Apple Signals Coronavirus’s Threat to Global Businesses

Apple is one of the world’s largest tech companies, but as it sits amongst the world’s elite in the business, there are obstacles ahead for CEO Tim Cook to overcome. The coronavirus has hit the global economy by storm, and it doesn’t seem to be stopping any time soon. The growing epidemic has impacted the Chinese economy in manufacturing, banking, and other sectors and the government has imposed restrictions on travel for 150 million people in the country. Apple has strong ties to China due to the use of factories for production and many stores selling its products across the nation.

Apple detailed just how bad the forecast for the company was with the spread of this deadly disease. The New York Times highlighted concerns by saying, “[the virus] was cutting sales expectations for this quarter, which a month ago it had projected to be robust.” Forty-two of Apple’s stores were closed and many of them have yet to reopen due to the growing concern from medical officials and ongoing research concerning how the disease was spreading.

Daniel Ives, Managing Director of Equity Research at Wedbush Securities stated, “Apple is heavily exposed. It confirms the worst fears that the iPhone impact was going to be more dramatic than expected.” China is Apple’s second largest market after the U.S. and has played a major role in the stock price continuously rising after previous quarterly earnings reports. Apple’s concerns are valid, as one of its most sought-after products is assembled in China, although not in the same province where the outbreak of the virus started. Apple is not the only company being affected by the coronavirus, as world leaders such as Starbucks, General Motors, and Ikea have been impacted as well. Many people travel to China for business, vacation, and other important events, but major airlines like American, Delta, and United have halted trips to the region due to growing fears of the disease spreading.

Tim Cook responded to Apple’s large sales forecast range by stating, “the company provided investors with a wider than expected estimate range because it was uncertain about the rapidly spreading coronavirus.” The company is working on plans to mitigate the impact but will face more challenges when the factories are back to normal operations and the government conducts inspections and tests for current workers.

Apple Signals Coronavirus’s Threat to Global Businesses

Trump’s $4.8 Trillion Budget Would Cut Safety Net Programs and Boost Defense, Highlighting an Ever-Growing Ideological Divide

The New York Times, in a recent article, outlined the budget cuts and spending initiatives advanced by President Trump in his $4.3 trillion budget proposal. The budget cuts include those relating to loan assistance, affordable housing efforts, food stamps, and Medicaid. The proposed cuts fall in line with President Trump’s efforts to cut government spending in the midst of his second presidential campaign. According to the proposal, the biggest reduction is an annual two percent decrease in spending on discretionary domestic programs, like education and environmental protection.

As for tax cuts and defense spending, the budget proposal extends the individual income tax cuts that were set to expire in 2025 and provides for additional spending for the military, veterans, national defense, and border enforcement. Key areas for military spending include $3.2 billion allocated for the development of a hypersonic missile system and $18 billion for the newly established U.S. Space Force.

In terms of the federal deficit, the budget proposal estimates that the deficit will be wiped out by 2035. Notwithstanding this projection, the budget proposes adding $3.4 trillion to the national debt by 2024. Currently, the U.S. deficit for the fiscal year of 2020 alone stands at $1.08 trillion, and as of February 2020, the total U.S. debt stands at $23 trillion. As stated in the U.S. Treasury’s report in November 2019, foreign governments are the largest holders of the U.S. debt at $6.7 trillion. Accordingly, it appears that the Trump Administration is heavily relying on borrowings to sustain this level of expenditure, which directly contradicts the policies promulgated by prominent Democratic candidates. Many Democrats recently outlined detailed plans for raising liquidity by raising taxes for corporations and the rich and expanding government efforts to provide health care, education, affordable housing, and aid for the poor. Despite the proposed policies to increase liquidity, critics argue that Democrats do not have an articulable solution for lowering the federal deficit or national debt.

The differences in the budget proposal put forth by President Trump and his Democratic rivals highlight the key ideological differences among Republicans and Democrats. In terms of the Republican Party, the laissez-faire economic theory, championed by Adam Smith and further advocated for by Ronald Reagan, rejects the practice of government intervention in the economy. The Democratic Party, on the other hand, largely believes in modern liberalism, advanced by John Rawls and John Fitzgerald Kennedy. Under this theory, the government is an active participant in reducing inequality, providing education, ensuring access to healthcare, regulating economic activity and protecting the natural environment.

