The honeymoon between Donald Trump and the tech industry came to an end this weekend, as various companies denounced the executive order banning immigrants from seven Muslim-majority countries. Apple CEO Tim Cook wrote a memo to his workforce saying his company “would not exist without immigration, let alone thrive and innovate the way we do.” Apple’s founder Steve Jobs was, famously, the son of an immigrant from Syria, one of the now-blacklisted countries. Facebook CEO Mark Zuckerberg said the U.S. should focus its security measures on “people who actually pose a threat.”
Some companies went beyond words. Google gave $2 million, to be matched by $2 million from employees, to the ACLU to help people affected by the order. The company says the order affects 187 of its employees. The co-founders of Lyft pledged $1 million (it was a good weekend for ACLU fundraising). Uber came under fire for alleged “strikebreaking” when Muslim taxi drivers in New York went on strike, prompting CEO Travis Kalanick to email employees. Airbnb offered free housing to refugees and anyone else affected by the ban.
IBM’s senior vice president of human resources sent a memo to workers saying: “As IBMers, we have learned, through era after era, that the path forward – for innovation, for prosperity, for civil society – is the path of engagement and openness to the world. Our company will continue to work and advocate for this.” Starbucks CEO Howard Schultz said he would look to hire 10,000 refugees in stores worldwide.
Opposition to the Trump order also came from the billionaire Koch brothers, who fund conservative organizations. “We believe it is possible to keep America safe without excluding people who wish to come here to contribute and pursue a better life for their families,” said Brian Hooks, co-chairman of the Koch network. “The travel ban is wrong, and will likely be counterproductive.”
In an apparent effort to calm the backlash, President Trump said the U.S. would resume issuing visas to all countries once secure policies are put in place over the next 90 days, and once again blamed the media for the fracas.
Other news below.
• Markets Sulk After Immigrant Ban, GDP Miss
The dollar may only have had a brief wobble, but stock markets are in a bona fide sulk this morning, as the upheaval over President Trump’s immigrant ban illustrates the new administration’s potential to disrupt. The major U.S. stock indices are down by around 0.3%. “It just seems that there are too many uncertainties, unknowns and major policy changes attached to a Trump presidency for it to be a smooth year,” Deutsche Bank strategist Jim Reid summed up. The upturn in volatility is all the more pronounced after a wholesale – some would argue undiscriminating – rally in recent weeks. Treasury bonds are well bid, not least due to a last week’s disappointing U.S. GDP numbers for the fourth quarter. The benchmark 10-year yield is now back below 2.50%.
• Sony Puts a Price Tag on Lynton’s Legacy
Sony said it would take a $1 billion writedown on its Sony Entertainment business after a string of poorly-received movies (including Ghostbusters and Angry Birds) that led to the departure of CEO Michael Lynton two weeks ago. The company said it was still reviewing the outlook for profitability at its Hollywood unit, which had only just recovered from a North Korean hacking operation in 2014. The Japanese company is to sell part of its medical web service unit M3 Inc. to Goldman Sachs to help shore up its balance sheet.
• Vive le Bernie Français! (Say 7% of Voters)
The rolling narrative of populism in Europe took an intriguing turn at the weekend. France’s Socialist Party chose the hard-left Benoit Hamon as its Presidential candidate, despite the fact that only 7% of French voters say they’d vote for him. Hamon, who is campaigning for a tax on robots and a ‘basic universal income’ of 750 euros ($800) a month, raises the chances of 39 year-old Emmanuel Macron, whose offer of a modernized, Europhile, centrist policy has gained considerable momentum recently, while last month’s center-right media darling François Fillon has slipped after claims that his office employed his wife in a lucrative sinecure during his time as a lawmaker.
• Toyota Slips Behind VW
Toyota’s annual sales confirmed that it lost its crown as the world’s number 1 automaker by volume for the first time in five years, falling behind a resurgent Volkswagen Group. If that seems counterintuitive in the wake of the diesel scandal, bear in mind that VW’s reputational damage hit it most in a market (the U.S.) where it had relatively little to lose. At the same time, VW was staging a very strong comeback in China, its biggest overseas market. Toyota by contrast, suffered more from a 0.6% drop in U.S. sales, and global sales edged only 0.2% higher to 10.18 million vehicles as a result.
Around the Water Cooler
• Dodgy Computers Have No Immigration Policy
Delta Airways’ operations out of six key U.S. airports were struck by an IT systems outage, as the gremlins decided to descend on a company they had left in relative peace in recent months. The 2½-hour outage led to around 150 domestic flights being cancelled Sunday but international flights were unaffected, according to the FAA. The company’s last major outage in August had cost it an estimated $100 million in sales. This one appears relatively minor by comparison. CEO Ed Bastian apologized profusely and called the disruption “unacceptable”.
• A Mega-Merger in Indian Telecoms
U.K.-based Vodafone confirmed speculation that it is in talks to create India’s biggest telecoms company, two months after having to write down the value of its Indian business by over $5 billion due to aggressive competition from Reliance Jio, a low-cost challenger. Vodafone, the country’s no. 2 mobile carrier, wants to merge with Idea Cellular, owned by the Aditya Birla Group. The Indian market is interesting not only because of its size, but because the lack of banks in rural areas and Narendra Modi’s controversial war on cash is allowing mobile carriers the opportunity to lead in bringing financial services to the masses. That can stop them being relegated to the ‘dumb pipe’ status that they largely have in the West after being outsmarted by ‘over-the-top’ content providers.
• Unicredit Comes Clean(er) on Capital Needs
Italy’s banking crisis continues to rumble. Unicredit, the most globally important Italian bank by virtue of its extensive international operations, admitted that it would have missed regulatory capital norms if it hadn’t issued a massive cash call at the end of 2015. That flatly contradicted its earlier line that it had had no regulatory constraints, and is a blow to the credibility of its new French CEO Jean-Pierre Mustier, who had been seen as the new broom that was sweeping clean. It’s also another blow to the credibility of a system groaning under the weight of bad loans, and struggling to find a remedy that can be reconciled with the EU’s laws on state aid. Its shares fell over 5%.
FT, metered access
• The Grand Budapest Answer to Ransomware
There are obviously as many kinds of cyber vulnerabilities as there are businesses. The infinite variety of the hydra-headed monster has been on display in the swish Alpine resorts of Austria, where hackers crippled the ‘smart locks’ on guest rooms at one upmarket hotel for the fourth time in recent years (the Seehotel Jägerwirt in the small resort of Türracher Höhe). This being Austria, there are no hangups about seeking sanctuary in the past as a solution. Hotel manager Christoph Brandstätter is taking out the smart locks and returning to old-fashioned metal keys.
Summaries by Geoffrey Smith Geoffrey.email@example.com;