Big Brother Bezos

MARKETS

• U.S. markets: Stocks fell from Monday's highs. The North Korea summit on June 12 is up in the air, and the president isn't happy with the U.S.-China trade talks.
• Trade: Japan, Russia, and Turkey are now considering retaliating in response to the U.S.' steel and aluminum tariffs.
• Earnings today: Lowe's, Target.

REGULATION

Zuck's Apology Tour Continues with the EU Parliament

On Tuesday, we found out in just how many different languages you can say, "Mark Zuckerberg, explain yourself for allowing the misuse of millions of users' information."

In only his second (known) appearance in a suit, Zuck fielded questions from lawmakers across the EU, including:

1. Is Facebook (-0.37%) a monopoly?
2. What does Facebook intend to do about elections?
3. Will Facebook be GDPR compliant?
4. And seriously, why haven't you poked me back?

So why is Mark still under the spotlight? Well, after his two-day playdate with Congress (which didn't accomplish as much as some had hoped), the EU Parliament wanted its shot at the king.

And remember: If the U.S. is the good cop when it comes to data privacy regulation, the EU is the bad cop.

Our favorite bad cop moment:

"You have to ask yourself how you will be remembered. As one of the three big internet giants together with Steve Jobs and Bill Gates who have enriched our world and societies, or on the other hand, the genius that created a digital monster that is destroying our democracies and our societies."—Belgian representative Guy Verhofstadt.

So what were the takeaways?

Facebook has a lot of "top priorities" right now (read: keeping elections free from interference, monitoring bad content, data privacy, people over profits, you name it).

• "No"—Facebook is not a monopoly (per Zuck).
• "Yes"—AI will improve to better report and remove bad content.
• "No"—It's impossible to completely eradicate fake news, but they're hiring more security staffers to fight back.
• "Yes"—It'll be fully compliant with GDPR.

GDPR? General Data Protection Regulation—the EU's sweeping regulation on user data privacy that goes into effect this Friday. It's the official list of what companies "can" and "can't" do with European consumer data.

If you get caught breaking the rules...that'll cost you 4% of your worldwide revenue ($2.8 billion for Facebook).

Bottom line: Yesterday was just another stop on Zuck's apology tour—he'll be in Paris today to discuss using tech to promote the common good (no surprise, Uber will also be there). But the real test will be turning apologies into actions.

FINANCE

House Party, No Rules

Bipartisanship shoots, it scores. The House voted 258-159 (no overtime needed) to ease banking regulations put in place after the financial crisis.

Here's the quick and dirty:

• Dodd-Frank (circa 2010) instituted strict oversight of banks with $50 billion or more in assets. This law would raise that threshold to $250 billion.
• That's a huge win for small and mid-sized lenders, which will wiggle free of costly red tape.

While many lawmakers and banks celebrated, some Democrats think we're inviting the next crisis: Minority leader Nancy Pelosi said, "The bill would take us back to the days when unchecked recklessness on Wall Street ignited an historic financial meltdown."

What's next: The bill will hit President Trump's desk, and he's expected to sign it...enthusiastically.

RETAIL

CEO Delivers a Lowe's Blow to J.C. Penney

You know what they say: "If you can't fix one retailer, move on to the next."

Just ask Marvin Ellison, who after three years is leaving his CEO post at J.C. Penney (-6.19%) to take the same gig at Lowe's (-1.88%).

• Good luck J.C. Penney: Its shift from clothing to appliances flopped. Last quarter it lost $69 million.
• How ya doin' Lowe's? Also not so great. This home improvement chain needs some major home improvement as rival Home Depot turns it to mulch.
• Speaking of Home Depot: That's where Ellison got his industry know-how. The 12-year Depot vet rose all the way up to executive status before moving to J.C. Penney. Maybe Lowe's is looking to get that insider information.

But does Ellison have what it takes to save Lowe's? We say be careful—there's already an activist investor lurking in aisle five.

+ Side note: Ellison is one of just three black CEOs in the Fortune 500 (along with TIAA's Roger Ferguson & Merck's Ken Frazier)

TRADE

3 Questions for China and the U.S.

The U.S.-China trade war may be on hold, but this geopolitical gunslinging is far from over. Here are three questions we're asking the trade gods:

1. What'll happen to ZTE? Both countries are in the process of cutting a deal to stabilize the giant smartphone maker. You know, the one that's come under fire for violating U.S. sanctions and lying about punishing the employees responsible.
2. Is China making enough concessions to keep the U.S. from threatening tariffs (again)? It hasn't given up much so far, but China will drop tariffs on imported cars to 15% from 25%.
3. China has agreed to buy more U.S. goods...but exactly how much are we talking about? If it's $200 billion like the U.S. hoped, here's what it could buy:

+ What the experts are saying: So far, China is getting the better of the U.S.

TECH

Amazon's Facial Recognition System Comes Under Attack

The ACLU and dozens more civil rights organizations are worried Bezos is tiptoeing the line to Big Brother status. They wrote a letter expressing their "profound concerns" over Amazon's (-0.26%) facial recognition system.

Amazon has a facial recognition system? Yep. It's called "Rekognition" and it's a tool that analyzes images and videos to identify people.

It's currently being used by law enforcement in Orlando and Oregon in the name of public safety. Or...you could be Sky News and use it to identify celebrities as they partied at the royal wedding.

But these groups envision more nefarious uses
They argue that governments could easily use Rekognition to violate citizens' privacy and target vulnerable communities. Not to mention, "People should be free to walk down the street without being watched by the government."

Bottom line: Amazon says it's been keeping everything kosher, but these sirens are sure to get louder.

WHAT ELSE IS BREWING

• Sony is acquiring music publisher EMI for $2.3 billion.
• A former Valeant exec and the ex-CEO of Philidor were found guilty of fraud in a $10 million bribery scheme.
• Tesla (-3.33%) is hiring away Stuart Bowers from Snap to be its VP of engineering.
• Kevin Durant talks Silicon Valley, investing, and how he wants to be an NBA owner some day.

BREAKROOM

WHAT THE CREW IS READING
Well...we're reading what Bill Gates is reading. He just released his five book recommendations for the summer, and they all look fascinating. We're going to start with Leonardo da Vinci by Walter Isaacson and Lincoln in the Bardo by George Saunders. Then? We'll check out the rest.

TALK LIKE THE CREW
Machine Learning—When computers are able to use data to teach themselves how to improve on a particular task. And really, it's not so different than how humans learn. Computers take in information, make a prediction...and if it's wrong, figure out why they were wrong and get it right the next time. And the applications? Infinite. Check out all the ways machine learning is changing the world, from driverless cars to disease prevention, right here (Entrepreneur).

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Breakroom Answers

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