Eleven countries meeting at the APEC summit in Da Nang agreed Saturday to seek a trans-pacific free trade agreement, despite the world’s largest market – the United States – pulling out of the deal. Vietnam is expected to be one of the biggest beneficiaries of freer trade as it expands rapidly growing exports, including technology. VOA’s Daniel Schearf visited Vietnam’s largest technology company, FPT, and has an exclusive interview with its chairman in Danang.
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Month: November 2017
Report: Crack Down on Internet Freedoms Continues to Undermine Democracy
U.S. intelligence agencies say that Russia meddled in the 2016 presidential election in part through online propaganda. But a new report shows the United States was not the only target. According to the 2017 “Freedom on the Net” report, disinformation campaigns are increasing as Internet freedom declines globally. VOA’s Jesusemen Oni has the findings of the report.
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The Most-Advanced U.S. Manned Spy Plane
Before advanced satellites and drones started collecting military intelligence, the U.S. relied on high-flying supersonic aircraft that could quickly penetrate the airspace of adversary countries, take pictures and exit before being caught. The last of those planes, retired in 1998, still holds several world records. But now, spy planes can only be found in museums. VOA’s George Putic reports.
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Muslim Charity Clinic Helps Needy People of All Faiths in California
San Bernardino is one the poorest cities in California. A group of Muslim doctors has established Al-Shifa, a medical clinic to provide health-related services to poor residents of the city. The medical facility has been providing free of charge services to people in need for more than a decade. Mohammad Habibzada reports for VOA from San Bernardino.
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Sudan to Unify Currency Rate in Bid to Win Foreign Investment
Sudan is taking steps to close the gap between its official and unofficial currency rates and scrap subsidies by end-2019 to win foreign investment after U.S. sanctions ended, Minister of State for Finance Magdi Hassan Yassin told Reuters on Tuesday.
Washington last month suspended 20-year sanctions and lifted a trade embargo because it decided that Sudan had made progress on counterterrorism cooperation and on internal conflicts such as one in Darfur. It also unfroze assets and removed financial restrictions.
Sudan is hoping the measures will help the import-dependent country get back on its feet after years of hardship caused partly when the south seceded in 2011 and it lost three-quarters of its oil output, its main source of foreign currency.
“We will gradually lift subsidies in accordance with the five-year plan by the end of 2019. … Most of the things that hinder foreign investment are being addressed and there are reforms to investment and company laws,” Yassin said.
Sudan last November cut fuel and electricity subsidies and announced import restrictions to save scarce foreign currency.
Sudan’s year-on-year inflation decreased in October to 33.08 percent from 35.13 percent in September on the back of lower food and beverage prices, a report from Sudan’s central statistics agency said Tuesday.
Sudan’s central bank has held the official exchange rate at 6.7 pounds to the dollar but currency is largely unavailable at that price. The pound currently hovers around 23 pounds to the dollar, according to currency traders.
“The 2018 budget, which will start in January, will be the first budget after the U.S. ended the economic sanctions. … The central bank will set policies to unify the exchange rate,” Yassin said.
But “there are no directions to float the pound,” he added.
Analysts and officials say Sudan must conduct tough reforms such as floating its currency if it hopes to benefit from sanctions relief and begin to attract new investment.
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Taylor Swift’s ‘Reputation’ Sales Soar, But Adele Keeps Her Crown
Taylor Swift’s new album “Reputation” has sold more than one million copies in its first five days, Nielsen Music said on Tuesday, but the U.S. pop star failed to beat the record set by Britain’s Adele two years ago.
Swift’s 1.05 million U.S. sales of “Reputation” came despite the singer keeping the album from streaming services and gave her the best-selling album of 2017.
But the figure was less than half the monster sales for the debut of Adele’s “25” album, which surpassed 2.43 million copies in the first four days of release in November 2015 and smashed a 15-year-old U.S. record set by boy band NSync in 2000. Adele also initially kept “25” from streaming services.
Swift, 27, recording on Nashville-based independent label Big Machine Records, now has four albums that have sold more than one million copies in their first week — “1989,” “Red,” and “Speak Now.”
“Reputation,” her first studio album in three years, marked another transformation for Swift with songs marked by vengeance that take aim at the media and some of her haters.
Full first week sales will be available next week, when “Reputation” will top the Billboard 200 album chart.
Swift this week announced the first U.S. dates of what is expected to be a world tour to promote the album.
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Study: Better Soil Could Trap as Much Planet-warming Carbon as Transport Produces
Improving soil health in farmlands could capture extra carbon equivalent to the planet-warming emissions generated by the transport sector, one of the world’s most polluting industries, experts said Tuesday.
Soil naturally absorbs carbon from the atmosphere through a process known as sequestration, which not only reduces harmful greenhouse gases but also creates more fertile soil.
