Posts in category Business


ApprovedBusinessBusiness and finance

What DeepMind brings to Alphabet

DEEPMIND’S office is tucked away in a nondescript building next to London’s Kings Cross train station. From the outside, it doesn’t look like something that two of the world’s most powerful technology companies, Facebook and Google, would have fought to acquire. Google won, buying DeepMind for £400m ($660m) in January 2014. But why did it want to own a British artificial-intelligence (AI) company in the first place? Google was already on the cutting edge of machine learning and AI, its newly trendy cousin. What value could DeepMind provide?

That question has become a little more pressing. Before October 2015 Google’s gigantic advertising revenues had cast a comfortable shade in which ambitious, zero-revenue projects like DeepMind could shelter. Then Google conjured up a corporate superstructure called Alphabet, slotting itself in as the only profitable firm. For the first time, other businesses had their combined revenues broken out from Google’s on the balance-sheet, placing them under more scrutiny (see Continue reading

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The management style of Amancio Ortega

IT IS a short walk from a tiny shop with peeling yellow paint in downtown La Coruña, in northern Spain, to a dazzling five-storey store, opened in September by Zara, by far the world’s most successful purveyor of “fast fashion”. In this stroll across three city blocks, the career of Amancio Ortega unfolds: from teenaged apprentice in the corner shop, Gala, a men’s clothing business, to Europe’s richest entrepreneur, the majority owner of one of its best-performing firms.

According to one employee of Zara who works with him, “the true story of Amancio Ortega has not been told.” Mr Ortega, the son of an itinerant railway worker, who started at the corner shop aged 13, had a basic upbringing: an ex-colleague says he talks of meals of “only potatoes”. He has lived mainly in Galicia, a relatively poor region with no history in textiles. Yet there, in 1975, he founded Zara—a manufacturer-cum-retailer that, along with its sister brands, has over 7,000 shops globally.  

Mr Ortega (pictured) is now 80 but he remains energetic and involved in the business (if uninterested in wearing trendy clothes). He owns nearly 60% of…Continue reading

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Behind the bid for Sky is a less powerful Murdoch empire

IT WOULD seem to be a stunning comeback for Rupert Murdoch and his clan. Five years ago News Corporation was engulfed by scandal. One of its British papers, the News of the World, had routinely hacked private phones. In the aftermath the company gave up a bid it had made for BSkyB (now simply called Sky), a satellite broadcaster in which it had a stake. A parliamentary report declared Mr Murdoch unfit to lead a large company. James Murdoch, his son, resigned as chair of BSkyB and chief of the newspaper division. Ofcom, Britain’s media regulator, eviscerated his leadership as “difficult to comprehend and ill-judged”.

Now the Murdoch empire appears to be striking back. On December 9th, 21st Century Fox, the Murdochs’ entertainment business, said it had reached a preliminary deal to pay £11.2bn ($14.1bn) for the 61% of Sky it does not already own. James Murdoch is ascending once more: indeed, this deal is chiefly his doing. Last year he succeeded his father as boss of 21st Century Fox, and in January he reclaimed his Sky chairmanship. But the show of strength comes with new weaknesses.

Much has…Continue reading

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ApprovedBusinessBusiness and finance

Management theory is becoming a compendium of dead ideas

NEXT year marks the 500th anniversary of the event which, more than any other, gave birth to the modern world: Martin Luther promulgated his 95 theses and called the Catholic church to account for its numerous theological errors and institutional sins. Revisionist historians have inevitably complicated the story (including questioning whether he did actually nail his proposals to the door of All Saints’ Church in Wittenberg) but the narrative remains clear. The church was ripe for change. It was sunk in corruption and divorced from the wider life of society. And by unleashing that change, Luther brought the Christian faith, including Roman Catholicism itself, a new lease of life.

The similarities between medieval Christianity and the world of management theory may not be obvious, but seek and ye shall find. Management theorists sanctify capitalism in much the same way that clergymen of yore sanctified feudalism. Business schools are the cathedrals of capitalism. Consultants are its travelling friars. Just as the clergy in the Middle Ages spoke in Latin to give their words an air of authority, management theorists speak in mumbo-jumbo. The medieval…Continue reading

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Food packaging is not the enemy of the environment that it is assumed to be

ROUGHLY a third of food produced—1.3bn tonnes of the stuff—never makes it from farm to fork, according to the UN’s Food and Agriculture Organisation. In the poor world much of this waste occurs before consumers even set eyes on items. Pests feast on badly stored produce; rough roads mean vittles rot on slow journeys to market. In the rich world, waste takes a different form—items that never get picked off supermarket shelves, food that is bought but then goes out of date.

