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    Undertaxed and over here: why the UK welcomes US mega firms | Phillip Inman

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    Americans love Britain, and in many ways the British admire Americans, but the benefits of the relationship are becoming increasingly one-way.That’s the argument set out in a book published next month documenting how US companies have made inroads into the UK economy by exploiting a desperate need for investment, weak regulation and a public that seems oblivious to the cost to themselves and, ultimately, the economy.Clinton, Bush, Obama, Biden: whichever administration is pulling the levers, presidents pay lip service to a special relationship with the UK. Each one makes sure US companies leverage Washington’s power to gain entry, kill off local competition, secure monopoly control and run off with the profits largely tax-free.But UK companies that try to break into the US face huge legal and regulatory hurdles. It’s true that selling goods to America is a lucrative business. That’s not the same as setting up a US subsidiary in the US and going head-to-head with domestic corporations.Labour leaders fall into the trap of lauding energetic and profitable US companies as much as their cheering Tory counterparts do. Tony Blair and Gordon Brown were more ardent Americanophiles than most. And Keir Starmer shows every sign of rushing to Washington should he be elected, even if Trump is in charge – much as Theresa May did in 2017, before a humiliating return visit two years later.The new book is not an anti-American leftist call to arms of the kind published in the 1980s, when Margaret Thatcher’s admiration for Ronald Reagan generated tomes about the UK being the 51st state of America. Vassal State by Angus Hanton (Swift Press) examines for the first time the disparate data showing how much US companies have embedded themselves in the UK, capitalising on our willingness to pay them outlandish fees and subscriptions and afford them the hefty tax breaks needed to keep them in the UK.We know about the power and influence of Amazon, Apple, Meta/Facebook, Microsoft, Netflix and Alphabet/Google. Other high-profile names include online sellers eBay, Wayfair and Etsy, and streaming companies Sky, Disney and Apple TV.The internet’s cloud storage is mostly provided by American companies. All our data, bit by bit, is being collected by US firms, whether at the front end as we buy stuff using Amazon or travel using Google Maps, or at the back end, so to speak, as health data is scraped by US spy technology firm Palantir – which is run by Peter Thiel, the co-founder of another US web behemoth, PayPal.Hanton, a London-based entrepreneur who co-founded the Intergenerational Foundation charity, documents their rise, but also that of less well-known firms which have acquired the UK’s financial and physical plumbing.A classic example is WorldPay, a payments system used by tens of thousands of UK businesses to process card transactions. Once owned by NatWest, it was offloaded after the 2008 crash to US private equity firms Advent International and Bain Capital for £2bn.That was a European Commission order that the UK could have ignored but chose to obey. Advent and Bain floated the company on the London stock market for a handsome profit in 2015, but it soon went private again. Another Advent-owned firm, payments processing technology company Vantiv, paid $10.4bn for it in 2018, then Florida-based Fidelity National Information Services (FIS) paid $35bn in cash and shares for WorldPay in 2019.What ties these firms together is that they offer popular services that somehow we accept should be charged for, without any reference to the cost of production or market influence.It doesn’t happen on the continent in nearly the same way – and some would probably argue France, Germany, Spain and Italy are the poorer for it. WorldPay executives would no doubt say US companies are big investors, enhancing and expanding the UK businesses they buy, often with a long-term vision. Except that the vision includes domination and control of the economy, holding the government to ransom with threats of cutting investments if tax subsidies are not generous enough or tax rates low enough.Google’s soon-to-be-opened monster HQ in London’s King’s Cross is emblematic of the way the UK’s red-carpet treatment for investors has profited US companies and offset the threat of an exodus after Brexit. Google has found the UK, unlike the EU, willing to turn a blind eye to its monopolistic practices.That is great news for Brexiters. It’s not so good for the rest, who, wherever they turn, must pay for the services of an ever-expanding array of US mega-companies. More

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      Inside tech billionaires’ push to reshape San Francisco politics: ‘a hostile takeover’

