Month: August 2019

WASHINGTON (Reuters) – American Airlines Group Inc (AAL.O), the largest U.S. airline, will pay $22.1 million to settle claims it falsely reported the times it transferred possession of U.S. mail to foreign postal administrations or other intended recipients, the U.S. Justice Department said on Tuesday.

The United States Postal Service contracted with American to take possession of receptacles of U.S. mail at six locations and then deliver it to numerous international and domestic destinations. The settlement resolves claims American Airlines falsely reported the times it transferred possession of the mail. American did not immediately comment Tuesday.

“We expect companies doing business with the government to comply with their contractual obligations,” said Assistant Attorney General Jody Hunt, who heads the department’s civil division. “The Department of Justice vigorously pursues all manner of fraudulent conduct that undermines the benefits that the government has bargained for.”

American said in a statement it was pleased it had reached a settlement.

“The allegations focused on conduct that was remedied years ago, and we have invested in new equipment and procedures to ensure that we are in full compliance with our commitments,” the statement said. It added that “the U.S. Postal Service is an important customer for American, and we are glad to have corrected these procedures and put this matter behind us.”

American said in a securities filing the Justice Department in April 2015 notified the airline it was investigating American’s 2009 and 2011 contracts with the U.S. Postal Service for the international transportation of mail by air.

The contract required American to take possession of mail at U.S. locations or at various Department of Defense and State Department locations abroad, and then deliver that mail to numerous international and domestic destinations.

“To obtain payment under the contracts, American Airlines was required to submit electronic scans of the mail receptacles to USPS reporting the time the mail was delivered at the specified destinations. The contracts specified penalties for mail that was delivered late or to the wrong location,” the Justice Department said.

“The U.S. Postal Service contracts with commercial airlines for the safeguarding and timely delivery of U.S. Mail to foreign posts, including the mail sent to our soldiers deployed to foreign operating bases,” said Scott Pierce, special agent in Charge, USPS Office of Inspector General.

NEW YORK/SAN FRANCISCO (Reuters) – Alphabet Inc’s Google has shut down a service it provided to wireless carriers globally that showed them weak spots in their network coverage, people familiar with the matter told Reuters, because of Google’s concerns that sharing data from users of its Android phone system might attract the scrutiny of users and regulators.

The withdrawal of the service, which has not been previously reported, has disappointed wireless carriers that used the data as part of their decision-making process on where to extend or upgrade their coverage. Even though the data were anonymous and the sharing of it has become commonplace, Google’s move illustrates how concerned the company has become about drawing attention amid a heightened focus in much of the world on data privacy.

Google’s Mobile Network Insights service, which had launched in March 2017, was essentially a map showing carriers signal strengths and connection speeds they were delivering in each area.

The service was provided free to carriers and vendors that helped them manage operations. The data came from devices running Google’s Android operating system, which is on about 75{5048a9ac22a95e6c0a00d427d71a0d7ff263f9d98391fe7073acb5a0aa0a3f48} of the world’s smartphones, making it a valuable resource for the industry.

It used data only from users who had opted into sharing location history and usage and diagnostics with Google. The data were aggregated, meaning they did not explicitly link any information to any individual phone user. It included data relating to a carrier’s own service and that of competitors, which were not identified by name.

Nevertheless, Google shut down the service in April due to concerns about data privacy, four people with direct knowledge of the matter told Reuters. Some of them said secondary reasons likely included challenges ensuring data quality and connectivity upgrades among carriers being slow to materialize.

Google spokeswoman Victoria Keough confirmed the move but declined to elaborate, saying only that changing “product priorities” were behind it. Google’s notice to carriers when it shut down the service did not specify a reason, two of the four people told Reuters.

“We worked on a program to help mobile partners improve their networks through aggregated and anonymized performance metrics,” Keough said. “We remain committed to improving network performance across our apps and services for users.”

CLOSER SCRUTINY

The loss of Google’s service is the latest example of an internet company opting to end a data-sharing service rather than risk a breach or further scrutiny from lawmakers.The European Union’s General Data Protection Regulation, introduced last year, prohibits companies sharing user data with third parties without users’ explicit consent or a legitimate business reason.

U.S. and European lawmakers have stepped up their focus on how tech companies treat user data after a series of large-scale data security failures and the revelation that Facebook Inc improperly shared data on 87 million of its users with political consultancy Cambridge Analytica.

In April, Google shut down its Video Checkup service from its YouTube operation, which it launched in mid-2017 to let customers in Malaysia compare their provider’s streaming capability in a specific spot with other carriers. YouTube spokeswoman Mariana De Felice cited “relatively low user engagement” with Video Checkup for its retirement, which has not been previously reported.