While the ideological underpinnings of the Democratic and Republican Parties are clear, the solution for significantly reducing the U.S. deficit and national debt is not. In a practical sense, what would be prudent here is to close the ever-growing partisan gap, which would in turn set the U.S. economy on a long journey of achieving a budget surplus.

Trump’s $4.8 Trillion Budget Would Cut Safety Net Programs and Boost Defense, Highlighting an Ever-Growing Ideological Divide

The Space Race: Countries to Billionaires?

When President John F. Kennedy launched a national effort to put astronauts on the Moon within a decade, Americans were inspired and ultimately met his challenge.  The coordinated effort of the NASA Apollo Program, which successfully landed humans on the moon, took place in the context of the Space Race between the United States and the Soviet Union.  As Neil Armstrong and many historians have suggested, the Cold War served as an impetus for human exploration into space.

However, today’s space exploration efforts are taking place in a much different context.  It’s true that the United States, Russia, China, and India view space exploration as important to their geopolitical interests.  And some American politicians including Vice President Pence have suggested that there’s a new space race between the United States and China.  But the most important feature of current space efforts is the transformation of JFK’s national aspirational effort into a space race of billionaires.

As the founder of SpaceX, Elon Musk is pursuing the colonization of Mars and the development of cargo missions into space for the U.S. military and others.  Jeff Bezos, founder of Blue Origin, desires to build a lunar base and create a space tourism industry.  Virgin Galactic founder Richard Branson is also interested in developing space tourism.

The three billionaires desire to beat the others in their space ambitions.  Litigation may serve as a tool to gain an edge over the others.  Therefore, the business law community should prepare itself for the litigation that will occur between the companies.  SpaceX has sued the US government because of a $2 billion agreement to build rockets which the Air Force granted to Blue Origin (and other companies).  Now Blue Origin wants to defend its deal by intervening in the lawsuit.  In addition, the two companies were previously engaged in a ruthless patent dispute over a way of landing rockets on vessels.  SpaceX prevailed.

If the billionaires succeed in their space ambitions it will pose novel legal issues regarding space travel and human life in space.  Also, litigation between their companies will likely increase if they are still in competition.  Therefore, it is crucial that space law, business law, and intellectual property law regimes currently begin to transform in a manner that will encourage the betterment of humanity in space.

The Space Race- Countries to Billionaires?

Preventing Foreign Influence in Democracy

Foreign influence in democracy through the use of misinformation on social media has been a widely discussed topic since Russia’s interference in the 2016 U.S. Presidential Election. One prominent tactic used by Russia in 2016 was to use fake social media accounts to spread misinformation with the goal of tilting the election in favor of Trump.  Social media companies were caught off-guard and were unprepared for such a campaign.  Yet, social media companies have not made enough progress to halt such activities, which have a corrosive effect on the integrity of democracies.

Recently, Russian misinformation campaigns aimed at influencing African politics have been uncovered.  The campaign spread misinformation about local elections and promoted policies that were favorable to Russia.  The platforms used in Russia’s efforts were Facebook, Instagram, WhatsApp, and Telegram. The targeted countries included Sudan, Libya, Madagascar, Mozambique, Democratic Republic of Congo, Central African Republic, Cameroon, and Côte d’Ivoire.  In response, Facebook suspended the related accounts for foreign interference.  It is important to note that these Russian misinformation efforts have evolved in sophistication as they partly relied on authentic domestic accounts in conjunction with their efforts.  Although Facebook has added fact-checking features, it is unlikely that the feature itself will be enough to protect the integrity of democratic elections and prevent the spread of misinformation.

