Warren Buffett famously said that it takes 20 years to build a reputation and five minutes to ruin it.
Mark Zuckerberg is finding this to his significant personal cost as the Facebook founder endured another torrid day yesterday in the aftermath of the data leak that saw 50 million users’ data end up in the hands of Cambridge Analytica.
Firstly, he was summoned in a strongly-worded letter by Damian Collins, chairman of the digital, culture, media and sport committee, to appear before the committee at Westminster to give an “accurate account” of what he labelled a “catastrophic failure of process”. This after having roundly ticked off other officials at the social media company for previously “misleading” parliament over the risk of data being taken without users’ consent.
No sooner had Collins’ letter landed in Zuckerberg’s inbox when a similar one arrived from the Federal Trade Commission. The US regulators are demanding answers on how the consultancy firm from the UK obtained such a wealth of personal data, mostly of US voters.
The international scrutiny has unsurprisingly left investors jittery, and the ‘Great Facebook Sell-off’ entered a second day yesterday. Shares closed down 2.6%, which followed a near 7% drop 24 hours earlier. This means the company has seen more than $40bn wiped from its value, which roughly equates to the entire size of the economy in Lithuania. Zuckerberg himself has lost around $5bn.
The situation is also a worry for the wider industry. Twitter and Snapchat were not immune to yesterday’s falls, likely as a consequence that the model of targeted ads in which these platforms are built is under severe threat.
So, what does this all mean for you, me and the millions of others who use social media every day? Is our democracy in danger of falling into the hands of tech firms that know too much? Not necessarily, according to some. Tom Whipple, science editor at The Times says while it has been proved that they have much information, actually knowing how to use it to influence and persuade complex minds is another leap that has so far not been made with any great success.
And what next for Zuckerberg? Long considered a presidential candidate for 2020, it might be the case that it was indeed a Trump campaign that ended his hopes for a run at the White House, only it happened to come four years before he expected to square up to him.
The pay cap that has been imposed on the NHS for the past eight years is to be lifted later today, with government negotiators and trade unions expected to agree a 6.5% increase over the next three years. The deal will include nurses, midwives, healthcare assistants and paramedics, and will cost around £3bn. Doctors will not be included in the agreement.
Jean-Claude Junker has come under criticism for a “nauseating” letter to Vladimir Putin, where he congratulated him after his election victory over the weekend. Ashley Fox, leader of the Conservative group of MEPs, said the letter from the president of the European Commission wishing Putin “every success” in his fourth term as president and omitting any mention of the Salisbury poisonings, amounted to appeasement. Donald Trump also failed to raise the suspected poisoning of a former Russian spy when he spoke with Putin yesterday.
“Self-confidence” was the reason North Korea decided to advance talks with South Korea and the US, according to the country’s state media. The KCNA editorial criticised "small-minded" detractors who questioned North Korea's motives, with some commentators believing strong sanctions were the primary motive for Kim Jong-un to seek talks.
Business & Economy
A plan by Aviva to cancel £450m of preference shares, many of which are owned by pensioners and charities, has been attacked by some of the City’s biggest investors. A group consisting of M&G Prudential, Invesco, GAM, Blackrock, Legal & General and Eden Tree met with Aviva Chairman Sir Adrian Montague to demand the insurer withdraw its proposal to cancel three issues of preference shares which pay an average of 8.5% annually. Cancelling preference shares is seen as a popular option when interest rates are low and a benign economic environment as it allows for expensive debt to be replaced with a cheaper form of funding. (£)
A draft EU document has illustrated that the post-Brexit relationship with the UK financial services industry would be on an "improved equivalence" basis, a system Philip Hammond rejected two weeks ago. The EU had previously said financial services would not be included with goods in any free trade deal, while the Chancellor rejected any form of equivalence on the basis that it would make the UK a rule-taker.
