fortune--2020-02-06--How Randy Newman’s family built a film-scoring dynasty over the course of a century

At the 92nd Academy Awards, two cousins will square off against each other for Best Original Score: Thomas Newman for 1917 and Randy Newman for Marriage Story. They’re part of the most Oscar-nominated family in history—over 90 collectively. Randy and Thomas alone have been nominated for 37 combined.
But on Sunday, don’t expect either to spike the football if he wins.
“[Newmans] all think they’re frauds,” Randy’s cousin Maria Newman tells Fortune. “They think people will wake up the next day and say, ‘Ah, that wasn’t so good after all.’” (She recalls her father, Alfred, absentmindedly walking offstage at the 1953 ceremony without his statuette.)
“The Newmans [can] be a little acerbic,” her brother David tells Fortune. “To say the least.” (Neither Randy nor Thomas Newman were available to comment for this piece.)
Randy in L.A., circa 1970. “I Love L.A.” became the go-to song for the city’s sports teams. Michael Ochs Archives/Getty Images
If one only thinks of Randy Newman as the ivory-tickler for Toy Story with a grudge against short people, think again. While he’s best known for kiddie fare, from 1998’s A Bug’s Life to 2017’s Cars 3, his songbook contains very adult singer-songwriter albums in which he sang from the perspectives of bigots, warmongers, and itinerant losers.
Whether poignant or pointed, the extremes of Randy’s art arguably come from the pressure cooker of Hollywood, where his larger-than-life uncles dominated movie music.
From the golden age of cinema…
Three of Randy’s uncles, who all grew up impoverished, went on to become major Hollywood film composers.
Alfred Newman scored more than 200 films, appeared on a U.S. postage stamp, and wrote the classic 20th Century Fox fanfare. (Yes, that one.) Emil Newman scored wartime dramas like 1946’s The Best Years of Our Lives before, David says, “personal stuff got in the way.” Lionel Newman scored 1956 Elvis flick Love Me Tender and later supervised the music for the original Star Wars trilogy.
Alfred Newman composing music for the film “Brigham Young,” circa 1940. Bob Landry—The LIFE Images Collection via Getty Images
Randy’s father was Irving Newman, a budding songwriter, clarinetist, and saxophonist who wrote “Who Gave You the Roses,” which Bing Crosby recorded in 1954. Still, Irving would become a doctor at his father Michael’s behest.
“Music came very easy to me,” he told journalist Timothy White. “[But] I gave up the horn and took out my microscope.”
When Randy was 18, he released his gawky debut single about a fetching football star, “Golden Gridiron Boy,” and wrote music for the sitcom The Many Loves of Dobie Gillis. At the time, his idiosyncratic bent as a lyricist precluded a hit.
“I would write things and get all excited, and think, ‘Okay, this is right down the middle of the road,’” he told Variety in 2019. “And then I’d play it for somebody, and they’d say, ‘Randy, this is not the middle of the road.’”
David Newman conducts the New York Philharmonic’s performance of the score to “On the Waterfront” at Avery Fisher Hall in 2015. Hiroyuki Ito—Getty Images
While attending UCLA, he frequently played hooky to hang out at the 20th Century Fox music department. “There was a sound at Fox, almost hysterical, beautiful, wistful, anachronistic, with the texture of strings vibrating as if it was the ’20s and ’30s,” David says. “Randy was old enough to soak it up, and he could see the art in it.”
That “wistful, anachronistic” sound informed the essence of Newman’s art. “His songs are generally third-person … nostalgic, wistful, filmic storytelling,” David says. “They’re not him. They’re stories of characters that he invents.”
“Obviously he’s doing his songwriting thing, and what a songwriter,” he continues. “But this other side of Randy is coming out of this milieu. This absolute need and drive for excellence.”
As Randy hit his songwriting stride in the 1970s, releasing classics like 1972’s Sail Away, 1974’s Good Old Boys, and 1977’s Little Criminals, David decided to take his own shot at film scoring.
“I wrote a piece, I made a demo, I slogged around for three or four years before anybody would hire me,” he says. “I eventually got hired, but it was the slowest buildup ever.”
…to the VHS and DVD eras…
In 1983, Randy released “I Love L.A.,” about racing through the city’s most visually unstimulating streets with a “big nasty redhead.” Widely heard as an earnest homage and pumped into Dodgers, Lakers, and Rams games, the song pricked up the ears of Randy’s young cousin Joey.
“That caught my attention almost more than anything else,” Joey tells Fortune. (The track ended up in movies like 1986’s Down and Out in Beverly Hills and 1996’s Escape from L.A.)
Composer Thomas Newman arrives at the Palm Springs International Film Festival awards gala in 2014. He’s received an Oscar nomination for Best Original Score for his work on “1917.” Charley Gallay—Getty Images for PSIFF
As the VHS era ramped up, Thomas and David scored their first major gigs—the former with 1984 romantic comedy Reckless, and the latter with that year’s Tim Burton stop-motion short Frankenweenie. David got on a roll with family-friendly comedies like 1989’s Bill & Ted’s Excellent Adventure, 1993’s The Sandlot, and 1996’s The Nutty Professor.
“You get sort of pigeonholed, which is fine,” David says. “Once a film makes a lot of money, they want to keep repeating it—keeping the same team and the same people.
“Almost as if it’s, you know, good luck,” he says, rapping the glass dining table in his home on Manhattan’s Upper West Side.
In 2003, Joey collaborated with Randy on the score for Seabiscuit, later doing the same for 2006’s Cars. “When I got out of school, a lot of my friends were like, ‘I’m sure you’re going to get a job working for your family,’” he says. “That’s not really how our family works. I had to prove myself.”
David and Randy conducted together at the 2014 Hollywood in Vienna concert, which featured a medley of “We Belong Together” from Toy Story 3, “The Time of Your Life” from A Bug’s Life, and “If I Didn’t Have You” from Monsters, Inc.
“Randy loves to conduct,” David says. “It’s one of his favorite things when he’s scoring a movie.”
Randy, after winning the Oscar for Best Original Song for “We Belong Together” from “Toy Story 3,” at the 83rd Academy Awards in 2011. “My percentages aren’t great. I’ve been nominated 20 times; this is my second time,” he said. “I want to be good television so badly.” MARK RALSTON—AFP via Getty Images
…and into 2020
Today, Randy lives in the Pacific Palisades in Los Angeles, where his parents first settled in 1943. Between film gigs, he releases a new solo album every decade or so, his latest being 2017’s Dark Matter. The Academy Awards are just around the corner, but attending events of this sort can be a bit laborious for the 76 year old.
“Randy and I will sometimes go to a concert at Disney Hall, but it’s just a big ordeal to set it up,” David says with a sigh.
“I think the [Oscars] ceremony is hot and boring,” Randy told The New York Times in 2002. “But I go because I’m honored that I was nominated by the music guild.”
Nine years later, he was awarded Best Original Song for “We Belong Together” and took his speech as an opportunity to castigate himself. “My percentages aren’t great. I’ve been nominated 20 times; this is my second time,” he said. “I want to be good television so badly.”
Randy may be skeptical of pomp and circumstance, but when it’s time to score a movie, he throws himself into it entirely. “When I’m doing a picture and have to write, that’s more important to me than my wife and children,” he told the Times. “Of course, if one were sick or hurt or needed me, I’d go.”
Randy with “Toy Story” characters Buzz Lightyear and Woody at his star presentation ceremony for the Hollywood Walk of Fame in 2010. MARK RALSTON—AFP via Getty Images
Today, several of the Newmans are busy with their own films and shows: Joey is promoting the 2020 Disney+ series Diary of a Future President, and David scored the Netflix show Green Eggs and Ham, while also being on board for Steven Spielberg’s reboot of West Side Story, due in December. Maria, a violinist and composer active in concert music and scoring century-old silent films, played on Randy’s Marriage Story score.
Maria Newman, a composer and musician, is the daughter of Hollywood composer Alfred Newman, and a cousin of Randy’s. She is pictured at the grand piano in her Malibu living room in 2015. Annie Wells—Los Angeles Times via Getty Images)
That said, “No Newmans spend much time with each other,” David says. “I’m not running over to Randy’s house unannounced and knocking on the door. Geographically, L.A. doesn’t work like that anyway, but even if it did, it’s not the way our family operates.”
The Newmans’ comfortable lives as Hollywood royalty are a far cry from the previous generation of 10 Newmans, who lived in a one-bedroom house in a “Russian-Jewish ghetto” in New Haven, David says.
But on Hollywood’s biggest night, one or both cousins could take home an Oscar—Randy is also nominated for Best Original Song for his Toy Story 4 tune “I Can’t Let You Throw Yourself Away,” which he will perform at the ceremony.
When it’s time to score a movie, Randy—pictured here in 1995—throws himself into it entirely. “When I’m doing a picture and have to write, that’s more important to me than my wife and children,” he says. “Of course, if one were sick or hurt or needed me, I’d go.” Steve Starr—Corbis via Getty Images
“We’ve had experiences that some people might not have had the ability to have,” David says. But despite this monumental Oscars night, these are Newmans we’re talking about, and it’s fair to say there will be little cousinly lavishing of praise backstage.
“We are an incredibly intense family,” Maria says. “We don’t sit around hugging.”
“There’s not a lot of ‘Hey, you did a great job, congratulations,’” David says.
But even if they’re disinclined to pat themselves on the back, one thing is clear: Movie music has been heavily influenced by the Newmans and continues to be to this day.
Correction, February 6, 2020: An earlier version of this story misstated that Thomas Newman will do the score for West Side Story. It has been changed to indicate that David Newman will do the score.
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—Taika Waititi on Kiwi humor, directing as Hitler, and why kids should see Jojo Rabbit
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fortune--2020-02-06--America’s youngest voters could sway an election, but what will it take to get them to the polls?

