TheChek News Flow

HM Revenue & Customs reveals plan to combat tax fraud in leaked document

Online marketplaces such as Amazon and eBay face being forced to collect value added tax on UK sales made on their platforms by overseas retailers in an effort to combat fraud worth an estimated £1.5bn a year.

In a leaked document seen by the Financial Times, HM Revenue & Customs revealed its plans to end the status of online marketplaces as mere facilitators of UK sales of overseas goods and instead treat them as the vendors that are responsible for handing over Vat to the government from January.

The move suggests that the tax authority has accepted that its previous attempts to stamp out Vat fraud by overseas retailers on online marketplaces has failed.

High street retailers in the UK have long complained that third-party sellers trading through online marketplaces fail to charge Vat on their sales and pass it on to the government.

Vat evasion by these companies was estimated by HMRC to cost UK taxpayers £1.5bn in 2016-17, and British retailers on the high street claim it is one reason why some of them are struggling to compete. 

“Following the end of the [Brexit] transition period, the UK will need to introduce a UK-wide model to ensure UK businesses are not disadvantaged by competition from Vat-free imports,” said HM Revenue & Customs in the leaked document.

The document was sent by HMRC as an “informal consultation” to customs experts in March.

It stated that the “key design features” of the policy to combat Vat fraud by overseas retailers and the implementation date of January were not up for consultation, indicating the government’s strong intent to introduce the plans.

The HMRC document also proposed the abolition of tax relief which allows goods under £15 to be shipped to the UK from overseas Vat free.

Alan Pearce, partner at accounting firm Blick Rothenberg, said placing new Vat obligations on online marketplaces would impose “significant” additional administration costs on them.

This would result in increased charges for consumers as companies passed on the costs, as would the abolition of Vat relief on goods under £15 shipped from overseas, he added.

Richard Allen, head of Retailers Against Vat Abuse Schemes, a campaign group, welcomed HMRC’s proposed new stance of asking online marketplaces to collect Vat.

“Common sense dictates it is far easier to police these facilitators than it is to police hundreds of thousands of sellers many of whom are merely temporary shells for organised tax evaders,” he said.

But Mr Allen warned that HMRC’s plans might not go far enough if they did not require web hosting sites providing overseas retailers with an internet presence, such as Shopify, to also collect Vat.

Richard Asquith, a Vat specialist at tax consultancy Avalara, said it would be a “massive challenge” for HMRC to introduce the changes by January, while completing Brexit-related customs and tax arrangements. 

He added that the UK’s proposals were more draconian than similar moves by the EU because they did not appear to protect smaller online marketplaces that lack the resources of larger companies.

“This could solidify ‘oligopolies’ of the largest marketplaces,” said Mr Asquith.

HMRC said it was informally consulting with and listening to views from customs experts and Vat practitioners.

“After the transition period ends on December 31, the UK will control its own borders and laws,” HMRC added.

“We want to ensure we don't lose out on tax due to non-compliance overseas. Having the right system in place will ensure equal treatment for all businesses.”

Amazon declined to comment, while eBay did not immediately respond to a request for a statement.

Suspected online assaults on water plant and port offer clues to next stage of rivalry

In early April, municipal workers at a water pumping station in central Israel noticed a warning from their computer systems — a few pumps had been malfunctioning, turning off and on without being told to.

At first, it seemed innocuous — water pumps are finicky and the malfunctions did not seem to disrupt the supply — but within hours, investigators found something more ominous.

A piece of Iranian-written code had travelled around the world, passing through servers in the US and Europe to hide its origins, and finally to the commercially manufactured software controllers that operated the water pumps, according to four Israeli officials and a western intelligence official briefed on the findings.

Its suspected goal? To trick the computers into increasing the amount of chlorine added to the treated water that flows to Israeli homes, the western official said.

An Israeli official said the suspected attack — the latest salvo in the four-decade hostility between the two countries — had opened the door to “an unpredictable risk scenario”. The official added that it had created a precedent for tit-for-tat cyber attacks on civilian infrastructure that both countries have so far avoided — and may still be keen to avoid.

An Iranian regime insider dismissed the allegations.

“Iran cannot politically afford to try to poison Israeli civilians. And even if Iran did so, where is the Israelis’ appropriate response?” the regime insider said. “Our suspicion is that Israelis want more money from the US and made up the whole thing. But the Americans are no idiots.”

Alireza Miryousefi, spokesman for Iran’s mission to the UN, said Iran’s cyber activities “are purely defensive and protective”.

“As a victim of cyber warfare . . . and other cyber sabotages, we know well how destructive it can be,” Mr Miryousefi said. “We have been continuously a target by malevolent forces, and will continue to defend against any attack.”

Both governments regularly accuse each other of nefarious activities and engage in propaganda.

The alleged Iranian cyber attack on the water plant could have triggered fail-safes that would have left tens of thousand of civilians and farms parched in the middle of an Israel heatwave, as the pumping station shut down when the excess chemical was detected. In the worst-case scenario, hundreds of people would have been at risk of becoming ill, said the western official, whose government was briefed on the attack.

“It was more sophisticated than they [Israel] initially thought,” the official said. “It was close to successful, and it’s not fully clear why it didn’t succeed.”

Israel is now braced for further cyber attacks.