The US Department of Commerce has imposed anti-dumping duties of nearly 150% on imports of carbon and alloy steel wire rod from Britain, as Donald Trump continued to escalate his trade war on British products. The tariffs are subject to final determinations by the US International Trade Commission, which normally sides with the commerce department. However, they have diverged in the past, most notably last year when they ruled differently in the Bombardier dispute. (£)
What happened yesterday?
The FTSE 100 ended the day yesterday 33.48 points higher at 7,076.41, a rise of 0.48%.
Tourism company, Tui, led the risers after it announced its intention to grow its TUI Cruise business from 15 to 18 vessels over the next five years, while continuing the modernisation of its current fleet. This news boosted shares by 2.4%.
Across the pond, all eyes will be on Jay Powell today as he chairs his first meeting of the Federal Reserve. Powell is excepted to preside over his first interest rate rise, though investors are likely to be more interested in hearing how they intend to stop the economy from overheating given the buoyant labour market and enormous fiscal stimulus being delivered by Congress.
On the currency markets, the pound remained steady despite an inflation report that showed prices were rising at a slightly slower pace than had been expected. As the close of trading approached, it was down just 0.1% against the dollar at $1.4011.
Accesso Technology Group
Alpha Fx Group
Brave Bison Group
Empiric Student Property
International Public Partnerships Ltd.
Personal Group Holdings
PJSC PhosAgro GDR (Regs)
Premier Technical Services Group
Science In Sport
Ten Entertainment Group
UK Economic Announcements
(09:30) Claimant Count Rate
(09:30) Public Sector Net Borrowing
(09:30) Unemployment Rate
(11:00) CBI Industrial Trends Surveys
Intl. Economic Announcements
(11:00) MBA Mortgage Applications (US)
(12:30) Current Account (US)
(14:00) Existing Home Sales (US)
(14:30) Crude Oil Inventories (US)
Columns of Note
Martin Wolf, chief economics commentator at the Financial Times, says the purpose of economics is to understand what might go wrong with an economy and how best to restore it to health when things do indeed head in this direction. Wolf says the discipline was caught unawares ahead of the financial crisis a decade ago, which he finds unsurprising as an analysis of fundamental macroeconomic theory suggests substantial ignorance of how our economies work. Wolf concludes by saying that economies must be more resilient to the “consequences of manias and panics”.
Writing in The Times, Daniel Finkelstein says it is now time for online communication to be regulated. Finkelstein says we have become “so dazzled by technological development that we have often thought of online communication as another world”, but it has grown to such an influence and maturity that it now needs new rules. (£)
Did you know?
90% of the data in the world today has been created in the last two years alone, at 2.5 quintillion bytes of data a day. With new devices, sensors, and technologies emerging, the data growth rate is likely to accelerate even more.
House of Commons
Prime Ministers’ Question Time
Proceedings on the Northern Ireland (Miscellaneous Provisions) Bill
House of Lords
European Union (Withdrawal) Bill - Committee stage (day 9) - Lord Callanan
Tactic of undercover police officers forming sexual relationships to develop their cover stories - Baroness Jones of Moulsecoomb
Government's human rights priorities for the communiqué of the Commonwealth Summit in April 2018 - Baroness Berridge
Guidance for Clinical Commissioning Groups providing medical respite care for seriously ill and disabled children - Baroness Brinton
UN International Day for the Elimination of Racial Discrimination
Communities, Social Security and Equalities
Stage 3 Proceedings
UK Withdrawal from the European Union (Legal Continuity) (Scotland) Bill
House of Commons
Digital, Culture, Media and Sport (including Topical Questions)
House of Lords
Power to call for evidence of the Government's review of press sustainability in the UK - Lord Stevenson of Balmacara
Permitting US companies to bid for NHS contracts as part of any future UK–US trade deal - Lord Brooke of Alverthorpe
Establishing a statutory regulator of media advertising - Baroness Hayter of Kentish Town
First Minister's Questions
Scottish Government Debate: Building Greater Fairness in the Workplace