Sociologists Examine Hackathons and See Exploitation

As the gospel of Silicon Valley-style disruption spreads to every sector in the economy, so too have the industry’s favorite competitive ritual, hackathons. The contests, where small teams of “hackers” build tech products in marathon all-night coding sessions, are a hallmark of Silicon Valley culture. Recall Facebook’s most famous hackathon, thrown on the eve of its IPO to show the world that the demands of being a public company would not kill the “hacker way” at One Hacker Way.

Now, sponsors ranging from Fortune 500 conglomerates to conference organizers host them. Even New York Fashion Week and the Vatican have hosted hackathons. They’ve become part of a “toolkit” for large organizations seeking a veneer of innovation. Some organizers view them as recruiting opportunities, others as opportunities to evangelize their company’s technology platforms, and others simply want to be associated with something cool and techie. They’re so common that hackathon enthusiast Mike Swift started a company dedicated to organizing and building community around them called Major League Hacking. Last year the company provided services for more than 200 hackathons with more than 65,000 participants.

The phenomenon is attracting attention from academics. One pair of sociologists recently examined hackathons and emerged with troubling conclusions. Sharon Zukin, professor of sociology at Brooklyn College and CUNY Graduate Center, spent a year observing seven hackathons, mostly sponsored by corporations, in New York City, interviewing participants, organizers, and sponsors. In a study called “Hackathons As Co-optation Ritual: Socializing Workers and Institutionalizing Innovation in the ‘New’ Economy,” she and co-author Max Papadantonakis argue that hackathons create “fictional expectations of innovation that benefits all,” which Zukin writes is a “powerful strategy for manufacturing workers’ consent in the ‘new’ economy.” In other words, institutions use the allure of hackathons, with sponsors, prizes, snacks, and potential for career advancement, to get people to work for free.

To Zukin, this is a problem, because hackathons are making the “hacker subculture” they promote into the new work norm. That norm, which coincides with the labor market trend of less-secure employment, encourages professional workers to adopt an “entrepreneurial” career and market themselves for continually shifting jobs. The trend also includes motivating workers with Soviet-style slogans venerating the pleasures of work.

Zukin tells WIRED the unpaid labor of hackathons recalls sociological research on fashion models, who are also expected to spend time promoting themselves on social media, and party girls, who go to nightclubs with male VIPs in hopes of boosting acting or modeling aspirations. Participants are combining self-investment with self-exploitation, she says. It’s rational given the demands of the modern labor market. It’s just precarious work.

Zukin was surprised to find that hackathon participants almost universally view the events positively. Hackathons are often social, emotionally charged, and a way to learn. Swift says his company found that 86 percent of student participants say they learn skills they can’t get in the classroom, and a third of them believe skills they learned at a hackathon helped them get a job.

Zukin observed hackathon sponsors fueling the “romance of digital innovation by appealing to the hackers’ aspiration to be multi-dimensional agents of change,” she writes. The themes of exhaustion (participants often work for 24 or 36 hours straight), achievement, and the belief that this work could bring future financial reward, were prevalent at the events she observed.

To the tech industry and its imitators, these are normal ideas. To a sociologist, they’re exploitative. “From my perspective, they’re doing unpaid work for corporations,” Zukin says. (Even hackathons thrown by schools, non-profits, publishers, and civic organizations tend to have corporate sponsors.)

Viewed through a sociologist’s framework, Zukin says the events’ aspirational messaging—typical Silicon Valley-style futurebabble about changing the world—feels dystopian. Hackathons show “the fault lines of an emerging production system” by embodying a set of “quasi-Orwellian” ideas that are prevalent in the current economic climate, she writes. Zukin encapsulates those ideas in slogans that could be at home on the walls of a WeWork lobby: “Work is Play,” “Exhaustion is Effervescent,” and “Precarity is Opportunity.”

Zukin only examined hackathons that were open to the public. But many companies, like Facebook, host internal hackathons over weekends. Zukin notes that such events, in which employees may feel obligated to participate, are a form of labor control. “They’re just trying to squeeze the innovation out of [their workers],” she says.

Hackathons reflect an asymmetry of power between the hackathons’ corporate sponsors and their participants, the study argues. Their corporate sponsors outsource work, crowdsource innovation, and burnish their reputations while concealing their business goals.

I noticed this phenomenon while reporting on a dozen hackathons between 2012 and 2014. At a 2013 college-sponsored hackathon, it seemed that everyone involved wanted something from the participants: Sponsors wanted to lay the groundwork for potential investments, hire the hackers, convince them to use particular software to build tools and apps, and boost their own reputations by offering cash, snacks and other prizes.

Swift, of Major League Hacking, doesn’t think sponsor involvement is bad for participants. “The corporate sponsors enable these amazing experiences that the students have at these hackathons,” he says. Their sponsorship “demonstrates that the companies understand developers, care about their interest and goals, and are investing in this community,” he says. He notes that because of sponsors, participants get to work with tools they might not have access to, like VR headsets or expensive software platforms.

The irony is that, regardless of whether hackathon participants willingly participate in self-exploitation or are simply having fun and learning, they rarely produce useful innovations that last beyond the event’s 36 hours. Startup lore has plenty of tales of successful companies that were created at hackathons—a popular example is GroupMe, the messaging app created at a TechCrunch hackathon, which sold to Skype for $85 million one year later. But such examples are rare. “Hacks are hacks, not startups,” Swift wrote in a blog post. “Most hackers don’t want to work on their hackathon project after the hackathon ends.”

Hackathons are not particularly effective as recruiting strategies for large companies, either, the study finds. But they sell the dream of self-improvement via technology, something companies want to be associated with regardless of any immediate benefit to their bottom line. As symbols of innovation, they’re not likely to go anywhere anytime soon.