“Cyber winter is coming and coming even faster than I suspected,” Yigal Unna, the head of Israel’s National Cyber Directorate told a conference last week, without mentioning Iran’s alleged role in the suspected attack on the water station. “We are just seeing the beginning — we will remember this as a changing point in the history of modern cyber warfare.”

Israel officials said the Jewish state retaliated last month for the alleged Iranian attack.

Under orders from Naftali Bennett, then acting defence minister, Israel carried out a small, but sophisticated attack on the Shahid Rajaee Port, which handles nearly half of Iran’s foreign trade, according to two of the Israeli officials, who asked not to be identified because they were not authorised to discuss the issue in public.

“It was small, very small — like a knock on the door,” said one official. “Think of it [as] a gentle reminder. ‘We know where you live.’”

Neither Israel nor Iran have officially acknowledged targeting each other’s civilian infrastructure, nor have they publicly described the severity of the cyber attacks.

The Iranian regime insider said: “Iranian ports are usually chaotic and disruptions happen.”

The Washington Post first reported the Israeli attack on the Iranian port, citing US intelligence officials. An Iranian government statement said Tehran was investigating the possibility of a cyber attack at the port.

Striking at Iranian civilian infrastructure was an escalation taken at the behest of Mr Bennett, who insisted on a visible response to the suspected attack on the water infrastructure, according to two Israeli officials. At the time, Mr Bennett’s tenure as caretaker defence minister was close to ending, as a new Israeli government had been agreed upon, but not sworn in.

Mr Bennett, who served in an elite military unit, and is considered more rightwing than prime minister Benjamin Netanyahu, demanded a list of targets from the Israeli military, said two of the Israeli officials. His office declined to comment.

The Israel Defense Forces has a small cyber security unit specifically dedicated to probing enemy defences, including a still unclaimed attack using malware that ended up crippling Iran’s centrifuge program around 2010 that is widely attributed to Israel.

The port was “roughly in the middle of the page of options,” said an Israeli official. “Any disruption would be economic, nobody’s safety would be placed at risk, they would be reminded we are here, we are watching.”

It is unclear how successful the attack was in disrupting the port’s activities, which are already chaotic due to sanctions that have crippled Iran’s economy. The western official said he was shown evidence of lines of trucks waiting to enter the port as the authorities sought to fix the damage.

“So Iran may have caused a temporary water shortage, and Israel may have caused a temporary traffic jam,” the official said. “In the grand scheme of things, it’s nothing. But it never stops at that.”

The exhausting playbook behind Trump’s battle with Twitter

The president’s response to Twitter’s fact-check of his tweets is the latest rehash of an old, unproven grievance.

“It’s becoming very clear,” Milo Yiannopoulos told Josh Earnest, then the press secretary for the Obama administration, in March of 2016, “that Twitter and Facebook in particular are censoring and punishing conservative and libertarian points of view.” Later that year, Twitter banned him entirely following his role in a harassment campaign against the actress Leslie Jones after she starred in a remake of Ghostbusters that swapped the original male lead roles for female ones, infuriating misogynists. In response, he claimed that Twitter was now a “a no-go zone for conservatives.”

Other conservative and far-right figures have regularly lodged similar complaints in the years since, depicting Twitter’s enforcement of its policies against abuse and misinformation as a crusade laced with anti-conservative bias; the charges have then filtered up into conservative and mainstream press coverage. But the issue came to a head this week, after Twitter appended fact-checks to two of President Trump’s tweets, noting that they contained misleading claims about mail-in voting.

Trump attacked the move as censorship and promised a response. He’s just signed an executive order that could penalize major social-media companies for perceived censorship of conservative views.

This moment feels like an inevitable escalation of a conflict that has been playing out across the major social-media companies, but particularly Twitter, for years—one that Yiannopoulos’s White House stunt foreshadowed. As platforms reckon with their role in amplifying misinformation, abuse, and extreme views, the arguments about content moderation that once lived on the fringes of Twitter’s rules increasingly involve people at the very center of mainstream power.

“Republicans feel that Social Media Platforms totally silence conservatives voices,” Trump tweeted to his 80 million followers this week. “We will strongly regulate, or close them down, before we can ever allow this to happen.” His comments were covered widely in the media, as are many of his more inflammatory or conspiratorial tweets.

Hours before news of the coming executive order broke, Trump advisor Kellyanne Conway went on Fox News and encouraged viewers to hound a Twitter employee, spelling out his account handle and blaming him for the decision to fact-check the president’s tweets. “Somebody in San Francisco go wake him up and tell him he’s about to get a lot more followers,” she said.

Trump himself tagged the employee in a tweet on Thursday, effectively directing supporters to fill his mentions with abusive messages. The Twitter employee is also reportedly receiving death threats.

This cycle has been set off in the past when Twitter has rolled out new policies designed to protect targets of abuse, suspended far-right accounts for rule violations, or stepped up efforts to slow the spread of misinformation. It begins with waves of speculation arguing that Twitter isn’t actually, say, enforcing its new abuse policies but instead implementing a secret anti-conservative agenda that must be stopped. Then there’s a rush to find and target someone responsible for implementing it. The blueprint dates back at least to Gamergate, the harassment campaign championed by Yiannopoulos targeting women in video-game development, whose supporters also claimed instead to be fighting a conspiracy against them ( “It’s actually about ethics in gaming journalism”).

