WSJ : Meta to European Union: Your Tech Rules Threaten to Squelch the AI Boom

Meta to European Union: Your Tech Rules Threaten to Squelch the AI Boom
Facebook parent, other companies warn in open letter that the bloc’s regulations risk hampering innovation and economic growth

BRUSSELS—A group of companies including Meta Platforms META 0.30%increase; green up pointing triangle, Spotify and Italian luxury-fashion giant Prada warned Thursday that the European Union risks missing out on the full benefits of artificial intelligence because of the bloc’s tech regulations.

In an open letter that was coordinated by Meta, executives from more than two dozen companies said AI can boost productivity and expand the economy, but Europe might reap fewer rewards than other jurisdictions.

“Europe has become less competitive and less innovative compared to other regions and it now risks falling further behind in the AI era due to inconsistent regulatory decision making,” the letter said.

The letter calls on the EU to harmonize its rules and provide what the signatories refer to as a modern interpretation of the bloc’s data-protection law.

Other signatories include representatives from Swedish telecommunications-equipment company Ericsson, German software company SAP and German industrial group Thyssenkrupp, along with researchers and civil-society and trade groups.

The letter comes after Meta and Apple said new AI features they are rolling out elsewhere won’t initially be available in Europe because of the bloc’s regulations.

Apple said in June that it likely wouldn’t introduce its new AI system, called Apple Intelligence, for European iPhone users this year because of what it said were uncertainties caused by a new digital-competition law.

Requirements that large tech companies make it easier for rival services to work on their operating systems “could force us to compromise the integrity of our products in ways that risk user privacy and data security,” Apple said at the time.

Meta said separately in July that it wouldn’t release a future multimodal AI model in the EU in the near term because of what it referred to as “the unpredictable nature of the European regulatory environment.” The company had previously said it would delay a plan to train its AI models using data from adults’ public posts on Facebook and Instagram in Europe after Ireland’s data-protection authority raised concerns.

The European Commission, the bloc’s executive body, has said that all companies are welcome to offer their services in Europe if they comply with the bloc’s laws.

The EU has developed a reputation as a leading global regulator whose rules often have a sweeping global impact. The bloc’s General Data Protection Regulation, which aims to safeguard personal data, rippled globally and became a template for some countries.

More recent EU legislation dealing with digital competition, online content and AI has since been introduced, prompting some of the world’s biggest tech companies to change how they operate in the bloc.

Lawmakers and officials say the EU’s regulations are crucial to challenging monopolistic behavior by large tech companies, curbing the spread of disinformation and abusive online material and protecting children online.

But the rules have also prompted complaints from some companies and industry groups, which say they are cumbersome to implement and put Europe at a disadvantage.

It isn’t unusual for companies to stagger the rollout of new products and features in regions outside the U.S.

The Google AI chatbot Bard, since renamed Gemini, expanded into the bloc months after its initial launch in the U.S. and U.K. Bard’s release in Europe was delayed, in part, by a request from Ireland’s data-protection authority for additional privacy features.

Meta last year released its Threads social-media platform in the EU, months after it first rolled out in the U.S.

The EU, with some 450 million consumers, is among the world’s largest and wealthiest markets, making it an important source of revenue for large tech companies.

The letter published Thursday said that EU regulations could mean European organizations have worse access to open AI models, which can be downloaded and adjusted. The bloc might also miss out on newer models that can combine text, images and speech, the letter said.

The letter singled out what it said was an inconsistent application of the bloc’s data-protection regulations, which it said creates uncertainty over the kinds of data that can be used to train AI models.

“If companies and institutions are going to invest tens of billions of euros to build Generative AI for European citizens, they require clear rules, consistently applied, enabling the use of European data,” the letter said.

>>> US After Hours Summary: PGNY -23.3% after losing significant client; SCS -10

After Hours Summary: PGNY -23.3% after losing significant client; SCS -10.2% lower on earnings; PLTK +2.9% to acquire SuperPlay

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: None.

