The report adds that if the goal isn’t reached, it must be decided to either continue data collection after the deadline—or use the data it has already collected for decision-making.
“There are risks either way,” the report states. “If data collection ends before 99% completeness is met in every state, the Bureau will not achieve what it views as an acceptable level of accuracy and completeness. But, if data collection extends beyond Sept. 30, 2020, that will either further condense an already compressed schedule for data processing—which carries its own risks—or the Bureau will miss the Dec. 31, 2020, statutory deadline,” (the date in which the numbers must be presented to the President).
Additionally, internal bureau emails and memos shared between senior officials—released last weekend owing to a federal lawsuit in California—state that shortening the collection deadline down to Sept. 30 to meet the Dec. 31 statutory deadline “will result in a Census that has fatal data quality flaws that are unacceptable for a constitutionally mandated national activity.”
Attorneys for the Justice Department, according to NPR, maintain that Congress is the only authority that can step in and resolve the problem. But legislation has failed to pick up steam thus far, despite a recent bipartisan Senate effort to push the tallying deadline back to Oct. 31. It remains to be seen if any such legislation will pick up momentum in time; Congress is currently attempting to find agreement on another COVID stimulus package ahead of the break in early October.
On Tuesday, the bureau reported that more than 95% of U.S. households have been tallied so far in the Census. Roughly 30% were counted from field Census takers, while 66% of respondents submitted information online or via phone or mail. Still, 17 states currently lag behind a 95% total response rate, which Census officials clearly believe is enough to dramatically skew the results of the effort. Louisiana, Montana, and Alabama have the worst rates of response at 90.4%, 90.3%, and 89.1%, respectively. West Virginia, Idaho, and Hawaii sit at the top with 99.8%, 99.8%, and 99.5%, respectively.


fortune--2020-09-23--Four ex-eBay employees to admit guilt in cyberstalking plot

Four former eBay employees will admit to conspiracy to commit cyberstalking in an elaborate scheme to intimidate a blogger critical of the company.
The four were lower-level employees and don’t include eBay’s former senior director of safety and security, James Baugh, or former director of global resiliency, David Harville, both of whom deny wrongdoing.
The four will appear at a plea hearing set for Oct. 8, according to a federal court docket and confirmed by a spokeswoman for the U.S. attorney in Boston. They will also will admit to conspiracy to tamper with witnesses, the spokeswoman said. It wasn’t immediately clear whether they are cooperating with prosecutors.
Together with Baugh and Harville, the four — Brian Gilbert, Stephanie Popp, Stephanie Stockwell and Veronica Zea — are accused of carrying out a harassment campaign last year against a suburban Boston couple who put out the newsletter. The campaign allegedly included sending them a bloody pig mask, a funeral wreath and other disturbing items.
The U.S. announced the charges against them in June. Charges against a seventh former eBay employee, who supervised security at the online auctioneer’s European and Asian offices, were announced in July.
Former eBay chief executive officer Devin Wenig, who isn’t charged, last year texted a colleague expressing worry and anger over the unflattering coverage. What followed, prosecutors said, was a criminal plot by his underlings to cyberstalk the couple.
While there’s no suggestion in court papers that Wenig knew of the plot, prosecutors say his angry emails and texts triggered the scheme, and they play a central role in the narrative spelled out by the government.
“Take her down,” Wenig is alleged to have written in response to a post by the blogger.


fortune--2020-09-23--Amazon denies it’s developing an exercise bike with Echelon Fitness

Peloton Interactive shares rebounded Wednesday after Amazon.com said it’s not partnering with Echelon Fitness to sell a rival home fitness bike.
Earlier this week, Echelon Fitness unveiled an “Ex-Prime” bike for $500 that it said was developed in collaboration with Amazon. That was significantly less than Peloton’s machines that cost well over $1,000. The news pushed Peloton shares down as much as 6.7% early Tuesday before rebounding to close with a decline of less than 1%.
Later Tuesday, Amazon denied they were in a partnership and told Echelon Fitness to stop selling the bike.
“This bike is not an Amazon product or related to Amazon Prime,” an Amazon spokeswoman said in a statement. “Echelon does not have a formal partnership with Amazon. We are working with Echelon to clarify this in its communications, stop the sale of the product, and change the product branding.”
Peloton shares rose 4% to $98.13 at 11:41 a.m. Wednesday in New York after earlier jumping as much as 6.4%.
Echelon Fitness blamed the incident on a “miscommunication.”
”This product was built by Echelon to sell exclusively on Amazon,” an Echelon Fitness spokesperson said. “We are working to rebrand the product to get it back up for sale as soon as possible.”
In an interview on Fox Business, Echelon Fitness Chief Executive Officer Lou Lentine said the company began “working with Amazon in early January. It just was a miscommunication with the internal team. We are working on a new name for the bike.”
Amazon has earned a reputation for shaking up established markets from books to consumer electronics. When investors sense the company entering a new sector, they often react quickly.


fortune--2020-09-23--The Tesla stock selloff is an ‘overreaction’—and could be a buying opportunity say some analysts

It appears Tesla’s long-awaited Battery Day wasn’t enough to recharge investors’ love for the stock—but some analysts are more bullish than ever.
Following the presentation on Tuesday evening, during which the Elon Musk-led company unveiled battery construction innovations, factory details, and future cheaper models, Tesla’s stock slumped after hours and is trading down over 6% in Wednesday morning trading. But that hasn’t come as a surprise to some analysts.
“Given Tesla’s stock incredible run up, we were skeptical that its long-awaited Sept. 22 Battery Day event would meet market expectations and the stock fell about 7% in afterhours trading,” Morningstar’s David Whiston wrote in a note Wednesday. Wedbush’s Dan Ives tells Fortune that given all the hype, “it was almost possible for them to announce a string of things that would keep the stock higher after the event.”
But Ives boils down investor dismay to one catalyst: “They didn’t announce a million mile battery, … where there was high anticipation they would announce that,” says Ives. “I can tell you from investor feedback, … that speaks to why the stock is down.” (The one million mile battery, teased by Tesla, would allow batteries to be recharged more than current models.)
In Whiston’s view, “the stock has nothing left for the near term,” as the manufacturing innovations detailed in Tesla’s presentation are “a multiyear story and I think there are some investors disappointed by that. That can happen when a stock zooms upward for no reason for months, all of a sudden the rocket runs out of fuel,” Whiston tells Fortune via email.
But Ives is much less deterred: The negative “knee-jerk” reaction to the stock is an “overreaction,” he argues. And there’s plenty to be optimistic about in Tesla’s presentation.
For Ives, the “headline” is Musk “laying the groundwork” for a 50% reduction in battery costs. “If they’re able to execute on that, which we believe they will, the story changes from a profitability perspective,” he says. It’s that cost reduction announcement coupled with the company’s introduction of a new battery cell, the 4680 cell, that is a “potential paradigm changer,” Ives suggests, and could help the electric vehicle maker continue to achieve profitability and gain market share.
Meanwhile, Morningstar’s Whiston “liked what we heard … and new product, such as Plaid Mode for the Model S due in late 2021 and a $25,000 vehicle in about three years, bring opportunities for more volume,” he wrote.
From that perspective, those like Ives view Wednesday’s sell off as a buying opportunity for long-term investors, even as the stock has faced a tough September. This month, Tesla shares have taken a beating following its stock split and failure to join the S&P 500 index. The stock is down over 10% since Sept. 1.
But Ives argues “it’s very easy to get into the noise and the emotional bull/bear story. At the end of the day, if they’re able to execute on the cost side for batteries, everything else is going to come: profitability, S&P 500 inclusion, more market share, and ultimately that trajectory to what could be profitability that’s 5x, 10x from where it is today.”