The president uses his own account to continually test Twitter’s boundaries, and now he’s become the catalyst for a new cycle. In just the past week, he’s used his platform to amplify conspiracy theories suggesting that MSNBC host Joe Scarborough murdered a staffer and to spread misinformation about mail-in voting in an earlier series of tweets that were not subject to fact-check labels. He thanked a “Cowboys for Trump” account that tweeted a video where an unidentified man proclaimed that “the only good Democrat is a dead Democrat.” (After cheers from the audience, the speaker then clarifies that he meant the comment “politically.”) The widower of the deceased staffer at the heart of the Scarborough conspiracy theory has begged Twitter to intervene.

The company had not taken any action against those tweets as of Thursday, although it has indicated that it is working to expand the labeling system that was used to flag some of Trump’s tweets about mail-in voting.

Until the fact-checking labels were introduced to two of Trump’s tweets on Tuesday, the platform had scrupulously avoided enforcing its rules against Trump’s account. Some explanations for the enforcement loopholes have cited the newsworthiness of otherwise rule-breaking content and Trump’s status as the head of a government.

But Trump, despite the lack of evidence to support claims of systemic social-media bias against conservatives, has repeatedly promised to take up the issue on behalf of some of his more prominent supporters. In 2018, he accused Google of “rigging” news search results against conservative media, repeating a version of a claim that Trump supporters—including vloggers Diamond and Silk—had circulated in conservative media for a few days earlier. Diamond and Silk (whose real names are Lynnette Hardaway and Rochelle Richardson) claimed at a House Judiciary Committee hearing that April that they were being “censored” by Facebook because of their support for Trump.

In 2019, Trump met with Twitter CEO Jack Dorsey and reportedly took the opportunity to complain about losing Twitter followers. On the same day as that meeting, Trump tweeted that the platform was “very discriminatory.” He later tweeted that his administration was “closely” monitoring conservatives’ complaints of censorship. Later that year, Trump held a “social-media summit” with dozens of his most passionate online supporters to air their collective complaints that Google, Facebook, and Twitter were censoring them.

None of these claims have to be true to be popular, which is something Trump and his online supporters know well. They just need to sound controversial enough to grab attention—or, better yet, redirect it from something else.

The companies have similar policies on the limits of what they allow users to post. But Facebook is more permissive when the user is President Trump

SAN FRANCISCO — Earlier this week, as Twitter executives waded into a confrontation with President Trump, Mark Zuckerberg, chief executive of Facebook, took a very different tack: He kept his head down.

On Tuesday, Twitter added a fact-check link to one of Mr. Trump’s tweets criticizing mail-in voting. The company said the president violated rules regarding voter suppression. Mr. Trump posted the same words on Facebook, which has similar rules around voter suppression. But Facebook didn’t do anything to it.

Twitter’s face-off escalated Friday morning, when the company attached an addendum to one of Mr. Trump’s tweets. The company said the tweet had the potential to incite violence amid protests in Minneapolis. Facebook didn’t do anything when the same post was added to its service.

Jack Dorsey, chief executive of Twitter, took to his site not long after to say Twitter would not back down, presenting a stark contrast to Mr. Zuckerberg, who, in an interview a day earlier with Fox News, said Facebook wasn’t going to judge Mr. Trump’s posts.

“We’ve been pretty clear on our policy that we think that it wouldn’t be right for us to do fact checks for politicians,” Mr. Zuckerberg said. “I think in general, private companies probably shouldn’t be — or especially these platform companies — shouldn’t be in the position of doing that.”

Mr. Zuckerberg’s reminder that Facebook would not interfere with posts from Mr. Trump — even if they violate rules that would apply to other people — was in part the product of his longtime belief that his company should avoid getting into the political fray and let its three billion users have their say.

His assurance that his company would not be an “arbiter of truth” in political discussion was also indicative of an aggressive effort over the last year or so to court Republicans in Washington and conservative voices in the media. The goal: to keep regulators off his giant internet company’s back.

By staying on the sidelines as Twitter does battle with Mr. Trump and his allies, Mr. Zuckerberg could gain unlikely Republican friends to stave off regulatory intervention into his business, which lawmakers around the world have threatened for more than a year.

Many people in the tech industry believe regulators — not economic collapse brought on by the coronavirus pandemic or any other problem — are the one existential risk to Mr. Zuckerberg’s business.

“Zuckerberg’s instincts have been right,” said Brendan Carr, a Republican commissioner at the Federal Communications Commission. “Zuckerberg said, ‘We trust people to make up their minds.’”

But Mr. Zuckerberg’s hands-off approach to Mr. Trump’s increasingly incendiary behavior on social media runs the risk of alienating some users who think the rules about what can be posted to Facebook should be applied equally to everyone, including world leaders. It could also infuriate some of the company’s Silicon Valley work force, who still believe Facebook isn’t doing enough to counter misinformation campaigns.

And it could lend more ammunition to critics who say Mr. Zuckerberg is still unwilling — or unable — to own up to his company’s role in disseminating information to the world, particularly when many news organizations are collapsing.