Better soil management could boost carbon stored in the top layer of the soil by up to 1.85 gigatons each year, about the same as the carbon emissions of transport globally, according to a study published in the journal Nature.
“Healthier soils store more carbon and produce more food,” Louis Verchot of the Colombia-based International Center for Tropical Agriculture, and one of the study’s authors, said in a statement.
“Investing in better soil management will make our agricultural systems more productive and resilient to future shocks and stresses.”
Using compost, keeping soil disturbance to a minimum, and rotating crops to include plants such as legumes can help restore organic matter in the soil, Verchot told Reuters.
The extra carbon that could be stored from rejuvenated soil is equivalent to 3 to 7 billion tons of planet-warming carbon dioxide, he said.
“The U.S. emits around 5 billion tons of carbon dioxide per year. So [emissions] equivalent of a major economy could be sequestered in soils each year with changes in farming practices,” he added.
The study found the United States has the highest total annual potential to store carbon in the soil, followed by India, China, Russia and Australia, if soil management is improved.
Carbon sequestration could be increased intensively in parts of southern Africa, Ethiopia and Sudan too, Verchot said in a phone interview.
The Earth’s soils contain more carbon than the planet’s atmosphere and vegetation combined, but when land is overexploited or degraded, trapped carbon is released back into the atmosphere, resulting in planet-warming emissions.
About a third of the world’s soils are degraded because of soil erosion — the loss of the topsoil by wind, rain or use of machinery — and other practices, according to the United Nations Food and Agriculture Organization (FAO).
Agriculture, forestry and changes in land use together produce 21 percent of global greenhouse gas emissions, making them the second-largest emitter after the energy sector, FAO said.
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Glamour Fuses With Politics at Annual Women of Year Awards
There were movie stars and supermodels, TV hosts and pop stars.
But perhaps the most rapturous ovation at Glamour magazine’s annual Women of the Year awards went to 79-year-old Democratic U.S. Rep. Maxine Waters of California, who delighted the crowd — including hundreds of cheering young girls — with a rousing speech that ended on a very political note.
“Impeach him,” she exhorted the audience. “Impeach 45! Impeach 45!”
Alongside Waters, honorees at Monday evening’s ceremony, held at a theater in Brooklyn, included actress Nicole Kidman, singer Solange Knowles, late-night host Samantha Bee, model Gigi Hadid, film director Patty Jenkins, and fashion designer Maria Grazia Chiuri of Christian Dior.
Also honored were record-setting astronaut Peggy Whitson, Syrian refugee and UNICEF ambassador Muzoon Almellehan and the many organizers of the January women’s marches.
Though this was the 27th year of the Glamour awards, there was a different sensation this time around, noted Cindi Leive, Glamour’s outgoing editor-in-chief.
“There’s a feeling in the air,” she told the crowd at the beginning. She didn’t have to explain that she was referring to the Harvey Weinstein sexual harassment scandal and the subsequent cascade of allegations in Hollywood and elsewhere, with both women and men coming forward to accuse powerful men of sexual harassment, assault or misconduct.
“This is a singular moment for women,” Leive said. “I am so glad that we get to seize it.”
One of the most powerful moments in the ceremony came when the two New York Times reporters who broke the Weinstein story — Jodi Kantor and Megan Twohey — took the stage to introduce a quartet of women who had experienced sexual harassment or assault.
The first to speak: Anita Hill, who has been a symbol of the fight against sexual harassment ever since she testified in 1991 against then-Supreme Court nominee Clarence Thomas. She hadn’t gotten the result she wanted back then, she explained — Thomas was confirmed anyway — but in just a few years, official complaints of sexual harassment skyrocketed.
“I saw that we had a chance to shift the narrative,” Hill said.
Also appearing was Olympic gymnast Aly Raisman, who came forward last week to allege she was sexually abused by a U.S. team doctor, Larry Nassar, who has been accused by more than 100 women and girls of sexual assault.
“We need answers,” Raisman said.
Kidman, accepting her award, noted it had been “an extraordinary year — we’re in uncharted territory right now.” But she said she preferred to celebrate “all of us, and what makes us, us.” She thanked her parents, and then noted that she had “an extraordinary husband,” singer Keith Urban.
“As much as I’m a strong woman, I need help and I need support,” she said.
Along with the honorees, there were plenty of high-wattage presenters: Serena Williams, for example, came to introduce her friend, Hadid, noting that the supermodel was one of only a very few people that could get her to leave her new baby, even for one night. Drew Barrymore introduced Bee, and original Wonder Woman Lynda Carter introduced “Wonder Woman” director Jenkins.
Singer-actress Zendaya, 21, introduced Waters, who clearly had fans among the young women from various girls’ organizations seated up in the balcony.
