ReportWire

Tag: Corporate management

  • Alibaba CEO warns of being ‘displaced’ if the Chinese tech giant doesn’t keep up in AI

    Alibaba CEO warns of being ‘displaced’ if the Chinese tech giant doesn’t keep up in AI

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    Signage at the Alibaba Group Holding Ltd. booth at the Smart China Expo in Chongqing, China, on Monday, Sept. 4, 2023.

    Qilai Shen | Bloomberg | Getty Images

    Alibaba needs to be “user first” and “AI-driven,” new CEO Eddie Wu told employees on Tuesday, as he laid out the strategic priorities for the Chinese tech giant.

    Wu, who is just three days into the job as Alibaba chief executive, called for the e-commerce firm to “adopt a start-up mindset” as he looks to steer the company back to growth following one of the most tumultuous times in its 24-year history.

    “Times are changing, and so must Alibaba! As the world progresses, Alibaba needs to evolve even faster!,” Wu said in a letter to employees that was seen by CNBC.

    Wu, one of Alibaba founder Jack Ma’s close confidants, started as CEO on Sept. 10, taking over from Daniel Zhang, who stepped down from the role to focus on heading up the cloud computing business. However, in a surprise move, Zhang this week quit as CEO of the cloud business with Wu taking over in the interim.

    It comes months after Alibaba split its company into six different business groups, the biggest shakeup in its history.

    Wu said Alibaba’s two main strategic focuses will be “user first” and “AI-driven.” The company will “reinforce” its strategic investments in three areas.

    The first it calls “technology-driven internet platforms.” Wu said that Alibaba’s business should “seek out the most open and collaborative relationships,” even with competitors. This is a different approach from Alibaba which has tended to try to keep users within its ecosystem of products.

    Wu also touted the need to invest in artificial intelligence. Alibaba’s cloud unit has tried to position itself as a leader in AI inside China as it looks to reignite growth in the business.

    “Each of our businesses generates massive numbers of use cases; therefore, we must transform these use cases into applications for AI technology, driving breakthrough user experience and business models through technology innovation,” Wu said.

    “If we don’t keep up with the changes of the AI era, we will be displaced.”

    Alibaba Cloud has its large language model called Tongyi Qianwen, released earlier this year. An LLM is an AI model trained on huge amounts of data and underpins chatbot applications. It’s the same type of model that OpenAI’s ChatGPT is based on.

    Wu also said Alibaba needs to continue to invest in “globalization.”

    Alibaba will also look to promote younger talent. Within the next four years, the company will promote those born after 1985 and the 1990s “to form the core of our business management teams,” Wu said.

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  • Powered by solar and wind, this $10B transmission line will carry more energy than the Hoover Dam

    Powered by solar and wind, this $10B transmission line will carry more energy than the Hoover Dam

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    ALBUQUERQUE, N.M. — An energy infrastructure project bigger than the Hoover Dam is how Hunter Armistead describes the $10 billion venture his company will be overseeing during the next three years.

    As the chief executive of one of the world’s largest wind and solar development companies, Armistead said breaking ground on Pattern Energy’s SunZia transmission line marks a major milestone as the United States looks to make good on promises to address climate change and bolster the nation’s already overwhelmed power grids as demand increases and weather events become more extreme.

    It is also a cautionary tale, he told The Associated Press in an interview ahead of Friday’s ceremony on the open plains of north-central New Mexico.

    The U.S. can’t afford to take 12 years to “create this type of solution” given the growing need for more energy infrastructure, Armistead said.

    He pointed to Europe and China, where billions of dollars are being invested in new high-voltage lines to connect power plants to cities where demand is high.

    “They all recognize the need to build out bulk transmission, to create inter-regional transfer points in order to create greater reliability,” he said. “It also creates diversity in resources and diversity in dealing with weather, which is now the new most important factor driving both our load and our generation.”

    The Biden administration has set a goal to eliminate carbon emissions from the power sector by 2035. The effort faces numerous challenges, including the lack of transmission.

    The U.S. Department of Energy has cited independent estimates that indicate transmission systems need to expand by 60% by 2030 and may need to triple by 2050. The agency is working with two national laboratories on a transmission planning study, with findings and recommendations expected later this year.

    The Biden administration is just the latest to promise speeding up the development and modernization of the nation’s energy infrastructure through expedited federal permitting and regulatory reforms. Former Presidents Barack Obama and Donald Trump also vowed to roll back bureaucracy.

    The SunZia transmission project has been more than a decade in the making. After an initial review over several years, the U.S. Bureau of Land Management authorized a right-of-way grant on federal lands. That was revisited when developers in 2021 submitted a new application modifying the route after the U.S. Defense Department and environmentalists raised concerns about the path of the high-voltage lines.

    Final approval came in May, with U.S. Interior Secretary Deb Haaland saying the latest application was reviewed in record time as the administration has tried to fast-track more projects.

    In Arizona, there are still concerns about potential ecological damage from SunZia where it will cross the San Pedro River Valley. Critics plan to appeal a recent court decision affirming regulatory approval in that state.

    “I disagree with those who believe that poorly planned projects like SunZia should now be used as the pretext for granting the federal government even greater authority to sidestep legitimate state and local concerns over federal powerline siting decisions,” said Peter Else, chair of the Lower San Pedro Watershed Alliance.

    Haaland said the Bureau of Land Management consistently sought collaboration to develop the best possible route for the line. She doubled down Friday on the administration’s promise to permit at least 25 gigawatts of onshore renewable energy by 2025. She said New Mexico, her home state, stands to play a big role in production given its supply of sunshine and wind.

    The SunZia project will stretch about 550 miles (885 kilometers) — funneling renewable energy to more populated areas in Arizona and California. Developers say it will be capable of transporting more than 3,500 megawatts of new wind power to 3 million people in the West.

    Other projects in the works include the Southern Spirit transmission line that would link Texas with other grids in the southeastern U.S., the proposed Greenlink West Transmission Project in Nevada, and a set of high-voltage lines that would span from central Utah to east-central Nevada.

    Aside from addressing climate issues, U.S. Sen. Martin Heinrich said such projects represent one of this generation’s greatest economic opportunities. He and other officials have pointed to construction jobs and tax revenues for local governments and states.

    The New Mexico Democrat earlier this year introduced legislation to improve the planning, permitting and financing of transmission infrastructure. The proposals include a 30% investment tax credit for large-scale projects as well as coordinated agency reviews and early stakeholder engagement.

    Armistead said developers historically have tried to avoid federal lands because of the bureaucracy involved. The irony is that the federal government actually wants developers to build more transmission lines, he said.

    SunZia will cross varied terrain, from a riparian area along the Rio Grande to rugged canyons and cactus-dotted valleys.

    While rerouting the line around sensitive areas in New Mexico took more time and money, Armistead said he believed it was the right thing to do.

    “I believe that is a model for how it should be done in the future. And that’s what I’m so proud of,” he said. “I think this creates the credibility and the reality of what is possible, and we better keep building on from there.”

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  • How Wall Street’s REIT giants are reshaping U.S. real estate

    How Wall Street’s REIT giants are reshaping U.S. real estate

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    U.S real estate investment trusts today manage $4.5 trillion in real estate worldwide. Many groups on Wall Street offer these tax-friendly funds to retail investors. 

    KKR’s real estate business is one of the big players in the REIT game. The private equity firm manages multiple REIT funds. The KKR Real Estate Select Trust, which currently manages $1.5 billion in assets, paid a dividend of 5.4% to its investors in July 2023.

    But the benefits extend beyond returns.

    “When you look at the after tax equivalent of that yield, it is very compelling.” said Billy Butcher, CEO of KKR’s global real estate business. “The depreciation from our properties has covered 100% of the income generated by our properties, and there’s no tax on that dividend,” he said in an interview with CNBC.

    Larger funds sometimes contain a diversified pool of assets. Categories may include office, student housing, casino, timberlands, radio and cell towers, server farms, self-storage properties, billboards, and much more.

    “Back in the 1960s, there were three or four different types [of REITs], said Sher Hafeez, a managing director at Jones Lang LaSalle, a real estate services firm. “Now, I can count at least 20 different types.”

    Top performing REIT sub-sectors in recent years include data centers, self-storage properties, residential housing and tower REITs. Residential housing delivered a return of 16% from 2010 to 2020, according to a S&P Global Investments report.

    The investor-friendly tax rules can also increase the pace of large-scale development. 

    “Having REITs there as a potential exit helps the market, and helps the availability of financing,” said Michael Pestronk, CEO and co-founder of Post Brothers, a Philadelphia-based housing developer. 

    Some funds like Invitation Homes and American Homes 4 Rent were founded in the yearslong slowdown in U.S. home construction. At the time, REITs bought and managed commercial-scale properties, which could include products like master-planned communities or traditional apartment complexes.