“Twitter and Facebook both have community standards and policies to combat voter suppression, hate and the incitement of violence, and yet Twitter is actually enforcing those standards against the president of the United States and Facebook is doing nothing,” said Vanita Gupta, the president of the Leadership Conference of Civil and Human Rights. “The harm from this approach by Facebook is mass confusion, voter suppression and possible violence.”

Twitter has started to experience the repercussions of taking on the White House. Several Republican lawmakers and regulators argued — on Twitter — that Twitter was being hypocritical because it was focusing on Mr. Trump while allowing other world leaders to spread lies.

“I’m filing a complaint with the Federal Election Commission because of Twitter’s domestic election interference against President @realDonaldTrump,” Representative Matt Gaetz of Florida said in a tweet.

After Twitter applied the warning label on a tweet from Mr. Trump on Friday morning, Ajit Pai, the F.C.C. chairman, called on Twitter to apply its rules against inciting violence equally to other world leaders. He provided a link to to anti-Israel tweets from Iran’s supreme leader.

Senator Ted Cruz, Republican of Texas, retweeted Mr. Pai’s post and called for criminal action against Twitter.

“Exactly, @AjitPaiFCC. That’s why today I called on AG Barr & @stevenmnuchin1 to open a criminal investigation into @Twitter.”

That kind of confrontation is exactly what Mr. Zuckerberg, who controls a far larger internet megaphone than Mr. Dorsey, wants to avoid. In a speech at Georgetown University in October 2019, Mr. Zuckerberg declared that political speech would be protected on Facebook, including lies made by politicians on the site.

“Twitter is doubling down and they are showing how amazingly bad they are at the politics on this,” said Rachel Bovard, a senior adviser to the conservative Internet Accountability Project and a former aide to Republican senators Mike Lee of Utah and Rand Paul of Kentucky. “Republicans want social media to be a pass-through, a billboard. They believe bad speech will be countered by good speech and that is what Zuckerberg is saying he will do.”

Facebook did not immediately comment on Friday. A spokesman for Twitter declined to comment.

In truth, Facebook’s and Twitter’s rules are not all that different. Both companies have said they would take down posts, even from a president, if they contained threats and incitement to violence or attempts to suppress voter turnout or citizens’ ability to participate in elections.

But when it comes to political discussion and advertising, the companies have diverged over the last year.

In October, Twitter said it would stop accepting political advertising because of issues with disinformation and the effect that false political ads could have on civic discourse. Facebook continued to accept political advertising and said it would not fact check those ads. Mr. Zuckerberg argued that declining political ads would disenfranchise less well-established candidates with smaller budgets.

Mr. Zuckerberg’s courtship of conservatives has been aided by Joel Kaplan, a former aide in President George W. Bush’s administration and a well-connected Washington operative. Mr. Zuckerberg and Mr. Kaplan have tried to convince Republicans that although Silicon Valley may be largely left-leaning, Facebook’s platform itself is neutral.

Last year, Mr. Zuckerberg dined with top congressional Republicans, including Senator Josh Hawley of Missouri and Senator Lindsey Graham of South Carolina. The Facebook chief also met with conservative journalists like Tucker Carlson of Fox News. And in a dinner with Mr. Trump last fall, Mr. Zuckerberg flattered Mr. Trump’s standing as the public figure with the “most engaged following” across all of Facebook.

Courting conservatives seems to have helped Facebook in Washington, but the strategy has not been entirely embraced by the company’s employees.

Some have long believed that a double standard applies to conservatives on the platform. In discussions posted to the company’s internal message boards and privately between employees on Friday, workers wondered what the final breaking point will be for Facebook to enforce its rules evenly, according to three people familiar with the company’s internal deliberations.

Mr. Zuckerberg’s attempts to avoid the political fray face additional challenges. Democrats are criticizing Mr. Zuckerberg’s unwillingness to enforce its policies, while Republicans are embracing an executive order handed down by President Trump that could make tech companies — including, and especially, Facebook — liable for the content that appears on their platforms.

“They’re not neutral platforms, they are publishers, the most powerful publishers in the world,” said Mr. Carlson in a monologue delivered on his show Thursday evening. “It empowers a handful of tech monopolies to the detriment of everyone else.”

Late Friday afternoon, Mr. Zuckerberg wrote a post to his personal Facebook page explaining why Mr. Trump’s posts were not flagged in any way. He also addressed employees in a question-and-answer video session.

Despite what he called his own “visceral negative reaction” to Mr. Trump’s language, Mr. Zuckerberg said he felt compelled to keep the posts up on Facebook and Instagram, and that the president’s language did not violate the company’s policies.

“I know many people are upset that we’ve left the President’s posts up, but our position is that we should enable as much expression as possible unless it will cause imminent risk of specific harms or dangers spelled out in clear policies,” Mr. Zuckerberg wrote.

“ I disagree strongly with how the President spoke about this,” he continued, “but I believe people should be able to see this for themselves, because ultimately accountability for those in positions of power can only happen when their speech is scrutinized out in the open.”

Inside the company, one faction wanted Jack Dorsey, Twitter’s chief, to take a hard line against the president’s tweets while another urged him to remain hands-off.