Facebook has begun reviewing data deals with app developers and the four big U.S. wireless carriers recently stopped selling data on customers’ real-time locations to marketers and other firms.

WALKING TIGHTROPE

Internet companies now walk a tightrope in trying to generate revenue or improve their services by supplying user data to other companies because they risk compromising – or appearing to compromise – data privacy. And companies including Google and Facebook have curtailed access to data by outside companies over the past two years.

Google’s Mobile Network Insights service was not the only source of detailed customer data used by carriers to determine where cell tower upgrades are needed, but it was useful because of the sheer volume of Android phones in the market.

It was an “independent reference from the horse’s mouth, so you couldn’t get any better than this,” said Mushil Mustafa, a former employee at Dubai-based carrier du. “But the carriers have investment in other tools, obviously.”

Facebook offers a similar service, called Actionable Insights. Facebook appears committed to continuing the service but declined to comment when asked.

Data-sharing arrangements between tech companies became common over the past decade as the use of smartphones and apps exploded, but what data is collected and how it is shared is not always clear to users.

Companies often are not explicit about their data sharing. Google’s data policy that Android users agree to states that it may collect and share network connection quality information. Wireless carriers had not been specifically mentioned as recipients.

As users demand greater transparency, what constitutes a violation of consumer trust is not clear.

Facebook’s Actionable Insights service for carriers also includes information about users’ gender, age and other characteristics collected from its apps, which helps carriers spot demographic trends to target their marketing, but it does not tie data to specific individuals.

“We have publicly announced this program and carefully designed it to protect people’s privacy,” said Facebook spokesman Joe Osborne, in a statement.

Google said it shared neither aggregated nor individualized data on user demographics and app usage. The company rejected requests to give equipment vendors any data, it said.

MORRISTOWN, New Jersey (Reuters) – U.S. President Donald Trump on Sunday said he did not want the United States to do business with China’s Huawei even as the administration weighs whether to extend a grace period for the company.

Reuters and other media outlets reported on Friday that the U.S. Commerce Department is expected to extend a reprieve given to Huawei Technologies Co Ltd [HWT.UL] that permits the Chinese firm to buy supplies from U.S. companies so that it can service existing customers.

The “temporary general license” will be extended for Huawei for 90 days, Reuters reported, citing two sources familiar with the situation.

On Sunday, Trump told reporters before boarding Air Force One in New Jersey that he did not want to do business with Huawei for national security reasons.

“At this moment it looks much more like we’re not going to do business,” Trump said. “I don’t want to do business at all because it is a national security threat and I really believe that the media has covered it a little bit differently than that.”

He said there were small parts of Huawei’s business that could be exempted from a broader ban, but that it would be “very complicated.” He did not say whether his administration would extend the “temporary general license.”

Speaking earlier on Sunday, National Economic Council director Larry Kudlow said the Commerce department would extend the Huawei licensing process for three months as a gesture of “good faith” amid broader trade negotiations with China.

“We’re giving a break to our own companies for three months,” Kudlow said on NBC’s “Meet the Press”. 

PEBBLE BEACH, Calif. (Reuters) – Italian premium sports car maker Ferrari NV (RACE.MI) will expand sales of easier-driving grand touring cars, but will not try to chase rival Porsche’s annual sales volume, Ferrari Chairman John Elkann told an audience of classic car enthusiasts gathered at this storied golf resort on the Pacific coast.

Elkann also reiterated that Fiat Chrysler Automobiles NV(FCHA.MI), of which he is chairman, remains open to opportunities to combine with other automakers, but is positioned to remain independent. Fiat Chrysler in May proposed a merger with French automaker Renault SA, but the deal fell apart after the French government intervened and Elkann withdrew the proposed merger.

Fiat Chrysler Chief Executive Mike Manley sent the same message to Renault and other would-be partners earlier this month.

Elkann visited Pebble Beach during the annual Concours d’Elegance, during which wealthy collectors bring some of the world’s rarest vintage automobiles to be admired — and sold — and premium manufacturers showcase exotic new models.

Ferrari is best known for flashy, high performance sports cars. Among fans of vintage Ferraris, more understated GT, or grand touring, cars from the 1960s, some with seating for four people, are among the most popular models on auction blocks and at enthusiast events. GT cars were designed to be comfortable on longer road trips.

