Thursday, 12th October
Does Amazon have an unfair advantage in the marketplace?
That’s the argument NYU Stern professor Scott Galloway (author of the new book The Four) makes in this video published yesterday on Business Insider. Galloway’s argument is that the stock market keeps bidding up Amazon’s stock, irrespective of profits, and as a result they have “access to cheaper capital than any company in history. Amazon can now borrow money for less than the cost (at which) the Chinese can borrow money. …Effectively, this company is playing unfair, and winning.”
Unfair? Hard to blame Amazon because investors are throwing money at it. But winning? Yes indeed. And it is increasingly an uphill battle for others to compete.
Fortune’s Most Powerful Women conference yesterday featured two women—Rebecca Minkoff, founder of her eponymous fashion retailer, and Kristen Green, a general partner at Forerunner Venture—who are valiantly trying. Both talked about how they are combining online and in-store experiences. Stores increasingly incorporate technology as part of the shopping experience. And store associates are being given commissions for online sales that occur within six months after they help a customer. Green said “e-commerce” is no longer a word they use at Forerunner: “We call it commerce.”
Other news below.
• A Stroke of the Pen to Start ACA Replacement
President Trump is to sign an executive order Thursday directing federal agencies to provide lower-cost options in health insurance and increase competition in individual insurance markets, The Wall Street Journal reported. The move seems aimed at making sure that health care reform doesn’t drop completely off the radar in the wake of Congress’s failure to repeal and replace the Affordable Care Act. The WSJ’s sources noted that it would take months to take effect, and that key details would be left in the hands of the Labor Department. WSJ, subscription required
• California’s Wineries Face a Long Road Back
The death toll in the Californian wildfires rose to 23, while the number of homes destroyed rose above 2,000. The impact on the region’s wine industry (and in turn the hurricane-battered insurance sector) remains hard to quantify, but looks increasingly likely to be severe, especially since vines take longer to replace than winery presses and bottling facilities. Fortune
• Trump Threatens NBC Over Tillerson Report
President Donald Trump suggested revoking the licenses of TV networks for broadcasting “Fake News.” Trump was ostensibly reacting to an NBC report last week that cited anonymous sources saying Secretary of State Rex Tillerson had referred to Trump as a “moron” after a discussion of the U.S. nuclear arsenal. In separate, non-fake news developments, the White House said Trump will nominate cyber-security expert Kirstjen Nielsen to fill the vacancy at the Department of Homeland Security that was created by John Kelly’s move to become chief of staff. Nielsen is currently Kelly’s principal deputy chief of staff. Fortune
• China Wants a Piece of Its Tech Companies
China is pushing some of its biggest tech companies, including Tencent, Weibo and Alibaba’s video platform Youku Tudou, to offer the state a stake and to allow it a degree of input into corporate decision-making, according to The Wall Street Journal. China Inc.’s exposure to an intrusive state and its lack of protection from a predictable legal framework are not news per se. The question is at what stage such exposure mutates into value destruction. Recent state actions, such as warning about the addictiveness of Tencent’s video games, or the distribution of pornography over social media networks, have not been egregious, but rather symptomatic of worldwide regulatory concerns about tech companies. The process also goes both ways: private companies recently injected billions into state telecoms giant Unicom, in a move that aims to make it more responsive to market forces. WSJ, subscription required
Around the Water Cooler
• Out of Control
The scandal around Harvey Weinstein’s sexual predations continued to grow, with French actress Lea Seydoux and British model Cara Delevingne coming forward to share their experiences. Twitter suspended Rose McGowan, one of the Weinstein’s victims, for calling out Ben Affleck for hypocrisy in foul-mouthed terms, while Affleck himself was forced to apologize for his own sexual aggression towards actress Hilarie Burton 12 years ago. Ex-Disney CEO Michael Eisner said via Twitter he’d fired the Weinsteins in 2005 “because they were irresponsible, and Harvey was an incorrigible bully,” but said he had “no idea he was capable of these horrible actions.” As with the scandals at Fox, every new allegation raises questions about who knew what, when, and what degree of responsibility they could reasonably be expected to take for exposing and ending it. Fortune
A couple of readers took issues with yesterday’s summary on this subject (‘The Lady Not Bound by NDA Doth Protest Too Much, Methinks’), sensing that I was blaming the victims. This was emphatically not the case. ‘The Lady’ referred to was Hillary Clinton who, as noted yesterday, is (by her own admission) a long-term friend of Weinstein and a beneficiary of his political donations. Clinton’s claim, after a three-day silence, to be ‘shocked’ by the revelations sits uneasily with the sense that you doesn’t get to have a career like hers by accidentally staying unaware of what appears by most accounts to have been an open secret. That said, there is no proof to refute her version of events, and (as Gretchen Carlson told MPW yesterday) sexual harassment is essentially apolitical.
• Congress to Release Russia-Linked Facebook Ads
The leaders of the House of Representatives Intelligence Committee’s Russia investigation said they intend to publish thousands of politically-divisive Facebook ads purchased by Russia during last year’s presidential election. Facebook’s COO Sheryl Sanders is due to meet with House leaders in a closed session later today. Revelations over the past month about how Russia appears to have leveraged their platforms to spread propaganda have prompted questions from both political parties about whether more federal oversight of their businesses is needed. Fortune
• Facebook Offers Cut-Price VR
Facebook unveiled a new cut-price Virtual Reality headset that doesn’t need a personal computer to operate it. The ‘Oculus Go’ will cost $200 when it goes on sale next year. CEO Mark Zuckerberg also touted the existing Oculus headset as a tool for business at the company’s annual developer conference. The presentation passed off with none of the controversy that beset the launch of the “Spaces” feature earlier in the week. Fortune
• Qualcomm Slapped With Antitrust Fine
Qualcomm was fined $774 million by Taiwan’s antitrust authorities. It’s the latest in a streak of regulatory setbacks to its business model that comes as it also fights U.S. regulators and Apple in court over many of the same legal issues. The Commission said in a Chinese-language statement that Qualcomm had a monopoly over the chip market for several so-called modem technologies, which provide wireless data connectivity for mobile phones, and refused to license its technology to other industry players. Fortune
Summaries by Geoffrey Smith; firstname.lastname@example.org