harsh awakening for the tech industry, as stock prices have tanked amid rising interest rates, ballooning inflation and economic uncertainty. Investors, burned by the sell-off, have stopped chasing high-risk, money-losing start-ups, prompting many Silicon Valley companies to cut staff and slow their aggressive plans for expansion. The humbling moment has many predicting the end of a decade-long boom for tech start-ups.

Ms. Holmes accused Mr. Balwani of emotional and sexual abuse, but those accusations were not permitted as evidence in his trial.

“The story of Theranos is a tragedy,” Mr. Schenk, the prosecutor, said in his closing argument.

Kalley Huang contributed reporting.

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Netflix Says It’s Business as Usual. Is That Good Enough?

While being honored at the Banff Film Festival in Canada in early June, Bela Bajaria, Netflix’s head of global television, surprised some with what she didn’t say. Despite the recent turmoil at the streaming giant — including a loss of subscribers, hundreds of job cuts and a precipitous stock drop — she said Netflix was charging ahead, with no significant plans to change its programming efforts.

“For me, looking at it, the business works,” Ms. Bajaria said from the stage. “We are not doing some radical shift in our business. We’re not merging. We’re not having a big transitional phase.”

Two weeks later, after Netflix had laid off another 300 people, Reed Hastings, the company’s co-chief executive, doubled down on Ms. Bajaria’s message, reassuring the remaining employees that the future would, in fact, be bright and that in the next 18 months the company would hire 1,500 people.

“Spiderhead” and the series “God’s Favorite Idiot” have been critically derided.) A producer who works with Netflix said the word “quality” was being bandied about much more often in development meetings.

Emily Feingold, a Netflix spokeswoman, disputed the idea that focusing on a show’s quality was somehow a change in strategy, referring to such disparate content as “Squid Game,” the reality television show “Too Hot to Handle,” and movies like “Red Notice” and “The Adam Project.”

“Consumers have very different, diverse tastes,” Ms. Feingold said. “It’s why we invest in such a broad range of stories, always aspiring to make the best version of that title irrespective of the genre. Variety and quality are key to our ongoing success.”

The producer Todd Black said that the process for getting a project into development at Netflix had slowed down but that otherwise it was business as usual.

“They are looking at everything, which I get,” said Mr. Black, who last worked with Netflix when he produced “Ma Rainey’s Black Bottom” in 2020. “They are trying to course correct. We have to be patient and let them do that. But they are open for business. They are buying things.”

Indeed, the company still intends to spend some $17 billion on content this year. It paid $50 million last month for a thriller starring Emily Blunt and directed by David Yates (“Harry Potter and the Deathly Hallows”). And it plans to make “The Electric State,” a $200 million film directed by Joe and Anthony Russo (“Avengers: Endgame” and “The Gray Man”) and starring Millie Bobby Brown and Chris Pratt, after Universal Pictures balked at the price tag. The company also just announced a development deal for a television adaptation of “East of Eden” starring Florence Pugh.

On Tuesday, Whip Media, a research firm, said Netflix had fallen from second to fourth place in the firm’s annual streaming customer satisfaction survey, behind HBO Max, Disney+ and Hulu.

The most significant change coming for Netflix is its advertising tier, which, as it has told employees, it wants to roll out by the end of the year. Netflix’s foray into advertising stoked excitement among media buyers at the industry’s annual conference in Cannes last week.

“It was pretty intense,” said Dave Morgan, who is the chief executive of Simulmedia, a company that works with advertisers, and who attended the conference. “It was one of the top two or three issues everyone was talking about.”

Mr. Hastings said Netflix would work with an outside company to help get its nascent advertising business underway. The Wall Street Journal reported that Google and Comcast were the front-runners to be that partner. Still, advertising executives believe that building out the business at Netflix could take time, and that the company might be able to introduce the new tier only in a handful of international markets by the end of the year.

It could take even longer for advertising to become a significant revenue stream for the company.

“You have a lot of media companies duking it out, and it’ll take quite a while to compete with those companies,” Mr. Morgan said. “I could imagine it will take three or four years to even be a top 10 video ad company.”