Hacking Away

  • More than 100 students recently coded for 36 hours straight at the Vatican’s first-ever hackathon.
  • Some participants in a federal government hackathon aimed at solutions to the opioid crisis had second thoughts.
  • A photographer documented the networking parties, hackathons and grubby crash pads where techies tap away at their laptops.

Read more: https://www.wired.com/story/sociologists-examine-hackathons-and-see-exploitation/

Martin Shkreli jailed: ‘Pharma Bro’ sentenced to seven years for fraud

Shkreli, convicted of securities fraud and conspiracy, sought leniency from the court after calling the trial a witch-hunt

In a packed Brooklyn courthouse on Friday, Martin Shkreli, the Pharma Bro who rose to international notoriety after increasing the price of a lifesaving drug 50-fold, was sentenced to seven years in prison.

Shkreli, 34, was convicted of two counts of securities fraud and a single count of conspiracy last August. He had dismissed the trial as a silly witch-hunt perpetrated by self-serving prosecutors.

But before his sentencing, Shkreli wrote to Judge Kiyo Matsumoto asking for leniency. I was a fool. I should have known better, he wrote.

Prosecutors had called for 15 years. The defense had pushed for 12 to 18 months.

In court a tearful Shkreli apologized: I did not act appropriately. He said that the government had not brought him down. I took down Martin Shkreli, he said.

Shkreli, who has grown a beard since his time in prison, wore a blue prison uniform and a brown undershirt. He slouched throughout the sentencing, with his chin against his chest or hands interlaced in his lap.

His lawyer, Benjamin Brafman, argued against a lengthy sentence saying the prosecution had painted a dark picture of Shkreli.

He shouldnt be sentenced simply for being Martin Shkreli, said Brafman. Im old enough to be his father. He said there had been times I want to hug and hold him, times I want to punch him in the face for some of the things hes said.

Quite frankly, Ive got my begging voice on, said Brafman.

Federal prosecutors accused Shkreli of cheating investors out of more than $11m between 2009 and 2014 in the investment funds and paying them back as well as financing his own life with money from Retrophin, a pharmaceutical company he founded in 2011.

Summing up they called him a dangerous man who had failed to show contrition, mocked the justice system and needed to be stopped.

The charges were unrelated to the drug scandal that made him nationally notorious and saw him dubbed the most hated man in America.

Shkreli rose to infamy in 2015 when, as the CEO of Turing Pharmaceuticals, he raised the price of Daraprim, a lifesaving drug used by some Aids patients, from $13.50 per pill to $750.

The news sparked a national debate about US drug prices and Shkreli managed the unlikely feat of uniting Hillary Clinton and Donald Trump in condemning his actions.

Shkreli seemed delighted with the attention and began a high-profile campaign trolling his critics, refusing to speak to the congressional committee that summoned him to testify against them while calling lawmakers imbeciles on Twitter.

At the trial his bizarre behavior led prosecutors to call for him to be gagged. He eventually lost bail after he encouraged his fans to obtain a hair off Clintons head: $5,000 but the hair has to include a follicle. Do not assault anyone for any reason ever (LOLIBERALS), he wrote in a now-deleted Facebook post.

Matsumoto said Shkreli had created a danger to the public with his Clinton post. She also noted that a doctor had written to the court stating Shkrelis greed and mendacity had cost one of his patients life and that he had threatened the wife of a former employee, writing: I hope to see you and your four children homeless.

The judge cited emails Shkreli sent while in prison, where he said, Fuck the feds, as evidence that six months in maximum-security prison may not have had the desired effect of deterring Shkrelis behavior.

I would encourage you while in custody to seek mental health treatment, she said.

But she also cited acts of generosity, said he had created no problems in jail and said he was a gifted individual with the capacity for kindness.

John Coffee, director of the Center on Corporate Governance at Columbia Law School, said Shkreli would probably have been prosecuted even without the Daraprim controversy.

Lots of anonymous people get prosecuted for insider trade. If you are the CEO of a company and you are involved in basic common law fraud, I would think that would be reason enough that the prosecution would say we cant ignore this he could do it again, said Coffee.

But his behavior in court and his threat to Clinton didnt help. Im not saying he made life easier being the Pharma Bro that didnt help his case, said Coffee.

Read more: https://www.theguardian.com/us-news/2018/mar/09/martin-shkreli-jail-sentence-how-long-pharma-bro-court-trial

What Led the Middle East’s Top Dealmaker to Step Down

The Middle East’s biggest private equity dealmaker is stepping aside under a cloud of controversy. Arif Naqvi ceded control of the fund-management unit of his Abraaj Group in February on the heels of allegations that money in the company’s health fund had been misused. Naqvi and the company denied any wrongdoing and blamed unforeseen political and regulatory hurdles for a delay in deploying the money. The fund, which invests in hospitals in some of the poorest countries in the world, is a model for replacing aid with accessible, affordable and quality health care using private financing.

1. What’s special about Abraaj?

The 400-person firm has grown to become one of the largest private equity groups in the emerging markets — "growth markets," as Naqvi prefers to call them — with $13.6 billion in assets under management. From its roots in the Middle East, Abraaj now invests in private equity, health care, clean energy, lending and real estate across Africa, Asia, Latin America and Turkey. According to its website, the firm’s $1 billion health-care fund focuses "on improving care in the fields of non-communicable disease and mother and child health in 10 cities, including Lagos, Hyderabad, Karachi, and Nairobi." The fund owns 24 hospitals, 17 clinics and 30 diagnostic clinics across India, Pakistan, Nigeria and Kenya with over 3,200 patient beds.

