Axios - Business
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Big business to Trump: Don't gut the State Department

Jacquelyn Martin / AP

Ahead of the White House's budget proposal this week, which is rumored to cut 31% from the budgets of State Department and USAID, hundreds of top business leaders have sent Secretary of State Rex Tillerson a letter urging him to fight for funding for State, per the WSJ.

A key quote: "With 95 percent of the world's consumers outside the United States and many of the fastest growing economies in the developing world, now is the time to double down on America's global economic leadership."

A taste of the signatories: Top executives from Walmart, Pfizer, Coca-Cola, GE, Nike, UPS, and Marriott.

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Pittsburgh sours on Uber's driverless car experiment

Gene J. Puskar / AP

Nine months after Uber rolled out its self-driving car trials in Pittsburgh, the relationship is deteriorating, the New York Times reports.

Why it matters: Self-driving car companies are forming partnerships with cities that will allow them to test their vehicles on their streets. It's a high-risk, high-reward proposition for city leaders.

Pittsburgh Mayor Bill Peduto told The Washington Post this fall, "Is there going to be an accident in a robot car? Yes there is. But the greater goal is to make our streets safer in the long term. We have to start at some point and we can't wait for regulation to catch up with innovation."

The city's complaints: Uber began charging for rides that were expected to be free; it withdrew support from Pittsburgh's application for a major federal grant to overhaul transportation; and it hasn't hired local workers as it promised.

Uber's response: "Uber is proud to have put Pittsburgh on the self-driving map, an effort that included creating hundreds of tech jobs and investing hundreds of millions of dollars," Uber told the Times in a statement. "We hope to continue to have a positive presence in Pittsburgh by supporting the local economy and community."

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Another U.S. chemicals giant strikes global merger

Huntsman Corp. of Texas and Switzerland's Clariant have agreed to an all-stock merger that would create a specialty chemicals giant valued at around $20 billion (including debt). Clariant shareholders would hold around a 52% stake in the combined company, which is expected to generate $13.2 billion in annual sales and $2.3 billion of EBITDA.

Why it's a big deal: This tie-up is part of a trend of cross-border consolidation in the mega-chemicals space, following the pending deal between Praxair (Connecticut) and Linde (Germany) and PPG Industries (Pittsburgh) attempting to purchase Dutch rival Akzo Nobel. It's also notable for private equity buffs (yes, such people exist), as Huntsman was at the center of what arguably was the most contentious M&A failure failure of the financial crisis era.

Fun fact: "Huntsman... is best known for inventing the clam-shell styrofoam box for McDonald's Big Mac burgers." ― Reuters

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Zuckerberg: I'm not using this trip to run for office

Jeff Chiu / AP

Facebook CEO Mark Zuckerberg announced in a Facebook post Sunday:

"Some of you have asked if this challenge means I'm running for public office. I'm not. I'm doing it to get a broader perspective to make sure we're best serving our community of almost 2 billion people at Facebook and doing the best work to promote equal opportunity at the Chan Zuckerberg Initiative."

His learned insight: Zuckerberg said he sees an opportunity for Facebook to connect users beyond people they already know, and is hoping to soon introduce a system that recommends "people you should know," like mentors and people outside of your social circle who can provide "a source of support and inspiration."

Read next: Inside Zuck's real political strategy

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Young men are sliding to the bottom of the income scale

Paul Sancya / AP

"The loss of blue-collar jobs ... is forcing more men into low-wage service jobs, and in some cases causing them to drop out of the workforce altogether," according to a Boston Globe front-pager by Katie Johnston:

An analysis last month by the U.S. Census Bureau ("The Changing Economics and Demographics of Young Adulthood: 1975–2016") found that many young men have fallen to the bottom of the income scale, "despite the fact that they are better educated and working full time at the same rate."

  • What caused it: "Wages have stagnated, while the cost of living and student debt have skyrocketed, and college graduates are taking lower-level jobs ... [M]en are being hit particularly hard, as many of them are forced to take contract or part-time work."
  • Key fact: "The jobs that are growing the fastest ... are concentrated in female-dominated professions, such as health care."
  • Why it matters: "Many young men — defined by the Census Bureau as ages 25 to 34 — are starting out their working lives at a distinct disadvantage, compared with previous generations. And as more of them live at home and delay marriage, young adulthood has started looking much different than it used to."
Featured

Ford replaces CEO Mark Fields with autonomous driving exec

Carlos Osorio / AP

Ford will announce Monday morning that it is replacing CEO Mark Fields with Jim Hackett, who ran Steelcase furniture for 20 years before joining the car company, reports The New York Times. Hackett most recently headed Ford's autonomous vehicle subsidy, known as Ford Smart Mobility.

Under Fields, who served as CEO for three years, Ford shares dropped 40 percent. He also was criticized by investors and the board for failing to make Ford a competitive player in the development of high-tech vehicles for the future.