In an analyst report this month, Wells Fargo threw cold water on the notion that subscriber growth for an ad-supported tier would be quick. Wells Fargo analysts cautioned that the ad model would offer “modest” financial gains in the next two years because of a natural cannibalization from the higher-paying subscriber base. They predicted that by the end of 2025 nearly a third of the subscriber base would pay for the cheaper ad-supported model, roughly 100 million users.

Bank of America went further last week. “Ad-tiering could serve as a way for consumers across all income brackets to extend their streaming budget by trading down to subscribe to an additional service, benefiting Netflix’s competitors much more than Netflix itself,” it said in an analyst letter.

Netflix has also reached out to the studios that it buys TV shows and movies from in recent weeks, seeking permission to show advertising on licensed content. In negotiations with Paramount Global, Netflix has mentioned paying money on top of its existing licensing fee rather than cutting the company in on revenue from future ad sales, said a person familiar with the matter who spoke on the condition of anonymity to discuss active talks.

This mirrors the approach Netflix took with studios when it introduced its “download for you” feature, which allowed users to save movies and TV shows to their devices to watch offline. When Netflix added that feature, executives at the streaming service agreed to pay studios a fee in addition to their licensing agreement.

In the end, though, Netflix’s success will most likely come down to how well it spends its $17 billion content budget.

“Netflix, dollar for dollar, needs to do better, and that falls on Ted Sarandos and his whole team,” Mr. Greenfield said, referring to the company’s co-chief executive. “They haven’t done a good enough job. Yet, they are still, by far, the leader.”

Benjamin Mullin contributed reporting.

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Why a Not-So-Hot Economy Might Be Good News

When it comes to the economy, more is usually better.

Bigger job gains, faster wage growth and more consumer spending are all, in normal times, signs of a healthy economy. Growth might not be sufficient to ensure widespread prosperity, but it is necessary — making any loss of momentum a worrying sign that the economy could be losing steam or, worse, headed into a recession.

But these are not normal times. With nearly twice as many open jobs as available workers and companies struggling to meet record demand, many economists and policymakers argue that what the economy needs right now is not more, but less — less hiring, less wage growth and above all less inflation, which is running at its fastest pace in four decades.

Jerome H. Powell, the Federal Reserve chair, has called the labor market “unsustainably hot,” and the central bank is raising interest rates to try to cool it. President Biden, who met with Mr. Powell on Tuesday, wrote in an opinion article this week in The Wall Street Journal that a slowdown in job creation “won’t be a cause for concern” but would rather be “a sign that we are successfully moving into the next phase of recovery.”

“We want a full and sustainable recovery,” said Claudia Sahm, a former Fed economist who has studied the government’s economic policy response to the pandemic. “The reason that we can’t take the victory lap right now on the recovery — the reason it is incomplete — is because inflation is too high.”

undo much of that progress.

“That’s the needle we’re trying to thread right now,” said Harry J. Holzer, a Georgetown University economist. “We want to give up as few of the gains that we’ve made as possible.”

Economists disagree about the best way to strike that balance. Mr. Powell, after playing down inflation last year, now says reining it in is his top priority — and argues that the central bank can do so without cutting the recovery short. Some economists, particularly on the right, want the Fed to be more aggressive, even at the risk of causing a recession. Others, especially on the left, argue that inflation, while a problem, is a lesser evil than unemployment, and that the Fed should therefore pursue a more cautious approach.

But where progressives and conservatives largely agree is that evaluating the economy will be particularly difficult over the next several months. Distinguishing a healthy cool-down from a worrying stall will require looking beyond the indicators that typically make headlines.

“It’s a very difficult time to interpret economic data and to even understand what’s happening with the economy,” said Michael R. Strain, an economist with the American Enterprise Institute. “We’re entering a period where there’s going to be tons of debate over whether we are in a recession right now.”

11.4 million job openings at the end of April, close to a record. But there are roughly half a million fewer people either working or actively looking for work than when the pandemic began, leaving employers scrambling to fill available jobs.

The labor force has grown significantly this year, and forecasters expect more workers to return as the pandemic and the disruptions it caused continue to recede. But the pandemic may also have driven longer-lasting shifts in Americans’ work habits, and economists aren’t sure when or under what circumstances the labor force will make a complete rebound. Even then, there might not be enough workers to meet the extraordinarily high level of employer demand.