Land O ’ Lakes wants to introduce you to the farmer behind your butter

If the historic voter turnout during the U.S. midterm elections is any indication, the 2020 presidential election could potentially draw a record number of young people to the polls, including the 18- to 23-year-old Generation Z, many of whom will be casting ballots for the first time.
Together, Gen Z and millennials (ages 24 to 39) are projected to make up 37% of voters in the 2020 presidential election, according to the Pew Research Center, and both demographics are largely split along party lines.
“Gen Z is a little bit more liberal than millennials at this point,” Robert Griffin, a top researcher at the bipartisan Democracy Fund, tells Fortune. “They’re a little bit more racially diverse, they’re more educated, and they’re on track to be more secular than other generations.”
About 55% of current Gen Zers identified as Democrats, as opposed to 51% of their millennial counterparts, according to a soon-to-be-released Nationscape survey conducted by the Democracy Fund and UCLA.
James Lance Taylor, a political science professor and a former political science department chair at the University of San Francisco, believes it may be too early to say that these young generations of voters will have an impact in determining who will be sitting in the White House, but says Trump could have a “radicalizing effect” on young people.
“There could be an awakening because of the backlash they may think he represents,” Taylor says.
Taylor compares most young voters to a majority of black voters. He says the groups are not in full step with Republican ideology, and they may feel taken for granted by Democrats. Indeed, the President himself might be the common denominator in their decision-making.
But will America’s youngest voters play a significant role in the upcoming presidential election?
With this demographic so evenly split along party lines, it will depend on how many show up on Election Day. And what it will take to get these voters to the polls is up to both the Republican and Democratic parties to figure out.
Issues over candidates
Kyle Lelli, a co-founder of The Tylt, a debate and polling website focusing on issues relevant to Gen Z and millennials, says this election season, young voters are focused on issues like climate change, health care, and gun control, rather than the candidates.
“They’re not out there necessarily following the horse race, they’re more focused on the issues,” said Lelli. “Young voters are independent thinkers with strong opinions, and if they turn out, they definitely will have an impact.”
Democrats have been targeting those issues that tend to speak to younger voters, says Tim Malloy, Quinnipiac poll’s assistant director. Bernie Sanders, specifically, has not been afraid to call out big pharmaceutical companies and to make public pleas to help combat climate change.
“Sanders speaks to the younger segment of voters,” Malloy says.
And, as billionaire candidates like Tom Steyer and Mike Bloomberg try to reach out to the middle class as part of their campaigns, Sanders has been fighting for workers rights for years, even when he was seen as an outcast in the U.S. Senate.
Taylor says that, similar to 2016, Sanders, technically an Independent running as a Democratic candidate, “is speaking to young people” in a way the two major parties can’t. Taylor cites Sanders’ themes of being an advocate for economic, racial, social, and environmental justice.
“I think, more than anyone, Bernie speaks to issues that directly affect young people: minimum wage, student debt forgiveness, universal health care, and concerns about the environment, issues he’s been consistent with,” says Taylor, who teaches college students. “He’s nothing but a ‘New Deal Democrat,’ a centrist who attracts new voters and those really learning about politics for the first time.”
“There’s something about Sanders’ appeal that’s still a bit of a mystery,” says Carl Cannon, a longtime D.C. insider, and the Washington bureau chief for polling aggregation site RealClearPolitics. “Somehow, he’s caught lightning in a bottle with young folks, and it still seems to be working,” Cannon says.
On the subject of impeachment, according to a Quinnipiac University poll, the results of which were released last week, 52% of likely Gen Z and millennial voters surveyed believed that President Donald Trump should be removed from office—not a huge difference from the 43% of 50- to 64-year-olds and the 51% of those 65 and over, who said the same.
While younger voters appear divided on impeachment, they don’t seem to be divided on Trump, overall.
According to Nationscape, Trump is trailing all four of the top Democratic candidates in terms of favorability among Gen Z voters—Sanders by 40 points, Joe Biden by 37, Elizabeth Warren by 31, and Pete Buttigieg by 26.
Power in numbers
The increasingly Gen Z base is “going to vote at crazy rates,” Anne Moses, the founder of Ignite, a nonprofit training young women to become civically and politically engaged, said during Fortune’s Most Powerful Women Next Gen Summit last month. “Get ready.”
During the 2018 midterm elections, Gen Z and millennials doubled their presence at the polls, boosting their demographic’s average voter turnout of 16% to 34%, says John Della Volpe, the director of polling at Harvard University’s Institute of Politics and the founder and CEO of SocialSphere.
“They’re already proving through that one metric that they have a significant impact,” Della Volpe says of young voters. “They do believe that their votes matter.”
“It’s really going to be a matter of if they can be convinced to turn out,” says Rebecca Eissler, an assistant professor of political science at San Francisco State University. “If they do, they can sway the election.”
And candidates are reaching out to young voters in nontraditional ways in order to make it happen.
Consider Warren, the onetime Democratic presidential front-runner, who is now sliding fast in polls in Iowa and New Hampshire. She recently took the time to make a video answering personal questions for the traditionally young readers at Elle.com (as well as give some voting advice) in a unique attempt to attract younger voters.
“You show up to volunteer, you show up to vote,” Warren said. “That really means you’ve got that little piece of hope still in you that, in a democracy, no matter how bad it is, together, we’re going to make this better.”
Warren also organized Students With Warren to gain ground among voters; Biden launched a Team Joe Organizing Fellowship to teach young people about political organizing; and Sanders started Students for Bernie Summer School to do the same.
“Look, if the Democrats succeed in limiting Trump to one term, voters under age 40 will be the difference,” Cannon of RealClearPolitics says. “I’m convinced about that.”
With anticipated record turnouts, Gen Z voters could pose a short-term problem for the Grand Old Party in 2020—and beyond if those young American voters begin to show up at the polls consistently, Griffin adds.
“They appear to look like a generation that should be, over the long term, a concern for the Republican party,” he says.
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—2020 Crystal Ball: Predictions for the economy, politics, technology, and more
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fortune--2020-02-06--Will Casper be the latest startup humbled by the public markets?

Casper will make its brave, new public market debut today.
The direct-to-consumer mattress startup priced its IPO at the low end of its already reduced range.
Casper cut its IPO share price to $12 to $13 from $17 to $19 on Wednesday, signaling that it’s had a hard time attracting enough demand at the higher levels. This new share price would value the company at roughly $476 million, which is a significant decrease from its private valuation of $1.1 billion. Casper raised a total of nearly $340 million in venture funding from investors including IVP, Lerer Hippeau, Target and New Enterprise Associates.
Casper has dominated marketing over the years, but the prospectus tells us it’s somewhat of a double-edged sword. In its IPO prospectus, we learned that the company has spent $423 million on marketing since 2016. For every $1 it spent on marketing, it brought in $3 in revenue. More than 73% of its gross profit last year went to sales and marketing costs.
Let’s not forget that there’s a higher bar to clear in the public markets, and those investors want to see profitability — or at least signs that there’s some sort of viable path to profitability. Casper is not yet profitable. It generated $358 million in 2018 revenues, and posted $92 million in losses over the same period.
The unicorns who’ve been brave enough to go public have gotten the cold shoulder from public market investors, with Uber, Lyft, and SmileDirectClub trading below their IPO prices. (And of course, we all saw what happened with WeWork.)
Will Casper be the latest over-eager startup to get humbled by the public markets? Or will it surprise us all?
HOUSEKEEPING: I’ll be out of the office tomorrow, so please send deals for inclusion to my colleague Lucinda Shen at lucinda.shen@fortune.com. See you on Monday!
Polina Marinova
Twitter: @polina_marinova
Email: polina.marinova@fortune.com
VENTURE DEALS
- Aiven, a Finland-based startup that combines open source technologies with cloud infrastructure, raised $40 million in Series B funding. IVP led the round, and was joined by investors including Earlybird VC and Lifeline Ventures.
- Landing, a San Francisco-based proptech company that offers renters a membership for flexible, long-term living, raised $30 million in equity and debt funding. Greycroft led the round, and was joined by investors including Maveron and Abstract Ventures.
- HopSkipDrive, a Los Angeles based youth transportation solution for schools and families, raised $22 million in funding. Investors include Cyrus Capital Partners, State Farm Ventures, Upfront Ventures, FirstMark Capital and Greycroft.
- Cherre, a New York-based real estate data and analytics platform, raised $16 million in funding. Intel Capital led the round, and was joined by investors including Navitas Capital, Carthona Capital, Zigg Capital, Dreamit Ventures, and Silicon Valley Bank.
- Transparent Financial Systems, a Seattle-based startup developing on-demand cryptographic settlement solutions, raised more than $14 million in Series A funding. Investors include Pantera Capital, Square, Inc., FuturePerfect Ventures, IDEO Colab Ventures, Digital Currency Group, and CMT Digital.
- Clear, a Singapore-based provider of a settlement system that uses blockchain to facilitate cross-border B2B trading, raised $13 million in Series A funding. Eight Roads (formerly Fidelity Ventures) led the round, and was joined by investors including the venture subsidiaries of Telefonica, Deutsche Telekom, Hong Kong Telecom and Singtel.
- Lightning Labs, a San Francisco-based Bitcoin payments startup, raised $10 million in Series A funding. Craft Ventures led the round, and was joined by investors including Ribbit Capital, RRE, M13, and Slow Ventures.
- Maven Machines, a Pittsburgh, Penn-based provider of fleet management software for commercial transportation, raised $7 million in Series A funding. Allos Ventures led the round, and was joined by investors including Hearst Ventures, Riverfront Ventures, and Great Oaks Venture Capital.
- Laka, a London-based community-driven insurance technology company, raised $4.7 million in funding. LocalGlobe and Creandum co-led the round.
- Roshi, an Oakland, Calif.-based cannabis inventory management platform, raised $2.4 million in seed funding. Investors include Silverleaf Venture Partners and F7 Ventures.
PRIVATE EQUITY DEALS
- Advent International and Crosspoint Capital agreed to acquire Forescout Technologies, Inc. (NASDAQ:FSCT) in an all-cash transaction valued at $1.9 billion.
- Align Capital Partners acquired UtiliWorks Consulting, a Baton Rouge, La.-based advisory firm that partners with water, electric, and gas utilities and municipalities. Financial terms weren't disclosed.
OTHER DEALS
- Flexera acquired Revulytics, a Waltham, Mass.-based software usage analytics company. Financial terms weren't disclosed. Revulytics had raised approximately $14.5 million in venture funding from investors including Ascent Venture Partners, Core Capital Partners, and Rockford Capital.
PEOPLE
- Madison McIlwain joined Defy Partners as an associate.
- Yellow Wood Partners promoted Tracy Pizzi to partner.
- Rohan Narayan joined One Rock Capital Partners as a partner.
- First Reserve promoted William Brown and Michael Scardigli to managing director, Thomas Amburgey to director, and Patrick McEnery to vice president of Credit & Capital Markets.
- Jerry Lu joined Advancit Capital as an associate.
- Alpine Investors promoted Matt Moore to partner and Daniel Cohen to principal.


