Facebook – What Facebook Knows – The New York Times
Facebook’s internal affairs
This week, The Wall Street Journal published a bombshell investigation about how Facebook responds to the flaws in its platform. The four-part report, which is largely based on internal documents, suggests that the company often plays down what it knows about these problems. According to The Journal, at least some of the documents have been turned over to the S.E.C. and Congress by a whistle-blower.
A Facebook spokesman responded to the investigation in a tweet: “As the Wall Street Journal itself makes clear, we have a team of experts who help us uncover patterns of harmful behavior so we can disrupt it. We’ve got arguably more experts and resources dedicated to this work than any other consumer technology company in the world.”
Among the investigation’s findings:
Facebook exempts high-profile users from some rules. The system, called “XCheck,” allows at least 5.8 million V.I.P. users to avoid Facebook’s normal enforcement process. The company told its Oversight Board that the system was used in “a small number of decisions.”
Instagram’s own research shows risks to teenagers’ mental health. The service, which is owned by Facebook, has been studying its effect on young users for three years. “We make body image issues worse for one in three teen girls,” read one slide in an internal presentation, according to The Journal. Senators Richard Blumenthal and Marsha Blackburn said that they would launch an inquiry into the research, which Instagram defended in a blog post.
Facebook knows its algorithm rewards outrage. In 2018, the company made changes to its algorithm that it said would encourage interactions among families and friends. But internal research found that publishers and political parties responded by creating content that produced a lot of discussion — often because it was sensational and divisive. “Misinformation, toxicity, and violent content are inordinately prevalent among reshares,” researchers wrote in an internal memo.
Facebook has been slow to stop drug cartels and human traffickers from using its platform. Internal documents reviewed by The Journal revealed that Facebook employees had flagged criminal use of the platform in some countries but received a weak response from the company.
HERE’S WHAT’S HAPPENING
A former World Bank leader is in hot water. An investigation by the bank’s ethics committee found that Kristalina Georgieva, the bank’s former chief, and other top officials pressured staff to raise China’s standing in a 2018 report so as not to anger the country. Georgieva, who now runs the I.M.F., denied accusations that she had acted inappropriately.
Italy makes showing a health pass a requirement to go to work. The country will require some 23 million people to show proof that they have received at least one dose of a coronavirus vaccine, or have recently recovered from Covid, or else take a virus test every two days. Workers who do not comply can be suspended from their jobs and fined.
Retail sales unexpectedly rise, but reveal an uneven pace of recovery. The 0.7 percent gain in August, which came after a 1.8 percent decline in July, was driven by a rise in spending on clothing, electronics, furniture and home goods. But sales at bars and restaurants fell, after a rise in the previous month.
The Fed is re-examining its rules on trading by officials. The move follows an outcry over disclosures that the presidents of the Boston and Dallas regional Fed banks bought and sold stocks and real estate-tied assets last year. The transactions complied with Fed guidelines, but involved securities that could be affected by the central bank’s decisions.
The House calls oil executives in for questioning about misinformation. The House oversight committee has summoned executives from Exxon, Chevron, BP and Shell, as well as related industry groups, to testify next month about their parts in spreading disinformation about the role of fossil fuels in global warming.
Goldman’s new office
This week, Goldman Sachs planted its flag far from any of the world’s major financial centers. It opened a new office in Birmingham, Britain’s second-largest city. So far, about 100 people have been hired or moved there.
The Times’s Eshe Nelson spoke to Richard Gnodde, the head of Goldman Sachs International, at the office’s opening about Goldman’s future in Britain after Brexit and how the investment bank’s return-to-office plans were progressing. The conversation was condensed and edited for clarity.
Business & Economy
Post-Brexit agreements between Britain and the E.U. aren’t forthcoming, so British regulators are reviewing a lot of their financial rules. Is there anything you want to see changed?
Where we would want change is redundant, unnecessary regulation, which pushes up our cost of production because we are filing reports that no one ever looks at.
There’s a set of rules that right now is identical given that we were all joined up 12 months ago. If, on the margin, either side starts tinkering with those rules so there’s just a marginal difference, but no real benefit, we can’t then apply one set of processes across the board. Let’s not make changes for changes’ sake.
Do you expect to move more staff out of London?
We are done with the work that we needed to do for Brexit. But our teams will continue to evolve. And so there will be movement from here into Europe.
Are you planning more acquisitions in Europe?
To the extent that we saw further interesting acquisition opportunities across the asset management space, we’d be interested in that. And something potentially in the consumer space.
You removed social distancing in your British offices, returned them to full occupancy and encouraged staff to return. Did you feel something was lost when most people were working from home?