Waters told them that she didn’t just want them to vote — she wanted them to become politically active. “I want you to do everything you can to get ready to run for office,” she said.
Also exhorting the young women to action was astronaut Whitson, 57, who returned to Earth in September after 288 days in space. In all, she has spent 665 days in space — a record for a U.S. astronaut.
“I started as a farm girl in Iowa,” an emotional Whitson said. “I dreamed of being an astronaut and an explorer, and I made it.” She told the young women that it had taken 10 years of trying before she finally was accepted in the space program.
Leive, who announced in September that she was leaving Glamour after 16 years, said at a dinner following the ceremony that she had never seen women as energized as they are now, with the current, expanding conversation on sexual misconduct by powerful men.
“Something has shifted in the very molecules in the air,” she said.
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Stars Sign On to Support UNICEF World Children’s Day
David Beckham, Millie Bobby Brown and Hugh Jackman are among celebrities and world leaders announced Tuesday as participants and official supporters of the UNICEF initiative World Children’s Day.
The organization said events around the globe will focus on child takeovers to mark the day Monday, including a gathering at the United Nations in New York. That’s where U.N. Secretary-General Antonio Guterres will welcome children, and singer-songwriters Chloe x Halle will perform a new track written for the occasion.
Young people in Geneva, meanwhile, will take over the Palais des Nations to perform a special cover of Pink’s hit What About Us.
In Spain, children will join Leo Messi and others on the powerhouse soccer team FC Barcelona for a practice session, while in India, cricket will be the game for 22 child athletes who will play with legendary cricketer and UNICEF goodwill ambassador Sachin Tendulkar.
Brown, who appears on the Netflix series Stranger Things, will kick off the day in Australia. Jackman is lending his voice via video to a fundraiser focused on providing clean water to those in need, to take place in gyms around the world on Saturday.
‘It’s our day’
“I am so excited for the first-ever global celebration of World Children’s Day on November 20th with UNICEF,” Brown said in a statement. “It’s our day, everyone! A day for us to raise our voices and unite. So let’s do it — in our schools, with our friends, with our families!”
Beckham, a UNICEF goodwill ambassador, will appear in a short film with children. Other events are planned for Copenhagen and Accra, where 10 children from eight African countries will tell the world about the continent in a series of TED Talk-style appearances called Africa Dialogues.
More than 50 companies and organizations around the world will turn over key roles to children, including LEGO, Qantas and the H&M Foundation. In schools, children will also take over classrooms and assemblies to raise their voices and raise funds in solidarity with the world’s most disadvantaged and vulnerable children.
“It’s a fun day with a serious point. A day for children by children to help save children’s lives, fight for their rights and help them fulfill their potential.” said Justin Forsyth, UNICEF deputy executive director.
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From Catering to Coding, Jobs Help Survivors of Slavery to Rebuild Lives
With modern slavery emblazoned in headlines around the world, a growing number of companies and charities are stepping forward to help survivors get something they desperately need — jobs.
From making clothes and furniture in India to cooking, catering and even coding in the United States, such work opportunities are helping former slaves to rebuild their lives.
“Survivors of slavery see their own value and worth through work and their expectations change,” said Paula Haines, executive director of Freedom a la Cart, a catering and box lunch company that trains and employs trafficking survivors.
While no data exists on the number of victims who are freed, rescued or escape from slavery, more than 40 million people were estimated to be trapped as slaves worldwide last year, in forced labor, sexual exploitation and forced marriages.
With the lucrative crime — worth $150 billion a year — ever-evolving and spreading, countries and charities are ramping up efforts to catch traffickers and provide support to survivors.
But such help must go beyond just shelter and counseling, according to Hasina Kharbhih, founder of the anti-trafficking charity Impulse NGO Network, based in northeastern India.
Impulse helps girls and women trafficked from India to reintegrate into society by equipping them with the skills needed to enter the local job market or set up businesses.
“If you don’t provide rescued girls with skills and opportunities right away, they get frustrated and may end up being re-trafficked,” Kharbhih said ahead of speaking at the Reuters annual two-day Trust Conference.
“They come home and say: ‘This is not what we expected — we need skills, we need jobs, we need money,'” said Kharbhih, whose charity helps dozens of survivors each year find work in fields from cooking to clothing, in marketplaces, and as entrepreneurs.
Long road to recovery
However, for many survivors of slavery, the road from freedom to employment is long and arduous, campaigners say.
They often suffer stigma, discrimination and trauma, and struggle to access counseling, health care and housing.
Such hardships can put former slaves at risk of being re-trafficked, or even turning to criminality and enslaving others.
