Apple hit with antitrust complaint in China - Axios
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Apple hit with antitrust complaint in China

Ng Han Guan / AP

App developers in China have filed a complaint against Apple with Chinese regulators, claiming antitrust violations against the tech giant's alleged unexplained removal of apps from the App Store and a refusal to communicate regarding issues with developers in Chinese, per the WSJ.

  • Apple's response: The company told WSJ that most Chinese submissions to the App Store get approved within 48 hours, reiterating that all of its guidelines apply equally across the world.
  • Why it matters: The complaint comes at a fraught time for Apple in China, as it attempts to both maintain its foothold in its massive market and comply with the Chinese government's online scrutiny and censorship — highlighted by its recent removal of VPN apps from the App Store used to bypass the nation's Great Firewall.
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It snows at night on Mars, study shows

Until now, it's been thought that clouds on Mars don't move water in a way that allows snow to form but new mathematical models published in Nature Geoscience today suggest it is indeed possible for convection snowstorms to occur in the Martian atmosphere — at night.

Why it matters: Researching snow on Mars has been important to understanding water on the planet and the Martian climate. "There [are] a couple of holy grails in Mars science," Hanna Sizemore, an expert on ground ice on Mars at the Planetary Science Institute who wasn't involved in the research, told Axios. "One of them is life, biology, and one of them, which is linked to the first, is understanding the water cycle." The authors say their study shows snow precipitation may have "played a key role in forming tropical and mid-latitude glaciers on Mars."

Why it happens at night and not during the day: At night there's no sunlight shining on the clouds and the ice particles floating around, so they cool down. And when they cool down, they're denser and heavier, so they fall. During the day, they're a little stabler because "warm air is moving upward in convection, but the ice clouds are being warmed from above and no cooling can take place," Isaac Smith, who works with the U.S. SHARAD team, said. Since the clouds are neither cooling nor heating, the unstable layers that drive the snowstorms can't form.

"One of the reasons this wasn't understood earlier is because this is occurring at night. Our observational data is fairly limited to daytime observations," an expert on Mars' climate history , Nathaniel Putzig, said. "It's kind of hard to catch it in the act."

What's next: Nicholas Heavens from Hampton University suggested future research might try modeling different time periods on Mars to see if those different climate conditions persisted and could have resulted in snowfall to the surface to form glaciers. Ultimately, he notes the need for "more observations to firmly demonstrate that this is happening on Mars," not just a model.

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Putin appoints new ambassador to U.S.

Russian Deputy Defense Minister Anatoly Antonov at a briefing in the Defense Ministry in Moscow, Oct. 2016 (Ivan Sekretarev / AP)

President Vladimir Putin appointed his former deputy foreign minister, Anatoly Antonov, as Russia's new U.S. ambassador, replacing Sergey Kislyak, per AFP. Antonov has been serving as acting ambassador to the U.S. since Kislyak's return to Moscow in June.

Background: According to TASS, Russia's state-owned news agency, Antonov, 62, headed Russia's Foreign Ministry Security and Disarmament Department from 2004-2011, before serving as deputy defense minister from 2011-2016, during which Russia invaded Ukraine. Antonov was later appointed as Putin's deputy foreign minister in December 2016.

Why it matters: Kislyak, who served as Russia's U.S. ambassador for nearly 10 years, became a household name in recent months for his meetings with senior Trump aides during the campaign and transition. But Antonov, who according to AFP has a reputation as "a hardliner" and is seen as "a tough negotiator," will likely bring a new edge to Washington.

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Michael Bloomberg is the new Clinton

Christophe Ena / AP

Former New York Mayor Michael Bloomberg plans to bring together more than 30 heads of state and 100 CEOs in New York on Sept. 20, in conjunction with the United Nations General Assembly, as part of a plan to move into the elite space once held by the Clinton Global Initiative Annual Meeting.

  • The thinking behind Bloomberg Philanthropies' Global Business Forum is that UNGA week in New York puts more powerful people in one spot than any other single event on earth.
  • Former President Bill Clinton, who has said he wants other organizations to join him in the CGI mission, will speak at Bloomberg Philanthropies' Global Business Forum in an unofficial handoff.
  • Axios will be an official media partner (along with Quartz), so we'll be able to bring you exclusive insights:

The lineup features an astonishing roster of world and corporate leaders: French President Emmanuel Macron, the new Saudi Crown Prince Mohammed bin Salman, Bill Gates, Alibaba's Jack Ma, Goldman Sachs' Lloyd Blankfein, BlackRock's Larry Fink, World Bank President Jim Yong Kim, IMF head Christine Lagarde, Carlyle's David Rubinstein and dozens more.

