fortune--2020-03-31--Your next potato chip may be flavored by artificial intelligence

Goldman Sachs says its gloomy prediction of 24 % U.S. GDP contraction in Q2 wasn ’ t nearly grim enough

Poutine, S’mores, and Atlantic Lobster are among the more than 30 flavors visitors to Covered Bridge’s potato chip factory can sprinkle over a fresh bag of crisps. The seasoning session has been the cherry-on-top finale to the tour of the plant’s farmlike facilities, located in Hartland, New Brunswick, but it has also become something of a flavor feedback lab.
“We initially developed a lobster flavor as a bit of a gimmick,” says Brook Dickinson, the company’s national sales director. “But it did so well that first summer that we realized we had something.” Now the Maritime specialty is one of the brand’s summer staples.
In the potato chip business, plain and salted spuds tend to sell best, but new flavors can add zest to sales figures. In 2016, Covered Bridge teamed up with regional pizza chain Greco to create limited-edition donair chips, inspired by the East Coast’s famous sweet and garlicky spin on the Turkish doner. The special batch raked in three years’ worth of sales in a few months.
“Innovation is absolutely key for a percentage of the market,” Dickinson says. “We have to introduce something new every year.” Ideas for the lineup, which has included Sloppy Joe’s, Montreal Steak Spice, and Loaded Hot Dog, come from market trends, trade shows, customers, and social media. Storm Chips, the company’s top-selling winter mix of four flavors, was inspired by a hashtag.
Covered Bridge’s Storm Chips flavor combination. Courtesy of Covered Bridge
For leading potato chip maker Frito-Lay, to be innovative at scale requires artificial intelligence. The company’s culinary experts and scientists make decisions informed by a custom-built engine that monitors social media, retail sales, restaurant trends, and news and search analysis. It’s helped churn up flavors like Red Curry Coconut and Champagne Vinaigrette & Shallot for Red Rock Deli, its artisanal Australian chip brand, and the newly released Lay’s Fried Green Tomato.
With the data it collects, the engine can map flavor life cycles and predict staying power based on the depth and quality of conversations. This also lowers the risk of a flavor flop—and the potato chip industry has seen more than a few. The Raspberry Bellini blend put out by British crisp maker Tyrrells did not go down well with consumers when it was introduced two years ago. Jim Beam Bourbon chips were met with disapproval more than 10 years ago, even though they didn’t contain alcohol, but have since made a comeback with Burts. Timing, as it turns out, is everything: According to Frito-Lay, booze infusions are on trend this year.
Red Rock Deli’s Red Curry Coconut chips were popular enough that they were released in the United States. Courtesy of PepsiCo
Artificial intelligence has also helped Frito-Lay trim 10% off its development process. As the database grows, R&D timelines could be cut in half, says Michael Lindsey, chief transformation and strategy officer for Frito-Lay North America. Other snack companies, like Conagra Brands Inc. and McCormick, have adopted similar technology. By 2021, McCormick and its partner IBM expect its database of recipe mixes, extracts, condiments, and more to include more than 1 billion data points and 500,000 formulations.
Lindsey presented on Frito-Lay’s developments in machine learning at MIT Technology Review’s EmTech Digital conference, which was held virtually last week. One of the most significant advancements, he says, has been the technology’s ability to uncover micromarkets. It’s why moviegoers in Frisco, Texas, can now find curry-spiced Kurkure Cheetos—once available only in India— alongside Doritos at concession stands. Micromarket analysis revealed that the city was home to a large population of first- and second-generation Indian consumers, many of whom have a penchant for the snack.
“On a broad level, if you were thinking about what would sell well in Frisco, Texas, you probably wouldn’t land on curry-flavor Cheetos,” says Lindsey. “But when you start diving into the demographics of who lives there and what their preferences are, it lets us bring that variety to life at a micromarket level.” Age, ethnicity, gender, and income profiles are all attributes that can be correlated to snacking preferences, allowing Frito-Lay to target distribution of its 1,200 products to more than 200 North American centers right down to the zip code.
Artificial intelligence also influenced the textural twists in Lay’s latest flavors, including Poppable Sea Salt & Vinegar and Kettle Cooked Flamin’ Hot. Courtesy of Frito-Lay North America
The same logic was used to transform Turbos Flamas from one of the smallest to fastest-growing SKUs. After noticing sales of the tangy, hot lime corn chips spiked in areas with first-generation Mexican-American populations, bags were strategically placed in communities with corresponding demographics. The fiery-purple sacks flew off the shelves, increasing 39% between 2018 and 2019—four times Frito-Lay’s average growth rate.
Strategic distribution doesn’t mean there will be fewer flavors vying for shelf space anytime soon. Frito-Lay peppered its line with more than 50 products last year and is on track to do the same in 2020, though the spread of COVID-19 could slow things down. “Future innovation in salty snacks is vital as brands face intensifying competition for the snacking dollar,” says Lu Ann Williams, director of insights and innovation at global research company Innova Market Insights.
What flavors will land on shelves this year? “Spicy hot is the No. 1 trend, and I think it will stay the No. 1 trend for a while,” says Lindsey. Why? Because there’s almost infinite variety in the genre, from Turbos Flamas to cheddar jalapeño. Williams’s research confirms the trend, adding that pimento chili will stand out, and fruit and citrus will balance the hot and zippy.
Meanwhile, in Canada, Storm Chips will eventually make way for Covered Bridge’s take on a Canadian classic: All Dressed. “We’re hoping we do the Canadian market proud,” Dickinson says.
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fortune--2020-03-31--Huawei blames U.S. ban for $12 billion in lost revenue last year

Last year was “a very challenging year” for Huawei Technologies, the Chinese telecom manufacturer’s rotating chairman Eric Xu said during a press conference Tuesday, announcing the group’s 2019 results. Revenue rose 19.1% to $121 billion, and profits increased 5.6% to $8.84 billion—a significant slowdown from 25% profit growth the year before.
Action by the U.S., which last year squeezed Huawei’s supply lines by placing the smartphone maker and scores of its affiliates on the dreaded entities list, cost the smartphone maker $12 billion in projected revenue, Xu said. With the coronavirus pandemic continuing to threaten Huawei’s supply lines, Xu warns the year ahead could be even tougher than the year before.
Zooming in
“The coronavirus outbreak is catching everyone’s attention,” Xu said, addressing a camera in a largely empty auditorium. Journalists—both domestic and international—joined the meeting via Zoom.
Xu says Huawei’s production facilities in China have all been “fully restored” as the coronavirus outbreak is “under control in China.” However, with the pandemic still raging in the U.S., there’s a chance that Huawei’s semiconductor supply lines will be disrupted.
“We are being briefed on a daily basis on how our suppliers are performing,” Xu says. “If some individual suppliers cannot continue supplying to us, it will cause long-term challenges and it will provide uncertainty as to whether we can continue to supply to the market. Of course this is something we don’t want to see.”
The Trump administration recently issued a fifth reprieve on Huawei’s addition to the entities list—which would require U.S. companies to seek permission before trading with the company—but continues to threaten its complete implementation. The U.S. Commerce Department placed Huawei on its entity list in May last year because the Trump administration sees it as a security threat.
“I think the Chinese government will not just stand by to watch Huawei get slaughtered on the chopping board,” Xu said during the press conference, adding that he believes the government would take countermeasures, potentially even banning U.S. components from China’s 5G networks.
Paranoid android
The U.S. action has already prevented Google from providing Android services to Huawei, forcing the world’s third-most-popular smartphone maker to release products without Google services and apps. Nevertheless, Huawei’s consumer business group—which includes sales of smartphones, laptops, and tablets—led the company in revenue growth last year, rising 34% to $66 billion.
“Outside of China the loss of Google has made Huawei smartphones a tough sell, and sales have dropped somewhat. But in markets like Southeast Asia and Russia, they don’t use Google services as much, so they are fine so long as the phone has a good camera,” says Neil Shah, partner at Counterpoint Research.
Inside China, the loss of Android services wasn’t noticed, as Google is already banned. In fact, Huawei sales increased there last year, according to Counterpoint Research, surging 10 percentage points to occupy 36% of the market.
Some analysts reckon Huawei’s reliance on its domestic market has left it overexposed to the coronavirus lockdown, which kept swaths of the Chinese consumer market home during the first quarter of the year. However, Shah says Huawei performed well with shipments buoyed by online sales of its youth-focused Honor brand.
“Since the lockdown started in Wuhan, Huawei ramped up production in the last 10 days of January and increased their online strategy. They have enough stock to survive March, and already the China smartphone market is back to normal,” Shah says.
More coronavirus coverage from Fortune:
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—There will be another pandemic after the coronavirus. It’s time to start preparing
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—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: World leaders and health experts on how to stop the spread of COVID-19
Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.


fortune--2020-03-31--A coronavirus vaccine in 18 months? Medical experts say it’s not that simple