“People look down at survivors,” said Jessica Graham of U.S.-based non-profit Survivor’s Ink, that helps victims branded by traffickers get decorative tattoos to cover up their marks.
“They are victims,” Graham added. “Survivors need more help, more support … to find out how to lead a normal life.”
And gaining a job does not signal the end of a survivor’s recovery, said Phill Clayton of the British charity City Hearts.
“In reality, it is just the start,” said Clayton, whose charity in March partnered with British supermarket Co-op to launch a first-of-its-kind employment program which aims to offer jobs to 30 victims of trafficking and slavery this year.
“Some people are at first very overwhelmed at work … they may have panic attacks or mental health issues and have to take a break and seek help,” he said, stressing the importance of providing survivors with constant support around their jobs.
Dreaming big
While many charities and companies seek to guide survivors through their first foray into the workplace, General Assembly, a U.S.-based organization offering coding and data courses, wants to help those aspiring to go beyond entry-level jobs.
The company, which helps graduates get jobs in technology roles, has provided about 500 scholarships since 2015 to disadvantaged people including refugees and former prisoners, and plans to include survivors of slavery in the future.
“The first step for survivors is often a subsistence job, but they might get to a point where they ask: ‘What is next?'” said Tom Ogletree, head of social impact at General Assembly. “We are offering opportunities for people ready to get to the next level … this is really aspirational,” he added.
For 41-year-old Tawnya, the prospect of ever having a job or any career ambitions was unthinkable during the 20 years she spent living on the streets of Columbus, Ohio, as a victim of sex trafficking who was jailed several times for drug offenses.
But her life turned around three years ago, when she heard about Freedom a la Cart at a homeless shelter. Having started out part-time, she rose through the ranks to kitchen manager.
“I never thought I’d make it off those streets alive,” Tawnya said. “I went from being homeless to having my own apartment, a car and a job. I finally have self-worth.”
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UN: Syria Formally Joins Paris Climate Agreement
Syria has formally joined the 2015 Paris deal aimed at slowing climate change, the United Nations said on Tuesday, leaving the United States as the only country opposed to the pact.
Syria, racked by civil war, and Nicaragua were the only two nations outside the 195-nation pact when it was agreed in 2015.
Nicaragua’s left-wing government, which originally denounced the plan as too weak, signed up last month.
Syria announced last week that it intended to join.
U.N. spokesman Stephane Dujarric told reporters in New York that Syria had submitted instruments of accession to the Paris climate deal and that the move would enter into force for the country on Dec. 13.
U.S. President Donald Trump, who has expressed doubts that man-made greenhouse gas emissions are the prime cause of global warming, announced in June that he intended to pull out and instead promote U.S. coal and oil industries.
Overall, the Paris agreement seeks to limit a rise in temperatures to “well below” two degrees Celsius (3.6 Fahrenheit) above pre-industrial times, ideally 1.5.
The U.N.’s weather agency said on Monday that this year is on track to be the second or third warmest since records began in the 19th century, behind a record-breaking 2016, and about 1.1 Celsius (2F) above pre-industrial times.
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US Oil, Gas ‘Resurgence’ Expected as Global Demand Grows
Oil will continue growing as a source of energy for over two decades, with the U.S. set to become the undisputed leader in crude and gas production, the International Energy Agency said Tuesday.
The report from the Paris-based agency will come as grim news for officials attending global climate talks in Bonn, Germany, as they grapple with ways to contain carbon emissions. Scientists just this week said that emissions of the heat-trapping gas rose this year after three years of not growing.
The IEA said oil production will be driven by continued growth in energy-hungry industries. Though solar power is set to become the cheapest source of new electricity generation and the boom years for coal are over, oil and gas will continue to meet the bulk of the world’s energy needs, the IEA said.
Oil demand is forecast to keep rising until 2040, with natural gas growing by a sharp 40 percent.
A more widespread use of electric cars will not be enough to consign oil to the past, said IEA Executive Director Fatih Birol.
“It is far too early to write the obituary of oil, as growth for trucks, petrochemicals, shipping and aviation keep pushing demand higher,” said Birol.
Total energy demand is expected to have grown by 30 percent by 2040 — and would be growing twice that without efforts to improve energy efficiencies.
The price of oil has risen over 30 percent since June to a two-year high of around $57 a barrel in New York trading amid evidence of stronger economic growth around the world. But analysts expect the price to not rise much further in coming months as the U.S. ramps up production.
The IEA echoed that view, saying it expects the U.S. to see a resurgence in its oil and gas industries and become the world’s biggest net exporter by the end of the 2020s. Asian countries will become the biggest net importers of oil and gas, taking in 70 percent of imports by 2040 as their economies expand at a fast clip.
Environmental activists decried the IEA forecasts as discounting any efforts by countries to limit emissions as part of the Paris Agreement on climate change.