Such prodigious waste exacts multiple costs, from hunger to misspent cash. Few producers and processors record accurately what they throw away, and supermarkets resist sharing such information. But some estimates exist: retailers are reckoned to mark down or throw out about 2-4% of meat, for example. Even a tiny reduction in that amount can mean millions of dollars in savings for large chains.

Waste also damages the environment. The amounts of water, fertiliser, fuel and other resources used to produce never-consumed food are vast. The emissions generated during the process of making wasted food exceeds those of Brazil in total. Squandering meat is particularly…Continue reading

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The oil industry is bouncing back after OPEC’s meeting

PROUDLY, they call themselves elephant hunters. They are the geologists who scour the treacherous depths of the Arctic, or Brazil’s Atlantic pre-salt fields, or offshore west Africa, or the deep waters of the Gulf of Mexico, hoping to bag giant oil discoveries that can generate billions of dollars of cash for their firms over a span of decades. In some cases, they get naming rights. The Gulf of Mexico is peppered with fields named after geologists’ wives (risky if they are duds), or their favourite albums, bands, stars and football chants. They are part of the industry’s folklore. The question is, are they a dying breed? 

Several prospective deals announced this month, from the deep waters of the Gulf of Mexico to onshore Iran, suggest that the industry may be shying away from expensive forays into uncharted territory, and taking a more cost-conscious approach to exploration and production. It remains to be seen whether they can maintain their discipline if oil prices recover. But, for now, “they’ve all gone back to the drawing boards,” says Andy Brogan, an oil-and-gas specialist at EY, a consultancy.

On December 1st BP, a…Continue reading

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Glencore stuns the oil-trading business with a deal to take a big stake in Rosneft

Wild celebrations between Putin and Sechin

GLENCORE, a Swiss-based commodities company, and its biggest shareholder, the Qatar Investment Authority, are set to take a €10.2bn ($11bn) stake in the Russian oil giant Rosneft, giving them 19.5% of a business targeted by Western sanctions since Russia fuelled a war in eastern Ukraine in 2014. The unexpected deal, the largest in an ambitious Russian privatisation plan, delivers Vladimir Putin and Igor Sechin, Rosneft’s boss, a victory. The Russian state will keep control of the company, while filling a gap in the 2016 budget.

The transaction will also stir up old jealousies in the oil-trading business, which, as one industry participant puts it, is in “a pissing match to be top dog with Rosneft”, the world’s second-biggest crude producer. Last year Glencore was forced by the commodities slump to suspend its dividend, sell assets and issue $2.5bn of new shares. Its acquisitive boss, Ivan Glasenberg, had not been expected to make such an expansive move so soon.

In a statement Glencore said it will put only €300m of its own equity into the deal. The rest of the…Continue reading

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Europe’s nastiest takeover battle reaches its second anniversary

THE life of a predator can be fraught. Expend too much energy on hunting your prey and even success can be costly. Saint-Gobain, a French maker of glass and other building materials, might be learning that lesson. It mostly grows by snapping up smaller fry, but an attempt to buy a midsized Swiss rival, Sika, has gone on for two years. It could take as long again for Swiss courts to resolve the most intractable corporate struggle in Europe.

Pierre-André de Chalendar, Saint-Gobain’s CEO since 2007, was doubtless impressed by Sika’s high returns on its business selling industrial adhesives, mortar and construction chemicals. Its annual return on capital over the past decade has been an attractive 12.6%, more than double Saint-Gobain’s 5.1% (see chart). So when in 2014 the current, fourth generation of the Burkard family, which founded Sika in 1910, offered to sell 52.4% of the voting rights in their firm, Mr de Chalendar bit.