fortune--2020-02-06--Betsy DeVos is letting for-profit colleges trap students in debt they can never repay

Imagine you’re an ambitious young college student and, after a couple of years in the classroom, you decide to make teaching your career. The next step is a master’s degree, which is supposed to be a giant step toward obtaining your teaching credentials. You sign up for a program that looks great, pay for the classes, and work hard—only to find out the degree doesn’t meet your state’s requirements.
Or you’re an aspiring nurse halfway through your RN program, but when your school goes bankrupt you’re left back at square one—except for tens of thousands of dollars in student loans you still have to repay.
These nightmare scenarios are not movie scripts; they were the everyday reality for thousands of Americans ensnared by the for-profit and career college industry before the Obama administration began to regulate it.
While those rules worked well to protect students, the Trump administration wants to erase them. Last summer, Education Secretary Betsy DeVos repealed a crucial Obama-era protection, the so-called gainful employment rule, potentially sending us back to the not-so-halcyon days of debt and despair.
Late last month, our organizations—the American Federation of Teachers and Student Defense—filed suit to vacate the repeal and put the rule back on the books. Gainful employment has big implications for students and taxpayers. It says, in short, that nearly all for-profit college programs and nondegree career programs at public and private nonprofit colleges are only eligible for federal student aid if they lead to good jobs that pay enough for students to repay their loans.
The rule, finalized in 2015, was effective. It was enacted after an explosion in for-profit colleges that promised students a better life, but left them instead with disappointment and a pile of debt. High-profile collapses—think Corinthian Colleges and ITT Technical Institute—exposed some of the worst excesses and abuses of the industry.
A Seton Hall University study released last November found that failing the rule’s standards was associated with a higher likelihood of a program or college closing. The authors write, “It was reasonable for colleges to expect that these sanctions would not be enforced when the data were first released given the incoming Trump administration’s proposals to remove the rule. This means that any observed effects are likely due to pressures from internal stakeholders, college owners, or the general public instead of from the federal government.”
Jonathan Kaplan, former president of Walden University, wrote in Inside Higher Ed the following month that the study showed gainful employment had “achieved one of its stated policy goals: encouraging for-profits to examine with more intention the financial return of their programs for students.”
Most of us understand that consumers need protection from big business. Unfortunately, this administration seems to view it the other way around, perhaps because many of DeVos’s senior higher education advisers hail from companies like Bridgepoint Education, DeVry, and Career Education Corporation. All three ran numerous programs that did not pass the gainful employment rule’s standards and have been subject to federal and state investigations.
The Trump administration seems to believe that its primary job is to protect the industry, rather than to ensure borrowers get a good, affordable education—a position that would seem to chafe with the Education Department’s mission to “promote student achievement and preparation for global competitiveness by fostering educational excellence and ensuring equal access.”
Over her three-year tenure, DeVos has attempted to dismantle other borrower protections established in previous administrations. At the same time she announced her intention to roll back gainful employment, DeVos ordered her department to delay the effective date of the borrower defense rule, which provides defrauded students the opportunity to have their loans forgiven. And she effectively dismantled an enforcement unit that was focused on investigating abuses by for-profit schools.
But the secretary’s eagerness to carry out this ruinous agenda has a silver lining: Many of her highest-profile initiatives have been reversed in court. The delay of the borrower defense rule was struck down in October 2018, and after further litigation the Education Department discharged $150 million in debt owed by students whose schools had closed. In October the following year, a federal judge held DeVos in contempt of court for violating an order to stop collecting on the student loans of defrauded Corinthian students. That followed a ruling last year finding that DeVos had illegally delayed a rule providing additional protections for students enrolled in online education.
We are confident DeVos’s dismantling of the gainful employment rule will share the same fate. But why are unions and advocates forced to fight to defend what few protections borrowers have already won? Isn’t that DeVos’s job?
Instead of stymying students, the administration should be working with us to create new and affordable educational opportunities for tomorrow’s teachers, nurses, veterans, government employees, first responders, and trade workers. In other words, Betsy DeVos should protect the people she’s sworn to serve, not the for-profit industry that all too often exploits them.
Aaron Ament is president of Student Defense.
Randi Weingarten is president of the American Federation of Teachers.
More opinion in Fortune:
—Elizabeth Warren: I’ll use the government to make tech work for people with disabilities
—Mayors: Why gutting minor league baseball would be disastrous for our cities
—Don’t feel guilty about paper packaging when you shop online
—These new rules might end tech’s reliance on Chinese investors
—WATCH: The double burdens that hold women back
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fortune--2020-02-06--Startup uses A.I. to identify molecules that could fight coronavirus

Insilico Medicine, a startup based in Rockville, Md., says it has used artificial intelligence to rapidly identify molecules that could form the basis of an effective treatment against the coronavirus at the heart of the current outbreak.
It took Insilico’s A.I.-based system four days to identify thousands of new molecules that could be turned into potential medicines against the virus. Insilico says it will synthesize and test 100 of the most promising candidates, while publishing the full library of new molecular structures it has generated for other researchers to possibly use.
The global health emergency over the spread of the deadly new coronavirus, known as 2019-nCoV, is proving to be a crucial real-life test case for a host of new biomedical technologies, as well as new organizations and funding bodies, that aim to dramatically reduce the time it takes to create new vaccines and drugs to combat emerging pandemics.
The idea is to find and test new treatments, putting them into human clinical trials in as little as a week or two, as opposed to the years it might otherwise take. U.S.-based biotechnology firm Gilead struck a deal earlier this week with a Beijing hospital to begin immediate human testing of an existing antiviral drug, remdesivir, in Wuhan, the heart of the coronavirus outbreak.
Insilico only decided to see if it could come up with interesting leads for a new 2019-nCoV treatment on Jan. 28, Alex Zhavoronkov, the company’s founder and chief executive officer, says. “When the virus outbreak started, we didn’t realize it was serious,” he says.
Once it decided to get involved, Zhavoronkov says, the company studied the long list of possible targets for a 2019-nCoV treatment that have been published by the Beijing-based Global Health Drug Discovery Institute. It decided to go after an enzyme, called 3C-like protease, that is critical for the coronavirus’s reproduction.
Zhavoronkov says Insilico picked this target, in part, because it is similar to other viral proteases whose structures were previously mapped and because it had access to a model of the 2019-nCoV 3C-like protease itself that had been developed by Zihe Rao, a well-known expert on virus protein structures at Shanghai Tech University.
Beginning on Jan. 31, Insilico began using 28 different machine learning models to design new small molecules that might bind to the 3C-like protease and inhibit its functioning.
Some of these techniques employ generative adversarial networks (or GANs), the same kind of machine learning that is best known for creating deepfakes. In this case, instead of producing highly-realistic, fake videos, the A.I. generates new molecules that will form the right structure to bind with the protease.
Insilico uses further machine learning techniques to filter the molecule designs these GANs produce: it favors those that score highly for “drug-like” properties and for being chemically active, while tossing out molecules that, due to their properties, are unlikely to ever work as drugs, such as metal compounds.
It also applies filters to make sure the overall set of molecules it is generating are unlike existing, known structures (Zhavoronkov says that no molecule its system creates shares more than 70% of its structure with a molecule already discovered), and are diverse from one another, so that the company has a good range of candidates to test.
Four days later, Insilico’s software had generated hundreds of thousands of new molecule designs, and filtered them down into thousands that met its criteria for possible drug candidates. “In four days we generated pretty good molecules,” Zhavoronkov says.
The company published a paper detailing its research on the free, non-peer reviewed research repository Research Gate. The company also published its research and the designs for all of its potentially-useful molecules on its own website. It is calling on researchers to examine and critique the molecules its system has generated in the hopes of accelerating the process of finding ones that could be useful for a coronavirus treatment.
The company is not the only one hoping that A.I. will help create new treatments for the Wuhan coronavirus. A team from Michigan State University last week also published a paper on using machine learning techniques to create new drug candidates for 2019-nCoV.
Insilico, which was founded in 2014 and has raised about $50 million in venture capital funding to date, uses a number of different A.I. techniques to invent new molecules that can form the basis of pharmaceuticals, determine if existing drugs can be repurposed for new uses, and to predict the outcome of clinical trials. The company has a partnerships with pharmaceutical giant GSK and China’s Jiangsu Chia Tai Fenghai Pharmaceutical to help those companies find molecules for possible new drugs.
This story has been updated to reflect new information from Insilico Medicine about where its research has been published and to include updated links to that research. Insilico originally said it published on the research repository Biorxiv. It published on Research Gate instead.
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fortune--2020-02-06--After a strong decade, LinkedIn CEO gracefully departs