“None of its core scenarios for the future of energy provide a reasonable chance that the world will avoid climate catastrophe,” said Adam Scott, senior advisor at Oil Change International.
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Space Delivery: Astronauts Get Ice Cream, Make-own Pizzas
Astronauts got a mouth-watering haul with Tuesday’s Earth-to-space delivery — pizza and ice cream.
A commercial supply ship arrived at the International Space Station two days after launching from Virginia. Besides NASA equipment and experiments, the Orbital ATK capsule holds chocolate and vanilla ice cream for the six station astronauts, as well as make-your-own flatbread pizzas.
Astronauts always crave pizza in orbit, but it’s been particularly tough for Italy’s Paolo Nespoli. He’s been up there since July and has another month to go.
Nespoli used the space station’s robot arm to grab the cargo ship, as they zoomed 260 miles above the Indian Ocean.
Besides flatbread, the capsule contains all the makings of a good Earth pizza: sauce, cheese, pepperoni, anchovy paste, tomatoes, pesto, olive oil and more.
Astronauts also get a hankering for cold treats, thus the big frozen shipment of ice cream cups, ice cream sandwiches, ice cream bars and frozen fruit bars.
In all, the capsule contains nearly 4 tons of cargo. It’s named the S.S. Gene Cernan in honor of the last man to walk on the moon, who died in January.
The experiments include mealworms and micro clover, sent up by high school students.
The supply ship will remain at the space station until the beginning of December, when it’s cut loose with a load of trash. It will hover close to the orbiting lab as part of an experiment, then several mini satellites will be released and it will burn up in the atmosphere on re-entry.
SpaceX, NASA’s other prime shipper, will make a delivery next month.
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Study: Internet Freedom Worsens in Pakistan
A new independent study places Pakistan among the top four countries, including Brazil, Mexico and Syria, where people have been murdered in each of the last three years for writing about sensitive subjects online.
The annual “Freedom on the Net” report, released Tuesday by U.S.-based Freedom House, is based on an assessment of internet freedom in 65 countries, accounting for 87 percent of internet users worldwide. The latest study primarily focused on developments between June 2016 and May 2017.
The research declared Pakistan “not free” for a sixth consecutive year, noting internet freedom has deteriorated due to violence and intimidation related to social media activists.
“Internet shutdowns, a problematic cybercrime law, and cyberattacks against government critics contributed to the ongoing deterioration. Political speech online is vulnerable to restriction as Pakistan enters an election year in 2018,” the report noted.
The most frequent targets, it says, seem to be online journalists and bloggers covering politics, corruption and crime, as well as people who express religious views that may contrast with or challenge the views of the majority.
The study went on to conclude that perpetrators of the reprisal attacks remained unknown “but their actions often aligned with the interests of politically powerful individuals or entities.”
The report documented incidents of violence and intimidation during the research period. The government of Pakistan has not commented on the findings.
In June, a Pakistani court sentenced to death earlier this year an internet user, Taimoor Raza, for committing blasphemy on Facebook. In April, university student Mashal Khan was killed in the northwestern Khyber Pakhtunkhwa province by a mob who accused him of posting blasphemous content online.
Khan’s murder sparked widespread outrage across Pakistan. An anti-terrorism court is hearing the lynching case against 57 suspects indicated by the court.
“Such attacks often succeed in silencing more than just the victim, encouraging wider self-censorship on sensitive issues like religion. The state’s failure to punish perpetrators of reprisal attacks for online speech perpetuates a cycle of impunity,” according to the report.
The Pakistani government enacted the Prevention of Electronic Crimes Act in August 2016, introducing stronger censorship and surveillance powers with inadequate oversight, say critics.
Earlier this year, five bloggers known for criticizing the powerful military and religious militancy were abducted for few weeks. One of them later told media a government institution had detained and tortured him. Authorities had distanced themselves from the alleged abductions.
Tuesday’s report also criticized the government for the prolonged suspension of mobile internet services in parts of Pakistan, including the violence-plagued northwestern federally administered tribal areas, where security forces have been conducting anti-militancy operations.
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About 15 Percent of US Federal Agencies Detected Kaspersky on Networks
About 15 percent of U.S. federal agencies have reported some trace of Moscow-based Kaspersky Lab software on their systems, a Department of Homeland Security (DHS) official told Congress on Tuesday.
Jeanette Manfra, assistant secretary for cybersecurity at DHS, told a U.S. House of Representatives panel that 94 percent of agencies had responded to a directive ordering them to survey their networks to identify any use of Kaspersky Lab products.
The Trump administration in September ordered civilian U.S. agencies to remove Kaspersky Lab from their networks, saying it was concerned the Moscow-based cybersecurity firm was vulnerable to Kremlin influence and that using its anti-virus software could jeopardize national security.
