CEO Daily: Friday, July 31
Does Europe get to regulate the world? Google came out with a firm answer to that question yesterday – “Mais, non!” – setting the stage for a showdown that has profound implications for the global Internet.
Fortune’s Jeff John Roberts has written a smart story on yesterday’s developments, but the gist is this: Last year, the European Court of Justice issued its “right to be forgotten” decision forcing Google to remove certain links from search results. Since then, the company has been flooded with a quarter million requests to do so, and has been struggling to develop a methodology to decide which ones to honor. Then, French regulators said it’s not enough for Google to strip search results from European web pages (google.fr, google.de, etc.); it must take them down worldwide.
In a blog post yesterday, Google said it won’t comply with the French request. which it argued would create a regulatory “race to the bottom.” “There are innumerable examples around the world,” Google said, “where content that is declared illegal under the laws of one country, would be deemed legal in others: Thailand criminalizes some speech that is critical of its King, Turkey criminalizes some speech that is critical of Ataturk, and Russia outlaws some speech that is deemed to be “gay propaganda.” Should all these countries be able to remove such posts worldwide?”
We don’t know yet how France will respond, but this will be an important test case on whether national regulators can slow the free flow of information across borders. For the record, we are with Google on this one.
And speaking of Europe, my former colleagues at the Pew Research Center recently published results from their Global Attitudes survey showing just how disunited the European Union has become. Among Germans, 75% responded that the economy in their country is doing well, while among the French, only 14% said the same. In Italy, it was 12%. This is not the foundation of a happy marriage.
More news below.
• The U.S.-Europe banking divide
We felt this statistic really says a lot about the state of global banking today: Over the past five years, U.S. banks have added a total of $254.6 billion in market capitalization, while the Europeans have gained just $9.5 billion. This explains why Europe's top banks have recently been pulling back from a number of countries and businesses, while U.S. rivals seem poised to pounce on the opportunity. Barclays even conceded earlier this week that it sees Wall Street's top firms as "an enormous threat" to Europe. WSJ (subscription required)
• Facebook debuts Internet drone
The social-media website has developed a massive, solar-powered aircraft that will be responsible for beaming Internet signals back to rural areas on Earth that lack the kind of communications infrastructure needed to maintain Internet connectivity. The project – called Aquila – isn't a play to become an Internet service provider. Instead, Facebook said if the technology works, it would let major carriers operate and distribute the web as they do on Earth. Fortune
• New Google Glass meant for work
The new version of Google Glass is to be offered exclusively to workplaces such as hospitals and factories, featuring an updated version of the device that will reportedly hinge on a bigger display and a faster processor. The device is expected to be available this fall, and it will be at least a year before a new consumer version of the device will be seen. This all comes after Google earlier this year stopped selling a consumer version after tepid demand. Wired
• U.S. recovery weaker than expected
Some revised data has led to a disappointing discovery: the U.S. economy grew slower than previously estimated from 2012 to 2014, after a new government approach to gross domestic product addressed flows in how the report is produced. Over that time period, the U.S. expanded at an average 2% rate each year, instead of the 2.3% that was reported under the old method of calculating GDP. That means the U.S. recovery, already the slowest since the end of World War II, has been even weaker than everyone thought. MarketWatch
Around the Water Cooler
• The buyers who believes in China
Huey-yuan Yang, who manages the equivalent of $169 million for a HSBC fund in Taiwan, is among the investors that say the recent sell off in China hasn't changed their investment view. In fact, he says he sees a "buying-on-dip" opportunity amid "abnormal declines." Bloomberg polled fund managers in the Greater China region and found many plan to stick with the Chinese market, despite massive volatility and worries about state intervention. Bloomberg
• Uber to invest $1 billion in India
A rivalry with a local taxi-hailing company is driving Uber to invest $1 billion into its operations in the Asian country, with hopes to fend off a fairly strong competitor. Ola, an Indian company, recently raised $400 million and is rumored to be raising more. The investment in India should help Uber reach 1 million daily rides in India, as the company hopes to expand beyond the 18 Indian cities where it currently operates. But Ola is in more than 100 cities and is doing twice as much as Uber's daily business, so the U.S. startup has work to do to catch up. Fortune
• Diageo taps African market
Diageo and other major spirits companies are quickly expanding across Africa, targeting even the poorest consumers with liquor made locally and sold at dirt-cheap prices. The market is emerging as the final frontier for many of these firms, as only 2% of the industry's profits came from Africa and the Middle East as recently as 2013. But the continent's liquor market is projected to jump 45% over a four-year period. WSJ (subscription required)