This is the web version of Data Sheet, Fortune’s daily newsletter on the top tech news. To get it delivered daily to your in-box, sign up here.
In all my years of covering business people, I’ve never witnessed someone with a cleaner desk than LinkedIn CEO Jeff Weiner’s. I noted this in my 2014 profile of him, a piece that focused on how he translated meticulous career planning into an art form that proved surprisingly germane to his current gig. I visited him recently at his San Francisco office, which is probably easier to keep clean because he doesn’t use it every day, and he hasn’t grown messier with age.
Weiner gives careerism a good name. When he took a hiatus in 2008 from having a real job—leaving a flailing Yahoo and not having yet joined a fledgling LinkedIn—he parked at not one but two venture-capital firms, Accel and Greylock. He achieved such success leading LinkedIn that the company’s founder, Reid Hoffman, called him a “late-stage founder.” His timing was great again when he and Hoffman sold out to Microsoft in 2016 for $26 billion.
Weiner announced Monday that he’s stepping down in June as CEO and stepping up as executive chairman. Asked by LinkedIn journalist and former Fortune star Jessi Hempel why now, Weiner responded, as he often does, with a list of three reasons: LinkedIn’s brand has never been stronger, the future of the company is in good hands with his successor and longtime protégé Ryan Roslansky, and it’s a good time for him personally.
It is certainly a good time for LinkedIn. Annual revenues are $7.5 billion, up from just over $2 billion five years ago. Microsoft recently disclosed that LinkedIn is growing at a 26% clip, not bad for an aged Internet company and better than Microsoft overall. (The company announced other executive moves yesterday, by the way.)
As for Weiner, just as he has now shown a generation how to amiably advance in their careers, he’s about to show the not-quite-over-the-hill set how to age gracefully. He turns 50 in a couple of weeks, and his LinkedIn profile reflects a cornucopia of interests, from his own investment fund (“Next Play” is a favorite expression) to board seats to preaching the virtues of entrepreneurialism.
Adam Lashinsky
Twitter: @adamlashinsky
Email: adam.lashinsky@fortune.com
This edition of Data Sheet was curated by Aaron Pressman.
NEWSWORTHY
Gene editing. Sometimes consumers do care about privacy, it seems. Sales of DNA test kits have slumped on widespread privacy concerns and now Ancestry is cutting 100 people, or 6% of its workforce. Rival 23andMe made cuts last month.
Liquid assets. Maybe he's spending it all on better phone security? Jeff Bezos sold almost $2 billion worth of Amazon stock in two days. But don't worry, he still owns another $116 billion worth of it.
I'm not gonna write you a love song. In a strange twist in the Huawei saga, the Chinese telecom giant is suing Verizon, charging that the carrier violated 12 of its patents. The lawsuit could be a warning shot fired across the bow of efforts to cut Huawei's gear out of western 5G networks.
Tears of the unicorn. Online mattress retailer Casper Sleep priced shares for its IPO on Wednesday at $12, well below earlier hopes for as much as $19. That valued the never-profitable company at under $500 million, less than half its value in its last private fundraising.
Busy people, busy day. Speaking of Wall Street, Peloton had a merry Christmas but a bumpy New Year's. Sales for the holiday quarter jumped 77% to $466 million, but the company warned that its current quarter would miss analyst estimates. The company's shares, previously up 13% since it went public in September, dropped 8% in premarket trading on Thursday. At mobile chipmaker Qualcomm, sales increased 5% to $5.1 billion, beating analyst forecasts. But shares of Qualcomm, already up 83% over the past year, dropped 2% in premarket trading. And at Twitter, revenue for the fourth quarter rose 11% to $1 billion, better than expected. Twitter's stock price, down 2% over the past year, jumped 8% premarket.
FOOD FOR THOUGHT
The impact of social media and its cadre of influencers has probably had a greater impact on the cosmetics business than any other market. Victoria Turk spent time with Glossier founder and CEO Emily Weiss for a profile in Wired UK that illuminates just how a beauty blog became a billion-dollar makeup startup. Weiss explains how her online sales model is the "third wave" of beauty product sales.
First came the beauty counter, where individual brands would sell their own product through their own representatives – which she characterises as a “teacher-student” interaction. Then came shops like LVMH-owned multinational Sephora, which put hundreds of brands in one place, with the same salesperson selling them all. Now, she says, people want to put their trust in people like them, whether that’s reading online reviews before making a purchase, buying a lipstick on the recommendation of a YouTube influencer, or just messaging a friend to ask if they think something’s a good idea. “We're in an era where people want to choose who they listen to, right?” she says. “We're in an era where people are predominantly looking to peer-to-peer connection and community to make beauty purchasing decisions.”
IN CASE YOU MISSED IT
Trying to make sense of Tesla’s unbelievable run By Ben Carlson
AT&T just added 5G in 13 more cities. Here’s where By Aaron Pressman
Bitcoin is too slow. Is Lightning Labs poised to fix that? By Jeff John Roberts
Bakkt aims to turn your rewards points into a wallet you can spend anywhere By Shawn Tully
Introducing the #BlackLitChallenge By Ellen McGirt
Coronavirus, bird flu, swine fever: Why China is still so susceptible to disease outbreaks By Grady McGregor
BEFORE YOU GO
Stockholm's famous photography museum, Fotografiska, has been expanding into other cities. The latest outlet is in New York City's Flatiron neighborhood and looks worth a visit for the amazing bar, in addition to all the art on the wall. Phone cameras have made people more appreciative of great pictures, Yoram Roth, chairman of the New York City museum, tells Fortune. "Now that everybody has 10,000 terrible pictures on their phones, there is a higher appreciation for photography, both in terms of the skill set that's required and the unique creative eye."
Aaron Pressman
On Twitter: @ampressman
Email: aaron.pressman@fortune.com


fortune--2020-02-06--Citing terminal kidney failure, Bernie Madoff asks for prison release

Epic Ponzi schemer Bernard Madoff asked a federal judge Wednesday to grant him a “compassionate release” from his 150-year prison sentence, saying he has terminal kidney failure and less than 18 months to live.
Madoff’s attorney filed court papers saying the 81-year-old has end-stage kidney disease and other “chronic, serious medical conditions,” including hypertension and cardiovascular disease.
“There’s no cure for my type of disease,” Madoff told The Washington Post in a phone interview, expressing remorse for orchestrating the largest Ponzi scheme in history.
After spending more than a decade behind bars, Madoff said his dying wish is to salvage his relationships with his grandchildren.
“I’ve served 11 years already,” he said, “and, quite frankly, I’ve suffered through it.”
The U.S. Attorney’s Office in Manhattan declined to comment. Prosecutors are expected to file a motion in response to the request in the coming days.
Madoff pleaded guilty in 2009 to 11 federal counts in a fraudulent investment scheme involving billions of dollars, admitting he swindled thousands of clients over decades. The rich and famous were among his victims, as well as people of lesser means who had invested with him unknowingly through feeder funds.
The new court filings say Madoff was admitted in July to the palliative care unit of the federal prison in Butner, North Carolina.
“Madoff’s health has and will continue to deteriorate, and he will require more assistance physically and medically leading up to his death,” attorney Brandon Sample wrote.
A so-called compassionate release would allow Madoff to “receive end-of-life care in the community, which would be more efficient, timely, and less burdensome” on the U.S. Bureau of Prisons, Sample wrote.
The Bureau of Prisons denied Madoff’s request for release in December, according to court papers, saying it would “minimize the severity of his offense.” The agency lists Madoff’s release date as Nov. 14, 2139.
Madoff’s motion mentions Scotland’s controversial release of Abdelbaset al-Megrahi, who was convicted in 2001 of blowing up Pan Am Flight 103 over the Scottish town of Lockerbie in 1988, killing 270 people. Al-Megrahi was freed in 2009 on compassionate grounds and died of cancer in 2012, still protesting his innocence.
The motion also cites the more recent case of Bernard Ebbers, a 78-year-old executive sentenced to 25 years in prison in one of the largest corporate accounting scandals in U.S. history.
A federal judge in Manhattan ordered the former WorldCom chief released due to his deteriorating health, saying he posed no risk to society.