Elkann hinted Ferrari will unveil a new GT type car in November. Ferrari has said previously that about 40{5048a9ac22a95e6c0a00d427d71a0d7ff263f9d98391fe7073acb5a0aa0a3f48} of its total sales could come from GT cars by 2022, up from 32{5048a9ac22a95e6c0a00d427d71a0d7ff263f9d98391fe7073acb5a0aa0a3f48} now.

Ferrari has outlined plans to expand revenue to 5 billion euros ($5.54 billion) by 2022 from 3.4 billion euros in 2017. The company has said it plans to add a model called the Purosangue to compete with a growing stable of sport utility vehicles wearing premium sports car brands, such as the Lamborghini Urus.

Rival Porsche AG[PSCH.UL], a unit of Volkswagen AG(VOWG_p.DE), has expanded its sales to more than 250,000 sports cars and sport utility vehicles annually. Elkann said Ferrari is not aiming for Porsche’s level of sales.

($1 = 0.9018 euros)

(Reuters) – A federal judge on Friday allowed PG&E Corp to retain the sole rights to propose a plan to exit bankruptcy, as he rejected efforts by investors to put forward competing plans, according to court documents.

Judge Dennis Montali of the U.S. Bankruptcy Court in San Francisco turned down requests from two groups of creditors wanting to propose a Chapter 11 exit plan for PG&E, which is facing huge liabilities from California wildfires.

Montali said he believed allowing PG&E to retain the right to lead the process would be a speedier resolution for victims of fires that were caused by equipment belonging to the California utility, according to the court documents.

PG&E earlier this week said that it would file its plan by Sept. 9.

The company sought Chapter 11 bankruptcy protection earlier this year after severe wildfires in 2017 and 2018 resulted in more than $30 billion in liabilities.

In May, state fire investigators determined that PG&E transmission lines caused the deadliest and most destructive wildfire on record in California, a blaze that killed 85 people last year.

Hedge funds Knighthead Capital Management and Abrams Capital Management, which are shareholders in PG&E, made a public proposal earlier this month to raise $15 billion in equity to fund a planned reorganization and pledged to purchase a portion of the offered equity if shares are left unsold.

PG&E bondholders have proposed plans to inject money to help the company emerge from Chapter 11, saying it has been too slow to file its own plan.

PG&E was not immediately available for a comment.

(Reuters) – Facebook (FB.O) users suing the world’s largest social media network over a 2018 data breach say it failed to warn them about risks tied to its single sign-on tool, even though it protected its employees, a court filing on Thursday showed.

Single sign-on connects users to third-party social apps and services using their Facebook credentials.

The lawsuit, which combined several legal actions, stems from Facebook Inc’s worst-ever security breach in September, when hackers stole login codes – or “access tokens” – that allowed them to access nearly 29 million accounts.

“Facebook knew about the access token vulnerability and failed to fix it for years, despite that knowledge,” the plaintiffs said in a heavily redacted section of the filing in the U.S. District Court for the Northern District of California in San Francisco.

“Even more egregiously, Facebook took steps to protect its own employees from the security risk, but not the vast majority of its users.”

Facebook did not immediately respond to a request for comment.

Judge William Alsup told Facebook in January he was willing to allow “bone-crushing discovery” in the case to uncover how much user data was stolen.

Facebook has revealed few details since initially disclosing the attack, saying only that it affected a “broad” spectrum of users without breaking down the numbers by country.

The attackers took profile details such as birth dates, employers, education history, religious preference, types of devices used, pages followed and recent searches and location check-ins from 14 million users.

For the other 15 million users, the breach was restricted to name and contact details. In addition, attackers could see the posts and lists of friends and groups of about 400,000 users.

They did not steal personal messages or financial data and did not access users’ accounts on other websites, Facebook said.

WASHINGTON (Reuters) – China made no trade concessions after U.S. President Donald Trump postponed 10{5048a9ac22a95e6c0a00d427d71a0d7ff263f9d98391fe7073acb5a0aa0a3f48} tariffs on over $150 billion worth of Chinese imports, senior U.S. officials said on Wednesday, adding that talks aimed at resolving the trade fight would continue and markets should be patient.

“This was not a quid pro quo,” U.S. Commerce Secretary Wilbur Ross told CNBC television in an interview, using a Latin phrase meaning a favor exchanged for a favor.

Trump on Tuesday backed off his Sept. 1 deadline for imposing the tariffs on thousands of Chinese imports, including technology products, clothing and footwear, pushing it to Dec. 15 for certain items. U.S. and Chinese officials also announced renewed trade discussions.

Both developments drew cautious relief from retailers and technology groups as the world’s two largest economies enter the second year of their trade dispute.