Kaspersky Lab has repeatedly denied the allegations.
Reporting by Dustin Volz; Editing by Chizu Nomiyama.
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Freedom on the Internet 2017
Silicon Valley Blasts US Senate Proposal to Tax Startup Options
A proposal by the U.S. Senate to change the way shares in startup companies are taxed incited panic and dread in Silicon Valley on Monday, with startup founders and investors warning of nothing less than the demise of their industry should the proposal become law.
The provision in the Senate’s tax reform plan, which appeared to catch the industry by surprise, involves the treatment of employee stock options. These options give the holder the right to purchase shares in the future at a set price and can be very valuable if a company does well and the share price increases.
Options are often a major portion of the compensation for startup employees and founders, who take lower salaries in anticipation of a big payout if their startup takes off. Options typically vest over a four-year period.
Senate Republicans have now proposed taxing those stock options as they vest and before startup employees have the opportunity to cash them in, resulting in annual tax bills that could easily climb into the tens of thousands of dollars, say startup founders and venture capitalists.
“If there were a single piece of legislation to adversely affect startups, it would be this,” said Venky Ganesan, managing director at venture capital firm Menlo Ventures. “Everyone is freaked out.”
Justin Field, vice president of government affairs at the National Venture Capital Association, said that the Senate’s proposed tax change would be “crippling” to the startup industry.
How far the provision gets remains to be seen. The National Venture Capital Association was successful in getting a similar proposal removed from the House tax bill, although it “didn’t fully appreciate” the Senate’s intention to add the tax provision, Field said.
The association also helped to steer lawmakers away from a proposal discussed late last year to tax venture capitalists’ profits on investments at a higher rate.
Republican Senator Rob Portman of Ohio, a member of the Senate Committee on Finance, has filed an amendment to repeal the provision in the tax bill, according to his spokesman.
A new proposal
Under current tax code, employees are taxed only when they exercise their options. Options are exercised when the price they were granted at–known as the strike price–is lower than the share price, and some shares can then be sold to pay the taxes.
But the Senate proposal would require startup employees to pay regular income tax on the value gain of their stock options even before they are exercised. These options are illiquid assets, and cannot be spent or saved.
“What this would mean is every month, when your equity compensation vests a little bit, you will owe taxes on it even though you can’t do anything with that equity compensation,” Fred Wilson, a venture capitalist with Union Square Ventures, wrote on his blog Monday.
For instance, if a startup employee receives stock options at a dollar per share, and the shares increase in value by $1 every year during the four-year vesting period, the employee would have to pay income tax on $1 per share after the first year, pay again on the $1 increase in value after the second year, and so on.
When that employee owns hundreds of thousands and even millions of shares, that is a hefty bill to pay. And there is always the risk the startup will eventually fail.
“This reform will force the average employee to pay taxes on that bet well before they even know if it’s a winning ticket,” said Amanda Kahlow, founder and executive chairman of marketing data startup 6sense.
For startup founders in particular, such a tax bill could be ruinous.
“It would mean that I would have to sell the company,” said Shoaib Makani, founder and chief executive of long-haul trucking startup KeepTruckin. “I have zero net worth aside from the common stock I hold in the company. It would be impossible. I would be in default.”
Some executives in the startup industry, however, have pushed for companies to move toward bigger salaries so employees are not so dependent on options to buy a house or pay for other large expenses. And when startups suffer valuation cuts, employees can end up with worthless options.
The Senate’s proposal came as a revenue-generating measure to help offset tax breaks in the bill. A spokesman for Senator Orrin Hatch, a Republican and chairman of the Senate Committee on Finance, did not respond to requests for comment and other Republicans on the committee were not immediately available.
A spokeswoman for Senator Ron Wyden, the committee’s ranking member and a Democrat, said he was aware of concerns that the provision would limit startups’ ability to attract talent.
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Amazon to Produce ‘Lord of the Rings’ TV Series
Amazon.com has bought the global television rights to “The Lord of the Rings,” the company said on Monday, in what may be its biggest and most expensive move yet to draw viewers to its streaming and shopping club Prime.
Amazon said it will produce a multi-season series that explores new storylines preceding author J.R.R. Tolkien’s “The Fellowship of the Ring,” the first installment in the famed fantasy trilogy.
Three movies made of the trilogy in the early 2000s, filmed in New Zealand by director Peter Jackson, garnered nearly $3 billion at the box office and 17 Academy Awards.
Amazon acquired the rights from the Tolkien Estate and Trust but did not say how much it paid for them. The estate, HarperCollins and the films’ distributor New Line Cinema will help Amazon produce the television series.