The family investment is kept in a body called Schenker-Winkler Holding (SWH) which, following the death of the matriarch in 2013, the dynasty agreed to sell to the French firm for SFr2.75bn…Continue reading

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Charles Koch is a rare thing, a businessman besotted with ideas

CHARLES KOCH may well be the most demonised businessman in America, with his younger brother, David, a close second. Journalists argue that he is the mastermind of the country’s vast right-wing conspiracy. Lunatics have made death threats. The ultra-rich, particularly those who made their original fortunes in oil and gas, are supposed to make amends by giving their money to liberal causes. The Kochs have instead spent hundreds of millions backing conservative political causes (though Charles Koch has no love for Donald Trump), lobbying for lower taxes and attacking the idea of man-made global warming.

Mr Koch doesn’t come across as Dr Evil. True, the headquarters of Koch Industries is a collection of black boxes outside Wichita, Kansas; the security screening is rigorous. But its CEO has more of the air of a university professor. Despite his $40bn fortune, he lives in a nondescript neighbourhood in one of America’s most boring cities, puts in nine or more hours a day in the office and lunches in the company canteen. He doesn’t seem that interested in his surroundings: complimented on the firm’s art collection, he says his wife takes care of that…Continue reading

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America’s audit watchdog uncovers serious misconduct at Deloitte Brazil

ACCOUNTING scandals are nothing new in Brazil. Its former president, Dilma Rousseff, was impeached in August for cooking her government’s books. The bosses of its biggest building firms have landed behind bars for padding contracts with Petrobras, the state-run oil company. At least, governance gurus joke, all the imbroglios—and a three-year-old law against bribery—have prompted companies to replace what people used to call corruption departments with compliance offices. How ironic, then, that Brazil’s latest affair involves a firm that is meant to ensure that firms stay on the straight and narrow.

On December 5th it emerged that America’s Public Company Accounting Oversight Board (PCAOB) fined the Brazilian arm of Deloitte, the biggest of the “Big Four” accounting networks, $8m, for what Claudius Modesti, the watchdog’s director of enforcement, called “the most serious misconduct we’ve uncovered”. Deloitte is the first of the Big Four to be accused of failing to co-operate with a probe by the PCAOB, created by the Sarbanes-Oxley act of 2002, itself a response to a massive accounting scandal at Enron, an energy giant. The firm will also have to pay 5.4m…Continue reading

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South Korea’s chaebol bosses face parliament

FOR the South Korean public, the sight of nine of their most powerful business chiefs, who are rarely seen, submitting to a day-long grilling by South Korean MPs on December 6th was remarkable (eight of them are pictured). During the hearing, broadcast live on television, the heads of CJ, LG, Hanwha, SK, Samsung, Lotte, Hanjin, GS Group and Hyundai, all family-owned conglomerates, or chaebol, denied they had sought favours in return for the billions of won they paid into two foundations controlled by Choi Soon-sil, a former confidante of President Park Geun-hye. (As The Economist went to press, Ms Park faced an impeachment motion by parliament over her ties to Ms Choi.) Samsung’s Lee Jae-yong, whose 20.4bn won ($17.6m) grant was the biggest, was the most intensively interrogated. On many minds was the last time big bosses were thus summoned, during an inquiry in 1988 into the corporate funding of a foundation run by then-dictator Chun Doo-hwan. Six of those tycoons’ sons were among those testifying this week.

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BusinessBusiness and financeEditorial

Breitbart News is taking the business of outrage to Europe

A NOTABLE American commentator, Charles Krauthammer, once explained Rupert Murdoch’s success in founding Fox News, a cable channel, by pointing out that he had found a niche market—half the country. The same may be true of Breitbart News, a conservative website whose fortunes have risen with those of Donald Trump, and whose chairman, Stephen Bannon (pictured) is Mr Trump’s chief strategist.

Milo Yiannopoulos, an editor at Breitbart, explained after Mr Trump’s victory that half of voters are “repulsed by the Lena Dunham, Black Lives Matter, third-wave feminist, communist, ‘kill-all-white-men’ politics of the progressive left.” Breitbart saw it coming a while ago, he added. The company’s expansion plans suggest it sees something coming in Europe, too. It already has a website in Britain and in January it will launch French and German sites.

