Big Tech may need to swallow its political pride

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Tech’s tensions with government may be a big problem

Executives from Facebook, Twitter and Google will testify before the Senate Intelligence Committee tomorrow about their preparations for the midterm elections. In the afternoon, Twitter’s C.E.O., Jack Dorsey, will also testify before the House Energy and Commerce Committee on policing what users tweet.

Tensions between Silicon Valley and the government aren’t limited to misinformation — they stretch from data privacy issues, in the wake of Facebook’s Cambridge Analytica scandal, to the A.I. work by Google, Microsoft and Amazon for various agencies. Some companies have pulled out of high-profile projects because of concerns from employees.

My latest column argues that Silicon Valley might come to regret such puritan stances. Alex Karp, co-founder of Palantir, told me that he didn’t vote for President Trump but still feels a moral obligation to work with the government. And here’s what Adam Grant, a professor at the Wharton School and a member of the Defense Innovation Board, said to me:

“I worry that it will stall progress. Innovation has been fueled for decades by private-public partnerships. It smacks of cutting off your nose to spite your face. Even if you’re not a fan of the president, you can still serve your country.”

Silicon Valley employees set off a quiet — but growing — debate across corporate America in the age of Trump: What does it mean to be a patriotic company when you vehemently disagree with your nation’s leader? Tell me what you think.

It’s Nike vs. the N.F.L. over Colin Kaepernick

The sports clothing giant has made Mr. Kaepernick, the quarterback N.F.L. teams have shunned for his protests during the national anthem, a face of its latest “Just Do It” campaign.

Some people are very angry about that: #JustBurnIt is trending. But Mr. Kaepernick’s jersey became a best seller after he began protesting, and the company is clearly betting he’ll retain that pulling power. (The contract is said to be worth “millions” and give Mr. Kaepernick his own clothing line, according to Yahoo News.)

The timing is pointed. The N.F.L. season starts on Thursday, and Nike is the league’s official clothing supplier.

We might be headed for an emerging markets crisis

Argentina took emergency measures on Monday to stem concerns about its solvency, and is seeking an international credit line. Meanwhile, Turkey’s central bank has promised to reshape its monetary policy to deal with inflation.

Satyajit Das of Bloomberg Opinion warns that these may not be isolated cases:

"The textbook recipe for an emerging-market crisis requires a large dose of debt and an associated domestic credit bubble, including misallocation of capital into uneconomic trophy projects or financial speculation. Then add: a weak banking sector, budget deficits, current-account gaps, substantial short-term foreign-currency debt and inadequate forex reserves. Season with narrowly based industrial structures, reliance on commodity exports, institutional weaknesses, corruption and poor political and economic leadership."

Who else fits? Mr. Das names China, India, Indonesia, Malaysia, South Africa, Mexico, Chile and Brazil. And the WSJ warns against trying to buy the dip.

The backdoor battle isn’t going away

The governments of America, Britain, Canada, Australia and New Zealand issued a statement restating their desire to get into tech companies’ encrypted systems. “Privacy is not absolute,” it declares: The governments “may pursue technological, enforcement, legislative or other measures to achieve lawful access solutions” if companies don’t cooperate.

We’ve been here before, most notably with the F.B.I.’s request that Apple break into the iPhone of the San Bernardino shooter. Big tech companies make much of protecting user data. Government backdoors undermine their promises — and could end up opening for hackers, too.

But the sort of combined pressure this letter demonstrates may be hard to resist.

A Chinese tech mogul runs into U.S. legal trouble

The C.E.O. of JD.com, Richard Liu, was arrested in Minneapolis late last week on suspicion of sexual misconduct. His company, one of China’s e-commerce giants, is playing that down: He was released the next day, he’s home now, and his lawyers, JD.com says, expect no charges. (The Minneapolis Police Department said the investigation was “in its infancy.”)

