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Here’s what we’re watching:
• Italy’s political chaos could rock Europe’s finances.
• Congress doesn’t want to go easy on ZTE.
• Silicon Valley founders still want total control of their start-ups.
What the investor thinks can make the E.U. better
In an opinion piece written for Project Syndicate, the billionaire says that “everything that could go wrong has gone wrong” for Europe. His solution? The E.U. should reinvent itself, focusing on the biggest challenges that he thinks it faces, from immigration, austerity, and nations leaving the political bloc.
His suggested fix for the refugee crisis: no defined quotas for the numbers of immigrants that nations should accept, and an E.U.-led “Marshall Plan for Africa” that would help African governments to provide education and employment for citizens so as to reduce emigration.
But that runs counter to the E.U.’s current austerity drive, so Mr. Soros also suggests a way to help it spend more:
Without going into the details, I want to point out that the proposal contains an ingenious device, a special-purpose vehicle, that would enable the E.U. to tap financial markets at a very advantageous rate without incurring a direct obligation for itself or for its member states; it also offers considerable accounting benefits. Moreover, although it is an innovative idea, it has already been used successfully in other contexts, namely general-revenue municipal bonds in the US and so-called surge funding to combat infectious diseases.
Finally, to keep nations like Britain from leaving the E.U., Soros argues that the bloc must restyle itself as a club that it’s attractive to belong to:
Such a Europe would differ from the current arrangements in two key respects. First, it would clearly distinguish between the EU and the eurozone. Second, it would recognize that the euro has many unsolved problems, which must not be allowed to destroy the European project.
All this, Mr. Soros argues, could create a union where countries are both able to assert their sovereignty while also collaborating on joint goals more effectively.
Continue reading the main story— Jamie Condliffe
BMC has a new private equity owner
The investment firm KKR said on Tuesday that it plans to buy the enterprise software company BMC. It’s just five years since BMC sold itself to another group of investors for $6.9 billion. Terms of the new deal weren’t disclosed.
“With more than 10,000 customers and 6,000 employees, BMC is a global leader in managing digital and I.T. infrastructure with a broad portfolio of software solutions,” Herald Chen, the head of KKR’s technology, media and telecom team, and John Park, another KKR executive, said in a statement.
The context: The transaction is the latest instance of a private equity firm buying from another, rather than pursuing the takeover of a fresh target. Why is that? Investors have complained in recent years that the valuations of public companies have grown too steep, making the potential returns from acquiring them unattractive.
In this case, KKR is buying BMC from Bain Capital, Golden Gate Capital, Singapore’s G.I.C. sovereign wealth fund, Insight Venture Partners and Elliott Management.
The advisers on the deal:
For BMC: Goldman Sachs, Credit Suisse, Morgan Stanley and the law firm Kirkland & Ellis.
For KKR: Macquarie Capital and the law firm Simpson Thacher & Bartlett.
Financing will come from Credit Suisse, Goldman Sachs, Jefferies, Macquarie and Mizuho.
— Michael J. de la Merced
Starbucks wants to serve up less bias with its lattes
The coffee shop giant will close 8,000 stores for four hours this afternoon. Why? To put employees through racial bias training. The move has drawn jeers, but Andrew argues it’s a laudable effort — if only because so few American corporations have been willing to tackle race issues.
More from Andrew’s latest column:
Having spoken with senior executives at many large American companies, I found it hard to find one that has taken on the issue of race so directly, with so many employees. Other corporations have programs to improve race relations and have spent money on diversity programs, especially for those in the senior ranks. Some, including Facebook and Google, have included implicit bias training. But few, if any, have taken as sweeping an approach as Starbucks will on Tuesday.
The big question: Will anyone else follow Starbucks? Or will they take the N.F.L.’s lead and ban discussions of race at work?
A mind-control start-up (really) raises $28 million
CTRL-Labs, a three-year-old start-up whose co-founders include the creator of Microsoft’s Internet Explorer browser, has a vision of how humans could one day interact with computers: It’s making an armband that reads electrical impulses sent from users’ brains to their fingers.
“If we can recreate virtually what the hand is doing, then we’ve captured all the information that’s coming out of the muscles themselves,” Thomas Reardon, a CTRL-Labs co-founder and the Internet Explorer creator, told me in an interview. (Mr. Reardon argued that smartphones actually represented a step backward, introducing an imperfect way to control computers even as it let consumers gobble up more information.)
And the start-up has signed up some heavyweight investors. In this round: Lux Capital and Google’s GV venture arm, as well as Paul Allen’s Vulcan Capital, Peter Thiel’s Founders Fund, and Amazon’s Alexa Fund.
Josh Wolfe of Lux Capital told me, “The gap between sci-fi and sci-fact keeps shrinking.”
The big question
I saw a demo of the device, where Patrick Kaifosh, another CTRL-Labs co-founder played Asteroids by just thinking. And another employee sent a somewhat creepy-looking spider robot across a table without moving a finger.
But brain-computer interfaces are notoriously hard to push out of prototype. Can CTRL-Labs do it? And will developers and consumers buy in if they can?
— Michael de la Merced
Italy’s political chaos could rock Europe’s finances
European markets were down this morning after Italy’s president, Sergio Mattarella, refused to confirm a euroskeptic economist as finance minister, pushing the recently elected governing coalition into collapse.