Founded by Andrew Breitbart, the site is just nine years old. Its formula—outraging and fascinating readers with “clickbait”, occasional fake news, polemics and attacks on mainstream media—has taken off. Ten days after the election it said it had received 45m unique visitors in 31 days—modest compared…Continue reading

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Siemens and General Electric gear up for the internet of things

IT DOESN’T take long to walk from Siemens’s old headquarters in Munich to its new one, inaugurated in June: the German industrial conglomerate has built it right next door. The design is cutting-edge, as are the building’s environmental features. It is packed with energy-saving sensors; channelled rainwater is used to flush the toilets.

General Electric, Siemens’s big American rival, will soon have a new base, too. But it takes three hours to drive from the old site in Fairfield, a Connecticut suburb, to the new one in Boston. Its building will also boast plenty of green technology, such as a huge canopy made of solar panels, as well as spaces that the public can enter, including co-working areas and lounges. There will be laboratories both for internal startups and some from outside. 

The two industrial giants aren’t so much showing off as signalling transformation. Both firms are going through the most profound change in their corporate histories, attempting to switch from being makers of machines into fully digital businesses. GE’s chief executive, Jeff Immelt, says the plan is to join the world’s top ten software firms…Continue reading

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Japanese golf courses hunt for a new driver

Slow fade

THE gold-coloured golf club priced at $4,700 that Japan’s prime minister, Shinzo Abe, gave to Donald Trump, America’s president-elect, in their first meeting last month may have been a piece of polished diplomacy. But it is unlikely to revive its posh Japanese maker, Honma, which calls itself “golf’s aristocracy”, presumably because it crafts the world’s most expensive clubs. It went bankrupt after Japan’s bubble-era splurge on new golf courses. Seven years ago a businessman from China bought the firm, hoping for an upswing.

Golf, long associated with extravagance in Japan, is flagging. Clubs have trimmed green fees as the level of golf-playing among Japanese has fallen by over 40% since a high in the early 1990s. As elsewhere, courses are in oversupply: Japan has over 2,300—half of Asia’s total.

More than 120 have closed since 2010. Entrepreneurial types have converted about 70 into solar-panel plants, encouraged by state subsidies for alternative-energy production following the disaster in March 2011 at the Fukushima Dai-ichi nuclear-power plant. A few others have been turned back into…Continue reading

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Donald Trump’s win has sent the shares of small American companies on a tear

THERE have been plenty of swings in financial markets since America’s election on November 8th. The Mexican peso has fallen against the dollar, reflecting worries about Donald Trump’s protectionist tendencies. Ten-year bond prices have tumbled as investors factor in the likelihood of much higher government borrowing. One particularly striking move has been a surge in the share prices of small firms. The Russell 2000 index of American midgets has leapt by 12%, compared with a 3% rise for the S&P 500 index of multinational leviathans (see chart).

Small companies are the backbone of America’s economy, employing about half of the private-sector workforce. But they have had a rotten decade. The Russell index had lagged the stockmarket until the election. The country’s 28m small firms—most of them unlisted—have never fully recovered from the financial crisis of 2008. As of October, confidence had yet to rise back to the level of 2006, according to an index of optimism that is based on surveys by the National Federation of Independent Business, a lobbying group. Giant firms, meanwhile, have been playing a bigger role: two-thirds…Continue reading

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France’s nuclear-energy champion is in turmoil

Under pressure

THESE are difficult times for Electricité de France (EDF), the country’s quasi-monopolistic electricity provider, serving 88% of homes. Outages at no fewer than 18 of the 58 EDF-owned nuclear reactors that provide three-quarters of France’s electricity have meant a slump in production: the company says annual nuclear output could fall to 378 terawatt hours (TWH), from 417 TWH last year. Eight reactors are currently lying idle and several may not restart for weeks or months. Power stations are burning coal at a rate not seen since the 1980s. As electricity imports and prices soar, officials are having to deny that a cold snap could bring blackouts.

The cause of the crisis—possibly faulty reactor parts throughout EDF’s fleet—suggests it may not be easily contained. France’s nuclear regulator, the Autorité de Sûreté Nucléaire (ASN), this summer ordered urgent tests of reactor parts, mostly bases of cylindrical steam generators. Inspectors are worried about high carbon levels found in steel forged by Creusot Forge, which is owned by Areva, another French firm, and by Japan Casting & Forging…Continue reading

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How companies should treat their most enthusiastic customers

THE hero of Nick Hornby’s novel, “High Fidelity”, cannot get enough of vinyl records. By day Rob Fleming runs a record shop where he spends his time sampling the stock and constructing fantasy compilations with his equally obsessive assistants. By night he moons over his favourite songs. “Is it so wrong, wanting to be at home with your record collection?” he asks himself. “There’s a whole world in here, a nicer, dirtier, more violent, more peaceful, more colourful, sleazier, more dangerous, more loving world than the world I live in.”

