Home modems, routers hit by U.S. China tariffs as 'smart' tech goods escape

WASHINGTON (Reuters) – U.S. tariffs that hit some $200 billion worth of Chinese products on Monday spare many high-profile consumer technology items such as “smart” watches and speakers, but the less flashy home modems, routers and internet gateways that make them work weren’t so lucky.

FILE PHOTO: U.S. President Donald Trump delivers his speech next to U.S. and Chinese flags as he and Chinese President Xi Jinping meet business leaders at the Great Hall of the People in Beijing, China, November 9, 2017. REUTERS/Damir Sagolj/File Photo

Consumer tech industry officials and the U.S. Customs and Border Protection agency say they expect billions of dollars worth of these products, including those designed for home use, will be subject to the 10 percent tariffs activated on Monday.

The move will effectively create a two-tiered tariff structure for consumer internet, with many products, such as Fitbit (FIT.N) fitness trackers, Apple Inc’s (AAPL.O) watch and Amazon.com Inc’s (AMZN.O) Echo smart speaker being favored over routers and internet gateways from Arris International (ARRS.O), Netgear (NTGR.O), D-Link (2332.TW) and others.

“We’re operating under the assumption that the tens of millions of devices that deliver high-speed internet into consumers’ homes will be impacted by these tariffs,” said Jim Brennan, Arris’ senior vice president of supply chain, quality and operations.

“It feels anti-consumer because our devices are what enables the core of consumer tech,” Brennan told Reuters.

The modems, routers, switching and networking gear that keep the internet functioning were not included in a newly created U.S. tariff code that was exempted from the latest China tariffs, a spokesperson for the U.S. Customs and Border Protection agency said.

The agency has made no distinction between consumer-use modems and routers and the commercial network equipment used by data centers and broadband internet providers.

Most new internet-connected devices had been lumped into a broad category in the U.S. Harmonized Tariff Schedule, 85176200, “Machines for the reception, conversion and transmission or regeneration of voice, images or other data, including switching and routing apparatus.”

The catch-all category saw $23 billion in U.S. imports from China and $47.6 billion from the world last year. It was the largest component of U.S. President Donald Trump’s latest tariffs targeting Chinese goods.

The U.S. Trade Representative’s office had said it was breaking out items such as smart watches, fitness trackers, Bluetooth audio streaming devices and smart speakers into a new subcategory that would be exempted, but it gave few details.

According to a notice posted by the U.S. International Trade Commission, computer modems would stay in a separate sub-category, while “switching and routing apparatus” would be put into a new sub-category. Neither of these sub-categories were granted exemptions from the tariffs.

“Although we have not had occasion to issue rulings on the scope of a provision for ‘switching and routing apparatus,’ we agree that as a general matter, modems, routers, and networking equipment will be subject to the remedy,” a Customs and Border Protection spokesperson said late on Friday, referring to the 10 percent tariff.

It was not clear how much of the $23 billion in Chinese imports within the catch-all category could escape tariffs, but a Reuters review of industry data suggests the share could be small.

U.S. Census Bureau data has not yet captured the volume of annual imports from China — or any country — of the goods that will be exempt.

But the Consumer Technology Association estimates that the U.S. market for fitness trackers, smart watches, smart speakers and wireless earbuds and headphones was $8.2 billion in 2017, with forecast sales of $11.6 billion for 2019.

Even if China produced a majority of those goods, exemptions would only apply to a fraction of the $23 billion category.

CTA has forecast direct sales of modems and routers to consumers at $2.3 billion for 2019, up from $2 billion in 2017, excluding the products supplied directly by cable and broadband internet providers and equipment used in data centers and other infrastructure outside the home.

But the group argues that consumers will bear the costs of the tariffs, even if their service provider buys the modems.

“Overall, access to the internet will get more expensive, mobile plans will get more expensive, and connected devices that go to your smart phones will get more expensive because everything speaks to each other,” said Izzy Santa, director of strategic communications for CTA.

Additional reporting by Jason Lange in Washington and Stephen Nellis in San Francisco; Editing by Michael Perry

The night a Chinese billionaire was accused of rape in Minnesota

MINNEAPOLIS/NEW YORK (Reuters) – With the Chinese billionaire Richard Liu at her Minneapolis area apartment, a 21-year-old University of Minnesota student sent a WeChat message to a friend in the middle of the night. She wrote that Liu had forced her to have sex with him.