The context: Italy will have another election, one that could turn into a referendum on whether it stays in the euro. Rating agencies are worried.
Critics’ corner: The problem with problems like this in Europe is that they’re allowed to drag on, Peter Eavis argues.
Europe has a tough new data law. No, not G.D.P.R.
All eyes have been on the E.U.’s sweeping new digital privacy rules. But an even stricter set of laws known as ePrivacy — meant to come in at the same time as the General Data Protection Regulation, but slowed down by disagreements among officials — could give tech companies still larger headaches.
More from Natasha Singer of the NYT:
The legislation currently provides only one condition under which a company may use data or metadata about users’ electronic communications: obtaining consumers’ explicit and informed permission to use their information for a specific, agreed-upon purpose. The bill also requires companies to offer people the same communications services whether or not they agree to have their data collected.
Unsurprisingly, companies and trade associations are trying to derail those rules.
Elsewhere in E.U. privacy news: G.D.P.R. will force companies to be more upfront about the extent of cyber attacks. But it could also get in the way of security researchers and law enforcers. (Bonus: the “I Love G.D.P.R.” playlist that’s all over Spotify.)
The political flyaround
• Stormy Daniels’s lawyer, Michael Avenatti, is said to be slowing down the federal investigation into Michael Cohen. (WSJ)
• The U.S. has reportedly signaled willingness to settle with Europe over a recent W.T.O. ruling on subsidies to Airbus. But don’t expect the two sides to agree about steel tariffs anytime soon.
• Britain’s Treasury and the Bank of England are reportedly at odds over how to regulate financial services after Brexit. (FT)
• The Department of Homeland Security plans to eliminate the international entrepreneur program, which is supposed to let immigrant start-up founders stay in the U.S. for up to five years. (TechCrunch)
Congress doesn’t want to go easy on ZTE
The White House may be exploring ways to lift penalties on the Chinese telecom company, but Congress appears opposed to any such leniency. Senator Marco Rubio said on Sunday that a veto-proof supermajority of lawmakers would back a ban on ZTE and peers like Huawei.
Much rides on the fight. Beijing is reportedly finally ready to approve Qualcomm’s $44 billion acquisition of fellow chip maker NXP Semiconductors — if the ZTE ban is lifted.
Behind the scenes: Critics suggest President Trump’s desire to go easy on ZTE may contain an element of self-interest — Beijing granted Ivanka Trump several trademarks right around the time the White House announced its plans.
Silicon Valley founders still want total control
A new generation of tech entrepreneurs shows little sign of giving up the kinds of dual-class shares that let Mark Zuckerberg and Larry Page keep a grip on their companies. Some are seizing even more power, say Rolfe Winkler and Maureen Farrell of the WSJ, giving WeWork as an example:
C.E.O. Adam Neumann, who has 65 percent voting control, is one of two members of his board’s compensation committee, along with longtime company investor Benchmark, according to WeWork’s recent bond-offering documents.
Venture capitalists have surrendered some oversight of many companies they’ve invested in just to maintain relationships with them.
The deals flyaround
• Verizon and others have reportedly asked several times whether the Redstones might sell CBS. (WSJ)
• The owner of Pret A Manger sold the British sandwich chain to JAB Holdings, the deal-hungry food conglomerate, for £1.5 billion (about $2 billion). (FT)
• SoftBank has ended talks about potentially investing in Swiss Re. (AP)
• The software maker Verint is reportedly close to a deal to buy NSO, an Israeli cybersecurity company, for about $1 billion. (WSJ)
• The C.E.O.s of big European banks think that they might need to merge to stay competitive. (FT)
• A flood of start-ups is poised to go public in Hong Kong, but they may have a hard time hitting their expected valuations. (Bloomberg Opinion)
The tech flyaround
• Intel is reportedly being investigated over age-discrimination claims. (WSJ)
• Hackers may have stolen personal details of 90,000 customers at two big Canadian banks. (Reuters)
• What will help Apple hit its $1 trillion market cap? Maybe not the iPhone. (FT)
• Airbus is creating a division devoted to futuristic transport like flying taxis. (Bloomberg)
• Robots, smart lighting, and AI assistants. Not your home, but the operating room of the future. (WSJ)
• How JPMorgan Chase is seeking ways to work with cryptocurrency hacker types. (Fortune)
• The FBI asks that you turn your router off, then on again. (NYT)
Quote of the Day
“It’s just not going to happen.”
— Troy Taylor, the C.E.O. of Coca-Cola’s bottler in Florida, on whether the U.S. would see broad-based wage rises again.
The speed read
• After eight years of budget-cutting, Britain looks less like the rest of Western Europe and more like the U.S., with a shrinking welfare state and growing poverty. (NYT)
• Government investigators found that executives of Purdue Pharma, which makes OxyContin, concealed information about opioid abuse. (NYT)
• What unites Barron’s 30 best C.E.O.s? The cloud, and smart buyouts. (Barron’s)
• Think big banks have given up on coal? Nope. (NYT)
• Graduate applications for bank jobs are soaring, even at Deutsche Bank. (FT)
• De Beers hopes lab-grown diamonds will help it break into mass-market jewelry. (NYT)
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