Alibaba's Jack Ma to step down in one year, Zhang to become chairman

BEIJING (Reuters) – Jack Ma, the charismatic co-founder of China’s largest e-commerce firm Alibaba Group Holding Ltd, will step down as chairman in exactly one year on Sept. 10, 2019, the company said.

FILE PHOTO: Alibaba Group co-founder and executive chairman Jack Ma speaks during a news conference in Hong Kong, China, June 25, 2018. REUTERS/Bobby Yip/File Photo

Current Alibaba Chief Executive Daniel Zhang will replace him as chairman, while Ma will complete his current term on Alibaba’s board of directors following the company’s annual general meeting in 2020.

Ma, who turned 54 on Monday, relinquished the role of chief executive in 2013. Zhang, 46, has been in the job since 2015 after serving as chief operating officer and is known as a key architect of Alibaba’s “Singles Day”, the Nov. 11 event that has become the world’s largest online shopping event.

“Under his stewardship, Alibaba has seen consistent and sustainable growth for 13 consecutive quarters… Starting the process of passing the Alibaba torch to Daniel and his team is the right decision at the right time,” Ma said in a letter released by the company.

Zhang will also retain the CEO title, the company said.

Ma, who co-founded Alibaba in 1999, is one of China’s richest people with a net worth of $36.6 billion, according to Forbes. The company has grown to have more than 66,000 full-time employees and a market value of some $420 billion.

Ma said that after he steps down from his current roles he will continue to mentor management as part of the “Alibaba Partnership”, a 36-member group of core company managers.

The group has the ability to nominate the majority of directors on the company’s board.

A former English teacher with no technical background, Ma has a large popular following in China and is seen as an icon of self-made wealth.

He is also known for his eccentric personality and has donned wigs and costumes to perform highly choreographed pop routines at company events. Last year he starred alongside Chinese action star Jet Li in a short kung fu film.

Since handing over the CEO role, Ma has concentrated on philanthropy and promoting Alibaba internationally at business and political events.

Last year Ma invested 300 million yuan ($45 million) in a rural education project in China. He has also established a scholarship program in Newcastle, Australia.

Ma, who also controls Alibaba payment affiliate Ant Financial [ANTFIN.UL], is stepping back amid more challenging times for Chinese tech companies as sales growth in China’s eastern mega-cities shows signs of slowing.

Alibaba maintained robust revenue growth in the first half of 2018, but its profit margins have been squeezed by big-ticket investments as it battles to maintain pole position in payments and e-commerce.

Reporting by Cate Cadell; Editing by Edwina Gibbs

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Trump tells Apple to make products in U.S. to avoid China tariffs

(Reuters) – U.S. President Trump tweeted on Saturday that Apple Inc (AAPL.O) should make products inside the United States if it wants to avoid tariffs on Chinese imports.

FILE PHOTO: An attendee uses a new iPhone X during a presentation for the media in Beijing, China October 31, 2017. REUTERS/Thomas Peter/File Photo

The company told trade officials in a letter on Friday that the proposed tariffs would affect prices for a “wide range” of Apple products, including its Watch, but it did not mention the iPhone.

Trump, speaking on Friday aboard Air Force One, said the administration had tariffs planned for an additional $267 billion worth of Chinese goods.

Trump tweeted that “Apple prices may increase because of the massive Tariffs we may be imposing on China – but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now.”

Apple declined to comment.

The technology sector is among the biggest potential losers as tariffs would make imported computer parts more expensive. Apple’s AirPods headphones, some of its Beats headphones and its new HomePod smart speaker would also face levies.

“The burden of the proposed tariffs will fall much more heavily on the United States than on China,” Apple said in its letter.

Reporting by Christopher Bing; Editing by Richard Chang

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JD.com CEO was arrested on allegation of rape: police report

MINNEAPOLIS/SHANGHAI (Reuters) – The founder and chief executive of Chinese retailer JD.com Inc, Richard Liu, was arrested in Minneapolis last week following an allegation of rape, according to a public information report released by police on Tuesday.

FILE PHOTO: Richard Liu, CEO and founder of China’s e-commerce company JD.com, attends a France-Chinese forum on the applications of artificial intelligence at SOHO 3Q in Beijing, China January 9, 2018. REUTERS/Jason Lee/File Photo

Liu, identified in the report by his Chinese name Liu Qiangdong, was released from custody on Saturday without being charged, and he returned to China.

Earl Gray, a Minnesota-based lawyer for Liu, said on Monday that the Chinese businessman has denied any wrongdoing and that he did not expect his client to be charged.

On Tuesday, defense attorney Joseph Friedberg said, “They are not going to charge in this case. There’s no credible complaint.”

Minneapolis Police Department spokesman John Elder said on Tuesday that if there were any charges against Liu they would not be filed until completion of a criminal investigation that would not occur before Friday.

The police report shed a bit more light on the nature of the accusation, which authorities had previously left vague. It said the alleged offense was “criminal sexual contact – rape,” and said domestic violence was not involved.

It gave no further details, but Elder said the alleged attack reportedly occurred at 1 a.m. local time on Friday, and that Liu was taken into custody later that evening.

Elder declined to disclose whether any accuser was cooperating with police. “I wouldn’t address that. That goes to the investigation,” he said.

JD.com Inc’s stock fell as much as 7 percent on Tuesday, hitting an 18-month low, reflecting investor uncertainty. Shares in China’s second largest e-commerce company closed down 6 percent at $29.43 on Tuesday on the Nasdaq and were steady after hours.

JD.com’s rules require Liu, who holds nearly 80 percent of the company’s voting rights, to be present at board meetings for the board to make decisions, although it was not clear if he has to be physically present or could participate by teleconference.

The company counts Walmart Inc, Alphabet Inc’s Google and China’s Tencent Holdings as investors. It faces stiff competition from rival Alibaba Group Holding Ltd at home.

“If this spirals as a media focus, negative attention could offset some of the positives associated with endorsement by Walmart and Google,” analyst Rob Sanderson of MKM Partners said.

“Negative publicity could also compromise JD.com’s ability to attract international brands to its marketplace, which has been a top focus of the CEO over the past two years or so,” Sanderson said.

Liu lost a court battle in Australia in July to keep his name out of a sexual assault trial. Liu was not accused of any wrongdoing in that case, according to a court document.

The case involved a person who had been a guest at a party hosted by Liu at his home in Sydney 2015 who accused another guest of sexually assaulting her at a hotel. The defendant was found guilty of seven offenses.