As a young researcher in the late 1980s, Michael Kinch wanted to solve the biggest medical puzzle of the day: how to design an HIV vaccine. But dozens of well-funded labs were attacking the problem, a solution seemed easily within reach, and Kinch moved on.
More than 30 years and 30 million deaths later, there’s still no approved HIV vaccine — a cautionary tale for anyone expecting a coronavirus vaccine within the next year, according to Kinch, a former drug developer who’s now associate vice chancellor at Washington University in St. Louis.
“There’s a built-in assumption that there will be a vaccine,” Kinch said. “We just have to go into it very sober.”
As worldwide cases surge past 750,000, governments, investors and the public are keenly watching the breakneck race to deliver coronavirus vaccines that could prevent future infections. Researchers are seen as the saviors who will deliver therapies and vaccines needed to defeat the coronavirus, and President Donald Trump has urged drugmakers to “get it done.”
Among the majority of the public, vaccines are embraced as safe and straightforward: show the virus or a key piece of it to the immune system to remember so that it’s ready when a real infection occurs. They’re typically far cheaper than drugs and can offer protection for decades, virtually for life.
But getting there is far from easy. Most vaccines go through years of tests before they hit the market; 12 to 18 months would be extraordinarily fast. The coronavirus shots moving most rapidly are made with brand-new technologies that have never proven useful in humans.
Even vaccines based on tried-and-true methods often have side effects that would limit, or prohibit, their use. Sanofi’s dengue vaccine can worsen symptoms in some people who haven’t yet been infected, restricting use, and a vaccine against Lyme disease developed by SmithKline Beecham, now GlaxoSmithKline Plc, was pulled in 2002 amid concerns about links to arthritis.
The world’s foremost experts in the field have seen the perils of predicting the arrival of a vaccine. In 1984, then U.S. Health and Human Services Secretary Margaret Heckler said a shot to prevent HIV would be ready for testing within two years. Researchers have chased that goal ever since.
Vaccine specialists this time are turning to technology aimed at speeding up a process that has traditionally taken 10 years or more. National Institute of Allergy and Infectious Diseases Director Anthony Fauci and others have predicted a coronavirus vaccine could be ready in a year to 18 months. Dozens of companies and universities around the world are pursuing a vaccine, among them Sanofi, Johnson & Johnson and Moderna Inc.
One of the front-runners, backed by the U.S. institute, is the approach used by Moderna that involves adding viral genetic material to human cells, inducing them to make proteins that spur an immune response. The U.S. company said March 16 that it treated its first patient in an early study.
The novel method is largely untested, and Holden Thorp, editor in chief of the Science family of journals, points out there are no guarantees that such messenger RNA vaccines, and others like it, will achieve their ambitious targets. Falling short could cost both society and faith in science, he said.
Double-Time
The concern is “people would get their hopes up and think that we’re going to achieve something sooner than we are, which will be demoralizing if we aren’t able to do that,” Thorp said. “Long-term, I’m worried that if science is portrayed as not coming through fast enough, that could have lasting damage.”
While similar concerns apply to new drugs, test results from Gilead Sciences Inc.’s remdesivir, first aimed at Ebola, are due next month. Regeneron Pharmaceuticals Inc. said earlier this month its efforts to develop a drug are ahead of schedule and it could start testing in humans this summer.
Vaccine makers will have to work double-time to try to hit their targets. The Coalition for Epidemic Preparedness Innovations, which has said it needs almost $2 billion to carry on coronavirus work, is funding at least eight potential vaccines. It’s already moving to set up a range of manufacturing platforms so they’ll be ready if one approach pans out, said Melanie Saville, director of vaccine research. Even if a shot is ready in the desired time frame, it probably won’t be formally approved and will only be available on an emergency-use basis, she said.
Vaccines must clear a higher bar than drugs to show they are safe because they’re injected into healthy individuals with the goal of preventing a disease that may never occur, Kinch said. Companies will likely push for exemptions from liabilities in case safety problems arise with coronavirus vaccines, and governments under pressure will probably acquiesce, he said. People should be “cautiously optimistic, with an emphasis upon the word cautious,” he said.
Still, the companies in the hunt are fueling optimism among investors, with Moderna shares gaining about 50% this year and another company relying on DNA-based technology, Inovio Pharmaceuticals Inc., more than doubling. Inovio plans to begin human trials in the U.S. in April, while Tianjin-based CanSino Biologics Inc. said this month that it received Chinese regulatory approval to start similar tests.
Catching Up
“People are way more optimistic than they should be,” said Dmitry Kuzmin, managing partner at 4BIO Capital, a London-based venture capital firm.
There are positive signs, as Kuzmin acknowledges. Drug companies are pushing ahead with different technologies, including more conventional methods, improving the odds and expanding the industry’s knowledge.
The mutation rate of the coronavirus also appears to be relatively low, unlike HIV, suggesting the pathogen could be “better behaved” and a vaccine could be durable, said Kinch, author of Between Hope and Fear: A History of Vaccines and Human Immunity. A big question is whether a shot is rendered essentially obsolete if most people are exposed to the virus before a vaccine is deployed, he said.
“I am a 100% believer in vaccines, but there’s a reality that we’re in a race against a virus and we are starting four or five laps behind,” he said. “We have to catch up.”
In the long run, an effective vaccine will likely arrive on top of therapies, but it may be intervention measures that defeat the coronavirus, said Andrew Ward, a professor and virus expert at the Scripps Research Institute. Governments around the world have imposed lockdowns and other measures in a bid to slow the spread as the death toll climbs to more than 36,000.
“This is a public health emergency, and it’s actually going to be overcome with public health measures, not with science,” he said.
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Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.


fortune--2020-03-31--Johnson & Johnson CEO on the race to make a coronavirus vaccine

Good morning.
Some good news yesterday from Johnson & Johnson, which announced that its experimental coronavirus vaccine could be ready for human testing by September, and for regular usage by early 2021. Most experts view the development of a vaccine as a critical step in conquering the virus, and getting the economy back to something approaching normal.
I talked with CEO Alex Gorsky shortly after the announcement. “Based upon our early data, we feel confident that we have a very good candidate,” he said. To speed up the time to market, the company plans to take the unusual step of ramping up its manufacturing capacity even as the vaccine is still being tested. Gorsky said he hoped the vaccine could be in use by early in the second quarter, reach hundreds of millions of people by the end of that quarter, and have reached potentially a billion people by the end of the year: “Our goal is to make sure this is accessible and affordable for patients in the U.S. and around the world.”
“I don’t use a lot of hyperbole. This is a moon shot for us,” he said. “This process can usually take five or seven years.” Will there be other vaccines? Gorsky says dozens of other efforts are underway. “Taking multiple shots on goal increases my confidence…This is not about competition between companies. This is a competition against corona.”
Gorsky was my guest in the latest episode of Fortune’s Leadership Next podcast, which you can find this morning here. Also in this episode, Stan Bergman, the CEO of Henry Schein, talks about the coronavirus testing kit that his company is testing that provides results in just 15 minutes.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
U.S. Lockdown Expands
At the start of the month, the U.S. had less than 100 cases of coronavirus. On Tuesday, there were nearly 160,000 U.S. cases with 2,900 dead, and the country is preparing for expanded lockdowns and restrictions on daily life. Meanwhile, layoffs and furloughs have expanded, with Macy's and Gap saying they will collectively furlough 200,000 employees. That comes as lockdowns also expanded across Europe, India, and Africa—and as China tries to gradually return to normal. WSJ
FBI Talks To Burr
The FBI has contacted Sen. Richard Burr over his sale of as much as $1.7 million in stock shortly before the spread of coronavirus pushed markets over a cliff. Burr has denied wrongdoing but has also requested an ethics review of the stock sales. The North Carolina Republican is one of several senators whose financial dealings shortly before markets fell have gained scrutiny in recent weeks. AP
M&A Halts
M&A ground to a screeching halt in March, as companies prioritized survival over buying up others. Deal activity last week was 12.5 billion pounds ($15.4 billion), the lowest weekly total since the middle of the financial crisis, in 2009, and the value of deals fell in the first quarter overall, led by a particularly swift decline in the U.S. FT
USPS Shut Down
Coronavirus should have made the U.S. Postal Service more valuable than ever, bringing packages and mail to even the remotest parts of the country. But even before the virus hit, the service was facing a liquidity crisis that, without intervention, would have hit in 2021—and now, with no relief included in the $2 trillion government package, it could cease to exist by the summer. Fortune
AROUND THE WATER COOLER
The wheat boom
Prices for staples like wheat and rice are surging amid demand for pantry basics, disrupted supply chains, and falling currencies in many of the countries where they're produced—even while there's more than enough food. But it's getting the food to the right place that is the problem. “We have a perfect storm of sorts right now,” said Abdolreza Abbassian, senior economist at the UN’s FAO. WSJ
Watch for the bottom
After JPMorgan analysts said on Monday that the worst was behind us, Goldman Sachs begged to differ, saying the market has still lower to go. Analysts there say there are three things that need to happen first, including evidence that coronavirus cases are actually slowing, and evidence that fiscal and monetary stimulus is actually working. Fortune
Lessons from 2008
The financial crisis of 2008 brought huge waves of high profile bankruptcies—and the fall-out from coronavirus could be even worse. Across the U.S., bankruptcy lawyers are preparing for an "onslaught", and with government bailouts only helping some businesses, a better-prepared bankruptcy system may be the best option many companies have. Fortune
Private jets in the age of coronavirus
For Fortune's series "The Coronavirus Economy", David Meyer spoke to the CEO of a British private-jet charter agent about how his job has changed. For one thing, rather than offering a luxury trip to a holiday, now "literally everything" the company is doing is repatriating citizens—from cruise ship staff to offshore rig workers. Fortune
This edition of CEO Daily was edited by Katherine Dunn


fortune--2020-03-31--Goldman Sachs says its gloomy prediction of 24% U.S. GDP contraction in Q2 wasn’t nearly grim enough