fortune--2020-09-23--These 5 apps are up-and-comers with Gen Z, report says

Five social media apps that are becoming popular with Generation Z are described in a new report as ones to watch during the upcoming year.
The apps, identified by Zebra IQ, a market research firm that helps advertisers reach young consumers, help users express their creativity online or compete with friends. And if the apps continue to gain popularity, they ultimately could challenge popular Gen Z app TikTok, along with Facebook’s family of apps.
Gen Z, made up of people born from 1995 to 2010, includes an estimated 3 billion people globally. In addition to being a tremendous economic power, they are establishing the winners and losers online.
Here are the apps Zebra IQ identified:
Genies
Genies lets users create personalized digital avatars of themselves to use across social media and messaging services. The Los Angeles–based company has raised $36.1 million in funding, according to PitchBook, and has attracted celebrity users including pop stars Jennifer Lopez, Justin Bieber, Rihanna, and NBA star Russell Westbrook. It also has landed partnerships with brands like Gucci, New Balance, the National Basketball Players Association, and Frito-Lay.
Bunch
Teens and video game fans have flocked to this app to play games like Fortnite, Flappy Bird, and Minecraft while video chatting with their friends. Last week, the three-year-old app received $20 million in funding from investors including General Catalyst Riot Games and Electronic Arts, on top of the $8 million it had previously raised. The company said it planned to use the new funds to accelerate the app’s integration with other popular multiplayer games.
Unfold
The mobile app gives users a set of editing tools and templates to create visually appealing stories on social media. Since its founding in 2018, it has helped users post more than a billion stories. The New York–based company, acquired by Squarespace for an undisclosed sum last year, offers three tiers of service, ranging from free to $99.99 annually. The free service offers users basic templates and standard fonts, filters, and stickers. Paying subscribers get access to premium tools, including the ability to add custom colors and logos.
Lomotif
Lomotif is trying to capitalize on the explosion of video across social media. The app helps users create their own mini–music videos with editing tools, music library, and a portfolio of GIFs. The app has garnered the attention of celebrities like Alicia Keys and Luh Kel, who promoted the app in a marketing campaign. Lomotif, based in Singapore, is backed by venture capital firms including Beijing’s China Creation Ventures, Singapore’s TNF Ventures, and StartX, a Palo Alto–based incubator.
Triller
The social video service is a TikTok rival that’s been rapidly gaining traction. The app, majority-owned by investor Proxima Media, gives users editing tools and video filters to make short videos of their dance challenges and comedy skits. The app, valued at $130 million in its most recent financing round last year, has been downloaded more than 250 million times and boasts 65 million active users.
In July, the Los Angeles company hired 18-year-old TikTok star Josh Richards to serve as its chief strategist. It also lured TikTokers Griffin Johnson and Noah Beck as advisers. Celebrities including Cardi B, Alicia Keys, and Eminem have all posted on the service.


fortune--2020-09-23--Is the Düsseldorf cyberattack really the first to result in death?