OAKLAND, Calif. — Jack Dorsey was up late Thursday at his home in San Francisco talking online with his executives when their conversation was interrupted: President Trump had just posted another inflammatory message on Twitter.

Tensions between Twitter, where Mr. Dorsey is chief executive, and Mr. Trump had been running high for days over the president’s aggressive tweets and the company’s decision to begin labeling some of them. In his latest message, Mr. Trump weighed in on the clashes between the police and protesters in Minneapolis, saying, “when the looting starts, the shooting starts.”

A group of more than 10 Twitter officials, including lawyers and policymakers, quickly gathered virtually to review Mr. Trump’s post and debate over the messaging system Slack and Google Docs whether it pushed people toward violence.

They soon came to a conclusion. And after midnight, Mr. Dorsey gave his go-ahead: Twitter would hide Mr. Trump’s tweet behind a warning label that said the message violated its policy against glorifying violence. It was the first time Twitter applied that specific warning to any public figure’s tweets.

The action has prompted a broad fight over whether and how social media companies should be held responsible for what appears on their sites, and was the culmination of months of debate inside Twitter. For more than a year, the company had been building an infrastructure to limit the impact of objectionable messages from world leaders, creating rules on what would and would not be allowed and designing a plan for when Mr. Trump inevitably broke them.

But the path to that point was not smooth. Inside Twitter, dealing with Mr. Trump’s tweets — which are the equivalent of a presidential megaphone — was a fitful and uneven process. Some executives repeatedly urged Mr. Dorsey to take action on the inflammatory posts while others insisted he hold back, staying hands-off as the company had done for years.

Outside Twitter, the president’s critics urged the company to shut him down as he pushed the limits with insults and untruths, noting ordinary users were sometimes suspended for lesser transgressions. But Twitter argued that posts by Mr. Trump and other world leaders deserved special leeway because of their news value.

The efforts were complicated by Mr. Dorsey, 43, who was sometimes absent on travels and meditative retreats before the coronavirus pandemic. He often delegated policy decisions, watching the debate from the sidelines so he would not dominate with his own views. And he frequently did not weigh in until the last minute.

Now Twitter is at war with Mr. Trump over its treatment of his posts, which has implications for the future of speech on social media. In the past week, the company for the first time added fact-checking and other warning labels to three of Mr. Trump’s messages, refuting their accuracy or marking them as inappropriate.

In response, an irate Mr. Trump issued an executive order designed to limit legal protections that tech companies enjoy and posted more angry messages.

Twitter’s position is precarious. The company is grappling with charges of bias from the right over its labeling of Mr. Trump’s tweets; one of its executives has faced a sustained campaign of online harassment. Yet Twitter’s critics on the left said that by leaving Mr. Trump’s tweets up and not banning him from the site, it was enabling the president.

“It really is about whether or not Twitter blinks,” said James Grimmelmann, a law professor at Cornell University. “You really have to stick to your guns and ensure you do it right.”

Twitter is girding for a protracted battle with Mr. Trump. Some employees have locked down their social media accounts and deleted their professional affiliation to avoid being harassed. Executives, holed up at home, are meeting virtually to discuss next steps while also handling a surge of misinformation related to the pandemic.

This account of how Twitter came to take action on Mr. Trump’s tweets was based on interviews with nine current and former company employees and others who work with Mr. Dorsey outside of Twitter. They declined to be identified because they were not authorized to speak publicly and because they feared being targeted by Mr. Trump’s supporters.

A Twitter spokesman declined to comment. Mr. Dorsey tweeted on Friday that the fact-checking process should be open to the public so that the facts are “verifiable by everyone.”

Mr. Trump said on Twitter that his recent statements were “very simple” and that “nobody should have any problem with this other than the haters, and those looking to cause trouble on social media.” The White House declined to comment.

The confrontation between Mr. Trump and Twitter has raised questions about free speech. Under Section 230 of the Communications Decency Act, social media companies are shielded from most liability for the content posted on their platforms. Republican lawmakers have argued the companies are acting as publishers and not mere distributors of content and should be stripped of those protections.

But a hands-off approach by the companies has allowed harassment and abuse to proliferate online, said Lee Bollinger, the president of Columbia University and a First Amendment scholar. So now the companies, he said, have to grapple with how to moderate content and take more responsibility, without losing their legal protections.

“These platforms have achieved incredible power and influence,” Mr. Bollinger said, adding that moderation was a necessary response. “There’s a greater risk to American democracy in allowing unbridled speech on these private platforms.”

For years, Twitter did not touch Mr. Trump’s messages. But as he continued using Twitter to deride rivals and spread falsehoods, the company faced mounting criticism.

That set off internal debates. Mr. Dorsey observed the discussions, sometimes raising questions about who could be harmed by posts on Twitter or its moderation decisions, executives said.

In 2018, two of the president’s tweets stood out to Twitter officials. In one, Mr. Trump discussed launching nuclear weapons at North Korea, which some employees believed violated company policy against violent threats. In the other, he called a former aide, Omarosa Manigault Newman, “a crazed, crying lowlife” and “that dog.”

At the time, Twitter had rules against harassing messages like the tweet about Ms. Manigault Newman, but left the tweet up.