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      In a way, it’s a story as old as time: ultra-wealthy figures pouring a flood of money into city politics in an effort to shape the way it is run.Still, the political-influence machine that tech billionaires and venture capitalists have recently built in San Francisco stands out for its size and ambition. A new analysis of campaign filings, non-profit records and political contributions by the Guardian and Mission Local reveals the extent of this network, which is using its financial and organizational muscle to push the famously progressive city into adopting policies that are tougher on crime and homelessness, and more favorable to business and housing construction.In the past six years, prominent tech and venture capital leaders – including the hedge fund manager William Oberndorf, the billionaire investor Michael Moritz, the cryptocurrency booster Chris Larsen, the PayPal co-founder David Sacks, the Y Combinator CEO, Garry Tan, and the Pantheon CEO, Zachary Rosen – have invested at least $5.7m into reshaping San Francisco’s policies, according to the analysis of public data. Because not all of their donations are publicly disclosed, the sum of their contributions may be far higher.In a solidly Democratic city, they have joined forces with traditional business and real estate elites in an effort to oust some of its most progressive leaders and undo its most progressive policies.To achieve those goals, they have created a loose network of interlocking non-profits, dark money groups and political action committees – a framework colloquially known as a “grey money” network – that allows them to obscure the true scale of their involvement in San Francisco’s municipal politics.View image in fullscreenThe three major groups in this network – NeighborsSF, TogetherSF and GrowSF – have pulled in more than $26m in contributions since 2020, according to campaign finance and tax records, more than $21m of which they have spent on various political issues.“They’re using multiple layers of organizations to hide the sources of their money, and to hide how much they’re spending,” said Jim Stearns, a political consultant with decades of experience in San Francisco politics and a critic of the groups.“This is a $20bn hostile takeover of San Francisco by people with vested real estate and tech interests, and who don’t want anyone else deciding how the city is run,” he said, referring to the combined wealth of the most prolific new donors.Billionaires’ increasing involvementIn its storied history, San Francisco has always seen tycoons seek influence over city business. In the 2010s, the tech investor Ron Conway played a crucial role in the election of the mayor Ed Lee and was a major factor in the ascent of the current mayor, London Breed, after Lee died in office in 2017 . But the entry of a libertarian billionaire class into local politics is new, said political operatives and people who have been targeted by them. So are the vast amounts of wealth created in the most recent tech boom that these figures can tap into.View image in fullscreenPolitical observers trace the newcomers’ involvement to 2018, when a special election brought Breed to power. Their engagement grew as progressive candidates won a number of narrow but surprising victories in 2019, including the district attorney office and several seats in San Francisco’s legislative body, the board of supervisors. But, those observers say, their political participation really intensified during the pandemic, when frustrations over rising visible homelessness, a sharp increase in petty crime and fentanyl-related overdose deaths, and an economic downturn in the city boiled over.“There is a growing sense … that the city’s progressive political class has failed its citizens,” Moritz, the billionaire investor and a former journalist, wrote in a May 2023 feature for the Financial Times. “Online discourse about San Francisco’s ‘doom loop’, a downward economic and social spiral that becomes irreversible, feels less like hyperbole by the day. Even for a city that has always managed to rebuild after flattening financial and geological shocks, San Francisco – emptier, deadlier, more politically dysfunctional – seems closer to the brink than ever.”The priorities of these deep-pocketed figures have varied. Oberndorf, the hedge fund manager, had been a long-time charter school advocate and major Republican party donor. Larsen, the crypto investor, has been a strong backer of expanding police ranks and surveillance capabilities. Tan, the Y Combinator CEO, has pushed for business policies favorable to crypto, artificial intelligence and autonomous cars.Broadly, though, they maintain that San Francisco needs a tougher approach to homelessness and drug problems, a more punitive approach to crime, and a climate more friendly to business and housing construction. Some have called for centralizing more power in the office of the mayor.In past years, several of these operatives have set up organizations to advance policy on those issues – non-profit organizations, so-called dark money groups, political action committees and even media outlets.View image in fullscreenDogged reporting by Bay Area outlets has previously exposed some of the money flowing into these groups. But their structure makes it difficult to easily uncover all sources of donations. Political action committees, or Pacs, are required to name their major donors. But the so-called dark money groups, which are technically civic leagues or social welfare groups, were formed under the 501(c)4 section of the tax code, and do not have to disclose donors or political contributions. Since the 2010 supreme court ruling Citizens United v Federal Election Commission relaxed regulation around political donations, 501(c)4 groups have exponentially increased their involvement in political donations, to the tune of at least $1bn by 2019 nationwide, according to ProPublica reporting.However, the Guardian and Mission Local’s analysis of financial records shows several of the organisations donating money to one another, and several groups sharing personnel, addresses and donors. And it reveals the sheer financial deluge they are spending ahead of the 2024 elections.Complicated contributionsAmong the most prominent and resourced groups in this network is Neighbors for a Better San Francisco Advocacy, which was founded by Oberndorf, and an affiliated 501(c)4 started by the longtime San Francisco real estate lobbyist Mary Jung, among others. Oberndorf sits on the board of directors of the dark money group.NeighborsSF says it is committed to improving public safety, public education and quality of life in the city, backing what it calls “pragmatic” and “responsible” groups and candidates. The group has funded publicity campaigns for moderate candidates and bankrolled other 501(c)4s working to advance related issues.NeighborsSF has been primarily funded by a handful of extremely wealthy donors from the tech and real estate worlds. Campaign contribution data from the San Francisco Ethics Commission and state election disclosures show that Oberndorf has poured more than $900,000 over the years into the 501(c)4s. The group’s biggest donor, Kilroy Realty, a southern California-based firm with major holdings in downtown office property and highly desired parcels in the South of Market district, has given $1.2m since 2020. The dynastic real estate investor Brandon Shorenstein has contributed $899,000 through his family’s real estate firm. Larsen has donated at least $300,000. Moritz donated $300,000 in 2020 alone.View image in fullscreenMoritz is one of the most prominent players in reshaping San Francisco. Since 2020, he has donated