Russia’s and other countries’ use of social media misinformation campaigns is a troubling trend.  Social media companies have created security teams to prevent against election meddling through misuse of their networks.  Further, data gained from these efforts will help the companies develop stronger defense mechanisms.  However, the number of countries engaged in disinformation campaigns has increased and will continue to do so.  Although social media companies have made some progress in trying to prevent and uncover these campaigns, it will not be an easy task for these companies to maintain the integrity of their networks given that foreign influence tactics will evolve as a result of any defensive mechanisms that tech companies put in place.

Preventing Foreign Influence in Democracy

Hong Kong Stock Exchange Drops Nearly $37 Billion Bid for London Rival

The Hong Kong Stock Exchange (“HKEX”) recently pulled out of its $36.6 billion bid to acquire the London Stock Exchange (“LSE”). The merger would have created the largest trading entity with a combined value of over $70 billion.

Prior to HKEX’s failed LSE acquisition bid, LSE publicly questioned “the sustainability of HKEX’s position as a strategic gateway in the longer term.” This statement is likely in response to the widespread protests in Hong Kong surrounding its political relationship with mainland China. Thus, LSE’s statement highlights a lack of investor confidence in the Asian giant amidst rising political instability.

As for M&A trends more broadly, external factors, such as politics, often play a role in deal making, and HKEX’s dropped bid is just one example. Earlier this year, the U.S. Treasury Department proposed an amendment under the Foreign Investment Risk Review Modernization Act that would give the Committee on Foreign Investment in the United States (“CFIUS”) greater authority to halt or scrutinize Chinese and other foreign investments. Under the proposed amendment, this authority would extend to investments the U.S. deems to be “protected.” Similarly, with respect to the bid made by HKEX, officials from the Bank of England had previously advised the U.K. Treasury that the LSE-operated clearing house constituted “critical market plumbing.” Therefore, the deal, if materialized, would have been subject to U.K. scrutiny. Accordingly, M&A lawyers advising clients with cross-border deals need to factor in this increased regulatory scrutiny, especially when dealing with acquirers from politically unstable regions.

With HKEX’s bid out of the picture, LSE may now proceed with its deal to acquire Refinitiv Holdings Limited, a portfolio company of the Blackstone Group. LSE claims that the deal would put it at the forefront of the financial data sales industry. In addition, earlier this year, LSE mentioned that it would like to proceed with the deal since it made more “strategic sense” than the proposed merger with HKEX. Thus, while the political instability in Hong Kong likely attributed to HKEX’s change of heart, LSE is now able to move forward with its strategic business goals unhindered by HKEX. It remains to be seen whether HKEX will be successful with future acquisitions if the political climate does not dramatically shift soon.

Hong Kong Stock Exchange Drops Nearly $37 Billion Bid for London Rival





Siri, Google Assistant, and Amazon Alexa can be Hijacked with Light

Researchers have recently found that voice assistant technology is vulnerable to hijacking by cheap lasers.

Researchers from Tokyo’s University of Electro-Communications and the University of Michigan have almost bested inbuilt security mechanism in voice-controlled devices, including popular smartphones. A mere shining of a bright laser at the devices’ microphone is interpreted as a sound by their system.

Researchers have concluded that by producing electrical signals in the light beam on microphones hijackers may control a device because the system will interpret it as a genuine command. For this test, the cheap laser pointers used was around $13.99 to $17.99. This was coupled with a sound amplifier to direct speakers with a specific instruction cost of $27.99. A laser device was also connected to control the Lasers intensity. This was the most expensive tool of all, costing $339.

The team ran a test on voice control speakers and smartphones of renowned major tech firms, such as Google’s Assistant, Amazon’s Alexa, and Apple’s Siri. The list is not exhaustive, but includes Google Home, various Amazon Echo models, the Apple Home Pod, and Facebook’s Portal speaker, which runs Alexa. They also tested an iPhone XR, a Samsung Galaxy S9, and a Google Pixel 2.

Relying on inbuilt security layers in the gadgets is now in question. The varying degree of vulnerability in tablets, phones, and speakers is another issue discovered by the researchers after shining the laser from some distance, including through windows. Out of all devices tested, Google Home was hijacked from 110 meters away.