Your next potato chip may be flavored by artificial intelligence

Goldman Sachs Group Inc. expects the U.S. economy to experience a far deeper slump than previously anticipated as the coronavirus pandemic hammers businesses, causing a wave of mass unemployment.
The world’s largest economy will shrink an annualized 34% in the second quarter, compared with an earlier estimate of 24%, economists led by Jan Hatzius wrote in a report. Unemployment will soar to 15% by mid-year, up from a previous forecast of 9%, they wrote.
The economists, however, now expect a stronger recovery in the third quarter, with gross domestic product expanding 19%.
“Our estimates imply that a bit more than half of the near-term output decline is made up by year-end,” they wrote. While there’s a risk of longer-term fallout on income and spending, the aggressive action by the Federal Reserve and the government should help to contain this.
The new forecasts come days after President Donald Trump extended U.S. “social distancing” guidelines to contain the virus until the of April, abandoning a plan for an earlier end.
Several major U.S. retailers are halting pay for hundreds of thousands of workers as they struggle to cope with the slump in demand caused by measures to control the spread of the pandemic. The White House and congressional Democrats are preparing for a fourth round of economic stimulus to get the U.S. through the outbreak.
More must-read finance coverage from Fortune:
—Everything you need to know about the coronavirus stimulus checks
—Social distancing creates $8 trillion in economic benefits, study says
—Can’t afford to buy an apartment? This startup wants to sell you a share of one
—The lessons learned from the past 3 bear markets
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: U.S. tax deadline moved from April 15 to July 15
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-03-31--The Chinese economy bounces back, lifting global markets

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.
Good morning. Q1 comes to a close today, and there’s green on the screens.
Let’s check in where investors are putting their spare cash.
Markets update
We begin in Asia. The Hang Sang and Shanghai Composite are both trading higher, helped by a wave of new data showing the Chinese economy is bouncing back. The country’s manufacturing sector, in particular, is showing signs of renewed strength.
***
Next stop: Europe. The major bourses in Frankfurt, London and Paris all opened higher. Investors are relieved that Italy, still the worst coronavirus hotspot in Europe, is making steady progress in finally containing the outbreak.
The mini-rally is happening despite fresh pressure on dividends and buybacks. The ECB is putting the squeeze on European lenders to cancel dividends over the next six months. Germany is doing something similar, insisting a dividend ban be placed on companies requesting state aid.
Other companies have arrived at the conclusion on their own. Advertising giant WPP is halting all buybacks and dividends for the time being.
Let’s finish with some good news: Sweden’s Ericsson reports business is actually strong at the moment, and that 5G demand is soaring. Shares in the telecoms equipment supplier are up nearly 3% at the open.
***
As I type, the Dow and S&P 500 futures are ticking higher. The indices are looking to add to yesterday’s impressive gains.
Wall Street is giving mixed signals about whether or not we’ve already hit a bottom. JPMorgan Chase says most risk assets have seen their low point, suggesting equities will begin a rocky return higher. Goldman Sachs though warns it’s still too early to declare the worst is behind us, my colleague Anne Sraders writes.
There’s a big asterisk put on all these calls. It all depends on whether the U.S. can keep the coronavirus contagion numbers to a relatively manageable number. The situation in New York City looks dire.
***
A first big test will come later this week when the latest jobs numbers are reported. James Bullard, Federal Reserve Bank of St. Louis president, made a remarkably bearish call on the U.S. jobs picture yesterday, warning the unemployment rate could hit as high as 42%. That may not seem so farfetched after U.S. retailers announced yesterday they’ll be furloughing workers in record numbers.
***
Elsewhere, the dollar is climbing for a second straight day. Gold is flat, and oil is rebounding. The improved factory data out of China, plus the White House’s latest intervention in the Saudi-Russian price war, are lifting futures prices. WTI crude had hit a low on Monday last seen in 2002, and that’s showing up at the pump. A Bull Sheet reader yesterday told me he’s seen the price of gasoline in the Dallas-Fort Worth area sink below $1.50 per gallon.
***
Today is the final day of the quarter. It’s been a quarter to forget. Finding any kind of return on equities has been a global problem. As the Wall Street Journal notes, citing FactSet data, the MSCI All Country World Index was, as of yesterday, on pace to record its worst quarter since 2008.
Here’s how that compares to other benchmark indices around the world.
***
World beating
Let’s start with Germany’s Dax. It saw a nice rebound last week, but it’s still down 26.7% for the quarter, worse than the MSCI World Equity index. The S&P 500, thanks to a stellar seven-day stretch, is down a dreadful 19.4%. The best of the bunch is the Shanghai Composite, which is solidly outperforming the MSCI over the past quarter.
Postscript
Day 22 (23?) in lockdown here in Rome.
Last night’s coronavirus bollettino (bulletin) gave us reason for guarded optimism. The increase in new confirmed cases had hit a new low in the previous 24 hours; Italy’s growth rate has now halved over the past week. The numbers in the ICU are down too, and the ranks of “recovered” is climbing. But still the overall numbers are growing.
The World Health Organization says Italy and other European countries may be nearing a peak. And yet Italian officials warn they won’t even consider relaxing the stay-at-home measures until after Easter, and that we’ll likely be stuck in lockdown for another month.
Sit tight, everyone, and stay healthy. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
Looking for more detail on coronavirus? Fortune has a new pop-up newsletter. The aptly named Outbreak will keep you up to date on the latest news surrounding the coronavirus outbreak and its impact on business and commerce globally. Sign up here.
And, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.
Today's reads
Insider trading rocks D.C. The Justice Department will formally investigate Congressional at least one lawmaker who dumped shares in recent weeks ahead of the markets nosedive, the Wall Street Journal reports. Investigators will seek to determine whether Sen. Richard Burr (R., N.C.) was acting on confidential information gleaned from closed-door coronavirus intelligence briefings. He's not the only one under suspicion.
Daily bread. The price of wheat and rice futures has soared 15% and 17%, respectively, in the past two weeks, according to the Wall Street Journal. Staples like these are expected to be in high demand as the lockdown continues, driving up food prices.
Learning from Lehman. Why do we need bailouts when we have Chapter 11 bankruptcy protection? Fortune's Jeff John Roberts details what we've learned since the 2008 financial crisis, in which the likes of Lehman Bros. collapsed in spectacular fashion. We're unlikely to see that kind of corporate carnage this time round, policymakers seem to be saying. We'll see.
Market candy
$8 trillion
Social distancing is a hassle. No argument there. It's also a big life-saver. And, researchers at the University of Chicago say all those saved lives will have a huge added value to the U.S. economy. They tallied it up and arrived at the sum of $8 trillion. The numbers may seem fuzzy, but kudos for trying to find a silver lining in this awful coronavirus pandemic.


fortune--2020-03-31--Two health care CEOs on why coronavirus tests and vaccines are the ammunition needed to fight COVID-

Two health care CEOs on why coronavirus tests and vaccines are the ammunition needed to fight COVID-19

With no sense of normalcy on the horizon, the fallout from the coronavirus raises countless pressing questions for Americans, one of them very simple: Does the U.S. have the supplies we need to combat the virus?
Fortune posed this question to Alex Gorsky, CEO of Johnson & Johnson, and Stan Bergman, CEO of Henry Schein.
J&J announced on Monday that its experimental coronavirus vaccine could be approved under emergency authorization by early 2021, with human testing possibly beginning by September 2020. “For us to have an impact in a meaningful time, we have to start ramping up our production,” Gorsky said of J&J’s preparation to produce the vaccine.
Between now and that vaccine’s release—during which America’s health system will be stressed much farther than almost anyone alive today has seen before—Gorsky said the only thing that will bring any sort of confidence is knowing that the virus can ultimately be contained.
“In the near term, we’ve got to continue to emphasize hygiene, quarantine, social distancing, to stop people from spreading this virus in the first place,” he said.
As the CEO of the world’s largest provider of products to dentists and office-based health care practitioners, as well as many clinics, Bergman said, “we don’t have capacity in the U.S., and I think we need to develop that capacity very quickly because other countries have restricted the movement of these products.”
But don’t let that scare you. Henry Schein is working on solutions, which Bergman shares on the latest episode of Fortune’s new podcast Leadership Next. Hosted by Fortune president and CEO Alan Murray, Leadership Next gathers insights from the execs who are redefining the rules of business leadership. Bergman—whom Murray calls “the most interesting CEO you’ve never heard of”—is something like a pandemic supply chain expert, having helmed Henry Schein for over three decades.
Dating back to the AIDS scare of the mid-’80s and encompassing the Ebola virus outbreak five years ago, Bergman led Henry Schein in developing resilient medical supply chains that have the surge capacity needed when a crisis hits. It might be common sense, but as he breaks down around the three-minute mark, travel bans and other measures will not be effective for infection control if we lack basic disposable personal protection products like gloves, masks, and gowns for health care workers on the front lines of the fight.
Bergman also shares some sobering realities about what’s needed to provide adequate point-of-care testing and explains how Henry Schein’s commitment to stepping up during times of crisis falls under the umbrella of “doing well by doing good.”
Listen and subscribe to ‘Leadership Next’ now:
More coronavirus coverage from Fortune:
—USPS might have to shutter by June as stimulus package provides no funding
—Everything you need to know about the coronavirus stimulus checks
—There will be another pandemic after the coronavirus. It’s time to start preparing
—Political activists make sure Americans register to vote—from a distance
—Social distancing creates $8 trillion in economic benefits, study says
—Where do clothing rental and subscriptions fit in a world that works from home?
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: World leaders and health experts on how to stop the spread of COVID-19
Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.