Trump’s tariff delay coincided with recession fears in U.S. markets sending stocks to their biggest one-day loss since October. The U.S. Treasury yield curve inverted for the first time since 2007 – a possible recession signal – after China’s industrial output growth hit a 17-year low in July and Germany reported a second-quarter contraction in gross domestic product output.

The Dow Jones Industrial Average .DJI and Nasdaq Composite .IXIC both lost 3 percent, while the broader Standard and Poor’s 500 .SPX lost 2.9 percent.

‘MORE PAIN ON THEM’

White House trade adviser Peter Navarro, in a separate interview on Fox Business Network, said the decision to delay the additional tariffs was made to limit the pain on U.S. businesses, which already had contracts to buy Chinese goods for the holiday selling season and had no way to avoid passing costs on to consumers.

Trump on Tuesday said he delayed the tariffs to shield Christmas sales from the tariffs.

Chad Bown, a trade economist and senior fellow at the Peterson Institute for International Economics, said in a blog post that there was no good news in the tariff announcements.

“The only minor consolation comes in their timing,” Bown wrote. “By putting off the next two rounds until the import surges have already arrived to stock this year’s back-to-school and winter holiday shopping seasons, President Trump may be coming around, albeit belatedly, to the economic evidence on the costs of his trade war.”

Looking for concessions from China in exchange for the delayed tariffs is the “totally wrong way to look at it,” Navarro said.

“The whole premise of what we’re trying to do is pain on them, not pain on us,” Navarro said. “If we simply put the tariffs on Sept. 1 that would be more pain on us, rather than pain on them. That’s just silly.”

Navarro declined to say what U.S. negotiators would seek to achieve in the talks with Chinese officials before the tariffs take effect. Another phone call is scheduled between the two sides later this month.

“These negotiations will happen behind closed doors,” Navarro said. “People just need to be patient.”

Ross said on CNBC that it was too early to assess where U.S.-China trade talks stand. A date has not been set for another round of face-to-face discussions, Ross said.

BIBLES, SHIPPING CONTAINERS EXEMPTED

The tariff delay applies to about $156 billion worth of 2018 imports from China, according to a Reuters analysis of the revised tariff lists. The largest categories include cell phones, laptop and tablet computers and toys.

In addition, the U.S. Trade Representative’s office said it is granting a permanent reprieve from tariffs for about 25 import categories from China, including Bibles and religious texts, child safety seats, shipping containers and cranes used in ports and construction along with some types of fish products.

The editor of China’s state run Global Times newspaper said China would require removal of all additional U.S. tariffs in order to reach a deal, not simply delaying them.

Hu Xijin also cast doubt in a Twitter message that China would follow up with significant purchases of U.S. agricultural goods as requested by Trump.

“As far as I know, the Chinese side requests that both sides respect the consensus reached at Osaka summit, which is removing all additional tariffs, not delaying some. I doubt Chinese side will resume large-scale purchase of US farm products under current circumstances,” Hu tweeted.

(Reuters) – CBS Corp (CBS.N) and Viacom Inc (VIAB.O) have reached a deal to reunite media mogul Sumner Redstone’s U.S. entertainment empire, betting that a larger company will be able to compete and partner better in a media industry dominated by giants.

The new company will be named ViacomCBS Inc, although CBS shareholders will own 61{5048a9ac22a95e6c0a00d427d71a0d7ff263f9d98391fe7073acb5a0aa0a3f48} and Viacom shareholders will own 39{5048a9ac22a95e6c0a00d427d71a0d7ff263f9d98391fe7073acb5a0aa0a3f48}.

The merger will combine the CBS television network, CBS News, Showtime cable networks with MTV Networks, Nickelodeon, Comedy Central and the Paramount movie studios. Together, they will own more than 140,000 TV episodes and 3,600 film titles. Annually, it is estimated to generate about $28 billion in revenue.

It creates a company with roughly a $30 billion market value, which is still small compared with rivals including Netflix Inc (NFLX.O), at $136 billion, ABC network owner Walt Disney Co (DIS.N), at $245 billion, and NBC owner Comcast Corp (CMCSA.O) at $193 billion.

The merging companies are controlled by National Amusements Inc, the holding company owned by billionaire Sumner Redstone and his daughter, Shari.

“My father once said ‘content is king,’ and never has that been more true than today,” Shari Redstone said in a statement.

The third attempt at a merger since 2016 is a decisive win for Shari Redstone, whose father built the companies through a series of mergers and then broke them apart 13 years ago.

Previous merger talks had failed because of clashes between executives over divvying up top jobs and the companies’ relative valuation.

