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The Morning Risk Report: New York Sets Regulatory Sights on Tech Firms |
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For-hire drivers and their supporters rally in favor of proposed New York City legislation to a cap the number of ride-hailing vehicles on Aug. 6, 2018 in New York City. PHOTO: Drew Angerer/Getty Images
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Good morning. High-flying technology firms such as Uber Technologies Inc. and Airbnb Inc. are finding New York City as an adversary, The Wall Street Journal’s Greg Bensinger reports.
New York City Mayor Bill de Blasio signed legislation this week requiring Airbnb to disclose to the city detailed information about its hosts, while the City Council passed a bill freezing new issuances of ride-hailing licenses.
The two companies are in the middle of preparing for potential initial public offerings as early as next year, and some executives and investors have expressed concern the city’s restrictions could spur other municipalities to follow suit.
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The city argues a lack of regulation for ride-hailing, compared with the fixed supply of yellow taxi medallions, has allowed a proliferation of vehicles to clog city streets. It capped new ride-hail license issuances for at least a year to study traffic patterns; if it becomes permanent, Uber and Lyft couldn’t bring more drivers on the network to meet demand.
New York’s latest measures show how regulation remains an immense risk to the operations of tech firms. The companies have long fought regulation, especially early on as they moved into new cities, flouted local laws and sparred with entrenched local interests. Uber now is in nearly 80 countries and took more than $7 billion in revenue last year; Airbnb is in about 190 countries and brought in $2.6 billion in sales.
Cities around the world are wrestling with how to measure and manage the social effects of startups revolutionizing how people move about and visit.
“These companies have tried to pre-empt a lot of regulation by reaching deals with states, but this move by New York really could empower cities and local governments across the country to find new ways to regulate them,” said Veena Dubal, an associate professor at University of California’s Hastings College of the Law.
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| Exclusive to Risk & Compliance Journal |
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Electronics firm discloses bribery probe. Plantronics Inc., a company that produces audio communications equipment, disclosed this week U.S. authorities are investigating a subsidiary for potential violations of antibribery law.
The Santa Cruz, Calif.-based company said in a quarterly filing with the Securities and Exchange Commission that the SEC and Justice Department are investigating the firm's Polycom unit. The probe concerns conduct by Polycom prior to the Plantronics acquisition last month, the filing said.
Polycom is cooperating with the U.S. authorities, Plantronics said in the filing. -- Samuel Rubenfeld
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Qualcomm Inc. notched a victory in its effort to preserve its patent-licensing business, as it reached a settlement with the Taiwanese government that revokes a previous finding against the chip maker and saves the company nearly $700 million in fines, WSJ reports. Taiwan’s Fair Trade Commission ruled in October that Qualcomm violated the country’s laws by unfairly licensing its patents.
Three South Koreans illegally imported North Korean coal and iron via Russia in violation of sanctions, South Korean customs officials said, exposing a crack in the U.S.-led campaign to cut off trade with the Pyongyang regime, WSJ reports. Using forged customs documents and facilitating payments through a shell company in Hong Kong, officials said the individuals brought in over 35,000 tons of coal and pig iron worth almost $6 million from North Korea
Philippine competition authorities have cleared the way for Southeast Asian ride-hailing firm Grab Inc. to dominate the local market, approving its deal with Uber Technologies Inc. but imposing restrictions on services and threatening fines for breaches, WSJ reports. Uber said in March it would relinquish its battle for Southeast Asia’s riders, exchanging its local operations for a 27.5% stake in Grab.
An industry-backed group called the Restaurant Action Alliance is continuing to fight New York City’s impending ban on foam containers, despite restaurant owners saying they are largely unconcerned or no longer use such packaging. The group has close ties to a major foam manufacturer, Dart Container Corp., WSJ reports, citing people formerly involved with the group.
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Polystyrene foam soup containers are stacked in a New York restaurant in February 2013. PHOTO: Mark Lennihan/Associated Press
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A group of elections technology vendors announced plans to partner with an IT-focused cybersecurity information-sharing group to better protect voting infrastructure amid allegations of a widespread Russian effort to interfere in the 2016 U.S. election, WSJ's CIO Journal reports. And in Las Vegas, some of those attending the DefCon hacker convention are working to identify security issues in technology that could be used during the upcoming elections, Reuters
reports.