Persistently weak pay increases were a bleak hallmark of the long, slow recovery that followed the last recession. But even some economists who bemoaned those sluggish gains at the time say the current rate of wage growth is unsustainable.

“That’s something that we’re used to saying pretty unequivocally is good, but in this case it just raises the risk that the economy is overheating further,” said Adam Ozimek, chief economist of the Economic Innovation Group, a Washington research organization. As long as wages are rising 5 or 6 percent per year, he said, it will be all but impossible to bring inflation down to the Fed’s 2 percent target.

Fed officials are watching closely for signs of a “wage-price spiral,” a self-reinforcing pattern in which workers expect inflation and therefore demand raises, leading employers to increase prices to compensate. Once such a cycle takes hold, it can be difficult to break — a prospect Mr. Powell has cited in explaining why the central bank has become more aggressive in fighting inflation.

“It’s a risk that we simply can’t run,” he said at a news conference last month. “We can’t allow a wage-price spiral to happen. And we can’t allow inflation expectations to become unanchored. It’s just something that we can’t allow to happen, and so we’ll look at it that way.”

speech in Germany this week, Christopher J. Waller, a Fed governor, argued that as demand slows, employers are likely to start posting fewer jobs before they turn to layoffs. That could result in slower wage growth — since with fewer employers trying to hire, there will be less competition for workers — without a big increase in unemployment.

“I think there’s room right now for inflation to come down a significant amount without unemployment coming up,” said Mike Konczal, an economist at the Roosevelt Institute.

The Fed’s efforts to cool off the economy are already bearing fruit, Mr. Konczal said. Mortgage rates have risen sharply, and there are signs that the housing market is slowing as a result. The stock market has lost almost 15 percent of its value since the beginning of the year. That loss of wealth is likely to lead at least some consumers to pull back on their spending, which will lead to a pullback in hiring. Job openings fell in April, though they remained high, and wage growth has eased.

“There’s a lot of evidence to suggest the economy has already slowed down,” Mr. Konczal said. He said he was optimistic that the United States was on a path toward “normalizing to a regular good economy” instead of the boomlike one it has experienced over the past year.

But the thing about such a “soft landing,” as Fed officials call it, is that it is still a landing. Wage growth will be slower. Job opportunities will be fewer. Workers will have less leverage to demand flexible schedules or other perks. For the Fed, achieving that outcome without causing a recession would be a victory — but it might not feel like one to workers.

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Analysis: As shortage persists, Reckitt tightens grip on U.S. baby formula market

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Cans of Enfamil baby formula, produced by Mead Johnson, on partially empty shelves in a Target store, amid continuing nationwide shortages in infant and toddler formula, in San Diego, California, U.S., May 25, 2022. REUTERS/Bing Guan

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LONDON, May 30 (Reuters) – The U.S. baby formula crisis has boosted profits at Britain’s Reckitt Benckiser and helped it grab the top spot in a $5.8 billion-a-year market. The challenge now will be to stay there.

With the business reportedly up for sale, there’s even more at stake.

Reckitt (RKT.L) has ramped up production of its Enfamil formula since U.S. rival Abbott Laboratories (ABT.N) in February recalled dozens of products in the United States after customers complained of infants contracting bacterial infections.

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The British consumer goods company, which boosted formula production by 30%, told Reuters last week it now accounted for more than 50% of total baby formula supply in United States, up from around a third before the crisis. read more

Parents tend not to switch brands their infants like. A Reckitt spokesperson said the company was hoping to hold on to customers it has gained while Abbott products, such as Similac, are off the shelves.

The company said this week it was feeding 211,000 more babies than before the recall.

The stakes are high. Reckitt has reportedly long been looking to sell the formula business to focus on its higher margin household and consumer brands that range from Dettol disinfectants to Durex condoms. The Wall Street Journal said on Friday it was making a renewed sale attempt, and could fetch around $7 billion.

But the boost from the U.S. crisis may not last long.

The U.S. Food and Drug Administration (FDA) said on May 19 Abbott was on track to reopen its key baby formula plant in Michigan within one or two weeks, although FDA Commissioner Robert Califf told lawmakers a week later it would take until July before store shelves across the country were filled.