fortune--2020-03-31--FBI contacts U.S. senator who sold stock after getting coronavirus threat briefings in January

The FBI has reached out to Sen. Richard Burr about his sale of stocks before the coronavirus caused markets to plummet, a person familiar with the matter said Monday.
The outreach suggests federal law enforcement officials may be looking to determine whether the North Carolina Republican exploited advance information when he dumped as much as $1.7 million in stocks in the days before the coronavirus wreaked havoc on the economy.
Burr has denied wrongdoing but has also requested an ethics review of the stock sales.
The Justice Department’s action, first reported by CNN, was confirmed by a person familiar with the matter who was not authorized to discuss it and spoke on condition of anonymity. The Justice Department declined to comment.
In a statement, Alice Fisher, an attorney for Burr, said, “The law is clear that any American -– including a Senator -– may participate in the stock market based on public information, as Senator Burr did.
“When this issue arose, Senator Burr immediately asked the Senate Ethics Committee to conduct a complete review, and he will cooperate with that review as well as any other appropriate inquiry. Senator Burr welcomes a thorough review of the facts in this matter, which will establish that his actions were appropriate,” the statement said.
Burr, whose stock sales were first reported by ProPublica and The Center for Responsive Politics, is one of several senators whose financial dealings have generated scrutiny in recent weeks.
Senate records show that Burr and his wife sold between roughly $600,000 and $1.7 million in more than 30 transactions in late January and mid-February, just before the market began to nosedive and government health officials began to sound alarms about the virus. Several of the stocks were in companies that own hotels.
Burr has acknowledged selling the stocks because of the coronavirus but said he relied “solely on public news reports,” specifically CNBC’s daily health and science reporting out of Asia, to make the financial decisions.
There is no indication that Burr, whose six-year term ends in 2023 and who does not plan to run for reelection, was acting on inside information. The intelligence panel he leads did not have any briefings on the pandemic the week when most of the stocks were sold, according to a person familiar with the matter who spoke on condition of anonymity to discuss confidential committee activity.
More must-read politics coverage from Fortune:
—Coronavirus could put 47 million people out of work, says the Fed
—USPS warns might have to shutter because stimulus package provides no funding
—Political activists make sure Americans register to vote—from a distance
—Why cruise companies don’t qualify for coronavirus stimulus
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: U.S. tax deadline moved from April 15 to July 15
Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.


fortune--2020-03-31--Everything you need to know about furloughs—and what they mean for workers during the coronavirus pa

Everything you need to know about furloughs—and what they mean for workers during the coronavirus pandemic

Subscribe to Outbreak, a free daily roundup of stories on the coronavirus pandemic—and its impact on global business.
Monday brought more bad news for American workers, as companies continue to lay off employees to cope with the economic damage of the coronavirus outbreak and the related lockdown.
This time, Macy’s made the biggest headlines with the news that it will be furloughing the majority of its 130,000 employees. The department store giant—which also owns and operates Bloomingdale’s and Bluemercury—said that despite continuing to sell items online, it has “lost the majority of our sales” since closing all of its stores on March 18.
Macy’s is far from alone. Gap Inc. also announced that it would be furloughing most of its retail workers in the U.S. and Canada on Monday—“pausing pay but continuing to offer applicable benefits until stores are able to reopen,” the company said in a press release. And dozens of companies as diverse as Marriott, General Electric, Everlane, and The Cheesecake Factory have taken similar measures, ranging from furloughs to temporary and permanent layoffs.
With more economic hurt almost certainly in the cards, some estimates predict the number of unemployed people will reach a stunning 47 million in the weeks and months to come. Here’s what they need to know.
What does furlough mean?
In short, a furlough is an unpaid leave of absence. While furloughed employees still technically retain their jobs, the furlough itself means that they cease working for their employers and do not earn a salary. The idea is that this is a temporary arrangement, and workers will one day be able to return to their jobs.
What is the difference between being furloughed and laid off?
While a furlough is meant to be a temporary arrangement, being laid off is quite the opposite: a permanent termination of one’s employment, including salary and benefits. The door is open for one’s return when furloughed; when laid off, that’s very rarely the case.
Why do companies furlough employees?
As we’re seeing now, companies can fall under temporary economic pressures that mean they have to reduce payroll for the time being. In such cases, furloughing employees can make sense—especially if the company foresees better economic conditions on the horizon that would allow it to staff up again in the near future (and bring back experienced, already trained employees from furlough to take up those jobs). David Cote, who ran Honeywell during the Great Recession, said that furloughing employees rather than laying them off enabled his company to regain ground much more quickly once the crisis had ended.
Do you get paid during a furlough?
No. As a cost-cutting measure, companies do not pay employees while they’re furloughed.
Do you keep your benefits during a furlough?
Yes, more often than not. For example, both Macy’s and Gap said that furloughed employees would be able to retain their health benefits while on leave. But it can also depend on the employer, and non-health benefits (like retirement benefits) may be trickier to maintain depending on their terms.
Can you apply for and collect unemployment benefits if you get furloughed?
As unemployment insurance is predominantly managed at the state level, this usually depends on where you live and work; some states may allow furloughed workers to collect unemployment, while others may not.
However, Congress’s recently passed coronavirus stimulus package has temporarily resolved this issue on a wider scale—extending unemployment benefits to those who may not be eligible at the state level, so long as their unemployment is connected to the coronavirus outbreak. Furloughed employees qualify, as do part-time workers, freelancers, independent contractors, and the self-employed.
Am I eligible for the federal government’s $600 weekly payment to unemployed workers if I’m furloughed?
Yes. Congress is extending that $600 weekly check to all individuals eligible for unemployment insurance—now a significantly larger number given the coronavirus stimulus package’s expansion of unemployment coverage. The $600 weekly payout lasts through July 31.
How long can a company furlough an employee?
There is no uniform answer to this question; it depends entirely on the company, the rules and regulations in its local jurisdiction, and other factors (such as the terms of collective bargaining agreements for unionized employees). However, in general, furloughs are supposed to be viewed as temporary, short-term arrangements; otherwise, it would make more sense for companies to simply lay off employees, and for employees to move on and find new permanent employment.
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More must-read finance coverage from Fortune:
—When are stimulus checks coming? It could take months for some
—Millions of Americans won’t be able to pay their bills this month. What financial experts advise
—Even with the Paycheck Protection Program, small-business owners say it’s not enough to ensure they can survive
—You can now take money out of your 401(k) without penalties, but should you?
—CEOs are taking pay cuts as furloughs and layoffs mount. Is it actually helping?
—Everything you need to know about the coronavirus stimulus checks
—5 things to know about unemployment benefits in the COVID-19 stimulus package
—Close to retirement and panicking? How to avoid locking in losses
—How to defer your student loan payments during the pandemic
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: The U.S. tax deadline was pushed from April 15 to July 15
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-03-30--China’s coronavirus propaganda has shifted dramatically, report finds

As news of a coronavirus outbreak in Wuhan, the capital of China’s Hubei province, began to appear in Western news outlets in January, the country’s state-run media initially struck a tone of reassurance and transparency with hashtags like #wuhancoronavirus and #wuhanpneumonia. By February, such messaging had disappeared.
According to a new report by cybersecurity firm Recorded Future, Chinese authorities have directed two abrupt shifts in the English language media it produces. The first shift skirted facts about the disease’s spread and origins in favor of social media posts that praised the response of the government and President Xi Jinping. Then, starting in late February, such posts took on a more aggressive tone, accusing the West of xenophobia and casting doubts on the virus’s origins.
The shift in message can be seen in the social media posts below, provided by Recorded Future. The first is from early January and the second from Feb. 29:
COVID-19 'may not originate in China' Chinese top respiratory specialist Zhong Nanshan said although the COVID-19 first appeared in China, that does not necessarily mean it originated here. #COVID19 pic.twitter.com/gk1S7XKEvh — Global Times (@globaltimesnews) March 1, 2020
Both tweets are from Global Times, a Chinese propaganda account that has 1.7 million followers. According to Recorded Future, Global Times and other such media outlets—including Xinhua, People’s Daily, CCTV, and CGTN—have posted tens of thousands of coronavirus-related items on services like Twitter and Instagram.
Recorded Future’s account is consistent with a similar report published by news site Pro Publica last week, which describes a massive Twitter disinformation operation run by the Chinese government. Pro Publica claims the operation initially focused its attention on Hong Kong, but then shifted to a flood of coronavirus coverage. The publication also noted that the campaign appeared to be directed at Chinese expatriates and cited unnamed sources who said China was paying influential Twitter users to spread propaganda.
As for the earlier Chinese media messages describing the coronavirus spread in Wuhan, Recorded Future said “censors and propagandists had not yet communicated coordinated guidelines for foreign messaging by state-run media.”
Many of the Chinese propaganda outlets continue to publish on Twitter, despite reports of their promoting blatantly false information. A Twitter spokesperson said the company is aware of such accounts and, in some cases, is taking action against them.
“Using technology and human review in concert, we proactively monitor Twitter to identify attempts at platform manipulation and mitigate them,” said the Twitter spokesperson. “If we identify further information campaigns on our service that we can reliably attribute to state-backed activity either domestic or foreign-led, we will disclose them.”
All of this comes as the Chinese Communist Party attempts to portray its handling of the Wuhan situation as a success, and a model for other countries to follow. The country’s success in Wuhan is coming into question, however, as Bloomberg reports shared photos of thousands of funeral urns in the city—suggesting the actual death toll in Wuhan is much higher than the 2,535 fatalities authorities have stated. Meanwhile, the International Business Times has reported a soaring number of phone cancellations as evidence that the death toll in China owing to the coronavirus has been understated.
More must-read tech coverage from Fortune:
—How the coronavirus stimulus package would change gig worker benefits
—Inside the global push to 3D-print masks and ventilator parts
—Apple focuses on what’s next amid the coronavirus outbreak
—A startup is building computer chips using human neurons
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: Best earbuds in 2020: Apple AirPods Pro vs. the Sony WF-1000XM3
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-03-30--J&J’s coronavirus vaccine could hit the market by 2021