    In recent years, publicly traded trusts have targeted single-family rental market, and today, these REITs have grown tremendously — enough to build new neighborhoods in their entirety. 

    Watch the video above to learn the fundamentals of real estate investment trusts.

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  • Maui wildfires renew tensions around water rights in a centuries-old conflict over sacred streams

    Maui wildfires renew tensions around water rights in a centuries-old conflict over sacred streams

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    LAHAINA, Hawaii — Shortly after the ignition of the deadliest U.S. wildfire in more than a century, a developer of land around a threatened Maui community urgently asked state officials for permission to divert water from streams to fight the growing inferno.

    West Maui Land Company, Inc. said it eventually received approval from the Hawaii commission that oversees water management, but suggested the state body didn’t act quickly enough and first directed the company to talk with a downstream taro farmer who relies on stream water, according to letters by a company executive obtained by The Associated Press and other news outlets.

    Community members, including Native Hawaiian farmers, say the water the developer wanted for its reservoirs would not have made a difference in the fires. The reservoirs don’t supply Maui County’s fire hydrants, and firefighting helicopters — which could have dipped into the reservoirs for water — were grounded by high winds.

    The Aug. 8 fire that killed at least 115 people took place below West Maui Land Company’s developments and the Hawaiian communities that rely on the water. But the dispute over water access during the blaze has sparked new tension in a fight that dates to the mid-1800s, when unfair water distribution practices took root with colonization.

    “This is a 2023 rendition of what’s been happening in Lahaina for centuries,” said Kapua‘ala Sproat, director of the Native Hawaiian law center at the University of Hawaii.

    Glenn Tremble, who wrote the letters, told the AP via text that the company didn’t share the letters with the media and didn’t want to distract from West Maui’s losses. AP obtained the correspondence from various people familiar with the dispute.

    “All we have asked is for the ability to make water available for fire prevention and suppression, to help people while we recover and to rebuild what we have lost,” he wrote.

    The complex push-pull over Maui stream diversions recalls other battles over water rights in drought-stricken Western states that have pitted Native American tribes against farmers and farmers against urban areas.

    Native Hawaiians have long fought to protect what they consider a sacred resource. Stream diversions continued even after the plantations closed, and booming development contributed to West Maui’s arid conditions. The West Maui Land Company’s subdivision — including multimillion-dollar gated homes that use diverted water — was untouched by the Lahaina fires, noted Native Hawaiians who live off the streams and farm taro, a cultural staple.

    “At one time, Lahaina was known to be very verdant and very lush,” said Blossom Feiteira, a Native Hawaiian cultural practitioner and Lahaina native. Hawaiians revere water so much and its abundance was why Lahaina became the capital of the Hawaiian kingdom from 1820 to 1845, she said.

    When sugar cane and pineapple fields from the plantation era shut down in the 1980s and 1990s, the water was redirected to gated communities with lush green lawns and swimming pools, she said. Overgrown brown brush and invasive grass cropped up around these developments.

    “There has been resentment in the community about that kind of picture,” Feiteira said.

    In one of the letters, West Maui Land Company said the state Commission on Water Resource Management should not prioritize “one individual’s farm” over fighting a wind-whipped fire.

    “No one is happy there was water in the streams while our homes, our businesses, our lands, and our lives were reduced to ash,” the company said. The letter said the company requested “approval to divert more water from the streams so we could store as much water as possible for fire control” at 1 p.m. on the day of the fire, but that they were directed to first inquire with a downstream taro farmer.

    At about 6 p.m., the commission approved the diversion of more water, the letter said.

    West Maui Land’s suggestion that Kaleo Manuel, first deputy of the commission, delayed the release of stream water has struck a nerve among Native Hawaiians and others who say the company is making him a scapegoat and using the tragedy to take yet more water.

    A Lahaina stream sustains Keʻeaumoku Kapu’s taro patches on his ancestral lands deep in Kauaula Valley in the mountains above Lahaina. He fled the town on the afternoon of the fire as flames approached and spent a night in his truck. The fire didn’t get close to his home and farm in the valley, but in 2018 area residents used water from the stream to fight a wildfire, he said.

    He called West Maui Land’s characterization of the stream diversions “bogus” and disingenuous.

    “They’ll do anything to get it,” Kapu said of the water.

    The company is “trying to use this incredibly difficult time to get a legal and financial advantage, especially over their water resources, when that’s something they were not able to accomplish legally before the fire,” said Sproat, of the Native Hawaiian law center.

    The letters caused such a commotion that the state Department of Land and Natural Resources re-assigned Manuel, drawing a lawsuit from West Maui residents decrying the move. The department said in a statement that Manuel’s reassignment didn’t suggest he did anything wrong, but would allow officials to focus on Maui.

    Manuel couldn’t immediately be reached for comment. Community groups urged supporters to go to Manuel’s Honolulu office last week to bestow lei upon him in gratitude for his efforts.

    Conflicts over stream diversions are not just a West Maui issue. Soon after the fires started, the state attorney general’s office filed a petition with the state Supreme Court blaming an environmental court judge’s caps on East Maui stream diversions for a lack of water for firefighting.

    The court didn’t immediately issue a ruling after hearing arguments Wednesday.

    “This is what happens when there’s literally not enough water anymore,” said Kamanamaikalani Beamer, a former trustee of the Commission on Water Resource Management, calling streams “the veins that fill up our aquifers.”

    “Water brings together like the multitude of interests — economic, cultural,” he said. “But it’s because no one can just create it out of nothing.”

    ___

    Kelleher reported from Honolulu.

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  • What’s going on with Scooter Braun’s artist roster? Here’s what we know and what’s still speculation

    What’s going on with Scooter Braun’s artist roster? Here’s what we know and what’s still speculation

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    LOS ANGELES — Scooter Braun is one of the most recognizable names in the music business for his singular work as an executive and entrepreneur. He’s managed many of your favorite artists, propelling the likes of Justin Bieber to stratospheric fame, and earned the ire of Taylor Swift and her legions of fans for his business practices.

    On Friday, rumors circulated online that Justin Bieber was leaving Braun, his longtime manager — and the man credited with discovering him. In the days that followed, speculation grew, and media outlets began reporting that some of Braun’s other hype-profile clients like Ariana Grande, and Demi Lovato were also parting ways with him — all of which has yet to be confirmed.

    Braun hasn’t issued a public statement, but did tweet in jest, writing “Breaking news… I’m no longer managing myself.”

    As the story continues to unfold, here’s everything we know — and everything we don’t — about what’s going with Scooter Braun and his powerful client roster.

    Who has Scooter Braun managed?

    Without confirmation from artists, their teams, or Braun himself, changes to Braun’s roster are conjectural. AP reached out to every artist listed as being managed by Braun on the SB Projects website and only heard back from a select few.

    The site mentions his company’s “past and present work” and includes artists Braun no longer works with, including Hilary Duff and J Balvin.

    Representatives for Carly Rae Jepsen, BabyJake, and Asher Roth confirmed to AP that those artists no longer work with Braun and haven’t for quite some time.

    A person close to Idina Menzel told AP the singer is no longer managed by Braun but was not authorized to speak publicly.

    A representative for pop star Ava Max confirmed that she is still represented by Braun.

    OK, but why is Scooter Braun a big deal?

    In the early 2000s, Braun dropped out of Emory College to throw parties for elite musicians traveling to Atlanta: Ludacris, Eminem, even Britney Spears. Jermaine Dupri recruited him to become So So Def’s executive director of marketing. Later, in 2007, Braun started his own talent management company, SB Projects, where in 2008, he’d discover Justin Bieber on YouTube, growing the teen heartthrob’s profile by utilizing social media.

    SB Projects encompasses a few ventures: Management, which included clients like Bieber, Ariana Grande, J Balvin, and for a short-stint, Kanye West; Sheba Publishing, a joint venture with Universal Music Group Publishing; and Schoolboy Records, a record label first put on the map by Braun’s client Asher Roth and his 2009 hit “I Love College.”

    Braun operated his assorted companies under one entity called Ithaca Holdings.

    In the midst of his incredible success, in 2019, Braun bought Big Machine Records, the label that originally signed Taylor Swift and released her first six records. Its CEO Scott Borchetta stayed in place. With the purchase, Braun purchased ownership to Swift’s master recordings, which he sold to an investment fund the following year. As a result, Swift announced that she would re-record her albums to own her new masters in a project called “Taylor’s Version.”

    In April 2021, Braun sold Ithaca Holdings to HYBE — the publicly traded company formerly known as Big Hit Entertainment, best known for creating the K-pop group BTS — in a $1.05 billion deal. According to the corporate filling, Braun would receive about 462,380 shares of the company (totaling $86.2 million) while his star clients Grande and Bieber would each receive 53,557 shares, or almost $11.0 million apiece.