Reporting by Adam Jourdan and Todd Melby; Additional reporting by Arjun Panchadar; Writing by Frank McGurty; Editing by Toni Reinhold and Edwina Gibbs

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Boeing 737 Production Meltdown

In August there was quite some media attention to the problems Boeing (BA) was facing on the single aisle program as it has tried to simultaneously ramp up production to record highs and gradually transition from production of the Boeing 737 Next Generation to the Boeing 737 MAX. Early in August, I had a first look at the problem and my intention was to follow up by the end of the month to see how things had developed. Things went slightly different than planned; a report was published on Seeking Alpha with the claim that Boeing would be forced to cut single aisle production in 2019 as there was not enough turbofan capacity to support increased production. We found that some assumptions made the outcome questionable and we countered with an in-depth report. That took quite some resources away and we decided to postpone the August update on the current problems a little bit. One thing that we’d like to point out is that with Seeking Alpha being a crowd-sourced investment research platform, we can highly appreciate that there is room for opposing analyses and readers are given the opportunity to read both and discuss both freely.

Gerelateerde afbeelding

Source: flydubai

In this report, we want to have a look at the current situation. The situation changes day by day, but we think it is good to analyze it, point out what Boeing’s options are, zoom in a tiny bit on complexity and then zoom out from the shortage of turbofans and focus on the complete picture because we think some elements are not weighed properly by critics.

The Boeing 737 MAX

The Boeing 737 MAX is successor to the Boeing 737 Next Generation. Views may differ, but we consider the Boeing 737 Next Generation to be Boeing’s response to the Airbus A320ceo (current engine option). Airbus (OTCPK:EADSF) (OTCPK:EADSY), possibly partly driven by fears over a development from Bombardier (OTCQX:BDRAF) that could grow into the single aisle duopoly, increased pressure on Boeing even more with the launch of the Airbus A320neo which simply said is built on the sales success of the Airbus A320ceo featuring winglets and more efficient turbofans. Boeing had evaluated possibilities to build a Boeing 787-based new single aisle aircraft, but quickly found that the systems could not be sized down efficiently to be used on a single aisle aircraft. So the jet maker ended up launching the Boeing 737 MAX instead.

The MAX, just like the neo, makes use of slight aerodynamic improvements and big improvements in propulsive efficiency.

The Boeing 737 MAX makes use of an advanced winglet design. It’s natural behavior that liquids and gasses want to flow from high pressure areas to low pressure areas to form an equilibrium state. The lifting capability of an aircraft is basically generated by a pressure gradient between the upper and lower path of the wing, which pushes the wing and aircraft up. Where the low and high pressure come together a vortex is generated. Since these vortices, like with many things in nature, search the path of least resistance they come together at the wing tips where a bigger wingtip vortex is generated. That vortex generates a down wash on the wing and generates drag, which locally spoils the lift and aerodynamic efficiency.

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Figure 1: Advanced winglet Boeing 737 MAX (Source: Boeing)

A solution to that problem is the application of wingtip fences, though less effective, or winglets. The winglets create a lift component pointed towards the lift and a small forward force that reduces the drag and there is the potential that for a good design the vortices are smaller resulting in less energy losses. On the Boeing 737 MAX, Boeing went a step further and added a lower part to the winglet that has an outward pointing lift component and a drag countering component. Additionally, laminar flow technology was implemented giving another boost to drag reduction.

While the advanced winglets are likely what is going to catch the attention of most passengers when looking at the Boeing 737 MAX, together with the cleaned tail cone these elements reduce the fuel consumption just by 2 to 2.5 percent. The remainder of the 15% percent target reduction comes from the CFM LEAP 1B turbofans. So one important thing to be aware of is that the CFM LEAP turbofans are key to achieving the desired fuel burn performance.

Propulsion system complexity

One of the easiest ways to improve the specific fuel consumption is by increasing the bypass ratio. The bypass ratio is the ratio between the air bypassing the core and the mass flowing through the core. In essence, this means that by increasing the fan diameter, the thrust specific fuel consumption can be improved. One clear limitation is the required clearance between turbofan and ground. So unless the landing gear is lengthened to increase the clearance, simply increasing the fan diameter to improve fuel efficiency is not always a suiting solution given that lengthening the landing gear requires a thorough redesign, adds weight, development and certification costs. For the Boeing 737 MAX turbofans, the BPR increased from 5.1 to 9.

Afbeeldingsresultaat voor cfm leap 1b

Figure 2 (Source: SP’s Aviation)

The other solution is to optimize the core or in other words ‘increase the overall pressure ratio.’ Pratt & Whitney chose to put a gearbox between low pressure spool and the fan. By putting a gearbox between the fan and the other components on the axis, the fan can rotate at a slower speed, meaning that all components can spin closer to their optimum speeds. This, however, is a complex solution. So CFM International chose to increase the efficiency by a combination of improving the shapes of the components and design the components to be able to spin at optimum speeds to improve the pressure ratio. One way to improve the shape of certain components to improve their efficiency is by 3D printing parts. The low pressure rotor on the CFM LEAP 1B rotates slightly slower than its CFM56-7B counterpart, but the high pressure components can spin over 30% faster. These components have to be designed to withstand these increased rotational speeds.

When increasing the overall pressure ratio, the temperature increases even more during the compression stages. Achieving the increased pressure ratio is one thing, but making them withstand the higher temperatures is another. To handle the increased temperatures while simultaneously improving thrust, advanced materials were used. One of those advanced applications is the use of carbon matrix ceramics. CMCs come with a weight benefit, but more importantly allow for higher temperatures which subsequently allow for higher pressure ratios and that eventually helps CFM in increasing the thrust of the turbofan and making the turbofan more efficient. Mass producing ceramic matrix composites has been amongst the biggest hurdles to overcome.

Shortly before the service entry of the CFM LEAP 1B with Boeing, CFM was notified on a quality escape at a facility of one of the suppliers for the low pressure turbine which postponed the first deliveries by a few days.

A few months later while in service, it was found that a coating inside the CFM LEAP turbofans degraded faster than expected and CFM had to design and apply a fix for that. This likely is one of the reasons why there have been delays in deliveries.

