Good morning.
Apple CEO Tim Cook sat down with President Trump in the Oval Office yesterday, to air their substantial differences over trade. Apple is the world’s most successful manifestation of a global supply chain; Trump has been unabashedly blunt in his criticism of Apple’s China-based suppliers.
So will Cook get Trump to back off his China trade war? Or will Trump get Cook to build more factories in the U.S.? In the long run, it may not matter, argues Fortune contributor Ian Bremmer, who is one of the most thoughtful observers of the global political-economic scene. Bremmer is an unapologetic globalist (as am I.) But in his new book: Us vs. Them: The Failure of Globalism, he says that critics who focus on Trump “and ignore the underlying emergencies that lifted him to the White House…exacerbate the American problem of us vs. them.”
Anti-globalist sentiment is going to spread, Bremmer argues. That’s because the problems of inequality that have plagued the developed world are about to move to developing countries. With AI and other new technologies reinventing industry, those countries won’t be able to play the China game of providing unskilled labor to the rest of the world. As a result, “it is going to get worse.”
So what’s the solution? There is no simple fix, but Bremmer advocates a new social contract that involves new approaches to lifelong education and training, new ideas on taxation, a reorganization of the social safety net to help those trying to survive in the gig economy, and new thinking about other programs that can help those left behind. And he argues there is a big role for the private sector to play. “Private companies and institutions will be a crucial part of any serious effort to rewrite the social contract, because they can incubate ideas that government won’t and experiment in ways that government can’t.” (That’s exactly why we at Fortune have created the CEO Initiative…which you can read more about here.)
Bremmer’s book is short, but thoughtful—a style we favor at CEO Daily. You can order it here.
News below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
Facebook Thrives
Has the Cambridge Analytica scandal affected Facebook's bottom line? Well, Q1 revenue was up 49% to $12 billion and EPS up to $1.69, both beating estimates. Daily active users were up to 1.45 billion, much as expected. The markets responded positively, sending Facebook's shares up 7% in after-hours trading. But that said, a fair amount of the scandal played out this month, after Q1. Fortune
Ford Cuts
Ford plans to make another $11.5 billion in cuts in order to reach a profit margin target of 8% by 2020, two years earlier than was previously planned. The plan means the end of the line for the Fusion and Taurus sedans. Ford wants to save $25.5 billion by 2022. "We're going to feed the healthy part of our business and deal decisively with areas that destroy value," said CEO Jim Hackett. Bloomberg
Sky Bidding War
Comcast has formalized its bid for Sky, which it first revealed back in February. The move, at £12.50 per share, led Sky to withdraw its recommendation of 21st Century Fox's rival bid, which was only £10.75 per share. We may now see a bidding war evolve, as the news of Comcast's formal offer sent Sky's shares up to £13.59. BBC
Tesla Troubles
Tesla has lost another key executive. This time it's chip-design rockstar Jim Keller, who was heading up the automaker's Autopilot program. Keller, a former AMD and Apple engineer, is joining Intel. His replacement is Pete Bannon, another former Apple employee who has been at Tesla for a couple years. The new Autopilot leads are well-credentialed, but Tesla does seem to have trouble hanging onto talent. Fortune
Around the Water Cooler
Nintendo Chief
Nintendo's new president is Shuntaro Furukawa, who replaces Tatsumi Kimishima. Furukawa is relatively young, though he has worked at Nintendo since 1994—mostly in accounting, but in corporate planning since 2015. "He is fluent in English. He may be the perfect person to fill the communication gap that exists between Nintendo and investors," said Jefferies Group analyst Atul Goyal. Fortune
GDPR Strikes Again
Europe's incoming privacy overhaul is having a big effect on messaging apps. First WhatsApp set a new age limit of 16 for its European users; now Snapchat is going to stop retaining certain data about kids under that age in the EU. The data includes precise location history. Snap's stock dropped 7% after the WhatsApp move, but Snapchat's take on GDPR compliance doesn't cut off its crucial teen base. Financial Times
Huawei Probe
The Chinese telecoms equipment and phone manufacturer Huawei is under investigation by the Justice Department for violation of Iran sanctions. The question now is whether Huawei will end up like ZTE, denied access to U.S. components and software. With ZTE, that potentially means a ban on using Android, and Huawei is one of the biggest Android device manufacturers out there. Wall Street Journal
Uber Draws a Line
Will Uber keep withdrawing from territories while buying stakes in its victorious competitors? Nope, according to Chief Operating Officer Barney Harford, who told CNBC: "…Going forward we have no interest in doing transactions for minority stakes…the markets that we remain in today are core markets for us, we are doubling down on our investment and we are very committed to these markets." Let's see how that plays out in sub-Saharan Africa, which key investor SoftBank has suggested isn't one of those core markets, and where Uber is still active. Harford only specifically mentioned North Africa as a territory to maintain. CNBC
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