JD.com founder Richard Liu, also known as Qiang Dong Liu, is pictured in this undated handout photo released by Hennepin County Sheriff’s Office, obtained by Reuters September 23, 2018. Hennepin County Sheriff’s Office/Handout via REUTERS

“I was not willing,” she wrote in Chinese on the messaging application around 2 a.m. on August 31. “Tomorrow I will think of a way to escape,” she wrote, as she begged the friend not to call police.

“He will suppress it,” she wrote, referring to Liu. “You underestimate his power.”

This WeChat exchange and another one reviewed by Reuters have not been previously reported. One of the woman’s lawyers, Wil Florin, verified that the text messages came from her.

Liu, the founder of Chinese ecommerce giant JD.com Inc, was arrested later that day on suspicion of rape, according to a police report. He was released without being charged and has denied any wrongdoing through a lawyer. He has since returned to China and has pledged to cooperate with Minneapolis police.

Jill Brisbois, a lawyer for Liu, said he maintains his innocence and has cooperated fully with the investigation.

“These allegations are inconsistent with evidence that we hope will be disclosed to the public once the case is closed,” Brisbois wrote in an email response to detailed questions from Reuters.

Loretta Chao, a spokeswoman for JD.com, said that when more information becomes available, “it will become apparent that the information in this note doesn’t tell the full story.” She was responding to detailed questions from Reuters laying out the allegations in the woman’s WeChat messages and other findings.

Florin Roebig and Hang & Associates, the law firms representing the woman, said in an email that their client had “fully cooperated” with police and was also prepared to assist prosecutors. Florin, asked if his client planned to file a civil suit against Liu, said, “Our legal intentions with regard to Mr. Liu and others will be revealed at the appropriate time.”

Representatives for both Liu and the student declined requests from Reuters to interview their clients.

The police department has turned over the findings of its initial investigation into the matter to local prosecutors for a decision on whether to bring charges against Liu. There is no deadline for making that decision, according to the Hennepin County Attorney’s Office.

The Minneapolis police and the county attorney declined to comment on detailed questions from Reuters.

Reuters has not been able to determine the identity of the woman, which has not been made public. But her WeChat messages to two friends, and interviews with half a dozen people with knowledge of the events that unfolded over a two-day period provide new information about the interactions between Liu and the woman, a student from China attending the University.

JD.com founder Richard Liu, also known as Qiang Dong Liu, is pictured in this undated handout photo released by Hennepin County Sheriff’s Office, obtained by Reuters September 23, 2018. Hennepin County Sheriff’s Office/Handout via REUTERS

The case has drawn intense scrutiny globally and in China, where the tycoon, also known as Liu Qiangdong, is celebrated for his rags-to-riches story. Liu, 45, is married to Zhang Zetian, described by Chinese media as 24-years old, who has become a celebrity in China and works to promote JD.com.

As the second-largest ecommerce website in the country after Alibaba Group Holding Ltd, the company has attracted investors such as Walmart Inc, Alphabet Inc’s Google and China’s Tencent Holdings.

Liu holds nearly 80 percent of the voting rights in JD.com. Shares in the company have fallen about 15 percent since Liu’s arrest and are down about 36 percent for the year.

“IT WAS A TRAP”

Liu was in Minneapolis briefly to attend a business doctoral program run jointly by the University of Minnesota’s Carlson School of Management and China’s elite Tsinghua University, according to the University of Minnesota. The doctoral program is “directed at high-level executives” from China.

Liu threw a dinner party on August 30 for about two dozen people, including around 20 men, at Origami Uptown, a Japanese restaurant in Minneapolis where wine, sake and beer flowed freely, according to restaurant staff and closed circuit video footage reviewed by Reuters.

Liu, who Forbes estimates is worth about $6.7 billion, ordered sashimi by pointing his finger at the first item on the menu and sweeping it all the way down to indicate he wanted everything, one restaurant employee said. The group brought in at least one case of wine from an outside liquor store to drink along with the dinner, according to the restaurant staff.

Security video footage from the restaurant shows the group toasted each other throughout the night.

Later the woman told a second friend in one of the messages that she felt pressured to drink that evening.

“It was a trap,” she wrote, later adding “I was really drunk.”

The party ended around 9:30 p.m. The tab: $2,200, the receipt shows. One inebriated guest was helped out of the restaurant by three of his associates, according to the restaurant security video footage.