2. Who invests in its funds?

Abraaj attracts investors, including foundations, sovereign wealth funds and pension funds, pursuing higher returns alongside social goals. The Bill & Melinda Gates Foundation, the World Bank’s International Finance Corp. unit and two government-backed development finance organizations, CDC Group Plc and Proparco Group, are among some two dozen investors in Abraaj’s health fund, and they hired a forensic accountant to examine what happened to some of their money, the Wall Street Journal reported on Feb. 2. (The Seattle, Washington-based Gates Foundation is the world’s largest private philanthropic organization.) Dutch health-equipment company Royal Philips NV, another investor in the health fund, said in a statement on Feb. 5 that it "remains aligned with the fund’s efforts and objectives." Private-equity investors usually commit capital for five to seven years, making it a highly illiquid investment.

3. What happened to the money in question?

Abraaj says it’s all properly accounted for and that some unused capital from its health fund — it didn’t say how much — was returned to investors. It dismissed questions over disappearing money as “inaccurate and misleading" and said it worked with KPMG “to verify all receipts and payments made by the fund." It said the discrepancy between the money it collected and the money it invested was due to delays in its projects. The health fund also invests in greenfield and brownfield projects unlike standard private equity funds and so the timing of the deployment of capital is less predictable, Abraaj said. Retaining capital where an investment is delayed also met the terms of the fund’s limited partnership agreement, it said.

4. What changes has Abraaj made?

It said it’s separating Abraaj Holdings, the parent company, from Abraaj Investment Management Ltd., which manages the private equity funds. Naqvi will remain the chief executive officer of Abraaj Holdings and retain a non-executive role on the fund division’s investment committee, but will step down as committee chairman. Two younger executives, Omar Lodhi and Selcuk Yorgancioglu, become co-chief executive officers of the fund manager. No new capital commitments will be made until the reorganization is complete. Naqvi said in an interview last month that he’d outlined his plans to transition from his role and separate asset management from the holding company in a January 2017 memo to staff. The moves were accelerated by the recent news reports, he said.

5. Who is Naqvi?

A pioneer in the Mideast buyout market, Naqvi, 57, has been a conduit to the developing world for socially responsible global investors like Gates. Born in Karachi, Pakistan, Naqvi graduated from the London School of Economics, began his career in accounting at Arthur Andersen LLP and worked in Saudi Arabia for billionaire Suliman Olayan. He founded Dubai-based Abraaj in 2002 and worked with Gates on health-care projects in Africa and Asia since 2014. Abraaj began raising money for its health fund in 2015.

6. What’s next for Naqvi?

He will spend his time talking about “how private capital can serve the needs of communities that need it," and how to achieve world development goals, he said in the interview. He will no longer be involved in executing deals, governance, reporting structures and the day-to-day running of Abraaj’s fund management business.

The Reference Shelf

    Quotes from this Article

    Read more: https://www.bloomberg.com/news/articles/2018-03-02/what-led-the-middle-east-s-top-dealmaker-to-step-down-quicktake

    A Hurricane Flattens Facebook

    Two weeks ago, Facebook learned that The New York Times, Guardian, and Observer were working on blockbuster stories based on interviews with a man named Christopher Wylie. The core of the tale was familiar but the details were new, and now the scandal was attached to a charismatic face with a top of pink hair. Four years ago, a slug of Facebook data on 50 million Americans was sucked down by a UK academic named Aleksandr Kogan, and wrongly sold to Cambridge Analytica. Wylie, who worked at the firm and has never talked publicly before, showed the newspapers a trove of emails and invoices to prove his allegations. Worse, Cambridge appears to have lied to Facebook about entirely deleting the data.

    To Facebook, before the stories went live, the scandal appeared bad but manageable. The worst deeds had been done outside of Facebook and long ago. Plus, like weather forecasters in the Caribbean, Facebook has been busy lately. Just in the past month, they’ve had to deal with scandals created by vacuous Friday tweets from an ad executive, porn, the darn Russian bots, angry politicians in Sri Lanka, and even the United Nations. All of those crises have passed with limited damage. And perhaps that’s why the company appears to have underestimated the power of the storm clouds moving in.

    Facebook has burned its fingers on issues of data privacy frequently in its 14 year history. But this time it was different.

    On Friday night, the company made its first move, jumping out in front of the news reports to publish its own blog post announcing that it was suspending Cambridge Analytica’s use of the platform. It also made one last stern appeal to ask The Guardian not to use the word “breach” in its story. The word, the company argued, was inaccurate. Data had been misused, but moats and walls had not been breached. The Guardian apparently did not find that argument sympathetic or persuasive. On Saturday its story appeared, “Revealed: 50 million Facebook profiles harvested for Cambridge Analytica in major data breach.”

    The crisis was familiar in a way: Facebook has burned its fingers on issues of data privacy frequently in its 14 year history. But this time it was different. The data leakage hadn’t helped Unilever sell mayonnaise. It appeared to have helped Donald Trump sell a political vision of division and antipathy. The news made it look as if Facebook’s data controls were lax and that its executives were indifferent. Around the world lawmakers, regulators, and Facebook users began asking very publicly how they could support a platform that didn’t do more to protect them. Soon, powerful politicians were chiming in and demanding to hear from Zuckerberg.

    As the storm built over the weekend, Facebook’s executives, including Mark Zuckerberg and Sheryl Sandberg, strategized and argued late into the night. They knew that the public was hammering them, but they also believed that the fault lay much more with Cambridge Analytica than with them. Still, there were four main questions that consumed them. How could they tighten up the system to make sure this didn’t happen again? What should they do about all the calls for Zuckerberg to testify? Should they sue Cambridge Analytica? And what could they do about psychologist Joseph Chancellor, who had helped found Kogan’s firm and who now worked, of all places, at Facebook?