    In January 2023, he became the sole CEO of HYBE America, having previously shared the title after the merger with Big Hit’s Lenzo Yoon.

    Back up — what is Braun doing with HYBE?

    When Braun’s Ithaca Holdings merged with the globally minded HYBE in April 2021, it became one of the largest music companies in the world. Just a few months later, in July, Bang Si-hyuk, the CEO of Bit Hit Entertainment/HYBE stepped down, Park Ji-won took over, and Lenzo Yoon and Scooter Braun were named co-CEOs of HYBE America. In January, Braun became the sole CEO — which means he’s busy.

    There has been speculation that if Braun’s artists are leaving SB Projects management, it is because Braun is slowly placing his focus on HYBE America instead of acting as an artist manager. But so far, there’s been no confirmation that’s what’s happening.

    What does a music manager do?

    The role of a music manager is an elusive one, based largely on the kind of relationship between the businessperson and the musician. The best music managers — and we’re excluding business and tour managers here, whose specialties are in the title — are fiercely organized, dedicated to the success of their artist. They possess a deep understanding of the industry and the artist’s place within it.

    They work to ensure their artist’s projects run smoothly, connecting teams to reach a particular goal. Think of them as the behind-the-scenes engine responsible for allowing the artist to succeed. Often, they invest in and help develop an artist, and tackle anything from creative production to day-to-day operations.

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  • Dick’s 2Q profit falls, and the retailer lowers its full-year outlook on worries about theft

    Dick’s 2Q profit falls, and the retailer lowers its full-year outlook on worries about theft

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    Dick’s Sporting Goods profit slipped in its second quarter and missed Wall Street’s expectations as the retailer cut its full-year profit outlook, citing worries over theft at its stores.

    Shares declined more than 24% in morning trading Tuesday.

    For the period ended July 29, Dick’s earned $244 million, or $2.82 per share. A year earlier the company earned $319 million, or $3.25 per share.

    Analysts polled by FactSet predicted earnings of $3.81 per share.

    “Our Q2 profitability was short of our expectations due in large part to the impact of elevated inventory shrink, an increasingly serious issue impacting many retailers,” President and CEO Lauren Hobart said in a statement.

    Neil Saunders, managing director of GlobalData, said in a statement that a large portion of Dick’s quarterly profit drop appeared to be from theft.

    “In our view this is a particular issue for Dick’s as many of the products it sells are desirable and have good resale values,” he said. “While the problem is not one of Dick’s making, management does not seem to have any immediate solutions to the problem which could, if left unchecked, continue to weigh down on the bottom line.”

    Many retailers have struggled with theft concerns. In May Target said theft was cutting into its bottom line and that it expected related losses could be $500 million more than last year, when losses from theft were estimated to be anywhere from $700 million to $800 million. So that means losses could top $1.2 billion this year.

    During Target’s second-quarter conference call last week, CEO Brian Cornell told media and analysts that during the first five months of this year, its stores saw a 120% increase in theft incidents involving violence or threats of violence compared to the year-ago period.

    Dick’s sales during the quarter climbed to $3.22 billion from $3.11 billion. That missed Wall Street’s estimate of $3.24 billion.

    Sales at stores open at least a year, a key gauge of a retailer’s health, increased 1.8%. That compares with a 5.1% decline in the prior-year period.

    The Pittsburgh-based chain said it eliminated an unspecified number of jobs at its customer support center to streamline costs this week and expects to post $20 million of severance expense in the third quarter.

    Dick’s now foresees full-year earnings in a range of $11.33 to $12.13 per share. Its previous guidance was for earnings between $12.90 and $13.80 per share.

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  • Beyond Meat revenue plummets in the second quarter due to flagging US demand

    Beyond Meat revenue plummets in the second quarter due to flagging US demand

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    Beyond Meat said its revenue plunged 30.5% in the second quarter as consumer demand for its plant-based meat substitute fell despite price cuts

    ByDEE-ANN DURBIN AP Business Writer

    FILE – Packages of Beyond Meat’s Beyond Burgers and Beyond Sausage, are shown in this photo, in New York, Thursday, April 29, 2021. (AP Photo/Richard Drew, File)

    The Associated Press

    Plant-based meat substitute maker Beyond Meat said its revenue plunged 30.5% in the second quarter as consumer demand for its burgers, sausages and other products fell despite price cuts.

    The El Segundo, California-based company lowered its full-year revenue forecast as a result. Beyond Meat now expects revenue between $360 million and $380 million for the year. That’s down from the $375 million to $415 million it forecast at the end of the first quarter.

    Beyond Meat’s shares fell 10% in after-hours trading Monday.

    In a conference call with investors, Beyond Meat President and CEO Ethan Brown said the company faced tough comparisons to the second quarter of 2022, when a new beef jerky product generated sales and restaurants were reopening and placing big orders.

    But Brown said the company is also struggling to appeal to new customers because of perceptions that its products are unhealthy and overly processed. Brown said an ad campaign launched last week will better explain its “clean and simple” manufacturing process and highlight the products’ health credentials.

    “We’re going to be much more aggressive in our marketing,” Brown said. “It is an education issue. The facts are there. The health benefits of our products are very strong.”

    Brown said Beyond Meat has also reached out to some of its competitors to discuss working together on ads that would help change perceptions about the category.

    For the April-June period, Beyond Meat reported revenue of $102.1 million. That was lower than the $108.7 million Wall Street forecast, according to analysts polled by FactSet.

    U.S. revenue dropped 40% as both retail and food service sales weakened. International revenue was down 8.7%. International food service demand was flat compared to the same period last year, but retail sales were down nearly 16%.

    Beyond Meat makes plant-based burgers and nuggets in a partnership with McDonald’s in Europe, but those products aren’t offered in the U.S. Brown said he expects more U.S. fast food restaurants to add plant-based options in the near future.

    Beyond Meat said its net loss narrowed to $53.5 million, or 83 cents per share, as it reined in logistics and manufacturing costs. That was slightly better than the 84-cent loss analysts had forecast.

    Brown expressed confidence that revenue will grow modestly in the second half of this year as new products hit the U.S. market and distribution grows abroad.

    “We are very excited to be coming out of what we view as a trough in the category and resuming growth in the third and fourth quarter,” Brown said.

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  • Amazon reports better-than-expected revenue and profits for 2Q, sending its stock higher

    Amazon reports better-than-expected revenue and profits for 2Q, sending its stock higher

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    NEW YORK — Amazon on Thursday posted better-than-expected revenue and profits for the second quarter, sending its stock higher in after-hours trading.

    The e-commerce giant earned $6.7 billion, or 65 cents per share, for the three-month period ended June 30, much higher the $3.64 billion industry analysts surveyed by FactSet had anticipated.

    Amazon had reported a loss during the same period last year, driven by a big loss on its investment in electric vehicle start-up Rivian Automotive. Its profits for the second quarter include a pre-tax valuation gain of $0.2 billion in its Rivian investment.

    The company, which has been on a cost-cutting spree over the past few months, said overall revenue was $134.4 billion, up 11% from the same period last year and beating analyst expectations of 8.5% growth.

    “It was another strong quarter of progress for Amazon,” Amazon CEO Andy Jassy said in a statement.

    Amazon’s cloud unit AWS, which has been closely watched by investors, posted $22.1 billion in revenue.

    Jassy said growth in the cloud business, which had slowed since last year as companies cut back on costs, “stabilized as customers started shifting from cost optimization to new workload deployment.”

    AWS grew by 12%, slower than 16% in the first quarter and 33% during the same time last year. Part of the slowdown can be explained by the fact that AWS is the market leader in the cloud arena, which makes it challenging to sustain the higher levels of growth it had in the earlier days.

    In an effort to lure in more customers and gain a competitive edge in the generative AI race where it seems to be playing catchup, the company has also been rolling out AI tools its customers can use to make their own applications. Last week, it said an AI model called Amazon Bedrock is being used by the Irish carrier Ryanair, among others.

    Meanwhile, Amazon’s flagship online retail business, which had slowed dramatically following a boom earlier in the pandemic, grew 5%, its best showing since the third quarter of last year.

    Brian Olsavsky, Amazon’s chief financial officer, said during a call with reporters on Thursday that consumers are still operating on tight budgets and trading down to more generic brands even in the upscale grocery chain Whole Foods, which is owned by Amazon.

    Deliveries for customers who shop online are getting much faster under the retailer’s new regionalization model. Previously, Amazon used to fulfill orders from warehouses across the country. But now, the company has eight regions across the country that are serving smaller areas, which helps it accomplish a twofold goal of cutting costs and getting items to its Prime customers quicker.