The company began working on a specific solution to allow it to respond to violent and inaccurate posts from Mr. Trump and other world leaders without removing the messages. Mr. Dorsey had expressed interest in finding a middle ground, executives said. It also rolled out labels to denote that a tweet needed fact-checking or had videos and photos that had been altered to be misleading.

The effort was overseen by Vijaya Gadde, who leads Twitter’s legal, policy, trust and safety teams. The labels for world leaders, unveiled last June, explained how a politician’s message had broken a Twitter policy and took away tools that could amplify it, like retweets and likes.

“We want to elevate healthy conversations on Twitter and that may sometimes mean offering context,” Del Harvey, Twitter’s vice president of trust and safety, said in an interview this year.

By the time the labels were introduced, Mr. Trump was not the only head of state testing Twitter’s boundaries. Shortly before Twitter released them, the president of Brazil, Jair Bolsonaro, tweeted a sexually explicit video and the Iranian leader Ali Khamenei posted threatening remarks about Israel.

Last month, Twitter used the labels on a tweet from the Brazilian politician Osmar Terra in which he falsely claimed that quarantine increased cases of the coronavirus.

“This Tweet violated the Twitter Rules,” the label read. “However, Twitter has determined that it may be in the public’s interest for the Tweet to remain accessible.”

On Tuesday, Twitter officials began discussing labeling Mr. Trump’s messages after he falsely asserted that mail-in ballots were illegally printed and implied they would lead to fraud in the November election. His tweets were flagged to Twitter through a portal it had opened specifically for nonprofit groups and local officials involved in election integrity to report content that could discourage or interfere with voting.

Twitter quickly concluded that Mr. Trump had posted false information about mail-in ballots. The company then labeled two of his tweets, urging people to “get the facts” about voting by mail. An in-house team of fact checkers also assembled a list of what people should know about mail-in ballots.

Mr. Trump struck back, drafting an executive order designed to chip away at Section 230. He and his allies also singled out a Twitter employee who had publicly criticized him and other Republicans, falsely suggesting that employee was responsible for the labels.

Mr. Dorsey and his executives kept on alert. On Wednesday, Twitter labeled hundreds of other tweets, including those that falsely claimed to include images of Derek Chauvin, the white police officer who was charged with third-degree murder and second-degree manslaughter in the death of George Floyd, an African-American man in Minnesota.

Mr. Trump did not let up. Even after Twitter called out his shooting tweet for glorifying violence, he posted the same sentiment again.

“Looting leads to shooting,” Mr. Trump wrote, adding that he did not want violence to occur. “It was spoken as a fact.”

This time, Twitter did not label the tweet.

FTSE 100 faces big reshuffle as pandemic takes its toll

EasyJet and Carnival expected to drop out after chaos in travel industry

The FTSE 100 is set for its biggest shake-up in more than four years after the impact of coronavirus wiped out revenues for companies in travel and aviation but boosted others in emergency services and technology.

EasyJet and Carnival, the cruise ship operator, are expected to fall into the FTSE 250, according to share prices on Friday that have more than halved since the onset of the pandemic.

Dropping out of the FTSE 100 is significant for companies given the access to tracker or exchange traded funds that only follow the index of the UK’s top companies. 

“The world has changed since the last FTSE review at the beginning of March,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown. “The UK stock market was some 13.5 per cent higher back then and Royal Dutch Shell topped the list of the UK’s largest companies rather than AstraZeneca. With all the upheaval there looks set to be more movers than usual in this quarter’s reshuffle.”

He added that widespread global travel restrictions meant that “revenues have sunk to practically zero” for easyJet and Carnival, but “because cruise liners and planes are expensive and often funded by large quantities of debt, costs remain stubbornly high”. 

Centrica and Meggitt, whose shares have fallen sharply after coronavirus hit its civil aerospace division, are likely to join them in dropping out of the FTSE 100 based on their market capitalisation at the end of Friday.

Technology groups Avast and Homeserve, alongside gaming group GVC and ConvaTec, which makes medical equipment, are set to replace them in the FTSE 100. 

These companies — largely immune or with divisions that have fared better in the pandemic — are trading near to where they were before the crisis after falling with much of the rest of the market during the first weeks of the spread of coronavirus across the UK.

Homeserve and Avast, which floated about two years ago, would be making their first appearance in the UK’s top stock index. 

The reshuffle will be decided by the London Stock Exchange based on data at the end of Tuesday.

Russ Mould, investment director at stockbroker AJ Bell, said that any spike in the share prices of Kingfisher, Foreign & Colonial Investment Trust, B&M European Value Retail and Direct Line could also propel them into the FTSE 100, with ITV and Pearson then among those most likely to fall. 

Mr Mould said that eight changes were likely “but that number could go higher”. The last time six were promoted, and six relegated, was in September 1992, while the last time four pairs changed places was in March 2016. He added that Centrica has been in the FTSE 100 since its demerger from British Gas in February 1997 while Carnival has been in the index since 2002 when it merged with P&O Princess Cruises.

How France’s billionaires rallied around Arnaud Lagardère

Is it old relationships or the prospect of new deals that attracted LVMH’s Bernard Arnault to the media group?

Twenty years ago at the Polo Club in Paris, LVMH founder Bernard Arnault and media baron Jean-Luc Lagardère sat down for dinner after their regular game of tennis.