    By Monday, Facebook remained frozen, and Zuckerberg and Sandberg stayed silent. Then, late in the afternoon in Menlo Park, more bad news came. The New York Times reported that Alex Stamos, the company’s well-respected chief of security, had grown dissatisfied with the top of senior management and was planning to exit in a few months. Some people had known this for a while, but it was still a very bad look. You don’t want news about your head of data security bailing when you’re having a crisis about how to secure your data. And then news broke that Facebook had been denied in its efforts to get access to Cambridge Analytica’s servers. The United Kingdom’s Information Commissioner’s Office, which had started an investigation, would handle that.

    A company-wide Q&A was called for Tuesday but for some reason it was led by Facebook’s legal counsel, not its leaders, both of whom have remained deafeningly silent and both of whom reportedly skipped the session. Meanwhile, the stock had collapsed, chopping $36 billion off the company’s market value on Monday. By mid-Tuesday morning, it had fallen 10 percent since the scandal broke. What the company expected to be a tough summer storm had turned into a Category 5 hurricane.

    Walking in the Front Door

    The story of how Kogan ended up with data on 50 million American Facebook users sounds like it should involve secret handshakes and black hats. But Kogan actually got his Facebook data by just walking in Facebook’s front door and asking for it. Like all technology platforms, Facebook encourages outside software developers to build applications to run inside it, just like Google does with its Android operating system and Apple does with iOS. And so in November 2013 Kogan, a psychology professor at the University of Cambridge, created an application developer account on Facebook and explained why he wanted access to Facebook’s data for a research project. He started work soon thereafter.

    Kogan had created the most anodyne of tools for electoral manipulation: an app based on personality quizzes. Users signed up and answered a series of questions. Then the app would take those answers, mush them together with that person’s Facebook likes and declared interests, and spit out a profile that was supposed to know the test-taker better than he knew himself.

    About 270,000 Americans participated. However what they didn’t know was that by agreeing to take the quiz and giving Facebook access to their data, they also granted access to many of their Facebook friends’ likes and interests as well. Users could turn off this setting, but it’s hard to turn off something you don’t know exists and that you couldn’t find if you did. Kogan quickly ended up with data on roughly 50 million people.

    About five months after Kogan began his research, Facebook announced that it was tightening its app review policies. For one: Developers couldn’t mine data from your friends anymore. The barn door was shut, but Facebook told all the horses already in the pasture that they had another year to run around. Kogan, then, got a year and a half to do his business. And when the stricter policies went into effect, Facebook promptly rejected version two of his app.

    By then Kogan had already mined the data and sold it to Cambridge Analytica, violating his agreement with Facebook and revealing one of the strange asymmetries of this story. Facebook knows everything about its users—but in some ways it knows nothing about its developers. And so Facebook didn’t start to suspect that Kogan had misused its data until it read a blaring headline in The Guardian in December 2015: “Ted Cruz using firm that harvested data on millions of unwitting Facebook users.”

    That story passed out of the cycle quickly though, swept away by news about the Iowa caucuses. And so while Facebook’s legal team might have been sweating at the end of 2015, outwardly Zuckerberg projected an air of total calm. His first public statement after the Guardian story broke was a Christmas note about all the books he’d read: “Reading has given me more perspective on a number of topics – from science to religion, from poverty to prosperity, from health to energy to social justice, from political philosophy to foreign policy, and from history to futuristic fiction.”

    An Incomplete Response

    When the 2015 Guardian story broke, Facebook immediately secured written assertions from Cambridge Analytica, Kogan, and Christopher Wylie that the data had been deleted. Lawyers on all sides started talking, and by the early summer of 2016 Facebook had more substantial legal agreements with Kogan and Wylie certifying that the data had been deleted. Cambridge Analytica signed similar documents, but their paperwork wasn’t submitted until 2017. Facebook’s lawyers describe it as a tortured and intense legal process. Wylie describes it as a pinkie promise. “All they asked me to do was tick a box on a form and post it back,” he told the Guardian.

    Facebook’s stronger option would have been to insist on an audit of all of Cambridge Analytica’s machines. Did the data still exist, and had it been used at all? And in fact, according to the standard rules that developers agree to, Facebook reserves that right. “We can audit your app to ensure it is safe and does not violate our Terms. If requested, you must provide us with proof that your app complies with our terms,” the policy currently states, as it did then.

    Kogan, too, may have merited closer scrutiny regardless, especially in the context of the 2016 presidential campaign. In addition to his University of Cambridge appointment, Kogan was also an associate professor at St. Petersburg State University, and had accepted research grants from the Russian government.

    'All options are on the table.'

    Paul Grewal, Facebook Deputy General Counsel

    Why didn’t Facebook conduct an audit—a decision that may go down as Facebook’s most crucial mistake? Perhaps because no audit can ever be completely persuasive. Even if no trace of data exists on a server, it could still have been stuck on a hard-drive and shoved in a closet. Facebook’s legal team also insists that an audit would have been time-consuming and would have required a court order even though the developer contract allows for one. A third possible explanation is fear of accusations of political bias. Most of the senior employees at Facebook are Democrats who blanch at allegations that they would let politics seep into the platform.

    Whatever the reason, Facebook trusted the signed documents from Cambridge Analytica. In June 2016, Facebook staff even went down to San Antonio to sit with Trump campaign officials and the Cambridge Analytica consultants by their side.

    To Facebook, the story seemed to go away. In the year following Trump’s victory, public interest advocates hammered Cambridge Analytica over its data practices, and other publications, particularly The Intercept, dug into its practices. But Facebook, according to executives at the company, never thought to double check if the data was gone until reporters began to call this winter. And then it was only after the story broke that Facebook considered serious action including suing Cambridge Analytica. A lawyer for the company, Paul Grewal, told WIRED on Monday evening that “all options are on the table.”