German authorities are investigating what may be, as no shortage of media coverage has posited, the world’s first death linked to a cyberattack.
As the reports go: A ransomware-crippled clinic in Düsseldorf, Germany, turned away an ambulance bearing someone in need of emergency care earlier this month. The 78-year-old patient, who was suffering an aortic aneurism, died after being rerouted to another facility. (It is not clear whether quicker medical intervention would have saved her life.)
The incident represents a grievous health-care failure in a year full of them. Yet whenever I read “first,” my journalistic skepticism sensors go blaring. It takes only one example to disprove a supposed first. And as the Old Testament has long instructed humanity, there is nothing new under the sun.
What qualifies as a death linked to a cyberattack? Does the U.S. military blowing up an enemy combatant—or an innocent bystander, for that matter—by remotely detonating an improvised explosive device via hijacked cellular signal count? Or how about if a government—the Communist Party of China, say—kills moles and CIA informants after learning their identities, having hacked the covert communications network by which they communicate? How exactly does one define “cyberattack,” and when can it be said to result in death?
Perhaps one might grant that the Düsseldorf incident represents the first explicitly recorded case of a cyberattack leading to the death of a civilian. But even then, the data appear to indicate otherwise.
A study published last fall in Health Services Research, a health-care journal, suggests that cyberattacks have been killing people for years. The researchers, surveying Department of Health and Human Services records pertaining to more than 3,000 U.S. hospitals between 2012 and 2016, found an uptick in deaths at hospitals that recently suffered data breaches and ransomware attacks.
Hospitals that had been hit with such cyberattacks in the past three years were, on average, 2.7 minutes slower to take patient electrocardiograms—and their patients were 0.36% likelier to die of a heart attack. “Breach remediation efforts were associated with deterioration in timeliness of care and patient outcomes,” the authors concluded, in that jargony, passive voice of institutional science that so effectively disguises tragedy.
The uptick may seem like a small one, but it is real—and devastating. Across the whole health-care system, meager increases in mortality rates have profound impacts. These are people’s lives we’re dealing with; basis points represent parents, siblings, loved ones.
The Düsseldorf hackers are still at large—as are so many other deplorable hospital-extorting cybercriminals. Christoph Hebbecker, head of the cybercrime unit in Cologne, told me his team has opened a negligent homicide investigation and is pursuing leads. “There are no specific persons under investigation right now,” Hebbecker said in an email. “We are investigating in all directions.”
This may not, in actuality, be the first civilian casualty linked to a cyberattack. But it is heartbreaking nonetheless.
***
Thank you to everyone who wrote in about my Apple Watch dilemma. So many people shared their opinions! The winner of my online poll was, as Aaron alluded to last week, clear: the Apple Watch Series 6. Of course, it is the most expensive option. (You can read Aaron’s review here.)
Now I just have to decide on the finish and wristband…
Robert Hackett
Twitter: @rhhackett
robert.hackett@fortune.com
THREATS
This is a public service announcement. Beware fake news come election time. The Federal Bureau of Investigation and Cybersecurity Infrastructure Authority issued a joint PSA warning Americans that “foreign actors and cybercriminals likely to spread disinformation regarding 2020 election results.” As though on cue, Facebook said it took down a network of China-based fake accounts peddling election falsities. Sadly, foreign trolls’ jobs have gotten easier today as all they have to do is quote the president, the New York Times points out.
‘Shield’ or get off the pot. The associate general counsel of Facebook warned in a Dublin court filing that the company may be unable to continue operations in Europe now that the EU’s top court has struck down “privacy shield,” an international data-sharing agreement. Soon after, Nick Clegg, Facebook’s VP of global affairs and communications (formerly the UK’s deputy Prime Minister), denied the possibility of a pullout. “We of course won’t” shut down in Europe, he said.
A bicycle built for who? A Peloton-rivaling exercise bike appeared on Amazon’s online marketplace as a product exclusively available to Amazon Prime members. Hours after the $500 Prime Bike went on sale, Amazon removed the listing, warning potential buyers that the bike is “not an Amazon product or related to Amazon Prime.” In a since-pulled press release, the company behind the workout device, Echelon, apparently lied, calling the bike “Amazon’s first-ever connected fitness product.”
You're in; you're out. Apple has opened its first online store in India, the world’s fastest-growing smartphone market. The Indian government eased foreign retail rules last year, creating an opening for the iPhone-maker to begin selling its products directly to Indian consumers. Indian fans of embattled TikTok, meanwhile, are mourning the loss of their favorite viral video app, which the government recently banned.
Battery cell? More like battery "sell." Investors were none too pleased by Tesla’s highly anticipated “battery day” event. Shares in the electric carmaker dropped more than 6% after a hoped-for announcement of a million mile-battery failed to materialize. CEO Elon Musk did debut some battery innovations and cheaper overall costs, which Fortune’s David Morris details here; ambitiously, Musk wants to introduce a $25,000 mass market vehicle in three years.
Dispatches from the anarchy jurisdiction.
ACCESS GRANTED
You're being followed. An investigation by The Markup, a journalism outfit funded by Craig Newmark, the billionaire creator of Craigslist, scanned more than 80,000 of the world’s most popular websites to reveal the pervasiveness of online tracking. Most people probably don't realize just how prevalently third-party trackers glom onto their browsers, or how websites use privacy-thwarting techniques like "fingerprinting" to evade cookie-blockers.
Prepare for an eye-opening read...and an interactive one! You can use Blacklight, the investigative team's custom-made digital endoscope, to do your own research.
Zajac was floored when The Markup showed her how many trackers appeared on the site. She said she learned a hard lesson: “If it’s free, that doesn’t mean it’s free. It just means it doesn’t cost money.” Instead, it costs your website visitors’ privacy.
FORTUNE RECON
Microsoft has a solution for work days that blend into home life: a virtual commute by Dina Bass
Tesla lays out path to an electric car cheap enough for most people by David Z. Morris
Facebook users in Illinois can now apply for a privacy payout of up to $400 by Jeff John Roberts
How Microsoft’s Bethesda deal echoes Disney’s Star Wars and Marvel buys by Lucinda Shen
Could “Mindful A.I.” be the key to successful A.I.? by Jeremy Kahn
Instagram’s would-be TikTok killer, Reels, struggles to gain traction by Danielle Abril
(Some of these stories require a subscription to access.Thank you for supporting our journalism.)
ONE MORE THING
In June, Mwazulu Diyabanza, a Congolese activist, livestreamed a tirade against colonial-era cultural theft from the Quai Branly Museum, home to treasures from France’s former colonies. Then he tried to make off with an African artifact—an act he repeated at two other reliquaries. Diyabanza and his associates will stand trial fro attempted theft in Paris on Sept. 30, an event that is likely also to put Europe's history of imperial plunderage on trial.
“The fact that I had to pay my own money to see what had been taken by force, this heritage that belonged back home where I come from—that’s when the decision was made to take action,” Diyabanza said in a recent interview. I hope things end up better than they did for Black Panther villain Erik Killmonger.


fortune--2020-09-23--The 13 Trump officials under fire for violating the Hatch Act

On Monday, it emerged that a federal watchdog agency is investigating U.S. Secretary of Education Betsy DeVos for possible violations of the Hatch Act—making her the latest Trump administration official to fall afoul of the 81-year-old government ethics law.
The Hatch Act bars members of the executive branch (with the exception of the President and vice president) from engaging in political activities while in an official capacity, and DeVos appears to have stepped over the line thanks to an appearance she made on Fox News earlier this month. DeVos criticized Democratic presidential nominee Joe Biden during an interview on the network, and her Department of Education proceeded to disseminate a clip of the appearance via an official department email distribution list. Politico obtained a copy of the email, which was sent under the header “From the Desk of the Secretary.”
That has prompted the launch of an investigation by the U.S. Office of the Special Counsel (OSC), the government agency responsible for enforcing the Hatch Act. Though DeVos is among the most high-profile members of the Trump administration to be scrutinized for a potential Hatch Act violation, she is far from the first. At least 13 Trump staffers have been officially reprimanded by the OSC for flouting Hatch Act regulations, according to the nonprofit watchdog Citizens for Responsibility and Ethics in Washington (CREW).
Of those 13 administration officials, one—Kellyanne Conway, who recently departed her role as counselor to the President—was found to have violated the law to such an extent that the OSC recommended her firing last year. But since that decision ultimately belongs to the President, and President Trump refused to act on the OSC’s guidance, Conway was able to hold onto her job.
The Trump administration has thus far shown nothing less than disregard for the Hatch Act and its purpose of keeping politics out of the day-to-day running of the federal government. While the 12 other Trump officials to be reprimanded by the OSC escaped with a mere warning from the agency, many observers considered last month’s Republican National Convention—with its myriad speeches and events at the White House—to have been awash with Hatch Act violations, and House Democrats urged the OSC to investigate the matter earlier this month.
Not that it would necessarily matter to the President and his top advisers: White House chief of staff Mark Meadows brushed off the ethics rules last month, telling reporters that “nobody outside of the Beltway really cares” about the law and claiming critics were interpreting it “well beyond the original intent of the Hatch Act.”
These are the Trump administration officials found to have violated the Hatch Act to date:
The likes of CREW have also called for Hatch Act investigations of other high-ranking Trump administration officials, including Ivanka Trump, Jared Kushner, former White House chief of staff Mick Mulvaney, and former White House press secretary Sarah Huckabee Sanders. To date, none of those officials have been found in violation of the Hatch Act.
Prior to 2012, federal employees often faced the prospect of losing their jobs for breaching Hatch Act regulations. But President Obama signed the Hatch Act Modernization Act into law that year, which modified penalties to include a range of less severe disciplinary actions, including fines, suspensions, and demotions.
During the Obama administration, two cabinet secretaries were determined by the OSC to have violated Hatch Act regulations: Kathleen Sebelius, the former secretary of the Department of Health and Human Services, and Julian Castro, the former secretary of the Department of Housing and Urban Development.
Update, September 23, 2020: This story has been updated to revise the number of Trump administration officials found to have violated the Hatch Act to 13, from 11 previously, and to include FCC Commissioner Michael O’Rielly and former Interior Secretary Ryan Zinke among those ruled by the OSC to have violated the law.


fortune--2020-09-23--Will the pandemic give us a Sputnik moment?

