In the current political climate, many news sources have been heavily criticized as untruthful and polarized. It’s not only the “traditional” news sources, however, that have come under fire. Much of the condemnation has been directed at tech giants like Facebook, Twitter, and Google.

Recently, the Senate questioned Facebook’s commitment to privacy and distribution of news. The event added to an ongoing debate about whether these companies are media or technology businesses. Apple has almost miraculously managed to stay out of the limelight, even though its news app is used by roughly 90 million people.

Coincidentally, Apple is also the only company among the Silicon Valley corporations that chooses humans over machines and algorithms to pick its headlines. Thirty former journalists currently work for Apple in Sydney, London, New York, and Silicon Valley, where they review the news and pick stories to highlight on the news app.

Apple’s competitors, on the other hand, rely solely on algorithms. They argue that machines help to eliminate human bias. They forget, however, that algorithms are only as good as their creators. Therefore, they may propagate the systematic biases of their developers.

So, could human journalists be less biased than machines? Awareness of one’s shortcomings is often the first step in addressing them. Human journalists can watch out for such biases, while machines might not be able to do so. Yet, engineers and app developers can similarly combat bias in their thinking.

The lack of public scrutiny over Apple’s news app draws attention to another interesting phenomenon: society’s fundamental mistrust of machines. That sentiment could explain why Apple hasn’t faced criticism similar to that of Facebook.

Humans have historically curated the news provided to the public. Bias has always been there, lurking behind the scenes. Now, that bias has assumed a more robotic and systematic face. Therefore, it has become a foreign threat. It is, after all, the human condition to fear the unknown — even as we rapidly forge ahead in our quest for new technology.

Survival of the Least Biased

Constellation Brands Inc., an international producer of beer, wine, and spirits, is allegedly looking to sell some of its United States wine brands. According to sources close to the matter, this deal could be worth as much as $3 billion. This news comes just two weeks after Constellation’s CEO of 11 years, Rob Sands, announced that he is stepping down.

Constellation is a family-controlled company that has been in the alcohol production business for over 70 years and has grossed $7.33 billion in 2017. Pursuant to the deal, Constellation is contemplating selling Clos du Bois, Mark West, Arbor Mist, and Cooks. These brands generate 12-month earnings before interest, tax, depreciation, and amortization of more than $260 million.

Though the deal is still uncertain to close and is regarded as a confidential matter, it comes as little surprise that the company is looking to sell some of its wine brands. Last year, wine accounted for 38.6% of Constellation’s consolidated net sales, which is down from 44.7% two years ago. In contrast, Constellation’s beer business has continued to grow. During the second quarter of this year, Constellation was the top market share gainer in the U.S. beer industry. Further, one of Constellation’s top beer brands, Modelo, has grown nearly 20% in the last five years.

As the company turns away from wine, it is looking to invest in new markets, including the cannabis industry. In August, Constellation paid almost $4 billion to increase its stake in a Canadian cannabis company, Canopy Growth Corp., from 10% to 38%. Recreational marijuana is now legal in eight U.S. states and Washington D.C. Further, Canada just opened its first cannabis dispensaries within the last two weeks. Clearly, marijuana is a growing market and Constellation is taking advantage of the economic opportunity.

If Constellation sells these wine brands, it will represent a big shift in the company’s targeted customers. Since its inception, wine has been Constellation’s biggest business. However, as profitable opportunities increase in beer and cannabis, it will be interesting to see what other ventures Constellation engages in.

Constellation Brands Looks to Sell Wine Brands in $3 Billion Deal

On October 22, YouTube announced that it plans to spend $20 million on educational videos and other education initiatives. While YouTube is well-known as a home for everything from how-to videos to informational shorts, this represents YouTube’s first investment in education-specific content. In addition to working on its own original content and developing an explainer series with Vox to answer questions posed by viewers, YouTube also plans to host more EduCon events, where it gathers YouTube Creators to discuss real-world education.