Companies trading higher in after hours in reaction to news: FDMT +4% (highlights clinical activity for 4D-150 and design of 4FRONT Phase 3 Program), PLTK +2.9% (to acquire SuperPlay for $700 mln), TRIB +2.7% (to initiate CGM market study in India in furtherance of intended collaboration with Bayer), INCY +2.2% (INCY and SNDX announce NEJM publication of data from Pivotal AGAVE-201 trial), JCI +1.5% (launches update to Metasys), PLUG +1% (contracts with BP and Iberdrola JV to supply PEM electrolyzers in Spain), SNDX +1% (INCY and SNDX announce NEJM publication of data from Pivotal AGAVE-201 trial), CTGO +0.4% (stock offering by selling shareholders), PLTR +0.2% (awarded $99.8 mln U.S. Army contract), VST +0.1% (to acquire equity interests of Vistra Vision from minority investors, to become sole owner)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: SCS -10.2%, SANG -0.2%

Companies trading lower in after hours in reaction to news: PGNY -23.3% (significant client to terminate services agreement), CRMT -12.3% ($65 mln stock offering), ASND -4.2% (commences $300 mln ADS offering), AHR -3.4% (commences 14.5 mln share offering), ALGS -1.1% (to announce topline results from Phase 2a HERALD Study), HESM -0.9% (10 mln share offering by selling shareholder commences), SMAR -0.8% (COO to resign, co to eliminate position), MLKN -0.7% (in sympathy with SCS earnings), RGEN -0.6% (to restate results due to timing recognition of product revenue; increases FY24 revenue guidance), HNI -0.2% (in sympathy with SCS earnings), AGX -0.2% (increases dividend)

WWD : Chanel Extends Sustainability Partnership With Cambridge University Body

Chanel Extends Sustainability Partnership With Cambridge University Body
The two have worked together for three years to advance sustainability education, inspire innovation across the value chain and support students on their path to sustainability leadership.

LONDON — Chanel on Wednesday extended its sustainability partnership with the University of Cambridge for another three years.

The two first teamed in 2021, and the brand has since partnered with experts from across the university — including the Institute for Sustainability Leadership, the Institute for Manufacturing, and the Cambridge Judge Business School — to deliver on three core impact areas: building sustainability skills and knowledge, implementing innovative solutions and supporting students on their path to sustainability leadership.

The brand said nearly 500 leaders and key operational team members across Chanel have attended bespoke executive education programs at the university on topics such as biodiversity, climate change and efficient usage of materials.

Alongside education programs, teams from Chanel Fashion have worked with technical experts within the Institute for Manufacturing to run a series of intensive workshops, prototyping effective solutions for Chanel and its value chain, and resulting in significant energy and material use savings year-on-year.

Chanel has also sponsored students from underrepresented backgrounds to join the Institute for Sustainability Leadership’s master’s program as the biggest, single company supporter.

Moving forward, Chanel said the next phase of the partnership will build on strengthening ongoing education programs for company leaders to develop the knowledge, mindset and capabilities for a sustainable business transition; continuing to explore and implement innovative solutions across the value chain; working together to develop research on regenerative business practices, and continuing to provide bursary funding to students on sustainability leadership courses at the university.

Kate Wylie, Chanel’s global chief sustainability officer, said a long-term partnership with Cambridge is vital for the brand to address global challenges with solutions informed by the latest research and innovation.

“From providing deeper education to leaders to implementing innovative solutions in our operations, we have collaborated on concrete changes to advance our sustainability ambitions. The programs have inspired a collective sense of responsibility for sustainability, leading to business transformation. Now, we are focused on maintaining momentum in these areas, as well as helping inspirational students from diverse backgrounds shape an inclusive approach to sustainable action,” added Wylie.

Lindsay Hooper, interim chief executive officer at the Institute for Sustainability Leadership, praised Chanel’s leaders for their commitment to and curiosity about sustainability.

“We have seen leadership teams question, engage and commit to action — and most importantly, implement it. Chanel has a unique opportunity to work throughout its value chain to research, role model and learn from leading practices in sustainability,” Hooper said.

Chanel said its collaboration with Cambridge is an example of its commitment to working with leading academic institutions, NGOs, industry associations and governments around the world to support research and action on sustainability.

Most recently, it set the goal to reach net-zero greenhouse gas emissions across its value chain by 2040.