Liu and the woman then headed to a house in Minneapolis, according to one person familiar with the matter. Another source said that the house had been rented by one of Liu’s classmates in the academic program to give the class a place to network, smoke, drink whiskey and have Chinese food every night.

But they did not go in. Liu and the student were seen outside the house before Liu pulled her into his hired car, a person with knowledge of the incident said.

In the WeChat message to one of her friends sent hours later, the student said Liu “started to touch me in the car.”

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“Then I begged him not to… but he did not listen,” she wrote.

They ended up back at her apartment, according to sources with knowledge of the matter.

Reuters could not determine what happened over the next two hours. According to the police report, the alleged rape occurred at around 1 a.m.

The woman subsequently reached a fellow University of Minnesota student who notified the police, according to two sources and her WeChat messages.

Minneapolis police came to her apartment early that morning while Liu was there, but made no arrests, another source familiar with the situation said. Reuters could not determine exactly what occurred during the police visit, but the source said the woman declined to press charges in Liu’s presence.

In a WeChat message with one of her friends, she asked her friend why the billionaire would be interested in “an ordinary girl” like her.

“If it was just me, I could commit suicide immediately,” she wrote. “But I’m afraid that my parents will suffer.”

By Friday morning, she also wrote to one of her two friends that she had told several people about what had happened, including the police, a few friends and at least one teacher. She wrote that she would keep her bed sheets. “Evidence cannot be thrown away,” she wrote.

On Friday afternoon, the student went to a hospital to have a sexual assault forensic test, the source said.

Police officers arrived at a University of Minnesota office shortly after an emergency call around 9 p.m that night. The student was present at the office, alongside school representatives, and accused Liu of rape, the source said.

Representatives for the University of Minnesota declined to comment on detailed questions from Reuters.

Liu came to the university office around 11 p.m. while police were there, according to the person familiar with the matter. As an officer handcuffed him, Liu showed no emotion. “I need an interpreter,” he said, according to the source.

Liu was released about 17 hours later. Minneapolis police have said previously that they can only hold a person without charges for 36 hours.  

Within days, Liu was back in China, which has no extradition treaty with the United States.

“Liu has returned to work in Beijing and he continues to lead the company. There is no interruption to JD.com’s day-to-day business operations,” Loretta Chao, the JD.com spokeswoman, told Reuters.

Additional reporting by Blake Morrison and Christine Chan in New York, Adam Jourdan and Engen Tham in Shanghai, and Cate Cadell in Beijing; Editing by Paritosh Bansal and Edward Tobin

Asian firms shuffle production around the region as China tariffs hit

SEOUL/TOKYO (Reuters) – A growing number of Asian manufacturers of products ranging from memory chips to machines tools are moving to shift production from China to other factories in the region in the wake of U.S. President Donald Trump’s tariffs on Chinese imports.

FILE PHOTO: Mobile memory chips made by chipmaker SK Hynix are seen in this picture illustration taken in Seoul May 10, 2013. REUTERS/Lee Jae-Won/Illustration/File Photo/File Photo

Companies including SK Hynix of South Korea and Mitsubishi Electric, Toshiba Machine Co. and Komatsu of Japan began plotting production moves since July, when the first tariffs hit, and the shifts are now under way, company representatives and others with knowledge of the plans told Reuters. Others, such as Taiwanese computer-maker Compal Electronics and South Korea’s LG Electronics, are making contingency plans in case the trade war continues or deepens.

The company representatives and other sources spoke on condition of anonymity because of the sensitivity of the issue.

The quick reactions to the U.S. tariffs are possible because many large manufacturers have facilities in multiple countries and can move at least small amounts of production without building new factories. Some governments, notably in Taiwan and Thailand, are actively encouraging companies to move work from China.

The United States imposed 25 percent duties covering $50 billion of Chinese-made goods in July, and a second round of 10 percent tariffs covering another $200 billion of Chinese exports will come into effect next week. The latter rate will jump to 25 percent at the end of the year, and Trump has threatened a third round of tariffs on $267 billion of goods, which would bring all of China’s exports to the United States into the tariff regime.

FILE PHOTO: A logo of Mitsubishi Electric Corp is pictured at CEATEC (Combined Exhibition of Advanced Technologies) JAPAN 2016 at the Makuhari Messe in Chiba, Japan, October 3, 2016. REUTERS/Toru Hanai/File Photo

The tariffs threaten China’s status as a low-cost production base that, along with the appeal of the fast-growing China market, drew many companies to build factories and supply chains in the country over the past several decades.

