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Good morning. David Meyer here in Berlin, filling in for Alan.
When it comes to trade relations with Europe, President-elect Joe Biden is going to have a tricky start to his term. And while that’s partly down to the generally fractious transatlantic relationship cultivated by his predecessor, the biggest reason is Big Tech.
According to the Financial Times, France has ended its uneasy truce with the Trump administration over the issue of its so-called digital services tax. The paper reports that French tax authorities have been in touch with the likes of Facebook and Amazon, demanding that they pay the tax—designed to ensure French sales generate French tax revenues—for this year.
It’s now likely that the U.S. will respond with tariffs on things like French cheese and handbags, as threatened by U.S. Trade Representative Robert Lighthizer earlier this year.
A multilateralist Biden administration will be well-placed to clean up this mess. The Franco-American truce only existed because the countries agreed to let global digital-tax talks play out, but the U.S. pulled out of those OECD negotiations in June, citing coronavirus distractions. France claims it’s only going it alone until the OECD members (or the EU) come up with common rules. In theory, the Biden administration could make a global deal a reality.
But that’s no certainty. After all, the tech giants targeted by the tax are mostly American, and a global agreement could leave the U.S. worse off—though on the other hand, as the OECD warned recently, failing to strike that deal could trigger a trade war that lops a point off global GDP.
Tough choices lie ahead for Biden and his team. Meanwhile, Europe will continue developing its own approach to digital regulation.
On that note, the European Commission just proposed a new law that would “offer an alternative European model to data handling [practices] of major tech platforms.” It promises companies that, if they choose to share commercially-sensitive or personal data with other firms, they will be able to do so through neutral intermediaries that keep the information “trusted and protected.”
There’s a lot that might be achieved with this approach—particularly when it comes to the green transition and the development of personalized medicine—but it’s also an explicit challenge to U.S. tech giants whose value is largely bound up in their data hoards.
So stay tuned to both these sagas, because they’re about to get interesting. News below. And for those of you in the U.S., enjoy your Thanksgiving weekend—CEO Daily will return Monday.
The Dow yesterday closed above 30,000 for the first time, up more than 60% from the depths of March. The rally is being fueled by COVID-19 vaccine optimism, the fact that the Trump-to-Biden transition seems set to run smoothly-ish, and Biden's reported selection of Janet Yellen as Treasury secretary. Some bearish investors don't think it will last, as the pandemic is still rolling on forcefully. Fortune
Vaccine or no vaccine, General Electric sees its aviation unit shrinking over the next 18 months. The company warned staffers that more job cuts are coming, due to the pandemic's impact on commercial air travel. A quarter of the division's workers have already been axed. Wall Street Journal
The EU's securities watchdog, ESMA, will from the start of 2021 force banks in the bloc to use platforms within the EU (or within non-EU countries that have permission, such as the U.S.) to trade derivatives. That means EU banks' branches in the U.K., which will have fully Brexited at that point, will face conflicting EU and British requirements about where to trade derivatives. Reuters
Europeans like hatchbacks, so Tesla may make one to add to its stable of sedans and SUVs. “Possibly in Europe it would make sense to do, I guess, a compact car, perhaps a hatchback or something like that," CEO Elon Musk told a battery conference, adding that he had recently had trouble parking his Model X in Berlin. "In the U.S., the cars tend to be bigger for personal taste reasons. In Europe, [they] tend to be smaller." CNBC
AROUND THE WATER COOLER
The weird thing about AstraZeneca's candidate coronavirus vaccine is that its higher efficacy rate (90%) occurs when the first shot is just a half-dose. Turns out the half-dosing of trial volunteers was an accident, though a lucky one. However, it also turns out that the group receiving that dose was younger, with an age cap of 55. So, questions remain. Reuters
Fortune's Geoff Colvin writes about the imminent wave of COVID-related bankruptcies, which will disproportionately strike small firms: "It’s bad for the whole economy, because the surge of financial pain may overwhelm the bankruptcy system. As a result, the process could become chaotic, with viable businesses killed and doomed ones kept artificially alive. A major part of the problem: There are not enough bankruptcy judges." Fortune
We should be sanitizing the air around us with ultraviolet light, writes James Guyette, the COO of UV-sanitization-device-maker Healthe, in a piece for Fortune. Guyette claims Healthe's Far-UVC 222 technology is safe for humans and could help limit exposure to the SARS-CoV-2 coronavirus. Fortune
Jeffrey Sonnenfeld, the Yale luminary and regular Trump sparring partner, writes for Fortune that the president falls into the "monarch" category of departing leaders, which is to say he believes in the myths he manufactured about himself and will not leave gracefully. Fortune
This edition of CEO Daily was edited by David Meyer.