    During the second quarter, more than half of Prime orders across the top 60 U.S. metro areas arrived the same day or the next, the company said Monday, touting what it called its fastest Prime speed ever. The company also publicized its plans to double the number of same-day delivery sites in the coming years.

    Amazon’s physical store sales, which includes its Amazon Fresh and Go stores as well as Whole Foods, grew 7%. The company has ambitions to be a major player in the grocery sector but hasn’t grabbed significant market share since launching the Fresh and Go chain three years ago. It now operates dozens across the country.

    Amazon CEO Andy Jassy said earlier this year that groceries present a big growth opportunity for Amazon but the company needed to find the right “mass grocery format” worth expanding broadly.

    On Wednesday, Bloomberg reported the company was planning to add an online service that would allow customers to integrate orders from Whole Foods and Amazon’s other grocery stores into one cart. In a blog post, the company also provided a look at two revamped Fresh stores in Illinois that offer more product selections, self checkout and Krispy Kreme Doughnut shops. In addition to that, it has begun offering grocery deliveries for non-Prime members.

    The company said it expects to earn between $138 billion and $143 billion in revenue during the third quarter.

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  • Teamsters say Yellow Corp. is ceasing operations, filing for bankruptcy

    Teamsters say Yellow Corp. is ceasing operations, filing for bankruptcy

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    NEW YORK — Troubled trucking company Yellow Corp. is shutting down and filing for bankruptcy, the Teamsters said Monday.

    An official bankruptcy filing is expected any day for Yellow, after years of financial struggles and growing debt. Its expected liquidation would mark a significant shift for the U.S. transportation industry and shippers nationwide.

    “Today’s news is unfortunate but not surprising. Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government. This is a sad day for workers and the American freight industry,” said Teamsters General President Sean M. O’Brien.

    The Associated Press reached out to Yellow for comment on Monday. No bankruptcy filings were found as of the early morning.

    The company’s collapse arrives just three years after Yellow, formerly known as YRC Worldwide, Inc., received $700 million in pandemic-era loans from the federal government. But the company was in financial trouble long before that — with industry analysts pointing to poor management and strategic decisions dating back decades.

    Former Yellow customers and shippers will face higher prices as they take their business to competitors, including FedEx or ABF Freight, experts say — noting that Yellow historically offered the cheapest price points in the industry.

    Yellow is one of the nation’s largest less-than-truckload carriers. The 99-year-old Nashville, Tennessee-based company had 30,000 employees across the country as of earlier this year.

    On Wednesday, The Wall Street Journal and FreightWaves reported that Yellow was preparing for bankruptcy — with some noting that customers had already started to leave the carrier in large numbers. And the company reportedly stopped freight pickups earlier in the week.

    Yellow shut down operations on Sunday, according to The Wall Street Journal, following the layoffs of hundreds of nonunion employees on Friday.

    The bankruptcy preparation reports arrived just days after Yellow averted a strike from the Teamsters, which represents Yellow’s 22,000 unionized workers, amid heated contract negotiations. On July 23, a pension fund agreed to extend health benefits for workers at two Yellow Corp. operating companies, avoiding a planned walkout — and giving Yellow “30 days to pay its bills,” notably $50 million that Yellow failed to pay the Central States Health and Welfare Fund on July 15.

    Yellow has racked up hefty bills over the years. As of late March, Yellow had an outstanding debt of about $1.5 billion. Of that, $729.2 million was owed to the federal government.

    In 2020, under the Trump administration, the Treasury Department granted the company a $700 million pandemic-era loan on national security grounds. Last month, a congressional probe concluded that the Treasury and Defense departments “made missteps” in this decision — and noted that Yellow’s “precarious financial position at the time of the loan, and continued struggles, expose taxpayers to a significant risk of loss.”

    The government loan is due in September 2024. As of March, Yellow had made $54.8 million in interest payments and repaid just $230 million of the principal owed, according to government documents.

    The current financial chaos at Yellow “is probably two decades in the making,” said Stifel research director Bruce Chan, pointing to poor management and strategic decisions dating back to the early 2000s. “At this point, after each party has bailed them out so many times, there is a limited appetite to do that anymore.”

    A Wednesday investors note from financial service firm Stephens estimated that Yellow was burning daily amount of $9 million to $10 million in recent days.

    According to Satish Jindel, president of transportation and logistics firm SJ Consulting, Yellow handled an average of 49,000 shipments per day in 2022. On Friday, he estimated that number was down to between 10,000 and 15,000 daily shipments.

    Yellow’s prices have historically been the cheapest compared to other carriers, Jindel said. “That’s why they obviously were not making money,” he added. “And while there is capacity with the other LTL carriers to handle the diversions from Yellow, it will come at a high price for (current shippers and customers) of Yellow.”

    —-

    AP Business Writer Matt Ott contributed to this report.

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  • Microsoft and Activision extend deadline to close $69 billion deal under close regulatory scrutiny

    Microsoft and Activision extend deadline to close $69 billion deal under close regulatory scrutiny

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    The deadline for Microsoft’s $69 billion acquisition of video game company Activision Blizzard has been extended as the companies seek to close a deal that has been challenged by regulators in the U.S., as well as by the U.K.’s Competition and Markets Authority.

    Microsoft believes that pushing back the deadline to Oct. 18 will provide enough time to work through the remaining regulatory issues, said Brad Smith, the company’s president.

    “We are confident about our prospects for getting this deal across the finish line,” Smith said.

    The extension comes with a bigger termination fee, should the deal be called off, and a number of other new agreements.

    Tuesday marked an important deadline for the deal announced 18 months earlier. Both Microsoft and Activision had agreed that either party could walk away from the planned merger if it hadn’t closed by then, triggering Microsoft to potentially have to pay a $3 billion breakup fee unless both sides decided to renegotiate.

    That termination fee has been increased to $3.5 billion with the extension. If the deal does not close by Sept. 15, it will increase to $4.5 billion.

    “I am happy to share that based on our continued confidence in closing our deal, the Activision Blizzard and Microsoft boards have mutually agreed not to terminate the deal until after October 18,” Activision Blizzard CEO Bobby Kotick said in a note to employees.

    He emphasized that it’s already been granted approval in 40 countries, which includes those in the European Union, and he was confident the U.K. concerns would be resolved.

    Microsoft spent this month working to resolve longstanding legal challenges from antitrust enforcers in the U.S. and U.K. who argued the merger would harm competition.

    The deal was effectively clear to go in the U.S. this week, especially after the Supreme Court decided against hearing a last-ditch effort to block the takeover from gamers who have described themselves as fans of popular Activision titles Call of Duty, World of Warcraft, Overwatch and Diablo.

    Justice Elena Kagan rejected the emergency appeal without comment on Tuesday. Kagan handles emergency matters from California and other western states.

    But the U.K. remained an obstacle, though one that’s likely to be surmounted.

    The Competition and Markets Authority initially rejected the deal, but later pushed back its final decision so it can consider Microsoft’s argument that new developments mean its acquisition can go through.

    A judge on Monday conditionally approved a joint request from Microsoft and the British regulator to delay upcoming proceedings, enabling both sides to further negotiate.

    Daniel Beard, an attorney representing Microsoft in the U.K. case, told the judge Monday he was grateful the process is moving quickly because “the U.K. is the only impediment to closing and speed is of the essence.”

    Among the additional information sought by the judge was Microsoft’s Sunday announcement of a deal addressing concerns from top rival Sony, maker of the PlayStation console that’s a competitor to Microsoft’s Xbox. Microsoft said it signed a deal with Sony to keep Call of Duty on PlayStation for at least 10 years.

    Such a deal would also appear to address at least one of the concerns about loss of competition brought by the U.S. Federal Trade Commission, which sued in December to stop the deal.

    The FTC hasn’t said if it will continue to fight the takeover after a federal judge and a federal appeals court both denied its attempt to stop the deal from closing. The FTC could still continue a case set for the agency’s in-house judge in August, but that wouldn’t preclude the two companies from completing the merger beforehand.

    Phil Spencer, head of Microsoft’s Xbox division, said in an email to employees: “While we can technically close in the United States due to recent legal developments, this extension gives us additional time to resolve the remaining regulatory concerns in the UK.”

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  • As Macron’s criticism reverberates, US economist says she won’t take top EU job

    As Macron’s criticism reverberates, US economist says she won’t take top EU job

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    The European Union says the American candidate to become one of the bloc’s chief economists will now not take up the position because of the political controversy it has stirred

    ByRAF CASERT Associated Press

    France’s President Emmanuel Macron gestures as he talks to journalists during the third EU-CELAC summit that brings together leaders of the EU and the Community of Latin American and Caribbean States, in Brussels, Belgium, Tuesday, July 18, 2023. (AP Photo/Francois Walschaerts)

    The Associated Press

    BRUSSELS — One day after French President Emmanuel Macron criticized her appointment because of her nationality, the American candidate to become one of the European Union’s chief economists will now not take up the position because of the political controversy it stirred, the bloc announced Wednesday.

