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CEO Daily: Friday, 23rd September

Happy Friday.


If you have a Yahoo account, it’s time to change your password. The company just announced it had a massive cyber attack back in 2004. More details on that below. Because this wasn’t known at the time the deal was struck, it could affect Yahoo’s merger agreement with Verizon.


Meanwhile, since many of you seem determined to suss out my political leanings, let me save you time. I’m a registered independent, and have voted for Republican presidential candidates as often as Democratic candidates over the years. The only discernible pattern is that I seem to have an aversion to giving anyone a second term. Perhaps that comes from spending too much time in Washington.


In the current campaign, I share the temptation of many CEO Daily readers to vote “none of the above.” But I will not vote for Trump, both for economic reasons – his repudiation of the global free market policies that have powered post-World War II prosperity – and because of his blatant race-baiting.


Having said that, the Trump and Sanders campaigns this year have highlighted a serious flaw in our current economic system. A substantial sector of the American public feels, with some justification, that the rising tide is no longer lifting all boats. This is the pressing issue of our times. And with the dysfunction in Washington unlikely to improve after the election, the business community must take the lead in addressing these issues.


At Fortune, this has become one of our two guiding missions. (The other is to help our readers navigate the accelerating pace of technological change on their businesses.) It is why we started the Change the World list, which focuses on companies that address major global social problems as part of their core business. And it is why we are taking 100 leading global CEOs to the Vatican in December, to engage them in a serious discussion about how to make the global economic system work better for all.


I’ll be on vacation next week. Fortune Deputy Editor Clifton Leaf will be writing this column.


Enjoy the weekend.


Alan Murray


P.S. We’re switching to a new email provider soon. To make sure you keep getting CEO Daily, please whitelist or add to your address book.


Top News

Hacking, Hacking Everywhere

Top tip for Friday: cybersecurity stocks. News of three high-profile data breaches came in quick succession yesterday. The most spectacular was a breach at Yahoo that compromised 500 million accounts. The company said a “state-sponsored actor” was responsible for the theft. It’s not clear whether the breach, which predates Yahoo’s agreement to sell its internet businesses to Verizon, will stop the deal from closing. Verizon learned about the breach two days ago, but Yahoo began investigating reports of user details being made available on the dark web already in August. Yahoo said yesterday that the August leak was an unrelated issue. Elsewhere, an image purporting to be a scanned copy of Michelle Obama’s passport was leaked to the Internet (with fingers pointed at Russian hackers), while a new report suggested that a vulnerability disclosed last week by Cisco affecting over 850,000 of its devices can be exploited to an alarming extent by readily-available hacking tools. Fortune

Facebook Reportedly Cheated Advertizers

Facebook misled advertizers who paid to place video ads on its site for two years, according to The Wall Street Journal. The WSJ said Facebook had overestimated average viewing time for video ads by between 60% and 80%, as it ignored all ads that were closed by viewers within three seconds of opening. That obviously inflated the average viewing time. The social network, now arguably the world’s most important medium, said the error “had not impacted billing” and said the metric was one of many used by its advertizing partners. The WSJ cited Publicis, one of the world’s largest ad buyers, as telling its clients that the new metrics were “new names for what they were meant to measure in the first place…Two years of reporting inflated performance numbers is unacceptable.”  WSJ, subscription required

Clinton Proposes Top Estate Tax Rate of 65%

Hillary Clinton proposed raising taxes on inherited property to 65% for the largest estates, in what appeared to be a reaction to the steady leakage of poorer voters to Donald Trump in recent weeks. The estate tax, levied on property such as cash, real estate, stock or other assets transferred from deceased persons to heirs, is currently imposed only on inherited assets worth $5.45 million or more for an individual. Clinton’s plan, posted on her campaign’s website, would raise the estate tax from the current 40% to 45%, the rate that existed in 2009. But the biggest estates would face rates of up to 65% for property valued at more than $500 million for a single person or $1 billion per couple, under her proposal. Fortune

AirBnB’s Funding Round

AirBnB raised at least $555 million in a new funding round that valued it at $30 billion. The round could eventually raise up to $850 million, according to people familiar with the situation. The new investment follows a $1 billion credit facility Airbnb secured this past summer, meaning that it has raised approximately $4 billion in total outside funding to date. The money will give the company more breathing space to fight a regulatory backlash against it in key markets such as New York, San Francisco and further afield in Europe. Big investors in the new round included Alphabet’s Google Capital unit and Technology Crossover Venture, although it appears that neither will gain a board seat.  Fortune


Around the Water Cooler

• Lipstick on a Pig of an IPO Market

The Blowout IPO is not dead after all. Shares in e.l.f. Beauty, a 12 year-old cosmetics company whose cut-price products are particularly beloved of the fast-growing millennial and Hispanic demographics, rose more than 50% on their stockmarket debut. The company boasted 43% retail sales growth last year, but still only has 2.3% of the $8 billion U.S. market. While it relies to a large extent on distribution through Wal-Mart, CVS and Target, it depends more than most on online channels. It’s a welcome morale boost for an IPO market that is weaker than at any time in the last 20 years, according to Dealogic figures quoted in The Wall Street Journal. So far this year, IPOs have only generated $3.7 billion in fees for Wall Street firms, down from an inflation-adjusted peak of $12.7 billion in 2000. Fortune

WTO Finds That the Kettle (at least) Is Black

Boeing had cause to celebrate after the World Trade Organization said the EU had failed to curtail $22 billion of dollars in subsidies to its rival Airbus. The loans from the U.K., Germany, France and Spain, which were at the heart of the dispute, were a “genuine and substantial” cause of last sales for Boeing, the WTO said. The ruling also covered $4 billion in loans tied to Airbus’s newest airliner, the A350, which the EU had hoped would fall outside the case (although it failed to endorse the U.S.’s view that A350 subsidies constituted “prohibited aid”). The EU said it would appeal the findings, and said they should be seen in the context of two other WTO reports on U.S. subsidies to Boeing which are due in the next couple of months. Both sides have sought WTO permission to draw up sanctions that could penalize other industries, with the U.S. calling for up to $10 billion in counter-measures and the EU $12 billion. Reuters

Wells Fargo CEO Quits Fed Post

Wells Fargo CEO John Stumpf resigned from the Federal Advisory Council, a group of 12 bank executives that advise the Federal Reserve’s board, ostensibly to concentrate more on fixing Wells’ in-house problems. Five senators had earlier called for him to be replaced, including Elizabeth Warren, who had led a generalized pummelling of Stumpf by the Senate Banking Committee earlier in the week. Stumpf is due back in DC next week to testify in front of the House Financial Services Committee. Wells Fargo’s shares have fallen 21% since July and are flirting with their lowest level since the start of 2014. Fortune

Sony Pictures Has a New Gateway Into China

China’s Wanda Group followed up its acquisitions of movie theater chain AMC and production studio Legendary Pictures with a partnership agreement with Sony Pictures, as it cements its dominance of the fast-growing Chinese movie market. The alliance will allow Sony, which has struggled to regain its mojo since the debilitating hack by North Korea, to gain better access to a Chinese market that is still tightly controlled when it comes to foreign content providers (Netflix complained of still-high barriers to entry earlier this week). Multiplex theaters anchored in its new retail malls have become a key part of Wanda’s development strategy, while consumer spending has become a more reliable source of income than the speculative real estate projects on which it rose to prominence. FT, metered access