more than $336m towards various causes in the city, both social and political, according to a recent Bloomberg report.In addition to his contributions to NeighborsSF, Moritz seeded $3m for TogetherSF Action, a 501(c)4 that is most famously known for a flashy, sarcastic poster campaign decrying the city’s fentanyl crisis and campaigns for expanding the power of the mayor. The group has an affiliated non-profit, TogetherSF, that serves as a volunteering hub. According to incorporation filings with the state of California, Moritz occupies key positions with both organizations, which also share personnel with NeighborsSF. Moritz has also sunk $10m into the San Francisco Standard, a startup news publication in the city run by Griffin Gaffney, a co-founder of TogetherSF.The third big player is GrowSF, a dark money group run by Sachin Agarwal, an alum of Apple, Twitter and Lyft, and Steven Buss, formerly of Google and Amazon. Tan is a member of its board. GrowSF has several affiliated Pacs and says it endorses “common sense” candidates as an alternative to “far-left” elected officials.Campaign contribution filings show that major donors include Agarwal’s father, Aditya Agarwal, as well as Larsen ($100,000), Tan ($25,000) and Pantheon’s Rosen, a tech investor who launched the controversial pro-market-rate development group YIMBY California. GrowSF has received tens of thousands of dollars from NeighborsSF over the years, according to federal tax filings.Follow the moneyThrough varying alliances, the groups have exerted their influence on debates that go to the heart of San Francisco policy. Among the first was the February 2022 recall of three members of the San Francisco school board, whom voters ousted from office over frustrations with the slow reopening of district schools during the pandemic, a controversial proposal to rename school sites, racially charged tweets by one of the members, and changes to the testing requirements for admission to the city’s only selective academic public high school, Lowell.The campaign to unseat the members raised more than $2m, more than 20 times the $86,000 the school board members gathered to fight off the challenge, according to campaign contribution filings.The billionaire charter school backer Arthur Rock was the single largest donor to the SFUSD recalls, giving $500,000. But NeighborsSF Advocacy came in a close second, directing $488,800 into political action committees supporting the recall effort.Separate from NeighborsSF, state disclosures show, Sacks gave $75,000 to Pacs supporting the school board recall, and the Y Combinator founding partner Jessica Livingston donated $45,000. Tan, Agarwal and Buss respectively gave $25,000, $10,000 and $5,000 to a cluster of political action committees bankrolling the school board recall efforts for each specific board member.NeighborsSF was also key to the successful recall of the progressive district attorney Chesa Boudin in 2022. A former deputy public defender and the son of convicted “new left” militants, Boudin was elected DA in 2019 on a promise to reduce mass incarceration and police misconduct. The pushback against his policies was immediate.Over 15 months, Boudin’s opponents raised $7.2m for the campaign supporting his ouster, more than twice the $2.7m collected by the anti-recall effort, campaign finance data compiled by Mission Local has shown.View image in fullscreenMost of these donations were channelled through NeighborsSF. The group contributed $4m of the $7.2m raised by the campaign, Mission Local reporting established, with the California Association of Realtors coming in a distant second at $458,000 in donations.State campaign finance records also show a $68,000 contribution to the recall campaign by GrowSF’s political action committee.There have been other victories. In 2022, GrowSF backed the successful candidacy of Joel Engardio, a former SF Weekly staff writer and former GrowSF leadership member, for supervisor through its Pac. GrowSF contributed more than $92,000 in support of Engardio’s campaign, per state campaign finance data. Since being elected, Engardio has promoted policies including increased police staffing, harsh penalties for narcotics offenses, building market-rate housing and sweeps of homeless camps.The Pac also spent at least $15,400 supporting the campaign of Matt Dorsey, a former head of communications at the San Francisco police department, for a full term as supervisor. And it spent at least $15,569 supporting Brooke Jenkins, Boudin’s successor and a supporter of the recall campaign, when she ran for re-election.It’s a “longer-term, widespread, deliberate strategy”, said Aaron Peskin, the progressive president of San Francisco’s board of supervisors. “They’re propping up innumerable 501(c)4s that are doing everything from mounting political attack campaigns to infiltrating dozens of long-term neighborhood groups … Why would you say no if someone knocked on your door to organize Saturday neighborhood cleanups?”Towards 2024With key successes under its belt, this network is gearing up to play a major role in the 2024 elections, which will determine control of the San Francisco board of supervisors and the Democratic county central committee.GrowSF is among the main drivers behind aggressive efforts to oust two progressive supervisors: Dean Preston, who represents the Haight, Hayes Valley and the Tenderloin districts, and Connie Chan, whose district includes the Inner and Outer Richmond neighborhoods.The group has set up separate “Dump Dean” and “Clear Out Connie” Pacs targeting the supervisors. GrowSF has raised at least $300,000 for its anti-Preston campaign, which has run attack ads falsely accusing him of opposing affordable housing. Larsen, Tan and a number of Y Combinator partners all have donated to GrowSF’s effort, according to San Francisco ethics commission campaign finance data.View image in fullscreenTan, who is known for his massive Twitter blocklist and recently faced ire for wishing a slow death upon progressive supervisors on the platform, has personally pledged $50,000 to oust Preston. He is publicly soliciting more donations.In addition to the board of supervisors races, GrowSF is backing a slate of moderate Democrats running to replace progressives on the Democratic county central committee, which makes endorsements for the Democratic party. Several of these moderate candidates are also running for supervisor, and while contributions to the supervisorial race are capped, there’s no limit to donations for the DCCC.The moderates have collectively raised about $1.16m, about four times as much as the progressive candidates.In light of the bruising national political landscape in 2024, San Francisco’s proverbial “knife fight in a telephone booth” may seem inconsequential. But the political network erected with the aid of libertarian tech money has already demonstrated its power to chill San Francisco’s progressive politics. So far, not one progressive candidate has thrown their hat in the ring to challenge London Breed.Peskin, who has long been eyed as a potential mayoral candidate, told Politico in January that the tech money backing moderate candidates has made it hard for progressives to fight back. It was one reason, he said, why he is leaning against getting into the race.The success of these political campaigns in one of the US’s most progressive cities could inspire similar efforts in cities around the country, Peskin warned.“There’s a sense by these guys that they are the tip of the spear,” he said. “If you can take on liberal/progressive thought in politics in San Francisco, you can do it anywhere.”This story was published in collaboration with Mission Local, an independent San Francisco non-profit news site More