The case became an internet obsession in China, says the NYT’s Li Yuan, showing how much the country now cares about its business leaders:

"The intense reactions to Mr. Liu’s legal troubles reflect the public’s fascination with China’s self-made tech tycoons, who have become symbols of the country’s rise as a global power and its upward social mobility. Their books are best sellers. Their private lives are tabloid fodder. Their speeches on success and entrepreneurship are perpetually running on TV screens at airports."

JD.com, meanwhile, was already facing headwinds: increasingly fierce competition from Alibaba, slowing Chinese economic growth. It could do without further headaches.

Britain seeks to stamp out white-collar crime

The country’s National Crime Agency announced yesterday that its new economic crime center would open on Oct. 31, seeking to put a dent in the ￡90 billion of criminal money that Britain estimates passes through its borders every year. It will have a team of 55, including tax officials, police and members of the Financial Conduct Authority and the Serious Fraud Office.

The news came out at the Cambridge Economic Crime Symposium, where Lisa Osofsky, a former U.S. prosecutor who now leads the Serious Fraud Office, promised to make Britain “an inhospitable place for criminals to do business.”

Bonus: Nigel Kirby, the deputy director of the National Crime Agency, let slip at the conference that the head of the London unit of a foreign bank had been arrested on suspicion of bribery. But he gave few clues about who.

ICYMI while DealBook was away

Coke agreed to buy the British coffee chain Costa for $5.1 billion. It’s the soda giant’s most expensive move yet away from sugary soft drinks.

More than 100 Facebook employees decried what they say is the company’s “intolerant” liberal culture. Their complaints showed a rare fissure in the tech giant’s ranks, and echoed President Trump’s attacks on Silicon Valley.

Mexico and the U.S. reached accord on a new Nafta, but the Canadians are holding out. Neither Congress nor respondents to an Axios poll want a deal without them. (Talks resume this week, with Mr. Trump planning to play hardball.)

Revolving door

WPP named Mark Read, a longtime company executive, as its new C.E.O.

Paul Pester has resigned as C.E.O. of TSB Bank, after a debilitating technology crisis at the British lender.

The speed read

Deals

? Two of China’s biggest wireless carriers are said to be in merger talks. (Bloomberg)

? The peer-to-peer small-business lender Funding Circle plans to go public. (Sky News)

? Three of Abu Dhabi’s banks are in talks to merge, creating a lender with $110 billion in assets. (Bloomberg)

? What to worry about in Aston Martin’s forthcoming I.P.O. (FT)

Politics and policy

? Wall Street super-lawyers are backing a Democratic candidate, Sean Maloney, to become New York State’s next attorney general. (FT)

? President Trump celebrated Labor Day with a public attack on the head of the A.F.L.-C.I.O. (Reuters)

? The E.U. parliament expects to vote on any Brexit deal just two weeks before Britain is set to leave. (Reuters)

? An arrested cryptocurrency expert could help Robert Mueller find out how Russia paid for some of its 2016 election interference. (Bloomberg)

Trade

? President Trump’s trade war could affect 11 million U.S. jobs. (Axios)

? Pfizer says Brexit will cost it over $100 million. (Bloomberg)

? Weak orders show that factories are feeling a hit from the trade war. (Reuters)

Tech

? Amazon wants in on the $88 billion online ad market. (NYT)

? Facebook groups have become a refuge for fringe figures (and the scene of spillover from violence in Libya).

? Samsung says it will unveil a foldable smartphone this year. (CNBC)

? China is luring Taiwanese chip experts with Silicon Valley-style pay and perks. (Reuters)

Best of the rest

? Could America’s next financial crisis lie in the oil patch? (NYT Op-Ed)

? Retailers are trying to compete with Amazon, and succeeding. (NYT)

? China’s economy may overtake America’s by the 2030s — but then slow dramatically, research suggests. (Bloomberg Opinion)

? NBC News’s president, Andy Lack, defended his network’s handling of Ronan Farrow’s investigation into Harvey Weinstein. (NYT)

? Should customers worry about paying Uber and MoviePass too little? (WSJ)

Thanks for reading! We’ll see you tomorrow.

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