    In a letter to the EU’s executive Commission released early Wednesday, Yale economics professor Fiona Scott Morton wrote that she had “determined that the best course of action is for me to withdraw and not take up the Chief Economist position.”

    EU Competition Commissioner Margrethe Vestager, who had pushed through the decision to appoint an American to such a high-level position, said, “I accept this with regret and hope that she will continue to use her extraordinary skillset to push for strong competition enforcement.”

    Macron had not been the only one to criticize the unusual move to take on an American for such a post but his criticism had the most impact.

    On Tuesday, he insisted that if the European Union needed more strategic independence, it was a bad move that the EU head office planned to hire an American expert as its chief competition economist.

    “Is there really no great European researcher with academic qualifications that could do this job?” Macron asked at an EU summit.

    In a bloc of some 450 million people, “is there no one in the 27 member states that has a researcher good enough to advise the (European) Commission? That is a real question mark,” Macron said.

    The EU’s executive commission announced last week that it had appointed Scott Morton as chief competition economist in its department tasked with ensuring that “all companies compete equally and fairly on their merits within the single market, to the benefit of consumers, businesses and the European economy as a whole.″

    Macron insisted that he has nothing against Scott Morton herself, an economist with multiple diplomas from elite schools.

    But the French leader demanded answers from the commission and suggested that hiring a non-EU citizen to such a senior job should not be allowed under EU statutes.

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  • Exec tells first UN council meeting that big tech can’t be trusted to guarantee AI safety

    Exec tells first UN council meeting that big tech can’t be trusted to guarantee AI safety

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    UNITED NATIONS — The handful of big tech companies leading the race to commercialize AI can’t be trusted to guarantee the safety of systems we don’t yet understand and that are prone to “chaotic or unpredictable behavior,” an artificial intelligence company executive told the first U.N. Security Council meeting on AI’s threats to global peace on Tuesday.

    Jack Clark, co-founder of the AI company Anthropic, said that’s why the world must come together to prevent the technology’s misuse.

    Clark, who says his company bends over backwards to train its AI chatbot to emphasize safety and caution, said the most useful things that can be done now “are to work on developing ways to test for capabilities, misuses and potential safety flaws of these systems.” Clark left OpenAI, creator of the best-known ChatGPT chatbot, to form Anthropic, whose competing AI product is called Claude.

    He traced the growth of AI over the past decade to 2023 where new AI systems can beat military pilots in air fighting simulations, stabilize the plasma in nuclear fusion reactors, design components for next generation semiconductors, and inspect goods on production lines.

    But while AI will bring huge benefits, its understanding of biology, for example, may also use an AI system that can produce biological weapons, he said.

    Clark also warned of “potential threats to international peace, security and global stability” from two essential qualities of AI systems – their potential for misuse and their unpredictability “as well as the inherent fragility of them being developed by such a narrow set of actors.”

    Clark stressed that across the world it’s the tech companies that have the sophisticated computers, large pools of data and capital to build AI systems and therefore they seem likely to continue to define their development

    In a video briefing to the U.N.’s most powerful body, Clark also expressed hope that global action will succeed.

    He said he’s encouraged to see many countries emphasize the importance of safety testing and evaluation in their AI proposals, including the European Union, China and the United States.

    Right now, however, there are no standards or even best practices on “how to test these frontier systems for things like discrimination, misuse or safety,” which makes it hard for governments to create policies and lets the private sector enjoy an information advantage, he said.

    “Any sensible approach to regulation will start with having the ability to evaluate an AI system for a given capability or flaw,” Clark said. “And any failed approach will start with grand policy ideas that are not supported by effective measurements and evaluations.”

    With robust and reliable evaluation of AI systems, he said, “governments can keep companies accountable, and companies can earn the trust of the world that they want to deploy their AI systems into.” But if there is no robust evaluation, he said, “we run the risk of regulatory capture compromising global security and handing over the future to a narrow set of private sector actors.”

    Other AI executives such as OpenAI’s CEO, Sam Altman, have also called for regulation. But skeptics say regulation could be a boon for deep-pocketed first-movers led by OpenAI, Google and Microsoft as smaller players are elbowed out by the high cost of making their large language models adhere to regulatory strictures.

    U.N. Secretary-General Antonio Guterres said the United Nations is “the ideal place” to adopt global standards to maximize AI’s benefits and mitigate its risks.

    He warned the council that the advent of generative AI could have very serious consequences for international peace and security, pointing to its potential use by terrorists, criminals and governments causing “horrific levels of death and destruction, widespread trauma, and deep psychological damage on an unimaginable scale.”

    As a first step to bringing nations together, Guterres said he is appointing a high-level Advisory Board for Artificial Intelligence that will report back on options for global AI governance by the end of the year.

    The U.N. chief also said he welcomed calls from some countries for the creation of a new United Nations body to support global efforts to govern AI, “inspired by such models as the International Atomic Energy Agency, the International Civil Aviation Organization, or the Intergovernmental Panel on Climate Change.”

    Professor Zeng Yi, director of the Chinese Academy of Sciences Brain-inspired Cognitive Intelligence Lab, told the council “the United Nations must play a central role to set up a framework on AI for development and governance to ensure global peace and security.”

    Zeng, who also co-directs the China-UK Research Center for AI Ethics and Governance, suggested that the Security Council consider establishing a working group to consider near-term and long-term challenges AI poses to international peace and security.

    In his video briefing, Zeng stressed that recent generative AI systems “are all information processing tools that seem to be intelligent” but don’t have real understanding, and therefore “are not truly intelligent.”

    And he warned that “AI should never, ever pretend to be human,” insisting that real humans must maintain control especially of all weapons systems.

    Britain’s Foreign Secretary James Cleverly, who chaired the meeting as the UK holds the council presidency this month, said this autumn the United Kingdom will bring world leaders together for the first major global summit on AI safety.

    “No country will be untouched by AI, so we must involve and engage the widest coalition of international actors from all sectors,” he said. “Our shared goal will be to consider the risks of AI and decide how they can be reduced through coordinated action.”

    ——

    AP Technology Writer Frank Bajak contributed to this report from Boston

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  • St. Louis Fed president Jim Bullard, one of the central bank’s most hawkish members, stepping down

    St. Louis Fed president Jim Bullard, one of the central bank’s most hawkish members, stepping down

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    St. Louis Federal Reserve Bank President James Bullard, one of the most hawkish members of the central bank since it started it aggressive rate-hiking campaign, is stepping down.

    Bullard is leaving his position as president and CEO of the St. Louis Fed to become the inaugural dean of the Mitchell E. Daniels Jr. School of Business at Purdue University next month, the bank announced Thursday.

    While he’ll be available in an “advisory capacity” to the Fed until Aug. 14, Bullard has recused himself from his role on the central bank’s committee that determines the direction of interest rates and other monetary policy.

    Illinois State Police say a Greyhound passenger bus crashed into three tractor-trailers parked along a highway rest area exit in southern Illinois, killing three people and injuring 14 others, some seriously.

    A no trespassing sign hangs on a fence around the West Lake Landfill Superfund site on Friday, April 21, 2023, in Bridgeton, Mo. Federal officials plan to remove some of the hazardous leached barium sulfate that is at the landfill and cap the rest. (AP Photo/Jeff Roberson)

    The St. Louis region has been struggling with nuclear waste since uranium was first processed at a plant near downtown starting in the early 1940s.

    Susie Gaffney poses for a photo along Coldwater Creek near where she used to live Friday, April 7, 2023, in Florissant, Mo. The creek was contaminated when nuclear waste from the Manhattan Project flowed into the waterway past homes, schools and businesses. St. Louis played an important role in the country’s effort to build the first nuclear weapon. (AP Photo/Jeff Roberson)

    Newly public documents are showing how America’s push for the atomic bomb helped saddle St. Louis with an enduring radioactive waste problem. St.

    This photo provided by the National Archives and Records Administration shows the damaged sixth floor and roof of the Military Personnel Records Center in Overland, Mo., near St. Louis, after a massive fire that started on July 12, 1973. (National Archives via AP)

    Fifty years ago, millions of files were destroyed in a huge fire at the Military Personnel Records Center in suburban St. Louis.

    “It has been both a privilege and an honor to be part of the St. Louis Fed for the last 33 years, including serving as its president for the last 15 years,” Bullard said in a statement. “This is an outstanding organization with staff in every area of the Bank bringing their passion, integrity and a deep sense of purpose to our mission of promoting a healthy economy and financial stability.”

    Bullard has been among the Fed policymakers who’ve taken an aggressive stance toward interest rate increases as the central bank took on the task of reducing the hottest inflation in four decades.