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      US orders immediate stop to some AI chip exports to China; Lloyds profits up but lending margins fall – business live

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      Good morning, and welcome to our live, rolling coverage of business, economics and financial markets.The US has ordered the immediate halt of exports to China of hi-tech computer chips used for artificial intelligence, chipmaker Nvidia has said.Nvidia said the US had brought forward a ban which had given the company 30 days from 17 October to stop shipments. Instead of a grace period, the ban is “effective immediately”, the company said in a statement to US regulators.The company did not say why the ban had been brought forward so abruptly, but it comes amid a deep rivalry between the US and China over who will dominate the AI boom.Nvidia said that shipments of its A100, A800, H100, H800, and L40S chips would be affected. Those chips, which retail at several thousand dollars apiece, are specifically designed for use in datacentres to train AI and large language models.Demand for AI chips has soared as excitement has grown about the capabilities of generative AI, which can produce new text, images and video based on the inputs of huge volumes of data.Nvidia said it “does not anticipate that the accelerated timing of the licensing requirements will have a near-term meaningful impact on its financial results”.Lloyds profits up but competition squeezes marginsIn the UK, Lloyds Banking Group has reported a rise in profits even as it said competition was hitting its margins as mortgage rates fall back.Britain’s biggest bank said it made £1.9bn in profits from July to September, an increase compared to the £576m for the same period last year. The comparison has an important caveat, however: the bank has restated its financials to conform to new accounting rules.Net interest margin – the measure of the difference between the cost of borrowing and what it charges customers when it lends – was 3.08% in the third quarter, down 0.06 percentage points in the quarter “given the expected mortgage and deposit pricing headwinds”, it said.The bank did set aside £800m to deal with rising defaults from borrowers, but said that it was still seeing “broadly stable credit trends and resilient asset quality”.The agendaFilters BETAAn EY-linked auditor to the Adani Group is under scrutiny from India’s accounting regulator, Bloomberg News has reported.The National Financial Reporting Authority, or NFRA, has started an inquiry into, S.R. Batliboi, a member firm of EY in India, Bloomberg said, citing unnamed sources.S.R. Batliboi is the auditor for five Adani companies which account for about half Adani’s revenues.Bloomberg reported that representatives for NFRA and the Adani Group didn’t respond to an emailed request for comments. A representative for EY and S.R. Batliboi declined to comment to Bloomberg.China’s economic slowdown is causing worries at home, as well as in Germany and other big trade partners.A series of Chinese government actions have signalled their concern about slowing growth, which could cause problems for an authoritarian regime.Xi Jinping, China’s president, visited the People’s Bank of China for the first time, according to reports yesterday. “The purpose of the visit was not immediately known,” said Reuters, ominously.State media also reported that China had sharply lifted its 2023 budget deficit to about 3.8% of GDP because of an extra $137bn in government borrowing. That was up from 3%. The Global Times, a state-controlled newspaper, said the move would “benefit home consumption and the country’s economic growth”, citing an unnamed official.Germany’s economic fortunes were better than expected in October, according to a closely watched indicator – but whether it’s overall good news or bad depends on who you ask.The ifo business climate index rose from 85.8 to 86.9 points, higher than the 85.9 expected by economists polled beforehand by Reuters.Germany has been struggling as growth slows in China, a key export market, as well as the costs of switching from Russian gas to fuel its economy. You can read more context here:Franziska Palmas, senior Europe economist at Capital Economics, a consultancy, is firmly in team glass half empty. She said:
      The small rise in the Ifo business climate index (BCI) in October still left the index in contractionary territory, echoing the downbeat message from the composite PMI released yesterday. This chimes with our view that the German economy is again recession.
      Despite the improvement in October, the bigger picture remains that the German economy is struggling. The Ifo current conditions index, which has a better relationship with GDP than the BCI, is still consistent with GDP contracting by around 1% quarter-on-quarter. This is an even worse picture than that painted by the composite PMI, which fell in October but points to output dropping by “only” 0.5% quarter-on-quarter.
      But journalist Holger Zschaepitz said it looks like things are improving:UK house prices will continue to slide this year and in 2024 and will not start to recover until 2025, Lloyds Banking Group has forecast.The lender, which owns Halifax and is Britain’s largest mortgage provider, said that by the end of 2023 UK house prices will have fallen 5% over the course of the year and are likely to fall another 2.4% in 2024.Those forecasts, which were released alongside its third-quarter financial results on Wednesday, suggest UK house prices will have dropped 11% from their peak last year, when the market was still being fuelled by a rush for larger homes in the wake of the coronavirus pandemic.Lloyds said the first signs of growth would only start to emerge in 2025, with its economists predicting a 2.3% increase in house prices that year.You can read the full report here:The Israel-Hamas conflict adds another cloud on the horizon for the global economy, according to the head of the International Monetary Fund (IMF).Kristalina Georgieva was at “Davos in the desert”, a big conference hosted by Saudi Arabia.The Future Investment Initiative conference was the subject of boycotts five years ago when Saudi crown prince Mohammed bin Salman allegedly ordered the murder of exiled critic Jamal Khasoggi. The distaste of global leaders has apparently faded since, however.Speaking on the Israel-Hamas conflict, Georgieva said (via Reuters):
