DealBook Briefing: Google’s #MeToo Moment

DealBook Briefing: Google’s #MeToo Moment


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When Andy Rubin, the creator of Android, left Google in 2014, he was given a $90 million exit package and an investment in his next venture. Left unsaid was that he had been accused of sexual misconduct by a fellow employee with whom he’d had an affair.

That was one of several instances where Google protected male executives accused of sexual misconduct, according to an NYT investigation. The tech giant ousted Mr. Rubin and another executive, but gave them big payments despite having no legal obligation to do so. Another executive accused of similar behavior remains in a highly compensated post.

After the NYT article was published, Google’s C.E.O., Sundar Pichai, told his staff that 48 employees had been fired over the past two years for sexual harassment. He added that the company should be a place where “there are serious consequences for anyone who behaves inappropriately.”

Not everyone at Google feels reassured, according to Daisuke Wakabayashi and Katie Benner of the NYT:

“When Google covers up harassment and passes the trash, it contributes to an environment where people don’t feel safe reporting misconduct,” said Liz Fong-Jones, a Google engineer for more than a decade and an activist on workplace issues. “They suspect that nothing will happen or, worse, that the men will be paid and the women will be pushed aside.”

More #MeToo news: A British lawmaker identified Philip Green, the billionaire owner of the Topshop retail chain, as the business executive who sought to block an investigation into sexual misconduct accusations against him. The controversy cast a spotlight on the use of nondisclosure agreements in settling sexual harassment cases.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London.

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Stocks rebounded yesterday from their steep Wednesday plunge, buoyed by strong earnings from major tech companies. But the same sector could drag things down again today.

The S.&P. 500 rose by 1.9 percent yesterday, bringing it back into positive territory for 2018. (The index was up 1.2 percent for the year by the closing bell.) Strong earnings from companies like Twitter and Microsoft seemed to ease some worries of investors, who have been focused on issues like the trade war with China, rising interest rates and the midterms.

Today could be different. Amazon and Google’s parent company, Alphabet, reported disappointing financial results after the markets closed — Amazon’s sales fell short of estimates, while Alphabet’s ad sales slowed — and their shares fell in after-hours trading. Snap fared similarly. U.S. market futures are down this morning, suggesting that another day of declines may be ahead.

But all this whipsawing may not portend gloom, according to Neil Irwin of The Upshot:

The stock market tumble of the last few weeks is not a mystery to be solved, nor a warning of horrible things to come, so much as an inevitable result of the economic expansion reaching a more mature stage. The stock market looks forward, not back — share prices are determined by what investors think the future looks like. And the economic future is starting to look quite different from the past.

An investigation by the WSJ suggests that working at Netflix can be an uncomfortable experience for many people. “To many Netflixers, the culture, at its worst, can also be ruthless, demoralizing and transparent to the point of dysfunctional,” it explains, citing interviews with more than 70 current and former employees.

Some key points from the WSJ’s Shalini Ramachandran and Joe Flint:

• “Employees are encouraged to give one another blunt feedback. Managers are all told to apply a ‘keeper test’ to their staff — asking themselves whether they would fight to keep a given employee — a mantra for firing people who don’t fit the culture and ensuring only the strongest survive.”

• “The firings can be insensitive, several former employees said. Ernie Tam, who had worked as a Netflix engineer for six years, was called into his manager’s office on a Monday morning in 2015. ‘You’re no longer a star performer,’ the manager said. An HR representative came in, discussed Mr. Tam’s severance package and took his laptop.”

• “Once people are fired, Netflix believes in explaining the reasons. The emails about firings can reach hundreds of employees across multiple divisions and can be painfully specific, calling out an employee’s flaws, while inviting more questions and gossip, many employees say.”

The Commerce Department releases third-quarter G.D.P. figures today. Economists predict that economic growth will have slowed to 3.3 percent, from 4.2 percent in the prior three months. Overall, however, the economy still looks on track for its best full-year performance in over a decade. (One big reason: government spending.)

Japan and China may sign some big deals. Prime Minister Shinzo Abe of Japan is visiting Beijing. Reports suggest that the two countries will seek to formalize closer trade and business ties by tomorrow.

Two years ago, Crown Prince Mohammed bin Salman of Saudi Arabia unveiled a plan to wean his country from oil and diversify its economy. But the killing of the Saudi journalist Jamal Khashoggi may have damaged that vision.

Prominent Western business executives like Jamie Dimon of JPMorgan Chase and Larry Fink of BlackRock abandoned this week’s big Saudi investment conference, and the crowd was mostly made up of lower-profile Russian, Asian and Arab attendees. And the scandal may reduce Prince Mohammed’s ability to work with international investors while finding new places to invest his country’s wealth abroad.

Not everyone has abandoned the Saudis — especially not energy executives who are dependent on the country’s oil. Attendees of the conference said it was largely business as usual, with some investors saying that the furor over Mr. Khashoggi’s death will blow over.

As Denis Florin of the consultancy Lavoisier Conseil told the NYT, “Practically, is this going to delay M.B.S.’s ambitions? Yes. Is it going to wreck them? No.”