The global pandemic has certainly been costly, claiming nearly a million lives and untold sums in lost economic activity since the outbreak emerged in Wuhan, China, late last year. How can we do it better next time?
Experts, speaking at a Fortune virtual event on Tuesday afternoon, weighed what will be required—from basic readiness to radical innovation to global collaboration—and what can be gained from the current moment.
“We never should have had this pandemic,” said Paul Stoffels, chief scientific officer at Johnson & Johnson. “We could have done so much more. And that’s what the future should bring. Everyone is ready to fight wars, but nobody is ready to fight wars with biology. But I think we’re ready to do this: The science is there; the capabilities are there. Let’s get ready to make this the next wave of innovation.”
Regina Dugan, the CEO of Wellcome Leap and a former director of DARPA, agreed with that assessment. “It feels very much to me like a Sputnik moment—almost as if the 1918 pandemic and the ’29 crash happened on top of each other.” She added: “It’s not coincidental that new waves of transformation happen and grow out of these very difficult situations. It’s my sense that just as we had a new commitment to innovation after Sputnik, this coronavirus could spark, not a space age, but a health age. And that’s going to require a lot of us. But it is certainly within our capacity to get it done.”
One area where she imagined radical innovation is in the way clinical trials are conducted. Rather than running expensive, time-consuming vaccine or drug studies with tens of thousands of human volunteers, she suggested we could use tissue and organ engineering strategies.
“We could accelerate the process without risking safety,” she said. “This is important, not only for the lives that will be saved, but also for economic damage. If we saved one month in the clinical trial, that’s $300 billion worth of economic damage avoided.” She also noted that such a strategy could address equity and representation issues that clinical trials investigators struggle with, as you’d be able to study the vaccine on all population types.
Trevor Bedford, associate professor at the Fred Hutchinson Cancer Research Center, made the case for better infectious disease surveillance systems. “If you can catch a cluster very early on before it gets to hundreds of thousands of people, you can quench that outbreak.” He also noted that legacy data systems that don’t easily communicate with each other as well as misguided regulatory policy had slowed the U.S.’s COVID response and could be vastly improved on.
Stoffels, a pharma veteran who has been on the front lines of many outbreaks, from HIV to Ebola to Zika, stressed one last point from his years in the field. “The attention of the world is only there when it when it threatens Western countries,” he said, noting that J&J had to stop its work on a once urgently needed Zika vaccine because there was zero interest in it. “Zika can come back anytime…The seeds of many of these viruses are in parts of the world [that get] no attention. They could start growing and expanding, and before we know, it’s a global problem. We have to be global citizens, having the conscience but also the insights and the commitment to not just work when it reaches the U.S. shores, but also work long before that.”
Dugan concurred: “We need to recognize that there is a certain class of problems…We’re just not going to solve them inside national borders. We need new strategies, new organizations, new collaborations, and we need the commitment of our leaders to facilitate those kinds of interactions. We’re going to have to solve those problems together.”


fortune--2020-09-23--The private equity shop that took Twinkies public leads the largest SPAC merger yet

