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China Mobile, Glencore Woes, HTC Cuts: CEO Daily for July 3, 2018

July 3, 2018, 10:00 AM UTC

Good morning.

Readers of this newsletter know I’m a fan of employee activism, which in most cases pushes companies to be better. But let’s be clear: tech is no longer just an industry, it’s a fundamental underpinning of every industry, and indeed, of our lives and of our future. It also has disturbing “winner take most” tendencies that are exacerbated by the move to AI, where quantity of data becomes an unbeatable advantage.

As a result, both money and talent are being funneled to just a handful of behemoth companies, based in two countries: the U.S. and China. I had breakfast yesterday with Kai Fu Lee, who is one of the few who understands the profound nature of this great divide—and has portrayed it compellingly in a book out this September called AI Superpowers. (Worth ordering in advance.)

Leave aside the argument that AI could help reduce collateral human damage in warfare, provide more humane policing of the border, and possibly even improve the government’s ability to reunite children with their parents. The bigger question tech workers should ask themselves is this: Do they want to live in a world where the Chinese government has unfettered access to the best technology its companies have to offer, while the U.S. government does not? Do they really think they are helping humanity by unilaterally disarming the superpower that was founded on a fundamental declaration of human rights?

That’s worth pondering during tomorrow’s fireworks. CEO Daily will take the day off to do so.

And by the way, we are taking nominations for Fortune’s 4th annual Change the World list—which highlights companies that do well by doing good—addressing pressing social problems as part of their core profit-making activity. You can learn more about the list here. Shoot me a note if there’s a company you would like to nominate.

News below.

Alan Murray

Top News

China Mobile

China Mobile, the world's largest mobile network operator by some margin, wanted to get a "common carrier" license in the U.S. so it could carry voice traffic in and out of the country. After some seven years of deliberations, the White House has said no, on national security grounds. According to President Trump's telecoms advisers, giving China Mobile that sort of access to U.S. networks would let Chinese spies get at U.S. government communications. Fortune

China Tumble Continues

Hong Kong's Hang Seng index fell as much as 3.3% today, and the Shanghai Composite Index was down 1.9% at one point. The Chinese stock markets are freaking out ahead of Friday, which is when the U.S. is set to impose tariffs on $34 billion in Chinese goods. And the disquiet is contagious—Japan's Nikkei was down 0.9% at one point. Reuters

Glencore Woes

Glencore's shares dropped more than 12% this morning after U.S. authorities subpoenaed documents in a probe about potential corruption and money laundering in the commodities giant's operations in Nigeria, Democratic Republic of Congo and Venezuela. Glencore also faces a possible bribery investigation in the U.S. “The DOJ fines can be big, but to wipe out 10% of the market cap would be bigger than any fine I can recall," Investec analyst Hunter Hillcoat told Bloomberg. Bloomberg

HTC Cuts

The Taiwanese smartphone manufacturer HTC is cutting around a quarter of its global workforce, with 1,500 jobs set to go in its home country. HTC used to be huge, having made the first Android smartphones—and indeed it still makes Google's flagship Pixel phones—but it's struggling these days in an industry dominated by Apple and Samsung. BBC

Around the Water Cooler

Rutte Says No

U.S. President Donald Trump and Dutch Prime Minister Mark Rutte had an entertaining trade-related exchange in front of cameras. Trump: "I think the EU—we’re going to be meeting with them fairly soon. They want to see if they can work something out, and that’ll be good. And if we do work it out, that’ll be positive. And if we don’t, it’ll be positive also. Because…" Rutte: (Laughs) "No." Trump: "… because we’re just thinking about those cars that pour in here." Rutte: "It's not positive." White House transcript

Megadeals Fall

Unsurprisingly, the rapid ratcheting-up of international trade and political tensions is having a knock-on effect on international megadeals, according to a new report. Mergermarket said cross-border mergers had dropped nearly six percentage points in the first half of this year, even though the merger market overall is more active than ever before. "With dealmakers now having to contend with a greater level of political intervention and protectionism, the majority of the increase in global M&A has been driven by domestic M&A,” the report said. CNBC

Gmail Controversy

It's not just Facebook that's getting negative attention for sharing its users' data with third parties. A new report notes that, although Google promised a year ago to stop scanning Gmail users' inboxes for marketing keywords, the company still lets "hundreds of outside software developers scan the inboxes of millions of Gmail users who signed up for email-based services offering shopping price comparisons, automated travel-itinerary planners or other tools." And it apparently doesn't police them very well. Wall Street Journal

Fake News

Facebook is reportedly buying a British natural-language processing company called Bloomsbury AI in order to help it fight fake news, among other things. According to TechCrunch, the deal is worth up to $30 million. The startup's research chief, Sebastian Riedel, is apparently a big name in natural-language processing—essentially, having computers understand the meaning of what people are saying, and helping them emit human-like language. TechCrunch

This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.