At SK Hynix, which makes computer memory chips, work is under way to move production of certain chip modules back to South Korea from China. Like its U.S. rival Micron Technology, which is also moving some memory-chip work from China to other Asian locations, SK Hynix does some of its packaging and testing of chips in China, with the chips themselves mostly made elsewhere.

“There are a few DRAM module products made in China that are exported to the United States,” said a source with direct knowledge of the situation, referring to widely used dynamic random-access memory chips. “SK Hynix is planning on bringing those DRAM module products to South Korea to avoid the tariff hit.”

Most of SK Hynix’s production won’t be affected, the source added, since China’s dominance in computer and smartphone manufacturing makes it by far the largest market for DRAM chips.

Toshiba Machine Co says it plans to shift production of U.S.-bound plastic moulding machines from China to Japan or Thailand in October.

The machines are used for making plastic components such as automotive bumpers. “We’ve decided to shift part of our production from China because the impact of the tariffs is significant,” a spokesman said.

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Mitsubishi Electric, meanwhile, says it is in the process of shifting production of U.S.-bound machine tools used for metal processing from its manufacturing base in Dalian, in northeastern China, to a Japanese plant in Nagoya.

In Taiwan, an executive at notebook PC maker Compal, who declined to be named, said the trade war’s impact had been limited so far, but the company was studying its options.

“We can also use facilities in Vietnam, Mexico and Brazil as alternatives,” the person said. “It won’t be easy because our majority production is in China; no other country can replace that at this moment.”

Smaller companies are exploring their options too. South Korean medical equipment manufacturer IM Healthcare, which makes products including air purifiers, is studying a move to Vietnam or South Korea if the trade conflict intensifies, a source with direct knowledge of the matter said.

Some Asian governments hope for an economic and strategic boost from the U.S.-China conflict. In Taiwan, the government is actively encouraging companies to move production out of China, pledging last month to speed up its existing “Southbound Policy” to reduce economic reliance on China by encouraging companies to move supply chains to Southeast Asia.

Taiwan economics ministry official William Liu told Reuters that the trade war was “a challenge and an opportunity” for the self-ruled island. Taiwan depends on China as an export market, he noted, but at the same time could see a boost in jobs from companies moving operations back home.

Thailand also hopes to benefit from the “flow of technology and investment leaving China during the trade war”, said Kanit Sangsubhan, Secretary-General of the Eastern Economic Corridor (EEC) Office of Thailand, which is coordinating a $45 billion project to attract investment into the country. The EEC last month took some 800 representatives of Chinese companies on a tour around the eastern industrial heartland, and the country’s Board of Investment has done seven roadshows in China this year to woo investors.

Reporting by Ju-min Park and Heekyong Yang in Seoul and Makiko Yamazaki in Tokyo; Additional reporting by Jess Macy Yu and Yimou Lee in Taipei, Patpicha Tanakasempipat in Bangkok, Sankalp Phartiyal in Mumbai and Fanny Potkin in Jakarta; Writing by Jonathan Weber; Editing by Alex Richardson

Jeff Bezos Just Revealed How the 'Smartest Guy at Princeton' Radically Changed His Life 34 Years Ago. (He Never Knew Until Now)

Do you ever wonder if you’ll have a lasting effect on the world?

But the truth is, your greatest impact might turn out to be something you never realize. 

The kind gesture to someone when he or she needs it most. The example you give to someone that leads them to pursue what turns out to be their calling.

Jeff Bezos just revealed the story behind one such person in his life.

It’s a 34-year-old tale, involving a college classmate he describes as “a humble, wonderful guy … the smartest guy at Princeton.” And as often happens, this classmate had no idea that Bezos even remembered him, until Bezos talked about him this week.

The story goes like this. When Bezos was in high school and college, he had his heart set on becoming a theoretical physicist. He enrolled at Princeton as a member of the class of 1986, one of about 20 students in the elite electrical engineering and computer science (EECS) program. 

Bezos fit right in. But although he was clearly very intelligent (he’d been the valedictorian of his high school class, and a National Merit Scholar), he by no means thought of himself as the smartest student in the program.

That honor, in his mind, went to a fellow student named Yasantha Rajakarunanayake, from Sri Lanka. And Bezos shared the moment that became truly clear.

He and his roommate, Joe, Bezos explained, had been working together for three hours on a particularly difficult partial differential equation, and getting nowhere. So they brought it to Yasantha.