While Abbott’s recall has presented an opportunity for other firms, such as Gerber maker Nestle (NESN.S) and Neocate maker Danone (DANO.PA), it is Reckitt that is benefitting most, as it was already No.2 to Abbott before the crisis.

On April 1, Barclays raised its 2022 organic sales forecast for Reckitt to 4.4% from 4.0%, including an uplift to 7.4% from 5.0% at its nutrition division, which includes baby formula.

Less than five weeks later, it hiked its forecasts again to 6.0% for the group and 12.4% for the nutrition division.

According to Refinitiv, analysts have on average raised their full-year earnings forecast for Reckitt by 4.35% in the past 30 days, to about 311 pence per share.

“Near term, the biggest financial impact is going to be on Reckitt,” said Barclays analyst Iain Simpson. “The big question is how much of the recent market share gains Reckitt holds on to once Abbott is back on shelf.”

WILL IT LAST?

On its own, the sales hike would result in increased profits. But margins have been further boosted by the United States saying it will temporarily cover the cost of baby formula for low-income families dependent on government discounts in states contracted with Nestle and Reckitt. read more

Companies normally bid for state contracts to be the sole provider of baby formula for low-income families under the Women, Infants and Children (WIC) programme. In their bids, they offer a “rebate”, in the form of discounts, to the states.

The government’s intervention, aimed at incentivising firms to boost supplies, effectively covers that rebate.

Reuters Graphics

“Financially, it’s great both for the top-line and profitability because they don’t need to give a rebate to the state government for selling formula,” Bernstein analyst Bruno Monteyne said. “It probably will add at least 20-30 basis points of higher margins for as long as this lasts.”

Barclays’ Simpson agreed not being bound by a WIC contract would be a boost, estimating they have a 5% EBIT (earnings before interest and tax) margin versus about 40-45% for non-WIC contracts.

But some analysts say this boost is likely to be temporary, and Reckitt may not be able to keep its new customers.

While Bernstein’s Monteyne said there was “some truth” to the idea Reckitt could benefit longer-term from the damage to Abbott’s reputation, he noted the U.S. firm overcame a similar backlash from a 2010 formula recall within just a year.

“There is decent precedent,” he said.

Reckitt shareholder Waverton Investment Management also suspects the market share gain will prove short-term.

“The U.S. is looking for other sources already to fill demand,” said Waverton fund manager Tineke Frikkee said. “Over time Abbott will get their formula back on the shelves and Reckitt will revert to normal market share.”

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Reporting by Richa Naidu
Additional reporting by Leah Douglas
Editing by Matt Scuffham and Mark Potter

Our Standards: The Thomson Reuters Trust Principles.

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Twitter’s Board Is Said to Seriously Consider Elon Musk’s Bid

Twitter may be moving closer to a deal with Elon Musk.

The board of the social media service met on Sunday morning to discuss Mr. Musk’s unsolicited $46.5 billion bid to buy the company, after he began lining up financing for his offer last week, two people with knowledge of the situation said. The financing was a turning point for how Twitter’s board viewed Mr. Musk’s bid of $54.20 a share, enabling the company’s 11 board members to seriously consider his offer, the people said.

Twitter’s board planned to meet with Mr. Musk’s side later on Sunday to discuss other contours around a potential deal, said the people, who spoke on the condition of anonymity because they were not authorized to discuss confidential information. Those details include a timeline to close any potential deal and any fees that would be paid if an agreement was signed and then fell apart.

Any deal remains far from certain, but the willingness of Twitter’s board to engage with Mr. Musk, the world’s richest man, represents a step forward. Mr. Musk, who has more than 83 million followers on Twitter and began amassing shares in the company earlier this year, declared his intent to buy the company on April 14 and take it private. But his proposal was quickly dismissed by Wall Street because it was unclear if he could come up with the money to do the deal. Twitter also adopted a “poison pill,” a defensive maneuver that would prevent Mr. Musk from accumulating more of the company’s stock.

Mr. Musk updated his proposal last week, putting pressure on Twitter to more seriously consider his bid. In a securities filing that was made public on Thursday, Mr. Musk detailed how he had put together financing from the investment bank Morgan Stanley and a group of other lenders, which were offering $13 billion in debt financing, plus another $12.5 billion in loans against his stock in Tesla, the electric carmaker that he runs. He was expected to add about $21 billion in equity financing.

earlier reported Twitter’s increased receptivity to Mr. Musk’s bid.