In no way do we want to make the issues that arise to appear smaller than they are, but what airlines and jet makers have asked for in terms of propulsive efficiency improvements is not impossible but does ask for some very innovative solutions. We are looking at increased pressure ratios inside the turbofan, higher temperatures, the implementation of advanced lighter and more shock resistant materials, advanced coatings and additive manufacturing while simultaneously bringing down part count. We are looking at highly advanced implementations and it is often ignored that turbofans feature some of the most advanced implementations of state-of-the-art technology in some of the most daring environments and all of this has to come at an affordable price for customers. At current production rates, the smallest teething issues can pose significant challenges to maintain timely delivery to the jet makers.

Continued coverage showed the strain early on

While it might seem that the problems in the supply chain are new, they are not. Even before a cumulation occurred, we could already see the first signs of stress on the supply chain.

Figure 2: Boeing dummy weight CFM LEAP 1B

In 2017, before the Boeing 737 MAX entered service we could already see some aircraft rolling out without the turbofan installed which usually points at a late arrival of the turbofan. So we are seeing quite a few aircraft missing their turbofans at this moment piling up at the Renton facility, but this certainly is not something new.

In February this year, Spirit AeroSystems (SPR) deployed SWAT teams to address bottlenecks in its supply chain. In April, it became clear that Spirit AeroSystems, for the first time in 4 years, sent a shipment of Boeing 737 fuselages late to Boeing’s facility and by May Boeing’s Tier 1 supplier had deployed SWAT teams to a dozen suppliers to address bottlenecks in the supply chain. In August, most of the delays had been eliminated though some fuselages were still late.

It was around that time that we wrote two notes to readers and investors; The first one in April where we pointed out that single aisle production is not infinitely scalable despite the rather smooth increases we have seen the past few years:

Earlier this month, we pointed out that Boeing’s first quarter earnings might disappoint as delivery volumes were weak in the first 2 months of the year. If no uptick in deliveries would take place in March, the jet maker would most certainly fail to meet expectations. Boeing eliminated this downside risk as it showed strong delivery figures in March, which should pave the way towards good first quarter earnings. Boeing’s commercial aircraft deliveries remain a key focus point due to the existing importance of the business to Boeing’s overall business as well as the growth in the coming years. While the commercial aircraft market is growing, there sometimes are program specific challenges which make it harder for Boeing to increase revenues. The Boeing 777 program is a clear example of that and we believe it takes 3 aircraft programs to offset the loss in revenues from the Boeing 777 program. This shows 4 important things to us. The first thing being the scalability of Boeing’s single-aisle business, though this is not infinitely scalable. The second thing is the health of the freighter product line up and market with the 3rd and 4th element being the importance of the Boeing 777 program in the past and the current and future importance of the Boeing 787. Simultaneously, the pressure on the Boeing 787 is increasing as it’s one of Boeing’s main cash and revenue drivers and we are currently seeing some pressure on deliveries.

and in the second one in our analysis of the April orders and deliveries, we also pointed out the delivery pattern being indicative of some strain that is leaking to Boeing’s ability to push jets to its customers and in our most recent analysis of Q2 deliveries we reiterated that view:

Delivery volume during April was a bit disappointing. The key programs for Boeing, namely the Boeing 737, Boeing 787 and Boeing 777 all showed deliveries below the production rate. The explanation for this is simple: Boeing pushed out a lot of aircraft for delivery in March to bolster its Q1 results and we are now seeing how that impacts the delivery numbers in the subsequent quarter. The lower deliveries could be somewhat indicative of strain on production. We expect that just like last quarter, Boeing will aim to pull the same trick again, having deliveries peak once every three months.

So the problems already showed earlier this year. At that time the chain was likely working on transitioning towards supporting a rate of 52 aircraft per month. While widely the turbofans and the late fuselage shipments are being blamed for Boeing’s sudden cumulation of aircraft, there are other key components arriving late at the facility in Renton as well.

Some aircraft rolled out without an auxiliary power unit [APU] installed, which also is a strong pointer that the supplier of the APUs is having problems coping with demand. Andrew McIntosh reported that another supplier is having problems with supplying enough passenger service units caused by production issues of one of its suppliers.

So we see a few things; the strain on the supply chain has been visible at the start of the year already and it never went away. Boeing just was able to recover shipment volume at the end of quarter, so it didn’t impact the company’s financials. That’s not the case now. We also observed that the issues are not limited to Tier 1 suppliers but go quite a bit deeper in the chain and some of those issues have been surfacing recently. So the pile-up is a result of combination of a lot of things including late deliveries of CFM LEAP turbofans due to fixes that had to be designed and applied, inconsistent fuselage deliveries, and late arrivals of essential components such as APU and PSU deliveries. That poses quite a significant problem for Boeing to timely deliver all single aisle jets.

Comment from Boeing

Afbeeldingsresultaat voor muilenberg 737

Figure 3: Boeing CEO Dennis Muilenberg and Boeing Commercial Airplanes CEO Kevin McAllister (Source: Daily Sabah)

While the issues are serious, Boeing spokesman Doug Alder said in early August that impact from late fuselage shipments and late turbofan deliveries was at its peak. At the time, shortage of parts from other suppliers was not that clear and from what we can see now the situation exacerbated.

CFO Greg Smith said that Q3 deliveries would drop, but would recover in Q4. To us the big question is whether Boeing can ramp up production efficiently. Somewhere in the coming months, probably at the earliest in October and at the latest in December, Boeing has to transition one of its assembly lines from NG to MAX production. That would mean that ideally production of the MAX should simultaneously go up. Current rates already seem to be difficult to support, so the big concern we have is that as NG production comes down MAX ramp-up this year might not go as planned.

So far, Boeing has answered media questions but we feel the company has not yet properly addressed the issue for investors. We hope to see that during the Morgan Stanley Laguna Conference, Boeing CEO Dennis Muilenburg will provide more insights on where Boeing is with recovering the delivery stream and also how its ramp-up is coming along.

Valuing the cumulation

The big question of course is how much worse did things get since the cumulation was first widely covered in the media. Back then over 40 jets were reported to be parked outside the Renton facility.

The most recent figures we saw mention 38 Boeing 737 MAX aircraft, 40% of which don’t have an engine and there are 17 Next Generation aircraft parked as well. AeroAnalysis estimated the value of those parked aircraft to be around $2.75B including one P-8 Poseidon. Now one thing to be taken into account is that it is far from uncommon that there are aircraft parked outside the facility in Renton. In normal conditions you will mostly probably see 10 to 15 aircraft being parked outside at the Renton facility as they await flight testing. That means that the cumulation would be more or less in line with the number of Boeing 737 MAX aircraft that are parked, though we believe it is a mix of both the NG and the Boeing 737 MAX. That means that in the best-case scenario the cumulation can be valued at $1.95B and in the worst-case scenario it would be $2.05B. The numbers are still significant and we think estimates on Boeing’s Q3 results could be lowered.