>>> US Close Dow -0.25% S&P -0.29% Nasdaq -0.31% Russell

Closing Stock Market Summary
Today's session started sluggish in front of the afternoon's headline event. The Federal Open Market Committee (FOMC) voted in favor of cutting the target range for the fed funds rate by 50 basis points to 4.75-5.00%. It was not a unanimous vote. Fed Governor Bowman preferred a 25-basis points rate cut.

The directive indicated that the Committee has "gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance."

The Summary of Economic Projections showed a shift in the median estimate for the 2024 unemployment rate to 4.4% (from 4.0% in June) and a downward shift in PCE inflation to 2.3% (from 2.6% in June) and core-PCE inflation to 2.6% (from 2.8%). The dot-plot, meanwhile, shows a median estimate for 2024 (4.40%) that implies another 50 basis points of rate cuts this year and another 100 basis points in 2025.

Fed Chair Powell defended the larger, 50-basis points cut today as a proper "recalibration" to make sure the labor market and the economy remain in a solid condition and that the intent of today's move is to make sure they remain there. He also said that the Fed doesn't feel like it is behind the curve with its policy rate and that the larger cut today can be construed as a sign of the Fed's commitment not to get behind.

There was some whipsaw trading action in the stock market and the Treasury market after the FOMC announced a 50-basis points rate cut at 2:00 p.m. ET and as Fed Chair Powell conducted his press conference, which began at 2:30 p.m. ET.

The major indices hit session highs in response, which marked fresh record highs for the S&P 500 (-0.3%) and Dow Jones Industrial Average (-0.3%), but ultimately settled lower than yesterday. Nine of the 11 S&P 500 sectors closed with declines ranging from 0.1% (industrials) to 0.8% (utilities).

The energy (+0.3%) and communication services (+0.02%) sectors were alone in positive territory at the close.

The interesting action was in the Treasury market. The monetary policy rate was cut, and it is likely to get cut again (several times) based on the Fed's own projections. The interesting thing is that Treasury yields, which dropped initially, moved higher, with the 10-yr note yield settling the session higher than where it was before the 2:00 p.m. ET policy decision.

The connection here is that the Treasury market could be pricing in some inflation angst in a curve-steepening trade. The 2-yr note yield settled today's session at 3.60%, up one basis point, while the 10-yr note yield settled at 3.69%, up four basis points. They had traded down to 3.54% and 3.64%,

respectively, in the initial wake of the policy announcement.
  • S&P 500: +17.8% YTD
  • Nasdaq Composite: +17.1% YTD
  • S&P Midcap 400: +10.4% YTD
  • Dow Jones Industrial Average: +10.1% YTD
  • Russell 2000: +8.8% YTD

  • Reviewing today's economic data:
    • The weekly MBA Mortgage Applications Index rose 14.2% with refinance applications surging 24% and purchase applications jumping 5%
    • Housing starts increased 9.6% month-over-month to a seasonally adjusted annual rate of 1.356 million units (consensus 1.320 million), bolstered by a 15.8% increase in single-unit starts. Building permits increased 4.9% month-over-month to a seasonally adjusted annual rate of 1.475 million (consensus 1.415 million), aided by a 2.8% increase in single-unit permits.
      • The key takeaway from the report is that single-unit starts and permits were up in every region, reflecting increased activity among builders that has been facilitated by sliding interest rates and pent-up demand.
    • The weekly EIA Crude Oil Inventories showed a draw of 1.63 million barrels following last week's build of 833,000 barrels

    Looking ahead to Thursday, participants receive the following data:
    • 8:30 ET: Weekly Initial Claims (consensus 232,000; prior 230,000), Continuing Claims (prior 1.850 mln), Q2 Current Account (prior -$237.6 bln), and September Philadelphia Fed (Briefing.com consensus 3.0; prior -7.0)
    • 10:00 ET: August Existing Home Sales (consensus 3.90 mln; prior 3.95 mln) and August Leading Indicators (consensus -0.3%; prior -0.6%)
    • 10:30 ET: Weekly natural gas inventories (prior +40 bcf)