The mission: "to discuss opportunities for advancing trade and economic growth, and the related societal challenges – from climate change to workplace automation to terrorism."

Topics will include megatrends such as: "As technology advances and increasing automation change the nature of work, how will we create new jobs and economic opportunities for those who are displaced? … Can disruptive technologies eradicate disease, create new sources of clean energy, and eliminate poverty?"

The background: "The Forum was inspired by the Bloomberg U.S.-Africa Business Forum, which in 2014 and 2016 brought business leaders together with heads of state from every African nation, and the Clinton Global Initiative, which held its Annual Meeting during U.N. General Assembly week and established a new model to bring together global leaders from all sectors to create and implement tangible solutions to the world's most pressing challenges"

From an open letter by President Clinton explaining why he was concluding the CGI Annual Meeting: "'I hope the hard work and benefits of CGI's great staff and its members' creative cooperation will keep rippling out into the world. The commitment model has been adopted by other forums and I hope that more will do so, or that new organizations will arise to do this work."

Go deeper:

  • Visit www.BloombergGBF.com for the latest program details and confirmed participants.
  • The event will be streamed live on Bloomberg.com.
  • Media can apply for media credentials here. Questions to press@BloombergGBF.com.
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China's Great Wall wants to buy Fiat Chrysler

Fiat Chrysler's Sergio Marchionne (Mark Lennihan / AP)

Great Wall Motor says it wants to buy all or part of Fiat Chrysler, another potential move by Chinese companies into American cars. The Chinese SUV-maker may bid for the whole of Fiat Chrysler, or only part — specifically its Jeep brand, Great Wall told Automotive News. The Italian-American company said it hasn't been approached yet, Reuters reported.

Until now, Chinese forays into the U.S. market have been in electric and autonomous vehicles.

  • In 2014, China's Wanxiang bought Fisker Automotive, an American electric sports car startup once discussed in the same breath with Tesla.
  • And two years earlier, Wanxiang bought A123, a bankrupt lithium-ion battery maker that had the largest IPO of 2009. Both companies had received much financial backing from the U.S. government before turning belly up.
  • Earlier this month, Chinese-owned Faraday Future leased a factory in Hanford, CA., to build electric cars.

Why it matters: China has already made explicit that it intends to win the fierce global race to dominate electric and self-driving cars. In Fiat Chrysler, Great Wall is showing interest in a company run by CEO Sergio Marchionne, an Italian dealmaker who has floated a partial or full sale of the company to help finance its way into the electric and autonomous car competition.

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Here’s how long Congress has to renew CHIP

Technically, Congress is supposed to reauthorize the Children's Health Insurance Program by the end of September, and it hasn't gotten very far on that. But here's why some top Republicans think they have a bit more time. This graphic is based on projections from the Medicaid and CHIP Payment and Access Commission (MACPAC), and it shows when states are expected to exhaust their federal CHIP funds.

Yes, but: As we've written, states have to go through a lot of preparations to shut down their programs before then if there's no sign that Congress is getting its act together. It's better for all of them if Congress can renew the program quickly, without a lot of unnecessary drama.

Data: MACPAC 2017 analysis; Cartogram: Andrew Witherspoon / Axios

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10 missing from USS John S. McCain after ship collision

Royal Malaysian Navy / AP

Per the Associated Press:

  • "The Navy says 10 sailors are missing and five were hurt in the collision [of the USS John S. McCain and the Liberian-flagged Alnic MC] in waters east of Singapore and the Strait of Malacca early Monday."
  • "Singapore sent tugboats and naval and coast guard vessels for the search and rescue effort... Osprey aircraft and Seahawk helicopters from the USS America were assisting in the search."
  • President Trump's response, per WH pool: "Thoughts & prayers are w/ our @USNavy sailors aboard the #USSJohnSMcCain..."