Happy Monday, readers.
A major bit of news from Johnson & Johnson today—the company is developing a coronavirus vaccine which it believes could hit the market by 2021.
That would be a stunning development. It usually takes anywhere from three to seven years, sometimes more, to move a vaccine from initial development to market. Pathogens are tricky.
But J&J is on a significantly ramped up schedule for a variety of reasons, CEO Alex Gorsky told Fortune.
For instance: the company invested in some vaccine technology development a decade ago which, according to Gorsky, “turned out to have much broader application than we anticipated.”
The firm is also ramping up its manufacturing capabilities should its vaccine candidate get an emergency use authorization by the FDA within the next year.
By the way, readers, during these challenging times we all have to make some changes. Given the importance of health care coverage in the current moment, I’m going to dedicate my resources to covering broader stories about the crisis.
As such, Brainstorm Health Daily will, for the time being, go to a weekly schedule. Watch for the revamped newsletter, filled with the week’s most important health care news, on Thursdays between 2 pm and 3 pm. We’re also planning a name change to go along with the new schedule but don’t worry, the format won’t change.
Read on for the day’s news—and see you again on Thursday.
Sy Mukherjee
sayak.mukherjee@fortune.com
@the_sy_guy
DIGITAL HEALTH
An Australian company is trying to make computer chips from human neurons. We've seen plenty of comparisons between the human brain and computing technologies (heck, there's an entire industry based on brain-machine interfaces). But this, as far as I know, is a first—a company attempting to create artificial intelligence out of human neurons. The Australian firm, Cortical labs, "is hoping to teach these hybrid mini-brains to perform many of the same tasks that software-based artificial intelligence can, but at a fraction of the energy consumption," my colleague Jeremy Kahn reports. (Fortune)
INDICATIONS
Gilead shakes up its coronavirus antiviral strategy. The saga of Gilead's coronavirus antiviral continues. At first, the company's drug had so much demand under a compassionate use program that it had to halt delivery of the experimental treatment; then it received an FDA designation as an orphan drug which would grant it several market advantages; shortly afterwards, in a remarkable move, Gilead itself asked for that designation to be revoked in order to make sure it was more widely available. And now, the firm is switching from the "compassionate use" protocol to something called "expanded access." What does that mean? "While it will take some time to build a network of active sites, this approach will ultimately accelerate emergency access for more people," said CEO Daniel O’Day. (Fortune)
Malaria drug receives emergency use authorization for coronavirus. An antimalarial drug touted by the Trump administration as a promising coronavirus treatment, hydroxychloroquine, has received emergency use designation. The treatment has been controversial since it is largely untested for this particular disease and there have been reports of serious adverse events associated with the drug. It's still unclear just how effective it will be in larger populations (it's being deployed in New York City, the epicenter of the outbreak in the U.S. to date), but it goes to show how drastic the situation has gotten. (Fortune)
THE BIG PICTURE
Doulas adjust to the coronavirus crisis. My colleague Emma Hinchliffe has a wonderful (and eye-opening) piece about the burden that pregnant women and doulas, non-medical workers who assist with the birthing process, face under the coronavirus pandemic. While there have been certain exceptions made for partners who may visit their significant others giving birth, no such exception has been made for doulas—and it's squeezing both the industry and the women who rely on them, Emma writes. (Fortune)
REQUIRED READING
3 things need to happen before the stock market hits bottom, by Anne Sraders
Coronavirus could put 47 million people out of work, Fed says, by Chris Morris
USPS warns it may have to shutter by June, by Nicole Goodkind
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fortune--2020-03-30--Gap Inc. furloughing 80,000 store workers because of coronavirus hit to sales

Gap Inc. became the latest retailer to furlough employees en masse while stores remain closed because of the coronavirus spreading through North America and Europe.
On Monday, the owner of Old Navy, Banana Republic, and Gap said that stores in those markets would stay closed past the initial April 1 date on which the company had hoped to reopen stores. Earlier on Monday, Macy’s announced it was furloughing the majority of its 130,000 workers.
Gap Inc. had taken steps in recent weeks to stanch the outflow of cash while much of its business ground to a halt, such as drawing down its $500 million credit line, suspending its dividend, and cutting capital expenditures. But the threat to Gap Inc. has only worsened since stores closed on March 18.
“We are now in a position where we must take deeper actions,” said Gap Inc. CEO Sonia Syngal, who took the reins earlier this month after years as head of Old Navy. In addition to the furloughs, Gap Inc. is laying off some staff at its San Francisco headquarters.
Before the outbreak, which has sickened at least 150,000 Americans so far and decimated company sales in March, Gap Inc. was already dealing with enormous challenges. Its namesake brand has been in decline for years, hurt by merchandise that has failed to stand out. Banana Republic has been hurt in recent years by the growth of casual wear. And Old Navy, long its juggernaut, has experienced an uneven performance in the past year. Prolonged closings will only make it harder for Gap Inc. to implement its plan to win shoppers back.
Gap Inc.’s problems also illustrate how even brick-and-mortar retailers adept at e-commerce won’t be spared by the economic toll of the pandemic. The company garners about 20% of its sales online, amounting to more than $3 billion. But people’s spending has shifted to essentials rather than clothing during the crisis, all the more since tens of millions of Americans are working from home and can’t go out.
In addition to the furloughs, Gap Inc. said its top executives and directors would take a compensation cut.
With GlobalData Retail estimating that some 40% of all American stores are closed, the industry, particularly apparel chains, is bracing for more furloughs on a scale that will shake the entire economy: 52 million Americans work in retail in the United States. Last week, the Labor Department said that a record 3.3 million Americans had applied for unemployment benefits the week before.
Other retailers that have recently announced furloughs of store workers include Ascena Retail, which owns Ann Taylor and Lane Bryant; Tailored Brands, owner of Men’s Wearhouse; and Bath & Body Works parent L Brands.
More must-read retail coverage from Fortune:
—Everything you need to know about furloughs
—Which stores are open—and closed—during the coronavirus pandemic in the U.S.?
—How re-commerce players like Poshmark and eBay are adapting to the coronavirus
—How Nike is overcoming the coronavirus impact on its China business
—It may be a while before many of America’s stores open again
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: The greatest designs of modern times
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.


fortune--2020-03-31--SBA small business loans: 7 things to know about the Paycheck Protection Program

It ’ s official : The stock market had its worst quarter since 1987—and its worst Q1 ever