This is the web version of Term Sheet, a daily newsletter on the biggest deals and dealmakers. Sign up to get it delivered free to your inbox.
Private equity firm The Gores Group was among the first to jump on this wave of special purpose acquisition companies, taking Twinkies maker Hostess public through a blank-check company in 2016 and valuing the confections maker at $2.3 billion—including debt—at the time.
Amid a surge of SPAC deals in 2020, Gores Group now plans to use its fourth blank-check company to take public a company estimated to be worth $16.1 billion in enterprise value. The group says it will be the largest SPAC merger yet. Data from Dealogic shows it would eclipse the planned $11 billion merger of MultiPlan with Churchill Capital Corp III.
On Wednesday, Gores Holdings IV announced plans to acquire United Wholesale Mortgage Group (which does exactly what it says on the tin).
Mortgage activity is spiking in the U.S. as the Federal Reserve lowered interest rates amid economic turmoil caused by the pandemic. In a move bolstered by the flurry of activity from its customers, Rocket Companies, the parent company of mortgage lender Quicken Loans, went public in August.
Gores Group has been busy: Another Gores Group SPAC, Gores Metropoulos, recently announced plans to merge with Peter Thiel-backed driverless car startup Luminar in a $3.4 billion deal. Its fifth SPAC, Gores Holdings V, is also out looking for a target.
Gores Holdings IV is by no means the largest SPAC out there. It does have $425 million in cash, and additional investors led by CEO Alec Gores have committed an extra $500 million to finance the merger with United Wholesale Mortgage. But that’s also to say far larger beasts could be coming to public markets, with Pershing Square’s enormous Tontine Holdings sitting on a $4 billion cash pile.
TICKED OFF: Chinese state-owned media is displaying a hardline stance on the proposed Oracle-Walmart-TikTok deal, saying China has no reason to approve a deal.
“What the United States has done to TikTok is almost the same as a gangster forcing an unreasonable and unfair business deal on a legitimate company,” a Wednesday editorial in China Daily reads, per Bloomberg. “China has no reason to give the green light to such a deal, which is dirty and unfair and based on bullying and extortion. If the U.S. gets its way, it will continue to do the same with other foreign companies. Giving in to the unreasonable demands of the U.S. would mean the doom of the Chinese company ByteDance.”
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- Bright Health, a Minneapolis, Mn.-based health insurance company, raised $500 million in Series E funding. Investors included T. Rowe Price, Tiger Global, NEA, Bessemer Venture Partners, and Greenspring Associates.
- Robinhood, the stock trading app, raised an additional $460 million in Series G funding on top of the $200 million announced in August. The funding, which values the firm at $11.7 billion, comes from Andreessen Horowitz, Sequoia, DST Global, Ribbit Capital, 9Yards Capital, and D1 Capital Partners.
- Mirakl, a Boston-based platform for launching enterprise marketplaces, raised $300 million. Permira Advisers led the round and was joined by investors including 83North, Bain Capital Ventures, Elaia Partners, and Felix Capital.
- Salsify, a Boston-based commerce experience platform, raised $155 million in Series E funding. Warburg Pincus led the round.
- Rappi, a Colombia-based delivery company, raised $155 million of a targeted $350 million, per an SEC filing. Investors have included SoftBank, Andreessen Horowitz, and Sequoia. Read more.
- SpotOn Transact, a San Francisco-based software and payments company, raised $60 million in Series C funding. DST Global led the round.
- Uncapped, a London-based startup offering revenue-based financing, raised $26 million in debt and equity. Mouro Capital led the round and was joined by investors including All Iron Ventures and existing investors Global Founders Capital, Seedcamp, and White Star Capital.
- Freeletics , a New York-based A.I.-powered fitness coaching app, raised $25 million in Series B funding. JAZZ Venture Partners and Causeway Media Partners led the round and were joined by KKCG.
- Servify, a Bangalore-based device lifecycle management company, raised $23 million in a Series C financing. Iron Pillar led the round.
- SigmaSense, an Austin-based touch screen performance company, raised $22 million in Series A funding. Foxconn Technology Group led the round and was joined by investors including Corning, E Ink, GIS, and MRI (managing partner of LG-MRI).
- Syfe, a Singapore-based robo advisor, raised SGD$25.2 million ($18.6 million) in Series A funding. Valar Ventures led the round and was joined by investors including Presight Capital, and Unbound. Read more.
- EasySend, a Tel Aviv-based platform for tracking customer experience, raised $16 million in funding. It raised $11 million in Series A led by Hanaco and a $5 million seed round from existing investors Vertex Ventures and Menora Insurance.
- Zoop, a Brazilian B2B fintech, raised $11.4 million in funding. Movile led the round.
- Netdata, a San Francisco-based maker of a health-monitoring solution for systems and applications, raised $14.2 million in additional Series A funding. Bessemer Venture Partners led the round and were joined by investors including Bain Capital Ventures and Uncorrelated Ventures.
- Willow, a Mountain View, Calif.-based maker of a wearable breast pump, raised $55 million in Series C funding. Investors included NEA as well as Meritech Capital Partners, Lightstone Ventures, and Perceptive Advisors.
- POM Partners, a New York-based personal and enterprise safety technology provider, raised $3 million in Series A funding. Cayuga Venture Fund led the round.
- Kognos, a San Francisco Bay-based cybersecurity firm, raised $1.8 million in seed funding. Investors included Tim Eades (CEO of vArmour) and Joe Eandi (Co-Founder and former CEO, BrightPoint Security).
- Ecomedes, a San Francisco-based platform for finding sustainable building materials, raised $1.5 million in seed funding. Investors included Saint-Gobain NOVA and existing investor PivotNorth.
- Voliro, a Swiss inspection drone startup, raised CHF2 million ($2.2 million) in seed funding. Alpana Ventures led the round.
- Meallogix, a San Diego, Calif.-based software maker for meal prep companies, raised $1.3 million in seed funding.
- Fan Controlled Football, a Los Angeles-based professional sports league that enables fans to call the plays in real-time, raised an undisclosed amount of funding from Lightspeed Venture Partners, Verizon Ventures, and others.
PRIVATE EQUITY
- Blackstone Group is nearing a deal to buy Precision Medicine Group, a Bethesda, Md.-based drug development and clinical trials firm, for about $2.3 billion, per Bloomberg. Bloomberg would acquire stakes from Berkshire Partners and TPG. Read more.
- Apollo Global Management is the frontrunner to acquire Asda, the U.K.-based grocery chain, from Walmart. Read more.
- Compass Diversified agreed to acquire BOA Technology, a Denver-based maker of performance wear, for $454 million. Financial terms weren't disclosed.
- Greenlight Planet, a provider of solar-powered home energy products in sub-Saharan Africa and South Asia, raised $90 million in equity and debt. Providers included CDC Group, FMO, Norfund, ResponsAbility, SIMA Funds, Symbiotics, Global Partnerships, and ARCH Emerging Markets Partners’ Africa Renewable Power Fund.
- AHEAD, backed by Centerbridge Partners, plans to acquire RoundTower Technologies and Kovarus, two IT infrastructure providers. Financial terms weren't disclosed.
- H.I.G. Capital invested in Construction Forms, a Port Washington, Wis.-based manufacturer of engineered, abrasion-resistant piping systems and accessories for concrete, mining, power generation, and other industrial applications. Financial terms weren't disclosed.
- Hunter Street Partners acquired All-Star Equipment Rental, a Naples, Fla.-based equipment rental company. Financial terms weren't disclosed.
- Thomas H. Lee Partners and existing investors will invest $23.5 million in Phytech, a digital farming company.
- Fircroft, backed by Equistone, merged with NES Global Talent, an engineering and technical talent job search platform. Financial terms weren't disclosed.
OTHERS
- 3M (NYSE: MMM) is weighing a sale of its food safety business, per Bloomberg, in a deal that could value it at $3.5 billion (£2.75 billion). Read more.
- Yandex is in talks to acquire Tinkoff, a Russian online bank, owned by TCS Group Holding, for $5.5 billion (£4.3 billion). Read more.
- Accenture has agreed to acquire N3, an Atlanta-based sales solution provider. Financial terms weren't disclosed.
- Diploma plans to acquire Windy City Wire, a U.S.-based wire and cable distributor, for about $465 million (£357 million).
EXITS
- KKR is in talks to acquire 1-800 Contacts, a Draper, Ut.-based eye contacts company, for over $3 billion from AEA Investors, per Bloomberg. Read more.
- Z Capital Group is exploring a potential sale of Sports Information Group, which owns horse-racing media platform Daily Racing Form, per Bloomberg. Potential buyers include Penn National Gaming, DraftKings, and Flutter Entertainment. The company could be worth over $350 million, Read more.
- Permira agreed to acquire Neuraxpharm, a European specialty pharmaceutical company focused on the treatment of the central nervous system, from Apax Partners. Financial terms weren't disclosed.
- Thomas H. Lee Partners and Frazier Healthcare Partners acquired a part of Adare Pharmaceuticals, a provider of pharmaceutical technologies, from TPG Capital. The acquisition includes Adare’s contract development and manufacturing organization, pharmaceutical technology and microbiome businesses, while TPG Capital will retain rights to Adare’s Eosinophilic Esophagitis product, which has been spun out into a separate entity dubbed Ellodi Pharmaceuticals. Financial terms weren't disclosed.
- Odyssey Investment Partners agreed to acquire ProPharma Group, an Overland Park, Kansas-based regulatory and compliance services provider to pharmaceutical, biotechnology and medical device customers, from Linden Capital Partners. Financial terms weren't disclosed.
IPOs
- Siemens Energy, a spinout of German conglomerate Siemens (FRA: SIE), could be valued at over €17 billion ($20 billion) when it floats on the Frankfurt stock exchange next week, per Reuters. Read more.
- GoodRx, a Santa Monica, Calif.-based company for discount drugs, raised $1.1 billion in an IPO of 34.6 million shares priced at $33 a piece. Silver Lake, Francisco Partners, and Spectrum back the firm. Read more.
- Corsair Gaming, a Fremont, Calif.-basd supplier of gaming hardware, raised $238 million in an IPO of 14 million shares (46% insider sold) priced at $17 apiece. It posted revenue of $1.1 billion and a loss of $8.4 million in 2019. EagleTree Partners backs the firm. Read more.
- Mission Produce, a California-based distributor of fresh avocados, plans to raise $150.4 million in an offering of 9.4 million shares priced between $15 and $17 apiece. Read more.
- Freshly, a ready-made meal delivery company, is planning to go public as soon as 2021 and is targeting a valuation of over $1 billion, per Bloomberg citing sources. Read more.
SPAC
- Aspirational Consumer Lifestyle Corp., a blank check company targeting a lifestyle brand, raised $225 million. Executives at LVMH and L Catterton formed the company. Read more.
- VPC Impact Acquisition Holdings, a special purpose acquisition company targeting a fintech, raised $200 million. Victory Park Capital formed the company. Read more.
F+FS
- Sequoia Capital China is raising 15 billion yuan ($2.2 billion), per Reuters. Read more.
- Blue Sage Capital raised $300 million for its third fund.
PEOPLE
- Greylock promoted Mike Duboe to general partner.
- Tribe Capital hiredMarcelino Pantoja as a vice president.