Why it matters: "The collision was the second involving a ship from the Navy's 7th Fleet in the Pacific in two months. Seven sailors died in June when the USS Fitzgerald and a container ship collided in waters off Japan."

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The Axios Way: How you do it

Lots of great feedback to our post on The Axios Way — some lessons learned starting two media companies. There were requests for us to expand it to cover tricks/techniques that apply to all organizations, not just media startups.

Why it matters: Thanks to the explosion of technology and social media in particular, every industry — and most jobs — are changing faster than ever. This requires a new set of strategies to thrive in this era of transparency, distraction and disruption.

Market manically. For all the whining about technology, you can reach more people, more frequently, with more precision than at any point in humanity.

  • How you do it: If your marketing plan has conventional media only or catch-all "social media" section, destroy it. You need a specific plan for every media ecosystem — Facebook, video, Twitter, TV, email, etc — and to understand it's a different, often radically different, one for each. Make no mistake, it's harder than ever to punch through the noise, so you need a level of brand marketing sophistication most lack.

Think of your brand as a political candidate. You need to be hyper-aware of how you're seen by your core constituencies (employees and customers) and by the broader public.

  • How you do it: Be vigilant for signs of erosion in your base; or failing to respond forcefully to negative attacks; or underutilizing technology to connect with your people in authentic, compelling ways. And don't forget that people love a good narrative. So write and sell one, internally and externally.

Over communicate. In our short-attention-span world, full of cluttered and distracted minds, every leader and manager needs to explain what they're doing and why they're doing it every week, if not every day.

  • How you do it: It's not enough to save it for the staff retreat. Find a simple, clear way to explain what each person is doing, how they'll be measured, and how it fits into your company's larger purpose. And do it often. If not, you will end up with a bunch of distracted, underperforming malcontents.

Speak like a human. What the hell is the difference between "mission" and "values"? Who the hell really cares? What all employees — millennials in particular — want to know is what you're doing and why you're doing it. So just say it that way. (We're in the process of doing just this, and it's been very clarifying).

  • How you do it: Social media thankfully forces authenticity and writing like you would speak in normal settings. Your "what" and "why" should be in this casual language. If you sound like a corporate robot, reboot.

Force-multiply. It's not just that hiring someone better than you makes you better. It encourages that person to do the same. Soon, you have a talent factory. But many leaders/managers are too insecure to hire others who might outshine them. So they hire middling talent, trained to do the same. Soon you have the hot mess of mediocrity with no easy fix.

  • How you do it: You get this right at the very top by obsessing about finding killer executive talent secure enough to hire/empower stars. This is contagious. As for the flip side, get rid of leaders who don't get it.

The tech wolf is at your door. Your job, your company and your industry face imminent threat from new technologies or robots. This threat will worsen.

  • How you do it: Knowing this alone should instantly sharpen your mind and shorten your planning cycles. You don't have the luxury of five-year plans or one-year budgets. Yes, set a North Star. But constantly adapt to keep pace with technologies and swift changes in your marketplace. Tame the tech wolves eyeballing your lunch — before they eat it.

Heed red flags. Bad values are cancer, and it spreads. We look for killer talent with humility, and never compromise on either half.

  • How you do it: Resist the urge to overlook signs that someone won't fit with your culture, even if they're awesome at what they do. In the past, we occasionally averted our gaze from people with bad values but great gifts — and regretted it every single time. The same will likely happen to you, too.
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Trump heading to the border

Ted S. Warren / AP

President Trump heads to Arizona Tuesday for a visit to the border and a campaign-style rally in Phoenix. Police are braced for mass protests in the wake of Charlottesville, and the Phoenix Mayor, Democrat Greg Stanton, made a startling request that the president stay away from his city because his appearance, and expected pardon of Sheriff Joe Arpaio, would "enflame emotions and further divide our nation."

Why this matters: Trump has an opportunity on Tuesday to show his base that he's still as committed as ever, after the firing of Steve Bannon, to the big, symbolic, promise of his presidency — to build a mammoth wall along the border with Mexico.