Wall Street was likely to view the openness of Twitter’s board to Mr. Musk’s bid as “the beginning of the end for Twitter as a public company with Musk likely now on a path to acquire the company unless a second bidder comes into the mix,” Dan Ives, an analyst at Wedbush Securities, wrote in a note on Sunday.

Mr. Musk’s offer for Twitter is a 54 percent premium over the share price the day before he began investing in the company in late January. But Twitter’s shares traded higher than Mr. Musk’s bid for much of last year.

when the company announced goals to double its revenue, but has since fallen to around $48 as investors have questioned its ability to meet those targets.

Mr. Musk, 50, has made clear that he sees many deficiencies in Twitter as a social media service. He has said that he wants to “transform” the company as a “platform for free speech around the globe” and that it requires vast improvements in its product and policies.

Mr. Musk has tried to negotiate with Twitter using the service itself, threatening in several tweets that he might take his bid directly to the company’s shareholders in what is called a “tender offer.” A tender offer is a hostile maneuver in which an outside party circumvents a company’s board by asking shareholders to sell their shares directly to them.

He has also acted erratically on the platform, raising concerns over how he might manage the service should he be in charge of it. On Saturday, Mr. Musk took aim at the billionaire Bill Gates, saying that Mr. Gates had taken a “short” position on the stock of Tesla, which meant that Mr. Gates was betting the carmaker’s shares would fall. On Sunday, Mr. Musk tweeted that he was “moving on” from making fun of Mr. Gates.

Even so, Mr. Musk maintains amicable ties with some high-ranking members of Twitter. Over the weekend, Mr. Musk traded friendly tweets with Jack Dorsey, the company’s co-founder and a board member. Mr. Dorsey stepped down as Twitter’s chief executive in November and soon will be leaving its board.

Both men share similar views on cryptocurrencies and on promoting more free speech online. When Mr. Musk briefly flirted with joining Twitter’s board this month, Mr. Dorsey tweeted, “I’m really happy Elon is joining the Twitter board! He cares deeply about our world and Twitter’s role in it.”

technoking.

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Activision says it is cooperating with federal insider trading probes, article with image

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April 15 (Reuters) – Activision Blizzard (ATVI.O) is cooperating with federal investigations into trading by friends of its chief executive shortly before the gaming company disclosed its sale to Microsoft Corp, it said in a securities filing on Friday.

It received requests for information from the U.S. Securities and Exchange Commission and received a subpoena from a Department of Justice grand jury, the maker of “Call of Duty” said in an amended proxy filing.

The requests “appear to relate to their respective investigations into trading by third parties – including persons known to Activision Blizzard’s CEO – in securities prior to the announcement of the proposed transaction,” it said.

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Microsoft (MSFT.O) in January agreed to acquire Activision for $95 a share, or $68.7 billion in total, in the biggest video-gaming industry deal in history. read more

The company did not name the parties, nor say whether the grand jury subpoena was directed at any employee.

The filing did not disclose when it received the subpoena or the SEC request for information.

Media moguls Barry Diller and David Geffen, and investor Alexander von Furstenberg, acquired share options after von Furstenberg met with Activision CEO Bobby Kotick and days before it disclosed the sale to Microsoft, the Wall Street Journal reported last month.

“Activision Blizzard has informed these authorities that it intends to be fully cooperative with these investigations,” the company said.

Diller told Reuters last month that none of the three had any knowledge about a potential acquisition and had acted on the belief that Activision was undervalued and had the potential for going private or being acquired. read more

The amended proxy filing that included the information on its cooperation with the SEC and DOJ came after shareholders sued the company alleging omissions to a preliminary proxy on the sale.

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Reporting by Gary McWilliams; Editing by Himani Sarkar

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Elon Musk Makes Offer to Buy Twitter

Credit…Laura Morton for The New York Times

Twitter’s board is considering a defensive move known as a poison pill that would severely limit Elon Musk’s ability to acquire the social media giant, two people with knowledge of the situation said.