Is history repeating itself?

Afbeeldingsresultaat voor 1997 boeing

Figure 4: The Boeing 737-700 being revealed (Source: Airline Reporter)

Another important question is whether history is repeating itself. Twenty years ago, Boeing reported its first loss in 40 years following a combination of production issues on the Boeing 737 and Boeing 747 program as well as acquisitions and some portfolio-driven decisions. The commercial airplanes segment recognized a $700 million charge in October 1997 and a $2.6B charge in November 1997, driven by labor and parts shortages that forced the Boeing 737 and Boeing 747 lines to be closed for 3 weeks. Important to note is that 1997 is the year of the introduction of the Boeing 737NG, the aircraft that is being gradually phased out from the production system now. At the time, the Boeing 737 program manager was sent home. Fast-forward to 2018 and we see that in August amidst the Boeing 737 pile-up at the Renton facility, Boeing announced that the program manager of the Boeing 737, Scott Campbell, would retire at year-end. We think that since Scott Campbell has been with Boeing for over 3 decades the company has given him the most honorable exit under current circumstances.

There are some parallels between 1997 and 2018, namely the difficult transition production of one family generation to the other, part shortages, labor shortages (part of the current pile-up is labor related) and the exit of the program manager. At this stage, however, we deem it unlikely that we will see a cost growth to the same extent as happened in 1997.

What can Boeing do?

In 1997, the lines stopped for 3 weeks and it has cost the company. We don’t expect that to happen this time but we also think that at this point, except for retesting the supply chain there is not a lot Boeing can do. The ramp-down in productions has been decided on quite some time ago and the entire supply chain is producing with the transition in mind, the fact that the MAX supply is not smooth does not mean that the NG supply capacity can be recovered. So for the jets that are parked now, Boeing can only put more people on reworking and finishing those jets with additional staff and send out specialized team to address the bottlenecks together with Tier 1 suppliers. Reverting back or even stopping a line for a longer time is going to mess up the schedules and cost even more than failing in the ramp-up and having aircraft piling up at the facility, so that doesn’t seem to be an option. From the contracts we saw with airlines, the terms change quite a bit from one contract to the other and in some cases Boeing is obligated to compensate for late deliveries and in some cases it is not. In some cases, we found that Boeing stated that there are excusable delays and those seem to include late arrivals of parts from the supplier. If Boeing has to compensate customers, it is likely that CFM International or any other manufacturer coping with supply chain issues will have to pay this compensation.

Risk mitigation should have happened upfront with a thorough stress test of the entire supply chain and quality system and assurance. As soon as Boeing increased the production rate on the Boeing 737 program, it became difficult for the supply chain to keep up which might be pointing at the supply chain being stress-tested insufficiently. The only thing that suppliers and Boeing can do is send in specialized teams to assess the bottlenecks in the supply chain and do additional hiring. One of the problems seems to be that all the way down the chain there are some small suppliers that have difficulties finding staff and some of those companies are also too small to provide the required investment to implement automation.

Conclusion

The main conclusion is that while there is a focus on engine shortage, we think it has been shown that the problem has been more widespread and did not occur from one day to the other. Suppliers simply are having an incredibly hard time keeping up and we have seen that stress on the supply chain from the start of the year. Properly addressing this is difficult, because it seems that the strain flows from the lowest levels of the supply chain all the way to the top. There have been concerns about Boeing being able to keep its production high in 2019, I think what currently is more of a concern is the delivery target for this year. Boeing signaled that deliveries would be backloaded, but we do have doubts whether Boeing can ramp up its production of the Boeing 737 MAX. Keeping Boeing 737 Next Generation rates high is not an option since the ramp-down has already been feathered into the production plan and the supply chain and cannot be changed on short notice.

Maybe this is the time to think about how complex the products that the jet makers make are and how extremely complex the turbofans are. We are looking at production rates at record highs while system complexity has risen quite a bit. That asks for hiring and training of skilled and talented staff and automation to some extent. In 2019, Boeing should deliver roughly 2 aircraft each day or 1 every 14 hours. From here it is only going to get more difficult to support demand.

Do the current problems make Boeing a sell? We don’t think so. The current status on the Boeing 737 is far from optimal but we think that just like Airbus, Boeing and its suppliers are working on executing a recovery plan. So for some short-term investors this might be time to sell, but for a long-term investor, any weakness in Boeing’s share prices can be used to add to positions.

Disclosure: I am/we are long BA, EADSF.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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In India, Google races to parry the rise of Facebook

SAN FRANCISCO/MUMBAI (Reuters) – Google retains only a slight lead over Facebook in the competition for digital ad dollars in the crucial India market, sources familiar with the figures say, even though the search giant has been in the country far longer and has avoided the controversies that have dogged its rival.

A woman walks past the logo of Google during an event in New Delhi, India, August 28, 2018. REUTERS/Adnan Abidi

Facebook’s success has shaken Alphabet Inc’s Google, led by an Indian-born CEO, Sundar Pichai, who has made developing markets a priority.

Google officials in India earlier this year were alarmed to learn that Facebook Inc was likely to generate about $980 million in revenue in the country in 2018, according to one of the sources. Google’s India revenues reached $1 billion only last year.

Facebook and Google declined to comment on Indian revenue figures or the competition between the two companies.

Google is now pushing back, attempting to lure customers with better ad-buying tools and more localized services. The revamped strategy mirrors initiatives that have succeeded in boosting the time Indian consumers spend with Google services.

The battle in India reflects an epic challenge for Google in developing markets around the world that are crucial to the company’s long-term growth – many consumers in those country’s are gravitating to Facebook and it’s siblings, Instagram and WhatsApp, at the expense of Google search and YouTube, and advertising dollars are quick to follow.

“Facebook is a far more user-friendly platform even though they haven’t created features specifically for Indian advertisers,” said Vikas Chawla, who runs a small ad-buying agency in India.

Facebook ads, compared with those on Google search or YouTube, tend to transcend language barriers more easily because they rely more on visual elements, said Narayan Murthy Ivaturi, vice president at FreakOut Pte Ltd, a Singapore-headquartered digital marketing firm. Pinpointing younger consumers and rural populations is easier with Facebook and its Instagram app, he and other ad buyers said.

