I’m in Toronto this morning, where I spent the day yesterday with members of the Business Council of Canada, in preparation for the Fortune Global Forum we’re holding here Oct. 15-17. (Details here.) Not surprisingly, I found the Canadian business leaders focused on three of the same big issues that are engaging their counterparts south of the border:
- Whither Trump? Canadians are clearly both amazed and miffed at America’s abandonment of the TPP treaty, its hard line on NAFTA, and its general retreat from the global institutions that formed the basis of post-World War II prosperity. Karl Rove, Ezra Klein and Ann Compton tried their best, but did little to eliminate their bewilderment.
- The training imperative. With unemployment at post-War lows, it’s painfully clear that society’s great challenge is not to create more jobs, but rather to create better programs that prepare people for the jobs that exist. RBC CEO David McKay is taking the lead for the council in building coalitions to expand cooperative work arrangements, internships, apprenticeships and other work-integrated learning programs.
- How to meld profit with purpose. The Council was hosted at a learning center run by two extraordinary young Canadians, Craig and Marc Kielburger, who created a group of organizations—WE Day, WE Charity, ME to WE—designed to help young people who want to become social entrepreneurs. In their book WEconomy, written with Richard Branson’s daughter Holly, the three say that in today’s economy: “if brands can’t finish the sentence: I am making the world better because ______, they can’t and won’t compete. In a matter of decades, companies that disregard the health of the people and the planet will be obsolete.” Let’s hope they are right; but in any event, it is encouraging to see their elders paying such close attention.
Separately, take time today to read the deep dive into the retail business by Fortune’s Phil Wahba—who, coincidentally, is also Canadian. Turns out not every retail company taken over by private equity a decade ago has bitten the dust (think Toys R Us, Sports Authority, etc.). Among the winning survivors of Hurricane Amazon are beneficiaries of PE-led turnarounds like Restoration Hardware, Dollar General, and—here in Toronto—Canada Goose.
More news below.
Alphabet’s profits for Q1 were up almost three-quarters, thanks to an increase in ad revenue. First-quarter net income was $9.4 billion, up from $5.4 billion the year before. Revenue was up 26%. That said, $3 billion of the boost came from changes to accounting rules, and there was also a $1.1 billion benefit from currency exchange fluctuations. BBC
Google and Privacy
Google CEO Sundar Pichai does not think the company has anything to fear from the EU’s incoming General Data Protection Regulation. But, while it’s true that most of Google’s ad revenue comes from search, and is therefore less sensitive to privacy regulation, the GDPR could have a big impact on the part of its business that comes from placing targeted ads on publishers’ webpages. Fortune
Stung by criticism over its content moderation policies, Facebook has for the first time published its guidelines for moderators. It has also launched an appeals mechanism for those who want to complain about their pages or posts being taken down. Meanwhile, YouTube also has been on a transparency push, detailing how AI helped it remove over 8 million videos in one quarter. Fortune
A 25-year-old is in custody after a van, which he is suspected of driving, plowed into pedestrians in Toronto yesterday. Witnesses say the driver deliberately drove over people on the sidewalk, killing at least 10. Alek Minassian was arrested by a policeman less than half an hour after the attack. Authorities are not calling this a terrorist attack at this point. CNN
Around the Water Cooler
Volkswagen in China
Although China is preparing to relax its limits on foreign ownership in the automaker sector, Volkswagen says it will still need to partner with “local tech enterprises” there. VW currently makes cars in the country in a 50-50 partnership with a local player, as the law requires. “From our side, we are really set up very nicely here in China,” said new CEO Herbert Diess. CNBC
Wells Fargo and General Electric shareholders may shortly be giving the companies’ auditor, KPMG, a very hard time. Wells Fargo, which KPMG has audited since 1931, has recently suffered accounting scandals. And GE, which KPMG has audited since 1909, is also in financial difficulty and facing regulatory investigation. The shareholder advisory service Glass Lewis is now advising both companies’ shareholders to demand a new auditor. Financial Times
More Tariffs Please
Big business doesn’t like President Trump’s Chinese tariffs, but some small businesses are asking for more. They include manufacturers of items such as steel wheels and safes. Trump’s tariffs have not so far targeted the Chinese companies making such goods, but companies such as Americana Development (a steel-wheel maker) and Champion Safe say the prices they pay for steel have risen by a quarter, creating an unfair advantage for their Chinese rivals. Bloomberg
United Airlines CEO Oscar Munoz is forgoing his bonus for 2017, in order to show “accountability and integrity” over the incident in which passenger David Dao was dragged off one of the carrier’s flights. So Munoz will get $9.56 million in compensation for the year’s work, little more than half what he pulled in for 2016. Fortune