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A rare glimpse into how Facebook really works
A cache of emails and other internal Facebook documents made public by a British parliamentary committee on Wednesday revealed how the social media giant used people’s personal data to favor some of its partners and to punish rivals.
The 250 pages of material, from 2012 to 2015, had been sealed by a U.S. judge as part of a lawsuit filed against Facebook by an app developer, but they were obtained by British lawmakers as part of a parliamentary investigation into the company’s practices.
Facebook engineered ways to collect data without telling users. In one exchange, employees discussed a possible app update that would log users’ phone calls. “This is a pretty high risk thing to do from a P.R. perspective but it appears that the growth team will charge ahead and do it,” Michael LeBeau, an employee, said in one email.
Mark Zuckerberg approved cutting off a competitor’s data access. In 2013, after Twitter released the video app Vine, Facebook ended Twitter’s access to friends data. “Unless anyone raises objections, we will shut down their friends API access today,” Justin Osofsky, a Facebook executive, said in an email at the time. The response from Mr. Zuckerberg, Facebook’s founder and chief executive: “Yup, go for it.”
Data was prized above almost everything else. “Sometimes the best way to enable people to share something is to have a developer build a special purpose app or network for that type of content and to make that app social by having Facebook plug into it,” Mr. Zuckerberg wrote in a 2012 email. “That may be good for the world, but it’s not good for us unless people also share back to Facebook and that content increases the value of our network.”
Facebook said the documents had been cherry-picked to show the company in an unfavorable light.
“Like any business, we had many internal conversations about the various ways we could build a sustainable business model for our platform,” the company said. “But the facts are clear: We’ve never sold people’s data.”
More Facebook news: The company’s board said it was “entirely appropriate” for Sheryl Sandberg to investigate whether George Soros had shorted the company’s stock. And internal tensions at the social network are reportedly becoming far more intense.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York and Jamie Condliffe in London.
Will the arrest of a Huawei executive inflame trade tensions?
Meng Wanzhou, the chief financial officer of the Chinese tech giant Huawei and the daughter of the company’s founder, was arrested in Canada on Saturday at the request of the U.S.
Context: The U.S. government, which views Huawei as a national security threat, has taken steps to restrict the use of the company’s technology and has been lobbying other countries to do the same. Just this week, a major British telecommunications company announced it would strip Huawei hardware from its core 4G network.
Why it matters: Given that Huawei is one of China’s corporate jewels, Ms. Meng’s detention would most likely increase tensions between Beijing and Washington as they start new trade negotiations.
What happens next in this high-stakes game? “The U.S. Department of Justice and the Trump administration have an important question to answer,” Tim Culpan of Bloomberg Opinion writes. “What do we want out of this?” The wrong decision could escalate the trade war at a time both nations are hoping for peace.
A travel note for U.S. executives: “They will retaliate and China will take hostages,” James Lewis, director of technology policy at the think tank CSIS told Axios. “If I was an American tech executive, I wouldn’t travel to China this week.”
Confidence sags over Trump’s vision for trade with China
President Trump said yesterday that the Chinese government was sending “very strong signals” about what might emerge from the trade truce he and President Xi Jinping reached last weekend in Buenos Aires. The comment was apparently a reference to remarks of Beijing being “confident” a comprehensive deal can be reached before a tariff freeze expires in 90 days.
Plenty of people are unconvinced. More from Alan Rappeport and Jim Tankersley of the NYT:
• “Mr. Trump and his advisers have been touting the trade truce reached in Buenos Aires as a victory, saying that China had agreed to buy $1.2 trillion worth of American products.”
• “But trade experts and industry insiders remain perplexed, anxiously awaiting information about the timing and composition of the $1.2 trillion, a number that dwarfs the $130 billion in goods that the United States exported to China last year.”
• “If China doubled the amount of goods it bought from the United States starting next year, it would take nearly a decade to reach the $1.2 trillion goal.”
Coming up: A crucial meeting for oil prices
OPEC officials are meeting in Vienna today, and it’s a tricky time for the oil industry, writes Stanley Reed of the NYT.
Why it matters: Oil prices have swung wildly in recent months, with crude tumbling 35 percent to less than $50 a barrel before rebounding slightly this week. The industry would like to lift prices by restricting production, but Mr. Trump has been explicit about wanting to keep prices low.
What to expect: “Most analysts say that the oil producers have little choice but to announce a substantial cut in production of at least one million barrels a day, or around 1 percent of world oil supplies,” Mr. Reed writes. “Otherwise, prices could slide into the $40-a-barrel range or lower, squeezing the oil-dependent economies of member countries.”
What can go wrong: The future of Russian oil production and the amount of Iranian oil that U.S. sanctions will take off the market could still sway prices.
How can businesses get customers to pay for climate change?
There’s a huge business opportunity in climate change. Exploiting it is the hard part.