The investment comes on the heels of two key Google initiatives. First, YouTube has been pushing a subscription service, YouTube Red, for years with limited success. Like many Netflix competitors, Google’s shift includes investing in original content: YouTube Originals is slated to create over 50 programs in 2019. Second, Google has seen great success in the education market in recent years with its Chromebook products. Google recently overtook longtime education champion Apple with Chromebooks owning 60% of the K-12 market. However, competition from Microsoft and Apple is heating up. The new axis of competition is software, where Google’s competitive strategy is largely focusing on creating software for educators. In both cases, a suite of original content will bolster its efforts.

The investment in educational initiatives also comes as YouTube faces increased scrutiny for how it categorizes and promotes videos. This year, YouTube’s recommendation algorithms were roundly criticized for radicalizing individuals, and the national security community has expressed concerns on similar grounds for years. Similarly, some of its Creators notably quit—claiming that YouTube’s algorithms create a stressful work schedule—or were kicked off for creating offensive videos some Creators claim YouTube incentivizes them to create. These issues are critically important for YouTube as feed-style algorithms attract increasing regulatory scrutiny. Harmless content, like the upcoming Vox explainer series and other new educational videos, may take some of the edge off.

YouTube Invests in Education

Residents of Palo Alto, California will soon be greeting banking giant JPMorgan Chase as it makes an aggressive expansion into the heart of Silicon Valley. The move comes as JPMorgan increases its focus on digital payments and technological integration within its various platforms and services. With roughly 50,000 employees working in tech, the division’s annual budget has reached a staggering $10.8 billion, with $5 billion in reserve for new investments. The “fintech campus” to be completed in 2020 will house over 1,000 employees, a quarter of whom were absorbed into JPMorgan’s payroll through the company’s recent acquisition of WePay, an online payment service provider.

Though the company has seen steady growth in the aftermath of the financial crisis, JPMorgan’s entrance into Palo Alto speaks to a grander vision that stretches far beyond the bolstering of its fintech operations. The banking industry has long been viewed as a white-collar vestige steeped in the formalism and soul-crushing expectations shrouded behind the Manhattan skyline—a snapshot of Wall Street elitism that runs contrary to the changing values of the modern tech workforce. JPMorgan’s entrance into Silicon Valley seeks to change this very notion.

In many ways, JPMorgan’s expansion illustrates the larger shift in the labor market for highly specialized workers: as the next generation of starry-eyed, socially conscious students surface from the libraries of elite universities, diploma-in-hand and the world at their fingertips, demand for brilliance will continue to outstrip supply. In such a market, concessions must be made—a reality that CEO Jamie Dimon has internalized by crafting the Palo Alto campus in a way that emulates many characteristics of its competing neighbors: laid-back work environments, humane hours, and bountiful amenities to keep workers happy, satisfied, and engaged.

Furthermore, the move serves as a fascinating case study into the convergence of both coasts—a decision that evokes memories of the “Traitorous Eight” and their relationship with deep-pocketed financiers of the east that gave rise to Silicon Valley mainstays such as AMD and Intel. JPMorgan’s new campus works to advance this very storyline—as an emblematic icon of a world in which minds and money are no longer separated by space, the future is looking bright for JPMorgan Chase in Palo Alto.

JP Morgan’s Fintech Vision Expands into the Valley

On Friday, General Motors announced its support of a National Zero Emissions Vehicle (NZEV) program.  The program, modeled on California’s electric vehicle efforts, would gradually increase the percentage of electric vehicles that car manufacturers must produce each year in their fleet, beginning in 2021 at seven percent.  The company said the plan would lead to seven million long-range electric vehicles on the road by 2030.  GM is asking the Trump administration to implement the plan nationwide, which would relieve automakers from having to follow specific electric vehicle sales requirements in individual states.  GM announced its proposal through comments to the Environmental Protection Agency’s Safer Affordable Fuel-Efficient rule that was announced this summer; the rule, in part, rolled back Obama-era emission standards.