He stared at it for a couple of minutes and came up with the answer without even writing anything down: “Cosine.”

Then he walked Bezos and Joe through the problem, writing three full pages of detailed algebra. Years before, he’d solved a similar problem years, Yasantha explained, and he remembered how he’d done it. So, he’d just “mapped this problem on to that problem.”

To him, the answer had been “obvious.”

“That was an important moment for me, because it was the very moment I realized I was never going to be a great theoretical physicist,” Bezos recalled in his talk. 

People laughed. And it’s funny of course to think that if Yasantha and Bezos hadn’t had that exchange, perhaps Amazon wouldn’t be exactly what it is today.

But of course that’s pretty theoretical. Instead, I think the real lesson from this story is Yasantha Rajakarunanayake’s take on it today.

The two men hadn’t talked since Princeton. Bezos also recalled him as “humble” and “wonderful,” but Rajakarunanayake had no reason to think that Bezos particularly remembered him-;certainly hadn’t known that he’d had any kind of impact that Bezos considered important.

And he was clearly proud.

“Wow! Jeff is talking about me,” Rajakarunanayake wrote on Twitter. “Amazingly he remembers interacting with me 34 years ago. What a memory! Also no Amazon if it weren’t for this, since he decided not to pursue physics!”

He continued: 

“Back in college, Jeff and I were just fellow students, and no one could have predicted what future would hold for us. Jeff remembers me as smart, humble and speaks fondly simply because I helped him with his homework.”

But Rajakarunanayake also had an insight into why Bezos went on to become the world’s wealthiest person.

Because remember-;Bezos had spent three hours trying to solve that problem before asking for help. And Rajakarunanayake recalled another time when Bezos stayed up all night working on another project, ultimately finding a solution that was better than the one Rajakarunanayake had come up with.

“Jeff was an excellent student, and a very persistent, tenacious one. That is unique to him,” he recalled to an Indian newspaper, The Print. He “will not give up like most of us would when presented with a challenge.”

That’s probably the ultimate combination: not just smart, not just tenacious, but both together in a single package. And that’s as good an explanation as any for why Bezos built Amazon, and you and I didn’t.

By the way, Yasantha Rajakarunanayake is doing fine. He went on after Princeton to earn a doctoral degree at ​Caltech, “and received 54 patents in the U.S.” with 40 others currently pending, according to The Print. “Currently, he is based in California and serves as a senior director for MediaTek, a Taiwanese semiconductor firm.”

7 Things Introverts Wish Extraverts Knew

As I pointed out a few columns ago, introverts tend to be more creative, more reliable, more trustworthy and to work harder than extraverts. Not surprisingly the great inventors and innovators of history have been markedly introverted: Einstein, Bill Gates, Mark Zuckerberg, Elon Musk, Isaac Newton, Nikola Tesla, Archimedes, and Charles Darwin.

Insanely, though, contemporary business culture values extraversion.  They hire people based upon first impressions (extraverts are good at that), goal them on “collaborating” (which extraverts love) and then spending billions of dollars creating open plan playgrounds perfectly suited for extraverts.

As I said, insane. Or maybe “inane” is the mot juste.  

Anyway, because of the egregious management boneheadedness, most workplaces are dominated by extraverts… to the great detriment of both productivity and innovation. However, since, alas that’s not likely to change any time soon, introverts and extraverts will need to learn how to get along.

Unfortunately, while introverts can see right through extraverts, extraverts simply don’t seem to grok introverts at all. So, since I’m off-the-scale introverted, I’ll take in on myself to speak for my fellow introverts to tell the extraverts what we wish they already knew. Here goes:

1. You’re talking too much.

Introverts are good listeners but the fact that we’re listening to you and not saying anything doesn’t mean that we’re enthralled by everything you’re saying. Quite the contrary. If you’ve been talking for more than a couple of minutes without pause, we’ve mentally proceeded from “What a bore!” to “OMG, will he never stop talking!?” to “For God’s sake, STFU!!” We’re not going to say anything, though, because if we did, we would never hear the end of it.

2. We don’t want to change.

Even though it’s abundantly clear that society (in general) and workplaces (in particular) tend to value outgoing “people-people,” we introverts don’t want to, nor feel the need to, change to fit other people’s ideas of how we ought to act and feel. We’re perfectly fine the way we are, thank you very much. What’s more, we’d greatly appreciate it if you stopped assuming we envy you. We don’t. Believe me. We don’t want to be like you.