      What we see is more jitters in what has already been an anxious world. And on a horizon that had plenty of clouds, one more – and it can get deeper.
      The war has been devastating for Israel and Gaza. Hamas killed more than 1,400 people and took more than 220 people as hostages in an assault on Israel. The health ministry in Gaza, which is run by Hamas, said last night that Gaza’s total death toll after 18 days of retaliatory bombing was 5,791 people, including 2,360 children.The broader economic impacts have been relatively limited, but Georgieva said that some neighbouring countries were feeling them:
      Egypt, Lebanon, Jordan. There, the channels of impact are already visible. Uncertainty is a killer for tourists inflows. Investors are going to be shy to go to that place.
      Reckitt, the maker of Dettol bleach and Finish dishwasher products, has missed sales expectations as revenues dropped 3.6% year-on-year in the third quarter.Its shares were down 2.3% on Wednesday morning, despite it also committing to buy back £1bn in shares.It missed expectations because of the comparison with strong sales in the same period last year in its nutrition division, which makes baby milk powder.Kris Licht, Reckitt’s chief executive, said:
      Reckitt delivered a strong quarter with 6.7% like-for-like growth across our hygiene and health businesses and has maintained market leadership in our US nutrition business.
      We are firmly on track to deliver our full year targets, despite some tough prior year comparatives that we continue to face in our US Nutrition business and across our OTC [over-the-counter medicines] portfolio in the fourth quarter.
      Speaking of Deutsche Bank, it posted its own earnings this morning: third-quarter profits dropped by 8%, but that was better than expected by analysts.Shares in Deutsche, which has struggled in the long shadow of the financial crisis, are up 4.2% in early trading.Reuters reported:
      The bank was slightly more optimistic on its revenue outlook for the full year, forecasting it would reach €29bn ($30.73bn), the top end of its previous guidance range, as it upgraded the outlook for revenue at the retail division.
      Net profit attributable to shareholders at Germany’s largest bank was €1.031bn, better than analyst expectations for profit of around €937m.
      Though earnings dropped, it marked the 13th consecutive profitable quarter, a considerable streak in the black after years of hefty losses.
      Here are the opening snaps from across Europe’s stock market indices, via Reuters:
      EUROPE’S STOXX 600 DOWN 0.1%
      FRANCE’S CAC 40 DOWN 0.4%
      SPAIN’S IBEX DOWN 0.3%
      EURO STOXX INDEX DOWN 0.2%
      EURO ZONE BLUE CHIPS DOWN 0.3%
      European indices appeared to be taking their lead from the US, where Google owner Alphabet’s share price dropped in after-hours trading last night. That dragged down futures for US tech companies, even though another tech titan, Microsoft, pleased investors.Analysts led by Jim Reid at Deutsche Bank said:
      Microsoft saw its shares rise +3.95% in after-market trading as revenues of $56.52bn (+13% y/y) beat estimates of $54.54bn and EPS came in at $2.99 (v $2.65 expected). The beat comes on the back of recovering cloud-computing growth with corporate customers spending more than expected. The other megacap, Alphabet, missed on their cloud revenue estimates at $8.4bn (v $8.6bn) with the share price falling -5.93% after hours as operating income and margins both surprised slightly to the downside.
      You can read more about Google’s performance here:We’re off to the races on the London Stock Exchange this morning: and the FTSE 100 has dipped at the open.Shares on London’s blue-chip index are down by 0.15% in the early trades. Lloyds Banking Group shares initially moved higher, but now they are down 2.1% after they flagged increasing competition hitting net interest margins.Good morning, and welcome to our live, rolling coverage of business, economics and financial markets.The US has ordered the immediate halt of exports to China of hi-tech computer chips used for artificial intelligence, chipmaker Nvidia has said.Nvidia said the US had brought forward a ban which had given the company 30 days from 17 October to stop shipments. Instead of a grace period, the ban is “effective immediately”, the company said in a statement to US regulators.The company did not say why the ban had been brought forward so abruptly, but it comes amid a deep rivalry between the US and China over who will dominate the AI boom.Nvidia said that shipments of its A100, A800, H100, H800, and L40S chips would be affected. Those chips, which retail at several thousand dollars apiece, are specifically designed for use in datacentres to train AI and large language models.Demand for AI chips has soared as excitement has grown about the capabilities of generative AI, which can produce new text, images and video based on the inputs of huge volumes of data.Nvidia said it “does not anticipate that the accelerated timing of the licensing requirements will have a near-term meaningful impact on its financial results”.Lloyds profits up but competition squeezes marginsIn the UK, Lloyds Banking Group has reported a rise in profits even as it said competition was hitting its margins as mortgage rates fall back.Britain’s biggest bank said it made £1.9bn in profits from July to September, an increase compared to the £576m for the same period last year. The comparison has an important caveat, however: the bank has restated its financials to conform to new accounting rules.Net interest margin – the measure of the difference between the cost of borrowing and what it charges customers when it lends – was 3.08% in the third quarter, down 0.06 percentage points in the quarter “given the expected mortgage and deposit pricing headwinds”, it said.The bank did set aside £800m to deal with rising defaults from borrowers, but said that it was still seeing “broadly stable credit trends and resilient asset quality”.The agenda More