The board met on Thursday to discuss Mr. Musk’s offer to buy the company, according to one of the people, who wasn’t authorized to speak publicly. The directors are weighing whether to move ahead with the poison pill — formally called a shareholder rights plan — that would limit the ability of a single shareholder, like Mr. Musk, to acquire a critical mass of shares in the open market and force the company into a sale.

The poison pill defense is a common tactic used by companies that want to fend off unwelcome takeover offers. It essentially lets the company flood the market with new shares or allow existing shareholders other than the potential acquirer to buy shares at a discount. This dilutes the bidder’s stake and makes buying shares more expensive.

The Wall Street Journal earlier reported that Twitter was weighing a poison pill.

If Twitter’s board rejects Mr. Musk’s bid, he could put his offer directly to shareholders, rather than the board, by launching a so-called tender offer. If Twitter’s other shareholders like Mr. Musk’s offer, which is currently at $54.20 a share, they could sell their stock directly to the billionaire, allowing him to gain control of the company.

“It would be utterly indefensible not to put this offer to a shareholder vote,” Mr. Musk said in a Twitter post on Thursday. “They own the company, not the board of directors.”

But Twitter’s investors on Thursday seemed underwhelmed with Mr. Musk’s bid, potentially over concerns as to how he would finance it. While shares of companies typically rise when there is takeover speculation, Twitter’s were down almost 2 percent on Thursday.

Prince Al Waleed bin Talal of Saudi Arabia, who described himself as one of Twitter’s largest and most long-term shareholders, said that Twitter should reject Mr. Musk’s because the offer was not high enough to reflect “intrinsic value” of the company.

Twitter’s other top shareholders, according to FactSet, include the Vanguard Group, the company’s largest shareholder, with a 10.3 percent stake; Morgan Stanley Investment Management, with a 8 percent stake; and BlackRock Fund Advisors, with a 4.6 percent stake. Vanguard and Morgan Stanley Investment Management declined to comment on Mr. Musk’s bid. BlackRock did not immediately respond to requests for comment.

Mr. Musk turned down a seat on Twitter’s board over the weekend, leaving directors who had recently welcomed him to their ranks to weigh a proposal in which Mr. Musk said he had no confidence in their management of the company.

The board is made up of Twitter insiders, including Jack Dorsey, a co-founder, and its chief executive, Parag Agrawal, in addition to independent directors.

Bret Taylor, the co-chief executive of the business technology company Salesforce, chairs the board. Mr. Musk texted Mr. Taylor on Wednesday evening, making his intent to buy Twitter known, according to a regulatory filing. “After the past several days of thinking this over, I have decided I want to acquire the company and take it private,” Mr. Musk wrote.

Salesforce considered purchasing Twitter in 2016, but the deal never materialized. Mr. Taylor, who has been on Twitter’s board since 2016, joined Salesforce a year later after it acquired his own company, Quip.

Another key player on the board is Egon Durban, the co-chief of Silver Lake, a private investment firm. Mr. Durban joined Twitter’s board in 2020 as part of a deal the company struck with another activist investor who wanted to shake up Twitter’s management.

At the time, Silver Lake invested in Twitter and helped steady its management, preventing the immediate ouster of Mr. Dorsey. Because Silver Lake has helped Twitter out of a difficult situation in the past, Mr. Durban could face questions about whether his firm can double down and help fend off Mr. Musk.

Mr. Dorsey could also influence the decision. He is friendly with Mr. Musk and initially celebrated Mr. Musk’s investment in the company and decision to join the board. But Mr. Dorsey has often delegated major decisions to his team, preferring to rely on their expertise. And Mr. Dorsey is also set to leave the Twitter board next month, which could give him another reason to recuse himself.

His allies on the board are Mr. Agrawal, who was named as his successor late last year, and Patrick Pichette, a general partner at the venture capital firm Inovia Capital and the former chief financial officer at Google.

Mr. Agrawal and Mr. Dorsey have been closely aligned on a vision to make Twitter’s technology more decentralized, and Mr. Pichette has been a close confidant of Mr. Dorsey in discussions about the long-term plan for Twitter. Mr. Pichette may also have experience negotiating with Mr. Musk — he was at Google in 2013 when it considered buying Tesla.

Mike Isaac contributed reporting.