fortune--2020-09-23--‘We know the dogs work’: Coronavirus-sniffing dogs go into action at Helsinki Airport

Our mission to help you navigate the new normal is fueled by subscribers. To enjoy unlimited access to our journalism, subscribe today.
For the rest of this year, passengers arriving at Finland’s Helsinki Airport will be able to get quick, apparently very reliable coronavirus tests from…dogs.
It’s one of the biggest trials so far in the use of dogs to sniff out SARS-CoV-2; a similar test has been underway for a month at Dubai International, and already published research from Germany indicates dogs have a detection rate of around 94% for the virus.
In the Finnish trial, which began Wednesday, four canines are being used—two at a time; they tire easily—though the University of Helsinki researchers behind the scheme say they have 10 that have been trained and can be relied upon to work in a noisy airport environment that is full of different smells.
Passengers are invited to take simple sweat swabs from their own skin using sterile tissue (the Dubai trial involves sticking plastic tubes into people’s armpits), then drop the tissue into a jar that is passed through a hole in the wall to the waiting dog. The test takes a few seconds. The subjects are then asked to take a standard polymerase chain reaction (PCR) test for the coronavirus, so comparative data can be gathered for the study.
If the canine test comes back positive, “we take them by the hand and see 100% that they go to the PCR test as well,” lead researcher Anna Hielm-Björkman told Fortune. People arriving in Finland with the coronavirus are encouraged to self-isolate, though the country has no heavily enforced quarantining system for such cases.
‘So much more sensitive’
The trial began Wednesday, and early in the European afternoon around 50 tests had already been conducted. Hielm-Björkman said the team expected to conduct around 100 tests a day and to see around one positive case in every 500 tests.
“It finds all the positives that the PCR finds and then [around] 5% more positives than the PCR. The dog is so much more sensitive,” she said. “It finds more positives where people have had the disease and still have the virus in their body, even though they’re not contagious anymore. Also what it’s able to [do] is it can find the positive ones up to one week before they get their clinical symptoms.”
If the dogs are so sensitive that they can detect the virus in people who have passed through the contagious stage, is that not overdoing it?
Not a problem, said Hielm-Björkman: “Some PCR tests do the same thing…The reason we haven’t changed the cutoff point yet is there is really no research yet on how long people are contagious. We will let the dogs tell us [that very small amounts of the virus have been detected] until there is enough science to back up a cutoff point. Then we’ll teach them again: ‘If it’s lower than this, you don’t need to tell us.’”
Hielm-Björkman’s team has been conducting preliminary tests since April, and first announced success in May. Although it has not yet produced any peer-reviewed paper about its findings—or indeed submitted an article for peer review—she said the urgency of the situation had led the team to move straight to this pilot.
“We know the dogs work,” she said. “We’ve been doing this research for five years before, training them [to detect] cancer and other diseases. We thought in this time of an epidemic, the most important thing for Finland at the moment is getting these good tests. Dogs are superior to PCR tests. It’s totally backwards, but in a time of COVID, knowing it takes three months to get something peer reviewed, we went operational before we had a peer-reviewed article.”
Instilling confidence
In theory, the technique being used at Helsinki Airport could be formally rolled out quite quickly. However, a scenario involving dogs sniffing passengers up close, rather than sniffing their samples in another room, would require a legislative change in Finland—this would be relevant in settings such as the entrance to a concert hall, where the dogs would operate like traditional sniffer dogs, Hielm-Björkman said.
The aviation sector, which has been hammered by the COVID-19 pandemic, is desperate to get people back on flights. Testing is crucial both for passenger confidence and for the confidence of border authorities, and—given the volume of passengers passing through large airports—speed is of the essence.
Also on Wednesday, Reuters reported that Lufthansa is talking to drugmaker Roche about the deployment of antigen tests—a faster and cheaper alternative to PCR tests—that produce results in 15 minutes or so (PCR tests take hours).
Alitalia is even running special flights between Rome and Milan that are reserved for passengers that have had negative antigen tests, indicating that they do not have the virus in their systems.
But antigen tests are known to produce more false negatives than PCR tests. It appears the smell-based technique is more reliable, and even quicker in producing results. It’s a test that can be automated—a French hospital is preparing to deploy an enormous and very expensive Breathalyzer, originally designed for atmospheric science, to get results within seconds—but sniffer dogs are smaller, cheaper, and already widely available.


fortune--2020-09-23--Will House Democrats be able to revive $1,200 stimulus checks?