After they were joined by Mr Lagardère’s son Arnaud, the conversation took on a serious tone when the two titans of French industry discussed the sudden death of an acquaintance. 

“If anything happens to me,” Mr Lagardère told his friend, “you must promise to take care of Arnaud.”

Mr Arnault agreed and — 17 years after the elder Mr Lagardère’s death — the luxury boss appears to be honouring his pledge. On Monday, Groupe Arnault announced it would buy 25 per cent of Arnaud Lagardère’s personal holding company through which he controls the publicly traded Lagardère group.

The deal has provided respite to Mr Lagardère after a bruising battle with a London-based hedge fund and saved him from an embarrassing reckoning with his French creditors.

It gives him a new opportunity to restore the fortunes of the Lagardère group, which was once one of France’s industrial powerhouses and today is focused on the Hachette publishing house and Relay newsagents as well as radio, sports and entertainment assets.

“I have spent a lot of time defending myself and the company, now I want to move forward,” Mr Lagardère told the Financial Times in an interview. “If I’m lucky, I have 15 or 20 years left to work to strengthen my family’s company. The goal is to make Lagardère a global leader in its two businesses — book publishing and travel retail.”

The terms of Mr Arnault’s investment were hashed out in just a few hours when the pair met at LVMH’s office this month, soon after the Covid-19 lockdown lifted, according to people familiar with the events. The 59-year-old heir addressed the 71-year-old tycoon with the informal tu pronoun as he made his pitch. 

The deal’s price tag, which people familiar with the matter put at around €80m, understates its importance to Mr Lagardère. It will give him a much-needed cash infusion to pay down €164m in debt owed to French bank Crédit Agricole, against which he had pledged his shares in Lagardère. 

The debts were undermining his control over the company that he has run since his father’s death. In early April, Lagardère had to suspend its dividend payments after lockdowns crippled its travel retail business, the biggest division accounting for 60 per cent of the group’s €7.2bn of annual sales. Without the dividend, the chief executive was deprived of the income stream he used to service his debt. 

The arrival of Mr Arnault also gives Mr Lagardère a powerful ally in his long-running battle against activist investor Amber Capital. The hedge fund has slammed his record as a manager and wants to overhaul the company's distinctive legal structure, known as a société en commandité par actions, a hybrid between a partnership and a limited liability company. It guarantees Mr Lagardère’s control even though his holding company — now shared with Mr Arnault — owns just 7.3 per cent of the group’s equity.

Amber has applied pressure in court to force Mr Lagardère to disclose the full financials of his personal holding company, arguing that shareholders need to know the extent of his debt problems. The 2018 accounts showed that there was an additional €202m in debt at another related vehicle controlled by Mr Lagardère, according to documents reviewed by the FT, more than the value of Mr Arnault’s shares in the group.

For all its agitating, Amber failed in an effort to replace the board at the May 5 shareholder meeting. In the run-up to that vote, however, Mr Lagardère had to scramble for support and ended up with one of France’s fiercest corporate raiders on the shareholder registry — Vincent Bolloré. 

Advisers from Rothschild had spent months making the rounds of France’s wealthy families and institutions to seek new friendly investors for Mr Lagardère. But it was former French president Nicolas Sarkozy, who in February was nominated to join the Lagardère board, who approached Mr Bolloré, according to people familiar with the matter.

The politician, who is so close to Arnaud Lagardère that he once referred to him as a brother, is also friends with Mr Bolloré, whose family-run empire spans logistics and shipping in Africa to Universal Music Group.

Mr Bolloré agreed to invest, and one person close to the situation said that he assured Mr Sarkozy that he would act amicably and not seek creeping control as he has done elsewhere at companies including Bouygues and Ubisoft.

The Breton billionaire was also on good terms with Arnaud Lagardère, a neighbour in the exclusive Paris enclave of Villa Montmorency.

Using the French media group Vivendi which he controls, Mr Bolloré built an 11 per cent stake in the Lagardère group in three weeks before the vote and has since raised it further to 16.5 per cent. 

Another billionaire, Marc Ladreit de Lacharrière, built a 3.5 per cent stake and informed Mr Lagardère he would back him.

Ahead of the crunch shareholder meeting, the Lagardère camp was also exploring a back-up plan. An adviser from Rothschild sounded out big shareholders, including the Qatar Investment Authority, about the possibility of Mr Lagardère giving up the commandité structure in exchange for a bigger equity stake — up to 20 per cent — in the listed group. Mr Lagardère would sacrifice control in exchange for a greater amount of liquid stock, fortifying his finances. Shareholders would suffer dilution but with more traditional corporate governance, and the possibility of a takeover or break-up, the valuation should improve.

But then came the surprise rescue by Mr Arnault, who agreed to invest in Lagardère Capital & Management (LCM). The proceeds will be used to pay down the Crédit Agricole loans.

The price was is in line with the €34 per share that was already ascribed to the Lagardère stake on LCM’s balance sheet, said one source, which represents a hefty premium to the current share price of €13.

The ties between the Arnault and Lagardère families run deep. In 2005, Mr Arnault bought Jean-Luc Lagardère’s mansion on the Left Bank from his widow, and still lives there. He sat on Lagardère’s board from 2004 to 2012; Arnaud Lagardère sat on the LVMH board between 2003 and 2009.