    Beginning with its first hike in March 2022, the Fed lifted its benchmark interest rate to about 5.1%, its highest level in 16 years, before forgoing a hike at its meeting of policymakers last month.

    On Wednesday, the U.S. government reported that inflation at the consumer level rose 3% in June from a year earlier, marking its lowest point since early 2021, though it remains above the Fed’s 2% target.

    Kathleen O’Neill Paese, vice president and chief operating officer of the St. Louis Fed, has taken over Bullard’s post on an interim basis while the bank’s board searches for a permanent successor.

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  • Saudi investment in PGA Tour will top $1 billion. And Norman will exit as LIV’s CEO, tour exec says

    Saudi investment in PGA Tour will top $1 billion. And Norman will exit as LIV’s CEO, tour exec says

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    WASHINGTON — Saudi Arabia’s sovereign wealth fund has agreed to invest more than $1 billion in a new commercial entity controlled by the PGA Tour, and Greg Norman will be ousted as the CEO of LIV Golf if the business deal between the Saudis and the tour is finalized, a tour executive told Congress on Tuesday.

    The agreement between the Saudi Public Investment Fund, the primary funder of LIV Golf, and the PGA Tour shocked the golf world when it was announced last month and led to probes by the Permanent Subcommittee on Investigations, which summoned tour officials to the Capitol to testify under oath, and the Justice Department, which is looking into potential antitrust violations.

    Among the subcommittee’s findings were that representatives of the tour and the Saudis discussed giving Tiger Woods and Rory McIlroy their own LIV Golf teams, a proposal that apparently never reached either player. There was no indication during Tuesday’s hearing that Congress would block the tour from going into business with the Saudis.

    The subcommittee chairman, Sen. Richard Blumenthal, D-Conn., said he was troubled by the geopolitical implications of Saudi investment in American sports and efforts by Crown Prince Mohammed bin Salman, the Saudi leader, to whitewash the kingdom’s human rights abuses. However, Republicans on the committee were more sympathetic to the PGA Tour and the existential threat it faced from the PIF, which controls $600 billion in assets — roughly 500 times what the tour is worth.

    “We’re here because we’re concerned about what it means for an authoritarian government to use its wealth to capture an American institution,” Blumenthal said.

    The PGA Tour and the Saudis agreed on June 6 to drop all lawsuits against each other and combine their commercial interests into a new for-profit company while maintaining the tour’s nonprofit status. Asked by Blumenthal how much money the Saudis have committed to the new venture, Ron Price, the PGA Tour’s chief operating officer, testified the amount was “north of $1 billion.”

    Blumenthal repeatedly pressed Price and Jimmy Dunne, a PGA Tour board member and a key negotiator of the Saudi deal, on why the tour did not seek alternative sources of funding to compete with the PIF. Price and Dunne said going into business with outside investors would not prevent LIV Golf and the PIF from continuing to compete with the tour and use its vast resources to sign top players.

    “My entire concern here is to put this divisive period behind us, and for the sake of players, fans, sponsors and charities, unite the game of golf again,” said Dunne, a New York investment banker who is well connected with the sport’s leaders.

    Critics of the Saudi investment in golf have pointed to the kingdom’s poor human rights record and the killing of journalist Jamal Khashoggi, which U.S. intelligence concluded was likely approved by the crown prince, an allegation he denies. The PIF has bought its way into other sports including soccer — it owns Newcastle United of the English Premier League — and Formula One racing.

    “There is something that stinks about this path that you’re on right now because it is a surrender, and it is all about the money, and that is the reason for the backlash that you’re seeing, Mr. Price,” Blumenthal said. “The equity ownership interest that the Saudis will have … gives them financial dominance. They control the purse strings.”

    But Sen. Rand Paul, a Kentucky Republican and a harsh critic of the Saudi regime, said Congress should not interfere with a private enterprise doing business with the Saudis. He proposed instead that the U.S. reduce arms sales to Saudi Arabia. And the committee’s ranking member, Sen. Ron Johnson, R-Wis., suggested that Saudi involvement in sports ultimately could improve human rights in the kingdom.

    “If the kingdom’s involvement in golf and other sports helps it to modernize or offer rights to women, wouldn’t that be a good thing?” Johnson said.

    Blumenthal pressed Dunne and Price to pledge that PGA Tour players would be free to criticize the Saudi regime if the deal is completed. Both men said they would not recommend that the tour’s policy board approve any deal that includes such restrictions on speech.

    Before the hearing, the subcommittee released documents detailing the secretive and hasty negotiations that led to last month’s framework agreement. Dunne conceded that the tour botched the announcement of the deal, leading many to mistakenly conclude that the tour and LIV Golf had completed a merger.

    “The rollout was very misleading and inaccurate, which is everyone’s fault. There is no merger,” Dunne said. “There is merely an agreement to try and get to an agreement instead of a lawsuit.”

    The documents released by the subcommittee detail the roles of people on the Saudi side of the negotiations, notably Amanda Staveley, a British investment banker who helped broker the Newcastle deal and now sits on the team’s board, and Roger Devlin, a British businessman.

    Devlin was the first to approach Dunne about the prospect of a deal between the tour and LIV, the documents show, although Dunne said Tuesday he never met Devlin in person and reached out to Yasir Al-Rumayyan, the governor of the PIF, on his own. Dunne initially contacted Al-Rumayyan via WhatsApp, the documents show.

    “My attitude was all of the people other than the guy with the money, we shouldn’t talk to,” Dunne said.

    A memo from Staveley’s firm titled “The Best of Both Worlds” includes the proposal that Woods and McIlroy take ownership of LIV teams and that each of them play in 10 LIV events per year. There is no indication in the documents that either Woods or McIlroy, both of whom remained loyal to the PGA Tour, were ever informed of the idea.

    Among the other proposals included in the memo are a mixed-gender, LIV-style team event with qualifying in Saudi Arabia and concluding in Dubai; awarding world ranking points to LIV events, including retroactively; and PIF sponsorship of two elevated PGA Tour events, including one in Saudi Arabia.

    None of those proposals was included in the framework agreement signed by Al-Rumayyan and PGA Tour Commissioner Jay Monahan. The parties also negotiated but did not sign a side agreement that called for ousting Norman as LIV’s CEO.

    Asked by Blumenthal whether Norman was out of a job, Price said that if the tour and the PIF complete their business deal, the tour would control LIV and Norman’s job would be eliminated.

    “We would no longer have a requirement for that type of position,” Price said.

    Norman remains in the CEO role, although he has been largely sidelined as the public face of LIV since the deal was announced. He was invited to testify Tuesday along with Al-Rumayyan; both declined. Monahan also did not testify because he is recovering from an unspecified medical situation that kept him out of work for a month; he has said he plans to return next week.

    ___

    AP golf: https://apnews.com/hub/golf and https://twitter.com/AP_Sports

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  • Fate of record tech industry tie-up heads to judge as Microsoft defends $69B Activision deal

    Fate of record tech industry tie-up heads to judge as Microsoft defends $69B Activision deal

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    SAN FRANCISCO — The fate of what could be the priciest merger in tech industry history is now in the hands of a federal judge who must decide whether to stop Microsoft from closing its deal to buy video game company Activision Blizzard.

    Federal antitrust enforcers have sued to block the $69 billion acquisition that they say will harm competition between Microsoft and gaming industry competitors such as Sony and Nintendo.

    And much of the decision could rest on a single Activision blockbuster franchise, the military commando game Call of Duty, and whether Microsoft could harm competition by controlling how it is distributed to gamers.

    “All of this is for a shooter video game,” said U.S. District Judge Jacqueline Scott Corley, expressing a hint of exasperation about the nature of the dispute near the end of a 5-day San Francisco court hearing Thursday. “We’re concerned about the competition for this one shooter video game.”

    Microsoft has largely had the upper hand in the court proceedings that ended Thursday, calling in its CEO Satya Nadella and other executives, including longtime Activision Blizzard CEO Bobby Kotick, to testify in favor of the merger.

    The Federal Trade Commission, which enforces antitrust laws, has asked Corley to issue an injunction that would temporarily block Microsoft and Activision from closing the deal before the FTC’s in-house judge can review it in an August trial.

    Both Microsoft and Activision have suggested that such a delay would effectively force them to abandon the deal they signed 17 months ago. Microsoft promised to pay a $3 billion breakup fee to Activision if the deal doesn’t close by July 18.

    “The relief the FTC seeks is not only unprecedented but deal-killing,” said Microsoft’s lead attorney, Beth Wilkinson, in a final written defense filed Thursday.