    What Comes Next

    Of Facebook’s many problems, one of the most confusing appears to be figuring out what to do with Chancellor, who currently works with the VR team. He may know about the fate of the user data, but this weekend the company was debating how forcefully it could ask him since it could be considered a violation of rules protecting employees from being forced to give up trade secrets from previous jobs.

    A harder question is when, and how exactly, Zuckerberg and Sandberg should emerge from their bunkers. Sandberg, in particular, has passed through the crucible of the past two years relatively unscathed. Zuckerberg’s name now trends on Twitter when crises hit, and this magazine put his bruised face on the cover. Even Stamos has taken heat during the outcry over the Russia investigation. And a small bevy of brave employees have waded out into the rushing rivers of Twitter, where they have generally been sucked below the surface or swept over waterfalls.

    At its core, according to a former Facebook executive, the problem is really an existential one.

    The last most vexing question is what to do to make Facebook data safer. For much of the past year, Facebook has been besieged by critics saying that it should make its data more open. It should let outsiders audit its data and peer around inside with a flashlight. But it was an excess of openness with developers—and opaque privacy practices—that got the company in trouble here. Facebook tightened up third-party access in 2015, meaning an exact replay of the Cambridge Analytica fiasco couldn’t happen today. But if the company decides to close down even further, then what happens to the researchers doing genuinely important work using the platform? How well can you vet intentions? A possible solution would be for Facebook to change its data retention policies. But doing so could undermine how the service fundamentally works, and make it far more difficult to catch malevolent actors—like Russian propaganda teams—after the fact.

    User data is now the foundation of the internet. Every time you download an app, you give the developer access to bits of your personal information. Every time you engage with any technology company—Facebook, Google, Amazon, and so on—you help build their giant database of information. In exchange, you trust that they won’t do bad things with that data, because you want the services they offer.

    Responding to a thread about how to fix the problem, Stamos tweeted, “I don’t think a digital utopia where everybody has privacy, anonymity and choice, but the bad guys are magically kept out, can exist.”

    At its core, according to a former Facebook executive, the problem is really an existential one. The company is very good at dealing with things that happen frequently and have very low stakes. When mistakes happen, they move on. According to the executive, the philosophy of the company has long been “We’re trying to do good things. We’ll make mistakes. But people are good and the world is forgiving.”

    If Facebook doesn’t find a satisfactory solution, it faces the unsavory prospect of heavy regulation. Already in the UK, the General Data Protection Regulation rule will give people much more insight and control over what data companies like Facebook take, and how it’s used. In the US, senators like Ron Wyden, Mark Warner, Amy Klobuchar, and others may have the appetite for similar legislation, if Facebook’s privacy woes continue.

    Facebook will hold its all-hands today, and hope for that inevitable moment when something horrible happens elsewhere and everyone’s attention turns. But it also knows that things might get worse, much worse. The nightmare scenario will come if the Cambridge Analytica story fully converges with the story of Russian meddling in American democracy: if it turns out that the Facebook data harvested by Cambridge Analytica ended up in the hands of Putin’s trolls.

    At that point, Facebook will have to deal with yet another devastating asymmetry: data from a silly quiz app, created under obsolete rules, fueling a national security crisis. But those asymmetries are just part of the nature of Facebook today. The company has immense power, and it’s only begun to grapple with its immense responsibility. And the world isn’t as forgiving of Silicon Valley as it used to be.

    Facebook and Cambridge Analytica

    This story has been updated to include further details about Tuesday's company-wide meeting.

    Read more: https://www.wired.com/story/facebook-cambridge-analytica-response/

    Billionaire Packer Quits Crown Amid Mental Health Issues

    • Packer to step back from all commitments, spokesman says
    • Gaming mogul only returned to the board seven months ago

    Billionaire James Packer quit the board of his casino operator Crown Resorts Ltd. due to mental health issues, the latest turn in a turbulent private and business life that’s seen his overseas gaming empire unravel.

    The 50-year-old Australian plans to step back from all commitments, said a spokesman, who didn’t elaborate on Packer’s illness.

    Crown stock fell as much as as 1.7 percent in Sydney trading. The billionaire’s private investment company, Consolidated Press Holdings, owns about 47 percent of Crown Resorts.

    Twice-divorced Packer has endured a tumultuous few years, from the public breakup of his engagement with pop diva Mariah Carey, to the conviction of Crown employees in China in 2017 for illegally promoting gambling.

    Today’s announcement comes about seven months after Packer returned to Crown’s board in the wake of the China crackdown. That ultimately led to Crown’s exit from Macau and the closure of most of its Asian offices. Packer has had an on-again, off-again involvement with the company since stepping down as chairman and then as a director in 2015.

    “He’s a large figure in the business world and there’s a lot more scrutiny of what he does than of others,” said Evan Lucas, an independent market analyst and consultant based in Melbourne. “He has been under a reasonable amount of pressure. It’s a sad story to hear.”

    Lucas said Crown “will get through it” without Packer because there’s enough leadership on the board already.

    Crown shares were down 0.9 percent at A$12.96 at 11:28 a.m., valuing the Melbourne-based company at A$8.9 billion ($6.8 billion).

    “Mr. James Packer today resigned from the board of Crown Resorts Ltd. for personal reasons,” a Consolidated Press spokesman said by e-mail. “Mr. Packer is suffering from mental health issues. At this time he intends to step back from all commitments.”

    In a rare interview with the Australian newspaper in October last year, Packer revealed he wanted a more “simple life” and acknowledged he had lost friends, put on weight and had led a reclusive life at his polo estate in Argentina.

    “It has been a tumultuous four or five years for me,” Packer said in the interview.

    A separate statement Wednesday by Crown Executive Chairman John Alexander didn’t elaborate further on Packer’s reasons for quitting.