But nonetheless, the arrival of Mr Arnault and Mr Bolloré has set France’s business elite into a frenzy of speculation over the billionaires’ plans. 

One banker said: “I don’t believe for a second that this is about honouring the memory of Jean-Luc.”

Another added: “It may very well be friendly but there is no free lunch with Bernard Arnault.”

Both billionaires may be attracted by Lagardère’s media assets, which include the Journal du Dimanche newspaper, radio station Europe 1, and Paris Match magazine. They bring in less than €300m in annual sales and are unprofitable, but confer political clout in France.

LVMH’s travel retail business called DFS could be combined with Lagardère’s similar business that operates duty-free stores and newsagents in airports and train stations, bankers said.

Mr Bolloré has not spoken publicly about Lagardère but he may have his eyes on its book publishing business Hachette, which brought in more than half of operating profit last year. Vivendi already owns a smaller French publishing business called Editis.

Jean-Claude Daumas, a professor emeritus of the University of Franche-Comté who has written about the history of France’s family companies, argued the two supposed “white knights” may well intend to dismantle the company. 

“Of course we cannot exclude that the two businessmen are acting out of friendship, but their past histories make it more likely that something else is going on. Both created their family-run empires through raids and hostile takeovers. If I were in Arnaud Lagardere’s shoes, I would not sleep particularly well.” 

It also remains to be seen what Amber will do. It has lost money on its investment so far since it bought its shares at prices varying from €18 to €20.

Amber’s founder Joseph Oughourlian said the fund plans to wait to see how things develop. It does not exclude mounting another proxy battle next year and has called on the French markets regulator to probe the deal with Mr Arnault.

“The commandité, which provides all the power to Mr Lagardère, has gone from being controlled solely by him to being shared by Bernard Arnault,” said Mr Oughourlian. “This is a material change that shareholders deserve to know more about.”

Asked whether he worried that Amber might form an alliance with one of the billionaires, Mr Lagardère dismissed the idea. “The families that anchor the French business world do not have much affinity for the tactics or philosophy of activist investors. I simply do not think that is going to happen.”

He also called attention to the fact that the billionaires were not all on the same footing.

“Bernard Arnault has come in at my request — via his family holding company and with an agreement that we will act in concert long-term — in my personal vehicle [LCM] that controls Lagardere’s operational businesses,” he explained. “Vincent Bolloré and Marc Ladreit de Lacharrière have made a financial investment in the listed group because they believed in its future prospects.”

He does not think that any would turn hostile towards him or the company. “I am not afraid of that at all,” he said. “They are my friends.”

Atlantia eyes sale of stake in Autostrade

Benetton family group in initial talks with potential minority partners for crisis-hit toll road arm

Atlantia, the Italian infrastructure company controlled by the billionaire Benetton family, is in talks to sell a stake in Autostrade per l’Italia, the toll road arm that has come under fire following the collapse of the Genoa bridge two years ago. 

Institutional investors including US investment funds, Italian state lender Cassa Depositi e Prestiti, and F2i, an infrastructure fund owned by CDP, Intesa, UniCredit, and a group of Italian pension funds, have held initial discussions with the company, said three people involved in the talks.

The Five Star Movement, Italy’s senior coalition partner, has made revoking Autostrade’s toll-road concessions a priority in the wake of the August 2018 disaster in which 43 people were killed.

However, stripping Autostrade of the concessions 18 years before its contract expires could lead to complicated legal proceedings and a lengthy international public tender to find a new operator, legal experts and junior coalition partners said.

Atlantia said talks were at a very early stage and that it had launched a “data room” to share information on Autostrade.

The company will only be able to start a negotiation phase once the Italian government has clarified its position, as this will determine the asset’s price.

“Atlantia is interested in a long-term minority partner for Autostrade,” a company spokesperson said.

“No one would ever buy a stake of Autostrade in the current conditions,” the person added, unless they did so for reasons that do not make sense from an investment standpoint.

The transport minister and finance minister, both from the centre-left Democratic Party, are pushing for a compromise where Autostrade maintains the concessions while also discounting toll fees by 5 per cent and selling a stake to CDP and F2i, according to two people involved in the talks.

Edizione, the Benetton family holding company that owns 30 per cent of Atlantia, could also sell part of its stake, further diminishing the family’s role within Autostrade.

“This solution would give the Five Star the Benetton family scalp while also avoiding very risky legal consequences for the state,” said one of the people.

Edizione said it was “not against being diluted if credible partners step in” with proposals that work in the interest of all the companies and the stakeholders involved, including the shareholders.

Autostrade and Atlantia have recently been downgraded below investment level, making access to credit increasingly complicated. Autostrade said its revenue would be down at least €1bn in 2020 because of an 80 per cent drop in road traffic due to the coronavirus lockdown, while its debt has risen to €9bn.

Several people with knowledge of the Benetton family’s thinking said it has no intention of being forced by the government to sell stakes and it would not do so if it did not make financial sense.

Autostrade is also awaiting the government’s green light for a €1.25bn state-backed credit line. According to several people briefed on the matter, while UniCredit and a pool of other banks have approved the request pending the state guarantee, public authorities’ clearance is dependent on the government’s decision on the future of the concessions contract.