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Ukraine Live Updates: Russia Continues Bombardment, but Its Forces Have Shrunk, Pentagon Says

WASHINGTON — When the Cold War ended, governments and companies believed that stronger global economic ties would lead to greater stability. But the Ukraine war and the pandemic are pushing the world in the opposite direction and upending those ideas.

Important parts of the integrated economy are unwinding. American and European officials are now using sanctions to sever major parts of the Russian economy — the 11th largest in the world — from global commerce, and hundreds of Western companies have halted operations in Russia on their own. Amid the pandemic, companies are reorganizing how they obtain their goods because of soaring costs and unpredictable delays in global supply chains.

Western officials and executives are also rethinking how they do business with China, the world’s second-largest economy, as geopolitical tensions and the Chinese Communist Party’s human rights abuses and use of advanced technology to reinforce autocratic control make corporate dealings more fraught.

The moves reverse core tenets of post-Cold War economic and foreign policies forged by the United States and its allies that were even adopted by rivals like Russia and China.

“What we’re headed toward is a more divided world economically that will mirror what is clearly a more divided world politically,” said Edward Alden, a senior fellow at the Council on Foreign Relations. “I don’t think economic integration survives a period of political disintegration.”

“Does globalization and economic interdependence reduce conflict?” he added. “I think the answer is yes, until it doesn’t.”

Opposition to globalization gained momentum with the Trump administration’s trade policies and “America First” drive, and as the progressive left became more powerful. But the pandemic and President Vladimir V. Putin’s invasion of Ukraine have brought into sharp relief the uncertainty of the existing economic order.

President Biden warned President Xi Jinping of China on Friday that there would be “consequences” if Beijing gave material aid to Russia for the war in Ukraine, an implicit threat of sanctions. China has criticized sanctions on Russia, and Le Yucheng, the vice foreign minister, said in a speech on Saturday that “globalization should not be weaponized.” Yet China increasingly has imposed economic punishments — Lithuania, Norway, Australia, Japan and South Korea have been among the targets.

The result of all the disruptions may well be a fracturing of the world into economic blocs, as countries and companies gravitate to ideological corners with distinct markets and pools of labor, as they did in much of the 20th century.

Mr. Biden already frames his foreign policy in ideological terms, as a mission of unifying democracies against autocracies. Mr. Biden also says he is enacting a foreign policy for middle-class Americans, and central to that is getting companies to move critical supply chains and manufacturing out of China.

The goal is given urgency by the hobbling of those global links over two years of the pandemic, which has brought about a realization among the world’s most powerful companies that they need to focus on not just efficiency and cost, but also resiliency. This month, lockdowns China imposed to contain Covid-19 outbreaks have once again threatened to stall global supply chains.

Credit…Kin Cheung/Associated Press

The economic impact of such a change is highly uncertain. The emergence of new economic blocs could accelerate a massive reorganization in financial flows and supply chains, potentially slowing growth, leading to some shortages and raising prices for consumers in the short term. But the longer-term effects on global growth, worker wages and supplies of goods are harder to assess.

The war has set in motion “deglobalization forces that could have profound and unpredictable effects,” said Laurence Boone, the chief economist of the Organization for Economic Cooperation and Development.

For decades, executives have pushed for globalization to expand their markets and to exploit cheap labor and lax environmental standards. China especially has benefited from this, while Russia profits from its exports of minerals and energy. They tap into enormous economies: The Group of 7 industrialized nations make up more than 50 percent of the global economy, while China and Russia together account for about 20 percent.

Trade and business ties between the United States and China are still robust, despite steadily worsening relations. But with the new Western sanctions on Russia, many nations that are not staunch partners of America are now more aware of the perils of being economically tied to the United States and its allies.

If Mr. Xi and Mr. Putin organize their own economic coalition, they could bring in other nations seeking to shield themselves from Western sanctions — a tool that all recent U.S. presidents have used.

“Your interdependence can be weaponized against you,” said Dani Rodrik, a professor of international political economy at Harvard Kennedy School. “That’s a lesson that I imagine many countries are beginning to internalize.”

The Ukraine war, he added, has “probably put a nail in the coffin of hyperglobalization.”