The recombination comes amid an increasingly competitive media landscape dominated by Disney and Netflix, prompting Redstone to pursue a merger.

Viacom Chief Executive Bob Bakish will be the president and CEO of the combined company. Joe Ianniello, interim CEO of CBS, will be named chairman and CEO of CBS, which will exclude the Showtime cable network and book publisher Simon & Schuster.

Ianniello will report to Bakish. Bakish cannot fire Ianniello unless the ViacomCBS board approves.

Bakish in an interview said that he will compete with Netflix, Disney and AT&T for subscribers and also create and sell TV shows and movies to other companies, an operation that will grow thanks to the new deal.

“This is not a put-your-eggs-in-one-basket story,” Bakish said. “They all work together.”

ViacomCBS can lure customers with free offerings from a service like PlutoTV, which it bought in January, then convince them to pay for a subscription service in another part of the empire like CBS All Access, Bakish said.

SLIGHT PREMIUM

Viacom shareholders will receive 0.59625 CBS shares for each share they own, representing a slight premium to Viacom’s closing price on Monday.

The companies said they expected about $500 million in annual cost savings.

The new board of directors will consist of 13 members. Six will come from independent members from CBS, four independent members from Viacom, Bakish, and two National Amusements members. Shari Redstone will be appointed the chairman.

Shares of Viacom rose 2.4{5048a9ac22a95e6c0a00d427d71a0d7ff263f9d98391fe7073acb5a0aa0a3f48} to $29.21 and shares of CBS rose 1.4{5048a9ac22a95e6c0a00d427d71a0d7ff263f9d98391fe7073acb5a0aa0a3f48} to $48.70 after the merger was announced.

Centerview Partners LLC and Lazard Frères & Co served as financial advisers to the CBS board’s special committee. Paul, Weiss, Rifkind, Wharton & Garrison LLP served as the special committee’s legal counsel.

LionTree Advisors LLC and Morgan Stanley & Co served as financial advisers and Cravath, Swaine & Moore LLP as legal counsel to the special committee to the Viacom board.

Viacom was advised by Shearman & Sterling LLP. National Amusements was advised by Evercore as its financial adviser and by Cleary Gottlieb Steen & Hamilton LLP as its legal counsel.

(Reuters) – A U.S. federal court on Monday issued a permanent injunction against American Airlines Group Inc’s (AAL.O) mechanics union, which the airline had accused of illegal slowdowns it said had devastated its operations during the peak summer travel season.

The judgment, issued in the United States District Court for the Northern District of Texas, made permanent an earlier order against the TWU-IAM Association demanding the workers stop interfering in American’s operations.

American filed a lawsuit in May against the union group after stalled contract negotiations that were being overseen by a federal mediator.

At the time, American said alleged disruption by the mechanics had caused hundreds of flight cancellations and even more maintenance delays.

The union group denied the accusations in court.

Monday’s order prohibits employees from “calling, permitting, instigating, authorizing, encouraging, participating in, approving, or continuing any form of disruption to or interference with American’s airline operations,” including a refusal to accept overtime or complete any maintenance repairs in the normal course of work.

(Reuters) – Goldman Sachs Group Inc said on Sunday that fears of the U.S.-China trade war leading to a recession are increasing and that Goldman no longer expects a trade deal between the world’s two largest economies before the 2020 U.S. presidential election.

“We expect tariffs targeting the remaining $300bn of US imports from China to go into effect,” the bank said in a note sent to clients.

U.S. President Donald Trump announced on Aug. 1 that he would impose a 10{5048a9ac22a95e6c0a00d427d71a0d7ff263f9d98391fe7073acb5a0aa0a3f48} tariff on a final $300 billion worth of Chinese imports on Sept. 1, prompting China to halt purchases of U.S. agricultural products.

The United States also declared China a currency manipulator. China denies that it has manipulated the yuan for competitive gain.

The year-long trade dispute has revolved around issues such as tariffs, subsidies, technology, intellectual property and cyber security, among others.

Goldman Sachs said it lowered its fourth-quarter U.S. growth forecast by 20 basis points to 1.8{5048a9ac22a95e6c0a00d427d71a0d7ff263f9d98391fe7073acb5a0aa0a3f48} on a larger than expected impact from the developments in the trade tensions.

“Overall, we have increased our estimate of the growth impact of the trade war,” the bank said in the note authored by three of its economists, Jan Hatzius, Alec Phillips and David Mericle.

Rising input costs from the supply chain disruption could lead U.S. companies to reduce their domestic activity, the note said. Such “policy uncertainty” may also make companies lower their capex spending, the economists added.