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      Silicon Valley Bank said it was too small to need regulation. Now it’s ‘too big to fail’ | Rebecca Burns and Julia Rock

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      Silicon Valley Bank was supposedly the type of institution that would never need a government bailout – right until its backers spent three days on social media demanding one, and then promptly receiving it, after the bank’s spectacular collapse last week.Eight years ago, when the bank’s CEO, Greg Becker, personally pressed Congress to exempt SVB from post-2008 financial reform rules, he cited its “low risk profile” and role supporting “job-creating companies in the innovation economy”. Those companies include crypto outfits and venture capital firms typically opposed to the kind of government intervention they benefited from on Sunday, when regulators moved to guarantee SVB customers immediate access to their largely uninsured deposits.Fifteen years after the global financial crisis, the logic of “too big to fail” still prevails. The financial hardship of student debtors and underwater homeowners is a private problem – but losses sustained by titans of tech and finance are a matter of urgent public interest. Moral hazard for thee, but not for me.What’s more, SVB’s meteoric rise and fall serves as a reminder that many of the guardrails erected after the last crisis have since been dismantled – at the behest of banks like SVB, and with the help of lawmakers from both parties beholden to entrenched finance and tech lobbies.Before becoming the second-largest bank to fail in US history, SVB had transformed itself into a formidable influence machine – both in northern California, where it became the go-to lender for startups, and on Capitol Hill, where it spent close to a million dollars in a five-year period lobbying for the deregulatory policies that ultimately created the conditions for its downfall.“There are many ways to describe us,” SVB boasts on its website. “‘Bank’ is just one.”Indeed, SVB’s management appears to have neglected the basics of actual banking – the bank had no chief risk officer for most of last year, and failed to hedge its bets on interest rates, which ultimately played a key role in the bank’s downfall. In the meantime, the bank’s deposits ballooned from less than $50bn in 2019 to nearly $200bn in 2021.From the moment that Congress passed banking reforms through the 2010 Dodd-Frank law, SVB lobbied to defang the same rules that would probably have allowed regulators to spot trouble sooner. On many occasions, lawmakers and regulators from both parties bowed to the bank’s demands.One of SVB’s first targets was a key Dodd-Frank reform aimed at preventing federally insured banks from using deposits for risky investments. In 2012, SVB petitioned the Obama administration to exempt venture capital from the so-called Volcker Rule, which prevented banks from investing in or sponsoring private equity or hedge funds.​​“Venture investments are not the type of high-risk, ‘casino-like’ activities Congress designed the Volcker Rule to eliminate,” the bank argued to regulators. “Venture capital investments fund the high-growth startup companies that will drive innovation, create jobs, promote our economic growth, and help the United States compete in the global marketplace.”After the Obama administration finalized the Volcker Rule in 2014 without a venture capital carveout, SVB sought its own exemption that would allow it to maintain direct investments in venture capital funds, in addition to providing traditional banking services for roughly half of all venture-backed companies.One such firm was Ribbit Capital, a key investor in the collapsed cryptocurrency exchange FTX, which lauded SVB’s tech-friendly ethos in a 2015 New York Times profile. “You can go to a big bank, but you have to teach them how you are doing your investment,” Ribbit’s founder told the Times. At SBV, “these guys breathe, eat and drink this Kool-Aid every day.”In the transition between the Obama and Trump administrations, SVB got what it wanted: a string of deregulation, based on the idea that the bank posed no threat to the financial system.In 2015, Becker, the CEO, submitted testimony to Congress arguing that SVB, “like our mid-size peers, does not present systemic risks” – and therefore should not be subject to the more stringent regulations, stress tests and capital requirements required at the time for banks with $50bn or more in assets.Two years later, SVB was one of just a handful of banks to receive a five-year exemption from the Volcker Rule, allowing it to maintain its investments in high-risk venture capital funds.The deregulatory drumbeat grew louder in Congress, and in 2018 lawmakers passed legislation increasing to $250bn the threshold at which banks receive enhanced supervision – again, based on the argument that smaller banks would never prove “too big to fail”.The Federal Reserve chairman, Jerome Powell, supported the deregulatory push. Under Powell, a former private equity executive, the Fed in 2019 implemented a so-called “tailoring rule”, further exempting mid-size banks from liquidity requirements and stress tests.Even then, the banks’ lobbying groups continued to push a blanket exemption to the Volcker Rule for venture capital funds, which Powell advocated for and banking regulators granted in 2020.Then, in 2021, SVB won the Federal Reserve’s signoff on its $900m acquisition of Boston Private Bank and Trust, on the grounds that the post-merger bank would not “pose significant risk to the financial system in the event of financial distress”.“SVB Group’s management has the experience and resources to ensure that the combined organization would operate in a safe and sound manner,” Federal Reserve officials wrote.Since the financial crisis, SVB has reported spending more than $2m on federal lobbying efforts, while the bank’s political action committee and executives have made nearly $650,000 in campaign contributions, the bulk to Democrats.Among the highlights of this influence campaign was a 2016 fundraiser for the Democratic senator Mark Warner of Virginia, hosted by Greg Becker in his Menlo Park home. A few months later, Warner and three other Democratic senators wrote to regulators arguing for weaker capital rules on regional banks.Warner went on to become one of 50 congressional Democrats who joined with Republicans to pass the 2018 Dodd-Frank rollback. When asked this week about his vote, Warner said: “I think it put in place an appropriate level of regulation on mid-sized banks … these mid-sized banks needed some regulatory relief.”In the wake of SVB’s collapse, Republicans have not renounced their votes for deregulation – nor have most of the Democrats who joined them, even as Biden is promising a crackdown.Warner took to ABC’s This Week on Sunday to defend his vote; Senator Jeanne Shaheen, the Democrat from New Hampshire, told NBC on Tuesday that “all the regulation in the world isn’t going to fix bad management practices”. Senator Jon Tester, the Democrat from Montana and a co-sponsor of the 2018 deregulatory law, even held a fundraiser in Silicon Valley the day after the SVB bailout was announced.Unless they reverse course, the Silicon Valley Bank bailout could prove politically disastrous for Democrats, who just oversaw the rescue of coastal elites in a moment of ongoing economic pain for everyone else.The good news is that there are straightforward steps that Democrats can take to start fixing things.For example: Senator Elizabeth Warren’s legislation to repeal Trump-era financial deregulation.Democrats can also revisit the areas where Dodd-Frank fell short, including stronger minimum capital requirements, and consider longstanding proposals to disincentivize risky behavior by banks by reforming bankers’ pay. And they should demand that Powell recuse himself from the Federal Reserve investigation of recent bank failures and take a hard look at whether his disastrous record merits outright dismissal under the Federal Reserve Act, which allows the president to fire a central bank chair “for cause”.And yet even now – amid the wreckage of deregulation – these and other measures to better regulate the banks may still be nonstarters among both the Republicans and corporate Democrats who voted for the regulatory rollbacks and have so far shown little sign of repentance.The words of the Illinois Democratic senator Dick Durbin still ring true, 14 years after the financial crisis.“The banks – hard to believe in a time when we’re facing a banking crisis that many of the banks created – are still the most powerful lobby on Capitol Hill,” he said back in 2009. “And they frankly own the place.”If that remains true today, the possibility of change looks grim.
      Rebecca Burns and Julia Rock are reporters for the Lever, an independent investigative news outlet, where a version of this article also appeared More

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      Be serious, conservatives. ‘Wokeness’ didn’t cause Silicon Valley Bank’s demise | Tayo Bero