Those beloved stimulus checks may not be dead yet.
Republicans and Democrats had reached an impasse in negotiations over a broader stimulus package earlier in the summer—one thought to be made even worse by the political posturing surrounding the death of Supreme Court Justice Ruth Bader Ginsburg on Friday. But there were glimmers of hope yesterday that Democrats may still push for stimulus checks, and that Republicans might be receptive too.
During a House hearing with Federal Reserve Chairman Jerome Powell and Treasury Secretary Steve Mnuchin yesterday, several members queried the men about more stimulus.
Memorably, Al Green (D-TX) quipped: “The economic impact payments must be made because the rent must be paid.”
According to CNBC, Rep. Rashida Tlaib (D-Mich) asked point blank: “Yes or no, do you believe another stimulus check could help stabilize the economy?” “I do,” Mnuchin said. “The administration does support another stimulus payment.” Powell also expressed agreement that the economy needed more help from the government.
But neither Democratic nor Republican leaders support passing a second round of stimulus checks in a stand-alone bill. Instead, it would be through a broad stimulus package, on issue on which the two parties are still $900 billion apart: Democrats are pushing for a package worth $2.2 trillion, and the White House is at $1.3 trillion.
The good news? The first hurdle to restarting stimulus negations was cleared Tuesday when Democratic and Republican leaders came to terms on a stop-gap funding bill that would avert a government shutdown at the end of September. The bad news? It’s unclear when or if the negotiations will restart.
Earlier this summer, another round of direct stimulus payments to Americans was one of the few issues the two parties agreed on. But they clashed on other issues such as aid to states (which the Republicans balked at) and the size of the overall package.
Last week President Trump voiced support for a bipartisan compromise that did include $1,200 checks. The Problem Solvers Caucus proposal in addition included $450 in weekly enhanced unemployment benefits, and $500 billion for state and local government funding. But the government aid portion proposed was well below the $1 trillion Democratic leaders are seeking.


fortune--2020-09-23--The UN General Assembly is the ultimate ‘manel’

This is the web version of The Broadsheet, a daily newsletter for and about the world’s most powerful women. Sign up to get it delivered free to your inbox.
Good morning, Broadsheet readers! Hillary Clinton has a new podcast, Betsy DeVos faces an ethics investigation, and the UN General Assembly begins without addresses from any female leaders. Have a wonderful Wednesday.
– The ultimate manel. If a ‘manel’ is an all-male panel, what’s the term for a full day of the UN General Assembly that features no women speakers? Words escape me.
The first day of the virtual general assembly on Tuesday featured formal speeches by 32 male leaders and none by women. The first woman to address the meeting of world leaders will be Slovakia President Zuzana Čaputová this morning; she’s speaker No. 50 or so. President Jeanine Añez Chávez of Bolivia is also scheduled to deliver an address this afternoon.
The UN reportedly makes the schedule on a first-come, first-serve basis, but it’s not as if the gender make-up of the speakers evens out later on. PassBlue, a publication that covers the UN, reported earlier this month that of the 196 speakers at this year’s general assembly, just 11 are women. Several member states reportedly tried to swap the order of speakers to address the lack of women on Day 1, but to no avail.
The speaker line-up essentially tells us what we already know; that the number of women among world leaders remains extraordinarily low. This year, there are 22 female heads of government representing the 193 UN member states.
But the optics are especially bad this year, since UN Secretary General António Guterres has publicly touted his dedication to gender equality; since so many female leaders have earned plaudits for their handling of the pandemic that continues to devastate; since the UN’s own research shows the pandemic is exerting a disproportionately high toll on the world’s women.
“The UN…should be a leading example in terms of representation and inclusion,” said Isabel Saint Malo, former vice president of Panama. “However, what we see at the UN is parallel to representation in other spaces.”
Claire Zillman
claire.zillman@fortune.com
@clairezillman
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Party lines. Cindy McCain, the widow of the late GOP Sen. John McCain, formally endorsed Joe Biden for President. She had appeared in a Democratic National Convention clip about her husband's relationship with the Democratic nominee, and moved forward with a formal endorsement following President Trump's reported comments calling injured soldiers "losers" and "suckers." McCain says she hopes "suburban women [will] take another look" at Biden. CNN
- Consequential clip. After the Department of Education distributed a Fox News clip of Secretary Betsy DeVos criticizing Joe Biden, DeVos will be investigated for a potential violation of the Hatch Act, or ethics breach for engaging in political activities as an on-the-job federal employee. A DOE spokeswoman called the complaint "frivolous." New York Times
- Style shares. Shares for Stitch Fix dropped by 14% after the personal-styling company reported a fiscal fourth-quarter loss of $44.5 million in earnings yesterday. CEO Katrina Lake says she thinks changing consumer habits during the pandemic could benefit the company long-term as even more customers turn to online shopping. CNBC
- Clinton-cast. The Michelle Obama Podcast is finishing up its season, but listeners will soon have You and Me Both, a new podcast from Hillary Clinton, to fill the void. The former presidential candidate will speak with guests from Stacey Abrams to comedian and Trump satirist Sarah Cooper. USA Today
MOVERS AND SHAKERS: Morgan Beller, cofounder of Facebook's Libra, left the company; she will join NFX as a general partner. Hogarth Worldwide named Elyse Epstein COO and Tania Sethi chief production officer. Citi promoted ICG head of diversity Kira Cordoba-Brown to head of ICG talent and diversity. Raines International hired former PepsiCo SVP Lisa Mann as CMO. Former Sony exec Andrea Wong joins Roblox's board of directors.
IN CASE YOU MISSED IT
- Parliamentary procedure. In Kenya, a judge advised that the President dissolve the country's Parliament after failing to meet a constitutional requirement that one-third of the body's seats be held by women. The justice noted that legislators have in the past demonstrated "lackadaisical attitude and conduct" toward the rule. Reuters
- All over again. Had a sense of déjà vu recently? Fortune's Rey Mashayekhi reports on how allegations of sexual assault by President Trump (which he denies) have played out similarly to how they did in 2016—meaning, failing to make much of a dent in Trump's political prospects. Fortune
- Riding the wave. This year, Maya Gabeira surfed the biggest wave ever ridden by a woman—and the biggest wave ridden by anyone during the 2019-2020 season. The 73.5-foot crest beat Gabeira's own personal record by five feet. New York Times
ON MY RADAR
Ruth Bader Ginsburg’s passing feels like millions of women have lost their bubbie Fortune
Why we need more women leading the fight for the planet Elle
RBG and the empty triumph of liberal pop culture Washington Post
PARTING WORDS
"I am unafraid to be ugly. ... In this one area, I can actually say I feel capable of being fearless."
-Actor Sarah Paulson on playing "unpleasant" characters, like Nurse Ratched in her new Netflix series Ratched


fortune--2020-09-23--There’s an ulterior motive to China’s carbon neutral pledge: Cornering the green tech market