Between the lines: The shake-up shows that Ford is shifting its focus to accelerate its self-driving technology. As the NYT points out, Ford has lagged behind other large automakers like General Motors and tech companies like Google, both of which have already begun testing their own autonomous vehicles. Ford is promising it will have a fully operating driverless car on the road by 2021.

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Striking AT&T workers head back to bargaining table

CWA

Over the weekend, AT&T stores were closed in a number of cities — from San Francisco to Boston to D.C. — when 40,000 workers walked off the job on Friday after the company failed to reach an agreement with the Communications Workers of America union. (AT&T told Fortune the majority of stores stayed open.)

In Oregon, Sen. Jeff. Merkley joined the picket line with workers. In New York City, Mayor Bill DeBlasio signaled support on Twitter.

Why it matters: It's the first labor strike AT&T has faced since 2012. AT&T is the largest U.S. telecom company, and the only one with a major union presence in its wireless business — the fastest growing part of the company. As a result, AT&T is having to contend with the pressures of competing with nonunion rivals in the increasingly competitive wireless sector, a company spokesman told the NYT.

At issue: CWA says AT&T has cut 12,000 U.S. call center jobs while moving jobs overseas, and has shifted jobs from company-owned retail stories to third-party reseller chains. Workers are also frustrated about rising healthcare costs and changes to commission rates. AT&T, for its part, says it's offering fair wage and pension increases and healthcare benefits. "Our employees are returning to work, and we remain committed to reaching fair agreements in these contracts," a spokesperson said.

What's next: In an email to members Sunday evening, CWA rep Dennis Trainor said the union will be back at the bargaining table Monday: "We stood up not only for ourselves and for our families, but for all working Americans who are sick and tired of being taken advantage of by greedy corporations. This fight is even bigger than AT&T. Let's congratulate ourselves for a job well done and walk into work tomorrow very proud."

Updated to include AT&T statement.

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Tech adoption skyrockets among older adults

Over 40% of American adults ages 65+ own a smartphone, more than double the amount since 2013, according to the latest survey from Pew Research Center. At the same time, more than two-thirds of seniors use the internet — a 55% increase from 2000. And for the first time, half of seniors have broadband at home.

Reproduced from 'Tech Adoption Climbs Among Older Adults' Pew Report

Why it matters: Despite these milestones, seniors still report feeling disconnected from the internet and digital culture. The study also found that roughly one-third of older internet users say they have little to no confidence in their ability to use electronic devices to perform online tasks, and roughly half of seniors say they usually need someone else to set up a new electronic device for them or show them how to use it. As more aspects of daily life become dependent on technology, particularly health care, senior adoption of new technologies will become increasingly important.

Other takeaways: The study also found that broadband access was dependent on household income and education levels. It's important to note that tech adoption among seniors is happening as the average population of seniors is on the rise in the U.S. Today, people ages 65+ account for 15% of the overall U.S. population and that number is expected to jump to 22% by 2050, according to U.S. Census Bureau projections.

Column / Harder Line Featured

How the GOP is slowly going green

Rebecca Zisser / Axios

Conservatives are slowly coming around on climate change.

Over the past few years, more than a half-dozen organizations have popped up pushing conservative climate-change and clean-energy policies, and the percentage of congressional Republicans going on the record acknowledging climate is a problem has gone from zero to 8%, as judged by a House caucus on the issue.

Why it matters: Since 2010, climate change has been an issue unilaterally pushed by the Democratic Party, but for any climate and energy policy to pass Congress, it must also get support from within the GOP ranks.

The changes among Republicans are small, but represent a sea change from a few years ago when under pressure from conservative interest groups and tea-party activism, most Republicans denied the scientific consensus that human activity is driving up the Earth's temperature.

"Tectonic plates beneath the Republican party are not stable," said Jerry Taylor, who in 2014 founded the Niskanen Center, a conservative group that supports a carbon tax to address climate change. "That's not obvious to anyone who is not engaging with Republicans on climate, but it's fairly obvious to us."

Here's some evidence:

  • A group of conservative leaders from previous GOP administrations helped create the Climate Leadership Council in February to build the case for a carbon tax. They have a planned $10 million budget, according to its founder Ted Halstead. The group is set to announce additional political leaders and a group of Fortune 100 companies backing their effort next month, have just opened a London office and last week hired two former GOP administration officials: Jill Sigal, a former top Energy Department official in the George W. Bush administration, and Taiya Smith, who worked under Treasury Secretary Hank Paulson in the same Bush administration.
  • Last year the Niskanen Center received a $70,000 grant from the Rockefeller Brothers Fund, the first that foundation has given to the group. This foundation's support is notable because it was created by the Rockefeller family made rich and famous for its oil business. The foundation is now divesting from fossil fuels and has funded activist group 350.org.
  • Of the 19 Republican members of a bipartisan climate caucus in the House created last year, 12 joined this year, including Rep. Darrell Issa of California. Jay Butera, who on behalf of advocacy group Citizens Climate Lobby helped create the caucus, said it took three years to find the first Republican, Rep. Carlos Curbelo of Florida.
  • The Energy and Enterprise Initiative, a conservative climate group founded by former GOP Rep. Bob Inglis in 2012, just received its first multi-year grant, which isn't public yet so its details weren't available, Inglis told Axios. Membership of its grassroots group, republicEn, has doubled since the election.
  • The Environmental Defense Fund and Nature Conservancy, two centrist environmental groups known for working with businesses, each received $10 million grants for two years from the MacArthur Foundation in 2015. Multiple people familiar with that funding say the money is targeted to help attract conservative support for climate policy.