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      You’d think that witnessing the second-biggest bank failure in US history would be a sobering moment. Since Silicon Valley Bank collapsed on Friday amid a bank run, however, Republicans have instead been twisting themselves into inelegant pretzels to blame “wokeness” for the financial disaster.For context, SVB – which before it collapsed was the 16th largest bank in the US and worth more than $200bn in assets – proudly reported that aside from 45% of its board being women, it also had “1 Black”, “1 LGBTQ+” and “2 Veterans”. According to Republicans, the bank’s focus on “woke” ideals is what led to its ultimate demise.“This bank, they’re so concerned with DEI and politics and all kinds of stuff, I think that really diverted from them focusing on their core mission,” the Florida governor Ron DeSantis told Fox News’s Maria Bartiromo.And according to Donald Trump, Jr: “SVB is what happens when you push a leftist/woke ideology and have that take precedent over common sense business practices. This won’t be the last failure of this nature so long as people are rewarded for pushing this bs.”This is a ridiculous and senseless leap, even for the right. “Wokeness” has gone from being a hamfisted shorthand for progressive overreach to a convenient – if lazy and illogical – explanation for every catastrophe.Of course, the actual circumstances that led to the collapse of SVB are of no importance here. Republicans have said little about the higher interest rates brought on by inflation anxiety and bad government bonds that helped SVB speed toward collapse.They’ve also refused to acknowledge that, as James Downie writes in MSNBC, “SVB might still be around today but for deregulation signed by former President Donald Trump that was supported almost unanimously by Republicans (and even some Democrats).”Look, it’s not easy to decide who deserves sympathy, or the opposite, in this moment. Nobody wants to “side” with a sinking Silicon Valley institution – we’re supposed to be eating the rich, remember? Still, it’s important to remember that while politicians spin this disaster, workers suffer. Americans will probably go without paychecks; some won’t have have jobs when this shakes out.According to The Verge, “Some people already know their paychecks will be [disrupted]; a payroll service company called Rippling had to tell its customers that some paychecks weren’t coming on time because of the SVB collapse.”Most of those people aren’t high-flying Silicon Valley tech founders. For some of these workers, money for rent, groceries, mortgage payments, childcare and other essentials simply isn’t coming.The right has always been contemptuous of corporate solidarity with marginalized people, so their disdain for SVB’s messaging is unsurprising. In a line that truly sounds like something out of an SNL sketch, Home Depot co-founder Bernie Marcus recently claimed on Fox News that SVB collapsed because the bank was overly concerned with global warming.“I feel bad for all of these people that lost all their money in this woke bank,” he said. “It’s depressing to me. Who knows whether the justice department would go after them? They’re a woke company, so I guess not. And they’ll probably get away with it.”The New York Post is also toeing the party line, accusing the bank’s head of risk management of wasting time in “spearheading multiple ‘woke’ LGBTQ+ programs, including a ‘safe space’ for coming-out stories”, even as “the firm raced toward collapse”.God forbid a financial institution be concerned with anything that even remotely falls outside their mandate of self-enrichment.SVB was a part of a Silicon Valley economic machine that has helped drive the tech industry’s success for decades. Initial reporting suggests that shoddy practices at the bank brought about its collapse; either way, that doesn’t change the essentially sad story here.As institutions continue to crumble under the weight of shaky policy and a volatile economy, it’s the people at the very bottom of that food chain who will suffer the most. That’s not because of “wokeness”. It’s just called capitalism.
      Tayo Bero is a Guardian US contributing writer More

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      The Uber campaign: how ex-Obama aides helped sell firm to world

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      The Uber campaign: how ex-Obama aides helped sell firm to worldUber sought access to leaders, officials and diplomats through David Plouffe and Jim Messina, leak shows

      Uber broke laws, duped police and built secret lobbying operation, leak reveals
      It was a Sunday afternoon in early November 2015 when David Plouffe emailed his fellow former Barack Obama campaigner Matthew Barzun, typing “Mr ambassador” in the subject line.Plouffe was working for Uber, and Barzun had been rewarded for his fundraising efforts for the US president with the plum job of American ambassador to the UK.“Hope you and your family are well. I will be in London Dec 9 and 10. Any chance you could host the event you kindly suggested with influencers one of those days? Uber, Trump, Clinton etc lots to discuss … David.”Barzun obliged. “What fun!” the ambassador pinged back. Few people turned down Plouffe when he called in favours. It was just one example of how Uber leveraged Plouffe’s reputation and his access to the Obama network to promote its agenda across Europe and the Middle East, according to documents in the leaked Uber files.The embassy staff organised an event in December built around Plouffe giving a talk on the gig economy, and they invited the business minister Anna Soubry, the shadow business minister Kevin Brennan, influential MPs, government officials, journalists and business people. More

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      Dignity in a Digital Age review: a congressman takes big tech to task

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      Dignity in a Digital Age review: a congressman takes big tech to taskRo Khanna represents Silicon Valley and the best of Capitol Hill and wants to help. His aims are ambitious, his book necessary Just on the evidence of his new book, Ro Khanna is one of the broadest, brightest and best-educated legislators on Capitol Hill. A graduate of the University of Chicago and Yale Law School who represents Silicon Valley, he is by far the most tech-savvy member of Congress.Silicon Holler: Ro Khanna says big tech can help heal the US heartlandRead moreAt this very dark moment for American democracy, this remarkable son of Indian immigrants writes with the optimism and idealism of a first-generation American who still marvels at the opportunities he has had.Even more remarkable for a congressman whose district includes Apple, Google, Intel and Yahoo, Khanna is one of the few who refuses to take campaign money from political action committees.Once or twice in a “heated basketball game” in high school, he writes, someone may have shouted “go back to India!” But what Khanna mostly remembers about his childhood are neighbors in Pennsylvania’s Bucks county who taught him “to believe that dreams are worth pursuing in America, regardless of one’s name or heritage”.His book is bulging with ideas about how to transform big tech from a huge threat to liberty into a genuine engine of democracy. What he is asking for is almost impossibly ambitious, but he never sounds daunted.“Instead of passively allowing tech royalty and their legions to lead the digital revolution and serve narrow financial ends before all others,” he writes, “we need to put it in service of our broader democratic aspirations. We need to steer the ship [and] call the shots.”The story of tech is emblematic of our time of singular inequality, a handful of big winners on top and a vast population untouched by the riches of the silicon revolution. Khanna begins his book with a barrage of statistics. Ninety percent of “innovation job growth” in recent decades has been in five cities while 50% of digital service jobs are in just 10 major metro centers.Most Americans “are disconnected from the wealth generation of the digital economy”, he writes, “despite having their industries and … lives transformed by it”.A central thesis is that no person should be forced to leave their hometown to find a decent job. There is one big reason for optimism about this huge aspiration: the impact of Covid. Practically overnight, the pandemic “shattered” conventional wisdom “about tech concentration”. Suddenly it was obvious that high-speed broadband allowed “millions of jobs to be done anywhere in the nation”.The willingness of millions of Americans to leave big city life is confirmed by red-hot real estate markets in far flung towns and villages – and a Harris poll that showed nearly 40% of city dwellers were willing to live elsewhere.“The promise is of new jobs without sudden cultural displacement,” Khanna writes.He suggests a range of incentives to spread tech jobs into rural areas, including big federal investment to bring high-speed connections to the millions still without them. This is turn would make it possible to require federal contractors to have at least 10% of their workforces in rural communities.The congressman imagines nothing less than a “recentering” of “human values in a culture that prizes the pursuit of technological progress and market valuations”. A vital step in that direction would be a $5bn investment for laptops for 11 million students who don’t have them.The problems of inequality begin at the tech giants themselves. Almost 20% of computer science graduates are black or Latino but only 10% of employees of big tech companies are. Less than 3% of venture capital lands in the hands of Black or Latino entrepreneurs.If redistributing some of big tech’s gigantic wealth is one way to regain some dignity in the digital age, the other is to rein in some of the industry’s gigantic abuses. Data mining and the promotion of hate for profit are the two biggest problems. Khanna has drafted an Internet Bill of Rights to improve the situation.Throughout his book, he drops bits of evidence to suggest just how urgent it is to find a way to make the biggest companies behave better.“Algorithmic amplification” turns out to be one of the greatest evils of the modern age. After extracting huge amounts of data about users, Facebook and the other big platforms “push sensational and divisive content to susceptible users based on their profiles”.An internal discussion at Facebook revealed that “64% of all extremist group joins are due to our recommendations”. The explosion of the bizarre QAnon is one of Facebook’s most dubious accomplishments. In the three years before it finally banned it in 2020, “QAnon groups developed millions of followers as Facebook’s algorithm encouraged people to join based on their profiles. Twitter also recommended Qanon tweets”. The conspiracy theory was “actively recommended” on YouTube until 2019.And then there is the single greatest big tech crime against humanity. According to Muslim Advocates, a Washington-based civil rights group, the Buddhist junta in Myanmar used Facebook and WhatsApp to plan the mass murder of Rohingya Muslims. The United Nations found that Facebook played a “determining role” in events that led to the murder of at least 25,000 and the displacement of 700,000.The world would indeed be a much better place if it adopted Khanna’s recommendations. But the question Khanna is too optimistic to ask may also be the most important one.Have these companies already purchased too much control of the American government for any fundamental change to be possible?
      Dignity in a Digital Age: Making Tech Work For All Of Us is published in the US by Simon & Schuster
      TopicsBooksSilicon ValleyDemocratsUS politicsUS CongressHouse of RepresentativesUS domestic policyreviewsReuse this content More