And Facebook is succeeding in India, which boasts the fastest-growing digital ad market of any major economy, despite internal turmoil and political controversy. It has been without a country head for the last year, and has faced a series of incidents in which rumors circulating on Facebook and WhatsApp have prompted mob violence.

Facebook and Google between them took 68 percent of India’s digital ad market last year, according to advertising buyer Magna. Media agency GroupM estimates digital advertising spending will grow 30 percent in India this year.

The Facebook phenomenon is evident close to home for Google. During a recent lunch period, six out of 10 people who walked out of Google’s Bangalore offices while looking at their phones told Reuters they were checking WhatsApp. All 10 said they regularly used Whatsapp.

Eight Indian ad buyers interviewed by Reuters were divided on whether Facebook would overtake Google in Indian ad revenue. That such a question would even be debated explains why Pichai, Google’s chief executive, has pressed to flip the company’s approach to emerging markets.

“India is the most important market for the ‘Next Billion Users’ initiative,” Caesar Sengupta, the head of the effort, told Reuters on the sidelines of the annual “Google for India” event in New Delhi last week.

A man walks past a Google hashtag during an event in New Delhi, India, August 28, 2018. REUTERS/Adnan Abidi

NEW TACTICS

For many years Google designed its services for early adopters of new technology, who tended to be in Silicon Valley, said Nelson Mattos, who oversaw Google’s Europe and Africa operations for several years. Great products would then find a broad global audience.

“Over time, as you saw the growth of Facebook, the importance of WhatsApp and other tools in these new markets, and not the same adoption of Google, the company started to realize that maybe they had to change that approach,” Mattos said.

Shortly after taking the helm three years ago, Pichai mapped a new strategy for places such as India: More services tailored to locals; more marketing on radio, billboards and TV; more local staff and start-up investment.

Google’s India workforce has more than doubled since to more than 4,000 employees, or about eight times Facebook’s presence, according to a tally of LinkedIn profiles and company statements.

Its products evolved too, becoming easier to use with low data plans. Smartphone apps such as Files Go and Tez – rebranded last week as Google Pay – were aimed at Indians.

“There’s definitely a sea change,” said Asif Baki, a user researcher at Google who oversees two-week “immersion trips” in developing markets for senior executives and staff.

The efforts are bearing fruit. Indian users during the first half of this year spent more time on Google services than on Facebook services, according to estimates from audience measurement firm Comscore. Over a similar period a year ago, Facebook came out on top.

Extending those gains to the ad business is a work in progress. A handful of Google executives, including leaders for display ads and small business advertisers, traveled to India earlier this year in a previously unreported trip to better understand the needs of Indian clients.

The visit spurred them to consider ideas such as enabling advertisers to reach users only in a particular Indian state, since language and literacy vary greatly around the country, according to a person familiar with the discussions.

At the New Delhi event, Google unveiled a plan to bring Indian newspaper content online, to increase the supply of search results – and ads – available in regional languages. 

Google still has to reckon with other issues. Small businesses in emerging markets are less likely to have websites, a foundation for Google ad campaigns but unnecessary for Facebook.

Executives met with one Indian merchant who recorded product videos on YouTube then messaged the links to potential customers on WhatsApp, said Kim Spalding, the company’s general manager and product lead for small business ads. 

    Facebook, meanwhile, is already on to commercializing such behavior. Just weeks ago, it began charging for text-based marketing features on WhatsApp, with video ads expected to launch next year.

Reporting by Paresh Dave and Sankalp Phartiyal; Additional reporting by Arjun Panchadar in Bangalore; Editing by Jonathan Weber and Alex Richardson

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California looks to adopt Obama-style net neutrality rules

LOS ANGELES (Reuters) – California lawmakers moved on Thursday toward imposing the nation’s strictest net neutrality laws on internet providers, flying in the face of sweeping new Federal Communications Commission (FCC) rules seen as a win for the companies.

FILE PHOTO: Supporters of Net Neutrality protest the FCC’s recent decision to repeal the program in Los Angeles, California, November 28, 2017. REUTERS/ Kyle Grillot

Members of the California Assembly voted 58-17 to send the bill to their colleagues in the state Senate, who have until midnight to pass so-called SB 822 on the final day of the legislative session or wait until next year.

If the measure passes both chambers of the Democrat-controlled state legislature it would still require approval from Governor Jerry Brown, a Democrat, who has not said if he would sign it into law.

“We have just one final vote left to go to get the strongest net neutrality protections in the nation passed out of the legislature and onto the governor’s desk,” state Senator Scott Wiener, the bill’s author, said in a statement.

“We will take nothing for granted, but we have momentum and the support of a broad and diverse coalition that understands the importance of a free and open internet for everyone,” Wiener said.

Proponents of California’s proposed regulations contend that net neutrality rules would bar major internet providers from blocking, slowing down or giving preferential access to online content.

Critics say the restrictions limit internet providers’ ability to recoup the costs of network improvements and lead them to curb investment.

In June, the FCC under President Donald Trump repealed rules adopted during the Obama administration that barred internet service providers from blocking content or charging more for access, a move intended to establish a more level playing field or “net neutrality.”

State attorneys general and the District of Columbia asked a federal appeals court earlier this month to reinstate the Obama regulations.

They were joined in that action a week later by a coalition of trade groups representing companies including Alphabet Inc, Facebook Inc and Amazon.com Inc.

The U.S. Senate voted in May to keep the Obama-era internet rules but the measure is unlikely to be approved by the House of Representatives or the White House.

(This version of the story corrects day of the week to Thursday in first paragraph)

Reporting by Dan Whitcomb; Editing by Paul Tait

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Why California's Privacy Law Won't Hurt Facebook or Google

California, that innovative economic juggernaut that so often takes the regulatory lead on matters such as automobile emissions, is once again establishing the ground rules to a vital industry. The California Consumer Privacy Act (CCPA), signed into law by Governor Jerry Brown in June, is the improbable result of a wealthy real estate investor, with the colorful name of Alastair Mactaggart, and a gang of volunteers taking an interest in consumer privacy. Mactaggart used California’s zany ballot initiative system (and his personal fortune) to get a version of a proposed privacy law onto the November ballot. Faced with the horrifying prospect of a well-funded privacy evangelist jamming regulation down the throats of the state’s golden-goose tech companies, legislators quickly devised their own alternative. This rollicking policy adventure is recounted at length in a cover story by Nicholas Confessore for The New York Times Magazine.