GM has been pushing for electric vehicles for a while.  The company already has a successful electric vehicle in its Chevrolet Volt.  GM stated that the NZEV program would “promote innovation in the United States and help the US to become a leader in “technologies of the future.”

While General Motors’ proposal seems like a noble effort to move towards cleaner technology, it is important to note that the NZEV program could create a multitude of economic benefits for GM. First, some of General Motors’ competitors have been slower to break into the electric vehicle market.  Given GM’s successful Volt and focus on electric vehicles, the company is likely better positioned than some of its major competitors to increase its production of electric vehicles.

Second, following a nationwide mandate on electric vehicle production would be easier for automakers rather than requiring manufacturers to meet individual states’ electric vehicle production mandates. California has one of the strictest electric vehicle standards in the country.  The state wants 15.4 percent of car sales to be from either electric vehicles or other zero emission vehicles by 2025.  Nine other states have also adopted this standard.  In January, California Governor Jerry Brown announced his goal of having five million zero-emission vehicles in California by 2030, a goal much more ambitious than that proposed by General Motors; there are currently around 350,000 of these vehicles on the state’s roads.  By having a single standard that applies to all fifty states, automakers would not need to make different cars for different states, which would likely reduce production costs.

The Trump administration has been an outspoken critic of California’s electric vehicle measures and goals, arguing that consumers do not want electric vehicles.  As a result, the Trump administration claims, automakers must spend billions on cars that have to be sold at a loss.  The administration has also said it is considering banning California from enacting its own emissions standards.

General Motors Wants the Trump Administration to Back a Nationwide Electric Vehicle Program

This past May, the Supreme Court released a 6-3 decision which legalized sports betting across the US. One study predicted that following the decision thirty-two states would likely offer sports betting within the next five years. While all four major sports leagues supported upholding the sports gambling ban in court, all of the league commissioners, aside from the NFL, showed some openness to the idea of change outside of court.

A Nielsen Sports survey, commissioned by the American Gaming Association, was released last week. The survey concluded that the big four US sports leagues, the NBA, NFL, NHL, and MLB, were likely to gain $4.2 billion each year from legal betting. The most fascinating aspect of this survey was that most of the projected revenue is expected to come from increased fan engagement, not from the betting itself. One explanation for this may be that sports betting is a novel issue and leagues have yet to lay out plans for revenue sharing with the gaming industry.

While leagues were originally reticence to legalized betting due to fears of losing integrity, they have since spoken more freely about their desire to share in the profits. As such, the NBA and MLB both suggested they should take 1% of all bets wagered on their games. Further, the leagues are not the only ones who will see a benefit from legalized sports betting. Sports media analysts also view the decision as a welcome sign in a time of recent turmoil. The sports media business may be in trouble since rights costs to sporting are rising, viewership is decreasing, and many are cutting cable altogether. However, the legalization of sports betting nationwide will be paired with an increase in viewership and engagement since sports bettors are said to watch almost twice as much coverage as non-bettors.

Although some fear that legalized betting creates skeptics out of fans who may believe games will become fixed, the reality is that fans already place bets legally in Nevada and others do so illegally through private sportsbooks nationwide. Even though some fans will be turned off by the acceptance and full embrace of gambling, the increase of fan interest overall will far outweigh this group.

Sports have always been intrinsically linked to the gambling industry, which only further increased with the rise in fantasy sports in the 2000s. As technology continues to evolve, people are offered an increasing amount of options in regard to how they spend their time. This ruling will give the sports industry another leg up in attracting a larger viewership, ranging from old to new fans who now have a vested interest in the results.

U.S. Sports Betting Legality- Profit Windfall for Leagues

Biotechnology startup Allogene Therapeutics debuted earlier this month as one of the largest startups in the field to go public since 2009. The initial public offering started at $18 per share, before surging over 30% on the first day of trading. At the midpoint of the target range of share prices, the firm commanded a market capitalization of $2.1 billion. Allogene amassed a $1 billion valuation after receiving over $400 million in initial proceeds to fund CAR-T therapies, potential anti-cancer fighting agents.