fortune--2020-02-06--Democrats want a paid family leave law—but not Trump’s

This is the web version of the Broadsheet, Fortune’s daily newsletter for and about the world’s most powerful women. To get it delivered daily to your in-box, sign up here.
Good morning, Broadsheet readers! Britain is up in arms about an MP’s wardrobe, Glossier tries to trademark its pink bubble wrap, and Trump endorsed paid family leave during the State of the Union—and got a muted response. Have a terrific Thursday.
– Paid leave limbo. Amid the protests and Nancy Pelosi’s paper-tearing, it was easy to miss another notable moment at Tuesday’s State of the Union speech: Donald Trump becoming the first Republican president to ever call for paid family leave during the annual address.
But the policy idea—long popular with Democrats and opposed by Republicans wary of additional government spending—got little applause from the left.
The New York Times‘ Claire Cain Miller explains the muted response to the bipartisan legislation: “It does not provide a new source of funding to pay parents during leave; instead, they borrow from their future selves. It covers only leaves for babies or newly adopted children under 6; it does not cover care for sick family members or to take care of personal medical problems. And it does not guarantee that a person’s job is protected when taking the leave.”
Advocates of the measure characterize it as a starting point; a compromise. For one, it gets around Republicans’ opposition to new taxes, making it politically-viable in a divided Congress. But critics say it doesn’t ease parents’ financial burden, it just reallocates it to another era of their child’s life. Democrats, for their part, are pushing the Family Act that’s modeled after a government-run paid leave scheme already enacted in eight states. It’s funded by an increased payroll tax on employees and employers.
Both parties are inclined to pass a federal paid leave bill considering the policy’s popularity with the vast majority of Americans (though they—like lawmakers—haven’t reached consensus on how to pay for it.)
It’s worth noting that while the U.S. spins its wheels on paid leave, Finland on Wednesday extended its already generous (by American standards) policy. New parents will each get nearly seven months of paid leave, up from four months for moms and two months for dads. Single parents will get both parents’ allotment: 14 months. The policy is designed to be gender-neutral and is aimed at improving Finland’s declining birth rate.
Finland’s women-led government, helmed by 34-year-old Prime Minister Sanna Marin, pursued the reform despite its additional $110 million cost. Said Social Affairs Minister Anna-Kaisa Pekonen: “The reform will support all kinds of families and ensure equal leaves for children regardless of the form of the family.”
Claire Zillman
claire.zillman@fortune.com
@clairezillman
Today’s Broadsheet was produced by Emma Hinchliffe.
ALSO IN THE HEADLINES
- The Collins/Murkowski effect. The Senate voted to acquit President Trump on both articles of impeachment yesterday. The two GOP women often eyed as potential swing votes—Sens. Susan Collins and Lisa Murkowski—both ended up voting not guilty. (Sen. Mitt Romney turned out to be the lone Republican defector.) This piece puts Collins's and Murkowski's decisions in the context of their votes during Brett Kavanaugh's confirmation hearing: Slate
- Bakkt to the future. Before she was appointed to her seat, Sen. Kelly Loeffler was the CEO of the fintech company Bakkt. Now that startup is launching a new product that will allow consumers to group together rewards and loyalty accounts and spend those points as dollars. Loeffler's husband Jeff Sprecher, CEO of Intercontinental Exchange which backs Bakkt, talks to Fortune about the big goals of his wife's former company. Fortune
- A personal decision. Charlotte Sullivan writes about her wrenching decision to have an abortion in part because of her and her husband's lack of access to paid family leave. Sullivan was employed at a liberal arts college but hadn't been working at the school long enough to qualify for its parental leave policy; her husband worked at a grocery store with no leave. She writes about the choice here: Guardian
- Producing parity. As the Oscars continue to snub female directors, female producers are actually having a pretty good year. Eight of nine best picture nominees have at least one female producer—the most since the Academy starting nominating 10 films in the category a decade ago. The producers whose movies are among this year's top picks include Kwak Sin Ae from Parasite, Amy Pascal from Little Women, Jane Rosenthal and Emma Tillinger Koskoff from The Irishman, and many more. LA Times
MOVERS AND SHAKERS: Engineering nonprofit DiscoverE named The Giving Collaborative's Kathy Renzetti executive director; she replaces Leslie Collins. Victoria Newton is the new editor of British tabloid The Sun.
IN CASE YOU MISSED IT
- Tax season. The island of Jersey, in the English Channel, until this week had a law on the books that prevented a married woman from filing taxes on her own or talking to tax preparers without her husband's permission. Lawmakers finally voted to scrap the rule, which had some other strange consequences too; in same-sex couples, the younger spouse was considered the "wife" and the older the "husband" to decide who was allowed to control the couple's taxes. Guardian
- Trademark pink. If you've ever bought anything from Glossier, you'll probably recognize its trademark pink bubble wrap pouches. Emily Weiss's brand is now trying to actually trademark those bags—but is running into a fight with the U.S. Patent and Trademark Office. The office says the packaging is "functional" rather than "aesthetic," which would disqualify it from a trademark. Glossier is trying to prove that the specific shade of pink makes this particular bubble wrap part of its brand. Fast Company
- Cold shoulder. Today's British Parliament drama involves MP Tracy Brabin, who wore an off-the-shoulder top inside of Parliament. She wore the outfit while commenting on the prime minister's recent treatment of journalists, and responded to criticism of its appropriateness with: "I'm not a slag, hungover, a tart, about to breastfeed, a slapper, drunk [or] just been banged over a wheelie bin. ... Who knew people could get so emotional over a shoulder[?]" Guardian
ON MY RADAR
Taylor Swift, Jessica Simpson, and the demands on women stars BuzzFeed
The Gates Foundation is pledging up to $100 million for the fight against coronavirus Fortune
Read an excerpt of Dylan Farrow’s debut novel, Hush Vanity Fair
Katy Perry named British Asian Trust ambassador, despite being neither British nor Asian CBS News
PARTING WORDS
"When you have somebody whose persona is bigger than the part, you got to make it right for me. Or why have me?"
-Fran Drescher on starring in the new NBC sitcom Indebted


fortune--2020-02-06--Looking to cut emissions, Europe eyes a ‘sustainability’ tax on meat

The war on meat has taken on renewed urgency in Europe under a controversial proposal to impose a steep “sustainability” tax on purchases of beef, pork and chicken.
The Amsterdam-based True Animal Protein Price (TAPP) Coalition, which brings together environmental, health and animal welfare groups, is lobbying the European Commission on a plan to wean Europeans off their favorite chicken cutlets, meatballs and pork chops.
The hope is to drive meat consumption down by two-thirds—essentially by driving prices at the butcher up by around 40% to reflect the environmental cost of meat production—in a novel new effort to combat climate change.
The livestock sector accounts for 14.5% of greenhouse gas emissions caused by human activities—mainly because of cows belching methane, but also through the impact of feed production, manure storage and transportation of meat, according to the U.N. Food and Agriculture Organization.
Each year, a single cow will belch about 220 pounds of methane, a potent contributor (28 times more so than carbon dioxide, for example) to warming the atmosphere, according to Frank Mitloehner, a researcher at the University of California Davis.
Jeroom Remmers, the TAPP Coalition’s director, told Fortune his proposal to raise meat prices would lower Europe’s carbon dioxide emissions and “show the world that Europe really wants to do something about climate change.”
TAPP, which presented its proposals at a breakfast event at the European Parliament in Brussels on Wednesday attended by several EU lawmakers, says the plan could also save cash-strapped national health care systems billions annually.
It argues that if the 450 million EU citizens were to eat less meat and replace it with more fruit and vegetables, their health would improve; Europeans eat roughly 50% more meat than is recommended in dietary health guidelines.
It would also reduce incentives for deforestation in countries such as Brazil, TAPP argues, where broad swathes of the Amazon rainforest have been cleared for cattle-ranching.
2050 emissions goal
The EU will need a trillion euros ($1.1 trillion) of public and private investment over the next decade to pay for its plan to cut net carbon dioxide emissions to zero by 2050. A meat tax could be one way to raise some of that cash, the group says.
Combating global warming is a top priority for Ursula Von der Leyen, the new German head of the EU’s executive Commission, who launched the “Green Deal” in December to chart a way forward to the 2050 goal.
The proposed meat tax was sharply criticised by the group representing farmers in Britain, the National Farmers’ Union, which called it a “regressive approach to dealing with environmental and health issues.”
Although Britain is, as of last week, no longer a member of the EU, British, American and other meat exporters could be affected if the proposed measure went into effect in Europe because the tax would also apply to meat imported into Europe.
“Beef production in Western Europe is currently 2.5 times more efficient in managing carbon emissions than the global average, and government should be positively encouraging this rather than penalising efficiency and productivity in farm businesses,” said NFU Vice President Stuart Roberts in comments emailed to Fortune.
“A tax on meat would also hit the poorest areas of society the hardest, and potentially subject those who already struggle with a poor diet to further challenges in accessing essential nutrients,” he said.
TAPP wants European countries to raise the price of beef, pork and chicken by 30-40% in stages over the next decade to bring it up to a “fair meat price” that it says reflects the livestock industry’s true cost to the planet, including air pollution and loss of biodiversity.
Billions in taxes raised
TAPP proposes that the 27 EU countries start by putting a minimum tax on meat of one-euro-per-kilogram (50 cents per pound) between 2023 and 2025.
By 2030, the proposed meat tax would rise to 4.77 euros ($5.25) per kg for beef or veal, 3.61 euros/kg for pork and 1.73 euros/kg for chicken.
This tax would reduce beef consumption in the EU by 67% by 2030. It would also take pork consumption down by 57% and chicken by 30%, TAPP estimates, based on a study it commissioned from research group CE Delft.
Such a move, it contends, would cut Europe’s carbon dioxide emissions by up to 120 million tons a year, nearly 3% of all EU greenhouse gas emissions.
The proposed meat tax would raise 32 billion euros ($35 billion) a year in revenue for EU governments. TAPP suggests the proceeds be spent on compensating low-income households that might struggle to pay the higher meat prices. They also suggest offering these groups subsidies for buying fruits and vegetables, and offering payments to farmers. A percentage of proceeds could also go towards the expansion of nature reserves and forests.
Foreign farmers exporting meat to the EU would not escape the tax under the proposal.
To prevent meat produced in countries without an environmental tax having a competitive advantage, TAPP proposes taxing this meat when it enters the EU, a policy which, if implemented, would likely cause friction with trading partners. The U.S. Commerce Secretary, Wilbur Ross, has already made it clear that the Trump Administration would retaliate against any EU carbon tax if it introduces new costs on American exporters.
“Close to zero”
Bas Eickhout, a Dutch Green member of the European Parliament, who chaired the event at the parliament in Brussels yesterday—on the menu was a meat-free breakfast of fruit, yoghurt, bread and jam—said he backed the idea of an extra charge on meat because “there are significant external costs to meat which are not reflected in the price.”
“Reducing meat consumption is an indispensable part of fighting climate change and biodiversity loss,” he said in comments emailed to Fortune.
He admitted that an EU-wide meat tax being approved any time soon were “close to zero, if not zero” because EU tax measures require the unanimous approval of member states. But he said he hoped to see individual EU countries move ahead soon along such lines. “We can’t wait for it to happen in the EU as a whole,” he said.
A spokeswoman for the European Commission, the body responsible for proposing EU-wide legislation, told Fortune on Thursday that the Commission “has no intention for the time being of proposing a harmonized meat tax at EU level.” However, the EU has no ability to block such levies on the individual member state level.
A source in the European People’s Party, the centre-right group that is the largest group in the European Parliament, said he was not aware of any talks in the parliament on a European-wide meat tax. As tax measures were under the control of the EU member states “these ideas wouldn’t fly for long,” the source predicted, adding: “We are also facing other environmental demands that may affect the income of farmers. An extra burden on top of those could bring many farms down.”
There has already been talk in some EU countries of introducing a meat tax. A politician from Germany’s Greens party last year suggested raising sales tax on meat to help tackle climate change. And in 2016, a Danish thinktank, the Danish Council on Ethics, recommended a similar tax on beef to lessen its climate impact.
In 2017, FAIRR (Farm Animal Investment Risk & Return), an investor forum that aims to raise awareness on the impact that factory farming and poor animal welfare can have on investment portfolios, said it was becoming “increasingly probable” that the Paris agreement on climate change would lead some governments to tax meat in the same way many now tax sugar, carbon and tobacco.
More must-read stories from Fortune:
—All of your questions on filing taxes in 2020, answered
—The health of the economy in nine charts
—Why investors are cooling on “direct-to-consumer” brands
—The coronavirus is already disrupting the global supply chain
—WATCH: Biggest investing opportunities and risks for 2020
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-02-06--What it took for Stockholm’s popular photography museum to make it in New York City