    “We have appreciated James’ contribution to the board and respect his decision to step down,” Alexander said.

    Read more: https://www.bloomberg.com/news/articles/2018-03-20/billionaire-packer-quits-crown-board-just-months-after-return

    Singapore Plans to Boost Goods and Services Tax to 9%

    Singapore Finance Minister Heng Swee Keat announced a range of tax increases in his budget, including a surprise hike in property levies, as he seeks to shore up savings to cope with a rapidly aging population.

    The stamp duty on residential properties in excess of S$1 million ($761,600) was increased to 4 percent from 3 percent, effective from Tuesday, Heng said in a speech in Parliament. The government also plans to raise the goods and services tax by 2 percentage points to 9 percent sometime from 2021 to 2025, he said.

    “There is a need to strengthen our fiscal footing,” Heng said. “In the next decade, between 2021 to 2030, if we do not take measures early, we will not have enough revenues to meet our growing needs.”

    Policy makers had warned of higher taxes to balance a budget that they see as too reliant on investment returns, and that will see new strains in the years to come. Spending on health and retirement benefits are set to grow over the years as the elderly population climbs, while the government is also planning on higher expenditure on infrastructure, security and education.

    “The message is that the economy is maturing, the population is aging,” said Irvin Seah, an economist at DBS Group Holdings Ltd. “In order to cater to the needs to various segments of the society going forward — corporations, individuals young and old — this budget is about re-balancing.”

    While Singapore has substantial reserves that it draws on to help fund the budget, Heng said the government must act prudently as the economy matures and the population ages. Income from reserves and investments managed by GIC Pte, Temasek Holdings Pte and the Monetary Authority of Singapore is already the largest contributor to the government’s overall revenue, estimated at almost S$16 billion in the fiscal year beginning April 1.

    The hike in GST is set to boost revenue by almost 0.7 percent of GDP a year. Heng said the timing of the increase will depend on the state of the economy, how much expenditures grow and how buoyant the existing taxes are, but added that he expects “we will need to do so earlier rather than later in the period.”

    Stiff Competition

    Even with increase, Singapore boasts sales tax that's on the lower side in Asia

    Source: Ernst & Young, Singapore Ministry of Finance

    Notes: Singapore Finance Minister Heng Swee Keat said Feb. 19 that government plans to raise GST to 9% "sometime in the period from 2021 to 2025." Other country "standard rates" for GST as reported in Ernst & Young 2017 tax guide. India GST varies by region.

    “The GST increase is necessary because even after exploring various options to manage our future expenditures through prudent spending, saving and borrowing for infrastructure, there is still a gap,” the minister said. “This boost in revenues will be vital in closing this gap.”

    The budget includes planned offsets to cushion the blow to lower-income consumers from higher taxes, while the delayed implementation of the tax increases will allow residents to ease into the changes.

    Singapore is facing a severe aging crisis. The share of the population that’s 65 years and older is set this year to match those younger than 15 for the first time. The fertility rate remains half the global average, at 1.2 births per woman in 2015, according to World Bank data. And the government has maintained fairly strict immigration policies to ensure locals have enough job opportunities.

    For now, Singapore’s economic outlook for 2018 remains bright. The boom in global trade last year that’s helped spur manufacturing, especially in semiconductors, is spreading to other sectors of the economy. The government sees growth at slightly above the middle of its forecast range of 1.5 to 3.5 percent this year, moderating from last year’s expansion of 3.6 percent.

    “As a small and open economy, we will always be vulnerable to fluctuations in the global economy and financial markets,” Heng said. “We can never predict where or when the next crisis will come. But we know, when the next crisis hits, we will be able to weather the storm because we have our reserves.”

      Key Highlights from Budget

      • GST to be increased to 9% from 7% sometime from 2021 to 2025
      • Budget surplus for FY2017 estimated at S$9.6 billion versus previous projection of S$1.9 billion; deficit of S$0.6 billion seen for FY2018
      • Tax on imported services, such as online video and music streaming websites, with effect from 2020
      • Carbon tax of S$5 per ton from 2019 
      • Infrastructure spending raised to S$20 billion in FY2018
      • Top marginal stamp duty for properties raised to 4% from 3%

      Read more: http://www.bloomberg.com/news/articles/2018-02-19/singapore-plans-to-boost-gst-to-9-as-spending-pressures-mount

      Remingtons Bankruptcy May Be the Tip of the Iceberg

      Firearms companies face declining sales, falling stock prices and tremendous debt. Gunmaker American Outdoor Brands Corp., formerly known as Smith & Wesson, has seen its stock plummet by almost half from 2017. On Monday, Remington Outdoor Co., an iconic, 200-year-old American firearms manufacturer, announced it’s planning to file for bankruptcy.  

      With Republicans in control of Washington, there’s little chance of firearm regulation—even in the face of Wednesday’s massacre in Florida. When Barack Obama was president or Democrats controlled Congress, gun sales would generally rise after a mass shooting for fear of more restrictive laws. The gun lobby pushed these worries despite a lack of significant legislative effort by the Obama administration. Now that Donald Trump is in the Oval Office, fear of new gun laws has receded, industry executives have said. And so have sales, hurting both retailers and manufacturers such as Remington.

      In December, James Debney, chief executive officer of American Outdoor, said “fear-based” buying of firearms had stopped. According to data collected by the FBI’s National Instant Criminal Background Check System, a barometer for firearms sales, January 2018 was the slowest in gun purchases since 2012. Even on Thursday, after gunmaker stocks rose in premarket trading, shares headed back down by afternoon. (The assault rifle used in the Parkland high school attack was a Smith & Wesson AR-15, police said.)