More Saudi news: The C.I.A. director, Gina Haspel, briefed President Trump on evidence from the Turkish government on Mr. Khashoggi’s killing. Saudi Arabia’s top prosecutor conceded that the journalist’s death appears to have been premeditated. And why the allure of an autocrat promising modernization remains strong.

The renminbi fell by as much as 0.22 percent this morning. That puts it within spitting distance of its lowest level against the dollar since the global financial crisis in 2008, according to the WSJ.

The slide is the latest problem for China’s weakening economy. Last week Beijing reported that the economy was experiencing its slowest growth since 2009, and it has introduced stimulus initiatives to turn things around. So far, none have worked well. Pan Gongsheng, the deputy governor of the People’s Bank of China, said that the central bank would continue to take measures to ensure the currency remains stable, according to Bloomberg.

Treasury Secretary Steven Mnuchin will be watching closely. He has commented on the falling value of the renminbi and warned China not to adjust the currency improperly. Though he has stopped short of labeling the country a currency manipulator, he has warned that the renminbi’s value would be a crucial aspect of trade talks.

Among Donald Trump’s most crucial backers during his presidential campaign was a longtime friend, the investor Tom Barrack. A billionaire deal maker who made his name with transactions for the Plaza hotel and Miramax, Mr. Barrack thought Mr. Trump could make it to the White House — and get him a plum government role.

But Caleb Melby of Bloomberg Businessweek shows that the wager has cost Mr. Barrack and his firm, Colony Capital, a lot:

He damaged relations with the Qatari royal family, his best business partner in the Middle East, by helping orchestrate a relationship between the White House and the Saudis. Meanwhile, Colony hemorrhaged talent, raised only half the debt fund’s target, and entered into an ill-fated merger. Its shares have fallen about 60 percent since Trump’s inauguration, even as U.S. market indexes have risen more than 20 percent.

Megyn Kelly is reportedly negotiating her departure from NBC.

Airbnb hired Aristotle Balogh from Google as its chief technology officer.

Cofco International, a big Chinese trading business, named its C.E.O., Jingtao Chi, as chairman as well.

Deals

• Disappointing quarterly results from independent investment banks suggest that the M.&A. boom is nearing an end. (Lex)

• Sears’s chairman, Eddie Lampert, is reportedly in talks to give the bankrupt retailer another loan — with serious strings attached. (CNBC)

• An activist investor roundup: Nelson Peltz’s Trian wants the paint maker PPG to oust its C.E.O. and potentially break itself up. Bill Ackman’s Pershing Square has taken a 3.7 percent stake in Hilton Worldwide. And Dan Loeb’s Third Point sued Campbell Soup, accusing the company of misinforming shareholders in their proxy fight.

• Four regional German banks are reportedly in talks to merge, which would create the country’s second-biggest lender. (Bloomberg)

Politics and policy

• The investigation into pipe bombs sent to prominent Democratic officials has centered on southern Florida. (NYT)

• President Trump proposed lowering some U.S. drug prices by matching what other countries pay. But the plan may have little effect on the midterms.

• The Fed’s vice chairman, Richard Clarida, defended continuing to raise interest rates. But the president of the Minneapolis Fed, Neel Kashkari, thinks the policy should be paused so that the economy can strengthen.

• Brexit talks reportedly are on hold amid internal disagreements within the cabinet of Prime Minister Theresa May of Britain over how to proceed. (Bloomberg)

Mikhail Gorbachev, the former president of the Soviet Union, and George P. Shultz, the former U.S. secretary of state, urged President Trump not to withdraw from a nuclear arms treaty with Russia.

Trade

• The U.S. is reportedly refusing to resume trade talks with China until Beijing offers firm solutions to the issues that sparked their feud. Also relevant: “How to Win a Cold War With Beijing.”

• A W.T.O. meeting prompted by U.S. complaints about the organization’s lack of action against China did little to address American concerns. (WSJ)

• The Trump administration is wrestling with the scope of new Iran sanctions. (WSJ)

Tech

• President Trump ordered a national spectrum policy to ensure that America maintains a lead in developing 5G technology. (Bloomberg)

• Intel raised its sales forecasts for the year — but its successes are not likely to last very long.

• Apple News’s radical approach? Humans, not machines. (NYT)

• The European Parliament called for a full audit of Facebook in the wake of its recent data scandals. And an investigation found that the social network’s “Paid For” ad disclosure system can be gamed.

• Ride-hailing appears to be linked to more U.S. traffic deaths. (MIT Technology Review)

Best of the rest

• The E.U. economy isn’t heading toward recession, according to the president of the European Central Bank. (NYT)

• Fox News “superfans” can now pay $65 a year for more content. (NYT)

• The next workplace benefit may be paying for your child care. (Axios)

• A portrait created by artificial intelligence sold at Christie’s for $432,500. (NYT)

Thanks for reading! We’ll see you next week.

We’d love your feedback. Please email thoughts and suggestions to bizday@nytimes.com.



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