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The $2.2 trillion coronavirus stimulus bill signed into law by President Donald Trump last week set aside $349 billion for a new small-business loan program.
If small businesses maintain payroll during this economic crisis, some of the money borrowed through the newly created Paycheck Protection Program can be forgiven. The goal is to help small-business owners and their employees ride out this economic storm.
We learned more details Tuesday on the $349 billion effort, called the Paycheck Protection Program—which is larger than the GDP of Arizona—from Treasury Secretary Steven Mnuchin and the U.S. Small Business Administration (SBA). A senior government official said it is possible millions of loan applications could roll in on Friday when these loans become available.
Here’s what prospective small-business loan applicants need to know.
Who is eligible for the SBA’s Paycheck Protection Program? What are the qualifications?
Small businesses with fewer than 500 employees are eligible to apply to the Paycheck Protection Program. These include firms that are nonprofits. It also includes sole proprietorships, self-employed individuals, independent contractors (a.k.a. gig economy workers), and veteran organizations.
Borrowers must certify that their business has been affected by the coronavirus slowdown. And businesses must have been in operation as of Feb. 15 to be eligible to apply.
Lenders will not require collateral or a personal guarantee.
When can I apply?
Treasury Secretary Mnuchin said Tuesday that small businesses will be able to start applying for the Paycheck Protection Program loans on Friday. Loans will be given on a first-come, first-served basis, according to a senior SBA official.
How much can be borrowed?
The Paycheck Protection Program provides small businesses loans that can be up to 2.5 times the borrower’s average monthly payroll costs. The amount that can be borrowed tops out at $10 million. The date range for calculating that average cost is different for seasonal businesses, nonseasonal businesses, and firms that opened in 2020.
Payroll costs include everything from salaries, bonuses, and retirement benefits to parental leave and health care benefits. The portion of employee salary in excess of $100,000 is excluded in the payroll calculation.
Do I have to pay the loan back?
Borrowed money used for expenses relating to payroll, mortgage interest, rent, or utilities in the eight weeks following the date of origination can be forgiven. That means business owners will not have to pay the government back the full principal amount of the money borrowed. Borrowers will need to provide documentation of these expenses in their loan forgiveness application. A decision on forgiveness of the Paycheck Protection Program loan will be made within 60 days of forgiveness submission.
“The loans will be forgiven as long as the funds are used to keep employees on the payroll and for certain other expenses,” said Treasury Secretary Mnuchin.
The forgiven money will be reduced for employers that lay off employees or reduce wages by more than 25%.
Laid-off employees must be rehired by June 30 for companies to recoup their wages through loan forgiveness, according to a senior SBA official.
How do I apply for the SBA’s Paycheck Protection Program?
Borrowers can apply for these federally backed loans at the more than 1,800 banks that already offer Small Business Administration loans. However, the number of lenders offering loans through the Paycheck Protection Program will end up being greater and includes many more traditional banks, credit unions, and fintech firms. The first step prospective borrowers should take is contacting their current bank.
“Businesses can go to a participating SBA 7(a) lender, bank, or credit union, apply for a loan, and be approved on the same day,” Mnuchin said.
There is no cost to apply for this loan, but businesses will be charged a fixed interest rate.
What interest rates will be charged?
Money borrowed from the Paycheck Protection Program will have a 0.5% fixed interest rate. The first payment is deferred for six months.
How long will it take to receive the loan?
The loans will be approved far more quickly than previous SBA-backed loans. A senior government official said these “stripped down” applications will not require SBA approval and funds could be made available on the same day you apply.
Should I apply—and is it a good deal for my small business?
It’s an incredible deal for small businesses, contractors, and self-employed folks. A forgivable loan like this should help small businesses retain payroll during the coming weeks when they’re likely to watch sales continue to dry up. For more information, here are two fact sheets published by the U.S. Chamber of Commerce and the SBA.
Editor’s Note: If you’d like to share your small-business story or expertise with Fortune’s Lance Lambert, please reach out via email to Lance.Lambert@fortune.com or on Twitter at @NewsLambert.
More must-read finance coverage from Fortune:
—Even with the Paycheck Protection Program, small-business owners say it’s not enough to ensure they can survive
—Millions of Americans won’t be able to pay their bills this month. What financial experts advise
—What to know about the coronavirus stimulus checks
—Social distancing creates $8 trillion in economic benefits, study says
—Everything you need to know about furloughs—and what they mean for workers
—The lessons learned from the past 3 bear markets
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: The U.S. tax deadline was pushed from April 15 to July 15
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-03-31--Xerox ends hostile HP Inc. bid, citing the coronavirus and market turmoil

Xerox has canceled its hostile takeover bid for HP Inc., citing the coronavirus epidemic and the resulting market turmoil.
The copy machine specialist, which announced its change of course Tuesday, said that it would also “no longer seek to nominate our slate of highly qualified candidates to HP’s board of directors.”
“While it is disappointing to take this step, we are prioritizing the health, safety, and well-being of our employees, customers, partners, and other stakeholders, and our broader response to the pandemic, over and above all other considerations,” the company said in a statement.
In response to Xerox dropping its bid, HP said that it would “remain firmly committed to driving value for HP shareholders.”
“We have a healthy cash position and balance sheet that enable us to navigate unanticipated challenges such as the global pandemic now before us, while preserving strategic optionality for the future,” HP said in a statement.
The move ends Xerox’s four-month odyssey to buy HP, which was pitched by Xerox management as a better way for the two companies to survive a declining printing market. HP repeatedly rebuffed Xerox’s advances and in early March said that the copy machine company’s $34 billion offer “meaningfully undervalues HP and disproportionately benefits Xerox shareholders.”
Several analysts questioned Xerox’s ability to buy the larger HP. During the fall, when Xerox first made its plans public, HP had a market capitalization of $31 billion while Xerox has a market valuation of $8 billion. More recently, the coronavirus’s toll on the overall market has hit both companies hard, with HP’s market capitalization now at $25 billion and Xerox’s market valuation at just $4 billion.
HP has also repeatedly questioned Xerox’s ability to raise the necessary funding required for the acquisition. Xerox would have to add about $24 billion in debt for the deal, company filings said.
In February, HP announced a $15 billion stock buyback plan, intended to entice shareholders and fend off Xerox’s advances.
Just a few weeks ago, Xerox was still moving ahead with its hostile takeover, despite the coronavirus pandemic worsening daily.
Xerox is acting as if there is no coronavirus. It's incredible how tone-deaf they and their bankers are. Have some decency for heaven's sake.. https://t.co/ATReVuRD4y — Jim Cramer (@jimcramer) March 5, 2020
At the time, Xerox CEO John Visentin continued to publicly promote the benefits of an acquisition, telling Fortune, “Printing is long overdue for consolidation” and noting, “The potential for cutting costs, for investing for the future, is tremendous.”
But ultimately, the coronavirus and the havoc it has wreaked on the stock market and business, proved too much for Xerox. Still, Xerox left open the possibility that it may revisit its takeover plans if and when the coronavirus epidemic subsides.
“There remain compelling long-term financial and strategic benefits from combining Xerox and HP,” Xerox said. “The refusal of HP’s board to meaningfully engage over many months and its continued delay tactics have proven to be a great disservice to HP stockholders, who have shown tremendous support for the transaction.”
More must-read tech coverage from Fortune:
—How the coronavirus stimulus package would change gig worker benefits
—Inside the global push to 3D-print masks and ventilator parts
—Apple focuses on what’s next amid coronavirus outbreak
—A startup is building computer chips using human neurons
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: Best earbuds in 2020: Apple AirPods Pro vs. the Sony WF-1000XM3
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-03-31--It’s official: The stock market had its worst quarter since 1987—and its worst Q1 ever

SBA small business loans : 7 things to know about the Paycheck Protection Program

Subscribe to Outbreak, a free daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business.
There’s one positive thing to say about Q1 and the stock market: It’s finally over.
Markets closed down nearly 2% on Tuesday, the final day of the tumultuous first quarter of 2020. That makes this the worst first quarter ever for the Dow and S&P 500. The Dow fell roughly 23% over the past three months (making it the worst overall quarter for the Dow since 1987), and the S&P 500 dropped about 20%, its worst quarterly decline since 2008.
Volatility this quarter was unprecedented, with the VIX (the common fear gauge on the Street) jumping upwards of 80 points at times—readings not seen since 2008. Markets were ravaged in the first quarter as the spread of the coronavirus paralyzed the global and U.S. economy. Now some firms like Goldman Sachs are even estimating that first-quarter real GDP will come in at –9% (the second quarter is looking drastically more ominous, at –34% GDP growth), the firm wrote in a note Tuesday.
The state of the market coming out of the first quarter is “dismal,” Peter Essele, head of portfolio management for Commonwealth Financial Network, tells Fortune. Still, “as painful as that was, you now have an S&P [500] that’s trading at some of the lowest valuations we’ve seen in years,” he notes.
Yet investors are growing even more bearish. According to a recent survey by Boston Consulting Group, 60% of investors are bearish on the markets for the remainder of 2020, with 55% expecting the “severe” economic impact of the crisis to have ended by the end of the third quarter. What’s more? Unlike some strategists, a whopping 87% of investors don’t foresee “a rapid ‘V’-shaped bounce back to pre-crisis economic level and growth rate (i.e., [they] foresee either ‘U,’ ‘W,’ or ‘L’ shapes),” according to the survey. To wit, BCG also found that investors estimated an average market bottom for the S&P 500 of 2,062 by the end of May—not far off from Goldman Sachs’ bottom estimate of 2,000.
Alongside the rocky finish to the first quarter in the markets, some strategists predict markets will go lower in the near term. CFRA’s Sam Stovall wrote in a note on Monday, “History advises investors to expect a ‘retest’ of the recent low,” he notes. “Even if the low for this bear market is already in place, the elevated volatility is expected to persist.”
While Commonwealth Financial’s Essele doesn’t think markets will retest recent lows, he does think “there will be volatility with some additional downside, especially with this Friday’s payrolls numbers and subsequent trends throughout the month of April.”
More must-read finance coverage from Fortune:
—Everything you need to know about the coronavirus stimulus checks
—Social distancing creates $8 trillion in economic benefits, study says
—Everything you need to know about furloughs—and what they mean for workers
—The lessons learned from the past 3 bear markets
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: U.S. tax deadline moved from April 15 to July 15
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-03-31--The coronavirus is changing the race beat