Look through the rah-rah triumphalism of the piece, however and you’ll see that far from succumbing to some irresistible activist push, incumbents Google and Facebook craftily shaped the legislation to suit themselves. When in the history of American democracy have state legislators voted to severely and onerously regulate trillion-dollar companies in their home districts, motivated only by an overweening concern for consumer rights (and not donor pressure)? Never, is the answer—which is why the implications of CCPA could use some further scrutiny. (Spoiler alert: Facebook doesn’t hate the law).

Antonio García Martínez (@antoniogm) is an Ideas contributor for WIRED. Previously he worked on Facebook’s early monetization team, where he headed its targeting efforts. His 2016 memoir, Chaos Monkeys, was a New York Times best seller and NPR Best Book of the Year.

First, what the law does.

CCPA resembles a weaker form of Europe’s General Data Protection Regulation, or GDPR, which took effect in May. The California law requires companies to provide an opt-out to data sharing (GDPR required an opt-in), clear statements of what data is being collected or shared with third parties (as does the GDPR), and the right to delete data about yourself. The unique element, and the only one that the tech giants really pushed back on, was a provision granting individuals the right to sue companies for violating their privacy. The clause was effectively neutered when a political compromise limited the right to cases of egregious data loss or theft.

This resemblance to GDPR, if you’re a privacy activist, is more bug than feature: Companies like Facebook and Google already comply with GDPR (or comply as much as anyone) and have extended those GDPR protections to US users. When the CCPA takes effect on January 1, 2020, the average Facebook user will likely not notice.

To understand why the CCPA won’t impact Facebook in any meaningful way requires understanding (at a high level, not to worry) how Facebook’s ads ecosystem treats data and outside partners. Unlike much of the ad-tech world, Facebook lives in a walled garden where no data leaves and very little enters. When an advertiser wants to retarget you, it exchanges your contact information with Facebook, both sides agreeing to a pseudonym for you, before placing you in one or more targeting buckets (“shoe shoppers,” for example). For Facebook’s most powerful and invasive micro-targeting, almost no data is shared between advertiser and publisher, and data middlemen are largely absent. Which is why, if you download your data from Facebook, the juiciest information is in the least remarkable section: “Advertisers Who Uploaded a Contact List With Your Information.” Users and journalists fixate on the supposed creepiness of Facebook having a call log for you, for example, but the real targeters are buried in that list of companies sharing contact information. The CCPA won’t change this.

So who is impacted by the CCPA?

Primarily, companies you’ve never heard of like Drawbridge and LiveRamp (now owned by Acxiom, another company you’ve never heard of, but which knows everything about you). Drawbridge, using data that it managed to beg or borrow, like your IP address or GPS-derived location, figures out all the devices you own. Why? So that an online retailer that notices you browsing for a new handbag on your work computer can serve you an ad for that handbag on your mobile device on your commute home. Such “cross-device targeting and attribution” is one of the holy grails of modern digital advertising.

What does LiveRamp do? Ever notice how you seem to get served ads online for products you bought in physical stores? That’s not because Facebook is eavesdropping on your phone. It’s done via what’s known as “data onboarding,” where personal data like your name, address, or phone number (which retailers know through loyalty-card programs and the like) are converted into ways to target you online. Middlemen like LiveRamp join online with offline by buying your personal data and then working with publishers—email newsletters, dating sites—to identify your browser cookies. Don’t sweat the details; the net of all this hackery is a table with your personal data plus a browser cookie or mobile device ID, which allows, say, a pharmacy chain that knows your phone number (which you entered at checkout to save 5 percent) to link all your purchases to your online presence.

Together, these relatively small players provide an alternative targeting ecosystem that competes with Facebook’s one-stop-shop. If you’re Walgreens, you can use LiveRamp (or its competitors) to target people via real-time ad exchanges. Or you can upload your customers’ contact details to Facebook. The advertiser is agnostic, so long as the pixels reach the right audience.

Here’s why Facebook is better positioned for CCPA, or GDPR: It has a direct relationship with you. How does it know every device you use? Because the first thing you do when you buy a new device is log into Facebook, Instagram, or WhatsApp. How does it know your name, phone number, and address? Because you told it those things, or opted into sharing your location via the Facebook app.

The California and European privacy rules favor these first-party relationships. Data coming from elsewhere—known as third-party data—is viewed with more suspicion, so this privileged state of affairs is unlikely to change soon. So long as Facebook’s apps remain as addictive as they are, Facebook will know who you are, where you are, and every digital pseudonym for you, whether a browser cookie or a mailing address.

You might now be wondering if this approach to advertising was a piece of far-sighted strategy by Facebook, to avoid the inevitable privacy storm. I can state, with some authority since I was at Facebook at the time, that the answer is no. This closed system of identity-matching with minimal data sharing was conjured mostly to assuage the mutual suspicions of Facebook and its advertisers: Advertisers didn’t trust Facebook not to recycle their precious consumer data, and Facebook didn’t trust advertisers not to repurpose its user data. A minimalist data join, with all Facebook data remaining safely within its walls and Facebook not touching often dubious outside data, was the result. It’s just a happy accident (for Facebook) that this is the optimal architecture for weathering privacy regulation like the CCPA and GDPR.

Ultimately, the CCPA is a fatal blow not to Facebook but to the competing middlemen. Shortly before GDPR took effect, Drawbridge announced it was leaving the European market. Then it announced it was leaving advertising altogether. LiveRamp is reported to be up for sale. Facebook itself shut down its Partner Categories program that used targeting segments from data brokers like Acxiom, cutting off its last connection to that world. Under CCPA and GDPR, if you want to target consumers across devices, or use your trove of offline consumer data online, you’ll have to use Facebook instead of the few competitors that once eked out a business outside its walled garden.

It’s as if the privacy activists labored to manufacture a fearsome cannon with which to subdue giants like Facebook and Google, loaded it with a scattershot set of legal restrictions, aimed it at the entire ads ecosystem, and fired it with much commotion. When the smoke cleared, the astonished activists found they’d hit only their small opponents, leaving the giants unharmed. Meanwhile, a grinning Facebook stared back at the activists and their mighty cannon, the weapon that they had slyly helped to design.