But it may relieve anxieties to consumers using iPhone, iPad, and a few Android smartphones that these devices require extra layers of authentication or a “Wake Word” to activate a device before the hijackers trick the system. This additional authentication of preventing a system against an invasion requires a system hacker to use a wake-up a command such as “Hey Siri” or “OK Google. Unfortunately, these additional security measures are missing in the smart speakers.

Researchers went to great lengths to explain in their paper the prospective chance that lasers could also be used to unlock smartphones and devices connected with it. This could expose consumers credit card information and even result in the ability to unlock tech-driven cars which are connected to a victim’s Google account

Since the paper’s publication, it is clear that tech giants such as Amazon need to update their gadgets security software to protect against any foreign invasion. Unfortunately, the research has already shaken consumers trust.

Siri, Google Assistant, and Amazon Alexa can be Hijacked with Light

US and China Avert Tariff Hikes in Partial Trade Agreement

After negotiations, Washington is geared towards reaching a subsequent agreement with Beijing ahead of re-escalating tariffs on Chinese products.

The Trump administration and Chinese officials have reinitiated talks to resolve a long-standing feud. With the recent development, the tech giants discussed reaching a limited trade agreement to hold off raising tariffs as high as 30% against the Chinese products in the US. Meanwhile, China has pledged to increase purchases of American agriculture products in the subsequent agreement, contrary to its currency standards.

Since news of the prospective agreement surfaced, the stock market has surged and prompted the International Monetary Fund (IMF) to persuade both countries to revise up the forecast for next year.

Bilateral talks have eased tensions, helping Washington to demand China to increase efforts to protect American intellectual property and technology. However, it is still unclear whether the communist government would change its tech practices and reform its economic policies with the provisions enumerated in Section 301 of U.S Trade Act of 1974.

Aligning with U.S trade policies is a focal point of an apparent truce between the two giants. For more than a year and a half, the trade war has agitated the world’s largest economies in retaliation to each other’s punitive measures. Hikes in duties imposed have affected millions of American consumers, who rely on products imported from China. Additionally, the backlash American agriculture received has disrupted its supply chains and manufacturing. The Trump administration’s pursuit of protecting intellectual property theft and illicit technology transfer has rationalized its continued sanctions on China and would give the U.S. an edge to win this trade war.

President Trump’s tweets have reiterated his commitment to building a strong economy. His consistent efforts cannot be undermined in the wake of his recently initiated impeachment inquiry over complaints of using his office for political gains with foreign assistance.

US and China Avert Tariff Hikes in Partial Trade Agreement

Inside Social Commerce – the New Breed of Influencer Marketing in China

What would Kim Kardashian have to do with mahjong on the most active e-commerce platforms in China?

Some theorize that the celebrity’s selling-power, with 150M followers on Instagram, boded well on a livestream channel run by popular Chinese celebrity, Viya, on Taobao, China’s e-commerce platform.

Indeed, Viya’s influence on China’s consumer is well-studied – at her peak in October, she sold nearly $50 million worth of goods in a single day. So after a quick product demo, Kardashian sold 150,000 bottles of perfume in mere seconds.

Kardashian’s appearance on the channel – and appeal to mahjong, a popular Chinese boardgame — is part of the larger effort to ramp up sales of her signature line of fragrances, KKW, for “Single’s Day,” China’s largest shopping day of the year. Last year, Single’s Day generated more than $30 billion in revenues for Alibaba’s two online platforms, which includes Taobao. This year, that number has crossed a record high of $38 billion – more than five times the online sales for Black Friday last year, in the United States.

Tellingly, despite China’s slowing economy, and fears of repercussions from the US-China trade war, sales through China’s ‘social commerce’ – a fusion of social media and online shopping – is more robust than ever. Through this ecosystem, e-payments, livestreaming, and e-commerce are integrated, allowing influencers to drive consumption.

Kardashian is one of Alibaba’s 500 recruits from ten countries. And soon, she’ll be one of many more. The retailer has announced plans to recruit and train 2,000 influencers to sell international goods to Chinese consumers, and celebrities are buying-in. Taylor Swift headlined the countdown for Single’s Day this year, on Nov 11, while Rihanna is marketing her brand, Fenty Beauty, through another one of Alibaba’s platforms.