Rob is an example of what management gurus dub “super-consumers”, “lead consumers” or “high-passion fans”. Only a tenth of customers are super-consumers but they account for 30-70% of sales, an even greater share of profits and almost 100% of “customer insights”, says a new book, “Super-Consumers”, written by Eddie Yoon of the Cambridge Group, a consultancy.

These people are not defined simply by the amount of stuff they buy (though they tend to be heavy users), but by their attitude to the product. Like Rob, they regard the things that they consume as answers to powerful…Continue reading

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The business of reselling returned shop items

Can I send him back, too?

IN STORES and warehouses across America, they wait: towers of toys, scarves piled on scarves, box upon box of shoes. The official start of holiday shopping in America begins on “Black Friday” on November 25th. Retailers hope to sell more than $650bn of goods this season, roughly the annual economic output of Switzerland. Ideally, companies’ supply of products would precisely match demand for them. In reality millions of items will stay on shelves or get sent back after purchase—in all of 2015 Americans returned goods worth $261bn, out of a total $3.3trn sold. What happens next?

Some returned goods will be resold by the very same retailer, but many will not. By the time an item is returned it might be either damaged or stale, points out Steven Barr of PwC, an accounting firm and consultancy; shops might want to offer newer wares. And resale is not an option for the stacks of goods that are never sold at all.

For retailers and manufacturers, this is a big headache. Dealing with unwanted goods can amount to a tenth of the cost of making and distributing them in the first place. But for…Continue reading

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ApprovedBusinessBusiness and finance

The business of reselling returned shop items

Can I send him back, too?

IN STORES and warehouses across America, they wait: towers of toys, scarves piled on scarves, box upon box of shoes. The official start of holiday shopping in America begins on “Black Friday” on November 25th. Retailers hope to sell more than $650bn of goods this season, roughly the annual economic output of Switzerland. Ideally, companies’ supply of products would precisely match demand for them. In reality millions of items will stay on shelves or get sent back after purchase—in all of 2015 Americans returned goods worth $261bn, out of a total $3.3trn sold. What happens next?

Some returned goods will be resold by the very same retailer, but many will not. By the time an item is returned it might be either damaged or stale, points out Steven Barr of PwC, an accounting firm and consultancy; shops might want to offer newer wares. And resale is not an option for the stacks of goods that are never sold at all.

For retailers and manufacturers, this is a big headache. Dealing with unwanted goods can amount to a tenth of the cost of making and distributing them in the first place. But for…Continue reading

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The future of the A380

AT THE world’s major airports, plane-spotters often spend days waiting for the world’s largest passenger plane, the Airbus A380, to make an appearance. The nerds at Dubai International Airport are spoilt for choice. It is home to Emirates, an airline that owns 86 of the monster aircraft, almost half of the global A380 fleet. These planes have propelled Emirates from insignificance a decade ago to its position as the world’s biggest carrier (measured by international passenger mileage in 2015). Now the airline has hit a rough patch. That is bad news for Airbus, the European aerospace and defence giant which makes the A380, and for the plane itself.

Demand once seemed insatiable for flights through Emirates’ hub in Dubai, which is known in the industry as a “super-connector” airport. Now its location helps explain the airline’s difficulties as well as its spectacular past growth, says its president, Sir Tim Clark. When he helped set up the airline in 1985, he says, Dubai was “an enchanting Arab village” that generated little air traffic. Instead of filling up the planes with locals, his strategy was to use its position halfway between…Continue reading

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Samsung is sucked into South Korea’s political crisis

IT WAS the third raid on the Samsung group in as many weeks. On November 23rd state prosecutors combed more offices of the South Korean consumer-electronics firm, part of a probe into an influence-peddling case that could be the undoing of President Park Geun-hye’s administration. The deepening inquest compounds a miserable few months for Samsung, which recently recalled 3m faulty washing machines and killed a new line of Galaxy Note phones after dozens exploded due to flawed batteries.