3. Give us private offices or let us work-from-home.

Today’s open plan offices are productivity toilets and health hazards for everyone. For introverts, though, they’re particularly hellish because there’s no way to get away from other people. Forcing an introvert to work in an open plan office is like forcing an extravert to spend all day in solitary confinement. We need privacy. Please have the common sense and common decency to give it to us.

4. We resent doing more than our share.

Because extraverts spend so much time collaborating, sharing, and gossiping, the burden of actually getting real work accomplished falls to the introverts. After a while–no, scratch that–from day one, we resent that you waste time and money socializing while we’re working our asses off. And we really resent it when you pipe up to steal the credit.

5. Leave us alone to recharge.

Introverts feel physically, emotionally, mentally and spiritually drained after being forced to interact with other people. The only way that we can recharge is by disconnecting and being by ourselves. Yes, we know that you draw energy from other people. Like a vampire. But we’re the opposite. So when you see us sitting by ourselves, don’t think you’re doing us a favor by pestering us. You’re not.

6. We are not shy loners.

Quite the contrary. Introverts are often talented at public speaking. We often have a small circle of close friends and family with whom we enjoy spending time. We’re not bashful about our accomplishments; we just don’t feel the need to toot our own horns. We don’t talk about ourselves because we’d rather talk about something more interesting than stuff we already know.

7. Go away, please.

Google staff discussed tweaking search results to counter travel ban: WSJ

(Reuters) – Google employees brainstormed ways to alter search functions to counter the Trump administration’s controversial 2017 travel ban, the Wall Street Journal reported on Thursday, citing internal emails.

FILE PHOTO: A Google logo in an office building in Zurich September 5, 2018. REUTERS/Arnd WIegmann/File Photo

Google employees discussed how they could tweak the company’s search-related functions to show users how to contribute to pro-immigration organizations and contact lawmakers and government agencies, the WSJ said. The ideas were not implemented. on.wsj.com/2DePzWh

President Donald Trump’s travel ban temporarily barred visitors and immigrants from seven majority Muslim countries. It spurred public outcry and was revised several times. Trump said the travel ban was needed to protect the United States against attacks by Islamist militants, and the Supreme Court upheld the measure in June.

The Google employees proposed ways to “leverage” search functions and take steps to counter what they considered to be “islamophobic, algorithmically biased results from search terms ‘Islam’, ‘Muslim’, ‘Iran’, etc.” and “prejudiced, algorithmically biased search results from search terms ‘Mexico’, ‘Hispanic’, ‘Latino’, etc,” the Journal added, quoting from the emails.

A Google spokesperson said the emails represented brainstorming and none of the ideas were implemented. She said the company does not manipulate search results or modify products to promote political views.

“Our processes and policies would not have allowed for any manipulation of search results to promote political ideologies,” the spokesperson said in a statement.

Reporting by Rama Venkat in Bengaluru; Editing by Cynthia Osterman

American Airlines Just Raised Its Baggage Fee and Offered an Incredible, Maddening Explanation

Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek. 

You knew it was going to happen.

I knew it was going to happen.

American Airlines knew it was going to happen too. 

The only question was how many hours the populace would be waiting before American followed Delta and United Airlines (and JetBlue) in raising baggage fees to $30.

When the announcement was made, I sat and pondered the meaning of life for a while.

Then I did the only thing my Yoda could suggest. I contacted American to ask for its logic in making this unpopular move.

An American spokesman told me: 

Like fares, baggage fees are set by the supply and demand for the product in the marketplace, and today’s changes are in line with what other U.S. competitors are charging. 

I stared at this for quite some time, tried to absorb it thoroughly and only then did I consider its fine logic.

I fear some might observe that if baggage fees are set by supply and demand, does that mean that American will raise them for every flight that happens to have a lot of cargo in the hold? 

After all, there might be less space. Ergo, the price should go up.

Please consider arriving at the ticket counter, to be told:

Yeah, sorry, we’ve got a big shipment of golf equipment in the hold today. So your baggage fee will be $175.

And when baggage fees didn’t exist, did this mean there was simply far too much space in the hold, none of it was precious, so it could be just given away?

I fear what American might actually mean by supply and demand is that when four airlines hold more than 80 percent of all available seats, they have most of the supply.

They therefore have the power to set the price of anything to a considerable extent.