Inside Social Commerce – the New Breed of Influencer Marketing in China

The Big Tech Way of Dealing with Harassment

David Drummond is the chief legal officer and senior vice president of corporate development for Google’s parent company, Alphabet. But rather than being known for these powerful titles, Drummond has been in the news for cheating on his wife with a former Google employee, Jennifer Blakely.

Blakely published a post on Medium in which she wrote about her relationship with Drummond, accusing him of emotional abuse directed at her and their son. In the aftermath of their relationship, she quit her job at Google and was abandoned by Drummond.

Google is notorious for its policies that regulate what is happening inside the company, even at the interpersonal level. Blakely worked initially as a paralegal in Drummond’s legal department. But given that interpersonal relationships among teams were disallowed by HR policy, Blakey was removed from the legal team and placed in sales, even though she had zero sales experience. Meanwhile, Drummond still works as one of Alphabet’s highest paid executives. He married another Googler two months ago and recently cashed out roughly $35 million in Google stock.

Blakely’s allegations are not the only insight into how Google treats workplace affairs. In 2018, thousands of Googlers protested the way the company deals with sexual harassment. The Andy Rubin scandal is still fresh; Google gave Rubin $90 million when he was leaving the company for his alleged sexual harassment, even though he could have been fired without compensation.

Blakely stated Google’s policy and culture protects elite executive men while oppressing women. On November 6, Alphabet’s board decided to initiate an investigation on sexual harassment allegations concerning Google. In addition to this, Google began to amend some of its policies. But Google still declines to publicly comment about workplace affairs that have become public. Thus, it seems like the real change may not be in policy, but rather in the mindset of decision makers of Google.

The Big Tech Way of Dealing with Harassment


Apple Commits $2.5 Billion to California Housing Initiatives

Apple recently declared its intent to contribute $2.5 billon towards housing initiatives in Northern California, a region heavily scrutinized for its unaffordability and homelessness. This move by the largest public U.S. company follows the roadmap put forth by Microsoft, Facebook, and Google. Earlier this year, these tech giants pledged grant and loan packages focused on similar initiatives. Tim Cook, Apple’s CEO, stated that the contribution was a part of Apple’s “civic responsibility to ensure that [Silicon Valley] remains a vibrant place where people can live, have a family, and contribute to the community.”

The projected breakdown of Apple’s $2.5 billion commitment includes:

  • $1 billion for a statewide affordable housing fund
  • $1 billion for first-time homebuyer mortgage assistance
  • $300 million for conversion of existing Apple property to affordable housing
  • $150 million to a Bay Area nonprofit focused on reducing and preventing homelessness
  • $50 million to address homelessness

While the move is sure to generate some positive media publicity, it has already generated some criticism. Apple, as one of the most cash-rich public companies, holds over $200 billion of excess cash and bought back more than $18 billion worth of its own stock in the last 3 months. Thus, their $2.5 billion commitment, while commendable, represents less than 1.5% of their outstanding cash and should be placed in context with other corporate initiatives.

Questions also arise as to the feasibility of the proposed initiatives. San Francisco and other Bay Area cities have reached the capacity of outward expansion, meaning that the only way to expand housing is to modify existing structures. However, as it stands, current zoning laws severely restrict high-density housing construction. Earlier this year, the California state legislature tabled a bill proposing to loosen some of these regulations. Certainly, the California state government will need to supplement large tech company contributions with laws encouraging affordable housing solutions.

Regardless of the criticism and feasibility, any Bay Area affordable housing aid is desperately needed. A 2016 McKinsey Global Institute report projected that California needs 3.5 million new housing units to address its current shortage. San Francisco maintains the highest cost of living in the country, contributing to increases in homelessness and demographic inequality. Unquestionably, large companies can help offset some of these costs, and California Governor Newsom hopes that more companies follow suit. In the meantime, historically low interest and unemployment rates, coupled with legislative inaction, suggests no end in sight for the Bay Area housing crunch.

Apple Commits $2.5 Billion to California Housing Initiatives