  • But, but... I can't get a straight answer from administration sources on whether Trump will make a full-throated demand that Congress fund the wall in the government funding bill due at the end of September.
  • Between the lines: Some Trump administration officials are nervous about making concrete funding demands, in Arizona, that will be almost impossible to get Congress to agree to. Some senior White House officials have told conservative allies the wall fight should be postponed until later in the year, after a three-month, kick the can down the road, government funding bill gets signed in September. Either way, the wall fight could ultimately shut down the government.
  • Trump is also likely to promote the administration's success in driving down illegal entries, according to an administration source. Officials view Arizona as a case study of why border fencing works.

What else we're watching:

  • Trump will likely be joined by Acting Secretary of Homeland Security Elaine Duke, for the official portion of the trip. But which Republican officials will show up to support the president?
  • Will Trump use his speech to attack his enemies in the Republican Senate, Arizona senators Jeff Flake and John McCain?
  • Will Trump pardon Arpaio, as he teased to Fox News? I'm told the relevant paperwork is prepared for Trump to pardon the former sheriff, who was found guilty for defying a judge's order to stop racially profiling Latinos during patrols. But officials won't tell me — and perhaps they haven't decided — whether Trump will announce the pardon on his Arizona swing.
  • Will Trump endorse Kelli Ward as a primary opponent to Sen. Flake? Trump signaled last week that he may be preparing to endorse Ward, but I'm told some of Trump's allies have counseled him to hold off on the endorsement because they think she's a weak candidate.
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Trump to announce Afghanistan plan Monday in TV address

Pablo Martinez Monsivais / AP

President Trump will address the nation on his Afghanistan war strategy tomorrow at 9 p.m. from Fort Myer in Arlington, VA. It's one of the most consequential decisions of his presidency, and it comes after Trump met with his national security team on Friday at Camp David .

  • Defense Secretary James Mattis said on Sunday, per Reuters: "I am very comfortable that the strategic process was sufficiently rigorous and did not go in with a pre-set position."
  • The stakes: Should Trump order a withdrawal of U.S. troops from Afghanistan, advisers believe he'd all but ensure the Taliban completes its takeover of the country. Al-Qaeda and ISIS would be allowed to flourish, and you'd have a terrorist launching pad similar to, or potentially worse than, before 9/11.

Trump's decision hasn't leaked; but I can illuminate some of the private conversations leading up to it, from senior administration sources and former officials close to the Pentagon:

Trump's top national security advisers all agree the only way they'll win their missions in Afghanistan is to modestly increase troop levels, keep training the Afghan military, and keep a strong CIA and special forces presence to run aggressive counter-terrorism operations.

Two missions:

  1. "Operation Resolute Support": While the Trump administration is explicitly repudiating both the idea and the phrase "nation building," ORS is a train, advise and assist mission to help the Afghan army fight the Taliban, an official tells me. It's meant to help keep the government from collapsing while reversing Taliban gains.
  2. Counter-terrorism mission — primarily to eradicate Al-Qaeda, ISIS-K and other terrorist groups from Afghanistan.

Inside Mattis' thinking: The Defense Secretary has been using this line in meetings: "Mr. President, we haven't fought a 16-year war so much as we have fought a one-year war, 16 times."

  • What Mattis means by that: Trump has already given Mattis the authority to increase troop levels in Afghanistan, but the Defense Secretary has refused to exercise that authority, believing that doing so without an agreed-upon strategy would be continuing the failures of previous administrations. Trump officials condemn the Obama administration for falling into a habit of asking each winter "what do we need to do this year to prevent total collapse?"

Trump's team presented him with other scenarios — which everyone on the team agreed would lead to disaster. They included a gradual withdrawal of U.S. forces from Afghanistan (a continuation of what Obama was doing), and counter-terrorism-only options.

  • What Steve Bannon wanted: Mattis and co. never took the idea seriously, but Bannon and Blackwater founder Erik Prince had been pushing for Trump to gradually withdraw the U.S. military from Afghanistan and replace it with private paramilitary forces to hunt terrorists.
  • I'm told the Bannon strategy has never been part of the NSC paperwork, though the former chief strategist circumvented the official process and took his arguments directly to the president.

Trump's instincts: The president has been blunt, telling his team that while he thinks the war in Afghanistan has been a disaster, and the U.S. is losing, he thinks total withdrawal would be bad.