      Following gun stores and manufacturers, the next victim of the industry’s political success could be distributors. Because most are privately owned, earnings data are hard to come by. Still, company debt can offer a glimpse into their financial health. The declining performance of a $140 million loan to distributor United Sporting Cos., for example, suggests there may be a problem. 

      United is a private equity-owned holding company whose subsidiaries include Ellett Brothers and Jerry’s Sport Center, two gun distributors that work with more than 30,000 independent retailers across all 50 states (Sturm, Ruger & Co. says 15 percent of its sales are to the two subsidiaries). They distribute hunting and shooting-sports products, including handguns, ammunition, silencers and holsters. In 2016, Jerry’s was named “distributor of the year” by Marlin Firearms, a company owned by Remington.

      A $140 million loan extended to United fell to less than half of its face value last year, according to U.S. Securities and Exchange Commission filings by the loan’s holder, the business development company Prospect Capital Corp. 

      Since Prospect makes loans to private companies but has issued shares to the public, it’s required to disclose its financials, even when the companies on the hook for the loan are not. In Prospect’s annual report for 2017, the company said a fair value of its loan to United was almost $47 million—about 33 percent of its face value. That was down from 94 percent in its report for the quarter ended March 31, 2017.

      Michael Grier Eliasek, a director of Prospect, said in the securities filing that United had been hit by a cyclical slowdown in gun sales, as well as by the bankruptcy of a major customer, sporting goods retailer Gander Mountain. 

      United and Prospect didn’t immediately respond to requests for comment.

      “When there are elections that go a certain way, there tends to be a slowdown in sales to the firearms sector for the first six or nine months or so, and then there’s a more of a normalization thereafter,” Eliasek said in an August conference call when he was asked about the writedown, which at that time was 59 percent of face value. 

        Read more: http://www.bloomberg.com/news/articles/2018-02-16/remington-s-bankruptcy-may-be-the-tip-of-the-iceberg

        School Shooting Suspect Made ‘Disturbing’ Social Media Posts

        Parkland, Fla. (AP) — The suspect in a deadly rampage at a Florida high school is a troubled teenager who posted disturbing material on social media before the shooting spree that killed at least 17 people, according to a law enforcement official and former schoolmates.

        Broward County Sheriff Scott Israel said the 19-year-old suspect, Nikolas Cruz, had been expelled from Marjory Stoneman Douglas High School for "disciplinary reasons."

        "I don't know the specifics," the sheriff said.

        However, Victoria Olvera, a 17-year-old junior, said Cruz was expelled last school year after a fight with his ex-girlfriend's new boyfriend. She said Cruz had been abusive to his girlfriend.

        School officials said Cruz was attending another school in Broward County after his expulsion.

        Broward County Mayor Beam Furr said during an interview with CNN that the shooter was getting treatment at a mental health clinic for a while, but that he hadn't been back to the clinic for more than a year.

        "It wasn't like there wasn't concern for him," Furr said.

        "We try to keep our eyes out on those kids who aren't connected … Most teachers try to steer them toward some kind of connections. … In this case, we didn't find a way to connect with this kid," Furr said.

        Israel said investigators were dissecting the suspect's social media posts.

        "And some of the things that have come to mind are very, very disturbing," he added without elaborating.

        Daniel Huerfano, a student who fled Wednesday's attack, said he recognized Cruz from an Instagram photo in which Cruz posed with a gun in front of his face. Huerfano recalled Cruz as a shy student and remembered seeing him walking around with his lunch bag.

        "He was that weird kid that you see … like a loner," he added.

        Dakota Mentcher, a 17-year-old junior, said he used to be close friends with Cruz but hadn't seen him in more than a year following his expulsion from school.

        "He started progressively getting a little more weird," Mentcher said.

        Mentcher recalled Cruz posting on Instagram about killing animals and said he had talked about doing target practice in his backyard with a pellet gun.

        "He started going after one of my friends, threatening her, and I cut him off from there," Mentcher said.

        "I think everyone had in their minds if anybody was going to do it, it was going to be him," Mentcher said.

        Broward County School District Superintendent Robert Runcie told reporters on Wednesday afternoon that he did not know of any threats posed by Cruz to the school.

        "Typically you see in these situations that there potentially could have been signs out there," Runcie said. "I would be speculating at this point if there were, but we didn't have any warnings. There weren't any phone calls or threats that we know of that were made."

        However, a teacher told The Miami Herald that Cruz may have been identified as a potential threat to other students. Jim Gard, a math teacher who said Cruz had been in his class last year, said he believes the school had sent out an email warning teachers that Cruz shouldn't be allowed on campus with a backpack.

        "There were problems with him last year threatening students, and I guess he was asked to leave campus," Gard said.

        ___

        This story has been corrected to show that Dakota Mentcher, not Victoria Olvera, said, "I think everyone had in their minds if anybody was going to do it, it was going to be him."

          Read more: https://www.bloomberg.com/news/articles/2018-02-15/school-shooting-suspect-made-disturbing-social-media-posts

          For Chinas Wealthy, Singapore Is the New Hong Kong

          When more than 80 of China’s wealth managers gathered recently at the Shangri-La hotel on Singapore’s resort island of Sentosa, the chatter during tea breaks kept returning to one theme: Hong Kong is starting to be eclipsed by Singapore as the favorite destination for the wealth of China’s rich.

          At stake for banks in both cities is a huge pile of money. China’s high-net-worth individuals control an estimated $5.8 trillion—almost half of it already offshore, according to consulting firm Capgemini SE. For some, the city-state of Singapore is preferable because it’s at a safer distance from any potential scrutiny from authorities in Beijing, according to interviews with several wealth managers. Multiple private banking sources in Singapore, who would not comment on the record because of the sensitivity of the subject, report seeing increased flows at the expense of Hong Kong.