The good news is that while the activists missed their big, showy target, they hit the often sketchy data arbitragers who do the real dirty work of the advertising machine. Facebook and Google ultimately are not constrained as much by regulation as by users. The first-party relationship with users that allows these companies relative freedom under privacy laws comes with the burden of keeping those users engaged and returning to the app, despite privacy concerns. Acxiom doesn’t have to care about the perception of consumers—they’re not even aware the company exists. For that reason, these third-party data brokers most need the discipline of regulation. The activists may not have gotten the legal weapon they wanted, but they did get the legal weapon that users deserve.


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3 Changes America Needs to Make to Revive Our Entrepreneurial Spirit

Entrepreneurship is, at its essence, about problem-solving. And real-world problems are complex, even messy. The solutions may change how we deal with health issues, transportation, business, the environment, and just about every facet of our lives.

Solving these problems often takes working in a diverse environment, with different kinds of thinkers bringing their own strengths. During the past century, America excelled at uniting people from different backgrounds and points of view, fostering a spirit of open collaboration and an exchange of ideas.

We need to once again encourage that collaborative spirit, and with it boost the type of innovation we need in the 21st Century. By focusing on a few key areas, we all can aid in the effort to stimulate entrepreneurs and innovation.

1. Increase STEM research and interest.

Schools have made a positive impact on efforts to increase interest in STEM (Science, Technology, Engineering, and Math), which can give future entrepreneurs the skills they need. But, federal investments in research has been dropping since the 1970s. We need to do all we can to encourage a new generation of STEM learners. And it’s not just teachers that need to increase interest in the scientific and technical — it’s something we all need to encourage in our culture.

For example, after-school programs, such as the After-School All-Stars, which is able to connect with more than 70,000 kids nationwide, are a great way to get kids interested in STEM. Programs outside of school hours are particularly helpful to broaden the “branding” for STEM, because those concepts can be applied almost everywhere in our world, so it’s good to make associations outside of a traditional academic environment. Business leaders can make a big difference here by partnering with a school or after-school program to ensure these programs have the resources they need to thrive. Plus, a partnership could help introduce students to entrepreneurship and business careers.

2. Turn researchers into entrepreneurs.

Researchers are constantly making discoveries that could improve our lives and the world we live in. But often their passion for research is disconnected from the practical implementation of their ideas. Instead, they may publish a paper and only hope an entrepreneur will be inspired to act. That means the people who understand a concept best are too rarely the ones that will lead the effort to create a practical solution — let alone form a company around the idea. To help counter that pattern, the country’s top universities have increased their push for researchers to take their ideas from the lab to the marketplace.

One fruit of this effort is SentiAR, which uses a mixed reality headset and the Microsoft HoloLens to arm physicians with a less invasive tool for treating patients with heart rhythm abnormalities. The researcher team, a married couple who teach at Washington University in St. Louis, created the tech then started the company and sought funding, including a NIH SBIR fast-track award of $2.2M. And both have remained actively involved in the business. That kind of expert oversight of a concept and product idea is the kind of deeply connected leadership we need more of in the business world.

3. Offer support to entrepreneurs who are buried in student loan debt.

The total amount of money that Americans owe in student loans has reached an incredible level — it’s now at $1.5 trillion. High student loan debt severely limits the life choices of many post-college Americans, including would-be entrepreneurs. This may drive some of them to go for sure bets over riskier innovation, and that can stifle entrepreneurial creativity. Need proof? Just look to the Federal Reserve Bank of Philadelphia’s study, which found that counties with high student debt fall behind other counties when it comes to establishing new businesses.

Although the government offers incentives toward aspiring entrepreneurs in the forms of special student loan repayment options, merely temporarily lowering the minimum required payment on interest-earning loans isn’t doing enough. For potential startup founders, having student loan debt is enough to make investors and lenders think twice before helping to fund their venture. Our aspiring innovators need better options and more support. Business leaders can take action by starting scholarship programs and advocating for policies that help aspiring entrepreneurs take the risk, even if they have student loan debt.

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Twitter's CEO Asked Elon Musk to Speak to All of Twitter's Employees. Here's the Truly Surprising Way It Changed 1 Musk Fan's Life

A few weeks ago, the CEO of Twitter, Jack Dorsey, took the stage at an unusual event in San Francisco, with virtually every Twitter employee in attendance. Looking down at his phone, he read aloud some direct messages he’d been trading with Elon Musk–inviting Musk to speak, in fact, at that very event. 

“I kinda hate speaking events,” Musk had replied, literally two minutes after the initial invitation. “But maybe for you all. I do love Twitter and I think it is a force for good.” 

As rumors about Musk’s appearance had spread among Twitter employees, their excitement had built. But now, literally minutes before some hoped that Musk would appear, Dorsey reported: “Unfortunately, he got extremely, extremely busy, and isn’t able to make it.” 

Twitter wouldn’t comment beyond Dorsey’s remarks (which haven’t been reported before, and which you can see in a video at the end of this column). And my efforts to reach Musk via both Tesla and SpaceX went unanswered. But two things are very clear.

First, literally an hour before the speaking slot at this event, Twitter didn’t know who was going to wind up speaking instead of Musk.

And second, the person they found to fill in–Jon Carmichael, a Twitter photographer who describes Musk as “my biggest source of inspiration”–turned the experience into a truly life-changing moment.

‘I was so devastated.’

In retrospect, it’s not such a big surprise that Musk wasn’t able to make it. The Aug. 2 event at the Moscone Center in San Francisco came basically halfway between his “pedo guy” tweet and his “funding secured” tweet–to say nothing of the fact that Musk was crushing to try to meet Tesla production goals at the time.

He had a lot going on. But, his absence apparently created a vacuum–and an amazing opportunity for Carmichael.

On the rumor and hope that Musk might speak, Carmichael had decided to give him a truly breathtaking gift: the first print of his now-iconic eclipse photo (which almost nobody had seen yet, on Aug 2). It was “printed on crystal with laser,” as he told me, “and back-mounted onto Dibond, which is like aluminum.” 

But then, Musk didn’t show.

“I worked very hard and spent a lot of money on this gift for him, and I got to the event and last minute, Elon [wasn’t there]. And I was so devastated,” Carmichael told me. “So I thought, maybe I should give this to Jack. You know, Jack Dorsey, the CEO.”

‘We’re changing the whole program’

An hour before Dorsey wound up taking the stage to talk about Musk not being there, Carmichael in a ballroom just above. He has literally started to write a note to Dorsey explaining the gift. 