  • Trump saw what happened when Obama withdrew from Iraq and believes that doing so precipitously in Afghanistan would allow the Taliban to take over, and Al-Qaeda would be resurgent. You'd have bad guys in Afghanistan in league with bad guys in Pakistan who want to overthrow the country.
  • Trump has told his advisers he's been shown the maps of Afghanistan, with the red on the map signifying the Taliban's presence in the country. He says that advisers show him the map in 2014 and there's a little bit of red. Look at the 2017 map and half the country's red, therefore "we're losing."
  • The generals' response to Trump: You're right. But we're losing because the strategy has been terrible. We can turn this around.

Bottom line: Trump has been reluctantly open to the generals' opinion and I'm told he doesn't want to be the president who loses the country to the terrorists.


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The coming earthquake

Sam Jayne / Axios

One feature of our time is the disruption du jour — the whiplash of yet another big surprise that promises to upset everything and everyone for years and perhaps decades to come:

  • Brexit, the Trump election, and the broader anti-establishment global uprising, springing from lost jobs, income, stature and community, and making many people ambivalent about the post-war system of collective diplomacy and open borders.
  • Robotization — the shift to hyper-automation and the potential that many of our jobs will be swallowed up by machines.
  • And now the new monopolists, a creeping change in how we view a few tech monoliths that have amassed colossal power — Amazon, Apple, Facebook, Google and Microsoft.

Connecting the dots: These three narratives are melding into a gigantic, compound earthquake. When we speak of the race to artificial intelligence and robotization, we mean research dominated by American big tech, along with its Chinese cousins — Alibaba, Baidu and Tencent. When the workplace is filled with intelligent machines some time in the future, their brains are likely to come from one or more of these companies.

In 2001, Goldman Sachs analyst Jim O'Neill published a paper that coined the term "BRIC." Brazil, Russia, India and China would power the next stage of global growth, O'Neill said. The acronym caught fire. The new powers in global growth are the major U.S. and Chinese tech companies, though they fit less comfortably into an acronym.

For that and other reasons, including the decimation of retail by Amazon, they are core to our unease and alienation, as Axios has reported, and they are facing increasing scrutiny.

Going deep: This week, we look at two forthcoming books and a much-discussed legal paper that explain this evolving mind shift, and point the way forward:

The Four, by NYU professor Scott Galloway; World Without Mind, by Atlantic magazine writer Franklin Foer; and Amazon's Antitrust Paradox, by New America fellow Lina Khan.


Frank Foer: A surrender of free will

We are at the mercy of these companies, with billions of people outside China using Google to search the Internet, Facebook to follow their friends, Apple to talk to them, Amazon to buy stuff, and Microsoft for their office needs. Within China, the same can be said for the BAT companies. But that is more dangerous than seems apparent. Foer notes:
  • Amazon can kill or hobble a book, an author or an entire publisher, and did so to Hachette and Macmillan in 2014, delaying shipments and stripping sales links so books couldn't be bought at all.
  • Google worked to swing the 2012 U.S. presidential election for Barack Obama, boasting about the power of its analytics tool to help his campaign.
  • Facebook can also target and favor candidates of its choosing.
All of this troubles Foer, who delivers a passionate argument for the public to wake up and reconsider its tech idolatry. "Our faith in technology is no longer fully consistent with our belief in liberty," he writes. "We're nearing the moment when we will have to damage one of our revolutions to save the other. Privacy can't survive the present trajectory of technology."
His central message: We are at risk of authoritarianism, and a loss of ourselves — "a breaking point, a point at which our nature is no longer really human."

When Foer started this book, "it felt like I was engaging in a quixotic, esoteric venture," he told me. "The tech companies were held in such high esteem that the possibility that there was something fundamentally wrong with them didn't register with people. But the zeitgeist has started to shift, now in a fairly extreme way."

One of Foer's primary targets is Silicon Valley's war on individual genius in favor of the collaborative and populist crowd. This, he says, flies in the face of how big tech views itself, championing "the fearless entrepreneur, the alienated geek working in the garage" — Steve Jobs, Jack Ma, Bill Gates, Larry Page and Jeff Bezos.

"The titans of technology may be capable of breathtaking originality and solitary genius, but the rest of the world is not," he writes.