Last week prosecutors accused Ms Park of conspiring to coerce 50-odd companies to funnel 80bn won ($70m) to two foundations, Mir and K-Sports, controlled by Choi Soon-sil, a confidante indicted for abuse of power. The biggest grant, 20.4bn won, came from Samsung. Prosecutors suspect that it funnelled a further €2.8m ($3m) to Ms Choi through Widec Sports, a German company she used to buy horses and equestrian lessons for her daughter, a dressage athlete.

Investigators had said that the firms, including many in the pantheon of South Korean business, such as Lotte, a retail giant, and SK Group, a conglomerate, both of whose offices were raided this week,…Continue reading

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False news items are not the only problem besetting Facebook

“MARK ZUCKERBERG, dead at 32, denies Facebook has problem with fake news.” The satirical headline, which made the rounds online this week, nicely encapsulates the most recent woes of the world’s largest social network: its algorithms, critics say, filled users’ newsfeeds with misinformation—and in the process influenced the American election result. But this is not the only problem the firm is grappling with. A volatile share price, privacy policies and advertising metrics have also kept Mr Zuckerberg (pictured) busy.

“News” that the Pope had endorsed Donald Trump or that a pizzeria in Washington, DC, is the home base of a child-abuse ring led by Hillary Clinton, were not confined to Facebook (nor were fake stories only a right-wing phenomenon). They often originate elsewhere, for instance on fake-news websites in Macedonia, which make good money via online ads, and on Twitter. But Facebook’s algorithms give prominence to such misinformation. They are tuned to maximise “engagement”, meaning they present users with the type of content that has already piqued their interest, as outrageous headlines tend to do.

Yet despite…Continue reading

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Donald Trump’s conflicts of interest

THE NEW Trump Tower in Worli, a buzzing district of Mumbai, looks like any building site but its marketing sells a dream. A golden structure soars to the sky alongside a picture of Donald Trump. He is—potential residents are assured—the gold standard around the globe, a dealmaker without peer who operates across the gateway cities of the world and the man who built the American dream. Until a few days ago the developer, Lodha, carried a message on its website: “Congratulations Mr President-elect”. But now that a storm has blown up over the possible conflicts of interest between the various operations of Mr Trump’s group and his new job, it has been deleted.

The self-embellished legend is of a global tycoon. In a kind of mirror image, outraged suspicion is mounting that the Trump Organisation could morph into a vast global network of cronyism. America has been treated to reports of multi-billion dollar projects across the planet, to photos of Mr Trump glad-handing businessmen and to images of exotic, Trump-branded buildings standing like monuments to the decay of American ethics. Paul Krugman, a left-of-centre economist, has suggested that the…Continue reading

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Donald Trump’s conflicts of interest

THE NEW Trump Tower in Worli, a buzzing district of Mumbai, looks like any building site but its marketing sells a dream. A golden structure soars to the sky alongside a picture of Donald Trump. He is—potential residents are assured—the gold standard around the globe, a dealmaker without peer who operates across the gateway cities of the world and the man who built the American dream. Until a few days ago the developer, Lodha, carried a message on its website: “Congratulations Mr President-elect”. But now that a storm has blown up over the possible conflicts of interest between the various operations of Mr Trump’s group and his new job, it has been deleted.

The self-embellished legend is of a global tycoon. In a kind of mirror image, outraged suspicion is mounting that the Trump Organisation could morph into a vast global network of cronyism. America has been treated to reports of multi-billion dollar projects across the planet, to photos of Mr Trump glad-handing businessmen and to images of exotic, Trump-branded buildings standing like monuments to the decay of American ethics. Paul Krugman, a left-of-centre economist, has suggested that the…Continue reading

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ApprovedBusinessBusiness and finance

False news items are not the only problem besetting Facebook

“MARK ZUCKERBERG, dead at 32, denies Facebook has problem with fake news.” The satirical headline, which made the rounds online this week, nicely encapsulates the most recent woes of the world’s largest social network: its algorithms, critics say, filled users’ newsfeeds with misinformation—and in the process influenced the American election result. But this is not the only problem the firm is grappling with. A volatile share price, privacy policies and advertising metrics have also kept Mr Zuckerberg (pictured) busy.