The only thing that might even hold them back even a little is the existence of a budget airline on a specific route or, in this case, Southwest’s insistence that its customers’ bags fly free.

There’s a little more logical consistency, I fear, in the second part of American’s statement: United and Delta have done it, so we will too. What did you expect?

Of course, it’ll be fascinating to see whether the more baggage fees go up, the more people try and haul all their belongings onto the plane, hence delaying departure.

That’s something airlines really don’t like.

The baggage fee hike is merely a fare hike by other means. It also comes with a lower tax rate for the airline, as fees are taxed differently from fares.

I wonder if, for even a nanosecond over a third cocktail, an American executive or two might have considered that not raising the baggage fee might have given the airline a little point of difference.

Ach, but what’s the point of difference when your only true distinction is your network and you can just keep on scooping up (what you think is) your fair share?

Australian regulator cracks down on misleading digital coin offerings

SYDNEY (Reuters) – Australia’s corporate watchdog said on Thursday it was stepping up scrutiny on “misleading” initial coin offerings (ICOs)targeted at retail investors while adding it has already acted against several such proposals.

Bitcoin (virtual currency) coins are seen in an illustration picture taken at La Maison du Bitcoin in Paris, France, May 27, 2015. REUTERS/Benoit Tessier

The Australian Securities & Investments Commission (ASIC) said consistent problems with proposed ICOs included the use of “misleading or deceptive” statements in sales and marketing materials and not holding Australian financial services licenses.

ICOs, or the selling of digital coins or tokens, are increasingly popular with start-ups as a way to finance projects. The ICO market is relatively small in Australia but ASIC is concerned poor conduct could have a negative impact on investor confidence.

“If you raise money from the public, you have important legal obligations,” ASIC Commissioner John Price said in a statement.

“It is the legal substance of your offer – not what it is called – that matters,” Price said, adding some proposed ICOs operated illegal, unregistered investment schemes.

Since April 2018, ASIC has prevented five ICOs from raising capital. These ICOs have been put on hold and some will be restructured to comply with legal requirements, ASIC said.

The regulator is taking action against one completed ICO, it said without identifying the company.

“ICOs are highly speculative investments that are mostly unregulated, and while there are genuine businesses using this structure many have turned out to be scams,” ASIC noted.

Earlier this year, Moscow-based cyber security firm Group IB found projects which raise funds through ICOs were attacked by cyber criminals 100 times a month on average, underscoring the risks of investment in cryptocurrency ventures online.

Globally, start-up firms have raised millions of dollars online to fund projects, with often little more than a handful of employees and an outline business plan attracting regulatory attention.

Reporting by Swati Pandey; Edtiting by Sam Holmes

A DOJ Probe Into Elon's Tweets Could Spell Yet More Trouble for Tesla

The Department of Justice has reportedly opened a criminal fraud investigation into Tesla, after CEO Elon Musk announced on Twitter last month that he was considering taking the automaker private and had “funding secured” to do so. Musk later revealed that the funding required to go private at $420 per share, which he had believed would come mostly from Saudi Arabia’s sovereign wealth fund, wasn’t exactly locked down. Seventeen days after that initial tweet, in late August, Tesla declared it would remain a public company after all—but the backtracking hasn’t stemmed the fallout from the incident. Bloomberg’s report of the probe sent Tesla shares down nearly 10 percent early this morning. (Stocks ultimately closed down 3 percent on Tuesday evening.)

While the Justice Department’s probe appears to be at a very early and not yet consequential phase, it’s yet another headache for Tesla and its embattled CEO—along with a reported Securities and Exchange Commission investigation and shareholder lawsuits over the same issue, a libel lawsuit filed against Musk by a man he accused of being a pedophile, and a stream of departures by high-level executives. Most crucially, it would add to ongoing questions about Tesla’s production capacity and profit margins as it works to ramp up the rollout of its Model 3 sedan.

In a statement, a Tesla spokesperson says the DOJ did send Tesla a voluntary request for documents and that the automaker has been cooperating. “We have not received a subpoena, a request for testimony, or any other formal process. We respect the DOJ’s desire to get information about this and believe that the matter should be quickly resolved as they review the information they have received,” the statement said. A DOJ spokesperson declined to confirm or deny the existence of an investigation into Tesla.

The Securities and Exchange Commission is also reportedly looking into the “going private” statements and whether the “funding secured” tweet was materially false, or even an attempt to manipulate the company’s stock price. The Fox Business Network initially reported that the federal agency subpoenaed the electric carmaker in mid-August. Many SEC investigations take months or years and end without the agency bringing a civil suit or enforcement action.