“All of sudden, I’m in this giant ballroom by myself and here’s Jack Dorsey walking right toward me,” Carmichael recalled. “He’s never by himself. He’s always extremely busy.”

“Hey Jack,” he called out. 

“Yeah, what’s up?” 

Carmichael gave him the Dibond print of his photo that he’d originally intended for Musk.

“It’s heavy, and he opens it up and goes, ‘What is this?'” Carmichael told me. “I said, ‘Oh, you remember The Great American Eclipse last year?’ Yada, yada, yada. ‘This is a photo I took.’ I told him the whole story.” 

Dorsey was blown away by the photo. And with 45 minutes to go before show time, he told Carmichael that he wanted him to do the speech.

“And he goes, ‘Okay, here’s what’s going to happen. In 45 minutes, I’m going to be introducing you on stage to share this story and this image with my entire company. Can you do that?'” Carmichael recounted. “And I’m like–internally, I’m freaking out.”

‘This is my first speech I’ve ever given’

We’ll just give away part of the ending here. Carmichael rose the occasion like nobody could have predicted. Right at the start, he confessed with a smile: “This is my first speech I’ve ever given,” and the audience was pretty much immediately won over.

(A video of Dorsey talking about Musk, and then Carmichael’s entire internal presentation to all of Twitter’s employees, is at the end of this post.)

“It was just the most beautiful moment I could’ve ever imagined,” Carmichael recalled. “It was so moving. I got multiple standing ovations. This was my first unveiling [of the photo] to 3,500 people … three weeks before I was going to unveil it publicly, on the one year anniversary of the eclipse.”

And as a result of his talk, Carmichael said, Twitter completely bought in. The company flagged his photo on the platform so that nobody could share it until he officially unveiled it.

And when he did actually share it,–on the anniversary, it came in the form of a streamed broadcast to all 32 Twitter offices around the world.

A life-changing experience

There are many ironies in Carmichael’s story, including the fact that he had his hopes dashed twice in its course, only to find that what he’d hoped would happen wasn’t as advantageous as what actually did happen.

The first example was that he’d originally entered a contest to get a seat on a special Alaska Airlines eclipse flight to photograph the eclipse–but he didn’t win. However, it turned out that the Southwest flight he found, and that he flew on as a regular passenger, offered a far better vantage point to create his photo.

The second disappointment was his excitement over the idea of meeting Musk. But had Musk been there to speak, that would have meant Carmichael never would have had his chance on stage. And then Twitter wouldn’t have been as involved to use its publicity machine and help him share the photo around the world.

“I immediately thought in that moment, this quote by the Dalai Lama,” Carmichael recalled. (In fact, the Dalai Lama was briefly one of his photography clients.) “And he says, ‘Remember, that sometimes not getting what you want can be a wonderful stroke of luck..” 

Carmichael says his ultimate goal is to try to the use his photo and his story to inspire more interest in astronomy and the idea of another total eclipse. In 2017, he said, tens of millions of people lived within a half hour of where they could have experienced totality, but didn’t make the trip.

“I’m really passionate about that, because this was such a uniting moment in our history and it was such a beautiful moment, too,” he said. “So in six years I want that to be even bigger.” 

Six years: The next total solar eclipse visible over the United States will be on April 8, 2024.

So if you’re moved, and you take the opportunity to go and observe totality yourself in April 2024, just remember the chain reaction: You might never have seen it, if Elon Musk had been able to give a speech at Twitter in August 2018.

Here’s the video of Dorsey talking about his DMs with Musk, followed by Carmichael’s speech at the Twitter event.

[embedded content]

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Mayo Florida Temporarily Changes Name to Miracle Whip, Supposedly Fooling 1,232 Residents

The Northern Florida town of Mayo in is temporarily changing its name to Miracle Whip. As you might guess, this is part of a marketing campaign by Miracle Whip maker Kaft Heinz, which is reportedly paying the town somewhere between $15,000 and $25,000 for the name change.

As far as that goes, this is not an unusual story. IHOP, the International House of Pancakes, temporarily became IHOB, the International House of Burgers, to mixed reviews. Hot Springs, New Mexico changed its name to Truth or Consequences in order to bring the then-popular game show to town. Topeka, Kansas tried the same approach, temporarily changing its name to Google, in the hopes that the search giant would bring high-speed internet, but it didn’t. North Tarrytown, New York even changed its name to Sleepy Hollow, just to make sure people knew it was the setting for Washington Irving’s headless horseman story.

But there’s one big difference. None of these other towns claimed to be trying to play a trick on 1,232 unsuspecting residents. Mayo–or, rather, Miracle Whip–town officials seem to think they can fool everybody who lives in their community into thinking the name change is permanent. 

The idea of the prank is for videographers from Miracle Whip to record townspeople’s reactions when they discover that their street signs and water tower are being changed to the new name. They also want to record what happens when people in town are asked to give up any mayonnaise they may have in their homes, presumably to be replaced with Miracle Whip.

How exactly did town officials expect to fool 1,232 people? For starters, they held a closed-to-the-public meeting with Kraft Heinz where they worked out the details of the surprise. Ann Murphy, the mayor, gamely tried to stick with the illusion that the name change was permanent, telling the Associated Press, “We’re not going to be boring old Mayo anymore. We are going to be Miracle Whip! I definitely think this will put us on the map.” (In case you’re wondering, the town got its original name from Confederate Colonel James Mayo.)

Unfortunately for the town’s wannabe prankster leadership, Linda Cone, town clerk, was more forthcoming, admitting to reporters that, yup, the name change is temporary and that town officials were trying to fool residents, at least for a few days,  by pretending it was permanent. But in a town of just over 1,200 people, she added, everyone knows everyone and it’s not easy to keep a secret. “It’s been kind of difficult to keep everything under wraps.”

Nothing is under wraps anymore. Any residents who might have been fooled probably are in on the joke now since the story’s gone out over the Associated Press and has appeared in the Tampa Bay Times and on a local TV station’s website.

So that would appear to be that, except for one thing. That closed meeting town officials held with Kraft Heinz to plan their prank? It may have been illegal under Florida’s Sunshine Law, which guarantees open access to most government meetings.

“If this is all supposed to be a big joke perpetuated on residents, I expect they probably violated the law to pull it off,” Barbara Petersen, president of the First Amendment Foundation located in Tallahassee told the Associated Press. “I hate to be a Debbie Downer, but seriously, I don’t think they thought this through.” 

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