Most of you probably didn’t read all 294 slides in tech guru Mary Meeker’s annual power point presentation, which was released this week. So let me relieve your FOMO. I read it, and can point to a few important highlights for CEOs:
Well into the deck (Slide 201), she notes that AI spending by large companies is small, but rapidly rising. In a Morgan Stanley survey of CIOs in January, only about 2% cited AI as the area that would “see the largest spending increases in 2018.” But by April, that had jumped to 5%.
In the next slide (202), Meeker quotes Google CEO Sundar Pichai comparing AI to the discovery of fire. “AI is one of the most important things humanity is working on,” Pichar says. “It is more profound than electricity or fire….We have learned to harness fire for the benefits of humanity, but we had to overcome its downsides too.”
Skip to slide 229, and Meeker says USA is ahead in AI, but “China = Focused + Organized + Gaining.” On the next slide, she quotes Eric Schmidt: “In five years, we’ll kind of be at the same level, possibly.”
The tsunami of change that AI will bring makes “lifelong learning = crucial in evolving work environment” according to slide 232, with “tools getting better + more accessible.” The most popular online course offered by Coursera last year, according to slide 233, was Machine Learning, and number two was Neural Networks.
— AI will change every business.
— Companies are moving slowly to invest…but moving.
— The U.S. is in danger of losing its lead to China within a decade.
— Reskilling is the challenge of our times (or at least one of the big ones.)
— All of this is a heck of a lot more important to keeping America great than tariffs on steel and aluminum.
You can read the full report here. The reskilling point, by the way, will be an important focus of the CEOs who gather in San Francisco later this month for the Fortune CEO Initiative. Learn more here.
It’s on. With the U.S. having hit Canada, Mexico and the European Union with steel and aluminum tariffs, the responses are already taking shape. With Canadian Prime Minister Justin Trudeau promising “dollar for dollar” retaliation, the EU will sue the U.S. at the World Trade Organization and slap duties on U.S. products. Per European Commission President Jean-Claude Juncker, the Americans “don’t listen. They think they can talk Europeans down and make them small. That is not going to happen. This is not the way to deal with allies.” Independent
As for the other big issue causing stock market turmoil in the last week, Italy’s populist 5Star Movement and far-right League parties have managed to form a government on their second attempt—the first was thwarted when President Sergio Mattarella vetoed their choice of finance minister. The new prime minister is the obscure academic Giuseppe Conte, 5Star leader Luigi Di Maio is welfare and economic development minister, and League leader Matteo Salvini is interior minister. The new finance minister is an economist called Giovanni Tria—naturally, a critic of the eurozone. Wall Street Journal
Mired in corruption scandals, Mariano Rajoy and his right-wing Popular Party (PP) have been ousted from government in Spain, following a no-confidence vote this morning. The Socialist Party (PSOE) is back in power after more than six years in the wilderness, with Pedro Sánchez in as prime minister. PSOE tabled the motion of no confidence, and won the backing of the populist Podemos, the Basque Nationalist Party (PNV) and two Catalan separatist parties. PP had the support of the center-right, anti-separatist Ciudadanos party. The Spain Report
Pity new Deutsche Bank CEO Christian Sewing—S&P has just cut the bank’s credit rating to BBB+, citing “severe execution risk” regarding his major restructuring plans. Deutsche Bank “appears set for a period of sustained underperformance compared with peers, many of whom have now finished restructuring,” the ratings agency said. On the other hand, S&P said Deutsche Bank had enough liquidity, so its shares went up. Bloomberg
Around the Water Cooler
Meanwhile, Deutsche Bank is one of the financial institutions set to be prosecuted on criminal cartel charges in Australia—the others are ANZ and Citigroup. The case revolves around arrangements for the sale of $1.9 billion in ANZ shares a few years back. Deutsche Bank, Citigroup and JP Morgan (which is not accused of anything) underwrote the deal, and regulators think there was illegal collusion on how shares were taken up. BBC
Sears has announced plans to close 72 more stores this year, including 48 Sears stores and 15 Kmarts. All will be shut by early September. So far this year, the company has already shut 64 Kmart stores and 39 Sears stores. It says it has identified 100 more unprofitable locations that will close over time, and by the end of this year it will have fewer than 1,000 stores left across the U.S. Sears’ first quarter earnings yesterday showed a 30% drops in sales. By the end of yesterday’s trading, its stock was down 12.5%. CNBC
“Emulate George Washington, not Vladimir Putin,” an investor told Mark Zuckerberg at Facebook’s ill-tempered annual shareholder meeting yesterday (a reference to Washington’s willingness to resign.) And here’s Christine Jantz, chief investment officer at NorthStar Asset Management: “If privacy is a human right, as stated by Microsoft’s CEO, then we contend that Facebook’s poor stewardship of user data is tantamount to a human rights violation.” No matter—shareholders rejected a motion to strip the CEO of his special voting rights, leaving him as omnipotent as ever. NBC
Basav Sen, director of the Climate Policy Project at the Institute for Policy Studies, wrote a piece for Fortune about the Trump administration’s efforts to bail out the coal and nuclear industries. He accuses the government of revisiting regulations with predetermined conclusions in mind, and takes issue with the reportedly planned tactic of propping up coal and nuclear on national security grounds. “What is clear is that under this proposal, taxpayers will subsidize old, uncompetitive technology that harms the planet to boot,” Sen writes. Fortune