The project underscores a shift in Amazon’s video programming. Its studio started in 2010 with a focus on unique shows beloved by critics, such as “Transparent,” about a father coming out as transgender to his family.
That was a winning formula for attracting Hollywood talent, awards and buzz, though not Prime subscribers around the world.
Now, Amazon is looking for a dramatic show that could be a hit globally, much like HBO’s popular fantasy series “Game of Thrones.” It is going head to head with Netflix, Hulu and others to bid for top content.
This puts Amazon in uncharted territory, with higher production costs expected.
Amazon justifies its spending on programming as a way to draw new sign-ups to Prime, whose members buy more goods more often from the world’s largest online retailer.
“Amazon Prime heads to Middle Earth,” Chief Executive Jeff Bezos said in a Twitter post.
Although “The Lord of the Rings” is the most famous work to emerge from Tolkien’s pen, he wrote much else, including prequel “The Hobbit” – also made into a movie trilogy by Jackson – and the denser “The Silmarillion.” The Amazon series will delve into some of Tolkien’s work that the movies did not explore.
“Amazon is committed to producing super high quality, recognized, branded entertainment,” said Wedbush Securities industry analyst Michael Pachter. “That’s a departure from shows like ‘Transparent’ and ‘Catastrophe.'”
“By definition this will be expensive,” he added.
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Shrinking GE Rattles Investors, Shares Hit 5-year Low
General Electric’s new Chief Executive John Flannery on Monday outlined steps that will turn the biggest U.S. industrial conglomerate into a smaller, more focused company, surprising some investors who sold the company’s shares to a five-year low.
Flannery’s plan to shrink GE’s multi-industry array of businesses was a reversal of the deal-driven empire building of his predecessors, Jeff Immelt and Jack Welch, and potentially a milestone in the decline of the conglomerate as a business strategy.
Other companies that once emulated the GE model of spreading bets among diverse industries are now unwinding their portfolios as well, something Immelt also did throughout his 16 years as CEO, even as he made acquisitions.
Flannery said he will pare GE down to three core businesses: power, aviation and healthcare. He will keep Immelt’s strategy of building software to complement GE’s machinery, albeit with a narrower focus and reduced budget.
For investors, Flannery’s decision to cut both the dividend and the 2018 earnings forecast by half added up to a whole that was less than they judged GE be worth last week.
GE shares fell to their lowest level in more than five years as investors worried the years-long overhaul would not pare down enough expenses or generate as much cash as they hoped. They closed off the day’s lows, down 7.2 percent to $19.02.
“They need to cut more cost,” said Scott Davis, an analyst at Melius Research. “GE is still a bloated company with duplicate costs up and down the organization.”
GE stock has effectively been dead money since September 2001, when Immelt took over, posting a negative total return even after reinvesting its juicy dividends. Once the most valuable U.S. publicly traded company, GE now has a market value of $168 billion, less than a fifth of Apple.
“You have pessimism around its portfolio of businesses mixed with a pretty harsh cut in the dividend,” said John Augustine, chief investment officer at Huntington Private Bank. “It took them years to get into this mess and it will take them several years to right the ship and get back into a stronger position.”
‘Soul of the Company’
Flannery, who took over as CEO on Aug. 1, said he was “looking for the soul of the company again” and would focus on “restoring the oxygen of cash and earnings to the company.”
He will cut its board to 12 from 18 members, and bring on three new directors early next year.
GE said it already has shed 25 percent of its corporate staff, meaning 1,500 jobs around the world, including some at its Boston headquarters. It is aiming to reduce overhead cost by $2 billion next year, half of that at its troubled power unit that sells electrical generation equipment.
The transition includes GE getting rid of at least $20 billion of assets through sales, spin-offs or other means.
GE will jettison businesses with “a very dispassionate eye,” Flannery said, keeping only units that offer growth, a leading market position and a large installed base.
GE said it would exit its lighting, transportation, industrial solutions and electrical grid businesses, all of which were widely expected, closing factories around the globe.
But it was vague about other disposals.
It plans to get rid of its 62.5-percent stake in oilfield services company Baker Hughes, only months after making the multi-billion dollar investment. Baker Hughes shares lost 3.2 percent.
Flannery offered no quick fixes for investors. He said power, one of the businesses GE would focus on, was “challenged,” but could be turned around in one to two years.
GE’s Digital unit, on which Immelt bet billions of dollars, would focus on selling apps to customers in its core businesses, Flannery said. He confirmed that the shift meant sales staff were being let go, as Reuters reported last week.
GE also will cut spending on the digital unit to $1.1 billion in 2018 from $1.5 billion in 2017. GE had previously said it would invest $2.1 billion in its digital unit in 2017, but that tally included money not tied to Predix, GE’s industrial-internet platform, GE said.