Another is tax dodgers: Amazon can offer low prices in large part because for years it paid no taxes, while brick-and-mortar stores forked over both that and rent — Walmart paid a 30% tax rate over the last decade and Home Depot 38%. Amazon's effective tax rate is 13%, and Apple and Alphabet's 16%.
Profits left abroad: Far from reaching their station fair and square, big tech squirrels away its profits overseas, and doesn't pay its fair share at home. Amazon dodges taxes by basing much of its operations in Luxembourg. As of 2015, Google had parked $58.3 billion in tax havens abroad including Ireland and Bermuda. In 2012, Facebook earned $1.1 billion in the U.S., on which it paid not a cent of federal or state tax. "The tech companies maintain every shred of data, yet seem to want to purge every bit of taxable earnings," he writes.
What should be done: Foer urges —
  • The creation of a Data Protection Authority to secure the sanctity of privacy, similar to former government oversight over telephone and TV.
  • The possible breakup of Facebook, Google and Amazon into smaller companies, or, Lina Khan writes (see below), forcing them to act as common carriers, and not predatory platforms for their singular corporate good.
  • "The Internet is amazing," Foer writes, "but we shouldn't treat it as if it exists outside history or is exempt from our moral structures, especially when the stakes are nothing less than the fate of individuality and the fitness of democracy."

Lina Khan: The new railroad barons

In January, the Yale Law Journal published a "note" that has since attracted remarkable attention — more than 50,000 hits — and made Amazon lawyers especially nervous.

  • It all goes back to 1911, and the U.S. Supreme Court decision to break up John D. Rockefeller's Standard Oil. Khan does not name the old oil titan, but she renders Amazon's Jeff Bezos as the Rockefeller of our age. Like him, Bezos subjects lesser competitors to a "good sweating," predatory pressure designed to drive them out and leave the latest market to Amazon.
  • Amazon can afford this approach because it seeks no profit, but only to grow; and pays little taxes or rent.
  • Amazon's reach is breathtaking, Khan notes, comprising "a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading provider of cloud server space and computing power."

They are modern-day railroad barons: Amazon, Khan told me, should be viewed "as an infrastructure company." And as a group, big tech "are utilities on which other companies depend," equating to the 19th century railroads, which their owners exploited to outsized profit advantage because they could.

Khan's intellectual breakthrough: Her big splash is taking explicit and injurious aim at Robert Bork's landmark 1968 book, The Antitrust Paradox, which carved the path to today's casual attitude toward corporate bigness, as Steven Pearlstein writes at the Washington Post.

  • Rather than judging anti-trust impact by pricing, supply and demand, Khan reasons, it should be examined through the lens of 21st century online business
  • The lens should be "whether a company's structure creates certain anticompetitive conflicts of interest; whether it can cross-leverage market advantages across distinct lines of business; and whether the structure of the market incentivizes and permits predatory conduct," Khan writes.

Scott Galloway: Power corrupts

Galloway takes the theme of bigness the next step into popular philosophy: Big tech's success, he writes, pivots on the human need for God (Google) love (Facebook), sex (Apple) and consumption (Amazon). Galloway has mixed success with carrying out the theme, but it's a showcase for a toughly argued, hard-edged message: Big tech's big success is "dangerous for society, and it shows no sign of slowing down. It hollows out the middle class, which leads to bankrupt towns, feeds the angry politics of those who feel cheated, and underpins the rise of demagogues."

Big money, small work force: Google employs 72,000 people, Galloway notes, about 40% of the 185,000 who work for Disney, which has a quarter of Google's $650 billion market cap.

  • As for the whole of big tech, when you include Microsoft, it employs about 660,000 people.
  • By comparison, with 3% of big tech's $3 trillion market cap, the three big American carmakers employ 940,000 workers.

In other words, says Galloway, the spoils of America's old corporate oligarchy was carved out more fairly among many more workers. "Investors and executives got rich, though not billionaires; and workers, many of them unionized, could buy homes and motorboats and send their kids to college," he writes.

  • "That's the America that millions of angry voters want back. They tend to blame global trade and immigrants; however, the tech economy, and its fetishization, is as much to blame."
  • And time will catch up with the companies: "Until now, it's been only sycophancy," Galloway told me. "Everyone wants to hang around the hot girl. They all want to seem young and hip and hold these companies to a different standard. I predict there is going to be a populist uprising. A politician is going to find that the fastest way up is to go after one or more of the companies."
  • He said, "We are already seeing it."