Every year we bring a lot of people into the firm. And how do you integrate, how do you train those people? Memories fade. The office is our center of gravity, absolutely crystal clear. People should be spending the majority of their time in the office, but around that there can be flexibility.
“It was beyond a small matter of negligence. It was complete and thorough.”
— William Galvin, the Massachusetts secretary of the commonwealth, on MassMutual’s lack of supervision of Keith Gill, the insurer’s former employee who became famous as the meme-stock trader known as “Roaring Kitty.” In a settlement with the state, MassMutual will pay a $4 million fine for failing to adequately oversee Gill, a registered securities broker who had carried out trades on behalf of other people not affiliated with the insurer without its approval.
Setting sail with Bain and Virgin
Virgin Voyages, a joint venture between Bain Capital and Richard Branson’s Virgin Group, made its U.S. debut this week, more than a year later than scheduled. DealBook spoke with Ryan Cotton, the head of the consumer and retail group at Bain, about the venture and the prospects for the cruise industry, which has been upended by the pandemic.
Branson has wanted to start a cruise line for about 25 years, Cotton said. (He still has his original sketches.) Seven years ago, he got serious about it and brought in Bain to help with financing a Virgin-branded cruise ship. The idea was to bring to cruises the same sensibility that Branson brought to his airlines: younger and slightly edgy. (There is a tattoo parlor onboard.)
The venture’s first ship, the Scarlet Lady, has been cruising around Britain this summer on short trips open only to British residents. It was originally supposed to begin operations from the U.S. early last year, just as everything shut down. Some cruise ships were hit hard by Covid outbreaks early in the pandemic, which decimated the industry. But demand among aficionados has proved resilient, giving cruise lines hope.
“The Covid situation has not gone the way any of us expected,” Cotton said. But the vaccine rollout has given the new venture confidence in going ahead with a soft launch of the adult-only cruises in the U.S. Ships are for the vaccinated only, and travelers need to be tested before they board. Onboard precautions include grab-and-go food options, capacity restrictions and an air ionization system.
Your feelings on handshakes
Last week, we wrote about a survey that suggested the majority of people aren’t ready to shake hands again — and may never feel comfortable doing it. We asked readers how the pandemic had changed your approach to greetings, and here’s what some of you said:
“The handshake is outdated. Its origin was to affirm that neither party was armed — hardly a cordial way to start a business meeting. If that’s the pretext of the meeting, you really do have a lot to cover!” — Ed in Connecticut
“I feel that the pandemic has put to bed the hug that many men greet women with. I hope the pandemic brings back a more subtle version of a contactless Regency bow, which can both acknowledge and dismiss without a word said.” — Elizabeth in New York
“A verbal greeting alone feels cold, especially in professional greetings. A bow doesn’t seem to fit here. The elbow bump is just awkward. I’m ready to take up a new ‘greeting custom’ and it would be helpful if we could have some agreement on a sanitary replacement for the sometimes damp, other times weirdly limp, and nearly always germy handshake.” — Jennifer in California
THE SPEED READ
JPMorgan Chase is opening its first overseas retail operation in its history, launching a digital-only lender in Britain next week. (FT)
Japan’s Mitsubishi UFJ Financial Group is reportedly considering a sale of its U.S. banking arm, which has about 300 branches. (Bloomberg)
A Canadian government pension plan committed extra funds to the forthcoming listing of the satellite company Planet Labs via a SPAC merger. (PE Hub)
Private equity has played a part in a record 30 percent of global transactions so far this year. (Bloomberg)
Germany has boomed under Angela Merkel’s leadership, but when she leaves office this month there are signs that the economic success won’t last. (NYT)
New Jersey is divesting from Ben & Jerry’s parent company, Unilever, over the ice cream maker’s decision to stop selling in Israeli-occupied territories. (NYT)
Google and Apple removed a tactical-voting app created by the jailed Russian opposition leader Aleksei Navalny from their local app stores. (NYT)
France’s foreign minister said that Australia’s decision to scrap a submarine deal with the country in favor of a new agreement with the U.S. and Britain was a “knife in the back.” (NYT)
Best of the rest
Piers Morgan will return to Rupert Murdoch’s News Corp. as host of a TV show on its new British channel, talkTV. (NYT)
The World Economic Forum will return to Davos next year after a pandemic-enforced cancellation this year. (Bloomberg)
“Oops, I Accidentally Created a Mini SPAC Meme Stock.” (Bloomberg Opinion)
The father of the C.E.O. of Carvana, the online car dealer, has sold $3.6 billion in company stock over the past year. (Fintech Zoom)
A team of researchers built a room that wirelessly charges your smartphone as soon as you walk in. (Fast Company)
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Facebook – What Facebook Knows – The New York Times
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