Good morning. Instagram’s Reels video service is designed to show users streams of short videos on topics the system decides will interest them, such as sports, fashion or humor.

The Meta Platforms-owned social app does the same thing for users its algorithm decides might have a prurient interest in children, testing by The Wall Street Journal showed.

The Journal sought to determine what Instagram’s Reels algorithm would recommend to test accounts set up to follow only young gymnasts, cheerleaders and other teen and preteen influencers active on the platform. Instagram’s system served jarring doses of salacious content to those test accounts, including risqué footage of children as well as overtly sexual adult videos—and ads for some of the biggest U.S. brands.

• Background: The Journal set up the test accounts after observing that the thousands of followers of such young people’s accounts often include large numbers of adult men, and that many of the accounts who followed those children also had demonstrated interest in sex content related to both children and adults. The Journal also tested what the algorithm would recommend after its accounts followed some of those users as well, which produced more-disturbing content interspersed with ads.
   
• Ads for U.S. brands: In a stream of videos recommended by Instagram, an ad for the dating app Bumble appeared between a video of someone stroking the face of a life-size latex doll and a video of a young girl with a digitally obscured face lifting up her shirt to expose her midriff. In another, a Pizza Hut commercial followed a video of a man lying on a bed with his arm around what the caption said was a 10-year-old girl. The Canadian Centre for Child Protection, a child-protection group, separately ran similar tests on its own, with similar results.
   
• Meta’s response: It said the Journal’s tests produced a manufactured experience that doesn’t represent what billions of users see. The company declined to comment on why the algorithms compiled streams of separate videos showing children, sex and advertisements, but a spokesman said that in October it introduced new brand safety tools that give advertisers greater control over where their ads appear, and that Instagram either removes or reduces the prominence of four million videos suspected of violating its standards each month.

U.S. whiskey is ‘collateral damage’ in trans-Atlantic trade fight.

Brooke Glover wants to ship her award-winning, West Virginia-made whiskey to Europe, where fans have been clamoring for a taste. But she has no plans to expand across the Atlantic just yet. Starting in 2024, each bottle shipped risks facing a 50% tax. 

Swilled Dog distillery is one of many American whiskey makers falling victim to a fight that has nothing to do with bourbon or rye. The threatened tariff is the European Union’s retaliation for U.S. tariffs on European steel and aluminum, which themselves were part of tougher trade measures designed to boost U.S. manufacturers.

In this case, tariffs erected to protect some U.S. industries swung back to hurt other homegrown small businesses. The bar fight over whiskey is just one example. EU tariffs retaliating against the U.S. also struck Harley-Davidson motorcycles, orange juice and Levi’s jeans. Like whiskey, those products remain on the EU’s list of suspended tariffs.

• The European Commission said Monday that Amazon’s proposed deal to buy Roomba-maker iRobot may limit competition in the robot vacuum cleaner market.
   
• Tesla is suing the Swedish Transport Agency to receive new-car registration tags directly, rather than through the mail, in a move related to a mechanics strike in the Scandinavian country.
   
• DouYu International Holdings said its board has established an interim management committee to oversee operations after the Chinese livestreaming company said last week its chief executive and chairman was arrested.

Israel, Hamas agree to extend truce by two days.

Israel and Hamas agreed on Monday to a two-day extension of their truce in Gaza to allow for the release of more Israeli hostages as part of a fragile agreement that has brought respite from seven weeks of war, according to Egyptian, Qatari and Hamas negotiators.

Hamas released another 11 Israeli hostages Monday night as part of the initial deal. The latest group, which included no Americans, were in Israel, Egyptian officials said. The 11 included six citizens of Argentina, three French citizens and two German citizens, according to Qatari officials.

Efforts to extend the pause in fighting came amid rising international pressure on Israel, whose military offensive has caused thousands of civilian casualties in the enclave, triggered a spiraling humanitarian crisis and forced most of the two million residents from their homes.

For the U.S. and Israel’s other allies in the West, an extended truce could achieve two objectives: getting more hostages out of Gaza, including American citizens, and encouraging Israel to hold off on its offensive in the south until there is a plan to minimize civilian casualties.

• Negotiators Press to Extend Israel-Hamas Truce for Further Three Days and Beyond
• Volunteers Flock to Israel to Fill Vacant Jobs, One Plane Load at a Time
• Hackers Targeting Israeli Businesses Say They Will Pause as Fighting Stops

• As Russia’s war against Ukraine approaches its third year, Moscow holds the advantage on the military, political and economic fronts.
   
• Wall Street is gearing up for rate cuts. Twenty months after the Federal Reserve began a historic campaign against inflation, investors now believe there is a much greater chance that the central bank will cut rates in just four months than raise them again in the foreseeable future.
   
• China's green lights to Broadcom and Mastercard show how companies can become pawns in the intensifying geopolitical competition between Washington and Beijing.

Cyber insurers warn catastrophic hacks will require government help.

A cyberattack that disrupts everyday life in the U.S. will likely cost more than the insurance industry can afford to cover, requiring government intervention, insurers and brokers said.

The idea of a federal backstop to help insurers cope in the event of a catastrophic cyberattack has been examined by the government in recent years, but has gained momentum with tandem efforts at the Treasury Department, the Office of the National Cyber Director and the Cybersecurity and Infrastructure Security Agency over the past year. Government officials and the insurance industry plan to meet in April to work out exactly what such a program would look like.

• Retailers are heading into their most crucial sales period of the year with a very different inventory strategy than they undertook in 2022.
   
• With the Cybertruck, Tesla sought to break from convention by cladding its electric pickup in ultrahard stainless steel, a material that doesn’t need to be painted, resists dents and adds to the vehicle’s distinctive look.
   
• President Biden won’t attend a United Nations climate summit in Dubai this week, White House officials said, skipping an annual gathering of world leaders focused on addressing global warming.
   
• The goal to limit warming appears elusive as the COP28 summit opens.
   
• The man arrested in connection with the shooting of three young men of Palestinian descent in Burlington, Vt., was charged with attempted murder.
   
• Elon Musk said that those “intent on murder must be neutralized” after touring an Israeli community recently attacked by Hamas, weeks after the billionaire described an antisemitic social-media post on X as “the actual truth.”

Follow us on X at @WSJRisk. Follow Risk & Compliance editor David Smagalla @DSmagalla_DJ and reporters Mengqi Sun @_MengqiSun, Dylan Tokar @dgtokar and Richard Vanderford @VanderfordRich.

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