Alibaba CEO Jack Ma was in town yesterday for an event tied to the UN’s annual meetings, and stopped by Fortune’s offices. Among his comments:
–While only 5% of Alibaba’s business is outside China today, he expects that to be 40% in ten years.
–In 20 years, he believes the value of the merchandise handled by Alibaba will reach $1 trillion – double its levels today.
–He doesn’t see Amazon as a competitor, because Alibaba doesn’t actually buy the goods it sells, but rather provides a virtual platform and logistics and finance services for buyers and sellers. “Our job isn’t to be Amazon,” he says. “It is to allow every company to become an Amazon.”
–He believes his proposal for an “Electronic World Trade Platform” is the future of global trade agreements, because it is “driven by business not government.” (You can see Ma talk about the eWTP here.)
The Chinese ecommerce giant launched the biggest IPO ever on Wall Street two years ago. Shares surged 38% before tumbling through most of 2015 as growth prospects in China fell. But this year, shares have come back strong, and the company now vies with Tencent as Asia’s most valuable company by market capitalization.
Alibaba reports the Gross Merchandise Value of goods traded over its platform, rather than revenue – a distinction that keeps it from being listed on the Fortune Global 500, which ranks companies by revenue. It is being investigated by the SEC for accounting practices, but Ma said yesterday: “We should be transparent to everyone. We have given them all the information they asked for.”
Also in the office yesterday was Sprint CEO Marcelo Claure, who may have the distinction of being the first entrepreneur ever to be tapped to run a legacy company. The founder of Brightstar became CEO of Sprint in August 2014, and since then has worked to bring a startup mentality to the struggling 116-year old telecom. You can read Aaron Pressman’s report here.
More news below.
• Stumpf vs. Warren – Popcorn Time
Wells Fargo CEO John Stumpf goes in front of the Senate Banking Committee today to discuss the unethical sales practices that led to a $185 million fine and the dismissal of over 5,300 ‘bad apples’. Excerpts from Stumpf’s prepared remarks have already leaked out. According to The Wall Street Journal, Stumpf will accept “full responsibility” for the practices, while continuing to deny that the bank’s management or culture played any part in allowing or fostering them. Expect Elizabeth Warren and co. to rail against the kind of ‘responsibility’ that doesn’t include resignations and or the clawing back of bonuses given to those who presided over the affair. WSJ, subscription required
• Federal Government Claims Rights Over Self-Driving Car Rules
The Obama administration said it was considering seeking the power to review and approve technology for self-driving cars before they hit the road and said states should not set separate rules. The Transportation Department, in its most comprehensive statement yet on autonomous vehicles, also issued voluntary guidelines and urged automakers to certify that their highly automated vehicles were ready for public roads. The aim is to avoid a patchwork of state rules, Transportation Secretary Anthony Foxx said. The California Department of Motor Vehicles, which was criticized by Google last year for jumping the gun, said it planned to release revised draft regulations in the coming weeks. Fortune
• Merkel’s Mea Almost Culpa
German Chancellor Angela Merkel accepted that her policy of welcoming over 1 million refugees to Germany last year had been a misjudgment, after her party suffered a second stinging defeat in regional elections in a month at the weekend. “If I could, I’d turn back the clock many years in order to better prepare the government for the situation that hit us in the summer of 2015,” she told a press conference after the populist right-wing AfD party took 14.6% of the vote in regional elections in Berlin. Wishing ‘that the country had been more prepared’ is not quite the same as saying ”I was wrong”, but to misjudge so badly the preparedness of a country she had ruled for a decade was at the very least a gross error of statecraft, however noble its cause. Analysts interpreted her comments as a hint that Merkel will aim for a fourth term as Chancellor next year. The mishandling of the refugee crisis had been widely identified as the point on which she was most likely to be unseated by her otherwise highly loyal party. Deutsche Welle
• Google Faces Back Tax Bill From…Indonesia
Another day, another pushback by a country in search of missing tax receipts. Google parent Alphabet Inc., could face a back tax bill of over $400 million from Indonesia just for 2015, a senior official said after the company’s local offices in Jakarta were raided. The tax office alleges PT Google Indonesia paid less than 0.1 percent of the total income and value-added taxes it owed last year. In a familiar narrative, most of the revenue generated by Google in Indonesia is booked at its Asia-Pacific HQ in Singapore. Google is facing similar run-ins over its tax planning with France and Italy and may yet see its deal with the U.K. unpicked. Indonesia is working on a new regulation for ‘over-the-top’ service providers, and the tax office has proposed that a company with a “network presence” in Indonesia should also be subject to taxation. The final definition of what constitutes a “network presence” will be interesting. Time
Around the Water Cooler
• GM Averts Canada Strike at Last Minute
General Motors averted a strike by thousands of Canadian workers after appearing to make concessions to labor unions on future levels of work for its plants in the country. According to union bosses, GM’s engine and transmission plant in St. Catharines will in future produce some engines previously made in Mexico. GM said the deal would allow significant new investment at its plants, without specifying how big that investment would be. The strike had threatened to affect some of GM’s best-selling vehicles in the U.S.. Fortune
• Glaxo Names Emma Walmsley CEO
GlaxoSmithKline appointed Emma Walmsley to replace Sir Andrew Witty as chief executive, bringing the number of women in the FTSE-100 up to a whopping seven. Walmsley’s background in consumer products—she spent 17 years at French group L’Oréal—provides an interesting clue as to the U.K.’s biggest pharma group’s choice of direction in the coming years: consumer products, the division that Walmsley currently heads, are likely to stay within the broader group, rather than be spun off, as some activist investors have hoped for. That in turn suggests it will continue to stay away from the acquisition frenzy for smaller drugmakers that other pharma giants have engaged in as they try to counter the revenue ‘cliff effects’ of losing patent protection for blockbuster drugs. Fortune
• Lawsuits to Delay Tesla/SolarCity Merger
Tesla Motors said its proposed merger with SolarCity could be delayed by shareholder lawsuits. The risk of such a delay has always been apparent given the cross-shareholdings of Tesla founder and SolarCity Chairman Elon Musk, who came under fire from investors from the start for proposing merger terms that were highly favorable to SolarCity. Investors have also questioned Musk’s claim that Tesla needs to own the cash-strapped SolarCity in order to fulfil its own strategic goals. SolarCity’s shares, which are down by by nearly two-thirds this year, currently trade at a discount of more than 20% to the price proposed by Tesla, reflecting investors’ skepticism that the deal will be done. Fortune
• Sarepta Surges on Muscular Dystrophy Drug Approval
Shares in biotech company Sarepta gained more than 90% Monday after the Food and Drug Administration approved its Exondys 51 drug for treating Duchenne muscular dystrophy, a wasting disease that affects boys and generally leads to death within 20 years. The drug only caters to 13% of sufferers, but Sarepta is also working on similar drugs that would address a larger group. Barron’s speculates that the approval follows a bitter internal dispute at the FDA in which the head of the drug approval division, Janet Woodcock, overruled the staff of the neurology division, leading to the departure of its head Ron Farkas. The loss-making company is expected to announce an equity offering of up to $500 million to fund further research, according to Barron’s. Barron’s