    The case is an important test for the FTC’s heightened scrutiny of the technology industry under its Chair Lina Khan, installed by President Joe Biden in 2021 because of her tough stance toward what she sees as monopolistic behavior by tech giants such as Amazon, Google and Facebook parent Meta. A loss for the FTC could repeat what happened earlier this year, when another judge rebuffed the FTC’s attempt to stop Meta’s takeover of a virtual reality fitness company.

    Corley has shown skepticism of the FTC’s arguments against the Activision deal, particularly on Thursday when she stopped the agency’s lead attorney during his closing arguments to ask him to pin down “exactly what is the harm” to consumers.

    “Why don’t you sort of be a little bit more precise?” Corley said. She added later: “It’s not the harm to Sony we care about. It’s the harm to the consumer.”

    Sony, the deal’s most vocal opponent in the game industry, has told regulators that it fears Microsoft will deprive its dominant PlayStation game console of popular Activision franchises such as Call of Duty or offer a subpar version of those titles to drive gamers to desert PlayStation for Microsoft’s Xbox system.

    Nadella, Kotick and other Microsoft witnesses sought to dispel those concerns this week, arguing that it was better for business to keep games like Call of Duty on multiple platforms and that pulling it from PlayStation would lead to a gamer backlash.

    “The possibility of making Call of Duty exclusive to Xbox was never assessed or discussed with me, nor was it even mentioned in any of the presentations to or discussions with the Board of Directors,” said Microsoft’s chief financial officer, Amy Hood, in written testimony filed before Thursday’s court session. Hood sat in the courtroom Thursday but wasn’t asked to take the stand.

    The FTC’s lead attorney in the case, James Weingarten, on Thursday sought to undercut Microsoft’s assertions that it didn’t care much about making games exclusive. Weingarten grilled a financial executive at Microsoft’s Xbox division about the company’s internal strategy discussions for the Activision Blizzard acquisition as well as its 2021 purchase of another top game-maker, ZeniMax, for $7.5 billion.

    Xbox’s chief financial officer, Tim Stuart, was asked about the stir he caused when he told an investor conference in 2020 after the ZeniMax deal was first announced that Microsoft’s long-run plan was to differentiate its platform by making its games “either first or better or best.”

    Stuart confirmed there were internal discussions about how a drop in sales from making games exclusive to Xbox could be offset by the money made from selling more Xbox consoles and subscriptions to Microsoft’s Game Pass monthly subscription service.

    Microsoft has since made some of ZeniMax’s games, such as the upcoming release Starfield, exclusive to Xbox. But in response to concerns about the Activision deal, Microsoft offered to make binding deals to keep Call of Duty on other platforms for at least ten years. Nintendo agreed to such a deal for its Switch console, while Sony has rebuffed it.

    Both Microsoft and the FTC made their closing arguments Thursday. Corley didn’t say when she would issue the ruling but said she was mindful of the timeliness of the case.

    The deal also faces opposition from another major regulator, the U.K.’s Competition and Markets Authority, while other countries and the European Union have approved it.

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  • How much did the Titan submersible search cost?

    How much did the Titan submersible search cost?

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    PORTLAND, Maine — The cost of the unprecedented search for the missing Titan submersible will easily stretch into the millions of dollars, experts said Friday.

    The massive international effort by aircraft, surface ships and deep-sea robots began Sunday when the Titan was reported missing. Searchers raced against a 96-hour clock in the desperate hope to find and rescue the vessel’s occupants before their oxygen supply ran out.

    But all hope was extinguished Thursday when officials announced the submersible had suffered a catastrophic implosion, killing all five aboard.

    A scaled-back search remained in place Friday as the robots — remotely operated vehicles, known as ROVs — continued to scan the sea floor for evidence that might shed light on what occurred in the deep waters of the North Atlantic.

    The search area spanned thousands of miles — twice the size of Connecticut and in waters 2 1/2 miles (4 kilometers) deep — with agencies such as the U.S. Coast Guard, the Canadian Coast Guard, U.S. Navy and other agencies and private entities.

    There’s no other comparable ocean search, especially with so many countries and even commercial enterprises being involved in recent times, said Norman Polmar, a naval historian, analyst and author based in Virginia.

    The aircraft, alone, are expensive to operate, and the Pentagon has put the hourly cost at tens of thousands of dollars. Turboprop P-3 Orion and jet-powered P-8 Poseidon sub hunters, along with C-130 Hercules, were all utilized in the search.

    Some agencies can seek reimbursements. But the U.S. Coast Guard — whose bill alone will hit the millions of dollars — is generally prohibited by federal law from collecting reimbursement pertaining to any search or rescue service, said Stephen Koerting, a U.S. attorney in Maine who specializes in maritime law.

    “The Coast Guard, as a matter of both law and policy, does not seek to recover the costs associated with search and rescue from the recipients of those services,” the Coast Guard said Friday in a statement.

    The first priority in search and rescue is always saving a life, and search and rescue agencies budget for such expenses, said Mikki Hastings, president and CEO of the National Association for Search and Rescue.

    “In the end, these people were in distress. We know what the ultimate result was. But during the search operation, there are people who are in distress,” she said of the Titan submersible.

    Rescue agencies don’t want people in distress to be thinking about the cost of a helicopter or other resources when a life is in danger.

    “Every person who is missing – they deserve to be found. That’s the mission regardless of who they are,” she said.

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  • Stock market today: US futures down slightly in first trading day after US-China talks

    Stock market today: US futures down slightly in first trading day after US-China talks

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    Wall Street is stable Tuesday, the first trading day of the week, after a meeting between Chinese leader Xi Jinping and Secretary of State Antony Blinken yielded no signs of progress from either side on Taiwan, human rights, technology and other issues of contention.

    Futures for the Dow Jones industrial and the S&P 500 fell about 0.3% before the bell Tuesday.

    U.S. markets were closed for a holiday Monday.

    The Chinese government said the meeting between Xi and the top U.S. diplomat produced “candid and in-depth” talks. Bilateral relations are at their lowest point in decades. Both sides indicated a willingness to cooperate.

    “There is no doubt China and the U.S.A. need each other, and their relationship to be back on a more secure footing for mutually beneficial commercial reasons, as well as reducing the risk of actual conflict,” Clifford Bennett, chief economist at ACY Securities said in a commentary.

    The Chinese economy is recovering at a slower pace than expected from the disruptions caused by efforts to vanquish COVID-19, leading the central bank to cut its benchmark 1-year loan prime rate on Tuesday by a tenth of a percentage point to 3.55%.

    The 5-year rate was lowered to 4.2% in a move to help ease credit and encourage spending and investment to boost economic activity.

    “Recent easing moves suggest that reopening efforts are losing their shine, setting the groundwork for more policy intervention to follow in the months ahead,” Yeap Jun Rong of IG said in a commentary.

    In Asian trading, Japan’s benchmark Nikkei 225 inched up less than 0.1% to finish at 33,388.91. Australia’s S&P/ASX 200 added 0.9% to 7,357.80. South Korea’s Kospi lost 0.2% to 2,604.91. Hong Kong’s Hang Seng dipped 1.5% to 19,607.08, while the Shanghai Composite edged down 0.5% to 3,240.36.

    Also in China, Alibaba Group announced a major management reshuffle as the e-commerce giant restructures into six different business divisions to spur growth and adapt to fast-changing technologies.

    Eddie Wu, chairman of its e-commerce group, will succeed Daniel Zhang as CEO, the company said Tuesday. Zhang will be CEO and chairman of Alibaba’s cloud computing unit, which will be spun off and is expected to be listed for trading within a year.

    Alibaba shares fell about 2.3% in premarket trading in the U.S.

    In Europe, France’s CAC 40 inched down about 0.2% at midday, while Germany’s DAX slipped 0.5%. Britain’s FTSE 100 added less than 0.1%.

    In energy markets, benchmark U.S. crude inched down 4 cents to $71.74 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, gained 75 cents to $76.84 a barrel.

    In currency trading, the U.S. dollar edged down to 141.42 Japanese yen from 141.91 yen. The euro cost $1.0928, up slightly from $1.0921.

    U.S. markets, which were closed Monday for the Juneteenth national holiday, are also watching the direction of interest rate hikes.

    Last week, the Federal Reserve held its benchmark lending rate steady, the first time in 10 straight meetings it hasn’t announced an increase. The Fed warned it could raise rates as often as two more times this year.

    Fed Chair Jerome Powell gives his semi-annual testimony before Congress on Wednesday and Thursday.

    Markets quietly lost ground on Friday, but Wall Street still closed out its best week since March. The benchmark S&P 500 logged its fifth straight winning week, its longest such streak since November 2021.

    ___

    Kageyama reported from Tokyo; Ott reported from Silver Spring, Md.