>>> Nanobiotix reports 1H24 results and provides update

Nanobiotix reports 1H24 results and provides update
  • Co reports 1H24 (Jun) revenue and other income increased to €9.3 mln from €3.3 mln last year, primarily resulting from services and product supply revenue linked to the exclusive licensing, co-development, and commercialization agreement with Janssen.
  • Co expects several clinical milestones over the next 12-18 months including updated data in pancreatic, and head and neck cancer, and initial data in esophageal and lung cancer.
  • "We continue to make strong progress advancing our nanoparticle-based therapeutic approach with lead candidate NBTXR3, which is part of our global licensing agreement with Janssen Pharmaceutica NV, a Johnson & Johnson company. The agreement is designed to realize significant therapeutic and market opportunities in solid tumor cancers worldwide, starting with lung and head and neck. We also continue to establish additional expansion opportunities across multiple cancer settings as part of our ongoing collaboration with MD Anderson." said Laurent Levy, co-founder of Nanobiotix and chairman.

FT : EU weighs expanding sanctions on exports to Russia

EU weighs expanding sanctions on exports to Russia
Officials consider proposal to crack down on shipments to Moscow from European company subsidiaries based overseas

The EU is considering extending its sanctions regime against Russia to include the foreign subsidiaries of European companies in order to restrict the flow of sensitive goods reaching the country’s war machine, a senior official has said.

“A lot of the product going through China [to Russia] is coming from subsidiaries of western companies in south-east Asia,” EU sanctions envoy David O’Sullivan said at an event in Brussels on Wednesday. “We are focusing our efforts more on trying to stop the transshipment from there through to China.”

Since Russia’s full-scale invasion of Ukraine, the EU has imposed 14 packages of sanctions against Moscow. These include export controls to stop Moscow procuring goods crucial to its war effort. The EU has also banned re-exports of certain sensitive goods via third countries.

But discussions on further rounds of sanctions, which have to be agreed unanimously by all 27 member states of the EU, have become increasingly fraught as countries find fewer areas on which they can agree without damaging their own economies.

O’Sullivan said that an extension of the re-export controls to subsidiaries of European companies was discussed at a meeting between business and European commissioners Valdis Dombrovskis and Mairead McGuinness last week.

“One of the ideas we had was to extend the no resale to Russia clause . . . which we now wanted to extend to subsidiaries,” O’Sullivan said.

He added that “there was some resistance” from the companies to the idea, and that it was a “difficult conversation” as it would impact production in third countries that have not aligned themselves with the EU sanctions regime.

Discussions on such an extension are likely to be controversial among EU countries as it would cause significant burdens for the businesses concerned.

O’Sullivan said the European Commission was conducting an impact assessment of how such a step would work. “We may find ways forward in a future package,” he said.

Two EU diplomats said that previous proposals to extend bans of re-exports to Russia had not been popular. “The assessment might be a good basis for a new try,” one diplomat said.

Olena Bilousova, a sanctions expert at the Kyiv School of Economics Institute, said that electronics manufacturers often outsource their production, increasing the risk of their products ending up in Russia, which operates a vast network of intermediaries around the world.

“Stronger regulations for subsidiaries are crucial, but should also be paired with monitoring and holding companies to account for negligence,” Bilousova said.

While such measures would extend EU sanctions, they would still fall short of the US system. The American authorities regard any product — even those made abroad by foreign companies — as potentially subject to their regulations if the items are produced using US technology or equipment.

O’Sullivan also highlighted the EU’s efforts to track the financial flows allowing goods shipments to Russia via third countries. “It is a question of identifying which are the financial institutions which are potentially funding the transshipment of battlefield products,” he said.

In the latest sanctions package adopted in July, the EU gave itself powers to target financial institutions outside its territory that facilitate trade with Russia, emulating a similar measure implemented by the US “to great effect”, according to O’Sullivan.

“The US threatened one bank in China, one bank in Turkey and one bank in the UAE. And the mere threat of imposing the sanctions was sufficient for these financial institutions to stop all business,” O’Sullivan said.

Trade data analysed by the FT shows that exports from China and Turkey to Russia of the most critical war related goods fell dramatically following the US decision in December.

The EU has not yet listed any financial institutions but would be prepared to do so. “We are also indicating to countries that if ever we are unable to deal with the issue in other ways, we could have [to] resort to this,” O’Sullivan said.

O’Sullivan added that the EU and its G7 partners were due to meet next week to discuss the financial sanctions and “compare notes”.