This is the web version of raceAhead, Fortune’s daily newsletter on race, culture, and inclusive leadership. To get it delivered daily to your inbox, sign up here.
We are living in deeply challenging times. So, for the time being, RaceAhead will appear in your inbox twice a week for the forseeable future. This will give me time to do deeper reporting into all the issues that matter to this community, including how the coronavirus pandemic is impacting our world. Through it all, I will maintain my focus on race, leadership, equity, and inclusion.
That all said, the raceAhead team is taking this opportunity to iterate a bit.
In addition to the now-familiar essays, op-eds, news roundups, and other historical items, we’ll also be adding some new elements to the newsletter. We think you’ll find them inspiring and useful.
But here’s the really good news.
At the heart of the revamped newsletter will be raceAhead’s Diversity and Inclusion Experts community on LinkedIn, a group of nearly 500 dedicated corporate practitioners, researchers, and other experts working across a variety of industries.
These are the people who are doing the work. We’ll be looking for ways to help this group cross-pollinate their ideas and amplify their impact with their respective constituents. And, I’ll be tapping these experts for on-the-record commentary, data, and recommendations, which I will share with you in raceAhead.
We will also be taking their collective pulse about diversity in the workplace in a brief monthly survey called Data Point, which will be reported exclusively in raceAhead. Our goal is to turn their unique perspectives into a Net Promoter Score-style insight about the changing world that you can refer to.
Join us! If you have diversity and inclusion as part of your corporate job description, this group is clearly for you. Are you a consultant, researcher, educator, race beat journalist, or other person who studies inclusion issues? Please consider joining in. Are you implementing new ways of applying inclusion as a broader theory of change—think venture investor or philanthropist? We’d love to have you, too. And finally, anyone who does unpaid inclusion work, for example, as part of your participation in an employee resource group, we’d love to learn from you and support you.
Other than all this, all the good stuff will stay the same, we promise. raceAhead will resume April 10. Look for us every Tuesday and, of course, on Haiku Fridays.
We are grateful for you.
Ellen McGirt
@ellmcgirt
Ellen.McGirt@fortune.com
On Point
Equal Pay Day during a pandemic This year, the Equal Pay Day gap stands at 81.6 cents (and is even worse for women of color). Making less money than men means women have less resources and savings. And the COVID-19 pandemic has put this issue "in a new light," writes our Broadsheet colleague Emma Hinchliffe. "Think about what the long-term impact of the gender pay gap means during a crisis like the one we’re in now." Add to that the impact COVID-19 has had on certain industries, like the service and restaurant industries, where there have been significant layoffs. Women make up a large portion of those workforces (while still being underpaid).
Fortune
It's Transgender Day of Visibility There are so many ways to mark this day, all of them involve becoming a better ally. Check out the Trevor Project’s Guide to Being an Ally to Transgender and Nonbinary Youth and The Human Rights Campaign for more. Then, head over to see (and share) this new body of work by visual narrator Texas Isaiah, in partnership with VSCO and the Marsha P. Johnson Institute. Every Image Is An Offering celebrates the unique beauty of the Black trans and nonbinary community, collaborative portraits taken of people as they live their lives, in homes, offices, parks, in either Oakland or Los Angeles. “It is essential to feature the everyday lives of Black trans people and to provide images that do not entirely disregard trauma but provide a fuller aspect of our lives,” says Isaiah.
VSCO
Racial health outcomes during the pandemic This is just one of the threads we will be following more deeply now, and the early signs seem predictably grim. Discriminatory practices are baked into the federal government’s response, observes Dr. Uché Blackstock, a Brooklyn urgent care physician. For one thing, you could only get tested if you had traveled recently or had been in verified contact with someone exposed to the virus. For the most part, only white, affluent patients said yes. “We got all of these patients who would come in and had flulike symptoms but didn’t have the flu, and they probably had COVID-19,” she tells Slate. “But we weren’t able to identify them because the criteria is already biased.”
Slate
On Background
Remembering Marsha P. Johnson and the Stonewall movement The modern LGBTQ movement is largely thought to have been born one summer night in New York City, when patrons of the Stonewall Inn, the only place in the city where people of the same sex could dance together, fought back after a harassment raid by the police finally went too far. But while the protest that night (and subsequent Pride marches) were largely credited to white men, two trans women of color lead the way: Marsha P. Johnson and Sylvia Rivera. Click through for some photos and true accounts, but both women kept the work alive. They ultimately co-founded the Street Transvestite Action Revolutionaries, a group that worked with homeless drag queens and transgender women of color. Tragically, both died young, Johnson under suspicious circumstances.
Mic
Research: Strict schools are contributing to the school to prison pipeline issue This research from Stephen B. Billings from the University of Colorado—Boulder, and David J. Deming of Harvard, studies how schools with high suspension rates have negative effects on all students, but primarily boys and Black and brown students of all genders. The negative impacts include lower grades and graduation rates. “Students who attend a school with a 10% higher number of suspensions are 10% more likely to be arrested and 12% more likely to be incarcerated as adults,” they find. But the research raises important new questions about education in the time of quarantine. How can the school experience be different for students of color in the new normal to come? (H/T Brown University’s Matthew Kraft.)
NBER
It’s time to watch Lemonade again It’s been nearly four years since Beyoncé blessed Planet Earth with her visual album, a tribute to the labor and pain of Black women, with extraordinary nods to Southern gothic traditions, diasphoric explorations, and Black feminist signaling. How do I know all that? An extraordinary body of literature emerged after Lemonade’s release that illuminated the themes of the work, the influences that made it possible, and why it meant so much to so many. Pour yourself a cup of strong tea and click through the inter-disciplinary analyses compiled in The Lemonade Reader, written by both scholars and popular bloggers, who were still feeling the Queen’s touch when they wrote them.
Black Perspectives
Tamara El-Waylly produces raceAhead and manages the op-ed program.
Quote
“It is revolutionary for any trans person to choose to be seen and visible in a world that tells us we should not exist.”
—Laverne Cox, actor and activist, in an interview with BuzzFeed.


fortune--2020-03-31--Fitbit users are walking less as shelter-at-home orders take hold

Users of the fitness tracking device Fitbit are moving a lot less, a sign that social distancing initiatives intended to slow the spread of the coronavirus are having an impact.
Steps by individual U.S. Fitbit users were down an average of 12% during the week of March 22 compared to the same period in 2019, according to a report from Fitbit on Tuesday. In certain large metropolitan areas, the decline was even sharper—likely because many workers are no longer commuting to the office and have reduced their more active lifestyles to comply with shelter-at-home orders. That includes San Francisco and New York, where steps were down an average of 20% for the week; Boston, where steps fell 17.5%; and Seattle, where they declined nearly 14%.
The greater inactivity was even more pronounced in some European countries that are under strict nationwide lockdowns. In the U.S., only certain states have issued shelter-at-home orders, meaning that residents in many places haven’t had to change their lifestyles much and are freer to walk or run.
In hard-hit Spain, for example, Fitbit users walked an average of 38% less than the same period last year. Meanwhile, in Italy, steps were down 25% and, in France, they were down 20%.
The data was gathered from the fitness tracking devices of more than 30 million Fitbit users globally. But the findings aren’t necessarily representative of the general population’s behavior in any particular country. Fitbit users may, for instance, be more affluent than average, more likely to be able to work from home, and more physically active than nonusers.
Fitbit’s data also shows that while the decline in U.S. activity has been lower than in some other countries, Americans were starting from a lower baseline. In the first three months of 2019, Fitbit users in Japan, China, Italy, Hong Kong, and Great Britain all averaged over 10,000 steps in most weeks. For Americans, the average was substantially lower at just over 8,000.
This relative inactivity may be cause for both optimism and worry as the virus makes its way across America.
On the one hand, some have argued that countries like Spain and Italy have been hit particularly hard by the virus because of normally vibrant public spaces, particularly in cities, enabling its early spread. Americans’ relatively sedentary lifestyles, and greater reliance on cars, may slow the pandemic’s progress by comparison.
On the other hand, the virus appears to be particularly lethal to those with certain underlying health conditions. Some of those, including obesity and diabetes, are strongly linked to a lack of physical activity. A lack of exercise has contributed to making America one of the most obese nations in the world, pointing to bleak consequences as coronavirus spreads.
More must-read tech coverage from Fortune:
—How the coronavirus stimulus package would change gig worker benefits
—Inside the global push to 3D-print masks and ventilator parts
—Apple focuses on what’s next amid coronavirus outbreak
—A startup is building computer chips using human neurons
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: Best earbuds in 2020: Apple AirPods Pro Vs. Sony WF-1000XM3
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-03-31--Hollywood showrunners assist the assistants amid coronavirus pandemic

