ZTE Pushback, Dodd-Frank, Barclays Plans: CEO Daily for May 23, 2018
Is artificial intelligence going to change the world of business? In our survey of Fortune 500 CEOs this year, a majority of respondents—54%—said AI was “very important” to the future of their companies. That’s up from just 39% last year, and far more than those who cited other technologies like advanced robotics (19%), virtual reality (16%), blockchain (14%), 3-D printing (13%) or drones (6%) as very important.
Yet when asked if they had made major investments in AI, only a little over 20% said yes—roughly the same as last year. The majority said they have made only modest investments in AI to date—suggesting the full promise of the technology lies far in the future.
Also this year, we asked the CEOs to tell us their leadership philosophy, in a few words. I was surprised to find how many of them used the term “servant leadership”—a self-effacing philosophy that dates back to Lao-Tzu. It’s a term that fits well to GM’s Mary Barra, whose effort to transform the giant auto maker is the subject of one of the deep dives in our Fortune 500 issue, which you can read this morning here. In the story, she describes her own leadership philosophy in clear but simple terms: “creating strategy, managing risk, empowering people to execute, and making sure we hold people accountable.”
More news below.
The White House's reported plan to rescue China's ZTE, which earned a ban on U.S. components after breaking sanctions on Iran, is seeing pushback in Congress. A bipartisan group of 27 senators has urged top trade officials to reject any proposals that would ease tech export controls in order to increase trade with China, and the Senate Banking Committee has approved legislation to stop the Trump administration from lifting the ZTE ban. Meanwhile, President Donald Trump denies the existence of the ZTE rescue plan. Wall Street Journal
The Financial Times reported that Barclays is quietly looking into a possible merger with another bank, maybe Standard Chartered, in order to please activist investor Edward Bramson's Sherborne. A source "who knows Bramson" said he wanted Barclays to shrink its corporate and investment banking division, in order to return capital to shareholders. However, Barclays has now said it is not actively exploring any potential merger with a rival bank. Reuters
The House has approved legislation that would roll back some of the Dodd-Frank banking regulations, introduced in the wake of the 2008 financial crisis. The changes exempt smaller and local banks from some of the toughest rules, which some say is needed to keep them afloat. Even though the core Dodd-Frank regulations will remain in place, some say its weakening will encourage risky behavior of the kind that precipitated the crisis a decade ago. Washington Post
Walmart and Flipkart
Walmart's takeover of Indian e-commerce giant Flipkart is moving forward, after SoftBank agreed to sell the U.S. firm its entire 21% stake in Flipkart. The Japanese conglomerate invested around $2.5 billion in Flipkart through its Vision Fund and is likely to make almost $4 billion from that investment. SoftBank's prompt sale of the stake had been in question due to tax issues. Economic Times
Around the Water Cooler
Mark Zuckerberg's appearance before leaders of the European Parliament yesterday was a disaster—not so much for the Facebook CEO, although he did manage to infuriate his interrogators with his non-specific answers, but definitely for the Parliament itself and for anyone hoping to learn new things from Zuck. The problem was the format of the session: the grandstanding politicians took about an hour to ask dozens of questions, leaving Zuckerberg with little time to answer them, and the freedom to pick and choose which "themes" he felt most comfortable addressing. Politico
Netflix is under fire over its content deal with Barack and Michelle Obama. Some customers say they will cancel their subscriptions over what they see as a political move by the streaming service. President Obama said his and Michelle's intention is to "cultivate and curate the talented, inspiring, creative voices who are able to promote greater empathy and understanding between peoples, and help them share their stories with the entire world." Fortune
Jennifer Lawrence is set to star in a movie adaption of Bad Blood, the new book about Theranos's downfall. She will probably play disgraced CEO Elizabeth Holmes, and Will Ferrell will also be in there. The book is written by Wall Street Journal reporter John Carreyrou, whose exposé brought down Theranos, a healthcare company that wildly oversold the capabilities of its blood-testing device. Fox Business
A Russian financial analyst was fired after writing a report in which he said Putin-connected oligarchs were the beneficiaries of Russian gas pipeline contracts. Former Sberbank analyst Alexander Fak said he was "dismissed… for writing the recent report on Gazprom." Sberbank said his report was "unprofessional," and the spokespeople for the oligarchs (Gennady Timchenko and Arkady Rotenberg) denied asking for Fak's head. Moscow Times