WSJ : How Did Thousands of Pagers Used by Hezbollah Explode at the Same Time?

How Did Thousands of Pagers Used by Hezbollah Explode at the Same Time?
Unprecedented attack comes after Israeli officials warned about escalating tensions on the Lebanese border

Thousands of people were injured and 12 killed when pagers exploded in Lebanon in an apparent Israeli attack against the militant group Hezbollah.

Why are Hezbollah operatives using pagers?
Hezbollah acknowledged the vulnerability of its communication networks earlier in its escalating conflict with Israel, which began with the start of the war in Gaza in October last year. In February, the group’s leader, Hassan Nasrallah, urged its fighters to get rid of their smartphones, saying Israel could use them for surveillance or targeting. A Hezbollah official said Tuesday that many fighters had pagers. Many of the affected pagers were from a new shipment that Hezbollah had received recently, part of a nearly yearlong process to swap out older devices.

Where did the pagers come from and who made them?
Early reports said that the pagers were manufactured by a company called Gold Apollo in Taiwan.

Gold Apollo’s president, Hsu Ching-kuang, told reporters on Wednesday that his company didn’t make the pagers in question and that they were manufactured by a foreign company that had licensed his company’s brand and trademark about two years ago. Gold Apollo later issued a statement saying the pagers were designed and built by a company named BAC Consulting Kft, registered in Budapest. Calls to that company went unanswered. The person listed as the chief executive of BAC Consulting didn’t respond to requests for comment.

How did the pagers explode in Lebanon?
Hezbollah said a number of pagers carried by its members exploded simultaneously at 3:30 p.m. local time. Survivors reported hearing the pagers beep and display a series of numbers on their screens about five seconds before they detonated.

According to people familiar with Hezbollah’s investigation, the initial assessment is the pagers detonated because an explosive device was planted in the new models. The scenario indicates Israel found its way into Hezbollah’s supply chain to modify the devices that were delivered.

Robert Graham, chief executive of Errata Security, a cybersecurity company in Atlanta, said it was possible that hackers made the batteries inside the pagers blow up with a page containing malicious code, but that would be highly challenging. The hackers would need to know the make and model of the devices and the effect wouldn’t be as powerful as videos of the explosions suggest, he said.

A more likely scenario, according to Graham, is that a shipment of pagers from their manufacturer was intercepted en route to their destination and explosives were placed inside along with malicious code. A page would set them off.

Who is behind the attack?
Hezbollah and the Lebanese government blamed Israel for the attack. Both said civilians were killed, and Hezbollah threatened to retaliate. Israel declined to comment Tuesday.

How many people were killed or injured?
Authorities said the attack injured nearly 2,800 and killed 12 across Lebanon. Iranian state television said the country’s ambassador to Lebanon, Mojtaba Amani, was injured by his pager but was conscious and not in danger.

What happens now?
The apparent attack by Israel on Tuesday risks escalating the low-simmering conflict between the two sides and frustrating U.S. efforts to seal a cease-fire in Gaza that could also allow a diplomatic solution to end the almost-daily exchanges of fire between the Israeli military and Hezbollah.

Hezbollah said Wednesday it would continue to support Hamas in Gaza by firing on the Israeli military.

Who still uses pagers?
Pagers have declined in popularity but are still widely used in the healthcare industry. Hospitals and doctors continue to use them to relay urgent messages, from summoning surgeons in an emergency to deploying staff and supplies where they are needed.

The technology has lost ground to cellphones, but pagers persist in healthcare because beepers can reach workers in cellular dead zones and have long-lasting batteries, said Eric Martinuzzi, a senior research analyst for Lake Street Capital Markets.

Roughly 2,200 U.S. hospitals still use the technology, according to Spok, a major seller of the devices, based in Plano, Texas. And as of June, the company had roughly 747,000 pagers in use across the U.S. and Australia, said Vince Kelly, Spok’s chief executive. The devices are manufactured exclusively for the company, he said.

Are other pagers at risk?
The average pager user likely isn’t at risk of harm, according to Vir Phoha, a professor of computer science and cybersecurity researcher at Syracuse University. This is because hackers should only be able to make specific devices explode remotely, not all devices or models associated with a particular brand.

“It wouldn’t be just any pager,” he said.