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      Facebook leak reveals policies on restricting New York Post's Biden story

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      Facebook moderators had to manually intervene to suppress a controversial New York Post story about Hunter Biden, according to leaked moderation guidelines seen by the Guardian.The document, which lays out in detail Facebook’s policies for dealing with misinformation on Facebook and Instagram, sheds new light on the process that led to the company’s decision to reduce the distribution of the story.“This story is eligible to be factchecked by Facebook’s third-party factchecking partners,” Facebook’s policy communications director, Andy Stone, said at the time. “In the meantime, we are reducing its distribution on our platform. This is part of our standard process to reduce the spread of misinformation. We temporarily reduce distribution pending factchecker review.”In fact, the documents show, the New York Post – like most major websites – was given special treatment as part of Facebook’s standard process. Stories can be “enqueued” for Facebook’s third-party factcheckers in one of two ways: either by being flagged by an AI, or by being manually added by one of the factcheckers themselves.Facebook’s AI looks for signals “including feedback from the community and disbelief comments” to automatically predict which posts might contain misinformation. “Predicted content is temporarily (for seven days) soft demoted in feed (at 50% strength) and enqueued to fact check product for review by [third-party factcheckers],” the document says.But some posts are not automatically demoted. Sites in the “Alexa 5K” list, “which includes content in the top 5,000 most popular internet sites”, are supposed to keep their distribution high, “under the assumption these are unlikely to be spreading misinformation”.Those guidelines can be manually overridden, however. “In some cases, we manually enqueue content … either with or without temporary demotion. We can do this on escalation and based on whether the content is eligible for fact-checking, related to an issue of importance, and has an external signal of falsity.” The US election is such an “issue of importance”.In a statement, a Facebook spokesperson said: “As our CEO Mark Zuckerberg testified to Congress earlier this week, we have been on heightened alert because of FBI intelligence about the potential for hack and leak operations meant to spread misinformation. Based on that risk, and in line with our existing policies and procedures, we made the decision to temporarily limit the content’s distribution while our factcheckers had a chance to review it. When that didn’t happen, we lifted the demotion.”The guidelines also reveal Facebook had prepared a “break-glass measure” for the US election, allowing its moderators to apply a set of policies for “repeatedly factchecked hoaxes” (RFH) to political content. “For a claim to be included as RFH, it must meet eligibility criteria (including falsity, virality and severity) and have content policy leadership approval.”The policy, which to the Guardian’s knowledge has not yet been applied, would lead to Facebook blocking viral falsehoods about the election without waiting for them to be debunked each time a new version appeared. A similar policy about Covid-19 hoaxes is enforced by “hard demoting the content, applying a custom inform treatment, and rejecting ads”.Facebook acts only on a few types of misinformation without involving third-party factcheckers, the documents reveal. Misinformation aimed at voter or census interference is removed outright “because of the severity of the harm to democratic systems”. Manipulated media, or “deepfakes”, are removed “because of the difficulty of ‘unseeing’ content so sophisticatedly edited”. And misinformation that “contributes to imminent violence or physical harm” is removed because of the security of imminent physical harm.The latter policy is not normally applied by ground-level moderation staff, but a special exception has been made for misinformation about Covid-19, the document says. Similar exceptions have been made to misinformation about polio in Pakistan and Afghanistan, and to misinformation about Ebola in the Democratic Republic of the Congo.Facebook also has a unique policy around vaccine hoaxes. “Where groups and pages spread these widely debunked hoaxes about vaccinations two or more times within 90 days, those groups and pages will be demoted in search results, all of their content will be demoted in news feed, they will be pulled from recommendation systems and type-ahead in search, and pages may have their access to fundraising tools revoked,” the document reads.“This policy is enforced by Facebook and not third-party factcheckers. Thus, our policy of not subjecting politician speech to factchecking does NOT apply here. If a politician shares hoaxes about vaccines we will enforce on that content.” More