“Nowadays, you can’t just put art on the wall,” says Yoram Roth, chairman of the board and majority shareholder of New York City’s latest cultural destination, Fotografiska, a 45,000-square-foot museum dedicated to photography.
The physical manifestation of Roth’s statement is made apparent after a quick walk through the venue. In addition to the three floors devoted to the various exhibitions, the space is home to Verōnika—a Stephen Starr restaurant—two bars, an event hall, a café, and, found right upon entry, a gift shop.
Verōnika at Fotografiska Courtesy of Fotografiska
What Fotografiska is effectively trying to offer is an entire experience—one that allows for visitors to enter in the morning and, potentially, stay until late at night. (The museum is open either until 11 p.m. or midnight daily.)
Given the destination’s for-profit stance (Fotografiska New York is one of very few for-profit museums in America), questions arise: Is this a replicable concept? How successful can an enterprise this massive, this expensive, and this niche-oriented be in a world now dominated by the virtual? How many cities can prove to be ripe enough to accommodate such an endeavor and, in turn, how can Fotografiska appeal to the different behaviors and tastes of audiences across the globe?
The original Fotografiska in Stockholm. Courtesy of Fotografiska
The original Fotografiska, still in operation, opened in the Södermalm district of Stockholm in 2010. The board opted to set up a second location in Tallinn, Estonia, in June 2019. Just a few months later, in December, Fotografiska New York landed in a historic landmark building in the Flatiron District (the same building at the center of infamous scammer Anna Delvey’s much-chronicled art-world and financial fraud).
Delving into the city selection process, Roth runs through each one: Stockholm is where the majority of the board is from. Telliskivi, the downtown Tallinn area where the museum is located, was undergoing a cultural resurgence that lent itself to the space. And New York, according to Roth himself, “is the capital of all culture. If we’re going to get a chance to work with the best artists and if we’re going to be leaders in photography, it means we have to be in the leading cultural city.”
A rendering of the building exterior of Fotografiska in New York City. Courtesy of Fotografiska
Trying to celebrate, in Roth’s words, “the whole breadth of photography—everything from the big names that are pop culture to emerging artists,” is no easy task when everyone with a smartphone calls himself an artist. Whether because of naivete or honest hope, Roth disagrees: “Ten years ago, when the smartphone came out, everybody said, ‘Photography is irrelevant.’ I think it’s actually gone the other way. Now that everybody has 10,000 terrible pictures on their phones, there is a higher appreciation for [good] photography, both in terms of the skill set that’s required and the unique creative eye.”
He goes on: “Because we’re confronted with thousands of images a day, we’ve become inundated and subsequently immune to photography. But when you stand in front of a high-quality print, you have a different experience. It returns to being art.”
That creativity is reflected in the selection of exhibits. A committee consisting of the museum’s founders (brothers Jan and Per Broman), a board member, and the director of exhibitions from each location picks the touring shows, which amount to about two-thirds of the 20 exhibits mounted at each branch per year. The last third includes exhibits meant for, and appealing to, the local culture set.
“We know New York is a very different city than Stockholm and Tallinn,” explains Amanda Hajjar, the exhibitions director in New York. “We will have exhibitions [here] that speak specifically to our [local audience],” she says, bringing up a specific show now on display at the location: Anastasia Taylor-Lind’s “Other People’s Children,” which delves into the childcare crisis that has taken over the city.
Photographs by Ellen von Unwerth at the “30 Years of Photographing Women” exhibition. Courtesy of Fotografiska
Hajjar mentions medium and quality of work as top priorities when selecting which shows to set up. “We look at genre and practice, and we always want a diversity of artwork in the building, such as fine art conceptual work, fashion photography, photojournalism, and mixed media.”
When asked to compare the various museums, Roth brings up visitors’ age. “The one thing we see in common across all these different [locations] is that we tend to target a really young audience,” he says. “We tend to be somewhere between the 28- and 35-year-olds. They are the ones who are culturally curious; they are the ones who are spending the money that they are earning on travel and on experiences and on dinners; and that makes it sort of a go-to place.”
But the critical question: Are people around the world willing to pay for this—undeniably expensive—experience? (General admission in New York costs $28, which is $28 more than the free entry that plenty of local nonprofit cultural destinations offer.) According to Roth, yes, given the for-now incessant hunger for things to do and to post about online: “People nowadays seek experiences, and then they seek to share that experience.” And it seems that Fotografiska is here to provide and profit from that human tendency.
More must-read stories from Fortune:
—The most anticipated books of 2020, according to Goodreads
—Cabo’s newest luxury resort favors tranquility over nightlife
—The magic of the wedding industry’s most exclusive conference
—High-tech fitness offerings are the newest luxury hotel must-have
—The best travel destinations for every season of 2020
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.


fortune--2020-02-07--Angry over U.K. refusal to ban Huawei from its 5G networks, Trump berates PM Johnson in heated phone

Angry over U.K. refusal to ban Huawei from its 5G networks, Trump berates PM Johnson in heated phone chat

All eyes are on the U.S. jobs report—plus these other factors moving the markets

Donald Trump berated Boris Johnson during a heated phone call, after the British prime minister rejected the U.S. president’s request to ban Huawei Technologies Co. from its next-generation broadband networks.
Trump had spent months trying to persuade the British government not to allow the Chinese company to take a role in the U.K.’s 5G networks and was unhappy that Johnson defied his demands.
The president’s angry reaction, first reported in the Financial Times and confirmed by a person familiar with the matter, is a blow to Johnson as he seeks to pin down a post-Brexit trade deal with the U.S. following the U.K.‘s split from the European Union on Jan. 31.
Donald Trump ‘apoplectic’ in call with Boris Johnson over Huawei https://t.co/6KFqeHUsrw — Financial Times (@FT) February 6, 2020
Johnson was planning to visit the U.S. but no date has been set, and there are reports in British newspapers that this trip is now delayed.
Trump wants allies to ban Huawei on security grounds, amid concerns that the Chinese company is vulnerable to state spies. Huawei strongly denies that it poses a security risk.
More must-read stories from Fortune:
—Stock scammers are using coronavirus to dupe investors, SEC warns
—Asia worries about big events like the Olympics amid coronavirus spread
—Why China is still so susceptible to disease outbreaks
—Looking to cut emissions, Europe eyes a “sustainability” tax on meat
—Fortune Explains: Tariffs and trade wars
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-02-07--No time for optimism

No time for optimism

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
I don’t mean to spoil a good party, but it’s beyond me why the U.S. stock market hit record highs yesterday. Traders seem to be whistling right past the coronavirus graveyard. What are they thinking? China has basically shut down for the month of February, and I doubt March will be much better. The official death count continues to rise—it’s now at 636—and the infection count is at 31,000. The New York Times quoted one Chinese official as saying the outbreak has led to “wartime conditions” in the country. The economic fallout from closing down one of the world’s two largest economies shouldn’t be underestimated.
A couple of pieces in Fortune on the topic this morning. One is this story by Grady McGregor, looking at the wet markets that seem to be the source of China’s exotic infectious disease problem. Another is this story by Jeremy Kahn on how AI could speed up efforts to find a treatment for the disease.
And then there’s this: the Chinese doctor who raised an early alarm on social media about the disease—and who said he was subsequently reprimanded by police for ‘rumor mongering’—died early this morning of the disease. He was 34.
You can follow Fortune’s coverage of the spreading virus here.
And if you are wondering whether tech-powered health care will make these sorts of outbreaks easier to fight in the future, you might consider joining us at Fortune Brainstorm Health, being held April 21-22 in Marina del Rey, Calif.—registration here. This is Fortune editor-in-chief Clifton Leaf’s baby, and he has put together a spectacular program that includes the chief executives of Amgen, Ancestry, Baxter International, Bristol-Myers Squibb, Cardinal Health, Centene, Cisco, GE Healthcare, IBM Watson Health, Google Health, among others.
I’ll be there. Let me know if you want to join.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Credit Suisse
Tidjane Thiam has quit as CEO of Credit Suisse, after former COO Pierre-Olivier Bouée was implicated in two spying operations—one involving a former wealth management chief who had left for rival UBS, and one involving Credit Suisse's former HR chief. Thiam, who is being replaced next week by Thomas Gottstein: "I had no knowledge of the observation of two former colleagues. It undoubtedly disturbed Credit Suisse and caused anxiety and hurt. I regret that this happened and it should never have taken place." CNN
Cannabis woes
One of the darlings of the nascent Canadian marijuana sector is in trouble. Aurora Cannabis CEO Terry Booth is stepping down and the company is to cut nearly a fifth of its jobs—along with the valuation of some of its assets in South America and Europe. CFO Glen Ibbott: "We believe that the long-term opportunity for Aurora remains very compelling, despite a slower-than-anticipated rate of industry growth in the near-term." MarketWatch
SoftBank stake
Activist investor Elliott Management has reportedly built up a stake of over $2.5 billion in the tech conglomerate and is pushing for improvements to its corporate governance—including better management of SoftBank's $100 billion Vision Fund. According to the Journal, discussions between Elliott and SoftBank's management have thus far been cooperative. WSJ
Data flows
The U.K.'s enthusiasm for surveillance and its intelligence-sharing with the U.S. could pose a major problem after this year. The European Commission has to decide if the U.K.'s privacy rules are adequate, in order to allow the free flow of personal data from the bloc—and at least one EU regulator sees big problems ahead. Fortune
AROUND THE WATER COOLER
Trump vs Johnson
U.S. President Donald Trump reportedly tore into British Prime Minister Boris Johnson over the U.K.'s decision not to ban Huawei from its 5G networks. Words such as "apoplectic" and "livid" are being used to describe Trump's tone on a phone call with his counterpart, and British officials were apparently surprised at his tone. Good luck with that trade deal! Financial Times
Tesla investment
Is Tesla a good investment at this point? As Fortune's Shawn Tully writes, the firm's lofty market cap "dictates the height of all future bars it must surmount to deliver a decent return… Tesla will need an Olympian pole vault of a jump, the kind usually achieved only by the best of tech, to reach those heights." Fortune
Starlink spinoff
Speaking of Elon Musk firms, SpaceX is reportedly planning to spin off its space Internet business, Starlink—and may even take it public. The Starlink constellation already includes almost 300 satellites, and the plan is to have 12,000 in the sky by mid-year, around which point SpaceX can start offering connectivity. Bloomberg
Thai baht
Last year, the Thai baht was Asia's strongest currency. Now it's one of the worst-performing in the region, thanks to the coronavirus outbreak. Economists say the Thai economy is over-reliant on Chinese tourism and exports, both of which have been hit by the outbreak. CNBC
This edition of CEO Daily was edited by David Meyer.