If it’s true that the Justice Department has not issued Tesla any subpoenas, it likely indicates that the probe, reportedly being handled in San Francisco, remains in its early stages. “It’s something that happens at the very beginning of the process,” says Jay Dubow, a partner specializing in white-collar litigation at the law firm Pepper Hamilton. “It’s just nosing around.”

It’s common for issues to be investigated by both the Department of Justice and SEC, Dubow notes, because federal securities law violations can be prosecuted criminally or civilly. If federal investigators find that Musk purposely misled investors and the public to goose Tesla’s stock price, then he, the company, and/or other employees involved could face fines or penalties (like being forced to take time-outs from roles in the public company), or possibly even prison time, says Stephen Diamond, who studies securities law and corporate governance at the Santa Clara University School of Law.

“The SEC only has the ability to get monetary relief. The DOJ has the ability to put someone in jail,” Diamond says.

If both the SEC and DOJ find evidence of some sort of violation and decide to move forward with their investigations, the two packs of lawyers would share information, legal experts say. If the DOJ moves forward with its probe, it would impanel a grand jury and issue subpoenas, which could eventually lead to indictments. Again, it’s early. “There are a lot of facts we don’t know here,” says Dubow.

We do know, though, that Tesla has faced a barrage of bad news in recent months—steadily driving down the automaker’s stock price and pushing some shareholders to question Musk’s leadership as Tesla’s CEO and chairman.

On Monday, British diver and cave explorer Vernon Unsworth sued Musk for libel in a California district court. (The filing said another suit, this one to be pursued in the United Kingdom, will follow). The lawsuit comes two months after Musk called Unsworth “pedo guy” on Twitter, following an interview in which the Brit denigrated Musk’s attempt to build a mini-submarine that could rescue a group of Thai boys trapped in a cave. Though Musk later deleted and apologized for the tweet, he doubled down on the pedophilia claim a month later, claiming to BuzzFeed News that Unsworth was a “child rapist” who had married a 12-year-old while living in Thailand. The suit (which notes Unsworth is in a relationship with a 40-year-old woman) cites Musk’s tweets extensively and seeks more than $75,000 in compensatory damages.

However those cases turn out for Musk, the clearest determinant of his company’s near-term future will be Tesla’s quarterly earnings report in October, when the automaker will reveal how many cars it produced and sold in the third quarter of the year. The automaker finally hit its goal of making 5,000 Model 3 sedans a week at the end of the second quarter, a rate it hopes to sustain as it strives toward profitability.

The news of the DOJ’s preliminary investigation, though, compounds questions about whether Musk needs to divide his responsibilities as company chairman and CEO into two roles, or hire a number two to help him steer the electric automaker toward that goal—and whether the current corporate board is willing to make that hard call. “The reported DOJ investigation ramps up the concern about the current governance structure of the company,” says Diamond. “At minimum, it’s a cloud over Tesla.”


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Microsoft introduces HoloLens to businesses through Dynamics 365 apps

(Reuters) – Microsoft Corp announced on Tuesday new AI and mixed-reality applications for its Dynamics 365 online business software, putting to use its augmented-reality goggles HoloLens for businesses.

FILE PHOTO: A Microsoft store is pictured in New York City, New York, U.S., August 21, 2018. REUTERS/Carlo Allegri/File Photo

The additions to its cloud-based software came two years after HoloLens was launched.

The new AI applications, Dynamics 365 Layout and Dynamics 365 Remote Assistant, help connect live remote colleagues with the use of HoloLens, Microsoft said in a blog. (bit.ly/2NlIfN7)

Citing oil company Chevron Corp’s use of the applications, Microsoft said they help to remotely collaborate with and assist firstline workers and remote experts, reducing travel time.

“Previously it was required to fly in an inspector from Houston to a facility in Singapore once a month to inspect equipment. Now it has in-time inspection using Dynamics 365 Remote Assist and can identify issues or provide approvals immediately,” Microsoft said.

Microsoft also announced the launch of Dynamics 365 AI for sales, customer service and market insights.

Dynamics 365, which posted a 61 percent increase when Microsoft reported its quarterly results in July, competes with San Francisco-based Salesforce’s flagship Sales Cloud.

The new AI applications will be released next month, the company said.

Reporting by Nivedita Balu in Bengaluru