“News” that the Pope had endorsed Donald Trump or that a pizzeria in Washington, DC, is the home base of a child-abuse ring led by Hillary Clinton, were not confined to Facebook (nor were fake stories only a right-wing phenomenon). They often originate elsewhere, for instance on fake-news websites in Macedonia, which make good money via online ads, and on Twitter. But Facebook’s algorithms give prominence to such misinformation. They are tuned to maximise “engagement”, meaning they present users with the type of content that has already piqued their interest, as outrageous headlines tend to do.

Yet despite…Continue reading

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Technology firms may struggle to disrupt the food business

THE office parks of Silicon Valley boast many firms that are trying to change the world. But there are plenty with more modest goals. Zume Pizza, a tiny startup that is located a few miles from the sprawling headquarters of Google, wants to redesign the way pizzas are made. Zume has programmed robots to make pizzas that are then cooked inside vans as they hurtle towards customers. Ovens are timed to finish cooking in sync with the vehicles’ arrival at their destination, so the pies are always piping hot.

In recent weeks spies from rival pizza companies and from food-delivery firms have been driving by in unmarked cars taking photographs of the office and the vans, says Julia Collins, one of Zume’s co-founders. To protect its business, the startup has patented the process of cooking food in ovens while a vehicle is moving (the patent probably gives Zume fairly defensible intellectual property, according to one patent lawyer). The company only operates in Mountain View, but has expansion plans. Since its founding last year it has reportedly raised $6m from investors, among them Jerry Yang, a co-founder and former boss of Yahoo, an early giant of…Continue reading

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The sharing economy brings tycoon lifestyles within reach of some

LAMENTING the rise of inequality is one of the few growth industries in an age of stagnation. One authority on the American wealthy, Robert Frank of CNBC, a TV channel, worries that the rich are “floating off” into their own country. Chrystia Freeland, a journalist-turned-politician, frets about the rise of the “new global super-rich” and the fall of everyone else. Charles Murray, America’s gloomiest social scientist, warns that society is “coming apart” as the rich retreat into their gated communities.

At the top of the income scale, however, a small counter-trend is observable. Never before have so many people been able to get access to the accoutrements of tycoonery—private planes, luxury yachts, fancy cars and interior-designed, exclusive homes. There is only so much comfort to be had from the fact that it is easier for the merely rich to lay claim to the lifestyle of the super-rich. But as a result of a combination of new technologies and businesses, that is nonetheless what is happening.

Tycoon living begins with a private jet. Whereas yachts are dispensable (not everyone wants to float around for weeks with the…Continue reading

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Polluting the outlook

So they hope

IT WAS on November 16th that the International Energy Agency (IEA), an organisation that represents oil- and gas-consuming countries, announced its prediction that over the next quarter of a century renewable energy, such as wind and solar, and natural gas will hugely eclipse the traditional role that coal and oil have played in satisfying the world’s growing demand for energy (see chart). That is the base case for what it says is a powerful shift in the global energy landscape towards cleaner fuels.

The trouble is that after the projections were calculated, Donald Trump, who is both a climate sceptic and a fossil-fuel fan, was elected as America’s next president. As Fatih Birol, the IEA’s executive director, pointed out this week, no one knows what his energy policies will be. Yet he will run the world’s biggest producer and consumer of oil and natural gas.

Many…Continue reading

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Amp my ride

“THE car is the ultimate mobile device,” said Jeff Williams, an executive at Apple, last year. It was taken as another sign that the maker of iGadgets would be deepening its interest in the automotive sector (among other projects, it is developing an in-house smart car that is codenamed Project Titan). Now Samsung Electronics, its big rival in the smartphone world, is following. On November 14th the South Korean company said it would pay $8bn for Harman, a firm based in Stamford, Connecticut, that makes internet-connected audio, information and security systems for cars. The deal is Samsung’s largest ever, and the first big transaction for its vice-chairman and heir apparent, Lee Jae-yong, grandson of the firm’s founder.

Though it is best known for its sound systems, Harman is one of the world’s largest supplier of smart parts for “connected cars” that help owners to drive by linking to the internet and to chip-enabled devices. It made $7bn in revenue in the year to September, two-thirds or so of it from the car sector, and has over three times that in new orders. Its products are the first step towards autonomous vehicles. Over 30m…Continue reading

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