China and, increasingly, Russia have taken steps to wall off their societies, including erecting strict censorship mechanisms on their internet networks, which have cut off their citizens from foreign perspectives and some commerce. China is on a drive to make critical industries self-sufficient, including for technologies like semiconductors.

And China has been in talks with Saudi Arabia to pay for some oil purchases in China’s currency, the renminbi, The Wall Street Journal reported; Russia was in similar discussions with India. The efforts show a desire by those governments to move away from dollar-based transactions, a foundation of American global economic power.

For decades, prominent U.S. officials and strategists asserted that a globalized economy was a pillar of what they call the rules-based international order, and that trade and financial ties would prevent major powers from going to war. The United States helped usher China into the World Trade Organization in 2001 in a bid to bring its economic behavior — and, some officials hoped, its political system — more in line with the West. Russia joined the organization in 2012.

But Mr. Putin’s war and China’s recent aggressive actions in Asia have challenged those notions.

“The whole idea of the liberal international order was that economic interdependence would prevent conflict of this kind,” said Alina Polyakova, president of the Center for European Policy Analysis, a research group in Washington. “If you tie yourselves to each other, which was the European model after the Second World War, the disincentives would be so painful if you went to war that no one in their right mind would do it. Well, we’ve seen now that has proven to be false.”

“Putin’s actions have shown us that might have been the world we’ve been living in, but that’s not the world he or China have been living in,” she said.

The United States and its partners have blocked Russia from much of the international financial system by banning transactions with the Russian central bank. They have also cut Russia off from the global bank messaging system called SWIFT, frozen the assets of Russian leaders and oligarchs, and banned the export from the United States and other nations of advanced technology to Russia. Russia has answered with its own export bans on food, cars and timber.

The penalties can lead to odd decouplings: British and European sanctions on Roman Abramovich, the Russian oligarch who owns the Chelsea soccer team in Britain, prevent the club from selling tickets or merchandise.

Credit…Andy Rain/EPA, via Shutterstock

About 400 companies have chosen to suspend or withdraw operations from Russia, including iconic brands of global consumerism such as Apple, Ikea and Rolex.

While many countries remain dependent on Russian energy exports, governments are strategizing how to wean themselves. Washington and London have announced plans to end imports of Russian oil.

The outstanding question is whether any of the U.S.-led penalties would one day be extended to China, which is a far bigger and more integral part of the global economy than Russia.

Even outside the Ukraine war, Mr. Biden has continued many Trump administration policies aimed at delinking parts of the American economy from that of China and punishing Beijing for its commercial practices.

Officials have kept the tariffs imposed by Mr. Trump, which covered about two-thirds of Chinese imports. The Treasury Department has continued to impose investment bans on Chinese companies with ties to the country’s military. And in June, a law will go into effect in the United States barring many goods made in whole or in part in the region of Xinjiang.

Despite all that, demand for Chinese-made goods has surged through the pandemic, as Americans splurge on online purchases. The overall U.S. trade deficit soared to record levels last year, pushed up by a widening deficit with China, and foreign investments into China actually accelerated last year.

Some economists have called for more global integration, not less. Speaking at a virtual conference on Monday, Ngozi Okonjo-Iweala, director general of the World Trade Organization, urged a move toward “re-globalization,” saying, “Deeper, more diversified international markets remain our best bet for supply resilience.

But those economic ties will be further strained if U.S.-China relations worsen, and especially if China gives substantial aid to Russia.

Besides recent warnings to China from Mr. Biden and Secretary of State Antony J. Blinken, Commerce Secretary Gina Raimondo has said her agency would ban the sale of critical American technology to Chinese companies if China tried to supply forbidden technology to Russia.

In the meantime, the uncertainty has left the U.S.-China relationship in flux. While many major Chinese banks and private companies have suspended their interactions with Russia to comply with sanctions, foreign asset managers appear to have also begun moving their money out of China in recent weeks, possibly in anticipation of sanctions.

Mary Lovely, a senior fellow at the Peterson Institute for International Economics, said she did not expect China to “throw all in” with Russia, but that the war could still strain economic ties by worsening U.S.-China relations.

“Right now, there is great uncertainty as to how the U.S. and China will respond to the challenges posed by Russia’s increasingly urgent need for assistance,” she said. “That policy uncertainty is another push to multinationals who were already rethinking supply chains.”

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