At the United Nations General Assembly on Tuesday, Chinese President Xi Jinping declared China would achieve “carbon neutrality before 2060,” after reaching peak carbon emissions “before 2030.”
The targets have yet to be padded out with details, but Xi’s vague goal-setting was heralded as a bold step in advancing international action on climate change—a move forward while the U.S. continues to turn inward.
Even without providing details of the plan, Xi’s announcement asserted China as a global leader in the fight against climate change, signifying that the country is willing to take drastic action to keep global warming to a minimum. But China’s bold moves are likely driven by an ulterior motive—that, as the world’s leading producer of green energy tech, China stands to emerge as a global powerhouse in the post-oil world.
Always have Paris
This year, the U.S. officially will withdraw from the landmark Paris Agreement, inked in 2015 under the leadership of President Xi and President Barack Obama. In his address to the U.N., delivered minutes before Xi’s, President Donald Trump continued to rail against the accord.
Subscribe to The Loop for a weekly brief on the revolutions in energy, technology, and sustainability, delivered free to your inbox.
“China’s carbon emissions are nearly twice what the U.S. has, and it’s rising fast. By contrast, after I withdrew from the one-sided Paris climate accord, last year America reduced its carbon emissions by more than any country in the agreement,” Trump said. His statement is true only because U.S. power stations switched from coal to natural gas—a cheaper fossil fuel. Some energy firms and governments praise natural gas as a cleaner hydrocarbon fuel that will help the world transition to a zero-carbon economy, but it is still a fossil fuel.
With the U.S. removing itself from the global conversation about a greener future, China is set to not only assume the political lead in the worldwide shift to carbon-neutral power, but the market lead too.
“China [is] the biggest energy financier and biggest market, so its decisions play a major role in shaping how the rest of the world progresses with its transition away from the fossil fuels that cause climate change,” said Richard Black, director of the Energy and Climate Intelligence Unit (ECIU).
A developing power
China is the world’s largest producer of solar panels and wind turbines, dominating roughly 70% of the global market for the former. And, while currently third, China is set to surpass the U.S. as the world’s largest producer of power from nuclear energy by 2030, too. With a tighter target for reducing carbon emissions, investment in alternative energy is likely to swell.
Despite its advances in green tech, China, for now, continues to focus overseas investment on fossil fuel. In 2017 China announced a new “green” core tenet to its Belt and Road Initiative (BRI)—Xi’s landmark policy for overseas infrastructure investment. The green track pledged more funds for green energy projects, but BRI financing continues to primarily fund fossil fuels. In 2018, over 40% of BRI funding went to coal alone.
Still, China’s investment in green energy projects is still increasing. In Myanmar, for example, Chinese firms were awarded contracts at 29 out of 30 sites recently put to tender for development as solar power farms. China’s hydroelectric giant, China Three Gorges (CTG), already operates in 47 countries and controls 14 of Brazil’s total 48 hydro-plants.
Safety switch
Undoubtedly, security concerns will present an issue for China’s ascent as a global green-energy powerhouse. In 2016, the U.K. government awarded construction contracts for a nuclear power plant at Hinkley Point, in southwest England, to a state-owned Chinese firm. Security advisers warned it could give China the ability to “shut down Britain’s energy productions at will.” The nuclear plant is still under development; it’s approved but over budget.
China’s other attempts to export its most advanced technology have been halted by national security concerns, too. The U.S. and Australia, for example, have banned Shenzhen-based Huawei Technologies—the undisputed leader in 5G technology—from participating in the rollout of national 5G networks, citing national security concerns. The telecom-equipment maker continues to face scrutiny in the EU, Canada, and other states.
As it happens, Huawei is also a significant player in China’s solar industry; it is the world’s largest manufacturer of inverters, which convert the direct current generated by solar panels into alternating current so that it can be introduced to the grid.
Last year U.S. senators flagged Huawei inverters as a national security concern, too, and requested the Department of Energy ban them from the grid. But the U.S. ban on Huawei as a supplier of telecoms tech revealed one thing: that America has no domestic alternative to champion.


fortune--2020-09-24--Why the Supreme Court vacancy could spell bad news for the health care industry

Facebook users in Illinois can now apply for a privacy payout of up to $ 400

The death of Supreme Court Justice Ruth Bader Ginsburg last week, at the age of 87, has sparked a massive political debate six weeks before the election—with President Trump, much to the dismay of congressional Democrats, set to announce his nominee to replace Ginsburg by the end of this week.
But there’s another, more apolitical group that may have reason to worry about Trump naming yet another conservative justice to the highest court in the land: the health care industry. On Nov. 10, one week after Election Day, the Supreme Court is set to begin hearing arguments in a case challenging the constitutionality of the Affordable Care Act (ACA), the landmark health care legislation also known as Obamacare.
With the departure of one of the court’s leading liberal voices, the future of the ACA is now increasingly uncertain—as are the revenues of U.S. health care providers who are now serving millions of insured patients they wouldn’t otherwise without Obamacare, according to analysts at credit rating agency Fitch.
“A repeal of the ACA, which would result in fewer insured patients and lower reimbursement rates, would negatively affect U.S. hospital revenues,” the Fitch analysts wrote in a note Tuesday.
That repeal looks increasingly likely given the way things currently stand. Should Trump and Senate Republicans succeed in confirming a new Supreme Court Justice to replace Ginsburg before the election—presumably one with more conservative views who may regard the ACA’s individual mandate provision unfavorably—that could swing the court firmly to the right, raising the chances that the mandate is ruled unconstitutional and the entire law is thrown out.
And if Ginsburg is not replaced before the election, there’s every chance that the Supreme Court will proceed with an eight-justice bench—one that, in Ginsburg’s absence, would have a decidedly conservative bend to it.
As such, the vacancy caused by Ginsburg’s passing “raises uncertainty across the health care sector,” Fitch analysts say. They note that the ACA has “had a positive effect on the financial profiles of most health care [companies] since going into effect in 2010, due to an increase in insured patients and a reduction of uninsured patients who self-pay.”
Roughly 25 million Americans have health insurance through Obamacare’s insurance expansion provisions, and the law has brought the number of uninsured Americans down by around 5 percentage points, to 8.5% currently. And the ACA is even more important given the economic impact of the coronavirus pandemic. According to Fitch, it “serves as a backstop for employer-sponsored health care if jobless rates remain structurally high.”
The law’s repeal—and the millions of Americans who would lose their health insurance as a result—would place “greater stress” on the operating margins of health care providers, Fitch says. It would particularly hurt nonprofit and publicly operated hospitals, which provide care to a larger number of uninsured and Medicaid patients and would see “a reduction in revenue due to increased uninsured care.”
While the credit rating agency says it expects providers to “adapt to new health care policies in order to protect credit profiles,” the end of Obamacare and a resulting “sustained reduction in cash flow” for health care operators would still place pressure on those companies’ credit ratings in the corporate debt sphere.