Good morning.
A group of U.S. executives and academics with expertise in artificial intelligence has gathered in Washington this morning for a meeting organized by the White House. It is a little unclear how high level the sponsorship is—no sign the President is participating—or exactly what the goal is. But it’s a good thing, nonetheless. Much of the rest of the world—most notably China—has been focusing its attention on the profound changes coming to business and society from this new wave of technology, while Washington has been caught up fighting old battles and settling political scores.
Of course, the U.S. isn’t China, and things often work best here when the private sector takes the lead. But the needs and implications of the AI challenge can’t be met without government involvement.
The federal government not only has a role to play in funding research—as it did in the early days of the Internet—but also in encouraging the necessary changes in workforce training and education, creating clear data use policies, building a framework for the ethical issues that AI raises, and more.
This is the most important competitiveness issue of our times—far more important than bilateral trade deficits or steel and aluminum subsidies. And while the U.S. starts the race with a natural lead, China is catching up rapidly, thanks in no small part to the advantages that come from a focused and well-financed government undistracted by the messiness of democracy. It’s well past time for Washington to take notice.
The Wall Street Journal reports that about 40 firms are expected to be represented at the meeting, including tech giants Amazon, Facebook, Alphabet and Microsoft. Big non-tech companies participating include Bank of America, Boeing, GE, Ford, Goldman Sachs and Walmart. But for the most part, participants are not CEO level, with a few exceptions including Intel’s Brian Krzanich and CVS’s Larry Merlo.
News below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
RIP ZTE?
The Chinese telecoms giant ZTE has abruptly shut down operations. Why? Because, faced with a U.S. denial order cutting off its supply of American components from firms like Intel and Qualcomm, ZTE's inventory has run dry. The company is/was China's second-biggest maker of telecommunications network equipment, and a major force in the world of Android smartphones. The questions now are: is Huawei next; and how long would it take for China's homegrown components industry to take up the slack? Fortune
RBS Settlement
The U.K.'s Royal Bank of Scotland will pay $4.9 billion to end a Justice Department investigation into its sale of mortgage-backed securities. The bank, largely owned by the British taxpayer, will need to book a $1.44 billion charge in its Q2 results—the rest it's already set aside. RBS says it's relieved that the probe is finally over and the payout level established, as the clarity will make it easier for the U.K. government to sell its RBS shares. Wall Street Journal
BT Tumble
BT, the company formerly known as British Telecom, has announced a major restructuring and the loss of a whopping 13,000 jobs over the next three years. Investors were not impressed with the plan because the company is not predicting much growth in free cash flow, and BT's share price fell by as much as 10% this morning. "We're too complex and we're overweight and that's why we need to make this change," said CEO Gavin Patterson. Bloomberg
Anbang Conviction
Wu Xiaohui, the former head of Chinese insurance giant Anbang (which incidentally owns the Waldorf Astoria in New York), has been jailed for 18 years over corruption and fraud. Chinese regulators seized Anbang in February, as part of a major crackdown on risky financial dealings. Wu was arrested last year, though. A very well-connected businessman, he was found to have defrauded Anbang by transferring more than $12 billion to companies under his control. CNN
Around the Water Cooler
Israel and Iran
Tensions in the Middle East are way up after President Donald Trump pulled the U.S. out of the Iran nuclear deal. Now Israel, one of the U.S.'s key allies in the region, has accused Iran's Revolutionary Guards—in Syria to support President Bashar al-Assad—of firing 20 rockets at its positions in the Golan Heights last night. In response, the Israelis conducted a series of air strikes on Iran's military infrastructure in Syria. Israel occupied the Syrian Golan Heights in 1967, and its subsequent annexation of the territory is not recognized internationally. BBC
California Solar
California is pushing ahead with its plan to force all newly-built low-rise homes—except those frequently in the shade—to come with solar panels as of 2020. It's the first state-level mandate of its kind, although cities such as San Francisco and South Miami are ahead of the game. The Californian plan was supported by construction groups, solar manufacturers and public utilities, and opposed by no-one in industry. NPR
Ford Fire
A fire at a parts factory last week has led Ford to suspend production of its best-selling F-150 pickup. The Meridian Lightweight Technologies factory in Easton Rapids, Mich. was Ford's only U.S. supplier of the magnesium radiator support structure that it uses in the trucks. The production halt has a significant effect on workers—Ford sent home almost 3,600 at its Kansas City plant earlier this week, while another 4,000 face temporary layoffs at its Dearborn, Mich. facility. Fortune
Apple Datacenter
Apple has cancelled its planned construction of a $1 billion datacentre in Athenry, Ireland, due to delays in the planning process. The project has been stalled for three years due to planning appeals, mostly coming from two objectors—concerned about environmental assessments and power grid usage—who took their case all the way up to the Irish Supreme Court. A Supreme Court hearing was due today, but Apple pre-empted it by announcing the scrapping of the project. Irish Times
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.