In a climate change report published yesterday, scientists likened the quickening growth rate of carbon dioxide emissions to a “speeding freight train,” and warned that the world may face some of global warming’s most severe consequences sooner than expected.
Greg Ip of the WSJ outlines what that means for businesses:
“Worries don’t translate into solutions unless businesses devise products that emit dramatically less planet-warming greenhouse gases. The innovation is the easy part; getting people to buy it is the hard part. That requires incentives, which depend heavily on governments. Without their intervention, solar and wind power, and electric and hybrid cars would have no foothold against their fossil fuel competitors.”
But he also notes that many government interventions aren’t sufficiently informed by long-term thinking. Tom Linebarger, the chief executive of the engine maker Cummins, tells Mr. Ip that there’s an obvious path forward. “If we want rules that are more effective, decide the end result we want and let technology compete for the best solution,” he said. “Carbon taxes are much better than all the other choices.”
Brace for possible market drama
The U.S. markets were closed yesterday in honor of former President George Bush. When they reopen today, there could be bad news.
Futures tracking U.S. stocks aren’t encouraging. The S&P 500, Nasdaq and Dow all appear set to open with losses of more than 1.5 percent today.
What’s driving the malaise? Trade concerns are playing a big role, and the arrest of Meng Wanzhou of Huawei added to unease about the prospects for the U.S.-China trade truce. The flattening yield curve, which is seen as an early indicator of a looming recession, is also having an impact. Add to that more general fears of a slowing global economy, Brexit and a troubled tech sector.
Global unemployment is at its lowest level in almost 40 years
A new study by UBS suggests worldwide unemployment was 5.2 percent in September. That’s down from 8 percent in 2010, and the lowest level since 1980.
More on the numbers from the FT:
Arend Kapteyn, UBS chief economist, said that greater labor market flexibility since the financial crisis — due to factors such as lower wages and the advent of the gig economy — had helped lower the natural rate of unemployment in many countries.
The change has been particularly pronounced in Eastern Europe: Polish unemployment has fallen to 6.2 percent from 20 percent in 2002, for instance, and Croatia and Slovakia have similar stories. But unemployment has dropped in many of the largest economies too, including the U.S., Britain, Germany and Japan.
Robert Dickey, C.E.O. of the newspaper publisher Gannett, plans to retire by May.
Martin Anstice, C.E.O. of Lam Research, has resigned amid allegations of misconduct in the workplace.
The speed read
• SoftBank reportedly sold all of the shares for the $23 billion I.P.O. for its telecom unit. (Bloomberg)
• The activist hedge fund Engaged Capital has pushed for the restaurant chain Del Frisco’s to sell itself. Del Frisco’s introduced a “poison pill” clause in its shareholder rights plan to prevent that from happening.
• Blackstone is said to be preparing an I.P.O. of the benefits management company Alight. (Reuters)
• Chinese start-ups raised more cash than their Silicon Valley counterparts did in the first half of 2018. That’s unlikely to last, and a downturn could produce casualties. (Breakingviews)
Politics and policy
• Here are the most important moments from the funeral of former President George Bush. (NYT)
• Senators introduced a resolution stating that Mohammed bin Salman, the crown prince of Saudi Arabia, was “complicit” in the killing of Jamal Khashoggi. (Hill)
• A House Democrat has called for an emergency hearing on suspected election fraud in North Carolina. (WaPo)
• President Vladimir Putin of Russia threatened an arms race with the U.S. (WSJ)
• Prime Minister Theresa May of Britain is said to be considering making concessions in her Brexit deal to win over skeptics in Parliament. Here’s how the E.U. could, grudgingly, renegotiate the agreement.
• Tariffs have done little to diminish American imports of foreign steel. (WSJ)
• The Federal Reserve said price rises stemming from tariffs have spread more broadly through the U.S. economy. (Reuters)
• Google workers have asked their C.E.O. to provide better working conditions for contractors. (The company also accidentally published dummy ads online during a training exercise, a mistake that could cost it $10 million.)
• Tesla hopes to start building cars in a new Chinese factory before the end of 2019. (FT)
• Australia’s anti-encryption bill is edging closer to passage. (TechCrunch)
• C.E.O.s from Google, Microsoft, IBM and other tech companies are set to discuss innovation at the White House today. (Bloomberg)
Best of the rest
• MoviePass announced plans for a reboot. Will it work? (NYT)
• U.S.A. Gymnastics, the sport’s governing body, has filed for bankruptcy. (NYT)
• Mary Barra, G.M.’s C.E.O., said she would keep an “open mind” about plant closings, but stopped short of saying she would backtrack on those already announced. (Reuters)
• Brexit uncertainty is making it tough to trade the British pound. (FT)
• James Dyson rose to fame by selling vacuums. Now he’s backing Brexit, and making antiquated comments on “racial differences.” (NYT)
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