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  • Chinese e-commerce giant Alibaba announces new CEO and chairman in major management reshuffle

    Chinese e-commerce giant Alibaba announces new CEO and chairman in major management reshuffle

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    China’s Alibaba Group has announced that Eddie Wu, chairman of its e-commerce group, will succeed Daniel Zhang as CEO in a major management reshuffle

    ByZEN SOO Associated Press

    FILE – Joseph Tsai, executive vice chairman of Alibaba Group, speaks to journalists during Alibaba’s 11.11 Global Shopping Festival, also known as Singles Day, in Shanghai, China, on Nov. 11, 2018. China’s Alibaba Group has announced a major management reshuffle aimed at spurring the e-commerce giant’s growth at a time when the Chinese economy is slowing despite an end to COVID-19 pandemic restrictions a half-year ago. (AP Photo/Ng Han Guan, File)

    The Associated Press

    HONG KONG — China’s Alibaba Group has announced a major management reshuffle aimed at spurring the e-commerce giant’s growth at a time when the Chinese economy is slowing despite an end to COVID-19 pandemic restrictions a half-year ago.

    Eddie Wu, chairman of its e-commerce group, will succeed Daniel Zhang as CEO, the company said in a statement Tuesday.

    Zhang will be CEO and chairman of Alibaba’s cloud computing unit, which has been approved to be spun off and is expected to be listed for trading within a year.

    Alibaba’s current executive vice chairman, Joseph Tsai, is to succeed Zhang as chairman of the Alibaba Group. Tsai, who owns the NBA basketball team Brooklyn Nets, is a Taiwan-born Canadian citizen and helped to found Alibaba in the late 1990s.

    The changes take effect Sept. 10.

    Zhang became Alibaba Group’s CEO in 2015 and succeeded Alibaba co-founder Jack Ma as chairman in 2019.

    “This is the right time for me to make a transition, given the importance of Alibaba Cloud Intelligence Group as it progresses towards a full spin-off,” Zhang said in a statement.

    “I look forward to working closely with Joe and Eddie in the coming months to ensure a seamless transition.”

    Alibaba in March announced plans to reshape itself into six business divisions with plans to allow all but its core e-commerce business to raise outside capital and go publ

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  • Airbus wins mammoth order for 500 jets from India’s IndiGo at Paris Air Show

    Airbus wins mammoth order for 500 jets from India’s IndiGo at Paris Air Show

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    India’s IndiGo airline is buying 500 passenger jets from European planemaker Airbus

    CEO of IndiGo Pieter Elbers, bottom left, Airbus Chief Commercial Officer and Head of International Christian Scherer, borrom right, Chairman and Non-Executive Independent Director of IndiGo Dr. Venkataramani Sumantran, left, Promoter & Managing Director of IndiGo Rahul Bhatia, centre, and Airbus CEO Guillaume Faury pose for a picture with signed documents during a news conference during the Paris Air Show in Le Bourget, north of Paris, France, Monday, June 19, 2023. (AP Photo/Lewis Joly)

    The Associated Press

    PARIS — India’s IndiGo airline is buying 500 passenger jets from European planemaker Airbus, the two companies said Monday, in a record-setting order that underscores surging demand for air travel fueled by the country’s economic growth.

    IndiGo, India’s dominant carrier, is buying the A320 aircraft in what the companies said was the single biggest purchase agreement in commercial aviation history.

    Executives from both companies announced the deal on the opening day of the Paris Air Show, the world’s largest event focusing on aviation and space industry. They didn’t disclose how much the order was worth, but it would likely amount to tens of billions of dollars.

    The purchase highlights how the two companies are “democratizing affordable air travel for millions of people in the world’s fastest growing aviation market,” Airbus Chief Commercial Officer Christian Scherer said in a statement.

    New Delhi-based IndiGo’s order surpasses another mammoth deal signed months earlier by Air India for 470 aircraft from both Airbus and U.S.-based rival Boeing.

    Indian airlines are racing to tap surging demand for travel from the nation’s growing ranks of middle-class consumers.

    Airbus likes to unveil major jet orders at the air show held every other year in its home country. Airbus is one of France’s — and Europe’s — biggest companies, and its performance at the Paris air show is seen as important to its public image in France.

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  • Stalled contract jeopardizes relations between new Disney governing body and firefighters

    Stalled contract jeopardizes relations between new Disney governing body and firefighters

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    ORLANDO, Fla. — After appointees of Florida Gov. Ron DeSantis took over Walt Disney World’s governing district earlier this year, its firefighters were among the few employees who publicly welcomed them with open arms.

    But that warm relationship is in jeopardy as a new district administrator has reopened negotiations on a contract that was approved last month by the unionized firefighters, promising pay raises and more manpower.

    A vote on the contract originally was targeted for last month during a meeting of the Central Florida Tourism Oversight District board of supervisors. But it was never brought up, and it did not appear on an agenda released ahead of the next meeting scheduled for Wednesday.

    Under the three-year contract proposal overwhelmingly approved by 200 firefighters and first responders, annual starting pay for firefighters would increase to $65,000, up from $55,000. It also promised hiring up to three dozen firefighters and paramedics.

    At several meetings since the DeSantis-appointed supervisors took their seats this spring, Jon Shirey, who leads the firefighters’ union, praised them for visiting firefighters at their stations around the 39 square-mile (101 square-kilometer) Disney World property.

    The firefighters looked forward to collaborating with the new supervisors and administrator after years of clashing with their Disney-supporting predecessors, and viewed the appointments as “an opportunity for a fresh start,” he said.

    “Almost overnight, a change occurred that we have never experienced — transparency, open dialogue, the ability to sit down and have our issues heard and felt listened to,” Shirey told board members last month. “You have been able to build bridges that were long burned.”

    The feeling was mutual, with board chairman Martin Garcia saying last month that the supervisors were working with the firefighters to resolve their issues. Even so, Garcia made clear that the firefighters weren’t the only district employees the board wanted to support.

    “We also need to let the (other) employees know, we love you, too. We care about you. We love you as much as we love our firefighters,” Garcia said.

    But the delay in approving the contract has alienated the firefighters’ union, which last year endorsed the gubernatorial reelection campaign of DeSantis, who recently launched a campaign for the 2024 GOP presidential nomination.

    The old contract expired four years ago, and the firefighters declared an impasse last year when the district’s board was still controlled by Disney supporters. The Reedy Creek Professional Firefighters, Local 2117 have warned for years that they are understaffed, which poses a safety risk as the central Florida theme park resort grows bigger.

    Last month, District Administrator John Classe, who originally negotiated the new contract, was replaced by the board with Glenton Gilzean, a DeSantis ally who previously served as president and CEO of the Central Florida Urban League and will receive a $400,000 salary in his new job. The district also is paying Classe to stay on as a special advisor.

    Board spokesperson Alexei Woltornist said negotiations with the union were continuing, without explaining why they were reopened with a contract already approved by the firefighters and first responders.

    “Administrator Gilzean is actively working with the fire department to finalize a deal that offers a competitive compensation package and gives firefighters the resources they need to protect the public,” Woltornist said in an email to The Associated Press.

    Officials with the firefighters’ union did not comment.

    While Gilzean may alienate the firefighters, whose support gave the DeSantis takeover some legitimacy, he may gain credibility with other constituencies within Disney’s governing district and put some distance between himself and his predecessor, said Richard Foglesong, a Rollins College professor emeritus who wrote a definitive account of Disney World’s governance in his book, “Married to the Mouse: Walt Disney World and Orlando.”

    “He’s an unproven administrator, yet here he’s showing he’s no pushover when dealing with a cantankerous group, which frankly impresses me,” Foglesong said.

    The DeSantis appointees took over the Disney World governing board earlier this year following a yearlong feud between the company and DeSantis. The fight began last year after Disney, beset by significant pressure internally and externally, publicly opposed a state law banning classroom lessons on sexual orientation and gender identity in early grades, a policy critics call “Don’t Say Gay.”

    As punishment, DeSantis took over the district through legislation passed by Florida lawmakers and appointed a new board of supervisors to oversee municipal services for the sprawling theme parks and hotels. But before the new board came in, the company made agreements with previous oversight board members that stripped the new supervisors of their authority over design and construction.

    Disney sued DeSantis and the five-member board, asking a federal judge to void the governor’s takeover of the theme park district, as well as the oversight board’s actions, on the grounds they were violations of company’s free speech rights.

    The board sued Disney in state court in an effort to maintain its control of construction and design at Disney World.

    The district was created in 1967 when then-Florida Gov. Claude Kirk signed legislation authorizing it to regulate land use, enforce building codes, treat wastewater, control drainage, maintain utilities and provide fire protection at Disney World.

    Such private governments aren’t uncommon in fast-growing Florida, which has more than 600 community development districts that manage and pay for infrastructure in new communities.

    ___

    Follow Mike Schneider on Twitter at @MikeSchneiderAP

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