To be sure: Republican policies on climate change aren't coming any time soon. Unlike issues such as healthcare where the GOP recognized it needed to replace, and not just repeal, President Obama's accomplishments, Republicans aren't focused on replacing Obama's climate regulations — repeal remains the focus for now. All House Republicans also backed a symbolic measure last year condemning a carbon tax. One Republican strategist described the party's overall position on the issue now as being an "agnostic holding pattern."

"I think we're at a point where most Republicans accept the climate is warming but don't see it as world ending and don't see a solution that'll really make a real impact," said a Republican strategist who has held positions in GOP political campaigns and congressional offices.

Looking ahead: In separate interviews, Halstead and Taylor said action could pick up after the 2018 midterm elections, and both predicted some Republicans could even start pushing legislation creating a carbon tax around that time.

Like Harder Line? Sign up for Generate, the Axios daily energy newsletter, to get this and more energy news in your inbox.

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Why it's a great time to be a telecom company again

Lazaro Gamio / Axios


A busy season of regulation-slashing in Washington has big upside for a major industry: phone & cable companies.

For the past eight years, tech firms like Google, Facebook, Netflix and Amazon have been seen as having a leg up in Washington over the phone and cable companies that run the nation's broadband networks. But that's changing under the Trump administration. The country's biggest telecom providers — Comcast, Charter Communications, AT&T and Verizon — have already racked up some major policy victories.

Why it matters: The shift is indicative of the types of companies the Trump administration sees as being crucial to the economy, and it's no secret there's no love lost between Trump and Silicon Valley. It also reflects a de-regulatory approach that generally squares less with the popular online platforms than with the physical pipes that deliver them.

A few reasons why the telecom industry is well positioned these days:

  • While tech companies mostly have employees on the coasts, telecom companies like AT&T, Verizon, Comcast and Charter Communications are important employers throughout the country.
  • The telecom industry is typically aligned with Republican politics while tech companies are liberal-leaning — one factor that helped them cozy up to the Obama administration.
  • Trump has an affinity for traditional jobs, like manufacturing. Although telcos don't run factories, they employ hundreds of thousands of workers to run fiber and cable lines and install wireless equipment — therefore supporting a segment of Americans who feel left behind by the high-tech industry.
What's happened so far:
  • Net neutrality reversal: The most obvious win for telecom companies is the FCC's proposal to undo Obama-era net neutrality rules that subject broadband internet service providers to more regulation. The telecom industry has repeatedly sued the FCC over this topic during the past decade. Chairman Ajit Pai last week cleared the first hurdle in the process to dismantle the rules, a move the tech companies oppose.
  • Privacy rules rollback: Congress killed the FCC's privacy rules that would have forced ISPs to get their customers' permission before sharing or selling their personal details to third parties like advertisers. That means ISPs can better compete against the likes of data-giants Google and Facebook in the growing online advertising market.
  • Infrastructure: Telecom providers are hoping a hefty slice of Trump's infrastructure package will spur broadband network buildout — a very capital-intensive effort — to fill in coverage gaps around the country.
  • Zero-Rating: Pai rescinded a report slamming some so-called "zero-rating" offerings, giving the providers the green light to offer their free data programs.
  • Business lines: The FCC made reforms to the $45 billion special access market — which governs access to the large-capacity data lines going to big businesses and banks — that favor companies like AT&T, Verizon, Frontier and CenturyLink.
  • Curtailing conditions: The agency eliminated a condition attached to the merger of Charter and Time Warner Cable, so Charter no longer has to "overbuild" its broadband network to certain areas where broadband service already exists.
  • Mergers: Despite Trump's populist bent, Wall Street and telecom CEOs see the new administration as more open to industry consolidation, opening the door to potential combinations like Sprint andT-Mobile, or even the rumored marriage of Charter and Verizon. Meanwhile, there's growing pressure to reign in the power of data behemoths like Google, Facebook and Amazon.
At the White House: Under the Obama administration, the Office of Science and Technology Policy was led by Silicon Valley techies such as former Googler Megan Smith and former Twitter general counsel Alex Macgillivary. Today, that office remains largely unstaffed.

The other side: Generally speaking, the administration's early days haven't been terrible for the tech industry, despite the ugly fight over net neutrality. Trump and Pai have both met with Silicon Valley companies. And web companies stand to benefit if efforts to expand broadband to unserved areas are successful — more people hooked up to high-speed broadband means potential new users for their services.