CAR-T therapies use cells from healthy donors rather than patients’ own cells. This means the cells do not have to be personalized for each patient and can instead be created in batches, leading to a cascade of effects—reduced costs and more readily available treatment for a greater number of patients. Robust results in earlier experiments point to a positive growth outlook for the company.

As is typical of many emerging biotechnology companies, Allogene has reported in its SEC registration filing that its product development is still speculative at this stage. The company is entailing significant upfront capital expenditure with the risk that future products will not reach an “acceptable safety profile, gain regulatory approval, and become commercially viable.”

Investing in newly public biotechnology startups has always been a risky venture for investors basing decisions off revenues and projected earnings, because many of these startups have little revenue and go public to raise additional funds for clinical trials. Despite the risks, investments are still flowing in rapidly. The pace of startup innovation is especially fast-moving today in the biotechnology industry—more biotechnology and healthcare startups have gone public this year than technology companies. The market is in a particularly bullish segment of the cycle for this industry, prompting the emergence of more companies.

Adding Allogene’s IPO to the 41 other U.S. stock listings by other life science companies this year brings the total to $4.3 billion raised. This is the highest amount since the excitement over gene therapies in 2000. As the results of previous years of investment and innovation lead to more developed curative therapies, venture capital money will flow in and pump life into biotechnology startups. Allogene is but one case in point for this burgeoning sector.

The Growth of Allogene and the Biotechnology Startup Sector

The financial technology arena is heating up as unregulated cryptocurrencies, digital tokens like Bitcoin that can be used as money without the backing of any country’s central bank, breed chaos and expose a need for international regulation. The Financial Action Task Force (FATF), Paris-based global watchdog for money laundering, is set to develop the first rules on cryptocurrency oversight in June. This is an important step toward creating global standards for an otherwise unfettered industry subject to patchwork approaches by different governments.

With impending concerns about fraud and unregistered business platforms trading cryptocurrencies, it follows that this emerging economy be subject to regulation. Many, including anti-money laundering lawyers and members of Congress, welcome the creation of international standards because the digital asset class is notorious for weak consumer protection and frequent security breaches. Lack of global coordination could be encouraging illicit use. Furthermore, as the digital money technology becomes increasingly more complicated, businesses may rely on a uniform set of rules to inform their financial practices and investments.

Still, others are apprehensive about rushing into normalized standards and want to proceed with caution, noting that extreme price volatility and regular exchange theft has defied historic regulatory approaches. In the world of cryptocurrencies, blockchain, and digital wallets, anonymity rules the day, and a user does not have to be the ultimate beneficial owner to proceed with coin exchanges, opening the door wide for fraudulent theft activities. In effect, developing a homogenous regulatory system will require creative reimagining of the finance industry to include genius technology, of which cryptocurrency is just one example.

Even in the face of standardized regulation, societal views and differences in technology access might impact regulation in action. In countries like China that subject their citizens to censored internet use, access to the technology might warrant strict regulation. On the other hand, countries like the U.S., which encourage individual autonomy, might want looser rules as a way of increasing business productivity and encouraging more participation from entrepreneurs and investors.

Cryptocurrencies Put a Fire Under Global Regulation

As evidenced by the large but temporary plummet in the U.S. stock market in 2010, later coined the “flash crash,” market manipulation has taken on a new and adaptive form. Earlier this month, the Department of Justice filed a lawsuit against Yuchun Mao, Kamaldeep Gandhi, and Krishna Mohan for commodities fraud and futures-spoofing. This spoofing scheme allegedly resulted in a 60 million-dollar loss among various market participants between 2012 and 2014. These allegations come amidst a wide-spread and targeted effort by the DOJ to crack down on the relatively new illicit practice of futures-spoofing.