          The rich may be feeling exposed by changing banking practices. Hong Kong has signed tax transparency agreements that for the first time last year required all banks to report their account holders’ information to Hong Kong tax officials, in preparation for giving that information to 75 jurisdictions, including mainland China. Singapore will have similar agreements with 61 jurisdictions. But they don’t include either Hong Kong or Beijing, meaning its accounts and account holders aren’t visible to the Chinese government. “Many rich people from the mainland believe Hong Kong is still a part of China, after all,” says Xia Chun, chief research officer at Noah Holdings Ltd. of Hong Kong, an asset management service provider. “They think there’s no difference in putting money in Hong Kong, compared to Beijing.”

          At the same time, more Chinese banks in Hong Kong are “trying to synchronize their internal systems with those on the mainland to improve service efficiency,” says Eva Law, the Hong Kong-based founder of the Association of Private Bankers in Greater China Region. “This also means the clients’ information will become more transparent and the mainland can identify fund flows more easily, or will have fuller and faster access to your asset holdings, thus enabling easier investigation and tracing.”

          Overall, Hong Kong remains the primary destination for China’s offshore money, according to a Capgemini survey, followed by Singapore and New York. Yet the number of Chinese high-net-worth individuals who view Hong Kong as their preferred overseas place of investment is down to 53 percent, from 71 percent two years ago, according to a survey in July by Bain & Co. More than 20 percent favor Singapore, up from 15 percent two years ago. “Singapore is the Zurich of the East,” says Xiao Xiao, the Beijing-based chief operating officer of Chinese wealth manager Fortunes Capital.

          “We see Singapore, not Hong Kong, as the bridgehead of China’s investment overseas,” says Li Qinghao, co-founder of NewBanker Tech Consulting, which organized the Sentosa conference last year. About 78 percent of S$2.7 trillion ($1.9 trillion) in assets under management in Singapore comes from overseas sources. Morgan Stanley, JPMorgan Chase & Co., and other firms with big private banking operations are building up their teams of China relationship managers in Singapore.

          China has been tightening its grip on Hong Kong. A year ago, Chinese financier Xiao Jianhua was reported by local media to have been seized from a Hong Kong hotel by Chinese authorities and taken to the mainland. The incident followed the disappearance of several Hong Kong booksellers who sold books critical of China’s Communist Party and were reported to have been taken involuntarily across the border.

          Then there are the increased restrictions on Hong Kong’s financial practices, such as a 2016 crackdown on sales of certain types of insurance products to mainland Chinese. The products pay dividends over a number of years and are essentially viewed as investments—and potentially a way to send money out of China and evade capital controls. “The Hong Kong market is now heavily affected by mainland China,” says Guan Huanyu, president of Beijing-based wealth manager Zhenghe Holdings, who attended the Sentosa event.

          While Hong Kong’s Securities & Futures Commission doesn’t break down the origin of funds, its data show that growth in the city’s private banking business has been slowing. Hong Kong logged 10.7 percent growth in private banking assets under management in 2016, down from 18 percent in 2015.

          Singapore has additional attractions for the wealthy of China. Mandarin is one of its four official languages, and it has world-class health facilities and international schools. Not far from the Shangri-La Hotel, Sentosa’s casinos are a popular draw for Chinese tourists. Mainland Chinese were the largest foreign buyers of luxury properties in Singapore during the first half of last year, according to consultancy Cushman & Wakefield. Real estate is far cheaper than in Hong Kong.

          But mainly, the rich like to diversify—not only among asset classes, but among political regimes. “Most of our clients have undergone a shift from poor to rich,” says Kou Quan, vice president at Tianjin-based Xinmao S&T Investment Group. “And they’re all worried about becoming poor again.”

            BOTTOM LINE – Hong Kong’s financial sector is becoming more entwined with the mainland, prompting more and more of China’s rich to turn to Singapore.

            Read more: http://www.bloomberg.com/news/articles/2018-02-06/for-china-s-wealthy-singapore-is-the-new-hong-kong

            Volkswagen Apologizes for Testing of Diesel Fumes on Monkeys

            The controversy over Volkswagen AG’s diesel-emissions cheating took another twist when the carmaker apologized for a test that exposed monkeys to engine fumes to study effects of the exhaust.

            The company said the study, conducted by a research and lobby group set up by VW, Daimler AG, BMW AG and Robert Bosch GmbH, was a mistake. The New York Times reported earlier about a 2014 trial in a U.S. laboratory in which 10 monkeys inhaled diesel emissions from a VW Beetle.

            “We apologize for the misconduct and the lack of judgment of individuals,” Wolfsburg, Germany-based VW said in a statement. “We’re convinced the scientific methods chosen then were wrong. It would have been better to do without such a study in the first place.”

            The revelations show the rocky road for Volkswagen as it emerges from its biggest crisis after the 2015 bombshell that the company installed emissions-cheating software in some 11 million diesel vehicles to dupe official tests. They also do little to help the poor public perception of the technology under scrutiny for high pollution levels in many European cities. In an additional twist, the Beetle model used in the test was among the vehicles that were rigged to conform to test limits, The New York Times reported.

            Daimler said separately it would start an investigation into the study ordered by the European Scientific Study Group for the Environment, Health and Transport Sector. BMW too distanced itself from the trial, saying it had taken no part in its design and methods. Bosch said it left the group in 2013. The study group, financed equally by the three carmakers, ceased activities last year and the project wasn’t completed, VW said.

            “We believe the animal tests in this study were unnecessary and repulsive,” Daimler said in a statement. “We explicitly distance ourselves from the study.”

              Read more: http://www.bloomberg.com/news/articles/2018-01-28/volkswagen-apologizes-for-testing-of-diesel-fumes-on-monkeys