fortune--2020-02-07--All eyes are on the U.S. jobs report—plus these other factors moving the markets

Angry over U.K. refusal to ban Huawei from its 5G networks , Trump berates PM Johnson in heated phone chat

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Happy Friday, Bull Sheeters. Let’s go right to the numbers that matter on this final day of the trading week.
Markets update
The markets seem to be losing momentum today. The major indices in Asia and Europe are mixed, as I type, and the U.S. futures are down a tick, too. Maybe it’s just a breather as Thursday was a big day everywhere. The Stoxx 600 in Europe, plus the S&P 500, Nasdaq and Dow Jones Industrial Average all closed in record territory.
Yet again today the markets’ main focus is on earnings and economic data, less so on the coronavirus outbreak (death toll now at 636, infections above 31,000) which also involves this harrowing situation in Japan of a quarantine cruise ship.
Numbers that matter
It’s Friday. I’m going to try something different—a look at a few of the big figures that have moved markets this week, with an eye on what to watch in the days ahead. That means no chart today. Here we go.
158,000. All eyes will be on the U.S. jobs report today, due out before the U.S. opening bell. Economists forecast an addition of 158,000 nonfarm payrolls last month. As always, the strength of the employment situation will go a long way towards determining Fed policy this year. The real drama in today’s report though will almost certainly come from the revised numbers. The Bureau of Labor Statistics has to clean up its math from 2018-19. The result? A jobs-drop of a half-million is predicted.
17%. Here’s our mystery stock for the week. Which Nasdaq-listed company came out of the gates flying this week, climbing a combined 32% on Monday and Tuesday…only to fall 17% on Wednesday…before—catch your breath—creeping up yesterday 2%? Answer: right, it’s Tesla. It’s up 17% so far this week. My colleague Shawn Tully is unconvinced this incredible run is sustainable. A reminder: shorting this stock has been a bad idea so far.
620. After a big weeklong rally, the Dow Jones Industrial Average closed yesterday at 29,379.77. That means we’re a mere 620.23 points away from Dow 30,000.
You may recall the very first Bull Sheet newsletter in which I asked for your predictions on when we’d hit Dow 30,000. Many of you calculated we’d hit that landmark, no problem, by end of January. Not quite, but I admire your bullish calls!
Since we have many new readers (Bull Sheet, amazingly has nearly doubled in subscribers since our mid-January launch) I want to open the floor once again to your predictions. Who here has a bet on when we’ll hit 30,000? Fire away! Message me. I’ll do a nice little shout-out to whomever comes closest.
***
Have a nice weekend. We’ll see you next week!
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
Today's reads
Thiam out. In a shocker, Credit Suisse CEO Tidjane Thiam is stepping down. He's been dogged by a spying scandal that's rocked the Swiss lender since September when it emerged the bank was tailing a former star banker, Iqbal Khan. An investigation found the surveillance was ordered by Credit Suisse’s chief operating officer, without Thiam’s knowledge. In a bank statement issued this morning, Thiam repeated his innocence, but added: “It undoubtedly disturbed Credit Suisse and caused anxiety and hurt.” Thiam will stay on for one more week, presiding over the company's Q4 results. Expect fireworks.
SoftBank targeted. Activist investor Elliott Management Corp. has quietly built up a more than $2.5 billion (about 3%) stake in Japan’s SoftBank Group and is pushing the sprawling technology giant to make big changes, The Wall Street Journal reported. Elliott is said to be calling for more transparency and better management of investment decisions at SoftBank’s $100 billion Vision Fund. Elliott, founded by billionaire Paul Singer, has pushed for SoftBank to buy back $10 billion to $20 billion in shares to help close a yawning gap between the company’s market value and the value of stakes in companies in which it has invested. SoftBank shares were up 7% on the news.
Boeing effect? Treasury Secretary Steven Mnuchin has claimed that U.S. economic growth would have achieved the Trump administration’s 3% target (spoiler: not a chance) if it had not been for Boeing’s 737 Max woes and the coronavirus crisis. Fortune’s Erik Sherman investigates, and finds the claim doesn't quite hold water.
Market candy
Desert downer. It's not quite as stomach-churning as Tesla, but consider the ride Saudi Aramco shareholders have been on. Since going public in early December, the Saudi oil giant briefly hit a record $2 trillion valuation. Shares have come crashing back since, hurt by a perfect storm of escalating U.S.-Iran tensions and now coronavirus. And now the Financial Times’ Lex column is warning of a more existential threat to Saudi Aramco and other oil majors: a combined $900 billion in "stranded assets," essentially energy deposits it will never be able to tap. The upside: Aramco shares are 4% above the IPO price, but there are few indications it'll budge beyond that any time soon.


fortune--2020-02-07--Credit Suisse CEO Thiam ousted after power struggle with chairman

Tidjane Thiam was ousted as chief executive officer of Credit Suisse Group AG, losing a boardroom showdown with the chairman in the wake of a tabloid scandal that unnerved the Swiss establishment.
The 13 directors rebuffed appeals from major shareholders in the U.S. and U.K. to back Thiam and instead closed ranks behind Chairman Urs Rohner, giving him their “unanimous” support, according to a statement Friday. They picked Thomas Gottstein, a 20-year Credit Suisse veteran, as the bank’s first Swiss-born CEO in almost two decades.
Credit Suisse shares dropped as much as 5.1%, reflecting doubts about strategy under the new boss.
The drama represents the culmination of a conflict between the CEO and Rohner that escalated after it emerged that top management hired detectives to follow former executive Iqbal Khan. While Thiam, 57, was cleared in an internal probe and a close lieutenant was blamed, the bank has struggled to move beyond the scandal. Swiss regulators have launched their own inquiry, raising questions about the culture at the top of the firm.
Top shareholders including Harris Associates, Silchester International Investors and Eminence Capital had warned the board of directors before Thursday’s meeting that if there was a choice to be made, Rohner should be the one to go. They urged the chairman to back Thiam or step down. Rohner’s backers saw the high-profile demands as an unseemly gambit, according to a person familiar with the matter. Meanwhile, the chairman lined up support behind the scenes from other shareholders for the board, including Qatar’s sovereign wealth fund, the person said.
“Tidjane has made an enormous contribution to Credit Suisse since he joined us in 2015,” Rohner said in the statement. “It is to his credit that Credit Suisse is standing on a very solid foundation and has returned successfully to profit.”
For Thiam, who was born in Ivory Coast and previously held top roles at Aviva Plc and Prudential Plc before Rohner hired him in 2015, the departure blemishes a record that includes a pivot away from volatile trading and toward the more stable business of catering to affluent clients. While the shares lost about half of their value during his tenure, he was applauded for stabilizing the franchise.
Thiam’s Troubles
The troubles started in September when Swiss media reported Khan, who had left for crosstown rival UBS Group AG, confronted his pursuers in downtown Zurich. Embarrassing disclosures followed, including accounts of the personal feud between Thiam and Khan and the suicide of a contractor, rattling business circles in a city that normally enjoys a reputation for quiet professionalism.
An internal probe concluded Thiam didn’t know about the spying, and that Chief Operating Officer Pierre-Olivier Bouee was responsible. Bouee was fired late last year. It later came out that human resources chief Peter Goerke was also followed, which the bank also blamed on Bouee.
“I had no knowledge of the observation of two former colleagues,” Thiam said in the Friday statement. “It undoubtedly disturbed Credit Suisse and caused anxiety and hurt. I regret that this happened and it should never have taken place.”
A third spying case, involving a former Credit Suisse employee in the U.S., was also probed and rejected by the bank. However, lawyers for Credit Suisse still looked into the matter as recently as last week, Bloomberg reported on Tuesday.
Gottstein is CEO of Credit Suisse Switzerland and has been in the banking industry for 30 years, including more than 20 at Credit Suisse. His experience includes 13 years in investment banking in London, as well as in private banking.
Thiam’s resignation after prominent overseas shareholders had backed him marks a victory for the Swiss establishment. A former lawyer who has been chairman of Credit Suisse for a decade, Rohner’s leadership “during this turbulent time” was praised by lead independent director Severin Schwan, CEO of Swiss pharmaceuticals company Roche Holding AG.
The spying scandal underscores the risk of reputational damage to companies if their top executives are seen as running afoul of ethical standards. Barclays Plc CEO Jes Staley survived a yearlong regulatory probe into his attempts to unmask a whistle-blower, escaping with a fine in 2018. The British lender reprimanded Staley after discovering he had twice tried to identify a whistle-blower who had raised concerns about his recruitment of a former colleague.
It’s unclear what impact Thiam’s surprise departure will have on the investigation by Swiss banking regulator Finma into the scandal. Finma said in December that it had appointed an independent auditor to investigate the case and that such probes typically take several months. No one at the regulator was immediately available on Friday morning to comment on the news.
Turnaround Plan
Thiam took over at Credit Suisse in mid-2015 and quickly outlined a plan to slash costs, boost profitability and increase his firm’s financial strength. A former politician and insurance executive, he had no direct experience in investment banking, a business that became one of his biggest headaches. He was blindsided by losses at the trading unit in 2016, pushing him to accelerate cost cuts.
While the cost reductions were successful, the bank initially saw revenue fall under his watch, and the CEO had to tap investors for fresh capital. The measures started to pay off last year as earnings bucked the gloom facing other European banks and wealthy clients added new money. But by December, Thiam cut a profitability target and warned of a loss at the investment banking and capital markets business.
Educated in France at the elite Ecole Polytechnique, the francophone Thiam has spent a lifetime defying the odds. By his mid-20s, he was working in Paris for McKinsey & Co., the high temple of consulting. By his mid-30s, he was back in Ivory Coast — and under house arrest following a military coup. By his late-40s, he was in Britain, as the first black executive of a FTSE-100 company.
More must-read stories from Fortune:
—Stock scammers are using coronavirus to dupe investors, SEC warns
—Asia worries about big events like the Olympics amid coronavirus spread
—Why China is still so susceptible to disease outbreaks
—Looking to cut emissions, Europe eyes a “sustainability” tax on meat
—Fortune Explains: Tariffs and trade wars
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-02-07--Post-Brexit U.K.’s surveillance practices could spell big problems for business