With the adoption of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, spoofing, a mechanism that is used to systematically manipulate market prices by making fraudulent offers or bids without the intention to execute them, was deemed illegal. Not only does spoofing skew market prices in a matter of seconds, it deceives other traders, particularly those engaged in high-frequency trading, and results in many unexpected losses. In terms of federal regulation, while there were initial technological barriers that made it difficult to isolate instances of spoofing, intent was difficult to prove as traders often cancel bids or offers. However, as technology has progressed, this illegal trading practice has picked up steam, and the DOJ has taken notice.

Notwithstanding the difficulty of isolating intent, the DOJ has directed its efforts towards market research to isolate instances of spoofing and, ultimately, protect investors. Earlier this year, eight individuals were charged with spoofing-related allegations. Unfortunately, this is just one example of how rapidly-changing technology in conjunction with a profit-driven industry can spin out of control. While fluctuations are frequent in the common stock exchange, coordinated spoofing efforts have the capacity to cripple the market and diminish investor confidence. This puts pressure on the DOJ to reign in market manipulation and continue to focus its efforts towards producing technology that can efficiently isolate market irregularities.

Moreover, this new age of market manipulation will likely continue to place pressure on investment firms. In order to better protect their investors’ interests, investment firms should allocate resources towards internally regulating their trading practices in order to maintain trust and keep the DOJ at arms-length. Intentional efforts to keep traders from engaging in market manipulation will not only allow investment firms to escape potential liability but will aid in the DOJ’s efforts of protecting consumers and investors alike.

Spoofing – A New Age of Market Manipulation Means Work for the DOJ

The Saudi investment conference, nicknamed “Davos in the Desert,” took a hit after three Wall Street executives and dozens of top business leaders withdrew their attendance over the disappearance and murder of Jamal Khashoggi, a Saudi critic and Washington Post journalist. Some of those leaders were Jamie Dimon of JPMorgan, Stephen Schwarzman of Blackstone, Larry Fink of BlackRock, and Masayoshi Son of Softbank. The boycott’s main purpose was a call for an investigation into Khashoggi’s death and punishment of those involved. While business leaders chose to publicly boycott the conference, inaction was the U.S. Government’s predominant response, leaving some to question if CEOs are acting as the country’s new diplomats.

Davos in the Desert was created to attract foreign investment into the Saudi economy to assist Prince Mohammed bin Salman’s, who is suspected of ordering Khashogg’s killing, visions of economic reform and modernization of Saudi Arabia. The conference commenced on October 26 and is taking place at Riyadh’s Ritz-Carlton Hotel. The effects of the boycott were present during the first day of the conference. While many of the sessions were packed, others were sparsely attended. The question now is whether the boycott accomplished its supposed request for an investigation into Khashoggi’s death.

A more interesting question to ask is if the boycott will actually translate into an economic impact on Saudi Arabia or if it was just for show. Henry Hall, the associate director at Critical Resource, stated that his decision not to attend is separate from the prospect of investing in Saudi Arabia and that there are “huge economic opportunities in Saudi Arabia,” which companies need to balance along with reputational risks. Saudi Arabia is a top purchaser of Western weapons, generating billions in revenue for the U.S. The fear of straining business relationships with Saudi Arabia lead many companies to send lower-level executives in lieu of top executives, which seems to point towards a false boycott.

Distrust of the world’s business leaders’ morally grounded demonstration seems well placed. Considering that such a boycott could cause irreparable harm to the leaders’ business interests in Saudi Arabia, it is likely that their actions were just for show. Harming their business interest is not a well-known risk that business leaders take on grounds of morality. After all, another event overshadowed by the boycott and drenched in human rights abuses is the Yemen war created by Saudi Arabia and assisted by the U.S., which has led to Yemen’s most severe famine in 100 years. Are the CEOs planning to boycott Saudi Arabia on these grounds as well?

CEOs Are Americas New Diplomats