This article is part of a Fortune Special Report: Business in the Coronavirus Economy—a look at the impact of the pandemic on more than 50 industries.
Even in the best of times, underpaid show-business assistants put in 12-hour workdays organizing their bosses’ schedules, fetching lunch, getting yelled at, picking up dry cleaning, walking dogs, coordinating scripts, taking notes, and handling myriad details that might distract talent agents, producers, executives, and television writers from the task at hand.
Support staffers, such as personal assistants, production assistants, script supervisors, or mail-room “floaters,” put up with long days and low pay because, as veteran screenwriter John August explains, “These jobs have classically been the first rung in the ladder to climb your way up the hierarchy of Hollywood.”
But Los Angeles had become radically more expensive in recent years and upward mobility more sluggish. And then, the pandemic hit. Like millions of other Americans, support staffers suddenly had no jobs, no income, and no safety net. #PayUpHollywood cofounder Liz Alper, who worked as an assistant for seven years before joining NBC series Chicago Fire as a story editor, decided to take action.
“I’d been hearing on Twitter from a lot of assistants who were laid off and hurting because the people in charge of the companies and studios weren’t coming forward to take care of support staff,” Alper tells Fortune. “I sent a text to my #PayUpHollywood cofounders, Deirdre [Mangan] and Jamarah [Hayner], saying, ‘I wish I could start a GoFundMe to get these people some money, but I have no idea what that would entail.’ Five minutes later, I texted them again, and I was like, ‘Oh fuck it, I’m doing it.’”
A still from “Living in Oblivion,” a 1995 parody of life on an independent film set. Sony Pictures/Courtesy of Everett Collection
Alper on March 13 set up the Hollywood Support Staff COVID-19 Relief Fund, which organizers say has raised more than $500,000 in donations. Last week, Alper started sending $600 and $1 , 050 checks to out-of-work Los Angeles–based assistants. Alper credits much of the fund’s rapid growth to first responders August and Emmy-winning Chernobyl creator Craig Mazin, hosts of the Scriptnotes podcast, which aired some support staff grievances last fall. Each donated $25,000 in matching funds. August, who started out reading scripts at $55 a pop before writing four Tim Burton movies and last year’s Disney hit Aladdin, noted the urgency of the situation.
“We’d been talking last fall about how to effect lasting change for Hollywood assistants. But when COVID-19 happened, we went from addressing a systemic problem to dealing with this very immediate crisis,” he says. “What could we do this week to help people who live paycheck to paycheck? When Liz reached out, we came up with the idea of matching the first $50,000 that came in, so that checks could go out ASAP.”
August and Mazin also enlisted help from their formidable network of colleagues. “Craig and I emailed our friends, guests who’d been on our show, as well as folks we just knew from working around town,” August says. “We asked them to contribute, or even better, match us on the $25,000 level. Very quickly, a bunch of those people stepped in to help.”
“Those people” included television writer-producers Shonda Rhimes (Grey’s Anatomy), Greg Berlanti (Riverdale) , Julie Plec (The Vampire Diaries), Damon Lindelof (Lost) , and David Benioff (Game of Thrones), who each donated $25,000, as did showrunner teams Rob McElhenney and Kaitlin Olson (It’s Always Sunny in Philadelphia) and Lisa Joy and Jonathan Nolan (Westworld). American Horror Story creator Ryan Murphy stunned Alper with a $50,000 donation.
Alper recalls, “My jaw just dropped when Ryan emailed me saying he wanted to lessen the burden that all these support staff people are facing.”
Hollywood executives are routinely portrayed as the low-empathy alpha personality types personified by screaming agent Ari Gold from HBO’s 2004–11 Entourage series. But the plight of assistants clearly struck a chord with TV bosses. August explains, “Many of the people who are now running this town started out as assistants, and they understand that these people are crucial to the functioning of our industry. They get things handled. So it’s not like assistants and executives come from two entirely different worlds.”
From left: Rex Lee as Lloyd Lee, the assistant to Jeremy Piven’s Ari Gold, who exemplified the low-empathy Hollywood type, on HBO’s “Entourage.” HBO/Courtesy Everett Collection
Assistants of course have plenty of company among Hollywood’s rank and file. Sucker punched in the wake of a boom year in which Netflix, Apple , and Amazon helped inject $67 billion worth of employment dollars into Los Angeles’ creative community (according to an Otis College 2020 Report on the Creative Economy), workers now largely depend on unemployment payments and savings to make ends meet. Additionally, SAG-AFTRA established the COVID-19 Relief Fund to help some of its 160,000 members. And Directors Guild of America on Thursday secured two weeks’ pay from studios for below-the-line artisans affected by production shutdowns.
But very few support staffers belong to a union, which makes Alper’s COVID-19 initiative all the more critical to assistants like Jerrica Long. She’s expecting $600 from the fund this week.
“It’s impossible to build a savings account off of what we’re paid,” says Long, who’s worked as an assistant at DreamWorks and five TV sitcoms since moving to L.A. in 2014. “You’re constantly worried because most of us are just one emergency away from, I hate to say it, being homeless or losing your living situation.”
Freshly unemployed after finishing a season on the CBS series Carol’s Second Act, Long, an aspiring comedy creator, lives in North Hollywood with two roommates. She drives a 2013 Mazda that broke down in November and cost $2,300 to repair. Long can already picture where most of her check will be going. “I’ll be able to pay the last part of my rent for the next couple of months,” she says. “Also, I have a lot of friends who are only eating, like, once a day right now because they haven’t been approved yet for unemployment. I’ll be able to get them some groceries.”
If and when show business as usual resumes, Long figures she’ll get back in the support staff game and hope for the best. She says, “When you work as an assistant, you’re basically getting paid nothing just so you can be in L.A. and fight for a dream.”
Correction, April 2, 2020: An earlier version of this story said Long moved to L.A. in 2011 and that her car repair cost $600. This story has been updated to show that she moved in 2014 and that the repair actually cost $2,300.
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—The coronavirus pandemic is changing broadcast and streaming TV as we know it
—As the coronavirus forces people home, interest in streaming services is surging; so is piracy
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—What to watch on Amazon Prime while social distancing
—MusiCares’s COVID-19 Relief Fund gets all-star help for donations, concerts
Subscribe to Outbreak, a daily roundup of stories on the coronavirus pandemic and its impact on global business, delivered free to your inbox.


fortune--2020-03-31--LinkedIn tries to improve equality across its site

LinkedIn, the professional social networking site owned by Microsoft, has begun testing every change to its service to ensure minority groups are not disadvantaged.
The company is now using equality metrics to assess the impact of any new features, updates, or design modifications it makes, it said in a blog post on Tuesday.
The professional networking site, like most Internet-based services, has long used A/B testing, experiments in which a change is rolled out to a small, representative group of users, as well as a control group, to assess its impact. But LinkedIn says it is now considering inequality when reviewing these experiments.
LinkedIn is using the Atkinson Index, a well-known measure of income inequality, but instead of using it to measure wealth differences, it is applying it to metrics relevant to the company, such as how many job listings are recommended for a user, says Guillaume Saint-Jacques, a LinkedIn researcher who has helped apply the technique at the company internally.
LinkedIn wants to be sure any changes do not disadvantage users when viewed through the lens of legally protected characteristics—such as race, gender, or age. Regarding gender, for instance, the site will examine whether a change encouraged engagement more from men than from women. But Saint-Jacques says the company also takes a far more expansive view of equality.
“For a lot of protected categories, such as ethnicity or religion, we don’t have the data,” he says. The site doesn’t routinely collect information about people’s race, religion, gender, or age—although users can choose to provide that data.
Instead, he says, the company’s data scientists and product managers look at the least well-off users, according to certain LinkedIn-specific metrics, such as social capital (how many connections to other LinkedIn users does the person have) or engagement (how much does the user post, comment, or take action such as applying for jobs on the site). They try to make sure that those users who rank low on these metrics do not see the metrics fall still further as a result of any changes the company makes.
He says that often users who rank poorly according to these metrics also tend to come from underprivileged socioeconomic backgrounds. So by improving how these users experience LinkedIn, the company is also probably helping with income inequality. And because income inequality is also linked in many cases to race, perhaps with racial inequality as well.
Saint-Jacques says that too many companies, when examining the fairness of their algorithms, have focused solely on the workings of the algorithm itself or the data the algorithm ingests. In other words, they’ve assumed that if their process is fair, they are okay.
While process is important, Saint-Jacques says, companies should devote just as much effort to looking at the fairness of outcomes: What impact does an algorithm or update have on different groups of users.
“Even if you treat people the same way, that can actually not make the outcome equal,” he says.
LinkedIn has begun applying inequality tests even to site changes that seem, on the surface, as if they ought to be neutral—such as altering the background color of a page or changing whether people reset their password with a text message or an email. It turns out, Saint-Jacques says, that even these seemingly neutral changes can wind up having a disparate impact on certain subsets of users.
And the key, the company said in its blog post, is to not look simply at the average impact of a change. “Even if no average impact is detected, we found many instances where there was an inequality impact,” it said.
The company noted that it found, somewhat to its surprise, that changes that improved the site’s speed and reliability, especially for low-bandwidth users, improved many of its equality metrics. It also found that pushing notifications about new features to less-engaged users had a big impact on improving equality.
Saint-Jacques says that the product managers are not compelled to always make decisions that will increase equality—only that they must consider the impact on inequality as part of their decision-making calculus.
For instance, he says, there are cases where a certain change to the site might help “influencers,” business leaders who tend to post a lot of content to LinkedIn and generate a lot of engagement from other users. But the same change could also disadvantage users with low social capital. The company might still implement the change, Saint-Jacques says, but it will have at least discussed what the equality tradeoffs are and looked at ways of possibly mitigating the adverse impact on less-active users.
This story has been updated to clarify that LinkedIn users can opt to provide data on race, gender, and ethnicity but that the company does not use any other method to infer such information. The update also corrects an error: Users who rank low on LinkedIn’s internal metrics often come from underprivileged backgrounds, not privileged ones as the article originally stated.
More must-read tech coverage from Fortune:
—How the coronavirus stimulus package would change gig worker benefits
—Inside the global push to 3D-print masks and ventilator parts
—Apple focuses on what’s next amid coronavirus outbreak
—A startup is building computer chips using human neurons
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: Best earbuds in 2020: Apple AirPods Pro vs. the Sony WF-1000XM3
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.