There are many artificial intelligence tools to identify misinformation, bots, fake accounts, influence campaigns, echo chambers and the cognitive, social and algorithmic biases that combine to distort what we see and hear--there’s just no consensus on how to use them, WSJ reports.
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The board at Tesla Inc. wants more details on how founder and Chief Executive Elon Musk intends to fund a plan to take the company private, Reuters reports, citing people familiar with the situation. Mr. Musk this week tweeted he was thinking about taking the electric car manufacturer private, stunning the markets. Tesla declined to comment on the report. WSJ reports this is a test of the board's independence, as many directors have close personal
or business relationships with Mr. Musk.
Sumner Redstone doesn’t want his heirs to have an easy time selling off his family’s controlling stakes in media companies Viacom Inc. and CBS Corp. And he put it in writing in his estate planning documents, WSJ reports. The confidential trust prohibits trustees from entering into any merger that would leave National Amusements Inc. shareholders with less than 30% of the voting control of the resulting company.
Glenview Capital Management continues to back the proposed merger between Cigna Corp. and Express Scripts Holding Co. despite strong opposition from investor Carl Icahn, Reuters reports. Mr. Icahn this week called on shareholders to reject the deal.
Activist investor Third Point LLC is pushing for a sale of Campbell Soup Co. with the help of an heir to the soup company’s founder, WSJ reports. "Given the significant obstacles” facing Campbell, a sale to another food maker is “the only justifiable outcome,” said the investment firm run by Daniel Loeb.
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A U.S. federal judge authorized the seizure of Citgo Petroleum Corp. to satisfy a Venezuelan government debt, a ruling that could set off a scramble among Venezuela’s many unpaid creditors to wrest control of its only obviously seizable U.S. asset, WSJ reports. The court order raises the likelihood Venezuela’s state oil company, Petróleos de Venezuela SA, will lose control of a valuable external asset amid the country’s deepening economic and political crisis.
High temperatures wilted crops in North Korea, prompting the International Federation of Red Cross and Red Crescent Societies to issue a warning the resuting food shortage could have "potentially catastrophic" effects, Reuters reports.
Empty trucks are so hard to come by right now Dean Foods Co., one of North America’s largest milk suppliers, cut its full-year earnings outlook in part because it simply can’t move its goods for anything close to what it expected to pay this year. WSJ reports Dean in among a growing line of U.S. businesses struggling with the tightest freight market in recent memory.
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Suppliers of everything from engines to electronic components aren’t keeping up with a boom in U.S. manufacturing thanks to strong economic growth, lifting demand in markets such as energy, mining and construction. As a result, WSJ reports some manufacturers are idling production lines and digesting higher costs.
As talks continue between the U.S. and Mexico about changes to the North American Free Trade Agreement, cities on the Mexico side of the border are not feeling negative effects of any uncertainty about what a revised deal will look like. Washington Post reports some cities with auto manufacturing facilties have employment rates approaching zero.
Ryanair Holdings Plc lost a decision in a Netherlands court to keep its pilots there from joining a strike on Friday that disrupted flights across Europe for thousands of passengers, Reuters reports. The pilots say the company is dragging its feet on talks for a new contract.
The next round of U.S. tariffs aimed at Chinese imports could wind up hurting a major product that initially comes from America: fish. WSJ reports an estimated $900 million worth of fish and seafood on the U.S. tariff list first is caught in the U.S., then sent to China for processing. The proposed tariffs could cut profits or boost prices throughout seafood supply chains, from fishermen to consumers.
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A fishmonger rinses swordfish carcasses just pulled from their shipping containers at the Fulton Fish Market in New York on Jan. 8, 2018. PHOTO: Julie Jacobson/Associated Press
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Perrigo Co. plans to shed its prescription pharmaceutical unit, which accounts for about one-fifth of total revenue, following a strategic review of its portfolio, WSJ reports. Perrigo said Thursday its board believes the separation would create shareholder value and allow the company to focus on expanding its consumer business.
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