Flannery said there is “no retreat on the idea” of GE providing both applications and the Predix platform to connect industrial equipment to computers that can make machines run better. However, getting one of its key applications to run on Predix could take two more years.
Flannery added that some of its healthcare IT business, such as software for imaging and hospital staff scheduling, were still critical to the company and not likely to be divested.
Dividend Cut
The dividend cut, to 48 cents from 96 cents next year, is only the third in the company’s 125-year history and the first not during a broader financial crisis. It is expected to save about $4 billion in cash annually.
“This dividend cut will be a major disappointment to GE’s (roughly 40 percent) retail shareholder base,” said RBC Capital Markets analyst Deane Dray.
The cut will be the eighth-biggest dividend cut in history among S&P 500 companies, according to Howard Silverblatt, senior index analyst of S&P Dow Jones Indices. GE also had the biggest cut when it slashed its dividend by $8.87 billion in 2009, Silverblatt said.
GE forecast 2018 adjusted earnings of $1 to $1.07 a share, compared with its earlier estimate of $2 per share. Wall Street was expecting $1.16, according to Thomson Reuters I/B/E/S.
Industrial free cash flow will total just $6 billion to $7 billion next year, up from an estimated $3 billion in 2017, but far below earlier targets of $12 billion for 2017.
GE said the weak power business had largely prompted the dividend cut and lowered earnings forecast. Demand for new power plants will remain slow through 2019, Flannery predicted.
But GE also was to blame, he said.
“We did not manage the (power) business well,” he said. “That’s a fundamental change we need to make and that’s going to take some time. This is not a magic wand.”
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Google Broadens Takedown of Extremist YouTube Videos
Alphabet’s Google in the last few months has begun removing from YouTube extremist videos that do not depict violence or preach hate, YouTube said Monday, a major policy shift as social media companies face increasing pressure from governments.
The new policy affects videos that feature people and groups that have been designated as terrorist by the U.S. or British governments but lack the gory violence or hateful speech that were already barred by YouTube.
A YouTube spokesperson, who asked not to be named for security reasons, confirmed the policy in response to questions. The company would not specify when the policy went into effect.
As YouTube terms already barred “terrorists” from using the service, the new policy keeps out videos uploaded by others that militants likely would try to distribute if they could have accounts, according to the spokesperson.
Hundreds of videos of slain al-Qaida recruiter Anwar al-Awlaki lecturing on the history of Islam, recorded long before he advocated violence against the United States, were among those removed under the new policy, the spokesperson said.
Governments and human rights groups have pressed YouTube for years to crack down on extremist videos. They argue that the propaganda radicalized viewers and contributed to deadly terror attacks.
British Home Secretary Amber Rudd amplified the pressure during visits with tech companies in Silicon Valley in July and a speech in Washington, D.C., last week. European Union and U.S. lawmakers this year have threatened consequences for tech companies if concerns are not addressed.
Legislation could resemble a German law approved in June to fine social media companies 50 million euros ($57 million) if hateful postings are not promptly removed.
Looking for balance
YouTube said discussions with outside experts prompted the new policy, but it was unclear why the company decided to act only recently. In June, the company announced that “inflammatory religious or supremacist content” that did not violate its policies would be allowed with warning labels and a restriction making them ineligible for ad revenue.
At the time, Google General Counsel Kent Walker said in a blog post, “We think this strikes the right balance between free expression and access to information without promoting extremely offensive viewpoints.”
The latest step goes farther and was praised by critics such as Paul Barrett, deputy director of the New York University Stern Center for Business and Human Rights.
“If the terrorist is in the business of recruiting and inciting people to make violent attacks, you’ve got to the draw the line” against any of their content, Barrett said.
Blurry lines
The new policy does not affect news clips or educational videos about terrorism. But YouTube will not always have an easy time distinguishing, experts said, pointing to tactics such as overlaying extremist commentary on news footage to get around censors.
YouTube has resisted imposing more editorial control because it fears making it harder for important videos to get a wide audience, Juniper Downs, YouTube’s global director of public policy, told a San Francisco conference sponsored by the Anti-Defamation League on Monday.
“We will lose something very valuable if we completely transform the way these platforms work,” she said during a panel discussion.
Internet freedom advocates such as the Electronic Frontier Foundation have urged tech companies to be cautious and transparent in responding to government pressure.
YouTube is relying on government lists of terrorists and terrorist groups for enforcement. Content moderators check the listings and make removal decisions after fielding reports from an automated system, users or partner organizations such as the Anti-Defamation League and The Institute for Strategic Dialogue.
Al-Awlaki, whom the U.S. killed in a 2011 drone strike, was designated a terrorist by the U.S. Treasury the year prior.
The New York Times first reported the removal of al-Awlaki videos.
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