In the surveillance world, the United Kingdom is kind of a big deal.
A key member of the “Five Eyes” spy club that also includes the U.S., Canada, Australia and New Zealand, the U.K.’s importance stems partly from its history and partly from geography—it has long been a major hub for undersea cables, giving it a good vantage point for monitoring the world’s communications. Across the Channel, European courts have also repeatedly ruled that British surveillance laws, governing the monitoring of the country’s own citizens, breach privacy rights.
Thanks to Brexit, this situation could soon become a major problem for British businesses that handle the data of European customers and staff—in the worst-case scenario, they may be unable to legally continue doing so after this year.
Different rules
That’s because of a peculiarity in the way the EU treats the surveillance behavior of its member states. It’s not like other European countries don’t also spy on their citizens and share intelligence with the U.S.—National Security Agency whistleblower Edward Snowden testified in 2014 that the NSA had a network of deals throughout the bloc. But these activities fall under the category of national security, which is one of the few areas where the EU cannot dictate policy to its members.
Step outside the circle, however, and the situation changes drastically.
Under EU law, the personal data of Europeans cannot be freely sent to a country outside the bloc unless the European Commission has formally decided the country has privacy laws that will adequately protect those people’s rights. The Commission has only granted this “adequacy” status to a dozen countries, including Argentina, Canada, Israel, Japan, and New Zealand—the U.S. doesn’t have it, which is why companies there have to sign up to a special register if they want to easily handle Europeans’ data.
During the Brexit transition period that runs through this year, the U.K. will effectively still be treated like an EU member state—there cannot legally be any obstruction to the flow of data between it and the remaining EU countries. But when the transition period runs out, the U.K. will need to have an adequacy decision in place so that its companies can keep processing customer and employee personal data that originates from the EU.
On Monday, British Prime Minister Boris Johnson told members of Parliament that an adequacy decision would be “self-evidently in the interest of both sides” and the Commission’s decision-making process should be “technical and confirmatory of the reality that the U.K. will be operating exactly the same regulatory frameworks as the EU at the point of exit.”
It is indeed true that the U.K.’s data protection rules are currently aligned with the EU’s tough General Data Protection Regulation (GDPR), because they are just a national implementation of that law. But the adequacy decision-making process won’t be quite so simple, says Johannes Caspar, the head of the data protection authority in Hamburg, Germany.
“The crucial point will be the U.K.’s surveillance activities and their participation in the ‘Five Eyes’ network,” Caspar—who along with other EU privacy regulators will advise the Commission on its decision—tells Fortune. “If the U.K. continues its large-scaled surveillance practice, I have serious doubts whether the Commission can adopt an adequacy decision.”
Hurdles to jump
In 2016, the EU’s highest court—the Court of Justice of the European Union —ruled that the U.K.’s mass surveillance practices were illegal under EU law. Specifically, people’s rights to privacy and data protection were being violated by the general and indiscriminate retention of their electronic communications data. Surveillance is allowed, the court said, but only when fighting serious crime; the U.K. was doing it to everyone.
That ruling involved a law that was superseded by the U.K.’s Investigatory Powers Act. The newer law, popularly known as the “Snooper’s Charter,” is also now being challenged at the CJEU over its mass-surveillance measures. The court has bundled the case with French and Belgian challenges to those countries’ surveillance laws, as the issues are similar.
The court’s top advisor, advocate-general Manuel Campos Sánchez-Bordona, recommended last month that the CJEU should again rule that general, indiscriminate data retention is not permissible. The court does not have to follow his recommendation, but it usually does, so the U.K. could be about to find itself in trouble again.
The EU’s privacy regulators will be looking out for the ruling in this case as they decide on the U.K. adequacy question, says Wojciech Wiewiórowski, the European data protection supervisor, who will also be advising the Commission on its decision.
Of course, the court’s jurisdiction over the U.K. will expire at the end of the Brexit transition period, when the U.K. fully disentangles itself from the EU club. But breaking EU privacy law is not a great look when trying to get a data-protection adequacy agreement.
“An adequacy assessment of a third country means looking at the reality of what the third country is doing,” says Graham Smith, a prominent Internet lawyer at Bird & Bird’s London office.
Apart from the U.K.’s mass surveillance practices and its sharing of intelligence data with the U.S. and other Five Eyes members, another potential hurdle lies in an exemption the country adopted when implementing the EU’s GDPR law in its own Data Protection Act of 2018.
The exemption is for immigration data—essentially, foreigners in the U.K. cannot exercise their GDPR-guaranteed rights, such as the ability to request copies of their personal data or ask for it to be deleted, if the data could be used for “effective immigration control.” This isn’t just potentially in conflict with EU law; it’s also a political problem for the U.K., given that it would apply to many constituents of the EU lawmakers that get to weigh in on the adequacy decision.
“Even if the Commission doesn’t find it fully problematic at first, they may raise issues later,” says Javier Ruiz, policy director at the Open Rights Group, a London-based digital rights organization that campaigned unsuccessfully against the exemption.
All politics
In reality, the political pressure on the Commission to grant the U.K. an adequacy decision will be enormous—without it, companies would need to set up complex and expensive legal mechanisms to keep sending data from the EU to the U.K.
“There will be a lot of pressure not to disrupt economic relations,” says Ruiz, who also pointed out that other EU countries may be less than keen on having a big debate about mass surveillance, given their own use of such tactics.
Even if the Commission cannot bring itself to grant the U.K. a full adequacy decision, it could opt instead for a deal like that between the U.S. and the EU.
The U.S. does not have “adequate” privacy laws, largely because of the powers of its intelligence services. But because its tech companies are so important, in 2000 the two sides struck a pact called Safe Harbor. This set up a register that U.S. firms could sign to say that, even if their country didn’t stick to EU-grade privacy rules, they would.
Then came Snowden, whose 2013 revelations prompted Austrian privacy activist Max Schrems to challenge Safe Harbor at the CJEU—Schrems said the deal did not protect his Facebook data from surveillance in the U.S. Two years later, the court invalidated the agreement with immediate effect, sending the Obama administration and the European Commission scrambling to come up with a new and improved version, which is called Privacy Shield.
As Caspar points out, this case was crucial to the current question of U.K. adequacy, because the court highlighted the relevance of intelligence services’ data access when judging adequacy. “The court noticed serious problems where [U.S.] authorities were able to access and process data beyond what was strictly necessary and proportionate to the protection of national security,” he says.
“Ultimately, if the choice comes down to changing the U.K.’s surveillance laws to accommodate the EU, or not getting an adequacy decision, the [U.K.] government would be faced with a difficult choice,” says Smith. “But it is perhaps more likely that some kind of pragmatic solution would be found, as it was with the U.S. Privacy Shield.”
But the CJEU is this year set to issue judgements in two cases that challenge the basis of Privacy Shield—that Europeans’ data can be safe on American soil. The shaky agreement’s second iteration may meet the fate of the first, as might the aforementioned complex legal mechanisms (so-called “model clauses” and “binding contractual rules”) that are companies’ fallback if Privacy Shield falls.
And therein may lie an indication of the U.K.’s future difficulty—privacy activists in the mold of Max Schrems, who are willing to challenge deals that they say don’t adequately protect their rights.
“Even if the European Commission agrees to give adequacy, it’s very likely that the decision will be challenged in courts in the same way Safe Harbor and Privacy Shield have been,” says Ruiz. “That is where the trouble starts, as courts are not allowed to make political calculations to the same degree as the Commission.”
More must-read stories from Fortune:
—Stock scammers are using coronavirus to dupe investors, SEC warns
—Asia worries about big events like the Olympics amid coronavirus spread
—Why China is still so susceptible to disease outbreaks
—Looking to cut emissions, Europe eyes a “sustainability” tax on meat
—Fortune Explains: Tariffs and trade wars
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.